Fed Dudley says more work is needed to improve culture within big banks

Speaking at a conference of bankers and regulators, Dudley said the world’s main lenders remained a source of financial risk even seven years after the financial crisis.

The Federal Reserve and US regulators have defended the laws and regulations implemented in the wake of the recession, stressing they are needed to ensure Wall Street does not experience a similar scenario again.

However, Dudley stressed that ethics and culture were as important as liquidity and capital to ensure stability in the banking industry.

"Dodd-Frank apparently did little to curb misconduct - a possible source of systemic risk," Dudley said of the 2010 financial reform law.

"If the people managing capital cushions and liquidity buffers view these tools as sufficient mitigants for the costs of misconduct, or if powerful incentives encourage workarounds of the new regulations, then the connection between post-crisis reforms and greater financial stability becomes threatened."