If politics makes strange bedfellows, it also makes for strange adversaries.
One day after former Citigroup chairman Sanford Weill’s startling remarks on CNBC that U.S. financial conglomerates should be broken up, former Sen. Christopher Dodd—one of the sponsors of Dodd-Frank—says a return to Glass-Steagall would be impractical.
“Just breaking up the banks is not the solution,” Dodd told CNBC’s Squawk Box.
He called for giving his signature legislation, which turned 2 years old last week, a chance to work.
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Dodd-Frank takes a regulatory approach to oversight of the nation’s largest financial institutions, rather than seeking to reduce their size. In fact, the nation’s five largest financial institutions are bigger today than they were before the financial crisis, with assets equal to about 56% of the nation’s GDP compared with about 43% in 2007.
So Dodd (left), who along with his legislative partner, Rep. Barney Frank, D-Mass., was thought to be the scourge of Wall Street, wants to keep banks big, while Weill, who oversaw the formation of the then-unprecedented banking giant Citigroup, says we ought to reverse course.
Weill played a key role in the repeal of Glass-Steagall, the Depression-era law that kept deposit institutions separate from investment banking and insurance. He personally lobbied former President Bill Clinton to support repeal, which was effected in legislation enacted in 1999.