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An anonymous executive inside one of the big banks recently said that breaking up the "Too Big To Fail" banks is crucial to decreasing systemic risk and shifting resources to the productive sectors of the economy.

We agree and just published a report that explores how they should be broken up.

We aren't the first to call for breaking up the banks. In fact, the Federal Reserve's longest-serving policymaker, Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, released a paper in December that explains why breaking up the big banks is critical to reducing systemic risk.

We asked a group of industry experts and watchdogs to tell us if they thought the government should leverage its stake in Citi to break up the bank -- and if so, how?

Our new report -- Restructuring Citi to Serve the Public Interest -- provides some interesting answers to these fundamental questions.

Given that a) banks like Citi have started to pay their TARP loans back and b) this is not a question that Senator Dodd and others seem willing to address in the current financial reform package, why bother with such a report?

A fair question to which there are many answers. As Thomas Hoenig told HuffingtonPost reporter Shahien Nasirpour, the idea that the United States needs megabanks to compete globally is a "fantasy."

In addition, the top four financial firms in the country collectively account for about 43 percent of all assets in the U.S. banking system. Would a vibrant and diverse economy give its biggest banks that much control?

I can think of at least three additional reasons to break up Citi:

1) It's not clear that banks like Citi are as healthy as they claim to be.

On 3/4/10 Citi CEO Vikram Pandit told the Congressional Oversight Panel that Citi is "fundamentally different from the company we inherited when I became CEO," pointing to increased cash reserves (from a massive "yard sale") and a substantial reduction in the bank's "exposure to risky assets." Investors apparently agree. The company's stock price has risen in recent months.

Nevertheless, reports that Citi is "better" may still be premature: In December, Bloomberg News reported that despite paying back tens of billions in TARP loans, Citi still holds $617 billion in troubled assets. Last week (4/9/10), the WSJ reported that the big banks "have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York."

It's fair to ask how anyone can really have a handle on the company's balance sheet given how much of its operations exist in the shadows. For instance, GAO's most recent survey indicates that Citi has more offshore tax haven subsidiaries than any Fortune 100 company. That's a lot of places where Citi can stash toxic assets in off-balance-sheet vehicles. (Think that's circumstantial evidence? Maybe. But keep in mind that Citi helped create some of the off-shore Special Purpose Vehicles that Enron used to hide its debt.)

Moreover, despite paying off tens of billions in taxpayer-funded TARP loans, Citi remains in hock to U.S. taxpayers for tens of billions more (not counting loans or other support from the Federal Reserve).

2) The big banks continue to pose a major potential risk to the broader economy, while failing to provide adequate support for the small businesses that create most American jobs.

Despite building up their cash reserves and lowering their leverage ration, the Treasury's most recent report indicates that the notional value of Citi's derivatives is still at least 30 times the total underlying value of its assets. In fact, according to the Treasury, just five banks control 97 percent of the derivatives market.

The incentives driving executive decisions -- both inside the company (i.e. executive compensation) and externally (e.g. the Federal Reserve's ongoing policy to keep the main interest rate near zero, thereby effectively guaranteeing a spread for speculation) -- together sustain a culture of speculation and unearned profits that guarantees that the banks will not ever reform themselves. Already in 2009, CEOs at the six banks receiving the biggest taxpayer-funded bailouts received between $9.2 and 30 million in total compensation.

Meanwhile, lending to small businesses by the nine big U.S. banks that received federal bailout money to small businesses dropped $20 billion in January compared with December, according to Treasury reports. Remember: small businesses consistently create more new American jobs than big corporations.

3) Big Banks like Citi are the biggest obstacle to real financial reform in Congress.

One of the more candid moments in Congress in recent years came when Senator Dick Durbin (D-IL) told a reporter that banks "own" Congress. And that was before the Citizens United decision.

The "Government Sachs" gold-plated revolving door to Treasury and other parts of the executive branch is well known and didn't begin with Obama. But as Nobel Prize-winning economist and author Joseph Stiglitz has suggested, the ties between Obama and Wall Street mean that his administration's programs "have been designed to help Wall Street rather than create a viable financial system." No wonder former IMF economist Simon Johnson suggested that the financial "coup" reminded him of Russia and other countries ruled by elite oligarchies.

The dimensions by which we can measure the banking industry's influence over the financial reform legislation currently before Congress is staggering:

* As Mother Jones reported last week, Congress has its own gold-plated revolving door: "In the past year, top bailout recipients...have dispatched more than 100 past congressional staffers and ex-government officials to shape the bailouts to their liking."

The door is turning so fast that even Barney Frank (D-MA), the chair of the Financial Services Committee where (16 staffers are ex-lobbyists) says it's gone too far. Two weeks ago Frank barred committee staff from communicating with Peter Roberson, their former colleague, who now lobbies on K Street for a derivatives trader -- after helping draft the credit default swap provisions in the bill that the House passed last fall.

* According to Public Citizen, the top 10 financial industry TARP recipients and their major trade associations scheduled at least 70 fundraisers for members of Congress and major party committees between Election Day 2008 and end of June 2009. Public Citizen released another analysis of the financial services industry's contributions that led them to conclude that "Wall Street's biggest profit center is not in Manhattan, but in Washington, D.C."

Given how limited the financial reform debate has been so far, I'd say that's hardly speculation.