Robert Kelly, Bank of New York Mellon’s chairman and chief executive officer, said a “huge" amount of uncertainty remains in the economy and until the housing situation is sorted out and unemployment is reduced, the financial system will remain uncorrected.

“Everything feels better than it did 12 to 18 months ago, but not as good as it did three to six months ago,” he said during a lunch time interview with Charlie Rose on Monday at SIFMA's annual conference in New York City.

Kelly said the United States is dealing with a mortgage system that is “totally broken.” He said it is “appalling and tragic” what happened to many homeowners and without reintermediation the U.S. could face another housing bubble in the next 10 years.

“We have to stabilize housing,” he said. “It feels like we are getting close to the bottom.”

To improve long-term, Kelly said we can’t do temporary things, “we need to do permanent things.” He said the U.S. government should focus on creating a plan to balance the budget, which he thinks could take three to five years to do effectively.

Kelly said the U.S. government was “breathtakingly effective” in its efforts over the past three years to reform the financial system. He said regulators used some “gigantic programs” and “not all of them were perfect, or explained well, but they were effective.”

“We were fortunate in that we avoided a global financial meltdown,” he said.

This doesn’t mean every program worked as advertised, Kelly said. He said the government’s TARP program, of which BNY Mellon was among the early recipient, “sounded like a good idea at the time” and was designed to make the public confident in the banks that TARP supported, but “maybe we should’ve let capitalism work its course.”

Kelly said he thinks the banking system is relatively healthy, specifically when it comes to large banks, but smaller regional institutions, specifically in the southeast that were heavily exposed to commercial real estate are still a concern.

“We are still in a period of uncertainty,” Kelly said. “The only way to improve our image is for unemployment to go down.”