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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 WarrenFormer Army paratrooper and congressional candidate Richard Ojeda files papers to run for president Kellyanne Conway responds to idea of Clinton 2020 campaign Schumer’s headaches to multiply in next Congress MORE (D-Mass.), Maria CantwellMaria Elaine CantwellCantwell easily wins reelection in Washington Senate race Dem senator won't return 'blue slip' on Trump judicial pick Hillicon Valley: Facebook deletes accounts for political 'spam' | Leaked research shows Google's struggles with online free speech | Trump's praise for North Korea complicates cyber deterrence | Senators want Google memo on privacy bug MORE (D-Wash.), John McCainJohn Sidney McCainSinema invokes McCain in Senate acceptance speech Overnight Health Care — Presented by The Partnership for Safe Medicines — Medicaid expansion gets extra boost from governors' races | Utah's expansion to begin April 1 | GOP lawmaker blames McCain for Dems winning House Overnight Defense — Presented by Raytheon — Trump's Armistice Day trip marked by controversy | US ends aerial refueling to Saudi coalition in Yemen | Analysts identify undeclared North Korean missile bases MORE (R-Ariz.) and Angus KingAngus Stanley KingGOP nerves on edge after Sinema takes lead over McSally Collusion judgment looms for key Senate panel People have forgotten 'facade' of independent politicians, says GOP strategist 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.