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Jamie Dimon has been allowed to continue as both chairman and CEO of JPMorgan Chase & Co. (JPM - Analyst Report). Many would argue that the fight to retain both titles has been a costly one for Dimon. It leaves his reputation tarnished as a primary spokesperson for Wall Street. It also draws attention to the issues that continue to plague the financial system, primarily the fears evoked by "too big to fail" banks.

Last year, 40% of shareholders had voted to divide Dimon’s duties. This year, that percentage has fallen, but the protests have been more strident. This despite the fact that JPMorgan has posted record profits over the last three years while other banks have struggled.

Such a situation arose when the bank lost $6.2 billion due to its "London Whale" trading debacle. This did little to curb the profits of the banking giant, which still made money that quarter. But Dimon was forced to admit publicly that a “terrible mistake” had been made.

But the bigger question is: Will simply bifurcating Dimon’s role help? According to The Wall Street Journal, assistant comptroller for New York City and a co-sponsor of the shareholder resolution to split the roles, Michael Garland has said an independent chairman would be able to more effectively deal with the concerns of regulators.

This still doesn’t strike at the root of the concerns of investors and observers alike. What would actually help are systemic changes like the Dodd-Frank Act. That piece of legislation still remains encumbered by several objections.

Attempts are continuously being made to weaken its various provisions. First introduced in 2010, the full force of the law has yet to be felt, as the financial sector approaches different agencies to object to its various provisions.

The concern over governance at JPMorgan is completely justified. With $2.4 trillion in assets, it is the largest financial holding company in the U.S. The effects of the failure of Lehman Brothers and the financial crisis that followed is still felt in the monetary stimulus program of the Federal Reserve, which may only now be coming to an end.

The primary beneficiaries of the bailout were the nation’s six largest banks - Bank of America Corporation (BAC - Analyst Report), Citigroup, Inc. (C - Analyst Report), The Goldman Sachs Group, Inc. (GS - Analyst Report), Morgan Stanley (MS - Analyst Report), Wells Fargo & Company (WFC - Analyst Report) and JPMorgan. According to estimates by Bloomberg, they have received $102 billion in tax concessions. Others, like non-profit organization ProPublica estimate that the figure may be closer to $160 billion.

The Dodd-Frank reform was intended to ensure that such a bailout of big banking would never occur again. It entailed a simple system to deal with banks headed for failure; outright liquidation. But the overall perception is far from this ideal. Most investors are content to invest vast sums in bank bonds at extremely low rates of interest. This is a clear sign that the "too big to fail" perception clearly exists.

The perception is shored up even further by a report released by Moody's Corp. (MCO - Analyst Report) in March. The second largest listed U.S. ratings company has raised the ratings of these six banks because of the perception that bailouts will still happen.

Higher scores have meant that borrowing has become cheaper for these banks. Even Fed Chairman Ben Bernanke believes that the situation is very much the same. Speaking at a press conference on March 20, he said: “It’s not solved and gone…It’s still there.”

These concerns led senators Sherrod Brown and David Vitter to introduce a seemingly straightforward solution to the problem. The Brown-Vitter legislation simply requires banks to with assets in excess of $500 billion to maintain a capital ratio of 15%, which is nearly twice that of current levels. However, if passed, such legislation would have very serious implications.

It would mean that banks would have to either conform to these stringent capital requirements or be broken up into far smaller entities. In one fell swoop, it would do away with the need for a more complicated set of regulations. It would also prevent implicit subsidization of banks in the future.

There is widespread skepticism about whether such a law would at all reach the Senate floor. Even the specifics of the law – such as focusing on executive compensation structure – need to be improved. However, one thing is undeniable: the law puts the focus squarely on the fact that banks need to hold more equity, not debt. And that is possibly the only way to address the "too big to fail" issue.

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