1 00:00:02,200 --> 00:00:06,800 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:07,320 --> 00:00:09,840 Speaker 1: This week on the podcast, I have a special guest. 3 00:00:09,960 --> 00:00:12,559 Speaker 1: His name is David Enrich and he is the finance 4 00:00:12,680 --> 00:00:15,239 Speaker 1: editor at the New York Times. Previously he was a 5 00:00:15,320 --> 00:00:18,720 Speaker 1: journalist at The Wall Street Journal. Last time we spoke 6 00:00:18,760 --> 00:00:21,600 Speaker 1: with David, it was when his new book The Spider 7 00:00:21,640 --> 00:00:27,120 Speaker 1: Network came out. That was back in all about libor manipulation. 8 00:00:27,680 --> 00:00:30,720 Speaker 1: His new book is Dark Towers. It's all about Deutsche 9 00:00:30,760 --> 00:00:35,800 Speaker 1: Bank and how what was once a sleepy, backwater German bank. Okay, 10 00:00:35,880 --> 00:00:39,640 Speaker 1: they also helped funds the Holocaust and the Nazi war machine, 11 00:00:40,120 --> 00:00:43,960 Speaker 1: but how they ended up having global aspirations in the 12 00:00:44,040 --> 00:00:47,920 Speaker 1: nineties and two thousand's, briefly becoming the biggest bank in 13 00:00:47,960 --> 00:00:53,160 Speaker 1: the world before an epic collapse. David is a really 14 00:00:53,159 --> 00:00:57,560 Speaker 1: interesting investigative journalist. He does a wonderful job flashing out 15 00:00:58,160 --> 00:01:01,560 Speaker 1: the characters in his book, who are all real people. 16 00:01:01,640 --> 00:01:05,520 Speaker 1: This isn't fiction. He is telling a story about what happens, 17 00:01:05,880 --> 00:01:09,160 Speaker 1: how it happens, and why. And he had access to 18 00:01:09,240 --> 00:01:12,959 Speaker 1: a treasure trove of documents and emails. In the Deutsche 19 00:01:12,959 --> 00:01:18,120 Speaker 1: Bank story, it's just utterly utterly compelling if you're at 20 00:01:18,120 --> 00:01:23,240 Speaker 1: all interested in stories of malfeasan set joint financial institutions. 21 00:01:23,280 --> 00:01:26,720 Speaker 1: This is up there with When Genius Failed and other 22 00:01:26,880 --> 00:01:32,360 Speaker 1: such issues, only this one involves criminality, not bad training decisions. So, 23 00:01:32,400 --> 00:01:35,280 Speaker 1: with no further ado, my conversation with The New York 24 00:01:35,280 --> 00:01:40,840 Speaker 1: Times David Enrich. This is Masters in Business with Barry 25 00:01:40,920 --> 00:01:44,800 Speaker 1: Ridholts on Bloomberg Radio. My special guest this week is 26 00:01:44,880 --> 00:01:47,840 Speaker 1: David Enrich. He is the finance editor at The New 27 00:01:47,920 --> 00:01:51,360 Speaker 1: York Times. Previously, he was an investigative journalist at The 28 00:01:51,360 --> 00:01:54,440 Speaker 1: Wall Street Journal. He is the author of several books, 29 00:01:54,840 --> 00:01:58,800 Speaker 1: most recently Dark Towers, Deutsche Bank, Donald Trump, and An 30 00:01:58,840 --> 00:02:02,920 Speaker 1: Epic Trail of Destruction. Previously, he wrote The Spider Network, 31 00:02:03,320 --> 00:02:08,520 Speaker 1: a book about the libor manipulation. David Enrich, Welcome back 32 00:02:08,720 --> 00:02:11,639 Speaker 1: to Bloomberg. Thanks for having me to Barry. So we 33 00:02:11,720 --> 00:02:14,360 Speaker 1: had you on a couple of years ago to discuss 34 00:02:14,639 --> 00:02:19,079 Speaker 1: The Spider Network, which I thought was a fascinating tail. 35 00:02:19,280 --> 00:02:23,480 Speaker 1: It it read like a spy novel almost and a 36 00:02:23,680 --> 00:02:27,919 Speaker 1: very short period of time elapse between that book and 37 00:02:28,080 --> 00:02:32,960 Speaker 1: Dark Towers. Obviously there's some overlap with Liebor and Deutsche Bank, 38 00:02:33,639 --> 00:02:37,359 Speaker 1: but why so quick? Between the two books? How did 39 00:02:37,360 --> 00:02:40,400 Speaker 1: the new one come about? Well? Why so quick? Is 40 00:02:40,440 --> 00:02:43,560 Speaker 1: the same question I've gotten from a number of people, 41 00:02:43,560 --> 00:02:47,640 Speaker 1: including my wife. And you know what the reality is, 42 00:02:47,680 --> 00:02:49,960 Speaker 1: when you've got a good idea for a book, they 43 00:02:49,960 --> 00:02:51,960 Speaker 1: don't come around that often, at least not for me, 44 00:02:52,400 --> 00:02:55,800 Speaker 1: and so you kind of jump at it at the 45 00:02:55,840 --> 00:02:59,240 Speaker 1: opportunity while you can. In this case, I mean, I've 46 00:02:59,280 --> 00:03:03,320 Speaker 1: been upset things about Deutsche Bank for really the better 47 00:03:03,360 --> 00:03:06,680 Speaker 1: part of the decade. Um back. I've been working with 48 00:03:06,680 --> 00:03:10,680 Speaker 1: the Wall Street Journal in London from two thousand two sixteen, 49 00:03:10,960 --> 00:03:14,680 Speaker 1: and during that period I was covering with banking and finance, 50 00:03:14,880 --> 00:03:18,160 Speaker 1: and you know, the biggest most troubled bank at that 51 00:03:18,160 --> 00:03:21,120 Speaker 1: time was Deutsche Bank, and it was it was pretty 52 00:03:21,120 --> 00:03:25,000 Speaker 1: technical and industry specific story. It was not something that 53 00:03:25,080 --> 00:03:27,880 Speaker 1: captured much public imagination, I don't think outside of the 54 00:03:28,320 --> 00:03:31,480 Speaker 1: finance world. But with the election of Donald Trump and 55 00:03:31,760 --> 00:03:34,520 Speaker 1: given his very close ties to Deutsche Bank over a 56 00:03:34,520 --> 00:03:37,600 Speaker 1: long period of time, the story kind of started becoming 57 00:03:37,600 --> 00:03:40,560 Speaker 1: a much more palatable story for the general public. And 