Commentaries
Now raising intellectual capital
from Rolfe Winkler:
Architect of Citi says bring back Glass-Steagall
Objective observers mostly agree that it doesn't make sense for banks to be in the securities business, not if they're explicitly insured by the government. Wall Streeters invent rationalizations to support the current structure because a large chunk of their profits come from trading.
It's very refreshing that John Reed, an architect of Citigroup -- the biggest, most disastrous financial supermarket of them all -- now says the merger was a mistake and banks should be broken up.
From Bob Ivry, Bloomberg:
Congress’ overhaul of U.S. financial regulations should include ordering banks to hold more capital, ensuring executives’ compensation is aligned with long-term profitability and banning firms that take deposits from also engaging in equities and fixed-income trading, Reed said.
“I would compartmentalize the industry for the same reason you compartmentalize ships,” Reed said in the interview in his office on Park Avenue in New York. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking you’d have consumer banking separate from trading bonds and equity.”
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The Wall
