With GAO’s equivocal subsidy report on Thursday, the TBTF battle returns to its corners, each side again swinging cudgels over whether big banks do or don’t have an undue advantage over the small fry. FedFin released a paper earlier this week adding to the subsidy debate the first quantitative analysis of just how much the biggest banks pay for the privilege of all their new rules. In short, it’s a lot. As GAO’s report states, a lot more work here is warranted, work I think is particularly urgent since – given the costs we calculated – the shadow-bank worries I’ve laid out in other recent work grow even greater. However, the biggest banks face an even more immediate challenge: proving that Dodd-Frank’s orderly-liquidation authority (OLA) is indeed the credible regime they say it is. If these arguments don’t quickly prove persuasive, subsidy advocates will have the wind at their back next year.

Given that they don’t much like Dodd-Frank and don’t believe in OLA, Republicans will launch their long-threatened campaign to repeal OLA after the mid-term, a campaign in which they will be joined by many liberal Democrats. I think Title II repeal will make the financial system a lot riskier than any big bank ever could, but it‘s a serious prospect if U.S. and global regulators can’t quickly come up with a convincing shut-down construct.

An irony here is that big banks have done more in private than regulators have in public to make Title II functional. Living-will exercises – especially the last round – have been for many big banks a rigorous process in which risks they long should have known were buried in their complex structures suddenly became all too clear. Critical work remains to clear away this under-brush and, if big banks can’t or won’t, regulators need to wield the axe. However, all of this hard – not to mention costly – resolution planning is for naught if the market and policy-makers don’t believe it counts in a crisis.

To be sure, GAO found that markets are less sanguine about rescue than before. However, it is unclear if counterparty stand-alone risk measurement or, in contrast, the dearth of meaningful risk premiums is the source of GAO’s no-subsidy finding. Thus, whatever the market has learned – and one can only hope it’s a lot four years after the crisis – one can’t count on investors not to come running to Uncle Sam without a forceful, final framework that makes clear in law and rule that they can’t.

My comments earlier this year to the FDIC lay out my thinking on what needs to be done – in the months since I sent them, the industry has made progress not only on living wills, but also on new cross-border default contractual provisions. From regulators, though, it’s been an all-quiet. They keep telling me the silence will stop after the G-20, when the FSB – backed by the U.S. and U.K. – will force recalcitrant Europeans to concur with critical planks of the orderly-resolution framework. Maybe, but long experience with these negotiations tells me that the actual result could well just be another round of consultations and next-step “high-level principles” to which no one need adhere in practice because the principles are indeed high-level and, thus, so vague as to be largely meaningless.

How long can regulators wait to come up with an orderly-resolution consensus that can quickly be implemented and enforced? Not long, I fear. The regulatory costs identified by our study – at least $70.2 billion at the end of 2013 for six of the largest U.S. banks – are a major drag on earnings. As such, they are also a major impediment to offering many traditional products (think loans), pricing them competitively, or developing new offerings to match those coming fast from agile non-banks. It’s one thing – and a bad one – if regulators aren’t ready for a stressed-out big BHC, but big banks have done a lot of the planning for them and, while still far from done, regulators are more ready for these SIFIs. Not so much for all the others – an orderly-liquidation or resolution framework for giant asset managers, CCPs and other financial-market utilities, and parent companies of giant insurers are in draft form if they exist at all.

The more risk that moves to these SIFIs as a result of higher costs, the riskier global finance gets. Without a clear orderly resolution framework that is fully constructed, given credibility, and made legally enforceable, we will face a renewed bout of moral hazard that will prove even more dangerous this time around because U.S. regulators, under law, can’t bail anyone out any more. At least in 2008, a Great Depression was averted by the Great Rescue. Dodd-Frank is a dangerous cause of systemic risk in the absence of a ready, robust resolution framework because the law bans bail-outs, but the market still hopes for them.