In extraordinary news, one of those who help create our megabanks, Sandy Weill of Citigroup, now says they should be split into investment bank and banking units.  Sandy Weill created Citigroup as we know it today. As their CEO he lobbied hard in 1998 for the repeal of the Glass-Steagall Act which mandated that deposit banks be separate from investment banks. But he has now come full circle and is, in effect, calling for Glass-Steagall to be re-instituted.

“We can have size and scale but it doesn’t have to be connected to a deposit-taking institution," Weill said "Have banks be deposit-takers, have banks make commercial loans and real estate loans."

Glass Steagall was passed into law in 1933 and repealed in 1999 after hard lobbying by financial interests. President Bill Clinton also strongly favored repeal and quickly signed it into law. This opened the floodgates for bank mergers and deregulated much of the financial industry. Many observers now think the repeal directly led to our financial crisis. The iron wall between investment banks and deposit banks was demolished. Banks were pretty much permitted to do whatever they wanted with depositor money, including using it for highly risky trades, as in the recent massive JPMorgan trading losses.

Weill is not alone is saying the big banks should be broken up. Former Citigroup board member Richard Parsons and Citigroup CEO John Reed agree.

TheStreet.com says Weill's plan isn't good enough. They use Wells Fargo as an example, citing its abysmal customer service, concluding that splitting off its small securities business won't help because Wells Fargo is so huge that it has no incentive to provide quality service. So, size does matter, and all the banks need to be broken into smaller pieces.

"If we really want to reduce risk from the banking system, we either need regulators who have the sophistication, the guts and the resources to figure out whether [Wells Fargo chief risk officer] Loughlin is telling the truth That's a tall order, and probably an unrealistic one. What that means is that separating banks and securities dealers isn't good enough, since most regulators can't reliably tell the difference between the two. As a result, we need to make banks smaller--whatever business they say they're in."

Our banks are too big and command far too much financial and political power. For the health of the country and the financial system, he is saying they need to be split into much smaller pieces.