"What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars, that's not too big to fail," Weill said in an interview.
"If they want to hedge what they're doing with their investments, let them in a way that's going to be mark-to-market, so they're never going to be hit," he said.
CNBC reported Wednesday Weill, for all intents and purposes, was advocating for the Glass-Steagall Act to be reinstated.
Important provisions of the Glass-Steagall Act were repealed in 1999. In place since the bill was written in 1933, the provisions separated securities activities and commercial banking.
It was seen in 1999 as ineffective, because commercial banks and their affiliates were overlapping. But analysts have said it was also a firewall that would have prevented the 2008 financial crisis by preventing some firms from becoming too big to fail.
Weill said he was "suggesting that they (banks) be broken up so that the taxpayer will never be at risk, the depositors won't be at risk, the leverage of the banks will be something reasonable, and the investment banks can do trading."
"They can make some mistakes, but they'll have everything that clears with each other every single night so they can be mark-to-market," Weill said, using an accounting term that means the value of an asset is reconciled with the market value.
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