The FBI is charged with counterterrorism in the United States, and it needs to play that role. Any operations focused against U.S. citizens need to be subject to U.S. law, and the FBI is the best place to apply that law. That the NSA can, in the view of many, do an end-run around congressional oversight, legal due process and domestic laws is an affront to our Constitution and a danger to our society. The NSA's mission should be focused outside the United States—for real, not just for show.
This is a very important point. The NSA has been able to establish a Catch-22 firewall around its behavior due to the nature of its mission.
The FBI has always been toothless as far as anything foreign, though. It goes way back - J. Edgar Hoover tried to get the OSS shut down because he felt (quite rightly) that anything involving investigation should fall under the aegis of the, you know, Federal Bureau of Investigation. Unfortunately the British refused to talk to J. Edgar because he didn't go to the right parties and had his own agenda. You couldn't get him to dance for you by dangling secrets in front of him. So the OSS became foreign intelligence and when the OSS faded out it became the CIA.
The CIA, for their parts, have always run the embassies and the NSA was created under their charter, not the FBI's. And, since most everything the CIA does is under congressional seal while most things the FBI does are public, the CIA can do a lot more loosey-goosey shit than the FBI. As James Bamford pointed out in The Puzzle Palace, the majority of intelligence-gathering by the CIA and NSA isn't military or security espionage, it's political and industrial espionage.
So while I agree with Mr. Schneier about what should be done, I'm more cynical about what will be done because Bruce bases his analysis on "here's what they say they are, so here's what they should do" rather than "here's what they say they are but since we all know that's bullshit we'll have to try another tack."