Sandy Weill calls for breakup of big banks...like the one he built at Citigroup

Sanford Weill, the former chairman and CEO of Citigroup, called for the breakup of banks, like his, once deemed “too big to fail.”

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“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 said during CNBC’s Squawk Box Wednesday.

Weill went on to explain that such a division would also lead to more profitability for banks, as well as help the financial industry rebuild its maligned reputation.

Ah, hindsight. How sweet it is.

Weill stepped down from his CEO post at Citigroup in 2003 and retired from his chairman role in 2006, but he’s credited with building Citigroup into the giant bank it became when he oversaw the “megamerger” of Travelers Group and Citicorp in 1998.

As The New York Times wrote on April 3, 2008, (just a couple of weeks after JPMorgan agreed to absorb a flailing Bear Stearns): “Ten years ago this Sunday, on April 6, 1998, Sanford I. Weill rewrote the rules of Wall Street.”

CNBC has more on its interview:

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.

He said banks should be split off entirely from investment banks, and they should operate with a leverage ratio of 12 times to 15 times of what they have on their balance sheets. Banks should also be completely transparent, Weill said, with everything on balance sheet. “There should be no such thing as off balance sheet,” he said.