Economics of Scale in Finance and Independence

Mr. Weil, who caught the headlines last week for calling the break-up of banks, discovered something else in 2001 -that economics of scale in financial firms could have the effect magnifying risks. As you "cross-sell" to customers (for example to the subprime mortgage owner Joe Citi's car insurance), the independence of risk between those two events perish. That is, in simple terms, bad. No wonder that Citi is less than half its book value. It's worth more dead than alive.