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The financial sector reforms in the US did not go far enough to ensure the banking system was free of risks and easier to regulate, and more steps need to be taken to ensure banks are not too big to fail, Nouriel Roubini, chairman of RGE Monitor, told CNBC Monday.
"In the case of the US this was an occasion to reduce the number of regulators, we have 6 of them at federal level, 50 at state and local level. It was a race to the bottom, they only closed one of them, in my view that's a mistake," Roubini told "Squawk Box Europe."
Banks that are too big to fail are simply too big, he said, and regulators should "clamp down on them much more strongly" with greater liquidity and capital requirements and rules on leverage, to make sure they are going to be broken up, he added.
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"Paradoxically, because of this financial crisis, there has been more financial consolidation and even bigger to fail (banks)," Roubini said.
Since the onset of the crisis in 2007, JP Morgan [JPM
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] took over first Washington Mutual then Bear Stearns, Bank of America [BAC
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] took over Countrywide and Merrill Lynch, while Wells Fargo [
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] took over Wachovia.
"These banks that were already huge have become even bigger and now we have to figure out how to slim them down," Roubini said. "I don't think we have addressed this big problem."
— With reporting by Stephane Pedrazzi in Paris
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