Financial regulators are confident steps they took to protect the nation from too-big-to-fail banks are enough to curtail excessive risk-taking.

Regulatory agencies defended these initiatives when testifying before the House Financial Services Committe Tuesday, despite ongoing wrangling about systemic risks at systemically important financial firms.

The perception that some institutions are too-big-to-fail reduces shareholder incentive and raises doubts about kinds of challenges banks are taking on, critics of Dodd-Frank suggest.

Additionally, opponents of Dodd-Frank, believe more meaningful reform is needed because large institutions create competitive distortions by enabling companies perceived as too-big-to-fail to fund themselves more cheaply than other firms.

However, the Federal Reserve and Federal Deposit Insurance Corporation firmly believe the Dodd-Frank Act contains enough provisions to stave off these risks. 

"These steps also force large firms to internalize the costs that their failure would impose on the broader financial system, minimize the advantage these firms enjoy due to market perceptions of their systemic importance, and give the firms regulatory incentives to reduce their systemic footprint," said Scott Alvarez, general counsel for the Federal Reserve.

On a similar note, the FDIC testified, saying the agency has made significant progress in its implementation of Dodd- Frank provisions.

"Our goal is to ensure that firms that could pose a systemic risk to the financial system develop and maintain resolution plans that identify each firm's critical operations and core business lines, map those operations and core business lines to each firm's material legal entities, and identify and address the key obstacles to a rapid and orderly resolution in bankruptcy," said James Wigand, director of complex financial institutions for the FDIC, and the agency's acting general counsel Richard Osternman.

Various provisions and measures have been taken, including stronger capital requirements, annual supervisory stress tests and significant liquidity requirements. 

"An important goal of post-crisis financial reform has been to counter too-big-to-fail by reducing the potential damage to the financial system and the economy from the failure of a major financial firm," Alvarez said. 

Nonetheless, many industry experts are convinced that Dodd-Frank is too little, too late. 

Anthony Sanders, finance area chair of George Mason University, pointed out that the United States is thinly supported by reserve capital, only Argentina is lower.

"Hence, we remain at risk from our too-big-to-fail banks," Sanders told HousingWire.