“As Federal Reserve Board Chair Janet Yellen recentlytold the Senate Banking Committee, the regulators’ grades on the latest round of the “living wills” for the nation’s 11 most systemically dangerous banks will be released shortly. It’s not clear who should be the most nervous: the banks, the regulators or the American people.

“The banks should be nervous because they spectacularly flunked the last round of living wills for which they received grades. The Fed and the Federal Deposit Insurance Corp. effectively found that the 11 banks had failed to demonstrate that they could be resolved under the Bankruptcy Code without requiring taxpayer bailouts. This shouldn’t really surprise anyone, since the too-big-to-fail banks want taxpayers to backstop their activities and bail them out if necessary. If their living wills are again subpar, the Fed and the FDIC will likely order the banks to take steps to become more resolvable. Under the Dodd-Frank Act, the regulators can ultimately require institutions with shoddy living wills to dispose of or spin off business lines or activities so that they can be resolved in bankruptcy. In other words, the regulators will order them to break themselves up.”

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Read the full American Banker Op-ed by Dennis Kelleher and Frank Medina here.