Results from the Treasury Department's stress tests are coming in, so the banking community is on its toes waiting to hear which banks are safe.  And over the weekend the Federal Deposit Insurance Corporation closed four banks.  FDIC chair Sheila Bair says there are more bank closings ahead, but not to worry, the FDIC has ample resources to handle the additional failures.  So while she is not stressed about the results of the tests, she does want the resolution authority of the FDIC broadened so the agency has authority over an entire banking organization rather than just depositor institutions.  Here is what she told The Economic Club of New York in a speech yesterday: 

The lack of an effective resolution mechanism for large financial organizations is driving many of our policy choices. It has contributed to unprecedented government intervention into private companies. It has fed the "too big to fail" presumption, which has eroded market discipline for those who invest and lend to very large institutions. And this intervention, in turn, has given rise to public cynicism about the system and anger directed at the government and financial market participants.

We need a new resolution regime for these large institutions, which does a better job of imposing loss on investors and creditors, instead of leaving it in the hands of government and the laps of the taxpayer. To be sure, creating such a resolution mechanism would be very bold. But recent history –I believe-- has shown that it is a very necessary step.

Bair also spoke to CNBC's Trish Reagan yesterday.  Reagan asked about the FDIC's capacity to handle the failure of the big banks.  Bair said losses on large banks are actually smaller.  For example, she tells Reagan that the FDIC had zero losses off of the failure of Washington Mutual (WaMu) last year. And she further explains her contention that it is time to drop the "too big to fail" myth:

You can read a transcript of Bair's speech before The Economic Club of NY here.