Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, the
Speaker 1: next guest has written about Goldman Sachs, the fall of
Speaker 1: Bear Stearns. He's written about the Duke Lacrosse scandal. He's
Speaker 1: written about his friends. His latest subject is General Electric
Speaker 1: And it is so great to have with us in
Speaker 1: our Bloomberg Interactor broker's studio, Bill Cohen, He's a former
Speaker 1: Wall Street m and a investment banker. I think for
Speaker 1: seventeen years seventeen long time financial journalist. He's been writing
Speaker 1: for a Who's Who, a business journalism, and more, including
Speaker 1: Business Week. He's authored many books, several New York Times bestsellers,
Speaker 1: former Bloomberg contributor, and I think you and I even
Speaker 1: anchored together at one point. We did time the good
Speaker 1: old days. Anymore, I'll just see myself out and listen
Speaker 1: to this. His latest book is Power Failure, The Rise
Speaker 1: and Fall of an American Icon. Really delighted to have
Speaker 1: you in studio. First of all, how are you. I'm great,
Speaker 1: Thank you. It's great to be here, great to be
Speaker 1: back in this building. Honestly, it is really great. Right
Speaker 1: A long time ago, you've been busy tell us about
Speaker 1: this book. Well, Uh, there seems to be a strange
Speaker 1: pattern going on, Carol. Like you know, when I wrote
Speaker 1: about bear Stearns, there's sort of a metaphorical dead body
Speaker 1: on the ground, and I wanted to know how it
Speaker 1: got there. Same thing with the Duke Lacrosse scandal. Uh,
Speaker 1: even the Goldman, I wanted to know how it avoided death. Uh.
Speaker 1: And with GE, you know, Uh, to me, it felt
Speaker 1: like also there was a dead body on the ground,
Speaker 1: and I wanted to know how it got there. It
Speaker 1: was sort of like a mystery that I wanted to solve,
Speaker 1: and I felt compelled to solve it. So some for
Speaker 1: some reason, I made the crazy decision to go back
Speaker 1: to the founding of the company and try to figure
Speaker 1: out what happened. And even from the outset, things aren't
Speaker 1: exactly the way they seem. People think that, you know,
Speaker 1: Thomas Edison was the great founder of GE, but in fact,
Speaker 1: by the time his company merged with another company, another
Speaker 1: electric company, Thomas Edison was already out of the picture.
Speaker 1: It was just a small shareholder of a company that
Speaker 1: was controlled by JP Morgan and Henry Villard, with Henry
Speaker 1: Vllard being the CEO, and then it merged with Charles
Speaker 1: Coffin's uh, you know electric company to form General Electric,
Speaker 1: and Charles Coffin became the CEO of the combined company,
Speaker 1: with Edison not even knowing about the merger, not wanting
Speaker 1: the merger, and him just like floating off, you know,
Speaker 1: over to New Jersey to you know, create some sort
Speaker 1: of limestone mining company or something. So right from the outset,
Speaker 1: and then just one more thing, because it is darn interesting,
Speaker 1: is that was? And then in was the big financial
Speaker 1: crisis and ge almost went bankrupt. And if they didn't
Speaker 1: buy their debt back at a discount, if this sounds familiar,
Speaker 1: if they didn't buy their desk debt back at a
Speaker 1: discount with permission from JP Morgan, they would have gone bankrupt.
Speaker 1: So fast forward to today, and yes, what we see
Speaker 1: what we see with g today. How would you just
Speaker 1: where or when would you describe the turning point into
Speaker 1: you know, the quote unquote dead body that you see
Speaker 1: gees today? When did that start to die? But you
Speaker 1: know that, of course is the subject of much debate
Speaker 1: sort of centered around the idea of whether sort of
Speaker 1: Jack Welch Uh, you know, bequeath Jeff Immult a company
Speaker 1: that was not nearly as robust as Jack thought it was.
Speaker 1: Jack thought he had bequeathed them a royal flush, and
Speaker 1: Jeff thought it was, you know, kind of a losing hand.
