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Former Citi Boss: Reduce Leverage to 15 Times Assets, Put EVERYTHING Back on the Books, and Mark All Assets to Market EVERY DAY
It is - justifiably - big news that former Citi CEO Sandy Weill said that we should break up the big banks, and separate traditional depository banking from speculative investing. Indeed, even congress members are confronting top government officials on why they haven't done this.
But Weill said 3 other equally important things today.
First, Weill told CNBC that the financial crisis was largely caused by too much leverage, and that we should reduce leverage to between 12-15 times. (Background.)
Secondly, Weill said that we have to restore transparency, so that nothing is hidden off balance sheet. (Leading economist Anna Schwartz told the Wall Street journal in 2008: “The Fed … has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible.”)
Third, Weill said that assets must be marked to market every day. (Background here and here.)
Mr. Weill's suggestions would go a long way toward fixing our broken financial system and giving us a shot at prospering once again.
Note:
We are obviously not defending Weill's horrific past actions, and he
failed to mention prosecuting fraud, which is perhaps the most important action we can take to help the economy recover. And we believe that bonuses and ill-gotten gains should be clawed back from every Wall Streeter who committed fraud.
However, we take our allies where we find them. And
on the points he raised today, Mr. Weill' is on the same side of the
fence as all of the top independent economists and financial experts.
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Well, a big chunk of his income comes from The Morgue and everybody knows that these days. So I suppose he's worried about being labelled a banker-by-association.
Credit where it's due, our Tony is fairly smart, could win a gold in the Olympic 'Lying with a straight face' event and is smoothly glib when put under pressure. But I haven't seem much sign of actually morality or evidence that he has enough courage to face his fate like a man. The fucker would tell you grass was blue if he thought it would advance his own agenda; Tony Blair - Galactic Overlord, Emperor of the Known Universe and Lord Protector of The Church Of Sociopathy... though maybe I'm not giving him enough credit for ambition, there?
if you hang them right side up by the neck, the blood doesnt drain properly and it spoils the meat
and what with the drought and impending food crisis and all, we cant have that
tony b was just doing a public service....
The sooner CNBC goes on vacation for the Banzai fraud olympics the sooner the sheeple can stopped for a little while being bombarded with the propoganda cons sales job by these scum, a cheetah cannot change his spots, and this Citi scum should be breaking rocks along with Timmah, Dimon, Greenspan, Bernanke if he is complicit, Gramm, Clinton, Dodd, Frank, Schumer, all the rest of the financial oversight? committee, Mazillo, Paulson, Fuld, Reines, Rubin, Summers, Leavitt, I am getting carpol tunnel syndrome here.
Fear is beginning to show itself among the 1% like Sandy Weill. This fear comes from the inevitability of knowing the catastrophe that awaits the human race should global economic activity collapse.
They have pushed the financial system almost past the point of no return. He is not appealing to the Masses but rather his peers among the power elite. He is telling us that we have a short window of time to enact reforms and if not we will jump of a fiscal cliff.
Mr. Stockman said the same thing this week as have P C Roberts and other former insiders. Are Benny and his jets listening or is he pushing the pedal in a last, frenzied Thelma and Louise moment?
true. maybe's he acting but the trial lawyer in me says this witness looks a little nervous
Funny how all the old Colonial houses in Greenwich between Post Road and the Merit (- the ones that served corporate and financial types for decades just fine) were rebuilt as faux French Chateaus (and quadrupled in size) are now surrounded by 6 foot high stone walls with iron gates.
These people have NO sense of history. Don't they remember how the French Revolution worked out? Thick walls and gates don't help (the Bastille anyone?)
These same hedge fund guys were screaming about a tax on cars that cost more than $100,000 - meanwhile these guys pay 20% 'capital gains' instead of 34% income tax on the millions they make.