58 00:03:40,960 --> 00:03:42,440 Speaker 1: I felt like I was in a really good position 59 00:03:42,480 --> 00:03:45,360 Speaker 1: to tell that, so I, you know, just grabbed the 60 00:03:45,400 --> 00:03:50,760 Speaker 1: opportunity while I could, and I do wish in hindsight, 61 00:03:50,880 --> 00:03:54,000 Speaker 1: I had It's hard writing a book, you know, it 62 00:03:54,040 --> 00:03:57,080 Speaker 1: takes a lot of time, and it's this labor of 63 00:03:57,160 --> 00:04:01,080 Speaker 1: love but also his objects of complete in total obsession, 64 00:04:01,440 --> 00:04:04,760 Speaker 1: and I've got little kids, and so it was. It 65 00:04:04,840 --> 00:04:07,880 Speaker 1: was not the easiest couple of years doing this, especially 66 00:04:07,880 --> 00:04:11,640 Speaker 1: when you're writing about a topic that is changing in 67 00:04:11,720 --> 00:04:17,520 Speaker 1: real time, ongoing investigations, ongoing soft price fluctuation. How did 68 00:04:17,560 --> 00:04:21,880 Speaker 1: you deal with the fact that this story continued past 69 00:04:22,160 --> 00:04:25,640 Speaker 1: when you put your pen down. Well, that's an interesting question. 70 00:04:25,720 --> 00:04:28,600 Speaker 1: I made a decision pretty early on in the consulta 71 00:04:28,600 --> 00:04:31,640 Speaker 1: issue with my publisher that this is not going to 72 00:04:31,760 --> 00:04:34,880 Speaker 1: be a book that told you everything in the world 73 00:04:34,880 --> 00:04:36,800 Speaker 1: about Deutsche Bank, and tried to break a lot of 74 00:04:36,839 --> 00:04:40,840 Speaker 1: news about the current ongoing kind of reorganizations at the 75 00:04:40,839 --> 00:04:43,920 Speaker 1: bank and restructurings and things like that. There was it 76 00:04:44,000 --> 00:04:47,359 Speaker 1: was going to be, and you know, as you probably know, 77 00:04:47,600 --> 00:04:50,760 Speaker 1: like eight percent of the book of the book is 78 00:04:51,000 --> 00:04:54,839 Speaker 1: the story of how Deutsche Bank grew from this provincial, 79 00:04:55,560 --> 00:05:00,279 Speaker 1: really German focused bank into this global juggernaut and into 80 00:05:00,320 --> 00:05:05,000 Speaker 1: this epic disaster, and so much less of the book 81 00:05:05,080 --> 00:05:09,000 Speaker 1: is spent focusing on the past, basically from the two 82 00:05:09,000 --> 00:05:12,920 Speaker 1: thousands sixteen period, two seventeen period onward, where the bank 83 00:05:12,960 --> 00:05:17,479 Speaker 1: has been in this pretty hardcore cleanup mode. And so 84 00:05:17,920 --> 00:05:21,200 Speaker 1: I had the liberty of just kind of drawing a 85 00:05:21,279 --> 00:05:25,159 Speaker 1: line basically around the time that shortly after the time 86 00:05:25,400 --> 00:05:30,920 Speaker 1: that the bank's leadership changed for you know, the eighteenth 87 00:05:30,960 --> 00:05:34,800 Speaker 1: time and uh, and so I really that made it 88 00:05:34,800 --> 00:05:37,520 Speaker 1: a lot easier to kind of put blinders on. Obviously, 89 00:05:37,520 --> 00:05:40,479 Speaker 1: I focused very I paid a lot of attention to 90 00:05:40,880 --> 00:05:44,200 Speaker 1: what was going on with the various reorganizations and the 91 00:05:44,240 --> 00:05:46,039 Speaker 1: new leadership. And I said a lot of time talking 92 00:05:46,080 --> 00:05:48,680 Speaker 1: to people who were involved in that. But what I 93 00:05:48,720 --> 00:05:53,960 Speaker 1: was not particularly worried about every little incremental twist and 94 00:05:54,000 --> 00:05:56,359 Speaker 1: turn as related to the bank and its financials. I 95 00:05:56,400 --> 00:05:59,640 Speaker 1: was much more interested, frankly, in in terms of things 96 00:05:59,680 --> 00:06:03,760 Speaker 1: that were moving, uh, you know, as I was writing, 97 00:06:04,040 --> 00:06:09,039 Speaker 1: as it related to investigations on money laundering and Donald Trump. 98 00:06:09,200 --> 00:06:11,480 Speaker 1: And so I spent I did spend a lot of 99 00:06:11,520 --> 00:06:14,800 Speaker 1: time both in the book and also doing reporting and 100 00:06:14,800 --> 00:06:18,560 Speaker 1: writing for the New York Times, uh, on those kind 101 00:06:18,560 --> 00:06:21,240 Speaker 1: of live topics. The other things that were much more 102 00:06:21,240 --> 00:06:24,159 Speaker 1: coming out of Germany, where I you know, just in 103 00:06:24,200 --> 00:06:27,320 Speaker 1: addition to not think move that core to the narrative 104 00:06:27,360 --> 00:06:29,920 Speaker 1: in the book, I also just simply wasn't as well sourced. 105 00:06:30,120 --> 00:06:34,040 Speaker 1: So um, I kind of just narrowed my field of 106 00:06:34,120 --> 00:06:37,160 Speaker 1: vision a little bit, which I think was it is 107 00:06:37,200 --> 00:06:39,359 Speaker 1: a little bit of a gamble, and I think it frankly, 108 00:06:39,360 --> 00:06:42,440 Speaker 1: it will probably make the book a little you know, 109 00:06:42,600 --> 00:06:47,320 Speaker 1: less satisfying in some ways to a certain um slice 110 00:06:47,480 --> 00:06:50,919 Speaker 1: of the world that is really obsessed with understanding where 111 00:06:50,960 --> 00:06:54,480 Speaker 1: the bank currently is. Uh, But I think for the 112 00:06:54,560 --> 00:06:57,200 Speaker 1: vast majority of readers it's a pretty good look at 113 00:06:57,200 --> 00:07:00,320 Speaker 1: how the bank and how the bank on to some soone, 114 00:07:00,360 --> 00:07:02,520 Speaker 1: how good companies in general get into someone trouble in 115 00:07:02,520 --> 00:07:05,240 Speaker 1: the kind of decisions and incentives that are set up 116 00:07:05,240 --> 00:07:08,839 Speaker 1: along the way that