WASHINGTON (February 2, 2010)--Former Federal Reserve Chairman Paul Volcker said Tuesday prohibiting large commercial banks from engaging in high-risk trades would cut back on institutions that are considered "too big to fail" and would add security to the financial system.

Volcker testified Tuesday before the Senate Banking Committee, pushing new bank limitations on behalf of President Barack Obama.

The Obama administration wants to add the restrictions on trading to legislation that would overhaul financial regulations.

The Banking Committee is in the midst of negotiating a bill that would do that.

Mr. Obama has embraced Volcker's idea to prohibit large financial companies that have both commercial and investment functions, such as Goldman Sachs, from engaging in speculative trading.

Large banks oppose the idea.