It may be the most direct apology of the financial crisis.
Former Citigroup chairman and CEO, John Reed, has apologized to a Bloomberg reporter for his role in creating the ailing mega-bank, which has received $45 billion bailout funds and more than $300 billion in asset guarantees.
In other words, Reed, is essentially saying, sorry about that whole "too big to fail" thing.
Here's what Reed told Bloomberg:
"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"...
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."
Reed's apologia comes on the heels of his letter to the editor of the New York Times last week, in which he put forth his support for separating banks lending operations from their trading arms. In 1999 Congress repealed the 1933 Glass-Steagall Act, and opened the door for commercial banks to meld with trading houses.
Salon's Andrew Leonard lamented earlier today about why there aren't more bankers willing to apologize:
While other bankers are running around trying to defend the Christianity of profit-seeking, and the banking industry as a whole is fighting tooth and nail against any regulatory reform, here's one former executive willing to apologize and admit error. It's refreshing, and worth applause
.
It should be noted that this isn't the first time that Reed has called for a return to the days of Glass-Steagall. In 2008, he blasted Citi's merger with Traveler's in The Financial Times. “The core of what was happening was a lack of supervision and structure at the managerial level. . . . Once we got the benefits from the merger in the first two years after the deal, we were not able to sustain a business model that gained traction,” he wrote in the FT.