really lead down this pretty disastrous path. 117 00:07:08,920 --> 00:07:12,120 Speaker 1: And to me, going to bank is just this classic 118 00:07:12,200 --> 00:07:15,920 Speaker 1: case study and how not only how not to run 119 00:07:15,920 --> 00:07:19,960 Speaker 1: a business, but the perils of growing too fast and 120 00:07:20,000 --> 00:07:23,680 Speaker 1: incentivizing people to essentially make just very bad decisions over 121 00:07:23,720 --> 00:07:26,920 Speaker 1: and over to them. So you hit on exactly a 122 00:07:27,080 --> 00:07:28,920 Speaker 1: question I was going to ask later, but I might 123 00:07:28,960 --> 00:07:31,600 Speaker 1: as well ask it now. When we look at some 124 00:07:31,680 --> 00:07:35,280 Speaker 1: of the biggest disasters of the past decade, whether it 125 00:07:35,400 --> 00:07:38,680 Speaker 1: was the collapse of We Works or all the trouble 126 00:07:39,120 --> 00:07:42,320 Speaker 1: that Uber got into, or go back to Lehman Brothers, 127 00:07:42,960 --> 00:07:47,880 Speaker 1: Deutsche Bank did many of the same things, disregardful legality, 128 00:07:48,560 --> 00:07:55,520 Speaker 1: incentivizing people for profits regardless of the consequences, effectively short 129 00:07:55,640 --> 00:07:59,280 Speaker 1: term versus long term greedy. Is that a fair assessment 130 00:07:59,280 --> 00:08:04,200 Speaker 1: of Deutsche Bank. Yeah, absolutely, I think that the bank, 131 00:08:05,440 --> 00:08:08,400 Speaker 1: and I think it's actually deeper than that in some ways. 132 00:08:08,440 --> 00:08:12,720 Speaker 1: I mean, thanks are obviously kind of peculiar beasts, right, 133 00:08:12,760 --> 00:08:17,320 Speaker 1: I mean, they are entrusted with essentially operating the economy 134 00:08:17,360 --> 00:08:19,640 Speaker 1: to a large extent for the entire world. And so 135 00:08:19,960 --> 00:08:23,120 Speaker 1: unlike an Uber we Work, which is important in its 136 00:08:23,120 --> 00:08:24,880 Speaker 1: own right, and it is kind of transformed the way 137 00:08:24,920 --> 00:08:29,640 Speaker 1: we live or work. It's banks occupied this very special 138 00:08:29,720 --> 00:08:32,160 Speaker 1: role at the heart of the financial system and therefore 139 00:08:32,280 --> 00:08:35,800 Speaker 1: the heart of the economy. And to me, there's one 140 00:08:35,800 --> 00:08:38,640 Speaker 1: of the most important shifts that taken place in the 141 00:08:38,640 --> 00:08:41,280 Speaker 1: global finance in the past I don't know, thirty years 142 00:08:41,280 --> 00:08:44,280 Speaker 1: at this point, I guess, is the transition from banks 143 00:08:44,320 --> 00:08:47,960 Speaker 1: being viewed as these kind of the profitable but not 144 00:08:48,360 --> 00:08:52,640 Speaker 1: egregiously profitable. They really, um, they have been much more 145 00:08:52,760 --> 00:08:56,120 Speaker 1: like public utilities. And they're to kind of grief the 146 00:08:56,960 --> 00:09:00,040 Speaker 1: years of the global economy and this transition that a 147 00:09:00,120 --> 00:09:02,800 Speaker 1: place that the coincides large was a big wall throught 148 00:09:02,840 --> 00:09:06,800 Speaker 1: firms going from private partnerships into publicly traded companies and 149 00:09:06,800 --> 00:09:12,160 Speaker 1: then later becoming banks. Uh, toward these just ridiculously fat 150 00:09:12,200 --> 00:09:15,920 Speaker 1: profit margins has been It's been very destructive for the 151 00:09:15,920 --> 00:09:18,120 Speaker 1: banks themselves in many cases, but it's also been very 152 00:09:18,120 --> 00:09:21,319 Speaker 1: destructive for the economy and for the financial system, I think. 153 00:09:21,400 --> 00:09:26,200 Speaker 1: And so Deutsche Banks transition from being this you know, 154 00:09:26,320 --> 00:09:30,480 Speaker 1: pretty plain vanilla German lender that was primarily focused on 155 00:09:30,600 --> 00:09:34,959 Speaker 1: helping big German companies spread their wings internationally and to 156 00:09:35,040 --> 00:09:38,080 Speaker 1: a lesser extent, helping non German companies enter the German 157 00:09:38,160 --> 00:09:41,840 Speaker 1: or European markets. And you know, those were very study 158 00:09:42,520 --> 00:09:45,600 Speaker 1: businesses and very important businesses. And in Deutsche Bank, as 159 00:09:45,600 --> 00:09:48,560 Speaker 1: a result of that, played a leading role in the 160 00:09:48,640 --> 00:09:51,760 Speaker 1: development of railroads in the nineteenth and early twentieth centuries. 161 00:09:51,800 --> 00:09:56,440 Speaker 1: It played a leading role in the reconstruction redevelopment of 162 00:09:56,480 --> 00:09:59,600 Speaker 1: Europe after World War Two and going out into the 163 00:09:59,600 --> 00:10:02,840 Speaker 1: mid nine reason as the iron curtains cell it played. 164 00:10:03,000 --> 00:10:07,400 Speaker 1: The bank played a leading role in helping to globalize 165 00:10:07,600 --> 00:10:13,760 Speaker 1: the economy and knocked down by unhealthy barriers to economic 166 00:10:13,800 --> 00:10:16,680 Speaker 1: development in some countries, and it was the banks CEO 167 00:10:17,720 --> 00:10:20,160 Speaker 1: up until the late nineteen eighties was a leading advocate 168 00:10:20,200 --> 00:10:23,040 Speaker 1: of forgiving thirdal depths, for example. And so it was 169 00:10:23,080 --> 00:10:26,480 Speaker 1: a bank that occupied this role not only you know, 170 00:10:26,559 --> 00:10:29,520 Speaker 1: providing banking services, but was it viewed its role as 171 00:10:29,600 --> 00:10:34,360 Speaker 1: kind of essential and intertwined with the fate of Germany 172 00:10:34,400 --> 00:10:38,000 Speaker 1: and the