Well sure, Wells Fargo and HSBC may have settled lawsuitsfor insurance overcharging. And maybe a Citigroup affiliatemay have violated the Bank Secrecy Act through moneylaundering. And JPMorgan Chase settled for $1.4 billion the NCUAover mortgage-backed securities fraud.

However, does the recent rash of litigation on Wall Street mean that the whole system is broken?According to one prominent regulator, that indeed is the case.

William C. Dudley, president of the Federal Reserve Bank of NewYork, is publicly speaking out against major banks, saying that bigbanks' misdeeds are indicative of a problem with the largerfinancial industry rather than simply a few bad actors.

“There is evidence of deep-seated cultural and ethical failuresat many large financial institutions,” Dudley said in a speech lastyear. He recently elaborated to the New York Times,saying that he is going on the offensive “to make it clear that'too big to fail' isn't the only problem. I don't want senior bankmanagement to feel, 'Oh gee, if we solve “too big to fail,” we'redone.' ”

When Dudley speaks, big banks listen. The Federal Reserve Bankof New York works on a close basis with many Wall Street financialinstitutions, with the NYT saying that Dudley'sagency “has more day-to-day contact with Wall Street than any otherarm of the government.”

According to Dudley, one of the major issues facing bankscurrently is the public relations battle. Despite the work ofregulators to instill public confidence in banks through toughrestrictions, banks often undo any good work with even moremisdeeds.

“I think that they really do have a serious issue with thepublic,” Dudley said. “And I think that trust issue is of their owndoing — they have done it to themselves.”

Notably, many Wall Street executives have not come out insupport of Dudley's statements. Many large financial institutionsalso claim that they simply have too many employees to be able tokeep track of everyone. Dudley, however, says that regulators willnot accept excuses.

“Either the firm is not too complex, you can manage it, you doknow what's going on,” he said. “Or, if you don't know, that's sortof raising the question whether the firm is too complex tomanage.”