In a segment so surreal it should have The Twilight Zone theme playing behind it, the architect of Too Big To Fail now says Too Big To Fail is a bad idea.
Former Citigroup Chairman & CEO Sanford I. Weill, the man who invented the financial supermarket [Too Big To Fail] called for the breakup of big banks in an interview on CNBC Wednesday.Seriously? Is this the same guy who keeps a memento of the Glass-Steagall repeal (Graham-Leach-Biley Act) on his wall?
“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,” Weill told CNBC’s “Squawk Box.”...
He essentially called for the return of the Glass–Steagall Act, which imposed banking reforms that split banks from other financial institutions such as insurance companies.
From the New York Times:
Sitting in his office on the 46th floor of the General Motors building in Manhattan, he is surrounded by reminders of a lifetime on Wall Street. The space is breathtaking with floor-to-ceiling windows and views stretching out over Central Park. One wall is devoted to framed magazine and newspaper articles chronicling his career. A Fortune magazine clipping from 2001 declares Citi one of its “10 Most Admired Companies.”OK then. Weill's justification was interesting, from TPM:
On another wall hangs a hunk of wood — at least 4 feet wide — etched with his portrait and the words “The Shatterer of Glass-Steagall.” The memento is a reference to the repeal in 1999 of Depression-era legislation; the repeal overturned core financial regulations, allowed for the creation of Citi and helped feed the Wall Street boom.
Weill said the model he built at Citi was “right for that time.” But “the world changed with the collapse of the housing market and the real-estate bubble … so I don’t think it’s right anymore.”CNBC even asked Treasury Secretary Geithner about Weill's proposal (and got a not so surprising reaction). Rep. Carolyn Maloney spoke about the story on the record and Eliot Spitzer said Weill's statement was a "game changer."