(Bloomberg News) Sanford "Sandy" Weill, whose creation of Citigroup Inc. ushered in the era of U.S. banking conglomerates a decade before the financial crisis, said it's time to break up the largest banks to avoid more bailouts.

"What we should probably do is go and split up investment banking from banking," Weill, 79, said yesterday in a CNBC interview. "Have banks do something that's not going to risk the taxpayer dollars, that's not going to be too big to fail."

Weill helped engineer the 1998 merger of Travelers Group Inc. and Citicorp, a deal that required repeal of the Depression-era Glass-Steagall law that forced deposit-taking companies backed by government insurance to be separate from investment banks. The New York-based company became the biggest lender in the world before taking a $45 billion taxpayer bailout in 2008 to avoid collapse.

Weill joins regulators, investors, analysts, former bankers and lawmakers in calling for the break-up of too-big-to-fail banks to unlock shareholder value and prevent another financial crisis.

"There is finally a growing recognition among a wide range of market analysts, financial market participants and policy makers that the repeal of Glass-Steagall was a mistake," said Thomas Hoenig, a Federal Deposit Insurance Corp. board member and former head of the Kansas City Federal Reserve. "It's time now to restrict banks to core services."

House Bill

Rep. Brad Miller, a Democrat from North Carolina, has introduced legislation that would cap the size of the biggest banks.

"There are very credible establishment voices now saying we really gain little if anything from the size and complexity of these banks," Miller said in an interview. He said he doesn't hold out much hope the Republican-controlled House of Representatives will take up his bill, meaning any breakup would be up to shareholders taking the initiative.

Arthur Levitt, a former business partner of Weill's who was chairman of the Securities and Exchange Commission when Citigroup was created, said Weill was "largely responsible" for the rollback of Glass-Steagall.

"He fought very hard for it, and really what Sandy did was to take advantage of regulators who weren't and still aren't doing their job," said Levitt, who is a member of the board of Bloomberg LP, the parent of Bloomberg News.

'Weak' Job

Levitt said he regrets supporting the bill that overturned Glass-Steagall, and didn't realize "how weak a job as regulators the Fed and Comptroller's office were doing," referring to banking oversight by the Federal Reserve and Office of the Comptroller of the Currency.