Editorial - Even Bigger Than Too Big to Fail - NYTimes.com Asserting that it "is among the strongest banks in the industry," Citigroup announced on Monday that it would soon repay $20 billion of federal bailout money. This from a bank that has been in the red for most of the past two years, that is expected to limp through 2010 amid a torrent of loan losses, that saw its stock price close after the announcement at a measly $3.70 a share - and that, like other big banks, is still reluctant to lend. Meanwhile, the Treasury Department, which seems to have no qualms about Citigroup's self-proclaimed strength, plans to sell its $25 billion stake over the next six to 12 months. Citigroup's planned exit from the bailout - like Bank of America's earlier this month - would be welcome if the banks were the picture of health. But their main motive is to get out from under the bailout's pay caps and other restraints. The Treasury Department's approval is a grim reminder of the political power of the banks, even as the economy they did so much to damage continues to struggle. Over the weekend, President Obama summoned the nation's biggest bankers to Washington, but some of the biggest recipients of taxpayers" money, including Citigroup and Goldman Sachs, didn't bother making the extra effort to get there ahead of time to avoid the predictable winter weather that grounded their flights. Mr. Obama was right when he said the banks owe "an extraordinary commitment" to taxpayers, and he got some promises to lend more. But that would have been more convincing if the administration had held the banks" feet to the fire in the first place and had not agreed so quickly to freeing them from the bailout restraints. The truth is that the taxpayers are still very much on the hook for a banking system that is shaping up to be much riskier than the one that led to disaster. Big bank profits, for instance, still come mostly courtesy of taxpayers. Their trading earnings are financed by more than a trillion dollars" worth of cheap loans from the Federal Reserve, for which some of their most noxious assets are collateral. They benefit from immense federal loan guarantees, but they are not lending much. Lending to business, notably, is very tight. What profits the banks make come mostly from trading. Many big banks are happy to depend on the lifeline from the Fed and hang onto their toxic assets hoping for a rebound in prices. And the whole system has grown more concentrated. Bank of America was considered too big to fail before the meltdown. Since then, it has acquired Merrill Lynch. Wells Fargo took over Wachovia. And JPMorgan Chase gobbled up Bear Stearns. If the goal is to reduce the number of huge banks that taxpayers must rescue at any cost, the nation is moving in the wrong direction. The growth of the biggest banks ensures that the next bailout will have to be even bigger. These banks will be more likely to take on excessive risk because they have the implicit assurance of rescue. The White House's proposal to overhaul financial regulation has ideas for banks that are too big to fail. The House passed a bill last week that would require big banks to have bigger capital cushions to absorb losses. It gives the government authority to seize and dismantle big financial firms at imminent risk of failure and mandates banks to pay for a $150 billion fund to cover the costs of any future mess. It grants regulators authority to limit the operations or even break up big banks deemed too risky, even if they appear healthy. These provisions still seem vulnerable to being gamed. The Senate, which is unlikely to pass its version of the deal until next year, should explore more direct measures, like banning banks beyond a certain size, measured by their liabilities. If we have learned anything over the last couple of years, it is that banks that are too big to fail pose too much of a risk to the economy. Any serious effort to reform the financial system must ensure that no such banks exist.