NEW YORK ( TheStreet) -- Bank regulators are not going overboard in tightening the screws on Wall Street's largest institutions, former Securities and Exchange Commission Chairwoman Mary Schapiro said at a finance and economics conference on Wednesday. "We tend to be focused on the moment and forget that our financial institutions were in deep distress five years ago and were on the brink," she said in a panel discussion at The Economist's Buttonwood Gathering. "Rules and compliance have a cost but so does failure of rule-making and failure of compliance." Schapiro, now managing director at regulatory compliance firm Promontory Financial Group, said that the complexity of the regulatory system was driven by the industry's desire to have nuanced approaches to rule-making and the fact that a number of regulators had to agree on the rules. The fact that there has been slow progress in writing the rules reflects the desire of regulators to ensure regulations were less burdensome. Jim Millstein, the former Treasury official who oversaw the restructuring of bailed-out insurer AIG ( AIG), said the regulatory response was appropriate given the size and complexity of the institutions. He argued that the banking industry has no market checks. "Banks are immune to takeover because they are too big. Where is this market discipline?" he asked. "It is not through the debt market. Because of too big to fail, the debt markets subsidize them, not discipline them. So it is left to the regulators. We are going back to treating them as public utilities because there are no market checks on their power." Their comments come amid industry complaints that the pendulum has swung too far on regulation, causing banks to restrict lending. Uncertainty about future regulations and the increasing cost of compliance are frequently cited by banks as a reason for lackluster loan growth. Banks also continue to pay for the reckless practices of the boom period five years after the crisis. JPMorgan Chase, the bank that sailed through the crisis and took over two failing institutions, Bear Stearns and Washington Mutual, at the behest of the government, is now facing a potential $13 billion fine to settle Department of Justice charges of mortgage fraud.