Source: CNN Money
NEW YORK (CNNMoney) — The man responsible for creating Citigroup — the world’s first financial supermarket — said Wednesday that the nation’s largest banks should be broken up in order to protect taxpayers.
Former Citigroup chairman Sandy Weill — who engineered a series of corporate takeovers and lobbying efforts to create Citigroup — explained during an interview on CNBC why he now thinks a firewall between commercial and investment banks is needed.
“What we should probably do is go and split up investment banking from banking,” Weill said. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail.”
Weill’s call to break up the nation’s largest banks comes a little more than a decade after he helped orchestrate the merger of Travelers Group and Citicorp, a deal that created what was the world’s largest financial services company.
The deal was not have been possible with Glass-Steagall, a Depression-era law that prevented commercial banks from dabbling in investment banking, on the books.
G&S act prevented banks from gambling with depositor’s money. The repeal of that in the late 90s took off the brakes that was a safety measure on corporate greed. It is ironic that now, after only a decade, we are talking about going back to that separation. With pending Volker rule, etc. it is inevitable now due to huge public and political outcry. Call it ‘Financial innovation’ or whatever fancy terms pundits would dream up now, it was a grave mistake to repeal it.