fate of Europe. And that sifted very dramatically 173 00:10:38,040 --> 00:10:40,680 Speaker 1: starting in the mid when the bank got a taste 174 00:10:40,679 --> 00:10:43,199 Speaker 1: for Wall Street and it decided that it was going 175 00:10:43,240 --> 00:10:47,240 Speaker 1: to prioritize short term profits above everything else. And you know, 176 00:10:47,440 --> 00:10:49,640 Speaker 1: I think we'll probably get into this later, but that 177 00:10:49,760 --> 00:10:53,000 Speaker 1: led to a complete transformation of the bank's culture and 178 00:10:53,120 --> 00:10:55,760 Speaker 1: one where literally the only thing you were supposed to 179 00:10:55,760 --> 00:10:58,640 Speaker 1: look at when deciding whether to do a certain transaction 180 00:10:58,920 --> 00:11:01,880 Speaker 1: or to bring on a certain client or make certain 181 00:11:01,920 --> 00:11:05,319 Speaker 1: investments as a business was what will the impact of 182 00:11:05,400 --> 00:11:09,040 Speaker 1: this decision be on our profits this quarter or maybe 183 00:11:09,040 --> 00:11:11,880 Speaker 1: this year. But there's no consideration to what will this 184 00:11:11,920 --> 00:11:15,080 Speaker 1: dud our reputations. What will this dud our business five 185 00:11:15,200 --> 00:11:18,079 Speaker 1: years from now? Is this sustainable? Is this smart? And 186 00:11:18,640 --> 00:11:22,960 Speaker 1: you know that that kind of just blinders on short 187 00:11:23,080 --> 00:11:27,920 Speaker 1: term decision making has very anticipatable consequences, and in a 188 00:11:27,960 --> 00:11:31,800 Speaker 1: business like banking that is highly levered, the seriousness the 189 00:11:31,800 --> 00:11:36,400 Speaker 1: gravity of those mistakes is dramatically amplified, to say the 190 00:11:36,520 --> 00:11:40,080 Speaker 1: very least. Removing the risk from the risk reward analysis 191 00:11:40,679 --> 00:11:44,840 Speaker 1: naturally leaves to certain outcomes. So let's talk a little 192 00:11:44,880 --> 00:11:49,600 Speaker 1: bit about that rise and fall we discussed earlier. In 193 00:11:49,720 --> 00:11:54,240 Speaker 1: the nineteen eighties and nineties, Deutsche Bank was a sleepy 194 00:11:54,640 --> 00:12:00,880 Speaker 1: regional bank in Germany. Of its profits came from testing banking, 195 00:12:01,559 --> 00:12:07,160 Speaker 1: and once this transformation and embrace of derivatives and aggressive 196 00:12:07,880 --> 00:12:11,920 Speaker 1: risk and trading and leverage took place, that shut up 197 00:12:11,960 --> 00:12:15,520 Speaker 1: to eighty five percent a year later. How did this 198 00:12:15,600 --> 00:12:19,320 Speaker 1: happen and how did it change the culture at Deutsche Bank? Well, 199 00:12:19,400 --> 00:12:23,880 Speaker 1: the in those kind of two very related questions, and 200 00:12:23,880 --> 00:12:26,480 Speaker 1: and the way it happened is that starting in the 201 00:12:26,520 --> 00:12:32,120 Speaker 1: mid the banks leaders saw that the big American banks 202 00:12:32,280 --> 00:12:34,840 Speaker 1: were making a tremendous amount of money on Wall Street 203 00:12:34,920 --> 00:12:37,360 Speaker 1: and also making a tremendous amount of money and kind 204 00:12:37,360 --> 00:12:41,200 Speaker 1: of approaching on the turf of European banks like Deutsche 205 00:12:41,240 --> 00:12:45,720 Speaker 1: Bank and Goldman Facts. Famously one a big deal taking 206 00:12:45,760 --> 00:12:48,599 Speaker 1: Deutsche Telecom private, and that that was a kind of 207 00:12:48,600 --> 00:12:55,240 Speaker 1: assignment that had traditionally gone to the hometown banks, European banks. Instead, 208 00:12:55,360 --> 00:12:57,360 Speaker 1: Deutche Bank got a role in that deal, the Goldman 209 00:12:57,440 --> 00:13:00,200 Speaker 1: Facts as the lead and that was a huge wake 210 00:13:00,240 --> 00:13:02,840 Speaker 1: up call to Deutsche Bank executives that, you know, Wall 211 00:13:02,840 --> 00:13:05,600 Speaker 1: Street was coming to invade their turf. Maybe it's time 212 00:13:05,640 --> 00:13:08,400 Speaker 1: for them to go invade Wall Streets turf. And so, 213 00:13:08,559 --> 00:13:13,880 Speaker 1: starting in the bank went on this epic hiring spree 214 00:13:13,920 --> 00:13:18,079 Speaker 1: where it brought in initially a small group of salesmen 215 00:13:18,160 --> 00:13:21,160 Speaker 1: and traders from Mary Lynch and basically gave them a 216 00:13:21,200 --> 00:13:24,360 Speaker 1: blank check to hire as many people as they could, 217 00:13:24,520 --> 00:13:27,880 Speaker 1: and they went on to hire thousands of people from 218 00:13:28,040 --> 00:13:31,640 Speaker 1: the big Wall Street firms of the time, very very quickly, 219 00:13:31,840 --> 00:13:35,200 Speaker 1: and that very quickly transformed that or began to transform 220 00:13:35,280 --> 00:13:39,840 Speaker 1: the culture from an institution that was primarily a German 221 00:13:39,840 --> 00:13:43,080 Speaker 1: one to one that was much more international, and the 222 00:13:43,160 --> 00:13:46,160 Speaker 1: locals of power started to shift slowly but surely from 223 00:13:46,360 --> 00:13:50,600 Speaker 1: Frankfort and Berlin to London and to a lesser extent 224 00:13:50,679 --> 00:13:55,000 Speaker 1: in New York. And even with spending billions of dollars 225 00:13:55,280 --> 00:13:58,960 Speaker 1: hiring thousands of people in this very fast manner, the 226 00:13:58,960 --> 00:14:02,160 Speaker 1: bank up much biggers actually in derivatives, but it still 227 00:14:02,280 --> 00:14:04,760 Speaker 1: was kind of a second tier, maybe even third tier 228 00:14:04,800 --> 00:14:08,199 Speaker 1: player on Wall Street and in