Prominent corporate lawyer H. Rodgin Cohen said Friday that he sees the environment between banks and their regulators as one of the most tension-filled times of his career.
"We have a debate about ... how the regulatory regime should be implemented in the examination process," he told CNBC's "Squawk on the Street." "Should it be done with confrontation and suspicion or should it be done with healthy skepticism and independence?"
Cohen, who is senior chairman of New York-based law firm Sullivan & Cromwell, said that it is a myth that banks have cozied up to regulators to avoid a true independent examination process. He adds that fiction is "driving the interaction between the regulators and the banks."
"I am relatively confident that what we saw in the past is not going on today," he said. "Banks have put an enormous amount of resources into improving culture and compliance."
The real culprit for the 2008 financial crisis was not the industry as a whole, says Cohen, but subcultures within it that were allowed to flourish. They need to be stamped out once identified to prevent future financial crises, he said.
He is most worried that regulations might be negatively impacting liquidity in certain markets, which could hamper economic growth.
"As a society we need a banking system that is both safe and sound and thereby can help the economy regain its footing," Cohen said.