Paul Volcker, senior economic adviser to President Barack Obama, said on Saturday that the U.S. economic recovery will be a long slog but that the rate of decline is going to slow.

The United States may not be in a Great Depression but it is in a great recession for sure, following the economy's unprecedented tumble in late 2008, Volcker said at a financial markets conference at Vanderbilt University in Nashville, Tennessee.

Volcker, a former chairman of the U.S. Federal Reserve, did not give a time-frame on his expectations for when the United States will pull out of the recession that started in December 2007.

Most economists believe the economy hit its lowest point in the fourth quarter of 2008, when gross domestic product shrank at an annual rate of 6.3 percent, or in the just-ended first quarter.

None of us has seen a decline in economic activity at the rate of speed seen late last year, Volcker said.

For now, troubles in the financial system continue to plague the economy, and vice versa.

The lack of a good strong recovery works against a strong financial system, he said. The financial system is not quite comatose, but it's on life support.

Volcker said a review the Federal Reserve's role, something traditionally regarded as taboo, now seems inevitable given the fallout from the long-running financial crisis.

For better or worse, we are at a point where the Federal Reserve Act is going to be reviewed, said Volcker.

The wide range of proposals, from giving the Fed much more supervisory authority to stripping it of part of its current authorities, are just an indication of how wide open that question is going to be.

The Fed, whose basic mandate is to support the U.S. economy without stoking inflation, has come under sharp scrutiny -- along with other government institutions -- since the credit crisis erupted in summer 2007.

Issues range from what the Fed's role would be in a revamped financial regulatory system, to criticism about a lack of disclosure about the central bank's vast new credit programs.

Volcker warned against a rush by Congress to act too hastily on financial reforms and an overhaul of the financial system.

The temptation is to act quickly, but we have to act comprehensively, he said.

The financial meltdown and associated economic crisis grew out of serious and prolonged imbalances in the international economy that created extremes in financial markets, he said.

As time progressed, those problems were supercharged by compensation practices geared toward excessive risk-taking that ultimately brought markets to their knees.

Volcker said it was important for regulatory reforms to minimize the risk of firms being treated as too big to fail because of their sheer size or perceived systemic risk.

I don't want to get to the point where some hedge funds or equity funds are getting very large and then getting into trouble to the point they need government protection.

(Editing by Leslie Adler)