In his first public speech as vice chairman of the Federal Reserve, Stanley Fischer criticized the idea of breaking up the big U.S. banks and boasted that regulators have made "significant progress" in preventing another financial crisis like the one that struck in 2008.

Fischer, who was sworn in as the central bank's no. 2 in mid-June, praised the Fed's response to the financial crisis and its subsequent reform efforts in a speech at the National Bureau of Economic Research in Massachusetts.

But he pushed back against the idea that cutting big U.S. banks down to size would help prevent another crisis, warning that "actively breaking up the largest banks would be a very complex task, with uncertain payoff," according to prepared text.

Fischer also cast doubt on the idea that large banks are able to raise money more cheaply that other financial firms because of the perception that they would receive a bailout from the government if they failed, proposing that they might instead enjoy "economies of scale" that justify their low borrowing costs. Furthermore, he added, breaking up the big banks might not end the need for bailouts, as smaller banks can also fail and threaten the financial system. "Financial panics can be caused by herding and by contagion, as well as by big banks getting into trouble," he said.

Even without breaking up the banks, Fischer argued, regulators have made progress in "strengthening the financial system and reducing the probability of future financial crises." In particular, he cited the increase in capital required at banks, claiming that the capital ratio — the difference between assets and liabilities — for the 25 biggest banks has risen by as much as 50 percent since 2005. He also referenced provisions of the 2010 Dodd-Frank financial reform law intended to give regulators the power to quickly wind down distressed firms during a crisis.

As the Fed and other agencies have been slowly implementing the Dodd-Frank rules and the Basel III capital rules, some lawmakers have expressed skepticism about whether those measures are sufficient. In November, Sen. Elizabeth Warren, the Massachusetts Democrat known for her criticism of Wall Street, warned that concentration in the financial industry had only increased since the financial crisis and called on Congress to act with new legislation aimed at tightening regulation if the regulatory agencies did not become more aggressive.

With John McCain, R.-Ariz., and others, Warren also last year introduced a bill to introduce a "21st-century Glass-Steagall," the Depression Era law that separated investment banks and commercial banks. That bill, which would have the likely effect of breaking up the biggest banks today, did not advance in the Senate. Another bipartisan bill, introduced by Sherrod Brown, D-Ohio, and David Vitter, R-La., would require big banks to maintain capital ratios of 15 percent, three times that required by the new rules approved by the Fed.

Estimates of financial sector concentration differ, but one report this year, from the data provider SNL Financial, indicated that in 2013 the five largest U.S. banks accounted for nearly half of the the industry's assets, up from before the crisis and from just under 10 percent in 1990.

The 70 year-old Fischer, who holds both U.S. and Israeli citizenship, was the head of Israel's central bank before being nominated by President Obama to serve at the Fed, having previously worked as an executive for Citibank, been official at both the International Monetary Fund and the World Bank, and taught as an academic economist.