I agree with Kay. It's more than time to break up monsters like Citigroup.
Wednesday, February 25, 2009
"The Obama administration's plan to limit the remuneration of employees of publicly supported financial institutions to $500,000 has the simplicity of genius. A limit on pay is an effective way to reinstate the Glass-Steagall Act's separation of commercial and investment banking. ... But no professional would join an investment bank unless he or she expected to earn far more. ... But German shareholders, taxpayers and depositors might take the alternative position. They might well want such talent to be kept far away from their savings. ... Diversified financial conglomerates are a bad idea. ... The culmanation of Sandy Weill's aspirations at Citibank was a behemoth that neither he, nor anyone else, was capable of running. They are a bad idea for those who work in them. Tension between the buccaneering culture appropriate to trading and investment banking and the meticulous processing and caution needed for retail banking is perpetual. ... Most of all, they are a bad idea to taxpayers. Banks used the retail deposit base, with its effective government guarantee, as collateral for speculative trading", my emphasis, John Kay at the FT, 11 February 2009.