Sandy Weill already said that Wall Street banks should be broken up on Squawk Box this morning, so there was obviously one question lingering in the air.
And Andrew Ross Sorkin got right to it: “Do we believe… the repeal of Glass-Steagall created the financial crisis, what is your view on that?”
In a word, Weill said “No.” But here’s his long explanation:
“Everybody thinks that the repeal of Glass-Steagall allowed banking and investment banking to come together. That’s absolutely not true, under the rules of the game when we went and talked to Citicorp we were able to… as an insurance company, we were able to buy a bank provided that we had two years to comply with the bank holding company rules and that could be extended five … and the only thing where we were out of compliance was insurance underwriting not investment banking, not trading, that had all changed. … Glass-Steagall didn’t have anything … it started that way … but that evaporated from 1933 to 1985.”
Earlier in the show he said that getting rid of Glass-Steagall was a big mistake.
And Wall Street right now? Weill is watching from the sidelines, but obviously he has an opinion.
“99 per cent of people on WS are honest, ethical, they care … about the country … shareholders … You always have bad apples in every business and in the financial business when you have it the numbers are bigger and they get a heck of a lot of attention. I think that we’ve done things wrong.”
One example of that “wrong” is the scandal du jour with banks manipulating the LIBOR. Today, Tim Geithner will surely get a grilling from Congressmen on that topic when he testifies before the House Financial Services Committee. Weill’s take on it?
“I was very surprised. We don’t know what sort of collusion was going on where or with what. It’s very unfortunate … it’s just another bad mark that’s going to re-energize people to hate banks … That’s why we need to simplify the banking side and let the I-banking and trading sides do their own thing and not be something that has to be supported by governments.”
Weill went on to say that he hoped that his statements weren’t politicized, and that he was just trying to do the right thing for an America that needs to show some leadership on the world stage.
We’re right there with you, Sandy.