John Reed, who was the architect of the merger between Citicorp and Travelers Group, has now admitted that he was wrong:

John S. Reed, who helped engineer the merger that created Citigroup Inc., apologized for his role in building a company that has taken $45 billion in direct U.S. aid and said banks that big should be divided into separate parts.

“I’m sorry,” Reed, 70, said in an interview yesterday. “These are people I love and care about. You could imagine emotionally it’s not easy to see what’s happened.”

He then makes a very good analogy:

“I would compartmentalize the industry for the same reason you compartmentalize ships,” Reed said in the interview in his office on Park Avenue in New York. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking you’d have consumer banking separate from trading bonds and equity.”

(emphasis mine)

I am tempted to quote Admiral David Beatty, “There seems to be something wrong with our bloody ships today,” when the Invincible and Queen Mary blew up in short order at Jutland

^*Originally, I was going to say a nice long drop and a tight knot to ensure that your end is quick, but then I remembered that I oppose the death penalty….Drat.