Hallelujah and Holy Smokes! Wall Street has had a “come to Jesus” moment — the biggest sinner on the Street has repented!
He is Sandy Weill, the once-lionized dealmaker who turned our banks into financial “supermarkets” that tie us everyday depositors and Main Street borrowers to the profiteering schemes of unbridled Wall Street traders and the whims of global speculators. Thanks, Sandy — for nothing.
Beginning in the late 1980s, Weill went on a decade-long merger binge, taking over Travelers Insurance, Smith Barney, Aetna, Solomon Brothers and other powerhouses of high finance, culminating in 1998 with his grabbing of Citibank. The whole empire was named Citigroup, Weill was paid a king’s ransom, and his conglomerated entity was widely hailed as a work of genius. Only one problem: It was illegal.
After the financial collapse of 1929 led to the Great Depression, the Glass-Steagall Act was passed to protect people’s deposits from another system-wide crash by prohibiting banks from also owning stock brokerages, insurance corporations, hedge funds and other shadowy, high-risk financial operations.
Picky-picky, said Weill, who hired a hoard of lobbyists to demand that Washington legalize his illegal structure by simply repealing the pesky law he was blatantly violating. He even brought former President Gerald Ford and former Clinton Treasury Secretary Robert Rubin onto Citigroup’s board of directors to be bipartisan front men leading the charge to kill Glass-Steagall.
Sure enough, in 1999, Congress dutifully went along with Weill’s push for repeal, and Wall Street promptly rushed to amalgamate more Citigroups, thus creating the “too-big-to-fail” system that — only eight years later — did indeed fail. Weill’s “work of genius” forced a multitrillion-dollar bailout on us taxpayers (including $45 billion that went to Citigroup itself), and it wrecked America’s Main Street economy. By then, though, the genius had retired with so much money that he could afford to air-condition hell.
But now — approaching 80 and perhaps hoping to avoid that destination — Weill has suddenly become a born-again convert to the gospel of Glass-Steagall. Late last month, the architect of today’s megabanks called for them to be “split up” so they do not “risk taxpayer dollars” and are “not too big to fail.”