Commercial banks should be separated from investment banks in order to avoid another serious financial crisis, former Federal Reserve Chairman Paul Volcker said today at a conference at New York University’s Stern School of Business.

“Maybe we ought to have a kind of two-tier financial system,” Volcker, who heads President Barack Obama’s Economic Recovery Advisory Board, said, as reported by Bloomberg.

Commercial banks would provide customers with deposit accounts and access to credit and would be highly regulated, while securities firms would have the freedom to take on more risk and practice trading “relatively free of regulation,” said Volcker.

Volcker also said international regulations on financial firms are probably an inevitable consequence of the sector’s current problems.

“In this world I don’t see how we can avoid international consistency” on securities regulations going forward, he said. “The U.S. is no longer in a position to dictate that the world does it according to the way we’ve done it.”

Volcker, who ran the Fed from 1979 to 1987, said the financial industry’s problems stem from larger issues. “I don’t think this is just a technical problem, it’s a societal problem,” he said. He cited bankers on Wall Street receiving multimillion-dollar bonuses for engineering failed mergers.

“There’s something wrong with the system,” Volcker said. “What are the incentives, what’s going on here?”