The Dodd-Frank Act, a law that places major regulations on the financial industry, may bear criticism as too onerous on the banks, but "the goals behind Dodd-Frank are absolutely the right goals," Richard Ketchum, the Financial Industry Regulatory Authority's chairman and CEO, told CNBC on Thursday.
"The amount of capital that the major banks had were not great enough. The amount of leverage that existed in the system was too great."
His comments come as five major banks failed the "living will" test, a part of the Dodd-Frank Act that examines a financial institution's ability to have a credible plan for winding down operations in the face of a crisis without the need of public money. Still, the former Nasdaq president contends that the regulation is appropriate and asks that market watchers step back and look at the legislation's impact a few years out.
"Each piece of Dodd-Frank action has been justified in response to a very real problem we saw in 2007 through 2009," he said on "Closing Bell."