Financial Times on Sandy Weill's Damascus Road Conversion
July 28, 2012 • 8:35AM

The lead editorial in yesterday's Financial Times, "Sandy Weill Stages an Epic Conversion," with the kicker, "Better to restore Glass-Steagall than a weak Volcker Rule," congratulates former Citigroup CEO Sandy Weill for his call for a return to Glass-Steagall.

"By standards of conversion, Mr. Weill's change of mind must qualify as being up there with St. Paul's on the road to Damascus," write FT. Although it goes on that this is no reason to trust his judgment, which had been pretty bad in the past, it points out that two of his former colleagues at Citi, Richard Parsons and John Reed, are now also calling for a return to Glass-Steagall. It details the toothlessness of the Volcker Rule and U.K. Vicker Commission's ring fencing, and concludes, "Mr. Weill may be slow on the uptake but he has a point. If a bank is too big to fail, it is too big to exist."

In another British article on Weill's call for a return to Glass-Steagall, this time in www.thisismoney.co.uk, Alex Brummer asserts that the big problem facing Britain is its financial sector, where liabilities are 500% of GDP or total output. "As [Bank of England Governor] Sir Mervyn King noted at the 'Great' Britain investment conference: 'Finance needs to return to its original mission of mobilizing private-sector capital to finance real investment opportunities.'

"Having watched the disgrace of the banks in recent weeks the governor is even more convinced of the need to go further than Vickers and split off utility banking from casino banking.

"King is not alone. Sandy Weill, who as chairman of Citigroup drove a coach and horses through Glass-Steagall, the U.S. law that separated broking from banking, now believes that was a mistake. Britain is never going to achieve a full recovery until it weans itself off fancy finance, borrowing and debt, and focuses on turning the creativity of the nation's R&D into great businesses and products."