The 67-year-old executive, who retires in November, says he remains concerned about the effect the Bank of Canada's low interest rate policy is having on spending habits.
He said Ottawa should be reacting more strongly to household debt to income ratios.
"Where these issues have been dealt with successfully is governments who lay out a framework for an industry," he said in an interview before delivering his final speech as CEO to the Empire Club of Canada.
The Bank of Canada has called household debt the No. 1 risk to the financial system and the economy, and the federal government has tightened mortgage lending rules four times since 2008 in an effort to keep spending from getting out of control.
Earlier this month, the central bank warned that risks associated with household debt still exist and noted that the housing market remained stronger than expected.
Household debt to income soared to a record of 164.1 per cent in the third quarter of last year, but fell slightly to 163.2 per cent in the first quarter. That means Canadians owed just over $1.63 for every $1 in disposable income they earn in a year compared with $1.64 at the end of last year.
Clark said the government needs to take the lead because individual banks aren't able to "change the world" by encouraging consumers to spend less.
"It's not possible (in a) competitive capital system," he said.
Throughout his 12-year tenure in the leadership role, Clark has navigated TD Bank during some of the most challenging years for the industry, including the global financial crisis. He also pushed TD Bank to expand into the United States with branches mostly on the East Coast.
Meanwhile, Clark said Canada's resilience to many of the global economic challenges that played out several years ago has made the country more vulnerable in the future.
"The risk that comes out of doing extraordinarily well is that you become complacent," he said.
"Canada is not immune (to) a lot of these global changes that are going on."
Clark's successor at TD is Bharat Masrani, who will take the chief executive position on Nov. 1 after serving as the bank's chief operating officer and playing key role in building its U.S. business.
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