Reverberations are still being felt from Sandy Weill's comments last week about breaking up the big banks. (See: Sandy Weill, Welcome to 'Team Break Up the Big Banks': Neil Barofsky)
This weekend was chock-full of op-eds and stories about Weill's change of heart and the wisdom of his recommendations -- or lack thereof.
"The fact Sandy Weill is coming forward is significant," says Laurence Kotlikoff, professor of economics at Boston University. "But he's got the wrong view of what's wrong with the banks."
The problem is not the size of the banks but their "opacity and leverage," Koltikoff says. "Secret-keeping small banks that are highly leveraged is not going to be a whole lot different. The way to fix it is to break up the banks by not breaking up the banks."
How's that now?
As detailed in his 2012 book, Jimmy Stewart Is Dead, Koltikoff advocates what he calls limited purpose banking, wherein banks would focus solely on being financial intermediaries, rather than trading or otherRead More »from Sandy Weill Is Wrong About How to Fix the Banking System: Kotlikoff