Former Citi CEO says banks should be broken up
Sandy Weill, the famed financial dealmaker who created the nation's first mega-bank, makes a surprising reverse course.
By Donal Griffin, Bloomberg
Sanford "Sandy" Weill, who ushered in the era of supermarket banks with the creation of Citigroup (C) 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 (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.
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.
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In addition to breaking them up, stricter regulations should be enforced on insider deals. Especially those who manipulate the market. There should be more transparency, everything should be available for public scrutiny, let light of day expose their greedy dirty dealings. Derivatives and other esoteric investments need to be regulated so toxic debt does not get rolled into so called 'good investments' as they did in the past. A lot of things need to be changed.
Most of all, those who fleeced the American people need to be brought to justice. The government did not go after them (because these rich criminals bribe politicians in both parties), but maybe someone heroic will go after those wall street criminals and make sure they are punished.
It is not fair that only poor criminals get punished. The rich criminals need to pay too.
The consolidation of the banks and the expansion of what they can do leaves the American financial system at risk. The too big to fail will not stop massive failures if we hit another financial meltdown.
The government does not have the ability to control these large banks nor monitor them for dangerous practices. There will always be people who value profits above ethics and honesty. Lately, we have seen the large banks manipulate the credit system with ease and apparent immunity. How can we trust our financial system when the main players are making up the rules as they go along.
It is vital to the future national security, financial health, the environment and all fields of production that all of the self serving career politicians be replaced with individuals who are dedicated to their oaths as senators, legislators and presidents. Line item veto, the same healthcare provisions as the voters, salary increases tied to the national price index, no ability to profit from insider trading as the Palosies, Reed, Dodd and Obama have done to great extremes, no reluctance to honestly address national sovereignty issues and no self approved forgiveness of education loans for congressmen and women and their staffs and families. The time to start is the next election.
Vote for the future of our children as well as ourselves.
What`s he care now..
He pushed the button on the financial meltdown and is now a billionair he should have been arrested.
The centralized banks have already been declared unconstitutional and thrown out of our country twice already first by hamilton ... the second time by andrew jackson (a true statesman who loved his country) and its not hard to see they were correct ... we need to put them out once and for all ... and maybe we will be smart enough this time add in the legislation that " any elected official who even attempts to write up or pass legislation to allow the centralized banks to return is to be publicly executed or sentenced to life at hard labor with no possibilty of parole and close the the door on this raping of our nation once and for all.
Andrew jackson even had it carved into his tombstone " I beat the banks" rest in peace andrew ...we are in desperate need of more statesman likeyou.
"What we should probably do is go and split up investment banking from banking,"
It would take a rampaging mob of angry Americans to march on Washington to get them to clean up these bank frauds. The same politicians who claimed "it was too much paperwork" for banks to report the amount of deposits they are holding in reserve are the same liars who help themselves to huge banker campaign donations. What these politicians really don't want is a paper trail that proves banks are defrauding the depositors.
Since the Savings and Loan debacle under Bush, Sr., I've been reading books by authors who know what happened and why it happened in that scandal. Those same authors and many others have been warning us in books and articles over and over since then, warning about the banking industry and how they control the economy and that it would eventually explode into chaos. And we, the American people, would be left holding the bag. That's exactly what happened. i.e. the "financial crisis on Wall Street that caused this recession.[along with huge tax breaks for the wealthy, 2 unfunded wars, unfunded medi-gap insurance, the huge recession, loss of milliins of jobs, etc. during President W Bush's 8 years] Clinton should have never signed to repeal Glass-Steigel and this couldn't have happened. Glass-Steigel needs to be reauthorized with even more "teeth" in it immediately and ALL "too big to fail" banks ened up and put back into the laws of the United States. Investment banks should be totally separate from the business and loans of a customer bank.
the banks need to be broken up so it doesn't happen again. they are already on a new destructive path. they are getting heavy in commodity futures.
why do you think the prices have been going crazy?
I may be cynical but it occurs to me that those who go swaggering around the planet proclaiming their genius ARE the biggest problem. From bloated ego comes attitudes of superiority from attitudes of superiority comes insulation from common sense. From Insulation from common sense comes the crash. In other words, too smart to recognize that all things in this life have a price and consequences. In banking today, it's almost as if these wise guys can't see any consequences for the decisions they make up to and including crashing an economy. They refuse to accept accountability, get a slap on the wrist and a fine or settlement they don't even pay for...and all they have to do is jack prices on their services and add on fees to pay the fines and settlements.
If your child ate too much candy and his/her teeth began to rot as a result, what do you do? Feed them more candy? Or do you restrict their access to the source of their rotten teeth? Do you mandate consequences if they violate your trust in their ability to police their own sense of self-discipline or do you ignore it all and play "bois will be bois" until they haven't a tooth left in their heads?
These over-salaried, overindulged, under-regulated bankers will use any childish excuse to continue to do what they know is wrong. WRONG...as in against the law? We tighten regulations...they squeeze through them. We create laws that prohibit their fraud. They ignore them or fly so close under the radar as if they are Houdini trying to escape a watery grave.
When children don't learn enough is enough...you punish them so they remember not to do it again. If bankers can't control themselves and behave with any measure of ethics, principles and standards, maybe, it's time to empty out the big banks and hand it to smaller more accountable banks to manage who have zero ties to the Wall Street frauds. It's either that or getting a regular round of Madoffing.
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