Call it a change of heart, treachery to his class, or just plain seeing the light, Sandy Weill almost gave me a heart attack when he admitted that banks are out of control and, in fact, “too big to fail.” Not to worry, his hospital is near our NYC offices.
As the father of “too big to fail,” ex-Citigroup CEO Weill worked tirelessly back in the late 1990s to turn banks into financial juggernauts by throwing out regulations and limits on the lines of business a bank could engage in. Almost like a parent who says, “All I can do is give them the right upbringing,” his banking progeny have turned into financial Frankensteins. Not so much during his tenure, mind you, but as the natural progression of what he started has taken hold, the industry has grown in directions no one could have anticipated. More importantly, it has grown in directions that defy our ability to monitor or control the behavior.
No need to recap the transgressions of banking here, but the Weill statement, as reported by CNBC, is fascinating for two reasons. It is a remarkable proclamation about just how badly the experiment has failed. We now have the staunchest of all supporters surveying the damage and realizing the continued danger these institutions represent — placing him at odds with the likes of Weill’s onetime protégé and ardent Dodd-Frank critic, JPMorgan Chairman and CEO Jamie Dimon. Positively titillating.
Moreover, it leaves barely anyone — besides the banking industry, that is — to defend the continued commercial dominance and freedom these mega financial institutions enjoy. All that remains is the thick campaign-fund checkbooks that buy loyalty in Washington. However, at some point, as the crowd with pitchforks and torches grows, maybe even that will be too toxic for politicians.
What do you think about Weill’s statement — sincere reckoning or a rewriting of history?