Back in July, CNBC.com reported that former Citigroup chairman and CEO Sanford ‘Sandy’ Weill was calling for additional Wall Stret reforms that would break up the major Wall Street banks. At a time when the regulation of the financial industry is playing a major role in the presidential campaign debate, Weill’s comments aren’t likely to be viewed in a positive light by the GOP candidate, Mitt Romney, who has repeatedly called for the Dodd-Frank financial reforms to be repealed. Interestingly, since he made his comments, Weill hasn’t received much in the form of support from the banking industry.
The CNBC.com article stated that Weill’s comments were being portrayed as ‘stunning reversal’ from someone who not that long ago “Crusaded for policies that helped create the so-called ‘too-big-to-fail’ banks.” CNBC quoted Weill as saying “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, and have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”
In the past Weill had been something of a crusader in lobbying to repeal the Glass-Steagall Act — a law which, in 1999 at the time of the repeal, was a 66 year-old law that kept investment and commercial banking separate. The simple fact that Weill is now longer directly involved in the banking industry may well go to show that sometimes it is difficult to see the big picture until you take a break and have time to reflect, especially when you consider that Weill doesn’t seem to have found much support from his former comrades in the banking industry. It will be interesting to see if any other prominent figures in the banking and finance sector follow his lead in calling to break up the big banks and impose new tougher regulations.
Wall Street bankers and the financial sector as a whole have been keen to lend their support to Romney’s bid for the White House. During the spring and summer months Romney’s presidential campaign received a significant increase donations from Wall Street. During the 2008 presidential election the Wall Street bankers had supported the then candidate Barack Obama. Roll forward four years and how times have changed, President Obama’s subsequent support for bringing about the Dodd-Frank Act, and Romney’s calls for its repeal were the decisive factors that led to Wall Street’s flip-flop.
The real issue at hand here is what will those as yet undecided swing voters think about banking reform? As November draws ever closer Weill’s views on baking reform may play right into President Obama’s hands. Simply by distancing himself from Romney’s free market deregulation ideology Weill appears to have found his conscience, something that Romney still hasn’t managed to do. A logical conclusion to draw would follow like this; undecided voters with a conscience will vote for President Obama, and undecided voters without a conscience will vote for Mitt Romney. We know this already – what we don’t know is how many undecided voters actually have a conscience.