Now's not the time to talk about breaking up the banks, Rep. Barney Frank (D-MA), told CNBC’s “Closing Bell”on Thursday. Frank was responding to former Citigroup CEO Sanford Weill’scall on Wednesday to separate commercial banks from investment banks.
Since the economy is still recovering and Europe is dragging us down, Frank said, “The notion that at this point we would do something drastic to a major part of the U.S. economy is not a very good idea.”
On Wednesday, Weill, who was the architect of the financial supermarket in the 1990s, told CNBC that it’s now time to break up the big banks to prevent a repeat of the huge taxpayer bailouts during the 2008 financial crisis.
“You can accomplish much of what Sandy Weill says he’s now for with the Volcker Rule,” Frank said. The Volcker Rule (Volcker Rule explained) says that banks should not be involved in certain trading and other non-lending activities, he said.
Frank also refuted the notion that it's difficult to discern between proprietary and non-proprietary trading.
Under the Dodd-Frank Act (Dodd-Frank Explained), regulators can order divestment for particularly institutions so you don’t need to break-up every single institution, Frank said.