Kansas City Federal Reserve President Thomas Hoenig said on Tuesday, said some activities may need to be curtailed at large financial firms to prevent a recurrence of the financial crisis that resulted in a global recession.
Need to consider some activities that are in these largest institutions that probably should not be trading for their account, gambling ... That portion probably does need to be separated out.
Commercial banking plays a crucial role in giving banks access to the payments system and functions as a key intermediary in the U.S. and global economies, he added.
Hoenig, a voter on the Fed's policy-setting Federal Open Market Committee, did not comment on the outlook for the economy or monetary policy in brief remarks. He is scheduled to speak on the outlook on Thursday.
The Kansas City Fed chief said some firms must be allowed to fail and called for federal regulators to have powers to wind down large systemic institutions on the brink of collapse.
Congress is considering wide-ranging financial reforms in the wake of the crisis, including monitoring risks to the broad financial system and giving authorities ways to shut down failing firms in an orderly way.