A customer exits a Citibank branch at 40th St. and Broadway in New York Tuesday, Nov. 25, 2008.Craig Ruttle/The Associated Press
Still shocked that former Citigroup chairman and chief executive officer Sandy Weill supports breaking up the too-big-to-fail banks? You're not alone.
But keep this in mind: He isn't the only heavyweight to support such a move. In the past few years, other notable banking big wigs to say similar things include John Reed, Mr. Weill's former partner-in-crime at Citi, and Phil Purcell the former head of Morgan Stanley.
Mr. Reed, for instance, wrote a very terse letter to the editor of the New York Times in 2009 saying the following: "As another older banker and one who has experienced both the pre- and post-Glass-Steagall world, I would agree with Paul A. Volcker (and also Mervyn King, governor of the Bank of England) that some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance makes sense."
Mr. Purcell took to the rival paper, the Wall Street Journal, earlier this year, to pen his thoughts. "There are many reasons people give for breaking up financial institutions that are "too big to fail." It would reduce their complexity, making it less likely they would fail in first place. And ending the government's implicit subsidies to these behemoths means they would no longer enjoy a lower cost of borrowing funds–a competitive advantage that now leads them to grow bigger.
"But there is one benefit of breakups that hasn't gotten much publicity: Shareholders would get greater value from their investments."
Even Toronto-Dominion Bank's Ed Clark recently went on the record, saying, "If you want to speculate, don't call yourself a bank, call yourself a hedge fund."
Both comments garnered the public's attention, but neither had the effect that Mr. Weill's did on Wednesday. That's easy to explain: Mr. Weill was the mega-merger banker. His motus operandi was to acquire financial institutions.
And now he's backtracking, saying it was a terrible idea. But better yet, his excuse is that things were different when he first merged Travelers with Citi back in 1998, as if no one predicted that bad things could happen.
To give you a sense of just how much he loved the spotlight from a mega-merger, take a look at this quote he gave the New York Times in a rare on-the-record interview in 2005.
"Going down to the Waldorf-Astoria for a press conference, with a gazillion flashbulbs flashing – I felt like a rock star," he recalled. "You're just blinded by God-knows-how-many cameras, and our stock going up 20 per cent that day, creating $15-billion (U.S.) or $20-billion of incremental market value. It was a very exciting thing."
I doubt he'd say the same thing about the stock today.
Tim Kiladze