They say it's never too late to change your mind, but this one is a doozy.
Jaws are dropping all across the financial industry this morning with the news that Sanford I. Weill, the former chairman and chief executive of Citigroup Inc., appeared on CNBC and announced in no uncertain terms that he thought big banks should be broken up.
Sandy, Sandy, Sandy.
It's not simply that Mr. Weill used to head one of the biggest banks in the world. This is the man who turned what was once a large but fairly normal bank into a leviathan through merger and acquisition until its reach stretched into every conceivable financial product on the planet.
But times have changed, he said, and he's had a change of heart. "What we should probably do is go and split up investment banking from banking, 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 too big to fail," Mr. Weill said this morning on CNBC's "Squawk Box."
He continued: "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, and the investment banks can do trading, they're not subject to a Volker rule, they can make some mistakes, but they'll have everything that clears with each other every single night so they can be market-to-market."
If the word "hypocrisy" is coming to your mind, you wouldn't be the only one. In his zeal to build Citi into a financial behemoth, Mr. Weill proudly helped to destroy what remained of the wall between commercial and investment banking – a series of Depression-era restrictions known as the Glass-Steagall Act. Now he is effectively advocating its return.
Mr. Weill says he's been thinking hard about this for the past year and maintained that breaking up the banks would help America reclaim its leadership of the global financial industry and resurrect banking's reputation more broadly. "I want to see us be a leader, and what we're doing now is not going to make us a leader," he said.
His comments stunned his two interviewers on CNBC ("When I say I'm speechless, I'm speechless," one said) and set the Twitterverse aflame. Sallie Krawcheck, who once headed Citi's wealth management business, summed up the reaction of many: "Ok, this is a wow," she tweeted.
No word yet on what Mr. Weill's former protégé and longtime colleague Jamie Dimon, the current chief executive of J.P. Morgan Chase & Co., makes of his mentor's about face.