APP - Ex-Citigroup chief says removing Glass-Steagal was wrong s

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Canceled


Who says miracles never happen? It's a pity though that he didn't have this clarity of vision before championing the repeal of Glass-Steagal in the 90's.

Ex-Citigroup Chief: You're Right, That Was Dumb

By Morgan Housel
November 10, 2009 (Source)



We love mea culpas, perhaps because we don't get enough of them these days. When something goes wrong, it's always someone else's fault. Housing bubble? Blame the Fed. Loose lending? Blame investor demand. Bad regulation? Blame Barney Frank. Demise of Lehman Brothers? Blame the short sellers. Economy crashed? Blame Greenspan. Greenspan's messed up? Blame Friedman. Blame Rand. Blame Balloon Boy. Blame. Blame. Blame.
That's why I'd like to send a big, warm thank-you to Citigroup's (NYSE: C) former CEO and architect, John Reed. After championing the push to repeal Glass-Steagall in the late '90s, enabling Citigroup to become what it is today, Reed recently told Bloomberg:
I'm sorry ... We learn from our mistakes ... When you're running a company, you do what you think is right for the stockholders. Right now I'm looking at this as a citizen.
I would compartmentalize the industry for the same reason you compartmentalize ships. 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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Strong words from a man who pushed and pried for the exact opposite one decade ago. Back then, he and others apparently believed that if we welded together everything with a dollar sign in front of it, we'd be ushered into a banking nirvana full of puppies, kittens, and rainbows. Yeah, not so much.
Let's not understate what Reed's advocating here: Some form of Glass-Steagall should be reinstated, and megabanks should be broken apart. That means you, Citigroup, Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Goldman Sachs (NYSE: GS), and Morgan Stanley (NYSE: MS). The latter two are already commercial banks by default, after being granted emergency status last fall. These monster banks all have fundamental flaws. And they need to end.
Why is retired Reed coming clean while so many other industry heavyweights still cling to the good ol' days? That question answers itself. Reed doesn't hold a high-level position at any major bank anymore. His livelihood isn't as vested in the industry's profits as those who still argue that megabanks are a good thing. He knows the situation better than almost anyone else, yet he's in a position to tell it like it is. That's the kind of guy you want to listen to.
Reed's comments are one of the strongest signals yet that major bank reform is not only necessary, but gaining support. Later this week, my colleague Ilan Moscovitz and I will publish a detailed rundown showing why we believe there's absolutely no excuse not to break up the biggest banks. Stay tuned.
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Mott, I don't think you'll find many conservatives here that agree with Glass-Steagal. It was repealed during the Clinton administration, so if conservatives show up, most likely they'll be blasting liberals for allowing this crap to happen. Then again, when they had total control, they didn't do shit about it either.

Re-instating Glass-Steagal only makes perfect sense, so can the Dem's put it back into place, pretty please? Or will Jamie Dimon whisper in Obama's ear that it's a bad idea?
 
Mott the Hoople said:
8 hours later not a peep from the far right calling you a communist. Did they forget to take their geritol?
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I very much doubt that you will get much from them, Fox News hasn't given them their talking points yet, they are still stuck on ACORN, Fannie Mae etc.

Here are a few quotes about Phil Gramm the real villain of the piece.

"The most dangerous place in Washington is between Phil Gramm and a camera" -- something reporters say.


"He's always willing to rise above principle. He's got every quality of a dog except loyalty." -- Dave McNeely, political columnist for the Austin, Texas American-Statesman


"You can love him or hate him, but when you're dealing with him, there are 2 things you've got to remember: #1, he's smarter than you are. #2, he's meaner than a junkyard dog." -- Marvin Leath, former Gramm colleague


"Voters vote for people they like. Now Phil, I know his mother likes him. I know Wendy likes him. I think his dog likes him. And I like him. I've named four." -- Buddy Roemer
 
Mott the Hoople said:
8 hours later not a peep from the far right calling you a communist. Did they forget to take their geritol?
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Considering that Clinton signed the laws repeal why should it only be the 'far right' that should be upset here?

