"I think it's hard to argue that the system is not safer today than it was 10 years ago. There's more capital by many measures, there's substantial more liquidity, there are better procedures for resolving failed institutions. There's more transparency with respect to liabilities. There's more comprehensive regulation of systemic institutions, there's better procedures for international corporations," he said.
"At the same time, it does bear emphasis that if you look at a ratio that I have found relevant in some of my work — the market value of equity to the total value of assets for large banks — it's lower than it was in the decade before the financial crisis," he added.
He said this suggested that the cushion "is not all that we might think it is." While regulators have mandated much more book capital in the financial industry, the "dynamic capital" represented by future profitability in many cases has left the industry, he added.
"So do we have any basis for complacency? No. Are there important issues of liquidity in the functioning of markets in difficult circumstances that remain to be addressed? Yes," he said.
"Is this any moment for the wholesale repeal of the changes that have been made in the last eight years, suggested by some? No, I think that would be a grave mistake," he said, referring to Republican calls to ease Dodd-Frank regulations.