Home » NEWS » Banking & Finance » ABA chief says Weill ‘misguided’ in wanting big banks broken up

ABA chief says Weill ‘misguided’ in wanting big banks broken up

Who would have expected this reaction?

The head of the American Bankers Association is disappointed and dismayed by the about-face Citigroup chairman emeritus Sandy Weill has done on breaking up the nation’s big banks.

Push the pause button on such thinking, Frank Keating, ABA president & CEO, urges.

Weill, often described as godfather to the too-big-to-fail movement, announced on CNBC a couple days ago that he now supports separating investment banks from commercial banks.

One pundit likened Weill’s reversal to Johnny Appleseed waking up one morning to complain about having apples everywhere.

If Keating appreciated the irony in Weill’s new stance, he wasn’t letting on. In a statement Friday morning, Keating said: “I’m dismayed by his comments supporting the breakup of our country’s largest banks.”

Following Weill’s “misguided proposal” would “damage our still recovering economy,” Keating said.

Reducing the size of our largest banks would severely diminish their capacity to serve America’s largest businesses, he added.

As Keating sees it, such a move would drive corporations to foreign competitors that would quickly move to meet their financial needs. “Financing would gravitate more heavily to the lightly regulated ‘shadow’ banking system and our country’s status as the world’s premier financial center would be in grave peril.

Some proponents of banking reform have called for the return of Glass-Steagall, a Depression era ban on the merging of commercial banking and investment banking lifted during the Clinton administration. Glass-Steagall would not have prevented the financial crisis, which the GAO found was caused by exotic securities that fueled massive amounts of subprime mortgages, Keating insisted. “Policy decisions should be based on reason and facts, not hysteria and catchy sound bites.”

Glass-Steagall’s repeal enabled Weill to create the financial giant Citigroup by combining Traveler’s Insurance and Citibank. That makes him the godfather of the very thing he now wants disposed of as if it were Fredo Corleone.

Some lovers of the “Godfather” series of movies think the problematic Fredo should have been dispatched of much earlier. Likewise, many who have assessed the casualties and causes of the U.S. banking crisis believe Weill is a bit too late in realizing what went wrong.




… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Ted Carter

Leave a Reply