There’s no clearer example of the collusion between government and corporate finance than the Citicorp-Travelers merger. The deal was a violation of the Glass-Steagall Act which separated banks from investment firms, but was approved by the Fed with a wink and a nod. A year later, Glass-Steagall was repealed. John Reed was at the helm of Citicorp at the time of the merger, and served as co-chairman of the newly-formed Citigroup from its creation in 1998 until his retirement in 2000. Ten years later — after the repeal of Glass-Steagall was widely cited as a cause of the biggest financial collapse since the great depression – Reed apologized for his role in the crisis and said that the repeal of Glass-Steagall was a mistake.
In this March 2012 Moyers Moment from Moyers & Company, Reed talks about his support for the Volcker Rule, a provision of Dodd-Frank that restricts banks from certain kinds of speculative trading, and shares a thoughtful metaphor to explain why the banking industry needs rules.
Watch the entire conversation between Bill Moyers and John Reed.