Guilty Conscience or Cynical Ploy? Architect of Too-Big-to-Fail Banks Says It Was a ‘Mistake’
By Dave Lindorff
Imagine for a moment what would happen if former President George W. Bush were to give an interview on television and declare that his invasion of Iraq, and the ensuing nine years of death and mayhem that resulted from that war, had been the wrong thing to do. Imagine if he were to say of that decision, “Mistakes were made.”
Well, something equally momentous happened yesterday when Sanford I. Weill, the former CEO of Citigroup back when it was the nation’s largest bank, announced in an interview on the cable network CNBC, that banks should never have been permitted to merge with insurance companies and investment banks. Discussing the financial crisis that continues to wreak havoc in the US and the global economy, he said, “What we should probably do is go and split up investment from banking. Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”
Incredibly, this shocking comment, surely as big as Bush announcing that he was wrong to invade Iraq, was buried on the business page in the New York Times. Many other major newpapers, including thePhiladelphia Inquirer, didn’t even run the story!
Sanford Weill, it must be recalled, was the Wall Street financier who pushed the government to the wall to get banks deregulated, and to end the Depression-era law, called Glass-Steagall, that since 1933 had barred them from engaging in investment banking and in dealing in insurance.
As principle shareholder and head of Travelers Group, an insurance company and brokerage he had acquired for less than $5 billion, Weill thumbed his nose at the law and arranged a merger with Citicorp, in which the big bank bought the Travelers Group for $72 billion. The merger, while making Weill a very rich man, was a blatant violation of the law, but Weill and Citicorp CEO John S. Reed didn’t care. They pushed the deal through and essentially dared the Securities and Exchange Commission and the Justice Department to stop them. The SEC and Justice Department, as well as Congress and the president at the time, who was Bill Clinton, were “rolled” (or bankrolled) by Weill and Reed, who together hired former Republican President Gerald Ford and Former Clinton Treasury Secretary Robert Rubin to lobby for the repeal of Glass-Steagal, which happened in 1999. There followed a wave over the next decade of ever bigger mergers between banks and investment banks, and not coincidentally a decade of increasingly wild gambling by bankers who played with dodgy derivatives and with other people’s money...
For the rest of this article by DAVE LINDORFF, please go to ThisCantBeHappening, the new independent Project Censored Award-winning online alternative newspaper atwww.thiscantbehappening.net, or to PressTV, where this article originally appeared earlier today.