many other many markets 229 00:14:08,200 --> 00:14:10,959 Speaker 1: around the world. So in the late ninety nineties, so 230 00:14:11,000 --> 00:14:13,720 Speaker 1: a few years after it started this expansion, the bank 231 00:14:13,800 --> 00:14:17,000 Speaker 1: decide that it really needed to double down on this strategy, 232 00:14:17,240 --> 00:14:20,480 Speaker 1: and so they went shopping for a big Wall Street 233 00:14:20,520 --> 00:14:24,000 Speaker 1: firm to buy, and they, you know, they were looking 234 00:14:24,000 --> 00:14:27,920 Speaker 1: at the likes of Mary Lynch Lehman Brothers, Uh and 235 00:14:28,080 --> 00:14:30,960 Speaker 1: Bankers Trust, which at the time was kind of one 236 00:14:31,000 --> 00:14:33,880 Speaker 1: of the most swashbuckling firms on Wall Street. It was 237 00:14:33,920 --> 00:14:38,000 Speaker 1: in pretty serious financial trouble because of very bad that 238 00:14:38,200 --> 00:14:41,280 Speaker 1: it's made on derivatives, and the FED was actually looking 239 00:14:41,400 --> 00:14:45,600 Speaker 1: for a stronger financial institution to come in and acquire 240 00:14:45,640 --> 00:14:48,440 Speaker 1: bankers Trust and basically take the mess off the FITS hands. 241 00:14:49,080 --> 00:14:51,880 Speaker 1: And so the SAD learned that Deutsche Bank was in 242 00:14:51,920 --> 00:14:54,840 Speaker 1: the market for a deal and kind of broker disagreement 243 00:14:54,880 --> 00:15:00,200 Speaker 1: where Deutsche Bank in would spend ten billion dollar ers 244 00:15:00,280 --> 00:15:03,440 Speaker 1: to buy bankers trust, and so that deal happened and 245 00:15:04,360 --> 00:15:08,520 Speaker 1: almost overnight the bank was transformed. I mean, as you mentioned, 246 00:15:08,600 --> 00:15:12,920 Speaker 1: the share of the bank's overall profits that came from investment, 247 00:15:12,920 --> 00:15:16,840 Speaker 1: banking and sales and trading went up and more than 248 00:15:16,880 --> 00:15:20,080 Speaker 1: tripled basically at the stroke of the pen. And but 249 00:15:20,080 --> 00:15:23,560 Speaker 1: it also are more important, really just completely changed the 250 00:15:23,560 --> 00:15:27,000 Speaker 1: bank's culture and the power had gone from being in 251 00:15:27,080 --> 00:15:30,680 Speaker 1: Germany and now is clear that since the overwhelming majority 252 00:15:30,720 --> 00:15:33,880 Speaker 1: of the bank's profits were coming from London and New York, 253 00:15:34,280 --> 00:15:37,080 Speaker 1: that's where the power centers should be. And so you 254 00:15:37,120 --> 00:15:42,040 Speaker 1: know that there were kind of very there's some cosmetic 255 00:15:42,200 --> 00:15:44,880 Speaker 1: changes where I think pretty symbolic, like the bank's official 256 00:15:44,960 --> 00:15:48,000 Speaker 1: language went from being German to English. But the more 257 00:15:48,040 --> 00:15:52,680 Speaker 1: important ones were that the supervisory board of the bank, 258 00:15:52,720 --> 00:15:59,720 Speaker 1: which was primarily consisted of German industrialists and corporate chieftain 259 00:16:00,200 --> 00:16:06,040 Speaker 1: and even labor leaders, was completely It was just neutered essentially, 260 00:16:06,200 --> 00:16:11,240 Speaker 1: and instead the mandate became, look, we're going to step 261 00:16:11,240 --> 00:16:13,120 Speaker 1: on the gas. We want to be as big as 262 00:16:13,160 --> 00:16:16,360 Speaker 1: we can, as profitable as we can, as quickly as 263 00:16:16,400 --> 00:16:20,480 Speaker 1: we can. And so the bank just underwent this really 264 00:16:20,560 --> 00:16:25,600 Speaker 1: revolutionary change where they had metrics that measured how profitable 265 00:16:25,640 --> 00:16:27,360 Speaker 1: they were, how quickly and that was they were. They 266 00:16:27,360 --> 00:16:30,560 Speaker 1: were using a metric called return on equity, which traditionally 267 00:16:30,720 --> 00:16:34,440 Speaker 1: a banks return on equity would be in the maybe 268 00:16:34,520 --> 00:16:38,360 Speaker 1: high single digits, very very low double digits. And the 269 00:16:38,680 --> 00:16:42,600 Speaker 1: newly appointed CEO in two thou too, Joe Ackerman, who 270 00:16:42,720 --> 00:16:46,800 Speaker 1: is himself a credit Swiss veteran, came in and said 271 00:16:47,160 --> 00:16:49,520 Speaker 1: that we want in the next two years for our 272 00:16:49,640 --> 00:16:53,240 Speaker 1: return and equity to go to and you know, that 273 00:16:53,360 --> 00:16:55,600 Speaker 1: was a huge jointment. At the time that he made 274 00:16:55,640 --> 00:16:58,040 Speaker 1: that prediction. I think the return on equity was four 275 00:16:58,160 --> 00:17:00,240 Speaker 1: or five percent, So he was basically called in the 276 00:17:00,280 --> 00:17:03,120 Speaker 1: period of two or three years for that to increase 277 00:17:03,560 --> 00:17:06,600 Speaker 1: what I guess which is you know, exbraordinary. And the 278 00:17:06,680 --> 00:17:10,119 Speaker 1: crazy thing is they achieved it, and he by the 279 00:17:10,160 --> 00:17:13,600 Speaker 1: mid two thousands Deutsche Bank had gone had become one 280 00:17:13,600 --> 00:17:16,800 Speaker 1: of the most profitable places on the planet and the 281 00:17:17,600 --> 00:17:20,679 Speaker 1: but again, the decision, the way they achieved that was 282 00:17:21,240 --> 00:17:24,760 Speaker 1: it really wasn't that complicated. They started evaluating every transaccident 283 00:17:24,800 --> 00:17:27,840 Speaker 1: and every client they did based on it's the return 284 00:17:27,880 --> 00:17:30,320 Speaker 1: on equity. So they were not going to be able 285 00:17:30,359 --> 00:17:35,359 Speaker 1: to