15% capital gains
reminds me of ex con burglars, or casino cheats becoming security consultants after their release. The important difference here, those folks were convicted, and paid their debt to society first.
their repayment will be at the end of a rope
more like the radar gun manufacturer selling the radar detector
They also didn't get to keep the loot they stole......
sandy weil (citibank "EMPEROR")
is he still holding to his citibank stock that peaked in the $60s or so..and NOW @ $2.5 (10X reverse split adjusted)
Is he the IDIOT-the so-called "postman", is he the idiot that told his "analysts" = paid cheerleaders, to "TAKE A FRESH LOOK" at those IPOs and slap them with BUY RATINGS?
he pushed for the repeal of glass-steagall in 1999 during CLINTOMICS, i didn't have sex with that 300 lb walrus....FREAKING IDIOT !!!!! (must have been Bushes’s fault!! LOL !!!)
NOW !!! he says: break up the banks...well you know "hindsight is 20-20" who could of THUNK it...NOT the folks of the 1930s with the glass-steagall act to CONTROL GREED!!!
You have a twin brother http://www.zerohedge.com/contributed/2012-07-25/former-citi-boss-reduce-...
Hmm...
The Banksters must be shit scared if they are rolling out an old crook like this. I guess they are trying to show that they aren't all crooks 100% of the time. They are trying to show us that there is at least one Bankster that can be honest for a few minutes.
Maybe this is a bankster effort to convince us that they shouldn't all be hung from the nearest tree or thrown in jail forever.
Maybe this is a bankster effort to convince us that they shouldn't all be hung from the nearest tree or thrown in jail forever.
Reality is, that the top politicians, the ruling class of the US, the old money and families from the UK and the US are the ones to blame. They made plans to rule the world and the small banksters one level below the top were happy to participate in their crimes and helped to loot the world - not just the US. So this "relative small bankster" Citi CEO Sandy Weill, wants to save his butt since he is not yet off the hook. Simply because the age old law prevails: The small ones are going to be hung while the big ones are walking away free.When the worst comes to the worst some people have to go to the jail for a long time, just to please the "bloodthirst" of the people. And these future long time jail inmates are coming from the same ranks as Mr. Weill. So his fate is sealed no matter what he says. He is gulity and the guys above him will make the whole world believe that the crimes were done by people like Mr. Weill only.
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Commenting on another article, cougar_w made an astute observation along these lines. He described these mea culpas as attempts to obtain a "get out of noose free" card. I believe he is correct.
Anyone can say that mistakes were made and appear apologetic if they think it will keep them from being hanged. Those who are truly sorry would atone for their criminal acts by liquidating the entirety of their wealth and using it to help directly those they have harmed, bypassing the intermediary government and financial skimmers.
If a bankster voluntarily exchanges his home in the Hamptons for a single-wide in a Mississippi trailer park, I'll believe he's sincere. Otherwise, they and their families should probably keep looking over their shoulders and try to keep a few steps ahead of the hangman.
I don't care who comes up with a good idea as long as it's a good idea. And, we are in desperate need of: (1) good ideas, and (2) politicians with enough back bone to enact them. Given the blowback the issue attracted today, I can only hope more "insiders" decide to speak the truth.
I did a very simple calculation months ago, using info presented here on ZH. The multiple of derivatives:tier 1 capital came out to 550:1 for the 6 largest US banks. In other words, a 0.15% dip in the value of the collective derivatives portfolios would (if recognized) wipe out tier 1 capital all together.
Goldman, at 2,480:1, was the worst of the bunch. Is there any doubt we've had some 0.15% blips in valuations already, and that if realized these banks would be seen for the corrupt and bankrupt facades they are?
https://pebblewriter.com/the-wipeout-ratio/
in mho its not a good idea to give the same thieves the same chance again, instead break up the banks, allow no bank the ability to create money...ever
Derivatives are often presented in terms of face value - it used to be to show how 'important' these markets were now these numbers are sometimes used for dramatic effect
To get a proper notional equivalent of real exposure you would have to work out what you stand to lose for all derivatives ie total amount at risk. This is easy for bonds and can be easily aggregated - not so for 'derivatives' i'm afraid
I don't believe anybody truely knows the extent of exposures for a 'derivatives' class of assets........notwithstanding this I agree with your sentiment our financial ponzi system is insolvent
Stay Gold
LibX
His last name means "Because" in German. Ze Germans. Why are they trying to take over the world? Weil sie sind Deutscher!
