Sandy Weill, the former CEO of Citigroup, has done an about face many have called “stunning” — and says that the time has come for intervention in reining in the big banks before they engage in any further economy-destroying hijinks and shenanigans.
Sandy Weill’s statements are somewhat transgressive in a climate where many linked with the banks have espoused a no-holds-barred entitlement culture — witness Jamie Dimon of Chase’s recent Congressional chit-chat after the bank lost billions gambling on risky trades despite a lack of recovery in an economy influenced negatively by bank gambling.
In the current polarized economic climate, the devotion to an entirely deregulated for business-only trading and banking environment is nearly religious in its fervor, where the suggestion that any failsafes at all be implemented is viewed as some sort of anti-business heresy. (And threats about the jobs never coming begin popping up.)
Citigroup’s former CEO Weill broke ranks and admitted that regulations like we used to have to decouple trading and banking would be an effective prophylactic, and speaking on CNBC’s Squawk Box, Weill said:
“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.”
“I’m suggesting that they 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.”
— Jon Lustig (@jonlustig) July 25, 2012
Remarkably, Weill also knocked all the behind-the-scenes financial maneuvering that has been so destructive to the economy in the past decade, adding:
“There should be no such thing as off balance sheet… I want to see us be a leader, and what we’re doing now is not going to make us a leader.”
What Weill was advocating for is essentially the return of Glass-Steagall, enacted after the ravages of the Great Depression and ensuring that big banks would never again commandeer and crash the economy gambling.
Ok, this is a wow: Sandy Weill says to break up the big banks soc.li/8Sq9hAQ
— Sallie Krawcheck (@SallieKrawcheck) July 25, 2012
HUGE breaking:Citigroup builder and Glass Steagall buster Sandy Weill just said on #CNBCSquawk that biggest banks should be broken up.
— Better Markets (@Bettermarkets) July 25, 2012