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‘Horrible Idea’: Wall St. Pro Pushes Back on Calls to Break up Big Banks

Sep. 6, 2012 8:15pm Becket Adams

Big banks became big for a reason and it would be a terrible idea to break them up, William Harrison, former Chairman of JPMorgan Chase, told CNBC’s “Closing Bell.”

“I think it’s a horrible idea to break up the banks. There was a reason why all the banks became large — that is scale and efficiency. It wasn’t an unnatural act,” Harrison said Wednesday. “The result of this has a lot of efficiency benefits for clients and customers both in the U.S. and around the world.”

He is, of course, referring to former Citigroup CEO and Wall Street legend Sandford Weill’s call to break up major commercial and investment banks.

Harrison, who helped build JPMorgan and Chase in 2000, argued that if the U.S. wants to compete on a global scale, then we must have large-scale banks in our corner.

“We have great companies, we have the best banks and our banks have an impact on creating the deepest capital markets in the world,” he said, adding that the U.S.’s economic standing in the world has been helped by this.

He also pointed out that the alternative to big banks would be smaller ones “that could not effectively serve their clients,” as CNBC puts it.

Watch the discussion [via CNBC]:

Harrison noted that being smaller doesn’t necessarily mean things won’t still go wrong in the financial industry.

“There’s not a high correlation between complexity and failure,” he said, adding that many of the firms that tanked during the financial crisis were fairly small in size.

He went on to note that government shares a portion of blame for the financial crisis and pointed out that being large helped JPMorgan deal with the massive billion dollar trading loss it suffered earlier this year.

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Front page photo source courtesy WKOW 27

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Comments (41)

Truth4SureNuff
Posted on September 7, 2012 at 9:26am
No bailouts .
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Truth4SureNuff
Posted on September 7, 2012 at 9:25am
Use credit unions
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Penn
Posted on September 7, 2012 at 8:56am
Big banks would not survive commercially without millions of small customers. I left my bank of 40 plus years when it was acquired by a bigger bank. I now bank at a local bank. I know the tellers, the lending officers and am a shareholder. I was able to refinance a mortgage within thirty days at a nice rate. No toasters, no ATM, no credit cards but a ot more peace of mind. Want to get rid of big banks?
Don’t use them. Let big corporations go to the equity markets for funds or reinstall Glass Steagall. Small businesspeople are better served by local bankers. Let’s face it big banks don’t “make” money for their shareholders, they don’t “service” their customers, They bet your money on aggressive investments and when they win big they pay themselves huge bonuses, when they lose, they run to Uncle Sam. When they get “fined” who pays? Stockholders, small employees and customers. The poobahs “resign” take their golden parachutes and then get a job as a bank”regulator” at the IMF or World Bank.

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soybomb315_II
Posted on September 7, 2012 at 6:43am
an article about some random DNC delegate or some DNC speaker’s analogy at the convention gets hundreds of posts – but real articles about the economy get less than 40….

not a good sign

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- WindyDualism
  Posted on September 7, 2012 at 10:24am
  The other articles were shinier. Just because peeps don’t post, don’t mean they don’t read. It’s akin to thinking all Paulbots are stoner anarchists. Peace and stuff.
  
  Report this comment
mharry860
Posted on September 7, 2012 at 1:56am
That’s a good one, smaller banks couldn’t serve their customers. When we bought our travel trailer the financing they used was our bank STCU. The sales person called the bank and they looked at our account sand said, yeah they’re approved. The wife’s 2007 F-150 blew up, they called about her late payment, like they always do, she’s in over her head. She told them to come get it, it’s in the driveway with a blown engine, the girl who called didn’t know what to say. The next day a young man from STCU called and wanted to know what was going on with the truck. After explaining what happened he said “The two of you need to come over and fill out some papers, we’ll add enough money to rebuild the engine, extend the loan and lower the interest rate.” We would never have received any of this customer service from any of the TBTF Banksters!

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Individualism
Posted on September 6, 2012 at 11:07pm
break up banks, break up corporations and break up insurance companies. break trusts, it worked under FDR. feed the bankers to the occupiers.

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- Jaycen
  Posted on September 6, 2012 at 11:25pm
  You want the Government to tell corporations, banks and insurance companies how they should be run? You want to use the force of government to do that? That’s “Individualism” for ya.
  
  Report this comment
- babylonvi
  Posted on September 7, 2012 at 1:00am
  No, but they should not get government money for a bailout either.
  
  Report this comment
Jaycen
Posted on September 6, 2012 at 10:49pm
“Break up” what, exactly?

