The Dodd-Frank regulatory reforms and the U.S.-led global effort to increase bank capital have produced more robust defenses against potential crises. Bank liquidity requirements were enhanced worldwide, reducing the reliance of financial institutions on unstable overnight funding. A range of other reforms have made derivatives markets and markets for short-term funding safer and more transparent. Importantly, financial regulators have been mandated to look for potential threats to the financial system as a whole, not just factors that affect individual firms or markets.

Together, these and other reforms should reduce the frequency and severity of financial crises, as long as they are preserved and not weakened over time. But stronger rules and stricter oversight will never prevent all crises. And unfortunately, the changes of the past decade could actually block some of the most effective actions used to defeat the panic a decade ago.

We ultimately went to Congress at the height of the crisis to get the authority we needed to recapitalize endangered firms. We believe that if we had started the crisis with that authority, we could have acted more forcefully, swiftly and comprehensively to help restore confidence in the system. Instead, we had to rely for most of the crisis on the more limited Fed liquidity tools and ad hoc rescues that kept us from getting out in front of the crisis.