Sandy Weill Says Big Banks Should Split Up

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Sanford I. Weill, left, of Travelers, and John S. Reed of Citicorp shake hands in New York, Monday, April 6, 1998. Citicorp and Travelers Group merged in a record $70 billion deal, and the two men became co-chairmen and co-chief executives of the new company, Citigroup Inc. (AP/Richard Drew)

In a surprising change of heart, the man who shattered the Glass-Steagall Act and practically invented too-big-to-fail banks called for strict new regulations yesterday. Sandy Weill, the orchestrator of the merger of Travelers Group and Citicorp in the late ’90s, commented on CNBC’s Squawk Box (watch video) that “what we should probably do is go and split up investment banking from banking … and have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”

Weill’s statement was quite a shock, considering the source. But it’s not unlike a similar statement made by his former Citigroup co-CEO, John Reed, who publicly apologized in 2009 for his role in the financial crisis. Here’s Reed explaining his position in an interview broadcast on Moyers & Company earlier this year.

You may recall that the Citigroup deal was in violation of a Depression-era law called the Glass-Steagall Act, which separated insurance companies, commercial banks and investment firms — but that didn’t stop Weill. With a nod and a wink from then-Fed chairman Alan Greenspan, Weill, head of Travelers, and John Reed, chairman of Citicorp, joined forces to form the behemoth Citigroup in 1998.

Weill and others had already made some headway in lobbying against Glass-Steagall, and the Fed gave them the space to operate legally for two years to see whether Congress would tear down the law completely. In that time, he lobbied hard, and won. By 2000, Bill Clinton had signed the Financial Services Modernization Act, a.k.a. the scrapping of Glass Steagall. A decade later, the repeal of Glass Steagall was widely considered a major cause of the 2008 financial collapse.

Watch Bill’s full interview with Reed and learn more about the history of the deal and The Glass-Steagall Act.

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  • JonThomas

    Translation: Ok guys, we’ve looted enough here, on to fresh meat. Let’s find a market where there’s less attention.

  • dogGal

    Yep. Hard to trust these characters, considering all of the damage they’ve done…

  • Dominic

    Weill is such a POS, SOB, MF, AH.

    He should be in Jail.

  • James

    I have always said that the nullification of Glass Steagall was a gross error in judgement. But the Genie is out of the bottle and I am sure that there isn’t anyone who can that will put that Genie back into the bottle. There are serious capitalistic, Republican, right wing reasons to reinstate a type of Glass Steagall but that is all just too close to common sense for the politicians of our country to move forward on. They’d rather continue their diatribe against the current occupant of the White House for reasons that have absolutely nothing to do with the wellbeing of our country.

  • Anonymous

    I wish these apologizers who regret their role in the take-down of the economy would band together and make some reparations. Scorned regulators are doing it — Bair,
    Born, Volker, etc. — why not these guys? Sitting on the sidelines while the lobbyists and their Congressional instruments take Dodd-Frank apart before it’s even had a chance to be fully implemented is not gonna bring stability back to either Wall Street or Main Street.

    Dr. Doom is dooming again, but this time he’s got a whole slew of economists and market watchers playing Greek Chorus. Get off your butts, you repentant but unpunished criminals, and help get this economy back on the rails.

  • Connie Snyder

    This guy is up to something. He’s suddenly for the same Act that he lead the charge to repeal? I’d say somebody call a cop, but God knows the corporate capitalist vultures own them, too.

  • JZ

    And this is the same guy who pushed to have Glass-Steagall repealed. Now that he’s got the world in a financial mess, he’s backing down? A little late for that.

  • shep2121

    Pathetic! A real sicko!

  • shep2121

    The No. 1 challenge facing America, if not the West in general, is to dismantle capitalism before it dismantles us. This is our singular purpose, and all our particular plans and bullet points follow from this one overriding goal. It would mean a redistribution of wealth in the short term, to relieve the suffering of the American people; but the shift to a steady-state, no-growth, no-profit, homeostatic economy in the long term.