high - risk firms almost unlimited access to funds generated through their new access to the safety net. finally, following a series of crises during the late 1980s and 1990s, the government confirmed that because of systemic impact, some institutions were just too big to fail – the largest institutions could put money in nearly any asset regardless of risk, and their creditors would not be held accountable for the risk taken. predictably, the industry ’ s risk profile increased dramatically. the sifi was born. is it any wonder then that in the fall of 2008 we experienced the greatest financial crisis since the great depression? financial institutions had again become irresponsible in their lending practices. they had increased their leverage ratios to unprecedented levels. they became “ dry kindle ” for a financial fire and, with the end of the housing boom, the match was struck. now, with their bailout costs amounting to billions of taxpayer dollars, sifis are larger than ever. strikingly, they are arguing that they should not be held to stronger capital standards if the united states hopes to remain globally competitive. that assertion is nonsense. the remainder of my remarks today will describe how the united states can achieve a stronger, more stable financial system in order to secure its future as a global economic leader. proposal to reduce costs and risks to the safety net and financial system following this financial crisis, congress and the administration turned to the work of repair and reform. once again, the american public got the standard remedies – more and increasingly complex regulation and supervision. the dodd - frank reforms have all been introduced before, but financial markets skirted them. supervisory authority existed, but it was used lightly because of political pressure and the misperceptions that free markets, with generous public support, could self - regulate. dodd - frank adds new layers of these same tools, but it fails to employ one remedy used in the past to assure a more stable financial system – simplification of our financial structure through glass - steagall - type boundaries. to this end, there are two principles that should guide our efforts to restore such boundaries. first, institutions that have access to the safety net should be restricted to certain core activities that the safety net was intended to protect bis central bankers ’ speeches – making loans and taking deposits – and related activities consistent with the presence of the safety net. second, the shadow banking system should be reformed in its use of money market funds and short - term repurchase agreements – the repo

market. this step will better assure that the safety net is not ultimately called upon to bail them out in crisis. consistent with the first principle, banking organizations with access to the safety net should be generally confined to the following activities : commercial banking, underwriting securities and advisory services, and asset and wealth management services. underwriting, advisory, and asset and wealth management services are mostly fee - based services that do not put much of a firm ’ s capital at risk. in addition, asset and wealth management services are similar to the trust services that have always been allowable for banks. restricting activities of banking organizations in contrast, banking organizations should be expressly prohibited from activities that include dealing and market - making, brokerage, and proprietary trading, which expose the safety net but have little in common with core banking services. 1 thus, banking organizations would not be allowed to do trading, either proprietary or for customers, or make markets because such activity requires the ability to do trading. in addition, allowing within the protection of the safety net, they create expansive risks that are difficult to assess, monitor or control. thus, banking organizations would not be allowed to do trading, either proprietary or for customers, or make markets because such activity requires the ability to do trading. in addition, allowing customer but not proprietary trading would make it easy to game the system by “ concealing ” proprietary trading as part of the inventory necessary to conduct customer trading. also, prime brokerage services not only require the ability to conduct trading activities but also essentially allow companies to finance their activities with highly unstable uninsured “ deposits. ” this combination of factors, as we have recently witnessed, leads to unstable markets and government bailouts. critics of this proposal contend that institutions grow to be large and complex because of economies of scale and scope and they need the size and related complexities to be profitable and to compete globally. they believe firms must have broad, mostly unrestricted access to all financial activities to provide one - stop shopping and compete on a global basis. arguments also are given that large banks and securities firms are necessary to make efficient markets for securities trading essential for carrying out monetary policy. these arguments are unconvincing and, in fact, mislead. first, yes, it would be unfortunate if restricting activities were to drive u. s. banks and jobs to other countries. however, we have 200 years of banking success in this country to refute that assertion. more recently, under glass - steaga