Taking power from the hands of big banks may necessitate the empowerment of small businesses and banks. Though it does not seem that a big bank breakup is likely to take place within the near future, the invoice factoring professionals at The Factoring Blog felt it would be important for small business factoring clientele and prospective factoring clients to know the state of big banks and their futures…
What would happen if Henry Ford came back to life and decided to tell all of us to dismantle our automobiles because the whole idea was a huge mistake? It would seem that, no matter what his intentions, the term world-class hypocrite might suffice to describe a man in a similar course of action.
Consider the example of Sanford Weill: Recently, the former longtime Chairman and CEO of Citibank decried the ethical foundations behind the financial institution that had been his life’s work. Weill had managed to convince Congress in 1998 to end a sixty-year ban on the legality of commercial banks’ ability to take part in investment banking. Weill, who capitalized on this change with Citi, declared on Wednesday that America’s banking behemoths ought to dissolve for the safety and security of the American taxpayer.
“I am suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk… Mistakes were made.”
Weill’s mistakes may in fact be at the root of the global financial crisis. Since massive banks with massive sums of money are able to wield their cash so openly with minimal liability, the results have been catastrophic for taxpayers and small business owners everywhere.
According to Big Bank Pioneer Seeks Breakup, (an article in The Wall Street Journal), “Weill had spent years working for the repeal of federal laws that prevented banks from branching into investment banking and stockbrokerage.” When Weill lobbied heavily for the repeal of the Glass-Steagall Act, so much so that he even called President Bill Clinton one night, late in the evening.
The bill that repealed the Glass-Steagall Act came to be known as the “Citigroup Authorization Act,” and Mr. Weill continues to defend the repeal. ‘”I think the earlier model was right for that time,” he said. “I think the world changed with the collapse of the real-estate market and the housing bubble and what that did because of leverage in certain institutions. So I don’t think it’s right anymore.”