This morning, former Citigroup CEO Sandy Weill said that Wall Street banks needed to be split up so that retail banking was separate from investment banking.
And in this world of instant communication, his words were news the instant he spoke them.
That means that hours later, Congressmen on The Hill questioning Tim Geithner had a new song to sing — ‘let’s take a look at Glass-Steagall’, a law repealed during the Clinton Administration that separated investment banking from retail banking.
The crazy thing is, this song was coming from both sides of the aisle.
Representative Carolyn Maloney (D-NY) mentioned Weill’s comment in her opening statement to Geithner and that got the ball rolling. She said that his words were “absolutely huge,” and asked Geithner to write a report on how 2008 could have been prevented had Glass-Steagall been enacted at the time.
After that, member after member picked up the torch.
Representative Walter Jones (R-NC) said that he regretted two votes during his time as a Congressman — the Iraq War and repealing Glass-Steagall. “Isn’t it time to have a discussion and debate about reinstating Glass-Steagall,” he asked.
Michael Capuano (D-MA), a fiery member of this committee to be sure, said “funny how people who voted to repeal Glass-Steagall are now complaining that banks are too big.”
Again on the Republican side, New Mexico’s Steve Pearce started his questioning of Geithner by saying that he wanted to add his voice to Maloney’s when it came to getting a report on how Glass-Steagall would’ve made things different in 2008. He then asked Geithner, “why should the people of New Mexico trust you or your policies?”
Also interestingly, there was little talk about the Volcker Rule, which is supposed to be like Glass-Steagall 2.0. Representative Stephen Lynch (D-MA) only mentioned it briefly when he brought up Weill’s appearance on Squawk Box saying, “is it better to separate the risk from the lending?”
So you get the picture.
When questioned about Weill’s statements, Geithner said he hadn’t seen the Squawk Box interview and that he “didn’t know what he (Weill) meant.” The Treasury Secretary then added that he would be happy to walk through all the measures the Obama administration has taken to shore up the financial system.
Obviously, all this noise doesn’t mean that Glass-Steagall is now on the table. Congress might run with this, get the report that Maloney asked for, make a stink, and then forget about the whole thing. Plus, there’s always the Senate.
But still, expect this to be a hot topic (with most of that heat directed at Wall Street) for a while.