If you remember it was Treasury Secetray Robert Rubin (who many credited with '90's economic boom) who heavily lobbied Clinton behind the scenes to sign the bill. It was then Citi CEO Sandy Weil whose dream was this one stop bank, a mega-financial conglomerate. Glass-Stegal was in the way. Once it was abolished Weill was able to go ahead. He then gave Rubin a seat on the board and chairman of the firm's 'executive committee' and Rubin quite possibly had one of the best jobs on Wall St.

As we all know this one stop banking didn't quite work out for Citi as they couldn't get all their different groups to communicate and cross sell. As Digital Dave mentioned they also canned Jamie Dimon which was a huge mistake. So in spite of the law change Citi has been a huge POS. So not surprising their new CEO might issue a mea culpa.

So back to the politics this was pretty much a true bi-partisan disaster. And as far as this board goes I've seen Superfreak argue this never should have been repealed and never heard anyone else argue that it should not have.
 
cawacko said:
Considering that Clinton signed the laws repeal why should it only be the 'far right' that should be upset here?

If you remember it was Treasury Secetray Robert Rubin (who many credited with '90's economic boom) who heavily lobbied Clinton behind the scenes to sign the bill. It was then Citi CEO Sandy Weil whose dream was this one stop bank, a mega-financial conglomerate. Glass-Stegal was in the way. Once it was abolished Weill was able to go ahead. He then gave Rubin a seat on the board and chairman of the firm's 'executive committee' and Rubin quite possibly had one of the best jobs on Wall St.

As we all know this one stop banking didn't quite work out for Citi as they couldn't get all their different groups to communicate and cross sell. As Digital Dave mentioned they also canned Jamie Dimon which was a huge mistake. So in spite of the law change Citi has been a huge POS. So not surprising their new CEO might issue a mea culpa.

So back to the politics this was pretty much a true bi-partisan disaster. And as far as this board goes I've seen Superfreak argue this never should have been repealed and never heard anyone else argue that it should not have.
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Even though they canned him cawacko, Jamie Dimon took away from that experience that in order to get what you want, you use the government to get it for you. He used this ruling for his own benefit too, but the problem is, he's good buds with Obama. There is even talk that he might take Geitner's position. It's pretty sick. But people who don't really know him, but have heard his name and know he "saved" other banks have a lot to learn. He didn't save these banks, he used the government and, since they repealed Glass-Steagel, he went after investment banks. He also used rating agencies to run these banks even further into the ground. Once they got near the bottom, he gobbled them up. Washington Mutual, a savings and loan bank, was a rush job. They used the FDIC, SEC, and OTS to steal that bank. SEC refused to put Washington Mutual on the short sell ban list, making it a target for shorting, then the OTS issued the Tier 1 capital rating for WaMu, which pissed off Sheila Bair at the FDIC because they wanted WaMu killed. So they colluded, created a run on the bank, which only included insiders to their little scheme, then tryed again. Once the FDIC caught word that WaMu STILL had enough capital, but it was floating between different subsidiaries of WMI, they seized them before they could get that money to the bank. They did it on a Thursday, and $17 Billion was sitting in WMBfsb, as extra capital. FDIC knew this, so they had to act quickly, and seized on a Thursday. Guess who won the bid with only 1 hour of bidding? JPMorgan! Jamie Dimon is now a hero!

Anyways, the point im trying to make is Jamie Dimon was trained by these assholes at Citi, and they knew how to work the system. By letting Jamie Dimon go, they just created a monster.
 
DigitalDave said:
Mott, I don't think you'll find many conservatives here that agree with Glass-Steagal. It was repealed during the Clinton administration, so if conservatives show up, most likely they'll be blasting liberals for allowing this crap to happen. Then again, when they had total control, they didn't do shit about it either.

Re-instating Glass-Steagal only makes perfect sense, so can the Dem's put it back into place, pretty please? Or will Jamie Dimon whisper in Obama's ear that it's a bad idea?
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I disagree. I am fiscally conservative and believe Glass Steagall was (and is) absolutely necessary.

The same for the uptick rule.

The ones who are fighting both being put back in place are the ones who benefit from their absence. (ie... Jaime Dimon as you mentioned)
 
Mott the Hoople said:
8 hours later not a peep from the far right calling you a communist. Did they forget to take their geritol?
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funny how you can make snide comments like the above, especially given your avoidance of the global warming thread.

