so boy did sandy weill raise more than eyebrows yesterday when the former chairman and c.e.o. is citi group said anough with these too big to fail banks take a listen. i'm suggesting that they be broken up so that the the taxpayer will never be at risk. the deposit is won't be at risk the leverage of the banks will be something reasonable and the investment banks can do trading and not subject to. they're not subject to not being there when they can make some mistakes . now the ironies should not be lost as sandy weill was at the helm of citigroup when it was becoming the he met that is today he was instrumental and pioneering the one stop shopping bank model even violating remaining provisions of glass steagall at the time in the process here is inside jobs filmmaker and predator nation author charles ferguson talking to us about it take a listen citi group wanted to acquire travelers did acquire travelers before the glass steagall act was repealed and so it was at the time. illegal combination of a commercial break and an investment is travelers which was at the time an insu

funny that you could start moving on when we had jim rickards last week we talked about sandy weill's comments about breaking up the too big to fail banks and if you responded and said i don't understand why separating commercial banking and investment banking would solve much i mean why is there a crucial difference between the same company giving out loans in securitizing them versus one company giving out loans and another one securitizing and selling them when the exact same incentives exist in both cases the incentive to get out risky loans to make a profit and the incentive to sell bad debt would exist in both cases as far as i can see you know it's an interesting point i really do think this is a key issue though the separation of investment banking and commercial banking because the issue is not that similar incentives exist in both places the issue is the lack of a fire wall between commercial and investment banking which means that average depositors and savers can't put their money in a bank without the risk of having a loss due to some risky trade or gone to investment and

good to be with you. >> you were out talking about this before sandy weill said this. eet journal. why do you think the banks should be broken up? it's different from sandy's line reasoning. >> yes. i have the perspective of the fdic. you need to break this will up by lines of business and the effects will be greater competition, for example. greater accountability of the institutions and, very importantly, i think it will begin to rationalize the use of federal deposit insurance and the government's guarantee behind these institutions so that we can fine it to what it was originally intended for and that's protection of the safety net and the intermediation process that goes on in commercial banks. i think our proposal that i put out addresses issues of the shadow banking industry. the proposal is forward-looking and i think the effects will be beneficial. in an important sense, i think, spur new activity and wall street and in the united states. so i'm very strongly supportive of not cutting them by size. >> the first of which the fdic funds are paid from the banks an

guest host and pnc chairman and ceo jim rohr sounds off on sandy weill's call. >>> and then the informationhe first trade. [ bell ringing ] experts on the dollar and energy markets are here on the "squawk" trading block. >>> getting inside the mind of the donald. >> just think of what's happening to this country. people used to respect us. they don't respect us anymore. they laugh at us. >> the billionaire and romney backer speaks out against his critics and what he's seeing now that could help boost your investments? the second hour of "squawk box" begins right now. ♪ >>> good morning and welcome to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen. it is a bromance week, becky is off. you can see green arrows across the board. nasdaq up 13% and the s&p 500 would also be up. let's get you through some of the morning headlines. massive fire at a california refinery, it is contained but not yet out, it is in the san francisco suburb of richmond, the plant produces 245,000 barrels of oil per day, one-eighth of the state's refining capacity and air quality has been issued

the twenty's part of the securities act of thirty three thirty four we got the glass steagall act sandy weill recently suggested we need to restore glass steagall of course standing while over at citi group and by travelers corp is the guy who demolished the glass steagall but now he's repainting or is recanted his initial thought. what are your thoughts on this conversion by sending while this foxhole conversion i guess you could cause i'm wonder whether or not the guy has terminal cancer death bed conversions are very common. no i only and i are exactly just saying he sounds like he's he's at the end of the line and he knows that he's going to hell for having done what he did and now he's trying to desperately talk his way out of hell like any good stockbroker would do you know i do like the fact that he's come clean on this i posted an article on that at the time it's about time that we started talking not only about west eagle but about the broader implication of this which is what i've called one dollar of capital for several years in. and it is all tied in the same principle year which

it's almost it would be like as if it would be use of sandy weill came out and said that he's against big banks and wants to break them up and bring black glass steagall of course that's impossible that would never happen well max of course. operates farmville in which people around the world grow virtual vegetables and raise virtual cows there's also a drought happening in the real farming world report drought intensifying across oklahoma and u.s. drought monitor report shows parts of northwestern oklahoma in exceptional drought the western one third of the state the panhandle and parts of central to southeastern oklahoma are in extreme drought while most of the remainder of the state isn't severe drought the only rain do max is no golly washer or strangler as they say down in those parts. of course not but you know this drought that's happening in the physical world the analog world that's just drawing the economy it's really reminiscent of the one nine hundred thirty s. dust bowl when you had the depression which was caused by wall street in the twenty's and all the acts. movies th

. >> there is also this, sandy weill stepped forward to say you should break up, you should break up the banks even though i spearheaded the drive to create these superbanks, i now think its with a bad idea. >> that sounds good but how far do you break them up. in 1948 when we had too big to fail was sort av nounced as a doctrine, those institutions if you just drew them-- grew them with inflation they would be $200 billion. so is $200 billion small enough. they were too big to fail in 1984 according to the comptroller of the currency. i think the only way to do it in a sensible way is to look at a failure, could you take them through bankruptcy and would it work? and that process of doing that analysis is what's going to show you are they too complex. should you separate these. i think that's the way to figure out how to break, whether to break them up or not. >> you can help us on this very important issue. jackson hole is coming up, okay. >> uh-huh. >> rose: what will be the focus of the discussion out there? >> that's a good question. i'll be out hike on the trails in the afterno

