Financial Regulation: The IMF  (International Monetary Fund) says society must stand with supervisors as they play their role as naysayers in times of exuberance. Fund officials say in a paper published on Tuesday that new rules aren’t the only thing needed - - good enforcement of existing rules is also critical. Meanwhile, Nouriel Roubini, who is known as 'Dr. Doom' said current efforts to reform financial regulation are 'cosmetic' and won’t prevent another crisis.

In Washington DC, at a press conference on Tuesday, Senate Minority Leader Mitch McConnell said the financial reform bill being debated in the Senate represents yet another Democrat-led government takeover of an industry.

“The marching orders are coming from downtown: push the bill as far to the political left as possible,” he said in reference to the White House. “Look at the last 15 months. They’re running banks, insurance companies, car companies, taking over the student loan business, taking over health care, now, apparently doing to the financial services industry what they did to the health care industry.”

What’s particularly important in regulation, is what the IMF calls, in the new paper, the “will to act.” “Developing this ‘will to act’ is a more difficult task and requires that supervisors have a clear and unambiguous mandate, operational independence coupled with accountability, skilled staff, and a relationship with industry that a avoids ‘regulatory capture.’”

The paper, 'The Making of Good Supervision: Learning to Say ‘No,’' was written by José Viñals, the IMF’s financial counselor and a former deputy governor at the Bank of Spain, and Jonathan Fiechter, who was involved in the the US reform of the savings and loans industry mess in the 1990s.

New reforms may be helpful, but they’ll never be sufficient, the two say. “An institution can never have enough capital or liquidity if there are material flaws in its risk management practices.”

To be effective, the authors say, supervision needs to be“intrusive, adaptive, skeptical, proactive, comprehensive and conclusive.”

Current reform plans for financial regulation are “cosmetic” and won’t prevent another crisis, economist Nouriel Roubini said on Tuesday at the London School of Economics.

“The way I think about this crisis is not in terms of black swans (a sudden, rare event), but white swan events," Roubini said. "Crises are much more common than we think.”

“We need more radical reforms," he added. "The idea that we’ll be able to close down an institution like Goldman (Sachs) in an orderly way -- a business that operates in nearly a hundred countries - - is absurd.”

Roubini, who is  a professor at the New York University Stern School of Business, said the three main problems with big banks like Goldman were that they were 1) Too big to fail, 2) Too big to be bailed out and 3) Too big to be risk managed.

“Experience has shown that ‘economies of scale’ achieved by the largest banks as a result of Glass-Stegall have been very small,” Roubini said. “The cost of being too big to fail has been much larger.”

The 1930s Glass-Steagall Act had mandated a separation of investment (e.g. securities trading) from commercial banking. It was repealed in 1999.

Democrats sought on Tuesday to toughen language in the US Senate's Wall Street reform bill on the proposed 'Volcker rule' curbing risky bank trading in securities and operating hedge funds. It was proposed in January by President Barack Obama and White House economic adviser Paul Volcker, the influential former chairman of the Federal Reserve. 

An update on the Super Tuesday races and the latest on the push for financial regulation, with CNBC's John Harwood: