Posted 5 years ago on April 21, 2012, 1:51 p.m. EST by arturo
from Shanghai, Shanghai
This content is user submitted and not an official statement
Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc., where he had served as chairman since 2009, said at a Rockefeller Foundation forum Thursday that, "To some extent what we saw in the 2007, 2008 crash was the result of the throwing off of Glass-Steagall. Have we gotten our arms around it yet? I don't think so, because the financial-services sector moves so fast."
The existence of Citigroup, created by the 1998 merger of Citicorp and Sandy Weill's Travelers Group (which owned Soloman Smith Barney), depended on the U.S. government overturning Glass- Steagall, which outlawed both insurance operations and investment banking by commercial banks. Alan Greenspan and his cohorts in Congress gladly complied.
John S. Reed, the former Citicorp CEO, also said in 2009 that he regretted having worked to overturn Glass-Steagall, and called for "some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance."
Parsons did not go so far as to call for restoring Glass- Steagall. "We are going to have to figure out how to manage in this new and dynamic world, because there are good and sufficient business reasons for putting these things together," Parsons said. "It's just that the ability to manage what we have built isn't up to our capacity to do it yet."
Nor could it ever be.