NEW YORK (TheStreet) -- It's too early to tell whether the banking reforms that stemmed from the financial crisis of 2008 will be enough for financial safety, according to Sir Mervyn King, the former Bank of England governor. 

The bank's capital ratios are now much higher, while leverage ratios are much lower. The system is certainly safer, but only time will truly tell if it's safe enough, he said. Bank managers are now much more aware of the systematic risks that exist, so hopefully they will be less likely to make the same mistakes again. 


SPDR Financial Sector ETF XLF data by YCharts

Image placeholder title

King stressed that complex banking methods and derivative trading instruments continue to weigh on many U.S. and European banks. And while he acknowledged that there isn't much risk currently present with these products, they have the potential to wreak havoc, just like they did just several years ago. 

The question remains, how much longer will these banks be able to do standard banking -- such as lending and accepting deposits -- while also holding larger and riskier assets, such as complex derivative products?

That raises the next question: when do big banks become too big?

A number of banks, including JPMorgan Chase (JPM) - Get Report , Citigroup (C) - Get Report and Deutsche Bank (DB) - Get Report , among others, have engaged in wrongdoing that has resulted in enormous fines

Most of this wrongdoing happened without the knowledge of its top management, yet is still resulting in multibillion dollar fines. King reasoned that too-big-to-fail institutions may also be too big to manage, something regulators will have to determine in the future. 

On former regulators transitioning to banking positions in the private and public market, King acknowledged that the pay tends to be much better. And while many people think there should be a longer "cooling off period" for those making the transition, it's less of an issue than those coming from the banking industry and going into the regulation industry, he said.

Bankers that go on to be regulators tend to tackle issues from a business perspective and aren't as tough-minded as say, Paul Volcker.

Regulators need to stand up to pressure and rule with a tougher stance, King concluded.

-- Written by Bret Kenwell

Follow @BretKenwell