I agree with everything that the controlled opposition just said.
+1
"Mr. Weill's suggestions would go a long way toward utterly destroying our fraudulent financial system and giving us a shot at asking how the hell everyone was asleep for a hundred years."
isn't that a little harsh?
You are so disingenious Weill. Give ALL your ill gotten gains back and then maybe I'll listen. Otherwise, stop the BS.
Clawbacks, bitchez!
Maybe he comes on like this to distract, yes. Maybe he feels a day of reckoning soon and wants to spin out of harm's way.
Weill said that assets must be marked to market every day
correction: Weill said that derivatives must be marked to market every day
(@2;45-3;05)
I know I may be a lone voice, but I agree with everything he said. I was in the business during the time of his ascent. We were trained in 1980 to be "Customers Men". Something changed in the late 1990's and I didn't like the changes and I left the business and went independent. Even thought I didn't like the change in the industry, I didn't forsee the massive corruption that was to follow. I have not followed Sandy Weil's career, but instead of attacking his character, I would rather respond to what he is saying and give him credit for speaking out. He has much more to lose from rejection from his peers than he has to loose from the anger of his critics. We need to support the joiners of our cause rather than to try to invalidate them.
re I have not followed Sandy Weil's career, but instead of attacking his character... blah... blah... blah...
Yes fellow "Customers Men" I stand before you guilty of calling Mr Sanford Weil a scumabg.
I know see the error of my ways and humbly propose - as a token of my contrition - that maybe next time we're all gatered around the campfire roasting marshmallows, Sandford could lead us off into a couple of verses of Kumbaya.
It's always been there to some degree - the Wall Street firm I was at in the 80's (in operations) was full of people who'd sell theior mothers or first born - and screw anyone in pursuit of more $. I saw senior management screw $20,000 a year clerks out of a well deserved $2000 bonus to keep their own multi-million dollar bonuses.
BTW - one of these senior execs is now running AIG - a master of smoke and mirrors - but as for REAL accomplishments....bwahaaaaaaaaaaaaaa
Problem is vanishing capital.
Capital = real goods.
Pseudo-capital = another goddamned loan.
if the banks reduce leverage then you have deflation. central bankers beleive deflation causes all these bad things. It doesn't. so they came up with inflation targeting. What that really is is a way to justify printing so the bamks can always stay over leveraged. if they can hold out long enough. that's why inflation targeting encourages instability, because it promotes being over leveraged in the system. But having taken economics courrses, I can say as a scientist, that economists have a faulty thinking process, and that their training is faulty, their logic faulty. I think the entire discipline trains them to not to be able to think.
you get known for a model, regardless of how bad it is, as long as you can sort of write it out on paper. think options opricing theory. won a nobel, but it has something like five assumptions, that I beleive are in no way valid, that must be vaid for it to work. hence it can't work. But they use it.
if x has no fravity, no friction, falls in a bell shape, then.....
except there is gravity, there is friction, and there isn't a bell shape. But you win a nobel. they then apply the faulty model. it's insane
never hated Becky Quick as much as i have in 2012........ disgusting !
