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Ben Chu: Separate the banks - even some bankers now agree

Posted by Eagle Eye
  • Friday, 6 November 2009 at 12:54 pm

The argument against separating retail banks from their investment banking operations has got to be on shaky ground when even the financiers who originally pushed for the repeal of Glass-Steagall now say it was a bad idea.

John S Reed was the head of the retail bank Citicorp before it merged with the speculating financiers of Travelers Group to form the leviathan Citigroup (which since last autumn has accepted $45bn directly from US taxpayers).

Reed now says:
"I would compartmentalize the industry for the same reason you compartmentalize ships…If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking you’d have consumer banking separate from trading bonds and equity."