WASHINGTON — Federal Reserve Board Gov. Daniel Tarullo said Wednesday that regulators have not yet eliminated "too big to fail" but continue to make progress in that direction.

Speaking in an interview on CNBC, Tarullo cited increases in capital requirements and steps taken by the Federal Deposit Insurance Corp. to bolster its ability to resolve a large bank, but acknowledged that "there's more to be done."

"This is a process," Tarullo said. "You know it's not a binary matter of a bank being either too-big-to-fail or not. I think it's a process of building up capital [and] of the FDIC continuing to do its very good work in building up its resolution authority. And as I say, us addressing the issues of funding."

Asked if the government would bail out a large bank if it failed now, Tarullo said no, but added "I don't think anybody can be assured of that right now."

Tarullo's comments echo recent remarks made by Fed Chairman Ben Bernanke, who said "too big to fail" was not "solved and gone. It's still here."

Tarullo reiterated plans for the Fed to move forward with proposed capital surcharges on the largest institutions, a move that several countries have agreed to as part of the Basel III accord. He said the Basel Committee has been collecting more data and refining its methodology, but he expects a final list from the international regulatory council later this year that will detail what firms are being charged and how much. (The Committee released a tentative list in November, which said Citigroup (NYSE:C) and JPMorgan Chase (JPM) will face the highest surcharge of 2.5%.)

During the CNBC interview, Tarullo also rejected push-back from other countries over the Fed's foreign bank proposal, which would require non-U.S. banks to face the same capital and liquidity requirements as their American counterparts.

Asked whether the proposal could undermine international cooperation on financial regulation, Tarullo replied, "I don't think so at all."

"In fact, we should take note of the fact that a jurisdiction that has already moved to require subsidiarization, to have separate, in-country liquidity requirements, is the United Kingdom, part of the European Union," he said. "And why is that? Well, because the U.K. is really closest to us in terms of its being a home for large broker-dealer operations that have lots of short-term funding."

Tarullo also defended charges of inadequate regulatory oversight of the largest banks, noting that the agencies are not in a position to catch everything.

"In some of these banks, which have 100,000 or 200,000 employees, we, the OCC, and the FDIC together have perhaps 100 supervisors," Tarullo told CNBC. "We can't see everything that they're doing. And that's why it's important to have strong regulatory requirements like capital, like liquidity, in addition to the ongoing monitoring, which our on-site teams can provide."

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