Sandy Weill Says Big Banks Should Be Split Up!

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

They should be broken up, said Weill, "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..."

Bloomberg explains why this is a big deal:

"Weill helped engineer the 1998 merger of Travelers Group Inc. and Citicorp, a deal that required repeal of the Depression-era Glass-Steagall law that forced deposit-taking companies backed by government insurance to be separate from investment banks. The New York-based company became the biggest lender in the world before almost failing and taking a $45 billion taxpayer bailout in 2008."

I find it interesting that Republicans are petrified of big government, but fail to see the dangers of too big to fail banks. It's almost as if the past five years never happened.

I belong to a credit union.

. . . his party had bigger majorities in congress than either party has had since carter. . .

OP-ED
“Regulate, Don’t Split Up, Huge Banks”
By STEVEN RATTNER
Published: July 31, 2012

http://www.nytimes.com/2012/08/01/opini ... ction.html [click upper right to skip ad]

“ . . . So the bank merger frenzy that Mr. Weill set off in the late 1990s was not the proximate cause of the financial crisis. Nor was the concentration of our banking system, which is less centralized than those in Britain, France, Germany, Italy, Japan, Switzerland and many other countries.

“What brought our financial system to its knees was old-fashioned poor management that expanded the banks’ portfolios and activities too aggressively without sufficiently robust risk controls, enabled by lax (or nonexistent) oversight by regulators. Many of those excesses were concentrated in the housing sector, where a now legendary bubble formed without regulators or industry leaders recognizing it. . . ”