By Peter Schroeder - 07/25/12 06:16 PM EDT
Sen. Sherrod Brown (D-Ohio), who has introduced legislation that would require the breakup of the nation's largest banks, used the remarks to further tout his bill, which so far has gained little traction in the Senate.
"Sanford Weill is one of many banking industry experts who have observed that too big to fail is often too big to manage," he said in a statement. "Allowing Wall Street megabanks to grow so large and over-leveraged that their downfall would send ripples throughout our entire economy isn't fair to taxpayers."
And several members from both parties highlighted the comments when discussing financial reform with Treasury Secretary Timothy Geithner Wednesday.
"It is absolutely huge that Sandy Weill has called for the break-up of the big banks," said Rep. Carolyn Maloney (D-N.Y.).
And Rep. Walter Jones (R-N.C.) opened his remarks at the hearing by saying his 1999 vote to repeal the Glass-Steagall Act, which separated investment and traditional banking, was one he regrets the most from his time in Congress. He pressed Geithner on whether it was time to reconsider separating those banking activities for the good of the system. He deflected the matter by saying he is sure Congress will mull the "widespread and common concern" at some point in the future, while touting tough financial reforms including in the Dodd-Frank financial reform law.
"We should give those reforms a chance to take effect and work," he said. Geithner noted later that he had not had a chance to review Weill's comments before appearing to testify.
Weill is just the latest in a series of public figures to advocate for the breaking up of big banks. Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation (FDIC) and Richard Fisher, president of the Federal Reserve Bank of Dallas, have both called for the splintering in the past. Former GOP presidential candidate Jon Huntsman called for a big bank breakup as part of his platform.
But Weill's comments carry added weight because they come from a man who initially led the charge on creating gargantuan banking systems. Under Weill's watch, the bank Citicorp merged with the financial firm Travelers Group to become Citigroup — a move that ushered in a new era of Wall Street giants and helped press Congress to repeal the Glass-Steagall Act.