02/22/2012 01:42 pm ET

Ex-SEC Commissioner On Dodd-Frank: 'This Is Not A Recipe For Strong Regulation'

Dodd-Frank isn't stopping this baby from going under once again.

That's according to at least one former commissioner of the Securities and Exchange Commission. Roberta Karmel told Bloomberg Law on Tuesday that Dodd-Frank financial reform isn't strong enough to stop another financial crisis.

"This is not a recipe for strong regulation," said Karmel, who is now a professor at Brooklyn Law School. "We not only did nothing to change the balkanization of the regulatory system; we actually made it a little bit worse by creating FSOC [the Financial Stability Oversight Council]."

The FSOC was created under Dodd-Frank to monitor the stability of the nation's financial system. Karmel said that the council's creation actually worsens divisions within the regulatory system, but it also has inspired criticism from Republican and Democratic Congressmen alike, who claim the council lacks specificity when discussing which banks it will deem too big to fail, according to the Wall Street Journal.

Karmel said that the Dodd-Frank Act "has improved some financial regulation, but it did not work any real structural change either in the regulatory system or in the financial system."

"What we've moved away from is holding people responsible for business failure," she added.

Karmel said in a separate interview with Barron's earlier this month that the government should break up the big banks rather than try to better regulate them.

"We have to eliminate the problem that comes along with too-big-to-fail: that of socializing losses and privatizing profits," Karmel told Barron's. "Such a system is antithetical to any notion of the capitalist ideal."

Some critics say that the Dodd-Frank Act, signed into law by President Obama in 2010, is unlikely to enact tangible change within the financial industry. Former Federal Reserve chairman Paul Volcker, the inspiration behind a rule to prevent banks from making risky bets with their own money, said in September that Dodd-Frank is "nowhere near what we need."

The question of too-big-to-fail banks, he said, has "not yet been convincingly settled."

Yet the financial industry continues with attempts to weaken Dodd-Frank, last year spending more than $150 million on lobbying, the second consecutive year it's spent at least that sum. They've also shifted focus on to the regulators themselves. Some banks have made strained arguments to claim that the Volcker rule would hurt the economy -- criticism that Treasury Secretary Tim Geithner recently dismissed as false.