We have finally reached the point in our financial history where even bankers hate bankers.Last week, the Federal Reserve Bank of Dallas issued its 2011 annual report with a 34-page essay, “Why We Must End Too Big To Fail—Now.” The report stops short of calling our nation’s largest banks terrorists, but it does dub them “a clear and present danger to the U.S. economy.”

It begins with a letter from regional Fed president Richard Fisher. “More than half of banking industry assets are on the books of just five institutions,” he complains. “They were a primary culprit in magnifying the financial crisis, and their presence continues to play an important role in prolonging our economic malaise.”

This is not the Tea Party. This is not Occupy Wall Street. This is not some disgruntled Goldman Sachs guy firing off a nastygram to the New York Times on his last day. This is a member of the Federal Reserve itself—an institution that bears responsibility for our banking system devolving into an untenable oligarchy that buys off politicians, captures regulators and eats up our money. This is a member of the establishment saying Too-Big-To-Fail, or TBTF, must die.

“The term TBTF disguised the fact that commercial banks holding roughly one-third of the assets in the banking system did essentially fail, surviving only with extraordinary government assistance,” the essay reads.

Their executives paid themselves fortunes to execute failed mergers and acquisitions and accumulate unimaginable piles of toxic debts. We saved them to save the financial system. But now we must break them up so they don’t put us in this ridiculous situation again.

These banks are “a hindrance to the very ideal of American capitalism,” Mr. Fisher writes. And capitalism requires “creative destruction.”

I would add that most of these TBTF banks are criminal enterprises and deserve the death penalty, anyway. The record is clear: They’ve paid millions of dollars to settle fraud allegations, often without admitting or denying guilt. And to crib a line from Gregg Costa, a federal prosecutor who recently won a conviction against Ponzi schemer Allen Stanford: “Fraud is just theft wearing a business suit.”

To keep everyone honest, capitalism demands the kind of competition that big banks love to crush.

“When competition declines, incentives often turn perverse, and self-interest can turn malevolent. That’s what happened in the years before the financial crisis,” the Fed essay says.

“A financial system composed of more banks—numerous enough to ensure competition but none of them big enough to put the overall economy in jeopardy—will give the United States a better chance.”

So how do we get there? The Dallas Fed doesn’t offer many clear solutions, but one way to go may be as simple as a variation on a 1960s anti-Vietnam War mantra: “What if there was a bank and nobody showed up?”

If you hear that your delusional, oversized banker is threatening the nation’s economy, why do you still bank there? Have you no patriotism?

You can’t wait for the next Democrat or the next Republican or the next Ron Paul to take action. There is only one thing you can do: Find a well-managed community bank or a credit union that hasn’t been bailed out or settled allegations of fraud and put your money there.

You don’t have to take it from the left or the right, or even me. Take it from the Dallas Fed: “Achieving an economy relatively free from financial crises requires us to have the fortitude to break up the giant banks.”

—Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com ; his email address is al.lewis@dowjones.com