make a profit on a loan or another transaction, 286 00:17:35,400 --> 00:17:37,399 Speaker 1: they simply wouldn't do it. And if a client like 287 00:17:37,480 --> 00:17:41,800 Speaker 1: a German mid sized business for example, wasn't going because 288 00:17:41,840 --> 00:17:45,479 Speaker 1: that relationship wasn't going to generate that huge return, they 289 00:17:45,480 --> 00:17:48,480 Speaker 1: would drop the clients. And so the reality was that 290 00:17:48,640 --> 00:17:51,199 Speaker 1: most of the business the bank had been doing in 291 00:17:51,280 --> 00:17:53,560 Speaker 1: Germany it was not all that profitable, and part because 292 00:17:53,600 --> 00:17:57,000 Speaker 1: the German banking system has this huge lot of banks, 293 00:17:57,000 --> 00:18:00,439 Speaker 1: so there's intense competition, which drives prices way down. So 294 00:18:00,520 --> 00:18:02,680 Speaker 1: let me let me circle back to something you said 295 00:18:03,000 --> 00:18:06,480 Speaker 1: before we drift too far away the supervision of the bank. 296 00:18:06,680 --> 00:18:08,680 Speaker 1: What is the valve stat I don't know how to 297 00:18:08,680 --> 00:18:14,240 Speaker 1: pronounce the divorce the divorce and the management board, and 298 00:18:14,280 --> 00:18:16,920 Speaker 1: then there's the supervisory board, which is really supposed to 299 00:18:16,960 --> 00:18:21,119 Speaker 1: be the oversight board. So between those two entities and 300 00:18:21,320 --> 00:18:27,119 Speaker 1: the Federal Reserve and the UH, the various regulators in 301 00:18:27,160 --> 00:18:32,320 Speaker 1: the UK and the regulators in Germany, how did Deutsche 302 00:18:32,320 --> 00:18:38,879 Speaker 1: Bank manage two skirt regulations, to skirt risk management, to 303 00:18:39,359 --> 00:18:43,360 Speaker 1: hide losses, to do all these things that bad banks 304 00:18:43,400 --> 00:18:46,359 Speaker 1: have a tendency to do for years and years and 305 00:18:46,440 --> 00:18:50,040 Speaker 1: years that this went on for almost two decades, didn't it. Yeah, 306 00:18:50,040 --> 00:18:53,199 Speaker 1: And you would think, given the number of regulators that 307 00:18:53,200 --> 00:18:55,120 Speaker 1: were supposed to be overseeing the bank, you would think 308 00:18:55,280 --> 00:18:58,399 Speaker 1: that it would have been very hard for them to 309 00:18:58,520 --> 00:19:01,320 Speaker 1: do that. And the reality be as the exact opposite, 310 00:19:01,760 --> 00:19:05,320 Speaker 1: which is that there was a patchwork of weak regulators 311 00:19:05,359 --> 00:19:10,520 Speaker 1: all over the globe, and the bank very deathly played 312 00:19:10,520 --> 00:19:13,000 Speaker 1: those regulators off each other. So the result was that 313 00:19:13,160 --> 00:19:17,520 Speaker 1: almost no one was actually doing substantive kind of hard 314 00:19:17,600 --> 00:19:20,879 Speaker 1: nosed oversight of them, and often which is the German 315 00:19:20,880 --> 00:19:26,920 Speaker 1: bank regulator was it wasn't is notorious for essentially playing 316 00:19:27,080 --> 00:19:31,800 Speaker 1: defense on behalf of hometown companies, and so Boten would 317 00:19:31,920 --> 00:19:35,600 Speaker 1: essentially demand that any regulatory inquiries that came from the 318 00:19:35,680 --> 00:19:39,000 Speaker 1: US or the UK had to be routed through this 319 00:19:39,320 --> 00:19:43,320 Speaker 1: labyrinth of German bureaucracy and and in some cases to 320 00:19:43,440 --> 00:19:47,600 Speaker 1: prevent the bank from complying with regulatory requests from outside 321 00:19:47,600 --> 00:19:50,919 Speaker 1: of Germany. And the FED, for its part, which was 322 00:19:51,000 --> 00:19:54,679 Speaker 1: really supposed to be aggressively overseeing a large swath of 323 00:19:54,680 --> 00:19:58,040 Speaker 1: the banks US business, and the FED knew that there 324 00:19:58,040 --> 00:20:01,439 Speaker 1: were really serious problems gone on. Weather it was uh, 325 00:20:01,560 --> 00:20:04,639 Speaker 1: you know, weak defenses against money laundering or did the 326 00:20:05,520 --> 00:20:09,639 Speaker 1: quality integrity of the financial data the bank was producing. 327 00:20:09,760 --> 00:20:12,440 Speaker 1: And over and over again the FET voice these concerns 328 00:20:12,480 --> 00:20:15,679 Speaker 1: to bank starting around two dozen two, and over and 329 00:20:15,720 --> 00:20:18,680 Speaker 1: over again, the bank did nothing to actually address the 330 00:20:18,760 --> 00:20:21,040 Speaker 1: sects concerns, and on a number of occasions the FETE 331 00:20:21,080 --> 00:20:24,480 Speaker 1: came in and punished the bank. That these were punishments. 332 00:20:24,480 --> 00:20:27,760 Speaker 1: That were to describe them as light touch would be 333 00:20:28,200 --> 00:20:31,439 Speaker 1: really like abould be exaggerating it. It's you know, they 334 00:20:31,480 --> 00:20:34,239 Speaker 1: were not even imposing any monetary penalties, they were not 335 00:20:34,720 --> 00:20:39,560 Speaker 1: publicly admonishing any executives. They were just very weak written orders. 