On July 25, 2012, Sandford I Weill, former Charman of Citigroup, said it’s time to break up the largest banks to avoid more bailouts. Mr. Weill, you'll recall, spearheaded the Citibank/Travelers, sparking the creation of super large financial institutions and creating the "too big to fail" dilemma. Mr. Weill accomplished this by getting policymakers to first ignore and then repeal the Glass-Steagall Act, a Depression era law designed to separate commercial from investment banks.
In an interview on CNBC, Mr. Weill stated that “ 'What we should probably do is go and split up investment banking from banking'..Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.' ” No kidding. Thank you, Mr. Weill. I suppose 5,151 days late is better than never at all.
An article about this matter on Bloomberg.com quoted Thomas Hoenig, a Federal Deposit Insurance Corp. board member and former head of the Kansas City Federal Reserve, that "There is finally a growing recognition among a wide range of market analysts, financial market participants and policy makers that the repeal of Glass-Steagall was a mistake...It’s time now to restrict banks to core services."
Growing recognition indeed. It all depends on what criteria you use to restrict the definition of market analysts, financial market participants and policy makers. Mr. Hoenig's definition has a clear cultural bias to it. Given this, I thought I would post my June 18, 1998 opposition to the Citibank/Traveler's merger, online at http://www.creativeinvest.com/FRBtrav.pdf.
The fact that Mr. Weill's policy, endorsed at the time by the market analysts, financial market participants and policy makers Mr. Hoenig cites, cost the American public $19.2 trillion in lost household wealth (2011 dollars) can be chalked up to, well, market analysts, financial market participants and policy makers.
Just not this one.