How to prevent the financial contagion from recurring?

Two elements of the current crisis jump out at me:

1.) banks which are so big that their failure is perceived to carry systemic risk

I would like to see an attempt made to determine the maximum size of a financial firm beyond which it becomes "too big to fail." Let's take that maximum, divide it by two, and make the result into an inflation-adjusted size limit for our banks. Just as exchanges don't allow speculators to exceed size limits beyond which the integrity of the market would come into question, we shouldn't allow banks to exceed the size threshold beyond which they start getting an implicit -- but very expensive! -- taxpayer guarantee.

2.) the spread of securities which are traded off exchange, and for which there is no central clearinghouse

Credit default swaps (cf. New York Times article on these securities) would be the poster children for this problem, and seem to account for a lot of the fear of what would happen if a major player were to go down. There are a couple of problems with them, starting with the lack fo transparency that goes with all the private trading. The central flaw, however, is the vulnerability a security holder has to failure by his counterparty; this risk is totally eliminated if we don't permit security trading without a central clearinghouse.

This would necessarily reduce the universe of tradable securities, but I think we are all seeing the expense that the current system carries.