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 WarrenWarren set to announce plan for universal child care: reports Barack, Michelle Obama expected to refrain from endorsing in 2020 Dem primary: report Booker seeks dialogue about race as he kicks off 2020 campaign MORE (D-Mass.), Maria CantwellMaria Elaine CantwellSenate votes to extend key funding mechanism for parks White House poised to take action on AI, 5G Overnight Energy: States press Trump on pollution rules | EPA puts climate skeptic on science board | Senate tees up vote on federal lands bill MORE (D-Wash.), John McCainJohn Sidney McCainGOP senator says Republicans didn't control Senate when they held majority Pence met with silence after mentioning Trump in Munich speech Mark Kelly's campaign raises over M in days after launching Senate bid MORE (R-Ariz.) and Angus KingAngus Stanley KingDrama hits Senate Intel panel’s Russia inquiry Warner, Burr split on committee findings on collusion Overnight Defense: Top general wasn't consulted on Syria withdrawal | Senate passes bill breaking with Trump on Syria | What to watch for in State of the Union | US, South Korea reach deal on troop costs 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.