Arthur Levitt, Ex-SEC Chairman, SLAMS Financial Reform Bill

Congress "ducked" on financial regulation, neglecting to solve the problems that caused the financial crisis, former SEC chairman Arthur Levitt said.

In an interview with the Street, Levitt, who now serves as a Goldman Sachs adviser, said the Dodd-Frank financial legislation, passed in July, accomplishes very little. It has left the regulatory bodies unfocused and ineffective, and it has failed to determine specific regulatory policy, he said.

"What Congress did, in effect, was they highlighted a battery of issues and then turned it over to the regulators," Levitt said. "Its efforts at preventing 'too big to fail' and systemic risk, I think, were ill-advised."

According to the Street interviewer, Levitt called the Dodd-Frank reform an "irrational mess" last week at the Loan Syndications and Trading Association conference.

A real problem, Levitt said in the interview, is that regulatory powers are shared by a variety of agencies, allowing for dangerous inefficiency. Creating a "council of regulators" was "the wrong solution," "almost by definition," he said, referring to "turf battles" that will distract the regulatory bodies, which include the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the new Consumer Financial Protection Bureau.

"With the different balances of power ... [regulators] are bound not to be terribly effective and responsive, at a period when timing becomes of critical importance," Levitt said. "Streamlining certainly should have been done."

The SEC and CFTC, for instance, should have been merged, he said.

"Because of politics involved, they [Congress] simply ducked on that issue," he added. "The lobbying that had been focused on the Congress up until now is going to be focused on the CFTC, and the FDIC and the SEC and the new bureaucracy created by the consumer-protecting agency."

WATCH the interview: