Man who helped get Glass-Steagall overturned now says banks should just be banks
Sanford “Sandy” Weill, who ushered in the era of supermarket banks with the creation of Citigroup Inc. before the financial crisis, said U.S. lenders should be broken up to protect taxpayers.
“What we should probably do is go and split up investment banking from banking,” Weill, 79, said today in an interview on CNBC. “Have banks do something that's not going to risk the taxpayer dollars, that's not going to be too big to fail.”
Weill helped engineer the 1998 merger of Travelers Group Inc. and Citicorp, a deal that required the U.S. government to overturn the Glass-Steagall law that forced deposit-taking companies to be separate from riskier investment banks. The company became the biggest lender in the world before almost failing and taking a $45 billion taxpayer bailout.
“We can have size and scale but it doesn't have to be connected to a deposit-taking institution,” Weill said. “Have banks be deposit-takers, have banks make commercial loans and real estate loans.”
Weill held the positions of chairman and chief executive officer of New York-based Citigroup after the merger. He retains the title “chairman emeritus.”
Weill said he hasn't spoken with Citigroup CEO Vikram Pandit or JPMorgan Chase & Co. (JPM)'s Jamie Dimon about breaking up the biggest U.S. banks. Dimon, 56, is a former protege of Weill's and helped to build Travelers before the merger with Citicorp.
Jon Diat, a spokesman for Citigroup, declined to comment on Weill's remarks.
Parsons, Reed
Richard Parsons, who earlier this year ended a 16-year tenure on the board of Citigroup, said in April that the 1999 repeal of the Glass-Steagall law made the business more complicated and ultimately helped cause the financial crisis.
Former Citicorp CEO John Reed apologized in 2009 for his role in building Citigroup and said banks that big should be divided into separate parts.
Weill said today he altered his view about the industry because “the world changes.” He has been thinking about it a lot over the last year, he said.
“The world we live in now is not the world we lived in 10 years ago,” Weill said. “Good things are simple.”
Former President Bill Clinton said when he signed the repeal of Glass-Steagall that it was “no longer appropriate” for the economy.
“The world is very different,” Clinton said at a White House signing ceremony.
--Bloomberg News--