Speaker 1: So whether that's true or whether Jack actually left, I mean,
Speaker 1: he did leave him the most valuable company in the world,
Speaker 1: the most respected company in the world. But you know,
Speaker 1: he also Jeff took over from Jack on September seven
Speaker 1: of two thousand one. G E made the engines on
Speaker 1: the jets. GEE had reinsured some of the buildings down
Speaker 1: at the World Trade Center, and they of course owned
Speaker 1: NBC Universe NBC which hadn't ran from with no advertising
Speaker 1: for you know, least a week, costing GE hundreds of
Speaker 1: millions of dollars. So uh, and they lost some employees
Speaker 1: that day. And of course, uh, you know, everything kind
Speaker 1: of changed in governance after nine eleven. Uh. And so
Speaker 1: you know, Jeff thought he had gotten a very different
Speaker 1: set of assets and opportunities than Jack thought he had
Speaker 1: bequeathed them. But so the question is, you know, did
Speaker 1: Jeff play the hand poorly or did you know, can
Speaker 1: make wrong decisions. I think really the turning point seemed
Speaker 1: to be, uh, the financial crisis, no surprise because because
Speaker 1: you know, g E owned G Capital, which was, you know,
Speaker 1: like the third or fourth largest financial institution in the country,
Speaker 1: and everybody was focused on Wall Street going down the tubes.
Speaker 1: But G Capital almost went to two down the tubes
Speaker 1: as well. It's something I want to ask you about,
Speaker 1: Um that's not related to your book, but the crypto world.
Speaker 1: For someone who has understood the financial market, it's been
Speaker 1: on Wall Street prior to writing all of these books. Um,
Speaker 1: how do you see the crypto world right now? Do
Speaker 1: you think about it? Do you want to write about it?
Speaker 1: I've I've written about it for Puck. You have written
Speaker 1: about it. Yeah, that book coming at some point, probably
Speaker 1: by Michael Lewis. I think over the weekend right I
Speaker 1: am working on a documentary film about cryptocurrency and did
Speaker 1: interview the infamous now SBF less December for ninety minutes
Speaker 1: for the film. Uh. You know, this is a watershed moment,
Speaker 1: and not a good one. It's sort of you know,
Speaker 1: it's it's hard to say whether it's an Enron moment,
Speaker 1: an MF Global moment, a Lehman moment, it's probably some
Speaker 1: of all of the same, and none of them en
Speaker 1: did well, So it's not going to be good for
Speaker 1: ft X, obviously already filed for bankruptcy. I mean, I
Speaker 1: think the big question is when you have the icon
Speaker 1: of the industry, you know, the guy who is supposedly
Speaker 1: the JP Morgan of the industry, you know, literally going
Speaker 1: up in smoke in three days when nobody even conceived
Speaker 1: of that. Of course, nobody conceived of Bear Stearns or
Speaker 1: Lehman going down, or en Ron or World Calm or
Speaker 1: any of those things. Of course, you know, they happened
Speaker 1: very very quickly. And uh, you know, I think though
Speaker 1: it's gonna have huge ramifications obviously for Mr SPF whether
Speaker 1: or not he goes to prison or not. You know,
Speaker 1: it's unclear whether you know, he's you know, criminally culpable
Speaker 1: for what went on or maybe just naive. I mean,
Speaker 1: it literally is unknown at this point. I think what
Speaker 1: we need is in an exam, an examiner in the
Speaker 1: in the bankruptcy case, like there was in Lehman, to
Speaker 1: figure out exactly what happened. And I hope the judge
Speaker 1: appoints somebody, but I think this is gonna chill, you know,
Speaker 1: investment in this industry for a while. But but let
Speaker 1: me just make one other point. I also think that
Speaker 1: it will be a good thing in the long run,
Speaker 1: just like you know Webb dot one do zero was
Speaker 1: a good thing to come and go. We're gonna come
Speaker 1: back with Bill Cohen right here on Bloomberg Radio. You
Speaker 1: want to get back to our guests. Bill Cohen still
Speaker 1: with us. His latest book well known obviously to our
Speaker 1: Bloomberg audience and a former Bloomberg contributor. His latest book
Speaker 1: is called Power Failure, The Rise and Fall of an
Speaker 1: American Icon. It is about ge I want to ask
Speaker 1: you something though, because you've written about Goldman sachs Um
Speaker 1: and our most read story in the Bloomberg has to
Speaker 1: do with Goldman paying out a twelve million dollars or
Speaker 1: well over twelve million dollars to a partner who complained
Speaker 1: internally about a toxic workplace for women in the highest
Speaker 1: echelons of Wall Street's most prestigious firm. This is our
Speaker 1: most read story all day today. I guess what I
Speaker 1: wanted to ask you is what is the right question
Speaker 1: to be asking? Is this a Goldman Stories that a
Speaker 1: Wall Street story, Like, what is it when we see
Speaker 1: something like this, which is, as our reporter said, this
Speaker 1: doesn't happen a lot, and it certainly isn't made public
Speaker 1: a lot when something like this happens. This is not
Speaker 1: just a Goldman Sachs problem. This is a chronic problem
Speaker 1: across Wall Street and has been for generations. You know.
