NEW YORK — NEW YORK Sandy Weill, the dealmaker who built Citigroup on the idea that in banking, bigger is better, said Wednesday that he believes big banks should be broken up.
Speaking on CNBC's "Squawk Box," the 79-year-old Weill appeared to shock the show's anchors when he said that consumer banking units should be split from riskier investment banking units. That would mean dismembering Citigroup as well as other big U.S. banks, like JPMorgan Chase and Bank of America.
It's an ironic twist and it's directly opposed to the stance of the industry's current leaders.
Weill said the radical change is necessary if U.S. banks want to rebuild trust and remain on top of the world's financial system. Weill also criticized banks for taking on too much debt and not providing enough disclosure about what's on their balance sheets.
"Our world hates bankers," he said.
The bad guys
Big banks have been villainized in the financial crisis and its aftermath. Critics blame them for risky trading that created a housing bubble and eventually led to global economic upheaval.
In some circles, there's still resentment that the government used taxpayer money to give bailout loans to the biggest banks, including Citigroup, because regulators believed that the financial system wouldn't be able to handle their failure.
But standalone investment banks, Weill said, wouldn't take deposits, so they wouldn't be bailed out.
Banks that have both investment banking and consumer banking say it's necessary to keep them together because they balance each other, ensuring stability no matter the economy.
Investment banking, which offers services like trading stocks and packaging loans into securities, can be spectacularly profitable in the good times and spectacularly unprofitable in the bad. Consumer banking, the plain-vanilla business of making loans and accepting deposits, generally offers a steadier, if slower, way to make profits.
Until the late '90s, federal regulations kept them largely separated.
'Sad what is happening'
In the same interview, Weill showed his fondness for the industry. He credited mega-banks for providing capital markets that helped convert communist countries to capitalism, and moved poor people into the middle class.
"It is really sad what is happening, and it's sad for young people," he said. "This was an industry that attracted a lot of really terrific people."
Weill retired as CEO of Citigroup in 2003 but remained chairman until 2006, building it into a giant that offered both consumer and investment banking.
By Christina Rexrode, Associated Press Jul 26, 2012
Split up banks, says builder of Citigroup - USATODAY.com
Reuters: Business News
National Commercial Real Estate News From CoStar Group
Latest stock market news from Wall Street - CNNMoney.com
- ► 2017 (49)
- ► 2016 (145)
- ► 2015 (146)
- ► 2014 (102)
- ► 2013 (395)
- Last days of the Borgata
- LifeLock reveals finances pre-IPO
- Home prices rose in July in 20 major US cities
- Radar Logic: Home Prices Hit Peak in July, Distres...
- 34,000 in Ariz. get mortgage aid
- Phoenix-based Vestar buys Calif. retail center for...
- Phoenix-area rental homes a red-hot commodity
- Home-related sales through the roof
- New US home sales edged down 0.3% in August
- Attorney General sets 3-year foreclosure plan for ...
- Top 10 things to know about Social Security
- Understanding Social Security benefits
- Maricopa County homeowners likely to see property-...
- Reagor: Building of homes slows a bit
- At 40, McCormick Ranch still desirable place to li...
- Fountain Hills mulls giving new life to avenue
- Peoria entertainment/hotel plan closer to reality
- Residential lot coverage debated in Arcadia
- Arizonans may not feel closure of local banks
- Proposed Scottsdale condo plan gains height, densi...
- Luxury retirement facility's sales rise
- Audit: Maricopa County housing-agency woes continu...
- Foreclosure starts fell on annual basis in August ...
- Housing prices up in most NE Valley communities
- Housing key part of SkySong's 'secret sauce'
- Valley in top 10 in US for foreign investors
- New tax on home sales is overblown rumor
- Home construction on uptick in Scottsdale
- Building set for approval - USATODAY.com
- Furnishings firm takes over ex-nightclub site
- The market: Views from the trenches
- City closer to Waterfront apartment-plan OK
- Scottsdale council approves permits for downtown b...
- Metro Phoenix a seller's (and landlord's) market
- Scottsdale home prices up 9.26 percent over a year...
- Valley bankruptcies keep plummeting
- IRS pays Swiss ex-banker, whistleblower $104 milli...
- Baby Boomers have many options for retirement plan...
- Proposed condo plan gains height, density
- Cottonwoods considers adding assisted living
- Scottsdale council approves contentious Echo at Wi...
- Phoenix-area home-price dip called a 'natural reac...
- City Planning Commission draws criticism
- US Home Prices Rise in July by Most in 6 Years - D...
- 2 large Phoenix warehouses being built
- City expands affordable housing - USATODAY.com
- Entertainment hub progresses - USATODAY.com
- City hopes Chandler site will be revitalized - USA...
- PV commission member resigns over resort redevelop...
- Top 5 lenders: $500M spent in Ariz. - USATODAY.com...
- 6,900 Scottsdale apartments in pipeline
- Home prices notch first 12-month gain since 2010 -...
- Advice for Arizonans on brink of foreclosure
- New-home sales rise to match 2-year high - CBS New...
- Beach-club complex votes on permits, licenses are ...
- US home sales rose 2.3 percent, sign of recovery
- Toll Brothers Posts Strong Growth - WSJ.com
- A challenge to finish preserve - USATODAY.com
- Valley agent did well by focusing on SHORT SALES -...
- New Mountain Shadows resort plan consolidates buil...
- ARMLS buys researcher
- Mesa senior-living complex will be based on Tempe ...
- Home prices up in 5 areas - USATODAY.com
- Newest numbers don't cast 'shadow'
- Run-up in home prices slows - USATODAY.com
- Fannie Mae posts $2.2B net gain for Q2 - Yahoo! Fi...
- Land purchase for theater expected to finalized so...
- ASU's SkySong will add residential space
- Reagor: New-home market projections promising
- 6 Phoenix-area apartment communities sold
- Fannie and Freddie principal cuts barred - USATODA...
- Phoenix expedites building process
- Plan for luxury homes at resort stirs controversy
- Mystery bidder gets 275 homes - USATODAY.com
- Meritage earnings rise - USATODAY.com
- Mesa minister gets maximum sentence in fraud
- Split up banks, says builder of Citigroup - USATOD...
- New home sales fall to 5-month low in June – USATO...
- GOP rips Geithner about LIBOR - USATODAY.com
- Historic homes at risk after they're foreclosed
- 100 more lots sold in project - USATODAY.com
- 4333 Building plan still viable, extension sought
- Census estimates: Phoenix remains sixth-largest ci...
- SIGNS OF HEALTH - USATODAY.com
- Subdivision is proposed - USATODAY.com
- Reagor: Home-listing group game for some fun
- After 6 years, Scottsdale is settling state-land c...
- Foreclosure Crisis Hits Older Americans Hard - US ...
- Government program to help avoid foreclosure
- Property-tax bills may rise in Paradise Valley sch...
- Construction, housing sectors face challenges
- ▼ September (91)
- ► 2011 (704)