Asked by CNBC what kind of regulations would work for banks, he cited 12- or 15-to-one leverage with no off-balance sheet liabilities (the latter was an area that Citi pioneered). Amazingly, he claimed breaking up the banks would make them more profitable. Weren't all those mergers supposed to slash overhead and create scale that would redound to shareholders' benefit? Given the price/earnings multiples of megabanks' shares these days, size doesn't seem to be enhancing value. If their shares continue to flounder, disgruntled shareholders could ultimately be the trigger that sparks a breakup of these mammoth institutions.
When questioned whether he was repudiating a record that earned him a wood etching entitled "the Shatterer of Glass-Steagall," Weill said no, it was the right strategy for the time. But that was then and this is now. Hmm.
The wake caused by the financial crisis and real estate depression demands a new regulatory structure in his view, one simpler and more far-reaching than outlined in Dodd-Frank. But a regulatory scheme that shifts with different economic cycles is impractical and isn't built to last. Moreover, it simply fails to add up.
As someone who devoted most of his life to building a major part of the U.S. financial system, Weill clearly possesses unique insights into how it works. Whether you agree or disagree with him, his opinion counts and it's clear he believes that our institutions have morphed into quasi-zombies that don't serve the national purpose the way they should.