Yours was the second comment on this thread. It is possible that people simply did not see the thread when he originally posted it. Given that most people were busy mocking ditzie on his newest attempt at a 1/3 thread, this is very possible.
 
Superfreak said:
I disagree. I am fiscally conservative and believe Glass Steagall was (and is) absolutely necessary.

The same for the uptick rule.

The ones who are fighting both being put back in place are the ones who benefit from their absence. (ie... Jaime Dimon as you mentioned)
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I meant agree with Glass-Steagal being repealed. sorry for that.
 
cawacko said:
Considering that Clinton signed the laws repeal why should it only be the 'far right' that should be upset here?

.
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exactly...kind of funny how mott seemingly won't blame clinton if repubs are in power in the house/senate, yet will blame bush despite the dems being in power
 
Yurt said:
exactly...kind of funny how mott seemingly won't blame clinton if repubs are in power in the house/senate, yet will blame bush despite the dems being in power
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Actually I do. I do blame Clinton for repealing Glass Steagal and I also blame him for signing NAFTA in the form in which he signed it. Perot was right about the sucking sound. I have many regrets about Clinton. Those include not voting for him.

On the whole, Clinton was an above average president on policy and below average in character. He certainly wasn't the bumbling fuck up Bush was but then again, I never voted for Bush either.
 
DigitalDave said:
Mott, I don't think you'll find many conservatives here that agree with Glass-Steagal. It was repealed during the Clinton administration, so if conservatives show up, most likely they'll be blasting liberals for allowing this crap to happen. Then again, when they had total control, they didn't do shit about it either.

Re-instating Glass-Steagal only makes perfect sense, so can the Dem's put it back into place, pretty please? Or will Jamie Dimon whisper in Obama's ear that it's a bad idea?
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Actually my intent there was to make fun of the rights knee jerk reaction opposing just about any form of regulation. You are correct. Clinton f'd up in repealing Glass Steagel.
 
Mott the Hoople said:
Actually my intent there was to make fun of the rights knee jerk reaction opposing just about any form of regulation. You are correct. Clinton f'd up in repealing Glass Steagel.
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Well, if you listen to the one guy who is probably the biggest opponent to government regulation in congress, Ron Paul, he doesn't call this regulation, he calls Glass-Steagal common sense. You don't allow investment banks and savings banks join forces or be one in the same. Savings are meant to be safe, but they aren't in the hands of investment banks.
 
Mott the Hoople said:
Actually I do. I do blame Clinton for repealing Glass Steagal and I also blame him for signing NAFTA in the form in which he signed it. Perot was right about the sucking sound. I have many regrets about Clinton. Those include not voting for him.

On the whole, Clinton was an above average president on policy and below average in character. He certainly wasn't the bumbling fuck up Bush was but then again, I never voted for Bush either.
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good points, bush is not as bad as many on the left portray, but he certaintly had his screw ups
 
Clinton should not have signed it and Phil Gramm and the Rs who wrote and fought for GS repeal for years still get the majority of blame.

Then there is the blame that an entirely R government has for NOT reacting to the obvious problems it was creating while they kept getting reelected.
 
evince said:
Clinton should not have signed it and Phil Gramm and the Rs who wrote and fought for GS repeal for years still get the majority of blame.

Then there is the blame that an entirely R government has for NOT reacting to the obvious problems it was creating while they kept getting reelected.
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What about Robert Rubin's role? And what has the Democratic Controlled congress done in the past three years when the problems truly came to light?
 
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They tried to stem it but it had already taken its toll and the remaining Rs did not cooperate.

Lets remember what happened to Spitzer when he tried to stem the tide in NY state.
 
evince said:
They tried to stem it but it had already taken its toll and the remaining Rs did not cooperate.

Lets remember what happened to Spitzer when he tried to stem the tide in NY state.
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What exactly did they do to try and stem it? And since they don't need a Republican vote to put it back into place what are the Democrats doing?

And what's Elliot Spitzer have to do with this? Like Spitzer claiming charges against Hank Greenberg and AIG has anything to do with Glass-Stegal?

And no comment on Bob Rubin?
 
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