. >> we had sandy weill on a couple of weeks ago.hat should happen to big banks, should they stay big, be broken up? >> there's a different culture between being a commercial banker and investment banker and i would find it difficult to be ceo of an institution that did both because i relate it to taking your salesman and making him credit manager, or take the credit manager and make him the salesman. can you imagine the conflict in cultures? you know, a commercial banker is taught to take no risk. investment banker is taking all kinds of risks but it's with other people's money. so how do you bring those two together? >> are you arguing to break them up? >> i don't think it's beneficial to have them combined. i do not. >> but is that a profit issue for you or a safety soundness issue? >> i think it's a soundness issue and i think that commercial banks, you know, they have guaranteed deposits and that being the case, they should be taking much, much less risk, and it's hard to draw, you know, they say there's a wall between the inves

stuart: it's you and sandy weill and john mccain, that's why i played that clip. i thought that would be interesting for you to see. it's great to see you. >> thank you. connell: let's go to the storm and talk about the flood defenses around the city of new orleans. they held strong as it turned out against isaac, but flooding in some areas has caused thousands to be evacuated. jeff flock has been reporting throughout. today he is actually literally on top of a levee, lake pontchartrain from louisiana where he's been reporting from throughout the day. jeff? jeff: i just walked down to the bottom of the levee to see where the water is. this is lake pontchartrain, and it is lapping up along the railroad tracks that run alongside the lake and outside the levee system. but i tell you, fortunately, this levee system held. as i walk up this levee system here, this is steel, concrete, tax dollars, $15 billion worth of them. we've got a unique perspective. i showed you this earlier connell. i want to show our viewers again. if you take that shot, this is from a security c

he talks about sandy weill in today's "new york times" says when sandy decided to split up the bank hes if j john d. rockefeller proposed the breakup of standard oil and he goes after him and it's vicious. given that he's been a member of the obama administration, given that he's been on the democratic side of this, the fact that he's not pushing harder, he's probably in some way in the tim geithner camp on sort of the volcker rule and some of these issues. >> right. so it's coming not only from the right on this but on the left. >> on the left. when you think about how this debate ultimately unfolds zip s -- >> i saw the news with sandy. i haven't thought about this. i watched sandy build shearson and he was held in very high esteem in the 80s and i know what happened at citigroup and i know how it turned out but he's a very talented executive. didn't turn out well. >> even the association doesn't agree with his standpoint on this but they say he's somebody you have to listen to. >> i give him credit for being willing to change his mind, even if he's not necessarily suggesting that he

. >>> former citigroup chief and banking legend sandy weill caused quite a stir on "squawk box" lastught the big supermarket banks that he created the model for should be broken up. today, william harryson, the man behind the merger that created jpmorgan chase back in the year 2000 wrote an op. ed in the "new york times" defending the big banks, things like the combination of commercial and investment banking he said is unnatural, that the banking giants, he takes on the idea the banking giants caused the financial crisis in the first place and that the large financial institutions are too complex to manage. harrison argues it would hurt customers, clients and the broader economy and inject new risks into the financial system if the banks break up. we have a new guest who can talk about all of these things, st. louis fed president jim bullard. jim your thoughts on this, is that the big banks should be broken up. >> yeah, i support my colleague, richard fisher, on this one, and my former colleague, tom hanig who argued these banks are too b big, i'm not against bigness per se but they

asher edelman is here, legendary banker, sandy weill said the nation's largest banks should be brokenandy, one of the world's leading corporate activists. i used to say asher edelman, 25 years ago, i think you may remember him now, we're going to talk about this as an inspiration from gordon gekko, that's not true, currently the ceo -- there are a lot of people that bandied the names out. you made a great point gekko went to jail, you never went to jail. ivan bosky went to jail, you disagreed off camera, the name of the book was "merger mania: arbitrage, wall street's best kept secret" but they pulled it because they found out he was sometimes there was a suitcase full of cash that he was giving to investment bankers under the table and they would tell him what -- i could figure out some mergers if i was willing to do it that way. i don't know if he put that in the book, now we've got it straight. you're not ivan or gordon gekko. >> i'll never forget ivan bosky coming to me and saying are you going on vacation again? how do you manage to make a living doing that? i said i only want to

>> i think that's certainly a possibility and when someone as prominent as sandy weill and the whole you make of that? >> i think a man who has reflected and changed his mind and that's okay. >> religion, is there some guilt there in. >> it depends on what side of the argument you're on and i don't think this is an open and shut case. i do believe what's clear is that the concept of too big to fail is a clear subsidy, that we as a society provide to those institutions that benefit from that moniker. >> and how does it benefit them, having lower funding which allows them to do things? >> yeah, if you think about a bank its cost of good sold is how much it costs. if ultimately you believe the institution that you are lending that money to cannot be allowed to fail because of its size, then it has an implicit guarantee of the u.s. government, which means it's going to borrow money more cheaply because nobody borrows more money more cheaply than the u.s. government. as a result, you are providing indirectly a fairly meaningful subsidy to those institutions. >> when does that come home to