US’ biggest banks unlikely to be dismantled despite calls for reform
Sandy Weill does an about-turn and joins advocates favouring the splitting-up of US’ largest banks in calling for far deeper changes among major banks to ensure past mistakes are not repeated. August 01, 2012 | Magessan RajFormer Citigroup chairman and chief executive officer Sandy Weill’s recent calls for US’ largest banks to be split up sent shockwaves through the banking industry and reignited heated debates between leading industry experts over “too-big-to-fail” banks. Weill remarked that consumer banking should be separated from the more precarious investment banking. “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,” said Weill. Speaking, presumably, with banks such JPMorgan, Bank of America and Citigroup in mind, Weill suggested that banks be broken up “so that the taxpayer will never be at risk, the depositors won’t be at risk, and the leverage of the banks will be something reasonable.” But what exactly prompted such a drastic change of heart from the very same man who in the late 1990s brought about the demise of the Glass-Steagal Act and built the Citigroup behemoth on the idea that in banking, bigger is better? It is indeed an ironic twist for the banking tycoon who helped concoct the merger between his Travelers Group and Citicorp, back in 1998, a deal that faced opposition in the form of the depression-era Glass-Steagal Act, a law that forced deposit-taking companies backed by government insurance to be separate from investment banks. Weill fervently lobbied for certain key provisions of the act to be abolished, a change he won in 1999. Retiring Citigroup CEO in 2003, Weill remained as chairman until 2006, helping build the bank into a large financial entity that offered consumer, investment and commercial banking, as well as trading and insurance services and products. Citigroup went on to become the world’s largest financial services network, before accepting a $45 billion taxpayer bailout in 2008 to avoid coll... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Regulation, Risk and Regulationriskregulation,Risk and Regulation, Regulation,Risk and Regulation, Keywords:Sandy Weill, Citigroup, JPMorgan, Jamie Dimon, Bank Of America, Glass-Steagal Act, Federal Deposit Insurance Corporation, Thomas Hoenig, American Bankers Association, Frank Keating, US Treasury, Tim Geithner, Dodd-Frank Act Sandy Weill, Citigroup, JPMorgan, Jamie Dimon, Bank of America, Glass-Steagal Act, Federal Deposit Insurance Corporation, Thomas Hoenig, American Bankers Association, Frank Keating, US Treasury, Tim Geithner, Dodd-Frank Act
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