Fed official suggests banking firewall isn’t needed

Tarullo said changes to Glass-Steagall made nearly 15 years ago were a "lost opportunity" to respond to the changing dynamic in the banking industry at the time. 

He argued that while there have been important steps taken since the financial crisis nearly five years ago to inject more stability into the financial system, including requiring banks to hold more capital, there are still other reforms yet to be made that can further bolster the industry. 

“My own view is that we still do need to do more to get to the point at which the risks posed by some of these institutions are confined to what we would think of manageable proportions,” he said. 

A bipartisan group of four senators — Elizabeth WarrenElizabeth WarrenSenate confirms Labor Secretary Acosta Meghan McCain: Obama 'a dirty capitalist like the rest of us' Warren 'troubled' by Obama's speaking fee MORE (D-Mass.), Maria CantwellMaria CantwellUnited explains passenger removal to senators Report: GOP lawmakers selling access to top staffers Bipartisan group demands answers on United incident MORE (D-Wash.), John McCainJohn McCainMeghan McCain: Obama 'a dirty capitalist like the rest of us' Top commander: Don't bet on China reining in North Korea Trudeau, Trump speak for second night about US-Canada trade MORE (R-Ariz.) and Angus KingAngus KingSenator: No signs of GOP 'slow-walking' Russia investigation Republican Sen. Collins considering run for Maine governor in 2018 Conway: Dems should listen to their constituents on tax reform MORE (I-Maine) — recently unveiled legislation that would largely reinstate Glass-Steagall as an avenue to better protect taxpayers and to prevent financial institutions from becoming "too big to fail."

"Despite the progress we've made since 2008, the biggest banks continue to threaten the economy," Warren said. "The four biggest banks are now 30 percent larger than they were just five years ago, and they have continued to engage in dangerous, high-risk practices that could once again put our economy at risk." 

Glass-Steagall prevented banks that engage in traditional banking activities — and enjoy the safety net of the Federal Deposit Insurance Corporation (FDIC) — from engaging in riskier investment activities and selling insurance. 

The new legislation would attempt to update the law and focus on newer risk-taking endeavors by banks, such as derivatives or hedge fund activities.