Bernanke: Big banks will not be allowed to fail, new regulator needed

Ben Bernanke dispelled all doubt about the Fed's policy on banks that are deemed too big too fail. The policy is simple as can be: big banks will not be allowed to fail.

"The Federal Reserve, other federal regulators, and the Treasury Department have stated that they they will take any necessary and appropriate steps to ensure that our banking institutions have the capital and liquidity necessary to function well in even a severe economic downturn," Chairman Ben Bernanke said in his speech before the Council on Foreign Relations. "Moreover, we have reiterated the U.S. government's determination to ensure that systemically important financial institutions continue to be able to meet their commitments."