Sandy Weill, the former Citigroup CEO and chairman who helped create the megabank model in the 1990s, said Friday that Morgan Stanley and Charles Schwab were "really very good buys" for long-term investments.
Bank stocks have been hammered this week, giving back recent gains tied to the reopening of the U.S. economy, in part because the Federal Reserve said it would keep its benchmark rate near zero through 2022. Low rates squeeze the margins banks make when they take in deposits and extend loans.
"The financial industry is in very good shape this time, and the stocks are selling, a lot of them well below book value," Weill told CNBC's Becky Quick on "Squawk Box."
"I think companies like Morgan Stanley and Schwab are really very good buys for the longer term because they really represent the building up of assets, recurring income," Weill said, referring to two of the biggest players in U.S. wealth management.
The two firms have "made a lot of very smart moves" and the stocks are "really, really cheap relative to the potential," he said. Morgan Stanley announced its takeover of online brokerage E-Trade in February, three months after Schwab said it was buying rival TD Ameritrade.
"I would expect that they come out of this and people will make some decent amount of money owning financial companies, including some property casualty companies," Weill added, referring to the insurance industry.
Weill, who also spoke about an educational nonprofit he founded in 1980, praised the Fed, lawmakers and the administration for their response to the financial fallout from the coronavirus pandemic.