When will they listen to Volcker?

Former Fed Chairman (primarily during the Reagan administration, but he became Chairman in the last few months of Carter's presidency) Paul Volcker is a sharp guy. Arguably the sharpest Fed chairman ever. So much so, that Obama had the presence of mind to make him his chief economic adviser.

So why doesn't anyone listen to him?

On Thursday, Volcker warned that by the government designating certain companies or sectors as "critical to the broader financial system", it creates the expectation of government bailouts in times of trouble, thus perpetuating the notion of "too big to fail".

While Volcker was in favor of rescuing the banks, his charitable feelings didn't extend as far as AIG, and he considered the bailout of automakers something of a travesty.

He also made clear that investment banks should receive no such protection. In Volcker's view, only commercial banks should be protected and there should be none of the blurring of the line between commercial and investment banks that has become de rigueur since the repeal of Glass-Steagall.

Finally, he is strongly opposed to government intervention into the compensation practices at banks. While he personally finds some of the levels of compensation objectionable, even obscene, he believes it is not government's place to dictate compensation policy.

Unfortunately, he appears to be largely ignored even by the people he works for. Why is that?