Sanford Weill, former Citigroup CEO and chairman, stunned the financial community yesterday when he called for the break-up of the big banks, the banks that are still “too big to fail”, emphasis mine:
“ What I think we should probably do is go and split up investment banking from banking and have banks be deposit takers, have banks make commercial and real estate loans. And have banks do something that will not risk tax payer dollars. And that is not going to be something that will not be too big to fail. If banks want to hedge what they are doing in their investments, let them do it in a way that is marked to market so that they are never going to be hit. ”
Weill went on to be even more explicit, emphasis mine:
“ 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. ”
According to The Hill, lawmakers in Washington took the opportunity to talk about additional financial regulation, which would be a very good thing. But let’s get real here, nothing, absolutely nothing will happen until and unless we elect a Democratic House, Senate, and President in November.