Tumblr Icon RSS Icon

Former Citigroup Chairman Calls For Breaking Up Big Banks

Posted on

"Former Citigroup Chairman Calls For Breaking Up Big Banks"

Share:

google plus icon

Sandy Weill

Former Citigroup Chairman and CEO Sanford “Sandy” Weill called for the separation of deposit and investment banks in an interview this morning on CNBC’s “The Squawk Box.” Weill is credited with inventing the so-called financial supermarket, a type of financial institution wherein a wide range of products involving banking, real estate, and stock trading are all available.

While the financial supermarkets were “right for their time,” Weill said, times have changed and it is time to break up the banks to protect taxpayers and financial institutions:

WEILL: 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. If they want to hedge what they’re doing with their investments, let them do it in a way that’s going to be market-to-market so they’re never going to be hit.

Watch it:

Later, Weill went even farther, explicitly saying the banks needed to be broken up. “I’m suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable, and the investment banks can do trading, they’re not subject to a Volcker Rule, they can make some mistakes, but they’ll have everything that clears with each other every single night so they can be market-to-market,” Weill said.

Weill isn’t alone in his endorsement of separating commercial banking from riskier investment banking. A former Goldman Sachs trader made the case for it in his resignation letter and another former Citigroup CEO, John Reed, wrote a letter to the Securities and Exchange Commission calling for breaking up the biggest banks.

« »

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.