The federalized monopoly of the United States Government? Seriously? If what they’re really asking is “should we stop giving them tax-payer dollars of any kind, for any purpose?” – then it’s YES.

It’s already a nationalized industry. WHAT. DO. YOU. THINK. WILL. HAPPEN?

“Oh, the government needs to be MORE involved in the banks. Yep, that makes sense.”

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- Jaycen
  Posted on September 6, 2012 at 10:53pm
  If you don’t understand what the fractional reserve banking system is, please look it up. Check out Mises.org for some great articles that offer economics-to-common-sense translations.
  
  Report this comment
- themachinist239
  Posted on September 7, 2012 at 10:44am
  It is precisely why the banks are too big to fail that we are forced at gunpoint to surrender federal bailout dollars to these thugs. Are you completely oblivious to the consequences of the merging of commercial banks and investment banks? The regulation in place that kept them separate was removed with the enactment of Glass-Steagle, giving the opportunity for investment entities like Citibank to swallow up Travelers (along with its assets to play with). This creates a moral hazard. When an investment bank is allowed to put mainstreet commercial and consumers’ deposits in the same pot, it will be lost with impunity. This too big to fail crisis is a direct result of deregulating wall street and legalizing over-leveraging schemes to privatize gains and socialize losses to the American people. Over leveraging the equity-asset ratio, which the self-regulated big banks rammed through the puny SEC, spurred the creation of exotic financial instruments. Taking away perfectly reasonable safeguards that have been in place for 100 years so that investment firms can gamble away mainstreet deposits, mainstreet assets, mainstreet pensions & 401k’s is irresponsible. This is where you’ve been duped.
  
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WAKEUPUSA2012
Posted on September 6, 2012 at 10:31pm
Hell yeah the big banks should be broken up. Its a revolving door from goldman sachs and jp morgan they all go to the Fed and work to get good deals for the banks. They dont care about the people. They have hijacked this country. Goldman sachs rules the freaking world. They want to consolidate everything after they crash all the economies then buy them up. Then call for world government. We must fight these tyrants.

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- Jaycen
  Posted on September 6, 2012 at 10:51pm
  What is? What “revolving door” exists? Make a specific point, or please shut up and stop asking for further government intervention into the economy.
  
  Please, God, just let Capitalism do what it’s supposed to do. Teach people important life-lessons, and bankrupt those who refuse to learn. The world has always needed ditch-diggers, too.
  
  Report this comment
watersRpeople
Posted on September 6, 2012 at 9:24pm
I wonder how a person thinks they can own a piece of land that was here billions of years before them, and will be here billions of years after they are gone? Like just because most of you have a deed doesn’t mean you own your own land – no the peoples who think they are gods think they own it. And they will tax you on your land and take it if you don’t pay a piece of your soul with money. Now you might be inclined to say I’m a Communist. No I’m not a Communist because they think they own it all every bit of it and they allow others to use it unless a Communist with bigger guns wants the land you are living on. I believe No one owns it, and so I have no right to make someone move their home off a piece of land, because they got there first, and since I neither own it then I can not make them move. People are just evil little animals.

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- nobull14
  Posted on September 6, 2012 at 9:35pm
  What?
  
  Report this comment
- watersRpeople
  Posted on September 6, 2012 at 9:38pm
  And then after those people who think they are gods confiscate your land because you are a few years behind in your taxes – they will sell your land to another who is more willing and able to pay a yearly piece of their soul through taxes to the land gods.
  
  Report this comment
- watersRpeople
  Posted on September 6, 2012 at 9:55pm
  But shortly the real owner of this land is coming back, and the real owner who leased out this land will see all the wickedness that has been done unto his children. It isn’t going to end well for you.
  
  Report this comment
- woodyee
  Posted on September 6, 2012 at 11:02pm
  WATERSRPEOPLE – Well then, you better trash your computer and return what you don’t own to the land it came from, n’est pas?
  
  Move out of your apartment because the guy you’re paying rent to doesn’t really own the place.
  
  Now, when you get to living in a tent, what are you going to do with your c-rap? Is the food you eat therefore borrowed? It comes from land farmed by people who don’t really own it, so if it’s not borrowed, you’re buying stolen merchandise, and ought to be in jail…
  
  Report this comment
pissantno.10
Posted on September 6, 2012 at 8:58pm
how do you suppose big companys make pay roll on time they borrow from big banks not pappy joes bank.

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- nobull14
  Posted on September 6, 2012 at 9:23pm
  @PISSANTNO.10 In are countries history the banks were not the big pile of thieves they are today in bed with the government ?. If you can remember back the the days of one of are greatest president in recent history Ronald Reagan who broke up big business like ATT and the air controllers union Patco which created untold job growth including tax cuts among other things. sometimes change is needed and sir you are not the sharpest tac in the box.
  
