Sandy Weil, chief architect of the supermarket bank, is now in favor of splitting up big banks. In 1998, Weil engineered the merger between Travelers and Citicorp, a deal that required the U.S. government to overturn the Glass-Steagall law that prohibited depository banks to be separate from investment banks. Basically, the law prevented banks from taking deposits and using those funds for riskier investments.
But this morning on CNBC’s ‘Squawk Box’, Weil said, “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 going to be too big to fail.”
It’s like re-opening a not-so-fresh wound and adding salt. Truthfully, other than to point out the ridiculousness of his statement, I’m not sure why anyone should care about Weil’s opinion on anything related to fixing the banking problem that he helped to create.
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