Ex-Citi CEO John Reed: We Need To Break Up The Big Banks

Sen. Elizabeth Warren (D-Mass.) has a friend in former Wall Street CEO John Reed.
The former CEO of Citicorp, which merged with Travelers Insurance in 1998 to create the mega-bank Citigroup, told the Financial Times in an interview published Sunday that it's time to reinstate the Glass-Steagall Act. The act largely separated investment banking from commercial banking until its controversial repeal in 1999.
Reed, who played a critical role in the creation of Citigroup, now the nation's third biggest bank by assets, told the Senate Banking Committee in 2010 that he helped create "a monster" by combining Travelers and Citi.
Still today, he told the FT, bankers are being pushed to become more like high-risk traders and take bigger risks to get bigger payouts.
“These cultures [investment from commercial banking] don’t mix well and one tends to push out the other," Reed said. "It does result in institutions whose behavior isn’t necessarily productive for the economy."
Warren has Glass-Steagall on her radar as well, and proposed a bill earlier this year with Sen. John McCain (R-Ariz.) and others that aims to reinstate the division between investment and commercial banks. Some say the act's repeal helped create the conditions for banks to become "too big to fail" and require taxpayer bailouts.
Reed also argued his point in a 2009 letter to The New York Times, saying that separating commercial and investment banking activities “makes sense."

Is she the only one with a brain?

Sen. Elizabeth Warren (D-Mass.) condemned the possibility of sequestration and urged her fellow lawmakers on Monday to reach a deal to avoid the automatic spending cuts.
Speaking Monday morning at a breakfast held by the New England Council and attended by a group of nearly 300 local businesses, Warren described the sequester as “just plain dumb," according to the Boston Globe.
"We’re out there trying to make clear this means children kicked out of Head Start programs. This means teachers that are potentially laid off. This means fewer air traffic controllers ... that means jobs right here in Massachusetts," the freshman lawmaker said, according to the Boston Herald, emphasizing the effects the sequester on her state. "It just means blunt, across-the-board cuts. It’s just an irresponsible way."
Warren's remarks came just hours after the White House released a detailed report on how each state would be impacted by the cuts to defense and domestic spending.
Warren also conveyed her disgust for how negotiations in Washington work.
"We seem to have a government that works only by holdout," she said, according to the Globe. "I don’t know anything more to do but get up and talk to the American people."
She told reporters before the event, however, that "the White House, the leaders in the Senate and the House of Representatives are in negotiations" to avoid the cuts.

Warren said she hoped that lawmakers in Washington would support President Barack Obama's proposal to avoid sequestration, which she acknowledged wasn't perfect.
"It's a little more balanced than I would have put on the table," she told the audience at the event, noting that the proposal is a 50-50 split between cutting spending and closing corporate tax loopholes.
The $85 billion in cuts are set to go into effect on Friday