Quick short summary of Glass-Steagall act for readers who don't know what it is. (click for Wikipedia) In the Great Depression back in the 1929 era, many laws where written to prevent repeating that event. Glass-Steagall was one of laws created to forbid banks from taking high risk. The logic being people's life savings should not be gambled by banks for profit/bonuses.
CitiGroup was formed in 1998 by merging CitiCorp and Weill’s Travelers Group Inc., which owned the investment firm Salomon Smith Barney Holdings Inc. The last remaining rules of Glass-Steagall act where removed by Senator Phil Gramm (Republican of Texas) and in the House of Representatives by Jim Leach (R-Iowa) in 1999. The bills were passed by a Republican majority, basically following party lines by a 54-44 vote in the Senate and by a bi-partisan 343-86 vote in the House of Representatives. .
John Reed of CitiGroup now apologies for his role in repealing the act.
Repealing Glass-Steagall is one of the corner stones for setting up the financial devastation that the entire banking industry faces, including CitiGroups woes.
Mr. Reed, you did nothing wrong, your interest in is your business. At the time you wanted largest profits by injecting high risk into banking for your own profit, as well as stock holders at that time.
The politicians are suppose to represent the people's interest. They are at fault for passing the law. There is plenty of actions that brought us here politically, as I covered in "Whos to blame Republicans or Democrats"
In turn, the public is at fault, since they don't care about what Washington does enough to vote out both parties, its party on for high power money interests. Voting is based on issues that will never resolve such as opinions on abortion, prayer in schools, etc. Its like people voting on who likes Coke or Pepsi. Who cares! In 1999, the politicians should have been voted out of office who supported the bill, with a public outcry to protect their life savings. Unfortunately, the default behavior for everything is react, not proactive.
BACK to INVESTING: All of this is moot, what matters for investing is what is best to put life savings in. Until Mark to Market accounting returns, off balance sheet debts are put onto the books, and regulate Credit Default Swaps occurs, I cannot in good faith invest my personal savings in most financial companies. I say most since, not all companies dove into this high risk arena, do you homework before investing.