Former Citi CEO and legendary Wall Street executive Sandy Weill shocked the financial industry today.While hosting CNBC’s Squawk Box, he called for banks to be broken up — for retail banks to be separated from investment banks.
This is all the more shocking when you know something about Weill’s career.
He has been a pillar of Wall Street for the past half century, being involved in some of the biggest mergers and acquisitions in the history of finance.
And the repeal of Glass-Steagall, the legislation that originally separated investment banking from retail banking, can be, in part, credited to him.
Sanford 'Sandy' Weill was born to two Polish-Jewish immigrants in Bensonhurst, Brooklyn on March 16, 1933.
He went on to graduate from Cornell University. His relationship with Cornell has obviously been a very important part of his life, as he has consistently donated to the University, including to the Weill Cornell Medical College located in Manhattan.
Over the next number of years after graduating from Cornell, Weill started his own company, Cogan, Potoma, and Weill. The company existed as a small research boutique that also conducted investment banking and brokerage services before it began purchasing Wall Street firms left and right.
Through 15 acquisitions that turned the brokerage into a financial powerhouse and eventually merged with Shearson Hamill, a company which had a household name due to its 1960s commercials.
Shearson became the second largest company on the securities industry before Weill sold it to American Express for $930 million in 1981. Weill became President of American Express through the sale, which he remained until 1985 when he resigned due to conflicts with the company's corporate structure.
Weill took over as CEO of Commercial Credit after investing $7 million of his own money into the company. Through a series of purchases, he turned Commercial Credit into a conglomerate known as Primerica Corp.
Primerica then purchased travellers Insurance and also bought back the old brokerage he started, Shearson. travellers was ranked number 32 on the Fortune 500 list of most successful American companies in 1996. A year later, travellers acquired Salomon, Inc. and subsequently made the deal of Weill's career.
Weill then merged travellers with Citigroup, but first Weill had to overcome some regulatory issues.
The merger between travellers and Citigroup sounded like a great idea on its face, but the deal faced serious regulatory issues. Since 1933, investment banks and commercial banks were forced to be separated due to the Glass-Steagall Banking Act. The merger continued regardless of the regulation, hoping that the act would be repealed within a temporary grace period.
Weill recruited Treasury Secretary Robert Rubin and former President Gerald Ford to serve on the board, so that the merged company could make a better case to Congress to remove the act. The Gramm-Leach-Bliley Financial Services Modernization Act passed in 1999, allowing the merger and similar mergers in the future.
This is where today's comment on CNBC becomes interesting. Essentially, Weill is saying that Glass-Steagall Act should return, even though he was one of, if not the biggest, reason for its demise.
As the New York Times reported in 2010, Weill had a four foot piece of wood in his office that said 'The Shatterer of Glass-Steagall.'
While at American Express, Sandy Weill and his group recruited Jamie Dimon out of Harvard Business School. The duo essentially took over Citicorp by themselves, but the two eventually had a big falling out and went their separate ways in 1998.
Weill fired Dimon, with rumours surrounding tension with Weill's daughter at American Express. Dimon eventually became CEO of Bank One, leading to his current job as CEO of JPMorgan Chase.
In 2006 Weill retired, but he had already been an active philanthropist even in his later years as CEO and Chairman of Citigroup.
As previously mentioned, he endowed the medical school at Cornell. He also raised $60 million for renovation of Carnegie Hall as the Chairman, and donated $8 million to the construction of the Gerald Ford School of Public Policy at the University of Michigan.
With all of the money he had accumulated over his tremendous career, Weill has of course found places to spend on himself and his family. He recently sold his penthouse on 15 Central Park West and donated all of the proceeds to charity, but still owns an apartment in the building as this was simply a case of 'downsizing.'
In 2011, Weill bought a $31 million estate in Sonoma, California,
During a time of economic turmoil, Weill said that the wealthier Americans should 'try to be quiet.'
Weill continued to donate to charity, so he did have some room to talk even though he has still been living large. But he had cut down, as he is tried and continues to try to sell his yacht and the previously aforementioned penthouse.
Weill told the hosts of CNBC's Squawk Box that he thinks investment banks should be spun off from banks that provide retail and commercial banking services, and quite frankly, the fact that he's saying this is blowing our minds.
'This system is really immobilizing the banking system,' he told the Squawk crew.