Earlier this week, when Sandy Weill made the very unexpected announcement that he no longer believed in his decision to push for repealing Glass -Steagall years ago and now believes the investment banking sector should be split, he had to have known the backlash would be coming soon – and it did.
Weill, the former Citigroup CEO, says this is the only way future bailouts could be avoided. In an interview with CNBC earlier this week, he said taxpayer dollars should be shielded from covering the costs of a “too big to fail” bank that, well, failed. He also credited a constantly changing financial climate. With so many banking scandals both here in the U.S. and overseas, the potential is always just around the corner and it seems as though the collective nation turns a corner every week. From the disastrous JPMorgan Chase multi billion dollar loss last month to the ongoing LIBOR scandal to the growing number of problems in the student loan sector, it would seem Weill had a unique perspective.
He wasn’t the only one who pushed for an elimination of this particular program. Former Fed Chairman Alan Greenspan said the break up would make banks more profitable. Even former President Clinton is weighing in and showing his support. He stated the a modern economy no longer needs those protections.
The backlash, however, has begun. During his own CNBC broadcast today, Gary Kaminsky went on a disturbing rant that surely left many folks wondering if there’s not more to this. One thing for sure, there’s no lost love between Kaminsky and Weill.
Kaminsky used the decade between 2000 and 2010 as his reference. He also refers to Weill’s banking concept as a “supermarket concept” and called him out for allowing Citigroup stock to drop more than 90% during that time period – even as Weill was bringing home hundreds of millions of dollars every year. He continues:
What is my point here? I was at those meetings. I know what Sandy Weill told people. So when Weill comes on TV and talks about his charitable endeavors, when he was able to cash out all that type of stock in a time when the supermarket model…the breakdown of Glass-Steagall…something he said at that time was the model of the future… What about all the employees? What do you tell them when they lost 90% of their wealth because they bought into this financial supermarket model that doesn’t work…. They still hold a tremendous amount of stock in their retirement plans. You cannot change history…these management teams think they can rewrite history… well let me tell you something… I’m their worst nightmare… I know where all the bodies are buried.
It’s also important to keep in mind Citigroup was the recipient of more than $45 billion in bailout funds. Other banks were accepting their own handsome paychecks, too. In some circles, it’s believed this was the beginning of the end of the trust consumers had in their banks. There are those who vehemently believe while they were struggling to make ends meet, their tax dollars were being used to bail out these big banks that should have had the bases covered all along.
It’s a pretty safe assumption that we haven’t heard the end of this brouhaha, especially with so many about-faces in financial circles.
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