Last week Elizabeth Warren questioned Fed Chairman Ben Bernanke on Too Big To Fail. Today she's taking on officials from the Treasury, Comptroller's Office, and the Fed on 'Too Big To Jail.'

The officials are appearing before the Senate Banking Committee to testify about HSBC's money laundering scandal. The bank paid $1.2 billion in December for a bevy of transgressions including laundering money for Mexican Drug cartels, handling accounts for Iran, and much more.

Yesterday Attorney General Eric Holder spoke on the Justice Department's part. The agency did not prosecute any individual criminally for this matter in part, he said, because the size of large banks “has an inhibiting influence – impact on our ability to bring resolutions that I think would be more appropriate”, Mr Holder told lawmakers. “And I think that is something that we – you all – need to consider.”

Warren definitely considered it before she took the mic today.

"The U.S. government takes money laundering very seriously," she said. "It's possible to shut down a bank that's been involved in money laundering, individuals can be baned from every participating in financial services, and people can be sent to prison. Now, in December HSBC... admitted to laundering $881 billion that we know of from Mexican and Colombian drug cartels and also admitted to violating our sanctions... and they didn't do it just one time... they were caught... and kept doing it. HSBC paid a fine but no individual was banned from the bank and there was no hearing to consider shutting down HSBC's activities in the United States. What I'd like... is your opinion...How many billions of dollars of drug money do you have to launder...before someone will consider shutting down a bank?"

The first unlucky respondent was David S. Cohen, the Under Secretary for Terrorism and Financial Intelligence U.S. Department of the Treasury. He said the Treasury took money laundering "very seriously" etc.

But Warren broke in: "I'm not hearing your opinion on this... You're the leaders on money laundering... What I'm asking is what does it take even to say here is where the line is and if you cross that line you're at risk of having your bank shut down?"

Cohen said that the Treasury was "mindful of what" its "authorities are" but that ultimately the responsibility lies with other regulators to determine that.

Warren was visibly annoyed: So you have no opinion on that. You sit in Treasury... you try to enforce these laws... and you have no opinion on when it is a bank should be shut down for money laundering? Not even an opinion?!"

The short answer to that was... not really. Cohen said that the Treasury and the DOJ do share information on issues like this, but that the Treasury did not give the DOJ an opinion.

"That did occur in the HSBC matter. We told the DOJ we weren't in a position to offer any meaningful assessment of what the impact might be," he told Warren.

That only made Warren more upset. "I want to make sure I understand what you just said. The DOJ in making its decision whether or not to pursue a criminal prosecution, checked with the Treasury on whether or not there would be a significant economic impact if a large bank would be prosecuted?"

Cohen responded that the Treasury was not "in a position to offer any meaningful guidance" because of HSBC's complexity and because the Treasury it didn't know what the DOJ was planning to prosecute or how other regulators would react.

"So you just said to the DOJ 'you're on your own'," said Warren.

What it comes down to is this. There are four regulators overlapping information responsibilities on this and other financial issues. For the Comptroller's office to kick HSBC out of the U.S. (revoke its charter) it has to be convicted of a criminal offense. Only the Justice Department can do that. The Treasury is supposed to advise the DOJ about HSBC's importance. The Fed was only asked about what an HSBC prosecution would do to investors.

Warren's take away, then, was easy — Make the whole system simpler. Consolidate it.

Doesn't sound like a bad idea.