Weill Comments Revive Washington Debate on ‘Too-Big-to-Fail’
By Emma Fidel
Sanford “Sandy” Weill’s call this week for breaking up large banks revived debate in Washington over “too-big-to-fail” lenders, prompting renewed assertions by industry groups that size yields economic benefits. Downsizing would impede U.S. banks’ ability to serve the country’s largest businesses and would lead companies to use foreign banks instead, said Frank Keating, president and chief executive officer of the American Bankers Association. “It’s time to push the pause button on flawed proposals that would damage the U.S. economy,” Keating said in a statement today. Keating and others commented after Weill, the former Citigroup Inc. (C) CEO who helped champion the repeal of the Depression-era law that split deposit-taking from investment banking, said in a July 25 CNBC television interview that he now believes the separation should be reinstated. “A big-bank bust-up on these simple, if alluring, criteria will do nothing to make banking safer,” Karen Shaw Petrou, a managing partner and co-founder of Federal Financial Analytics Inc., said today in a memo to clients of the Washington-based firm. Clearer rules for regulators and bankers are needed instead, she said.