New York Fed President and FOMC Vice Chairman Tim Geithner said the U.S. regulatory structure needs to be reformed to more clearly define rules and responsibilities.

Speaking at the Economic Club of New York, Geithner urged banks and Wall Street to come under a unified form of supervision and called for a stronger oversight of OTC payments systems.

"One of the central objectives in reforming our regulatory framework should be to mitigate the fragility of the system and to reduce the need for official intervention in the future," he said, but noted it's not realistic to act preemptively to diffuse the pockets of risk and leverage. "I do believe, however, that we can make the system better able to handle failure by making the shock absorbers stronger."

He said it is important to "move quickly" on regulatory reform as the current crisis has exposed significant problems in the financial system.

"Confidence in any financial system depends in part on confidence in the individuals running the largest private institutions," he continued. "Regulation cannot produce integrity, foresight or judgment in those responsible for managing these institutions. That's up to the boards and shareholders of those institutions."

Geithner said the Bear Stearns failure exposed an "acute risk" to the system and that the Fed took on "some risk" in the Bear Stearns loan.

He went on to say that liquidity facilities have eased the strains and that they will continue until conditions improve significantly.

By Stephen Huebl and edited by Nancy Girgis