This is a statement that is probably going to change the political landscape, considering how much Sandy Weill had to do with this mess. Most people don't seem to know the story of Weill basically playing chicken with the Clinton administration. He pushed through the Citigroup merger and dared them to stop it. Rather than pick a fight with the financial services industry, they let it happen. The Graham-Bliley-Leach bill was, as this article says, a mere formality:
They were words no one ever expected Sanford I. Weill — the man who helped usher in the age of the financial supermarket — to utter.
“What we should probably do is go and split up investment banking from banking,” Mr. Weill, former Citigroup chief executive, told CNBC’s “Squawk Box” on Wednesday. “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 going to be too big to fail.”
His words were essentially a call for a return to Glass-Steagall, the financial regulation that for decades separated commercial banking from investment banking in an effort to keep the financial world safer and easier to regulate. And it was an admission rich with irony.
For it was Mr. Weill, the empire builder who progressively turned an insignificant Baltimore-based lender into the towering financial services provider named Travelers and who erased Glass-Steagall with the $70 billion union of his firm with Citicorp in 1998.
While Glass-Steagall had already been worn away in large parts by then, thanks to various loopholes that firms like Citicorp and the Chase Manhattan Bank had exploited over the years, it was Mr. Weill’s deal and furious lobbying that finally broke the rule apart. The Gramm-Leach-Bliley Act of 1999 formally blessed the creation of the universal banking model, but by then it was almost a formality.
Mr. Weill said on Wednesday that Glass-Steagall had essentially dissipated by the mid-1980s; the only remaining regulation he sought to erode was a prohibition on banks conducting insurance underwriting.
[...] John S. Reed, who was Citicorp’s chief executive at the time of the 1998 merger, has already apologized for his role in midwifing the birth of the banking supermarket. But Mr. Weill had not uttered anything similar until now.
“I’m suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable,” he told CNBC on Wednesday.
He added that by making banks smaller, they could become more profitable.