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I agree with Barb Rehm's recent article on dealing with too-big-to-fail: The industry's two biggest problems — its lousy image and the intractable "too big to fail" issue — are linked. I'm not sure, however that supporting repeal of Title II will do much to alter the debate about changing any provision of Dodd-Frank.

See Barb's well-reasoned opinion at: http://www.americanbanker.com/issues/178_55/how-big-banks-can-cure-break-em-up-fever-1057731-1.html?zkPrintable=true

For one thing, the current political environment is not likely to generate reasoned compromise. For another, Senator Warren appears to be on a mission to “break 'em up.” So does the ICBA. And – according to Rasmussen – 50 percent of Americans support such a plan as it applies to the 12 largest entities.

There are wide differences of opinion about whether TBTF was resolved by Dodd-Frank. Similarly, there are conflicting views among bankers and federal banking regulators – as well as the two national bank trade associations – about breaking up the “big banks.” As Barb points out, the TBTF issue is a political one, and that's why repealing Title II is a likely non-starter in the Senate.

Republicans generally support total repeal of Dodd-Frank, not just Title II. If they can pick off one or two issues, like restructuring of the CFPB and repealing Title II, then they'll work hard to do that. But those issues simply won't get through the Senate.

As Barb points out, it's a perception problem that's at work here: many Senators on both sides of the aisle, and especially Senator Warren, believe TBTF is still in effect as a national policy. Throw Tom Hoening and Richard Fisher into the mix and you begin to understand the nature of the perception problem that's not likely to be settled soon.

What we're doing now as an industry clearly isn't working to allay fears or change opinions that TBTF is still with us. The major divide between the ICBA and the ABA is likely to perpetuate that problem.

Does it make sense for bankers to at least not oppose Cordray's confirmation? Of course it does, but I don't think the uncertainty surrounding his initial recess appointment will be resolved very soon. Without such a resolution we're not likely to change the minds of enough Senate Republicans to get us past the 60-vote requirement. They need the political leverage to change the structure of the Bureau.

At the end of the day the message from bankers will not be consistent. Some will say “break 'em up” and some will say don't. As a result, and as it was with passage of Dodd-Frank in the first place, Senators who are trying to score political points with their respective leadership teams will pick the banker message that supports their position. I just don't see that changing any time soon.

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