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An annual report from a regional Federal Reserve bank is typically a collection of banalities and clichés with some pictures of local worthies who serve on the board.
And so it is with this year's annual report from the Federal Reserve Bank of Dallas, whose pages are graced by the smiling, stolid portraits of board members who run local companies like Whataburger Restaurants.
But the text is something else entirely. It's a radical indictment of the nation's financial system. The lead essay, which is endorsed by the president of the Dallas Fed, contends that despite the great crisis of 2008, a cartel of megabanks is still hindering the economic recovery and the institutions remain too big to fail.
The country's biggest banks look much as they did before the 2008 financial crisis -- only bigger. They have "increased oligopoly power" and "remain difficult to control because they have the lawyers and the money to resist the pressures of federal regulation," Harvey Rosenblum, the head of the Dallas Fed's research department, wrote in the essay.
Having seen the biggest banks make risky bets, crush the economy and get rewarded leaves "a residue of distrust for the government, the banking system, the Fed and capitalism itself," Mr. Rosenblum wrote.
It's one thing for the Occupy movement to point out how bailing out the biggest banks -- with little cost to their executives or shareholders and creditors -- has demolished credibility. It's quite another for top officials in the Federal Reserve system to put it in an annual report.
As for Dodd-Frank's "resolution authority" -- the power to dissolve big financial institutions that Barney Frank famously hailed as a death panel for banks -- well, not so much. "For all its bluster, Dodd-Frank leaves TBTF entrenched," Mr. Rosenblum wrote, using the acronym for "too big to fail."
Yes, Dodd Frank has mechanisms in place to prevent taxpayer bailouts of the largest banks, he concedes. Banks are supposed to have "living wills" that explain how they could be seized and wound down while minimizing the use of taxpayer money.
But the Dallas Fed is deeply skeptical that this would work in real life.
"We know under the current structure that the government would be called on once again," the president of the Dallas Fed, Richard W. Fisher, told me. He has been giving a series of speeches about the continuing problem of "too big to fail."
The biggest banks are