Speaker 1: My first book was about Lazard, where I had worked
Speaker 1: for six years, and I had a chapter in their
Speaker 1: chapter fourteen called It's a White Man's World, and it
Speaker 1: basically chronicled back then. That's that book came out in
Speaker 1: two thousand seven about the way women were treated at
Speaker 1: Lizard and it was not pretty okay. Uh. In my
Speaker 1: Goldman book, I also wrote about the way women were
Speaker 1: treated at Goldman. And I think I know some of
Speaker 1: these women who just you know, who brought this lawsuit
Speaker 1: against Goldman. Uh. You know, this is a chronic problem
Speaker 1: across the industry. There's a lot of lip service paid
Speaker 1: to trying to treat people better, and not just women,
Speaker 1: but women in particular, and uh, you know, other people
Speaker 1: who don't have the opportunities they should have, you know,
Speaker 1: in this chronic you know that that goes back to
Speaker 1: sort of the original culture of the original sins, if
Speaker 1: you will, of these firms, which were sort of like
Speaker 1: white male partnerships, and they were family owned businesses. They
Speaker 1: were small, little, my own businesses. There was a Mr Goldman,
Speaker 1: there was a Mr Sachs, there was a JP. Morgan,
Speaker 1: there were three Lizard brothers, there were Lehman brothers. So
Speaker 1: these were all family owned businesses. They were very wary
Speaker 1: of outsiders, didn't want, you know, even to marry outside
Speaker 1: the family because they were afraid of deluding the ownership
Speaker 1: and the culture that they were creating at these firms.
Speaker 1: It was a matter of trust. But of course as
Speaker 1: they got bigger and wealthier and more successful, they brought
Speaker 1: in other partners. Sometimes it works, sometimes it didn't, you know.
Speaker 1: And and at Lazard they were wary of bringing in,
Speaker 1: you know, women, They didn't think women could you know,
Speaker 1: do this work or wanted to do this work. And
Speaker 1: I remember they had one woman, and then the idea
Speaker 1: was to bring in a second one. And somebody, some
Speaker 1: fancy partners, said, why do we need a second partner,
Speaker 1: We already have one. I was a second woman. We
Speaker 1: already have one. I mean, that was the mentalities. Yeah, okay,
Speaker 1: whatever exactly. I mean, obviously that's ridiculous and needs to change.
Speaker 1: But it's slow to change, and even when they give
Speaker 1: lip service to it, it's slow to change because it's
Speaker 1: not a particularly you know, pleasant work environment to begin with.
Speaker 1: It's very laborious, hard work, long hours. Nobody's gonna have
Speaker 1: much sympathy for people who work on Well Street given
Speaker 1: how much they get paid. But it's not, you know,
Speaker 1: a great lifestyle. The work life balance is completely messed
Speaker 1: up and hasn't really changed dramatically. Uh, you know, despite
Speaker 1: again what they say they're trying to do and pretending
Speaker 1: to try to do. So, you know, I hate to
Speaker 1: be a downer on this, but you know the fact is,
Speaker 1: there's a long, long way to go on this. I
Speaker 1: want to jump in here. We got some breaking news.
