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July 26, 2012

Weill calls for big bank breakups

NEW YORK (UPI) -- Former Citigroup Chairman and Chief Executive Officer Sanford Weill said Wednesday it is time once again to break up the big banks.

"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 said in an interview.

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

CNBC reported Wednesday Weill, for all intents and purposes, was advocating for the Glass-Steagall Act to be reinstated.

Important provisions of the Glass-Steagall Act were repealed in 1999. In place since the bill was written in 1933, the provisions separated securities activities and commercial banking.

It was seen in 1999 as ineffective, because commercial banks and their affiliates were overlapping. But analysts have said it was also a firewall that would have prevented the 2008 financial crisis by preventing some firms from becoming too big to fail.

Weill said he was "suggesting that they (banks) 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 can make some mistakes, but they'll have everything that clears with each other every single night so they can be mark-to-market," Weill said, using an accounting term that means the value of an asset is reconciled with the market value.

Comments :


You know what, I'm very much inelcnid to agree.


Why is it that no one talks about eradicating the root cause of the fnaciainl meltdown subprime loans. How in the world did the government allow subprime lending, especially the kind with no money down, no income, no job , no assets, no docs etc? As Paul Krugman pointed out it is against the law in Canada to make home loans with less than 20% down. Even with low interest rates and too big to fail banks , Canada didn't have much of a problem. The reason was no subprime lending.Why can't we just do that here? I really don't understand why no one talks about that. All the other problems followed from having made crappy loans in the first place. What am I missing here? All the other reforms do not address eliminating this root of the problem. Who is against eliminating subprime lending and why? [url=]oldftmfgw[/url] [link=]pzjybrd[/link]


I audit these loan files for the PMI companies, and I can tell you that some of the loans are coeverd by private mortgage insurance. In the case of piggyback loans (80%LTV 100%TotalLTV), the second mortgage is often coeverd by PMI. Now, the PMI might be added after the loan closed as a credit enhancement, so the borrower is not paying the premiums. [url=]uplpsd[/url] [link=]dmdbivvdvfs[/link]

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