Sandy Weill: The Guy Who Made the Bank Monster
So the inventor of the financial superstore has finally turned against his creation.
"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.
Weill isn't just the former CEO of Citigroup . He was its creator.
Starting with a small lender in Baltimore, Weill built the world's first one-stop-shop megabank that could offer customers every financial service available. Retail banking, commercial banking, insurance, investment banking, financial brokerage and trading all under one roof. He merged Citibank with the Travelers insurance company, a move which required the repeal of the Glass-Steagall Act.
But it is far from clear that the kind of changes Weill proposes, splitting investment banking from retail and commercial banking, would have prevented the near-collapse of Citi or avoided the financial crisis. Citi's problems arose from its extreme exposure to mortgage loans — something that could have happened even if it never engaged in investment banking. It was considered too big to fail not because of its investment banking operations but because of it sheer size.
You have to wonder whether Weill, who once had a fireplace installed in his office on the 106th floor of the World Trade Center, is in legacy-preservation mode. He knows he built the monster but now wants to be thought of as one of the good guys? So he's saying the monster needs to be taken apart. Perhaps he's hoping that he'll be remembered as a reformer instead of the evil scientist.
Hate to break it to you, Sandy, bro. You're always going to be the guy who built the monster.
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