OpEdNews Op Eds

The Man Who Invented "Too Big to Fail" Banks Finally Recants. Will Obama or Romney Follow?

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): ; ; ; ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

opednews.com Headlined to H4 7/26/12

Become a Fan
  (105 fans)


I'm in Alaska, amid moose and bear, trying to steal some time away from the absurdities of American politics and economics. But even at this remote distance I caught wind of Sanford Weill's proposal this morning on CNBC that big banks be broken up in order to shield taxpayers from the consequences of their losses.

Forget the bear and moose for a moment. This is big game.  

If any single person is responsible for Wall Street banks becoming too big to fail it's Sandy Weill. In 1998 he created the financial powerhouse Citigroup by combining Traveler's Insurance and Citibank. To cash in on the combination, Weill then successfully lobbied the Clinton administration to repeal the Glass-Steagall Act -- the Depression-era law that separated commercial from investment banking. And he hired my former colleague Bob Rubin, then Clinton's Secretary of the Treasury, to oversee his new empire.

Weill created the business model that Wall Street uses to this day -- unleashing traders to make big, risky bets with other peoples' money that deliver gigantic bonuses when they turn out well and cost taxpayers dearly when they don't. And Weill made a fortune -- as did all the other executives and traders. JPMorgan and Bank of America soon followed Weill's example with their own mega-deals, and their bonus pools exploded as well.

Citigroup was bailed out in 2008, as was much of the rest of the Street, but that didn't alter the business model in any fundamental way. The Street neutered the Dodd-Frank act that was supposed to stop the gambling. JPMorgan, headed by one of Weill's proteges, Jamie Dimon, just lost $5.8 billion on some risky bets. Dimon continues to claim that giant banks like his can be managed so as to avoid any risk to taxpayers.

Sandy Weill has finally seen the light. It's a bit late in the day, but, hey, he's already cashed in. You and I and millions of others in the United States and elsewhere around the world are still paying the price.

What's the betting that one of the presidential candidates will take up Weill's proposal?

 

http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

Go To Commenting
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Republican's Big Lies About Jobs (And Why Obama Must Repudiate Them)

Paul Ryan Still Doesn't Get It

What Mitt Romney Really Represents

The Minimum Wage, Guns, Healthcare, and the Meaning of a Decent Society

Why the Right-Wing Bullies Will Hold The Nation Hostage Again and Again

The Gas Wars

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
2 people are discussing this page, with 2 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)
Considering how much Obama and Romney rely on Wall... by Arlen Grossman on Thursday, Jul 26, 2012 at 8:36:38 PM
A thermonuclear attack might put an end to some of... by Peter Duveen on Friday, Jul 27, 2012 at 6:01:45 AM