The banks are blackmailing us, Sigmar Gabriel, the head of Germany's center-left Social Democratic Party wrote in a position paper for his party. But with the fuss over Gabriel's partly justified and partly exaggerated claim, one hopes that the most important words spoken last week will not get lost in the noise.
Those words were from Sandy Weill, who for eight years was the decisive figure at Citibank, the major American bank. This is the same Sandy Weill who forged a financial empire and successfully fought against just about every regulation that has been thrown at the banking sector. His message today? Split up the massive banks.
What Weill is calling for is a return to rules that already once served the world well. They were conceived during the 1930s financial crisis and then disposed of during the liberalization frenzy of the 1990s.
The Glass-Steagall Act is the name of the law that divided the banking world into two categories.