The Senate's latest proposal to break up the big banks faces an uphill battle, but senior regulator Thomas Hoenig still says it could have a major impact on the movement to separate big banks' commercial and investment activities.

Hoenig, the vice chairman of the Federal Deposit Insurance Corp., has long argued that the nation's largest banks should become smaller, simpler and less risky. Last week he threw his support behind a new bipartisan bill that would reinstate the Glass-Steagall law that once barred commercial banks from trading and other capital markets activities. The so-called 21st Century Glass-Steagall Act was introduced this month by senators including Elizabeth Warren and John McCain.

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