Irritating, isn't she?
reminds me of the quotation "Like a gold ring in a pig's snout is a beautiful woman without good sense."
way too late Sandy ......sorry you dont get it
Weill's office holds a wood etching of him engraved with the words "The Shatterer of Glass–Steagall". - wikipedia
mole
if anyone thinks Glass Steigall would have prevented anything they ought check-out the other thousand regulations gatherijng dust on the alpahbet soup of Regulators whistling Dixie since 2007
Rules/Laws/Regulations do not work ...because the criminals ARE the system
It's damn long for a ZH read, but worth the time if you're willing to risk modifying your position:
www.zerohedge.com/contributed/2012-07-24/reinventing-crony-capitalism
This son of a bitch was one of the architects of this disaster. Now all he is doing is talking his book getting set up to make another killing once the banks unwind. I promise you he has longs and shorts in position to profit from the collapse of his making.
Die you son of a bitch! And Phil Graham too.
http://en.wikipedia.org/wiki/Phil_Gramm?
Everything you need to know about this cocksucker (Phil Gramm....sorry for the earlier mispelling....happens when I am pissed)......in two statements.....
"We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness
"If we should vote next week on whether to begin producing cheese in a factory on the moon, I almost certainly would oppose it...On the other hand, if the government decided to institute the policy, it would be my objective to see that a Texas contractor builds this celestial cheese plant, that the milk comes from Texas cows, and that the Earth distribution center is located in Texas."[
So the first statement was his response to the outcry in the country about the collapse that he help to bring about and the second statement simply shows what a whore of a Republican he is and why Republicans when they preach about the deficit are nothing but Democrats of a different stripe.
He can't die fast enough for me.
Bernanke will shit in his pants if he stops printing. His sole job is to print.
Helicopter Benny don't even print now. He just add zero at will.
Yup... We are falsely led to believe the new notes contain additional colors to discourage counterfeiters. The REAL reason is because Benny wanted a chance to display his talents. Two color printing was getting a bit old and he wanted to show off with 4 colors.
LEVERAGE? How about fraud! No mention of ten to twenty years of jailtime for A holes?
Well, its a start. I bet Lloyd and Jamie are just shitting in their pants and ready to buy a contract on Mr. Weill.
Even if he has done a flip flop, he is thinking the right way now. If he can be an influence to cause change for the positive, I will supporthim.
He has not done a flip flop. Mr. Weill has however made an offer.
That Mr. Sandy appeared on CNBC the very day Mr. Paul's audit the Fed Res HB 459 was approved with a 2/3's majority in the House of Representatives is an unlikely coincidence. So Mr. Sandy talks about his interaction with unprivileged youth to imply that he now has seen 1st hand the damage his carelessness inflicted. Boo hoo bitch.
What Sandy is saying is this...We the Banksters will agree to a return of our criminally insane industry to its former self based on safety, soundness and stability. We the Banksters offer the reinstatement of Glass Steagall, mark to market, proper capital ratios and an end to off balance sheet transactions otherwise known as transactions that allow regulators to ignore our lack of transparency(lying).
Mr. Sandy on behalf of his Banksters makes this offer in good faith exchange for the following...The big fish would very much like to have all this talk of hangings and jail to stop immediately. Secondly and most important this move to audit the Fed Res including all internal communications/deliberations must be abandoned lest the criminal manipulations of those nearest the printing press be exposed thereby destroying the careers of 100 billionaires 5,000 millionaires and enumerable political enablers. What good is obscene wealth when your families are genuinely frightened because you were too greedy to settle for mere wealth? Fuck you and the printing press you rode in on Mr. Sandy.
Lastly I think Mr. Sandy's candid admission means our murdering fascist oligarchs now realize they must soon choose between protecting themselves or ceding some power because they are a mere breath away from losing control of this nation. You see allowing this nation to remove its boot from the neck of the world would be an indescribably unacceptable result for these maniacs. We must redirect our Republic to its original intent without the favor of such men who should be forced to observe America's restoration from a prison cell. Capitalism ends where theft begins.
Let us not be swayed by stale crumbs tossed at our feet. You all heard what Mr. Sandy did say now HEAR what he should have said. We must settle for no less than a total repudiation of ALL legislation and fascist drift post 1999. This is where the flip flop must begin.
Break their grip on the money supply once and for all.
well said.