Well, that is true, in that higher capital, better capital, better liquidity management, and higher liquidity actually carried on the books are all factors that will reduce the probability of failure of individual institutions and collectively will improve the resilience of the system.
The other factor, which is important to consider, is the interconnectedness of institutions. Do they hold each other's bonds? Are they big counterparties with each other? How related are institutions? Because the contagion effect of one institution going down....
I would point out—you know this, but it bears remembering—that Bear Stearns was the sixth largest investment bank in the United States, so not a big investment bank, but the sixth largest. It was the determination of the U.S. authorities that it was too big, or rather too interconnected, to fail, which is why they took steps to engineer an orderly rescue of that firm. I must say, based on what I know and understand of the situation--and understood at the time--that this was the right decision.
So one has to attack as well these interconnections as part of financial reform, so that an individual institution can be separated, if you will, from the system if it has failed.