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Gender: Male
Hometown: Sisters, Oregon
Member since: 2003 before July 6th
Number of posts: 6,145

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Former Citi CEO admits: Big bank model doesn't work. Repeal of Glass-Steagall was wrong.

Former Citigroup CEO: Big banks don't work

In an op-ed published in the Financial Times, John Reed says large banks like the one he used to run are now "inherently unstable and unworkable."

The man who was one of the chief architects of the "Big Bank" model now says the United States never should have repealed the Glass-Steagall banking act in 1999.

That's exactly what Democratic presidential hopefuls Bernie Sanders and Martin O'Malley have been arguing on the campaign trail. They want the law reinstated. Hillary Clinton and the Republican candidates do not.

Here is more from the complete OP-ED which can be seen here.

As I have reflected about the years since 1999, I think the lessons of Glass-Steagall and its repeal suggest that the universal banking model is inherently unstable and unworkable. No amount of restructuring, management change or regulation is ever likely to change that.

Breaking up the big banks by reinstating Glass-Steagall or something close to it is not a right/left issue. It is simply good public policy for those living outside of Wall Street. It's supported across the political spectrum from left wing economist Joseph Stigletz to right wing opinion magazines like the Weekly Standard.

Why is it framed in some political circles as a pet issue of the radical left that doesn't really matter?

In '08 Hillary advocated stronger urban gun laws and locally weaker laws in rural areas.

In 2016 she now claims that position means you have a "black problem". A charge apparently directed at Bernie Sanders but almost exactly her own position during the 2008 campaign.

Here is Clinton at the April 16 2008 debate:

SENATOR CLINTON: What I favor is what works in New York. You know, we have a set of rules in New York City and we have a totally different set of rules in the rest of the state. What might work in New York City is certainly not going to work in Montana. So, for the federal government to be having any kind of, you know, blanket rules that they're going to try to impose, I think doesn't make sense.

Transcript link

Video, skip to approximately 8:00


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