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woodyee
Posted on September 6, 2012 at 8:56pm
WATERSRPEOPLE said – “Banking is an evil primitive system.”

What would you like the banking system to be replaced with?

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- watersRpeople
  Posted on September 6, 2012 at 9:29pm
  God will take care of that, because it isn’t a matter of replacing the banks, but a matter of replacing the people on the planet.
  
  Report this comment
RedManWalking
Posted on September 6, 2012 at 8:51pm
Sandford Weills may have said it, but if it is really a horrible idea then it canme from an Obama AM thoughts. If it is a horribly stupid idea vthen it came from an Obama PM thought.

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pissantno.10
Posted on September 6, 2012 at 8:49pm
well trolles are all ready heavey in here. to bad you trolles missed out on a education

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nobull14
Posted on September 6, 2012 at 8:46pm
I have no love for the big banks and wall street and in that case big Government also ? . In my opinion they all need to be cut down to size .

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PIGSWILLNEVERFLY
Posted on September 6, 2012 at 8:46pm
Break them up. Reinstate Glass Stiegal. Stop all big company mergers. End unions.
Companies should serve America first. We don’t need these big monster power grabbers that have NO heart and soul..we need good products and services Americans can afford. And small and medium size companies that service their communities. That is why we have all these big billionaires that have no allegience to neighbor or country. Time to change the rules. Smaller with principle and values.

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watersRpeople
Posted on September 6, 2012 at 8:43pm
The difference between a blood-bank, and a money bank is a blood-bank deals in plasma, and a money bank deals in souls.

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- pissantno.10
  Posted on September 6, 2012 at 8:49pm
  man its gotta suck to be you
  
  Report this comment
- RWCT
  Posted on September 6, 2012 at 8:50pm
  I wonder how many bankers react adversely to Garlic?
  
  Report this comment
Pedro
Posted on September 6, 2012 at 8:43pm
There is too much danger to the economy for so much cash being in so few hands. When it comes to one bank failing in one state and taking down the whole company it is time to rethink reinstating the Glass-Steagall Act. With all of the talk of making the system more stable, there are now fewer banks and more Sub-Prime Loans that will make the next crash even worst then the last.

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watersRpeople
Posted on September 6, 2012 at 8:40pm
There’s only banks because humans think they own the earth, just like they think they are going to own the moon, and own Mars too. I guaranty you there is already banks laying claim to real estate on the moon, and Mars.

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- michael48
  Posted on September 6, 2012 at 9:42pm
  so it’s better to behind the curve???……are the gov.gumbas better at banking???…$16 trillion in debt…the economy is sitting on $2 Trillion waiting on these idiots to make the rules..without changing them hourly….you go ahead and have faith in the gov..I choose not to…
  
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Sicboy
Posted on September 6, 2012 at 8:38pm
Big Banks are a little more efficient then the Post Office, follow Jamesgrickards@twitter he will tell you some things every American should know.

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watersRpeople
Posted on September 6, 2012 at 8:38pm
Animals don’t have banks, know why? Because animals didn’t inherit the earth dry ground which gives people the ability to be selfish to make things easier for themselves while pretending they are doing it to make things easier for others.

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filbert
Posted on September 6, 2012 at 8:35pm
How stunningly newsworthy: Chairman of HumongoBank thinks it would be a bad idea to break up HumongoBank.

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watersRpeople
Posted on September 6, 2012 at 8:33pm
Banking is an evil primitive system.

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Lordcsmith
Posted on September 6, 2012 at 8:30pm
The next story will be the Pizza Hut CEO telling us about the health benefits of eating pizza and that it’s unfair to call it junk food.

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soybomb315_II
Posted on September 6, 2012 at 8:19pm
“I think it’s a horrible idea to break up the banks. There was a reason why all the banks became large — that is scale and efficiency. It wasn’t an unnatural act,”

NO! The banks became so large because of the federal reserve, implicit government backstop, and access to Fed borrowing that small banks are prohibited from. That is not free market!

Either we need to make sure the banks are NEVER bailed out – or we need to make sure they are broken up before they get “too big to fail”. We cannot continue with the status quo….I would much rather prefer no more bailouts and a return to free market

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- watersRpeople
  Posted on September 6, 2012 at 8:31pm
  One thing for certain, an asteroid will break up the banks.
  
  Report this comment
- watersRpeople
  Posted on September 6, 2012 at 8:33pm
  Someday banks will not exist.
  
  Report this comment

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