And another thing (banks part deux)

I read several economics blogs, try to keep up with the Bloomberg website, etc. I've read a lot of breathless paragraphs about the big traditional banks taking over the investment banks and the smaller traditional banks. I have questions:

• Is there an economic upside in concentrating all the bad debt from the various failed institutions in only a few huge banks?
• It seems like a bank such as B of A, which has low exposure to the bad debt, becomes more, not less, unstable by taking on others' bad debt. Am I missing something?
• I keep hearing the phrase "too big to fail" used in conjunction with B of A, JP Morgan Chase, and Citi. Is that supposed to reassure me? Scare me? The phrase is never accompanied by follow-up analysis. If one of these banks is on the brink of failure (because of taking on the bad debt of all the smaller banks it's gobbled up), and the government has to step in, is this something the FDIC is equipped to handle, or will it require some other form of government intervention (nationalization, etc.)?
• Where's Wells in all of this? (see earlier post)