Citigroup exec: Taxpayers not exposed to big banks
‘Consequences of failing big bank’ visited on debt-holders: Citi’s Helfer

July 26, 2012 | Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — One day after former Citigroup Inc. CEO Sandy Weill said banks should be broken up to protect taxpayers, a current executive at the super-sized financial institution defended a new system for dissolving a large failing bank, arguing that taxpayers are not exposed.

On Wednesday, Weill, often thought of as the father of too-big-to-fail banks, told CNBC that what “we should probably do is go and split up investment banking from banking and have banks be deposit takers, have banks make commercial and real estate loans.”

He added that big banks should be broken up so that the “taxpayer will never be at risk, so that the depositors won’t be at risk,” adding that in such a system bank leverage will be “something reasonable.”

However, Michael Helfer, Citigroup (US:C) vice chairman, argued on Thursday that a system set up in the Dodd-Frank Act — written in the wake of the financial crisis of 2008 — to dismantle a failing big bank so that it does not wreak havoc on the financial system will not expose taxpayers to costs.

“There can be no taxpayer bailout precisely because care was taken by Congress to ensure there would be no taxpayer exposure,” Helfer said at an event in Washington hosted by Deloitte focusing on how systemic risk can be better managed.