Speaker 1: Apple said that it's preparing to get made in US chips, uh,
Speaker 1: or I should say made in US chips in a
Speaker 1: pivot from Asia. Supply. These chips are going to come
Speaker 1: from Arizona. Um. We're gonna get more on that in
Speaker 1: just a minute. For though, I want to go back
Speaker 1: to you Bill and talk a little bit about the
Speaker 1: culture at g because for years, this was a place
Speaker 1: that speaking of cultures, yeah, I mean your newest book
Speaker 1: is about e UM. For years, this was a great
Speaker 1: place to work, especially if your upper management. You talk
Speaker 1: a little bit about how the culture they're allowed. For
Speaker 1: the downfall of G well, you know, my my first
Speaker 1: job out of business school, uh in was working at
Speaker 1: G Capital, financing leverage buyouts of all things, which was
Speaker 1: sort of like the last thing I would have ever
Speaker 1: expected to be doing in my life at that point.
Speaker 1: I had been a reporter and have gone to business school,
Speaker 1: and then I was working at G Capital financing LBOs
Speaker 1: around the corner from here, and then I went and
Speaker 1: worked for the chief credit officer of G Capital up
Speaker 1: in Stanford, Connecticut. I always found g E to be
Speaker 1: you know, quote unquote corporate. You know, I wasn't necessarily
Speaker 1: a real corporate guy, but I felt it felt corporate.
Speaker 1: You know, there were there were there were HR departments
Speaker 1: before you know Wall Street firms at HR departments. You know,
Speaker 1: there were uh lots of benefits and perquisites. You know,
Speaker 1: I got a company car, you know, I got to
Speaker 1: take these trips and go on golf outings and things
Speaker 1: like that, and it was sort of like Rara and
Speaker 1: really sort of American and sort of kind of white bready,
Speaker 1: you know, and you know it's okay. Uh, you know,
Speaker 1: I like the people. I really like the people I
Speaker 1: worked with. I think they are quite unique group of people.
Speaker 1: And I really enjoyed interviewing the people for this book.
Speaker 1: You are from everybody from Jack, Jeff m Malt, you know,
Speaker 1: even people like David Zaslov and David Calhoun and Dave Cody,
Speaker 1: that the David's who all have become very successful. They
Speaker 1: they just loved Jack and they loved working at GE.
Speaker 1: I mean it's incredible. I mean, having worked at a
Speaker 1: bunch of Wall Street firms, you know, and interviewed a
Speaker 1: bunch of people working in all sorts of Wall Street firms,
Speaker 1: you rarely get anybody who says how excited and glad
Speaker 1: they were to be working at Wall Street. But people
Speaker 1: really liked working at GE for for a long time,
Speaker 1: or at least during this you know phase, until things
Speaker 1: sort of unwound and uh, you know, did did did
Speaker 1: Jack Welch? And I do feel like the history around
Speaker 1: Jack Welch is being challenge and challenge and I think
Speaker 1: I think, I think it's un unfair to be honest
Speaker 1: with you, I I you know, I know David Gillis
Speaker 1: wrote that book about that, and uh, you know, I
Speaker 1: don't think that's particularly fair. You know, I spent a
Speaker 1: lot of time with Jack. I worked there. I spent
Speaker 1: a lot of time interviewing. I spent with time talking
Speaker 1: to Jeff Immalt and other senior executives and board members.
Speaker 1: And I worked there, so I really got a feel
Speaker 1: for the place. And I think Jack created something that
Speaker 1: was really quite special. He wasn't anything remotely like a saint.
Speaker 1: He'd been he'd probably been canceled long ago and you
Speaker 1: know today, but he took over a company that was
Speaker 1: worth twelve billion dollars and and and it became worth
Speaker 1: fifty billion when he left. Now, you know, that's quite
Speaker 1: an accomplishment. So the world's most valuable company right at
Speaker 1: one at one point, the world's most valuable company, the
Speaker 1: world's most respected company was It was kind of like Apple, Google,
Speaker 1: Microsoft all rolled into one. I feel like earning season
Speaker 1: would kick off officially when reported it was the bell
Speaker 1: Weather exactly. You know if the oldest member of the
Speaker 1: Dow it was, you know, it was, and the technology
Speaker 1: that came out of that place was extraordinary. Yeah, I
Speaker 1: wish we had more time. We come back and talk
Speaker 1: some more whenever you like. All right, we would love it.
Speaker 1: We would love it. Bill Cohen um with us. You
Speaker 1: need to check out his new book because so much
Speaker 1: has been talked about, studied about, written about when it
Speaker 1: comes to the company known as General Electric. His book
Speaker 1: is called Power Failure, The Rise and Fall of an
Speaker 1: American Icon.