Too failed to be big? Today, Public Citizen will send a formal petition to the Federal Reserve Board of Governors and the Financial Stability Oversight Council to break up Bank of America. The petition asks them to “recognize that the Bank of America Corporation . . . poses a ‘grave threat’ to the stability of the United States financial system and to mitigate that threat, as provided by section 121 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.”

Shahien Nasiripour’s article about Citibank’s near-bankruptcy in November 2008 shows how silly it is to expect safety by creating a “systemic risk council,” one headed, I might add, by Tim Geithner. He basically applies the Potter Stewart principle to systemic risk, saying that he’ll know it when he sees it. And somehow, I’d guess that he’ll see systemic risk in any big bank that goes down.

A month ago, Brad Miller and a dozen other Congressmen — including House Financial Services Committee Chair Barney Frank — wrote the Financial Stability Oversight Council to ask that they look into the systemic dangers of foreclosure fraud. Timmeh Geithner just responded to that letter. His response makes it clear he actually read Miller’s letter — because he references the first item I’ve laid out above, though rather than actually respond to that request, he describes what the FSOC is actually doing instead of examining collateral loan files. His response to the second and third requests is even more insolent; he refuses to even repeat the second one, and rather than consider either one seriously, he just says FSOC will take action “if abuses are found.”

Michael Barr, who is leaving the Treasury Department, made a few calls to the financial press in recent days (still waiting by the phone, sigh) to update them on the government regulator’s efforts in combating foreclosure fraud. He spoke with Felix Salmon and focused on an “11-agency, 8-week review of servicer practices, with hundreds of investigators crawling all over the banks.”

How in hell could the government give those who have been harmed redress if the government is only reviewing a select subset of the loan files? Is the government going to provide everyone who believes they were screwed some legal aid to prove their claim?

The Financial Stability Oversight Council met today; they discussed foreclosure fraud and securitization. For less than 15 minutes.

The optics of it — this apparent lack of concern about the way the banks will postpone admitting to their own insolvency by degrading the private property system in this country at the expense of real people — suck. They sure provide zero confidence that the FSOC intends to do its job to prevent this from becoming a systemic crisis.

The key person from Treasury working with the Attorneys General investigation into foreclosure fraud is leaving almost immediately, although he doesn’t appear to have his next teaching gig lined up. Rather interesting timing, yes?

A letter from Rep. Brad Miller and other members of Congress urges the Financial Stability Oversight Council to take action to prevent the foreclosure fraud problem from becoming a systemic crisis. The letter reminds the FSOC that Dodd-Frank gives them the power to avoid a systemic crisis. Barney Frank has signed the letter, and Chris Dodd has already admonished Treasury Secretary Tim Geithner to employ FSOC to mitigate systemic risk. And thus far?

Crickets. From both the Administration and the media.