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 WarrenFeehery: A whole new season of 'Game of Thrones' Overnight Energy: Warren wants Dems to hold climate-focused debate | Klobuchar joins candidates rejecting fossil fuel money | 2020 contender Bennet offers climate plan O'Rourke says he would 'absolutely' do Fox News town hall MORE (D-Mass.), Maria CantwellMaria Elaine CantwellDon't revive logging in national forests Top Finance Dem offers bill to help those repaying student loans save for retirement Facebook COO Sheryl Sandberg meets with senators on privacy MORE (D-Wash.), John McCainJohn Sidney McCainPelosi receives John F. Kennedy Profile in Courage Award Romney: Trump 'has distanced himself from some of the best qualities of the human character' MSNBC host: Barr 'the most dangerous person' who works for Trump MORE (R-Ariz.) and Angus KingAngus Stanley KingTrump, Europe increasingly at odds on Iran The Hill's 12:30 Report: Dems raise stakes with talk of 'constitutional crisis' Hillicon Valley: Regulators press Congress on privacy bill | Americans mimic Russian disinformation tactics ahead of 2020 | Ocasio-Cortez, Sanders back Uber strike | GOP senator targets 'manipulative' video games 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.