Paul Volcker has suggested, as has Mervyn King, the Governor of the Bank of England (the U.K.'s version of the Federal Reserve), along the lines of the Public Utilities Holding Company Act or the Glass-Steagall Act, both passed in the 1930s and since repealed, that commercial banking (including lending by thrifts, and probably by money-market mutual funds as well) be separated from proprietary trading and other high-risk financial activities.
The reasons are several. One of course is the contagion of the kind that brought down Lehman Brothers; unless risky and safe activities are conducted in strictly separate subsidiaries--which is difficult to do without sacrificing whatever benefits flow from having both types of activity in the same enterprise--the assets involved in the safe activities will be available to the creditors of the risky activities. Not that banking can ever be completely safe, given that its essence is borrowing short and lending long, but it can be made much safer than it is.
Another reason for separating out commercial banking besides the contagion effect is the awkwardness of trying to merge disparate business cultures in a single firm. The combination is likely to be unstable if the different cultures have different risk profiles. A safe, conservative banking operation will attract a different type of executive from a speculative trading operation. The banker will be more cautious and, because of the positive correlation between risk and return, will be differently--and less munificently--rewarded. The greater profitability and more generous remuneration of the traders will nudge the bankers (or induce top management to pressure them) to increase the profitability of their own operations, which will require their taking greater risks. Thus the separation of commercial banking from other financial activities would automatically solve the problem for which limiting the amount or structure of compensation of financial executives is proposed as the solution. A career in a "safe" bank would not draw persons with a taste for risk.