CHESSNOID

We know the financial crisis this time around is extremely bad.  Economists say this is the worst recession since the Great Depression.  No one on Wall Street wants to take responsibility nor does any politician and lawmaker hold anyone accountable.

Ron Paul says this financial debacle was mostly the Federal Reserve’s  fault.  He is currently trying to get a bill into law to see the secret dealings of this entity and audit them which will allow us to follow our own tax money distribution and understand interest rate moves.

There were other things that got us to this point.  I remember the Glass Steagall Act that had been around for a long time.  Many economists back then said this was a safe guard from big banks  meddling in too many businesses.  Yet because of greedy businessman, lobbyists, and politicians they successfully conspired and repealed this act.  That was so long ago and people forget who or why.

So it is surprising to see John Reed, former Citibank CEO,  make an apology and recognize this was a turning point in history down the wrong road.  He not only admits his role but acknowledges he and the company was wrong.

Nov. 6 (Bloomberg) –

John S. Reed, who helped engineer the merger that created Citigroup Inc., apologized for his role in building a company that has taken $45 billion in direct U.S. aid and said banks that big should be divided into separate parts.

“I’m sorry,” Reed, 70, said in an interview yesterday. “These are people I love and care about. You could imagine emotionally it’s not easy to see what’s happened.”

Citigroup was formed in 1998 when Citicorp, a commercial bank, combined with Sanford I. Weill’s Travelers Group Inc., which owned the investment firm Salomon Smith Barney Holdings Inc. The New York-based company lost $27.7 billion in 2008 and took $118 billion in writedowns. Now 34 percent-owned by the Treasury Department, Citigroup sought help in the wake of a credit freeze that claimed three of Wall Street’s biggest firms and led to the deepest recession in 70 years.

Congress’ overhaul of U.S. financial regulations should include ordering banks to hold more capital, ensuring executives’ compensation is aligned with long-term profitability and banning firms that take deposits from also engaging in equities and fixed-income trading, Reed said.

“I would compartmentalize the industry for the same reason you compartmentalize ships,” Reed said in the interview in his office on Park Avenue in New York. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking you’d have consumer banking separate from trading bonds and equity.”