Former Citigroup Chairman & CEO Sanford I. Weill, the man who invented the financial supermarket, called for the break up of big banks in an interview on CNBC Wednesday.
“What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” Weill told CNBC’s “Squawk Box.”
He added: “If they want to hedge what they’re doing with their investments, let them do it in a way that’s going to be market-to-market so they’re never going to be hit.”
He essentially called for the return of the Glass–Steagall Act, which imposed banking reforms that split banks from other financial institutions such as insurance companies.
“I’m suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable, and the investment banks can do trading, they’re not subject to aVolker rule (the Volcker rule explained), they can make some mistakes, but they’ll have everything that clears with each other every single night so they can be market-to-market,” Weill said.