WASHINGTON (MarketWatch) -- Like any politician, it seems Federal Reserve Chairman Ben Bernanke is prone to saying one thing when he's on the hustings and doing another thing when he's back inside the Washington Beltway.

A case in point is the issue of too-big-to-fail banks roaming the American economy.

Bernanke was asked about this issue more than any other during his town hall meeting on Sunday night with citizens of Kansas City.

The Fed chairman went to Kansas City to assure the average Americans that the economy was on the mend and the central bank was on top of the situation. But going through decades of endless debate and little action over the too-big-to-fail question didn't fit with that strategy.

"The problem we have is that in a financial crisis if you let the big firms collapse in a disorderly way, they'll bring down the whole system," Bernanke told the meeting.

"When the elephant falls down, all the grass gets crushed as well," Bernanke added.

He said he had to "hold his nose" to rescue such institutions during this crisis. As a result, Bernanke said it was his "top priority" to fix the issue of too-big-to-fail.

But Burt Ely, an expert on banking regulation, does not see that sense of urgency from the central bank or the White House. The Obama administration's reform of Wall Street regulation, which is backed by Bernanke on almost all points, basically sidesteps the issue of too-big-to-fail, argues Ely.

The plan would put extra requirements on the capital and activities of firms found to be too-big-to-fail. It would also put in place a new resolution program between bailout and bankruptcy where the government can come in and seize the firm and unwind it in an orderly way.

The Fed's top expert on the subject, Gary Stern, the president of the Minneapolis Federal Reserve Bank, said he was disappointed in the approach taken by Treasury, calling it "status quo plus."

"The Treasury proposal fails to come to grips with too-big-to-fail and therefore leaves the financial system considerably more vulnerable than it needs to be to future bouts of instability," Stern said in a speech earlier this month.

"There is little reason to think that these steps will, individually or collectively, succeed in reining in too-big-to-fail effectively over time because they do not change the incentives which create the problem. In fact, there is nothing in the Treasury proposal designed to put creditors of large, systemically important financial institutions at risk of loss," Stern said.

Stern wants the government to insist that it will not bail out uninsured creditors of the biggest firms. This will make risk more expensive. In turn, banks won't be able to take on excessive amounts.

Ely said the Fed and other banking regulators have flubbed the issue for decades and major questions remain in the wake of Bernanke's handling of the recent crisis.

"It was all ad hoc, and precedents have now been set," Ely said.

Experts still debate why the government let Lehman Brothers fail after a buyer was found for Bear Stearns.

Even in the aftermath of the crisis, regulators are still reluctant to identify which firms are too-big-to-fail, Ely said.

"How far does it extend -- to firms like GE Capital and insurance companies? Does it include domestic operations of foreign banks?" Ely asked.

Ely advocates a solution where big financial firms are required to find a series of voluntary guarantors who would agree to provide - for a fee -- unlimited equity should a firm exhaust its supply.

Ely said he was never able to make any headway with his argument until the recent crisis hit.

"People are coming toward me," Ely said.

"We're not going to get rid of these big financial institutions. We're stuck with these big monsters," Ely said.