Sandy Weill Gets Religion
A long-time reader writes in to comment on Sandy Weill's comments about the need to re-separate commercial from investment banking:
Well, what do you know. Sandy Weill, the guy who was leading the parade, banging the loudest drum for 'financial supermarkets' back in the late-90's is suddenly singing a different tune.
As one who said more than once back in 2007-09 (paraphrasing Carville 'it's the leverage stupid') I'm glad to see that good old Sandy agrees.
He's right about splitting up banking and the IB function. He's right about moving everything back onto balance sheets. He's right about (the IB's) marking everything to market on a daily basis. And while he's right too on capping leverage at a lower level, rather than his 12-15x, I'd limit it to about 8-10x (if I recall, it was 12x before Chris Cox and the SEC took the lid off back in 2003).
Will his comments (mea culpa?) get the ball rolling and lead to changes that transform the (big) banking gang from a parasitic, economic role to a productive, economic role?
About the Author
David Frum
David Frum is a contributing editor at Newsweek and The Daily Beast and a CNN contributor. He is the author of eight books, including most recently the e-book WHY ROMNEY LOST and his first novel Patriots, published in April 2012.
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