You've heard the philosophical question: If a tree falls in the woods and no one is there to hear it, does it make a sound?

For today's banking environment, I offer an alternative question that is equally baffling. If the leadership of a Federal Reserve Bank issues a warning of a sustained threat to the American economy and no one in a position to stop the threat takes heed, do their words matter?

The recent report issued by the Federal Reserve Bank of Dallas, "Choosing the Road to Prosperity: Why We Must End Too Big to Fail – Now," was different than what we are accustomed to seeing.

In the report's introductory letter, Dallas Fed President Richard Fisher makes the following poignant assertion: "The too-big-to-fail (TBTF) institutions that amplified and prolonged the recent financial crisis remain a hindrance to full economic recovery and to the very ideal of American capitalism. It is imperative that we end TBTF. In my view, downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response."

This statement might not have the same impact if said by the Occupy movement, but when the top officials at the Federal Reserve — the institution that bears responsibility for our banking system — put it in an annual report, it hits home. And why? Because it is true.

Harvey Rosenblum, a 40-year veteran of the Federal Reserve, former president of the National Association for Business Economics and author of the report, stated his concerns in no uncertain terms. "If allowed to remain unchecked, these entities [TBTF institutions] will continue posing a clear and present danger to the U.S. economy.”

His criticism didn't end in doom and gloom, but with a challenge. "As a nation, we face a distinct choice. We can perpetuate TBTF, with its inequities and dangers, or we can end it."

We stand less than 60 days away from the two-year anniversary of President Obama signing Dodd-Frank into law. Rosenblum’s criticism of the bill is plain. "Dodd-Frank does not eradicate TBTF…it may actually perpetuate an already dangerous trend of increasing banking industry concentration," he said. In fact, since the passage of Dodd-Frank, too-big-to-fail institutions have only grown while hundreds of smaller banks have failed. 

This brings two questions to mind: What has been done to date to address the danger presented by the TBTF system? And when are policy makers going to get serious about getting the U.S. economy out from under the thumb of TBTF banks?

It's an election year, and the political lines have been drawn clearly for all to see. Over the next seven months, we'll hear countless promises—but talk is cheap, and if Fisher and Rosenblum are to be believed, time is not on our side. 

A number of provisions in Dodd-Frank should be amended — quickly — to mitigate the impending avalanche of new, and in many cases unintended, regulatory burdens on community banks. Then, Congress should roll up its sleeves and tackle the task of unraveling the twisted web of TBTF institutions.

This isn't a time for lawmakers to stick their head in the ground and pretend like they can't hear the warnings of the Dallas Federal Reserve. For the American economy, there’s just too much at stake.

Christopher L. Williston is CEO of the Independent Bankers Association of Texas.

See related piece: "Break Up the Megabanks? We Could Do a Lot Worse"