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 Ann WarrenBiden, Sanders lead field in Iowa poll The 2020 Democratic nomination will run through the heart of black America Gillibrand says she's worried about top options in Dem 2020 poll being white men MORE (D-Mass.), Maria CantwellMaria Elaine CantwellCoal supporter Manchin named top Dem on Senate Energy Committee Can the climate movement survive populism? Lessons from 'yellow vest' protests Manchin’s likely senior role on key energy panel rankles progressives MORE (D-Wash.), John McCainJohn Sidney McCainTrump will likely win reelection in 2020 Kevin McLaughlin tapped to serve as NRSC executive director for 2020 Kasich on death of 7-year-old in Border Patrol custody: 'Shame on Congress' MORE (R-Ariz.) and Angus KingAngus Stanley KingLobbying World Dems have new moniker for Trump: ‘Unindicted co-conspirator' Maine senator calls impeachment 'last resort': 'We may get there, but we’re not there now' 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.