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We Should Debate Breaking Up Banks: Carlyle Pro

Javier E. David|Special to CNBC.com
Thursday, 9 Aug 2012 | 11:34 AM ET
Carlyle Capital
Source: Carlylecaptialcorp.com
Carlyle Capital

Reducing the size and systemic risk of big banks is “a debate we need to have”, the managing director of the Carlyle Grouptold CNBC Thursday, adding that a return to now-obsolete banking laws was possible.

Olivier Sarkozy, the head of Global Financial Services at Carlyle, said onCNBC’s “Squawk Box”that “a capitalistic society needs a vibrant banking system by force.”

Because banks have expanded briskly since the 1990s, “we've got to figure out how we're going to get there, recognizing that the banking system we have in place…got way, way, way outsized relative to both the economies it was serving and most importantly, the deposit base that it had access to,” Sarkozy added.

Big Bank Makeover
Discussing whether it's time to break up the big banks and how to do it, with Oliver Sarkozy, The Carlyle Group.

Although he shied away from stating that all ‘too-big-to-fail’ banks should be forced to break-up, Sarkozy asked: “does the world need banks that have trillion dollar balance sheets? I think it’s a valid debate to be had.”

Sarkozy – the brother of former French President Nicolas Sarkozy and a fixture in New York tabloids – made his remarks amid a stirring debate about whether large banks should be forced to downsize, and whether old financial firewalls between commercial and investment banking need to be erected once more.

In July, former Citigroup chief Sanford I. Weill surprised market watchers byyanking his support from the financial supermarket model he once championed. Sarkozy said it was “certainly a possibility” that Glass-Steagall laws could be revived.

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