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Former IMF Chief Economist Simon Johnson thinks Citigroup will and should be broken up, as reported by ValueWalk. Treasury Secretary Jack Lew, who held a position at Citigroup, also entered the discussion. In a blog post, Johnson accused former executives of pushing banks into taking on more risks with the potential of creating big returns for investors, but hurting the consumer. He wrote, “downside losses, when they materialize, become the taxpayer’s problem.”
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Johnson continues, “Citigroup is also, collectively stupid on a grand scale, ” and its executives up until the financial crisis ran it into the ground; “Give enough people clever incentives, and they will destroy anything.”
The result is that Elizabeth Warren, according to Johnson, is gaining credence in her criticism of Wall Street banks. Citigroup has been behind legislation to repeal part of the Dodd Frank banking reforms. In a speech, Warren noted, “Three of the four last Treasury secretaries have had close Citigroup ties.” The most recent, of course, is Treasury Secretary Jack Lew. Warren had particularly harsh words for Citi; “There’s a lot of talk coming from Citi how the Dodd Frank Act isn’t perfect. So let me say this to anyone listening at Citi.I agree with you. Dodd Frank isn’t perfect. It should have broken you into pieces.”
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