As Bloomberg news service panicked that Wall Street (and London's) top spokesmen are pinned down by those pesky allegations of fraud and money-laundering for traffickers and terrorists, former Citigroup chairman Sandy Weill came out swinging again for separating the banks, suggesting that he is thinking about drafting new legislation to force that through.
In a long profile of the "devoted" Weill couple published by the San Francisco Chronicle on August 20 ("Sandy Weill, Retired Banker, Changes Key"), Weill reaffirmed his late July "jaw-dropping moment" when he endorsed breaking up the banks along the lines of the Glass-Steagall Act which he had done so much to overturn, and he told the Chronicle: "We have the Dodd-Frank rules, but in my mind, there has to be a better way to do it. I think it can be done in a few pages. I don't know what those few pages are, but I'm thinking about it. I expect to get back to it after Labor Day."
Weill insisted that he's doing this to help restore public trust in the financial markets. The only reason he wanted Glass- Steagall repealed in the first place, he claimed, was to get into insurance underwriting, "and insurance had nothing to do with the recent financial problems." But since then, "derivatives have gotten to be much more widely used. There is a lack of transparency, and banks have gotten over-leveraged. There should be nothing off the balance sheets," Weill said.
So where does that leave Wall Street opponents of Glass- Steagall? A long Bloomberg wire issued the same day worries that Wall Street finds itself "leaderless" since JPMorgan's Jamie Dimon, Barclay's Robert Diamond, and Standard and Charters's Peter Sands were "muted by allegations that their firms rigged interest rates or were involved in money laundering. That means the industry is without an advocate to resist the most vigorous onslaught of regulations since Congress separated investment and commercial banking with the Glass-Steagall Act in 1933," Bloomberg moaned. "It coincides with the lowest level of consumer confidence in U.S. banks since Gallup Inc. began polling on the question in 1979. The percentage of Americans saying they had a great deal or quite a lot of confidence dropped to 21% in June, from 41% in 2007 and more than 60% in 1980."
A senior staff member of Phil Angelides's Financial Crisis Inquiry Commission, Thomas Stanton, rubs it in: Dimon, who once ordered politicians and Treasury officials around, now "is stumbling like an ordinary mortal."
Banks spent $61.4 million lobbying Congress and regulators in 2011, almost double the $36.1 million they threw around in 2006, but as Greg Donaldson, chair of Donaldson Capital Management LLC, told Bloomberg, their problem is that "the banks have no moral authority at the moment;" the banks are being hammered, and "somebody has to fight the damn thing." But who? Bloomberg runs through the list of potential such leaders, only to knock each off the list, one by one, as tied down fighting to keep their banks afloat or fighting off legal charges. And "a similar leadership vacuum exists in Europe," where even HSBC's Stuart Gulliver "is hamstrung by allegations in a U.S. Senate report last month accusing Europe's largest bank of laundering funds for the Taliban, Mexican drug cartels and international criminals," no less.