Richmond Federal Reserve Governor Jeffrey Lacker and former Minneapolis Fed Governor Gary Stern are serving some intellectual breakfast this morning in advance of today's testimony from Jamie Dimon, providing an updated take on too-big-to-fail.

Writing in the Wall Street Journal, the pair make the case that "living wills" are the only viable solution that will ward off future taxpayer bailouts of systematically important financial institutions.

"...to end too-big-to-fail it is not enough for regulators to declare their intention to withhold support from the creditors of distressed financial institutions.

"For such a commitment to be credible, investors must expect regulators to follow through.

"And for regulators to follow through, an unassisted wind-down must be a viable and credible option. In short, this kind of preparation is essential, for without it regulators are in a world of improvisation and continued bailouts are all too likely.

The problem with JP Morgan investing mammoth sums in risky bets is not their size, they argue, but rather their complexity. That was, ultimately the real issue in 2008 as well.

"Financial firms will argue that their complexity serves legitimate business purposes. That may be, but some complexity is designed to minimize tax obligations, reduce capital requirements, or shield assets from creditors, and it may have limited or no social purpose. Moreover, complexity that inhibits unassisted resolutions has serious social costs, as the most recent financial crisis illustrates.

Thus, the onus is on banks and regulators to know how to untie the strands of a given bank's obligations.

"There is no substitute for the painstaking work of charting out precisely how the resolution of a large institution would play out. How else would one know how small, or how simple, to require such institutions to become? Attempting to write a credible, detailed living will is the only way we can see of restructuring an institution so that it is not too big or too complex to fail."

Read the whole op-ed at WSJ.com.