There is a saying that goes like this: “For every saint there is a past, and for every sinner there is a future.” What happens when a big sinner looks for redemption? Just ask Sandy Weill. The 79-year old former chairman and chief executive of Citigroup Inc. (NYSE: C) is best known for putting together the financial supermarket model. It was a simple concept in theory. Rather than just being a bank, why not offer every single financial service needed by consumers under one roof?

This week came the shocking news that Sandy Weill was calling for the breakup of the big banks. Does it matter that Sandy Weill was once one of Time magazine’s top “25 People to Blame for the Financial Crisis”? You bet your assets it matters. This is almost like asking Eliot Spitzer to open a marriage fidelity center or like asking Bernie Madoff to give market advice now. Weill was big into lobbying for the repeal of Glass-Steagall back in the 1990s.

Weill told CNBC, “What we should probably do is go split up investment banking from banking, have banks be deposit-takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail.” Effectively, Weill is calling for a return to the Glass-Steagall Act, which aimed to keep banks acting as banks rather than acting as bank, broker, underwriter, trader and speculator. In short, the puppet master is trying to tell the toddlers that the death scene was not real.

Time said of Sandy Weill:

Who decided banks had to be all things to all customers? Weill did. Starting with a low-end lender in Baltimore, he cobbled together the first great financial supermarket, Citigroup. Along the way, Weill’s acquisitions (Smith Barney, Travelers, etc.) and persistent lobbying shattered Glass-Steagall, the law that limited the investing risks banks could take. Rivals followed Citi. The swollen banks are now one of the country’s major economic problems. Every major financial firm seems too big to fail, leading the government to spend hundreds of billions of dollars to keep them afloat. The biggest problem bank is Weill’s Citigroup. The government has already spent $45 billion trying to fix it.

The Wall Street Journal showed that Winfried Bischoff, the former chairman during the worst days of Citigroup, said he was surprised at the 180-degree turn from Weill. What is interesting is that he said he agrees with it. Bischoff is now chairman of the U.K.-based Lloyds Banking Group PLC (NYSE: LYG).

Another interesting point is that Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C) are both under the reins of relatively new CEOs. Brian Moynihan and Vikram Pandit might have had much easier jobs had their task been solely to dismantle their respective banking empires. It is unlikely that either would advocate an outright breakup today, even if they have been slowly cutting down the size of those empires.

If you want to know just how controversial (and enlightening) the Weill call was, just look at the roster of pundits that CNBC has had commenting on the matter.

If you conduct Google searches for Sandy Weill, he will show up as a former banker and philanthropist. Weill became immensely wealthy off of the creation of the financial supermarket model. We have not seen any news that he will donate his fortune to combat the big banks. If Sandy Weill wants to be considered a saint, he can offer his wealth to lobbying efforts to break up the banks, and he can show Congress and the regulators what really goes on behind the scenes in the sausage factory. Until then, Weill may just be another prostitute looking for some cheap way to find redemption.

There is at least one bit of irony here. Weill’s call could create vast wealth. Imagine if the big banks really were broken up. Most of these are trading well under book value and tangible book value. There is a lot of value to unlock under a breakup scenario.

JON C. OGG

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