NEW YORK, Nov 12 (Reuters) - Kenneth Griffin, founder of hedge fund Citadel LLC, said Tuesday that he supported breaking up the largest U.S. banks.
“If I could wave a magic wand, I’d break up the banking system,” Griffin said in an interview at a DealBook conference shown on CNBC television.
He said that the complexity and size of banks has created regulatory, compliance and management challenges and has hurt competition. He said, however, that he did not support the Occupy Wall Street movement since many of its demands are not “grounded in reality.”
Griffin said that he would remove the securities businesses from banks such as Goldman Sachs and Morgan Stanley and develop more mid-size banks to improve competition.
Griffin also said that the number of insider trading cases successfully brought against Wall Street firms, including the case against Steven A. Cohen’s SAC Capital Advisors hedge fund, “has put a bit of a dark cloud over the entire industry.”
“I think it’s unfortunate that the culture there allowed not one rotten apple but a couple of rotten apples,” Griffin said on SAC. SAC pleaded guilty to fraud charges on Nov. 8 as part of a $1.2 billion deal to resolve an insider trading investigation.
Griffin also said that the U.S. Federal Reserve’s $85 billion in monthly bond-buying stimulus has been “very successful” at inflating the prices of financial assets, but that it is not clear whether the benefits of the program have compensated for the costs.
“We need to reduce both the reality and perception of the Fed’s intervention in long-term rates,” he said. “I think that will do more to help real economic growth than most other things the Fed could do right now.”