336 00:20:39,840 --> 00:20:44,000 Speaker 1: And the bank and executives I talked to said explicitly 337 00:20:44,119 --> 00:20:46,720 Speaker 1: that the fact of the matters, they knew that the 338 00:20:47,000 --> 00:20:50,840 Speaker 1: consequences from misbehaving were not really that severe, and so 339 00:20:51,000 --> 00:20:55,240 Speaker 1: in the benefits to misbehaving in some cases were very attractive, 340 00:20:55,280 --> 00:20:58,320 Speaker 1: and they could make a lot of money providing services 341 00:20:58,359 --> 00:21:02,320 Speaker 1: like money laundering or or you know, money transfer services 342 00:21:02,359 --> 00:21:06,160 Speaker 1: to countries that were under U S sanctions, And it's 343 00:21:06,200 --> 00:21:09,520 Speaker 1: a pretty easy decision for them. Quite fascinating. So let's 344 00:21:09,600 --> 00:21:13,720 Speaker 1: talk a little bit about Russia and Deutsche Bank and 345 00:21:13,840 --> 00:21:17,720 Speaker 1: Trump and I have to start with the question, how 346 00:21:17,840 --> 00:21:21,320 Speaker 1: is it that Deutsche Bank was the only bank in 347 00:21:21,359 --> 00:21:26,159 Speaker 1: the world that actually would lend money to Donald Trump? 348 00:21:26,240 --> 00:21:29,720 Speaker 1: What's the background there? Well, the background is that banks, 349 00:21:29,840 --> 00:21:33,840 Speaker 1: as a general rule don't like lending money to people 350 00:21:34,119 --> 00:21:37,399 Speaker 1: or institutions that have a tendency of defaulting on their loans. 351 00:21:38,040 --> 00:21:41,919 Speaker 1: And that is a pretty good description. Knows exactly what 352 00:21:42,000 --> 00:21:46,120 Speaker 1: Donald Trump was in the late nines, and he had 353 00:21:46,119 --> 00:21:51,080 Speaker 1: repeatedly defaulted or his companies had repeatedly defaulted on their debts. 354 00:21:51,200 --> 00:21:55,880 Speaker 1: And as a result of that, mainstream financial instantiations were very, 355 00:21:56,000 --> 00:21:59,040 Speaker 1: very wary about doing any any business with them because 356 00:21:59,200 --> 00:22:02,800 Speaker 1: it wasn't Deutsche Bank considered a mainstream financial entity. How 357 00:22:02,880 --> 00:22:07,320 Speaker 1: different were they from JP Morgan or Best Starts? Well, 358 00:22:07,400 --> 00:22:09,399 Speaker 1: in the US, they were very different. And this was 359 00:22:09,440 --> 00:22:13,400 Speaker 1: the period where Deutsche Bank was trying to really establish 360 00:22:13,440 --> 00:22:15,399 Speaker 1: a name for itself and make inroads in the U S. 361 00:22:15,440 --> 00:22:17,760 Speaker 1: It was more or less a nonentity at the time, 362 00:22:18,320 --> 00:22:21,320 Speaker 1: and so the bank set out to try and build 363 00:22:21,359 --> 00:22:26,160 Speaker 1: a business, in particular business of commercial mortgage BacT security, 364 00:22:26,240 --> 00:22:29,400 Speaker 1: so basically making big real estate loans and then packaging 365 00:22:29,440 --> 00:22:32,760 Speaker 1: those into bonds. And you know the key the first 366 00:22:32,840 --> 00:22:35,640 Speaker 1: key step to that is finding commercial real estate clients 367 00:22:35,680 --> 00:22:39,679 Speaker 1: to lend to. And they it was very hard for 368 00:22:39,720 --> 00:22:43,680 Speaker 1: them to establish profitable relationships with the kinds of big 369 00:22:43,760 --> 00:22:46,640 Speaker 1: names in commercial real estate, as they were already banked 370 00:22:46,720 --> 00:22:50,840 Speaker 1: by much bigger banks, by JP Morgan or Bear or City, 371 00:22:51,040 --> 00:22:53,439 Speaker 1: and so they had to go kind of fishing for 372 00:22:53,480 --> 00:22:57,240 Speaker 1: the scraps. And it just so happened that Trump at 373 00:22:57,240 --> 00:22:59,719 Speaker 1: the time was in need of money himself, and so 374 00:23:00,200 --> 00:23:01,800 Speaker 1: they paired up. And it's kind of a match made 375 00:23:01,800 --> 00:23:03,639 Speaker 1: in heaven to do with this bank that's desperate for 376 00:23:03,680 --> 00:23:06,440 Speaker 1: clients in the US and you have this businessman who's 377 00:23:06,520 --> 00:23:10,520 Speaker 1: desperate for a bank. And so starting in, the bank 378 00:23:10,720 --> 00:23:14,000 Speaker 1: made several hundred million dollars of loans Trump in a 379 00:23:14,119 --> 00:23:16,399 Speaker 1: very short period of time, and every basically off to 380 00:23:16,440 --> 00:23:20,800 Speaker 1: the races from there. What's fascinating is Trump had a 381 00:23:20,840 --> 00:23:24,600 Speaker 1: relationship with Deutsche Bank and then he stiffed them on 382 00:23:24,720 --> 00:23:29,239 Speaker 1: a loan and came back to that same division and 383 00:23:29,359 --> 00:23:34,159 Speaker 1: was soundly rejected, but somehow managed to talk a different 384 00:23:34,200 --> 00:23:37,640 Speaker 1: division into making a new loan to him. Could could 385 00:23:37,680 --> 00:23:42,639 Speaker 1: you So essentially one division paid off the loan to 386 00:23:42,760 --> 00:23:45,480 Speaker 1: a separate division. Could you explain that, yeah, and this 387 00:23:45,560 --> 00:23:48,280 Speaker 1: is actually not the first time that has happened at Deutschment. 388 00:23:48,320 --> 00:23:50,760 Speaker 1: There are at least two other occasions where the bank, 389 00:23:51,119 --> 00:23:53,080 Speaker 1: one part of the bank made a loan or is 390 00:23:53,160 --> 00:23:56,399 Speaker 1: he's debt for Trump and he defaulted and he was 391 00:23:56,480 --> 00:23:58,320 Speaker 1: off limits for that division, and then comes back to 392 00:23:58,320 --> 00:24:00,439 Speaker 1: another division of the bank and find a way to 393 00:24:00,440 --> 00:24:02,960 Speaker 1: do business with them. The most famous example of this 394 00:24:03,280 --> 00:24:07,280 Speaker 1: is in two thousand eight, he defaulted on uh Dave 395 00:24:07,480 --> 00:24:11,240 Speaker 1: loan to finance the Chicago skyscraper, and there's all sorts 396 00:24:11,240 --> 00:24:14,000 Speaker 1: of litigation where Trump suites the bank, and eventually they 397 00:24:14,000 --> 00:24:16,800 Speaker 1: reached a settlement that says Trump has to repay a 398 00:24:16,840 --> 00:24:19,600 Speaker 1: certain portion of that loan in a couple of years. 