Weekend Economists Go Out with a Boom August 24-26, 2012

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59. Citigroup’s Pandit Says Regulators Should Avoid Product Control

http://www.bloomberg.com/news/2012-08-26/citigroup-s-pandit-says-regulators-should-avoid-product-control.html

Citigroup Inc. (C) Chief Executive Officer Vikram Pandit said regulators shouldn’t dictate what banks can sell to clients because such controls risk undermining financial stability and have no clear economic benefit.
Former Citigroup Chairman Sanford “Sandy” Weill said last month banks should be broken up, separating investment banking from lending and deposit-taking. U.S. regulators are also working to complete controls that include a ban on proprietary trading by banks -- the so-called Volcker rule.
Speaking on the Australian Broadcasting Corp., Pandit said he supports the “concept” of the Volcker rule -- that a bank’s capital should be used for clients. Still, he said dividing Citigroup, the third-biggest U.S. bank, in the manner suggested by Weill would be an “artificial separation” and the New York- based bank must continue to lend as well as tap capital markets for customers.
“Safety and soundness is really important -- let’s get the regulations in place,” Pandit said in an interview on today’s Inside Business program on the Australian Broadcasting Corp. “But we’ve got to stop telling which banks which products they should sell. I don’t know why that is safe for the economy and I’m certainly clear that it’s not good for our clients.”