Banking reforms need to go beyond Dodd-Frank and allow regulators access to information on significant financial risks to avert potential banking failures around the globe, according to William Dudley, president and chief executive of the Federal Reserve Bank of New York. Banking supervisors from different nations need to correspond and work more closely using crisis management tools to deal with obstacles that surface in a financial crisis, Dudley said in Japan Monday. "One challenge arises from the fact that we have a global economy with many large, globally active financial firms, but our regulatory regimes are implemented at the national level. Another is that any attempt to improve regulatory standards will inevitably meet with resistance from parties that have a vested interest in the status quo," he said. And the resolution of large financial firms that operate in multiple jurisdictions remains largely out of reach, Dudley said. "Legal rules are not harmonized across the different regulatory regimes with respect to bankruptcy and liquidation. For example, although the Dodd-Frank Act establishes a resolution regime for the U.S. operations of a large global financial firm domiciled in the United States, this resolution framework stops at the nation's borders." Another challenge is the uneven progress in reforming bank regulation and supervision across the different jurisdictions, according to Dudley. "In some cases, the supervisory authorities have been quite forceful in making banks domiciled in their countries raise capital," he said. "In other cases, the response has been less aggressive. The uneven progress of reform makes comprehensive reform more difficult. It shifts the tenor of the discussion away from what is the proper macroprudential framework and set of capital and liquidity requirements to one that focuses too much on issues of relative competitiveness. Too often the questions asked are: What is most beneficial to the banks of my particular country?" He also said financial reform measures are already on the table to ensure capital and liquidity requirements at banks remain strong and fluid for possible emergencies. "In addition to the Basel 3 standards for capital and liquidity, an international effort is underway to further reduce the probability of failure for systemically important financial institutions," he said. "The basic logic behind this effort is that the failure of a larger, more complex firm can have disproportionately large negative systemic consequences. As a result, such firms should be forced to hold additional capital in order to reduce their probability of failure below that of smaller firms." Additional capital requirement on these giant banking companies should "help to level the playing field between larger and smaller firms by offsetting the funding advantage that accrues to the largest firms that stems from the perception that they are 'too big to fail'," Dudley said. "Without revisiting all the causes and consequences of the credit boom and bust that led to a boom and bust in the U.S. housing market, the bottom line is that our regulatory system failed in two important dimensions. First, a significant number of large, internationally active financial firms reached the brink of failure. Second, the financial system was not very resilient when these firms got into difficulty. Instead, the threat of failure propagated further shocks that reverberated throughout the global financial system," he said. Write to Kerri Panchuk.