A Congressman Followed Elizabeth Warren's Lead And Pummeled Bernanke On Too Big To Fail Today

Perhaps Elizabeth Warren's sickness over 'too big to fail' (TBTF) is catching.

Today, Ben Bernanke was testifying before the House Financial Services Committee. The hearing lacked some fireworks without retired Congressman Barney Frank, but his fellow Massachusetts Democrat Representative Michael Capuano did his part to make things interesting.

Following Senator Warren's lead from yesterday, Capuano questioned hard Bernanke about TBTF and the "subsidy" big banks get in the form of lower borrowing costs.

"I want to read your words as recorded...you say 'the subsidy is coming because of market expectations that the government will bail big banks out if they fail. Those expectations incorrect.'... So am I reading this correctly, at least through legislative purposes, TBTF is non-existent... not through the market, but through the law?"

Bernanke responded saying that we now have the orderly liquidation authority which would wipe out all the shareholders of the company being liquidated. He said that if a big bank failed tomorrow, we'd still have problems, but the Fed is working on that.

Capuano seemed a little happy with that response saying, "...I... agree with you that regardless of what the law says, some people in the marketplace, especially some of my friends on the other side of the aisle, like to believe that it's still in existence. And I accept that not as a legal point but as a fact of reality. Some people think that the moon is made of cheese, and that's fine, to them that's real. So for some people TBTF is still there though there's no scientific or legal proof that it is. I guess what I'm asking is what do you think we should do to address that misconception of the market..."

Bernanke said there were steps being taken to move in that direction and mentioned some provisions in Dodd-Frank, but Capuano kept on him. He eventually asked Bernanke to quantify the subsidy banks were getting from the belief in TBTF.

Lucky for our Fed Chairman, Capuano's time then ran out.

Watch the video from CNBC: