Study Guide: Who Is Sandy Weill?
”We just made the president of the United States an insider.“
--Sandy Weill
Weil Goes to Washington
Sandy Weill’s creation of Citigroup – the first so-called “superbank” – and his successful lobbying for repeal of the Glass-Steagall Act that stood in his way, was a demonstration of Weill’s and Wall Street’s political muscle.
But what has been the impact of Glass-Steagall’s demise and the merging of investment banks and commercial banks within a single financial behemoth? Did the emergence of full-service superbanks like Citigroup contribute to the abuses of the late-1990s bubble? 1
In late 1999, to repeal Glass-Steagell Act, Clinton signed the the Republican-sponsored Gramm-Leach-Bliley Act. In his memoir Weill brags that he and Republican Sen. Phil Gramm joked that it should have been called the Weill-Gramm-Leach-Bliley Act. Informally, some dubbed it ’the Citigroup Authorization Act.’" 2
The Man Who Shattered Glass-Steagall
Due to his successful lobbying to destroy the Glass-Steagall Act which directly led to the 2007 economic collapse, Time Magazine placed Sandy Weill on it’s list of “Top 25 Blameworthy”. They wrote, “Who decided banks had to be all things to all customers? Weill did. 3
Starting with a low-end lender in Baltimore, he cobbled together the first great financial supermarket, Citigroup. Along the way, Weill’s acquisitions (Smith Barney, Travelers, etc.) and persistent lobbying shattered Glass-Steagall, the law that limited the investing risks banks could take. Rivals followed Citi. 3
The swollen banks are now one of the country’s major economic problems. Every major financial firm seems too big to fail, leading the government to spend hundreds of billions of dollars to keep them afloat. “The biggest problem bank is Weill’s Citigroup. The government has already spent $45 billion trying to fix it.”
Wastes over $45 billion of taxpayer funds
In a related article entitled, Why Your Bank is Broke, Time Magazine wrote, “Even without doing the math, you probably get that the government’s financial-rescue effort is failing. The signs are hard to miss. Your friend in finance got pink-slipped. A house sale down the street fell through because the buyer couldn’t get a mortgage. A local bank is closing a nearby branch or maybe shutting down altogether. 4
But do the math, and you can begin to understand how really botched this bailout has been. Since October, the government has deposited $165 billion into the accounts of the nation’s eight largest banks.” 3
Laughing All the Way From the Bank
Weill himself bailed out shortly before the crash. His retirement from what was then the world’s largest financial conglomerate was chronicled in The New York Times under the headline “Laughing All the Way From the Bank.” The article told of “an enormous wooden plaque” in the bank’s headquarters that featured a likeness of Weill with the inscription “The Man Who Shattered Glass-Steagall.” 2
Slate points out that, “Weill has moved to pre-empt [new regulations], by self-imposing new rules and regulations that Citibank will abide by. But that puts him in a strange situation: Weill helped write the rules (or unwrote them) that permitted Citigroup to come into existence, then behaved sleazily under those rules, and now he’s implying that those rules are to blame for his (and his firm’s) behavior. 5
Wine Country Retirement, with Rue and Chagrin
Weill picked Sonoma County as his hideout of choice. He used his ill-gotten gains to purchase a 360-acre hilltop estate, named Casa Rosa, that includes an 11,600-square-foot mansion. Weill no longer appreciates interview questions about his financial actions. 7
For He’s a Jolly Good Scoundrel
At a time when two-thirds of U.S. homeowners were drowning in mortgage debt and the American dream had crashed for tens of millions more, Sanford Weill, the banker most responsible for the nation’s economic collapse, was elected to the American Academy of Arts & Sciences. 2
Weill has become a major philanthropist, giving away millions of his ill-gotten billions in an attempt to whitewash his name. 6
By donating $4 million toward the completion of a concert hall in the $47 million SSU Green Music Center, Weill was able to get his name permanently plastered onto a university building that was largely financed through public funding sources. 7
Sources
1. Frontline. PBS. May 8, 2003
2. For He’s a Jolly Good Scoundrel. TruthDig
3. 25 People to Blame for the Financial Crisis. Time
4. Gandel, Stephen. Why Your Bank Is Broke. Time. Jan. 31, 2009
5. CitiGroup and Sandy Weill, Slate
6. Sandy Weill’s Wine Country Retirement with Notes of Rue and Chagrin. New York Times
7. SSU Gets 12 Million Donation. Press Democrat