someone in the biz

Blame Citigroup's Woes on the Citi-Travelers Merger

Although the Citi-Travelers merger was the catalyst for Glass-Steagal's repeal, it was by no means the only reason. Repeal of GS was in the works for some time - the law was antiquated and regulators had to jump through hoops to allow banks to engage in services that would enable them to compete with foreign banks and provide more unified risk oversight.

Repeal was stalled by politics - former head of the Senate banking committee, Al D'Amato had too much support from Wall St I banks to push for reform. it wasn't until Phil Gramm took his place that a more pragmatic piece of legislation was enacted.

Gramm-Leach-Riley not only repealed Glass-Steagal, it also enabled more efficient regulatory oversight by removing unnecessary red-tape hurdles (i.e. requiring banks to seek regulatory approval to open a branch, costing hunderds of $'s in legal fees).

The cause of Citi's problems go beyond repeal of GS.