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Robert Scheer
Truthdig / Truthdig Op-Ed
Published: Friday 20 April 2012
“Sanford Weill, the banker most responsible for the nation’s economic collapse, has been elected to the American Academy of Arts & Sciences.”

For He’s a Jolly Good Scoundrel

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How evil is this? At a time when two-thirds of U.S. homeowners are drowning in mortgage debt and the American dream has crashed for tens of millions more, Sanford Weill, the banker most responsible for the nation’s economic collapse, has been elected to the American Academy of Arts & Sciences.

So much for the academy’s proclaimed “230-plus year history of recognizing some of the world’s most accomplished scholars, scientists, writers, artists, and civic, corporate, and philanthropic leaders.” George Washington, Ralph Waldo Emerson and Albert Einstein must be rolling in their graves at the news that Weill, “philanthropist and retired Citigroup Chairman,” has joined their ranks.

This article was originally posted on Truthdig.

Weill is the Wall Street hustler who led the successful lobbying to reverse the Glass-Steagall law, which long had been a barrier between investment and commercial banks. That 1999 reversal permitted the merger of Travelers and Citibank, thereby creating Citigroup as the largest of the “too big to fail” banks eventually bailed out by taxpayers. Weill was instrumental in getting then-President Bill Clinton to sign off on the Republican-sponsored legislation that upended the sensible restraints on finance capital that had worked splendidly since the Great Depression.

Those restrictions were initially flouted when Weill, then CEO of Travelers, which contained a major investment banking division, decided to merge the company with Citibank, a commercial bank headed by John S. Reed. The merger had actually been arranged before the enabling legislation became law, and it was granted a temporary waiver by Alan Greenspan’s Federal Reserve. The night before the announcement of the merger, as Wall Street Journal reporter Monica Langley writes in her book “Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World ... and Then Nearly Lost It All,” a buoyant Weill suggested to Reed, “We should call Clinton.” On a Sunday night Weill had no trouble getting through to the president and informed him of the merger, which violated existing law. After hanging up, Weill boasted to Reed, “We just made the president of the United States an insider.”

The fix was in to repeal Glass-Steagall, as The New York Times celebrated in a 1998 article: “... the announcement on Monday of a giant merger of Citicorp and Travelers Group not only altered the financial landscape of banking, it also changed the political landscape in Washington. ... Indeed, within 24 hours of the deal’s announcement, lobbyists for insurers, banks and Wall Street firms were huddling with Congressional banking committee staff members to fine-tune a measure that would update the 1933 Glass-Steagall Act separating commercial banking from Wall Street and insurance, to make it more politically acceptable to more members of Congress.”

At the signing ceremony Clinton presented Weill with one of the pens he used to “fine-tune” Glass-Steagall out of existence, proclaiming, “Today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and granting banks significant new authority.” What a jerk.

Although Weill has shown not the slightest remorse, Reed has had the honesty to acknowledge that the elimination of Glass-Steagall was a disaster: “I would compartmentalize the industry for the same reason you compartmentalize ships,” he told Bloomberg News. “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.”

Instead, all such compartmentalization was ended when Clinton signed the Gramm-Leach-Bliley Act in late 1999. 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.” 

Gramm left the Senate to become a top executive at the Swiss-based UBS bank, which like Citigroup ran into deep trouble. Leach—former Republican Rep. James Leach—was appointed by President Barack Obama in 2009 to head the National Endowment for the Humanities, where his banking skills could serve the needs of intellectuals. Robert Rubin, the Clinton administration treasury secretary who helped push through the Citigroup Authorization Act, was the most blatant double dealer of all: He accepted a $15-million-a-year offer from Weill to join Citigroup, where he eventually helped run the corporation into the ground.

Citigroup went on to be a major purveyor of toxic mortgage-based securities that required $45 billion in direct government investment and a $300 billion guarantee of its bad assets in order to avoid bankruptcy.

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.”

That’s the man the American Academy of Arts & Sciences now honors, among others, for “extraordinary accomplishment and a call to serve.” Disgusting.

This article was originally posted on Truthdig.



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ABOUT Robert Scheer
Robert Scheer, editor in chief of Truthdig, has built a reputation for strong social and political writing over his 30 years as a journalist. His columns appear in newspapers across the country, and his in-depth interviews have made headlines. He conducted the famous Playboy magazine interview in which Jimmy Carter confessed to the lust in his heart and he went on to do many interviews for the Los Angeles Times with Richard Nixon, Ronald Reagan, Bill Clinton and many other prominent political and cultural figures.

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4 comments on "For He’s a Jolly Good Scoundrel"

pitch1934

April 23, 2012 5:51pm

We have no class whatsoever. B.O. screwed us and we still have to vote for him because of the alternative. Shitty, isn't it?

wildthang

April 20, 2012 4:20pm

Maybe it was the Leaky-Ship bill but I imagine quite a few were able to get out in time and leave the rest to suffer. In fact it seems almost like an engineered economic shock therapy that has the wonderful ability to force all levels of govenment to dump all kinds of social programs to privatized faith based patronage vehicles using the vulnerable people in our society for their own ideological voodoo dolls to stick pins in.

Ray Benter

April 20, 2012 4:07pm

Laws are made; laws are changed; laws are broken. AND laws can be reinvented! BRING BACK GLASS-STEAGALL !!!!! Obviously, first we have to elect legislators willing to work for the people, not only for their next payoff.

Jeffrey Hill

April 20, 2012 1:47pm

Sanford Weill is a guaranteed first year inductee into the Psychopathic GREEDmongers' Hall of Fame.

May the Law of Karma catch up to him in this life.