Former Citibank CEO Calls For Banking Breakups (VIDEO)


In his recent interview on CNBC, former Citibank Chairman and CEO Sanford “Sandy” Weill made some remarkable, and insightful remarks:

His call for the breakup of the major banking institutions, into their banking and investment sides, makes him the latest in a number who call for the breakups. But before you start getting too excited, please remember that Mr Weill was instrumental in the repeal of Glass-Steagall. It was the overturning of this, in 1998, which allowed megabanks to form. These megabanks now starve the marketplace and cripple the world economy. Much as giant oak trees can shade all who attempt to grow under them, these banks prevent the needed diversity of investment, and the needed diversity of banking, for a healthy marketplace. While he has not relented his former position, and still does not wish to Glass-Steagall’s restoration, his recognition of the problem is itself a large step forward.


He further discusses how the finance community has become overgrown with dead wood, and how it needs to take innovation seriously, and separately from the banking foundations. Investment is a risky venture. Reward without apparent risk is dangerous, because there always is risk. Failure to see it, due to bank overuse of hedging only hides it in the microcosm, only in the macro-economic sense as economies grind down, and eventually collapse.

His call for financial transparency however, remains a straw man. His claim that being able to see every aspect of the financial institution would suffice, is misplaced. Financial trading is a very complex system, even if full transparency were there, it could still be handled in the same manner as a 3 card monty game. All cards are on the table, but the dealer still holds them. Strong regulation is still needed, although Mr Weill has not yet come to accept that.

We should all be glad to see Mr. Weill finally recognize the folly of the system he helped to create. He’s not quite there yet, but to admit what he has is still a huge leap forward for the man who used to have the plaque on his office wall which read “The Shatterer Of Glass-Steagall.”