399 00:24:19,760 --> 00:24:22,320 Speaker 1: And so that brings you to two thousand eleven or 400 00:24:22,359 --> 00:24:26,439 Speaker 1: so and Trump reaching Trump through Jared Kushner, his son 401 00:24:26,480 --> 00:24:29,960 Speaker 1: in law, who had a relationship with a private banker 402 00:24:29,960 --> 00:24:34,359 Speaker 1: at Deutsche Bank named Rosemary Rablick. Kushner introduces his father 403 00:24:34,440 --> 00:24:37,679 Speaker 1: in law to Rosemary Rablick works in the private banking division, 404 00:24:38,280 --> 00:24:43,119 Speaker 1: and basically Rablick and her boss make a decision that 405 00:24:43,320 --> 00:24:46,240 Speaker 1: even though the bank has been burned by Trump, even 406 00:24:46,240 --> 00:24:48,720 Speaker 1: though he's off limits to the most of the bank. 407 00:24:49,119 --> 00:24:52,679 Speaker 1: They are willing to take that risk and start a 408 00:24:52,680 --> 00:24:54,800 Speaker 1: new relationship with him, bring him on, bring him back 409 00:24:54,840 --> 00:24:57,359 Speaker 1: on as a client. And so the bank makes a 410 00:24:57,359 --> 00:24:59,800 Speaker 1: couple of loans to him starting in early two twelve. 411 00:25:00,359 --> 00:25:03,520 Speaker 1: One of them is to finance the acquisition and renovation 412 00:25:03,520 --> 00:25:05,800 Speaker 1: of the door Al Golf resort in Florida. But the 413 00:25:05,920 --> 00:25:09,320 Speaker 1: other is, I believe a forty eight million dollar loan 414 00:25:09,840 --> 00:25:13,800 Speaker 1: to Reap that's used primarily to repay what Trumps still 415 00:25:13,800 --> 00:25:16,879 Speaker 1: owed this different division of Deutsche Bank for the defaulted 416 00:25:16,920 --> 00:25:21,359 Speaker 1: loan on the Chicago Tower. And that is uh. I 417 00:25:21,400 --> 00:25:23,320 Speaker 1: don't know. I've been covering banking and finance for almost 418 00:25:23,320 --> 00:25:25,640 Speaker 1: twenty years now, and I've never seen anything like that. 419 00:25:25,760 --> 00:25:28,560 Speaker 1: And I still talk to people in the banking world 420 00:25:28,600 --> 00:25:31,720 Speaker 1: today who are just kind of, you know, their jaw 421 00:25:31,800 --> 00:25:33,760 Speaker 1: just drops when they hear the story. It's not something 422 00:25:33,840 --> 00:25:37,400 Speaker 1: that a normal bank with proper risk management and a 423 00:25:37,440 --> 00:25:41,119 Speaker 1: good cohesive internal culture would ever dream of doing. And 424 00:25:41,160 --> 00:25:43,960 Speaker 1: for obvious reasons, right it's embarrassing for the bank. The 425 00:25:44,040 --> 00:25:48,520 Speaker 1: bad credit risk and the potential reputational damage of getting 426 00:25:48,560 --> 00:25:50,760 Speaker 1: back in bed with this guy actor. He's already stiffed 427 00:25:50,760 --> 00:25:53,560 Speaker 1: you multiple times. It just doesn't make much sense, right, 428 00:25:53,680 --> 00:25:57,400 Speaker 1: quite amazing. I love the anecdote within the book about 429 00:25:58,000 --> 00:26:01,680 Speaker 1: Trump's relationship with bear Stern. He was buddies with their 430 00:26:01,840 --> 00:26:05,760 Speaker 1: CEO A. S. Greenberg. And even though Ace and him 431 00:26:05,840 --> 00:26:09,359 Speaker 1: or friends, Ace won't sign off on a loan. And 432 00:26:09,440 --> 00:26:12,800 Speaker 1: the poor banker that has to call Trump to tell 433 00:26:12,880 --> 00:26:16,480 Speaker 1: him that A said no, has this brilliant way of 434 00:26:16,560 --> 00:26:20,000 Speaker 1: letting him down. Uh, And he says to Trump, Ace 435 00:26:20,119 --> 00:26:22,400 Speaker 1: loves you. The reason he doesn't want to do it 436 00:26:22,480 --> 00:26:24,560 Speaker 1: is because he told me there are four guys in 437 00:26:24,560 --> 00:26:26,760 Speaker 1: the world he doesn't want to be on the opposite 438 00:26:26,800 --> 00:26:31,520 Speaker 1: side of the table from Bill Gates, Warren Buvett, Henry Cravis, 439 00:26:31,520 --> 00:26:37,200 Speaker 1: and you how Unearthed could such a transparently but kissing 440 00:26:37,359 --> 00:26:42,760 Speaker 1: ploy work on anybody? It was, really, it was perfectly 441 00:26:42,760 --> 00:26:46,000 Speaker 1: and it's perfectly tailored to the client in this case. 442 00:26:46,119 --> 00:26:50,920 Speaker 1: And you know, I sometimes has a skeptical cynicals journalist 443 00:26:51,359 --> 00:26:54,680 Speaker 1: and roll my eyes when investment bankers like both about 444 00:26:54,680 --> 00:26:56,920 Speaker 1: their skills and how valuable they are. But I'm gonna 445 00:26:56,960 --> 00:26:58,639 Speaker 1: tell you, when I heard this story related to me 446 00:26:58,760 --> 00:27:02,480 Speaker 1: by by the banker who pulled this off, I was 447 00:27:02,560 --> 00:27:05,399 Speaker 1: just so impressed. It is a real in addition to 448 00:27:05,440 --> 00:27:09,399 Speaker 1: being hilarious, he knew his client, He understood the psychology 449 00:27:09,400 --> 00:27:14,520 Speaker 1: of his client and managed it perfectly. Who knew that 450 00:27:14,600 --> 00:27:16,920 Speaker 1: know your client rule could ever be applied in such 451 00:27:16,920 --> 00:27:21,080 Speaker 1: a brilliant way. Let's talk a little bit about Deutsche Bank. 452 00:27:21,720 --> 00:27:26,720 Speaker 1: What sort of ties did Jeffrey Epstein, who, even after 453 00:27:26,800 --> 00:27:29,840 Speaker 1: he's been dead, still keeps popping up in the news. 454 00:27:29,960 --> 00:27:33,800 Speaker 1: What sort of ties did Epstein have to the bank? Well, 455 00:27:33,840 --> 00:27:37,640 Speaker 1: Epstein's relationship with the bank is not as long as 456 00:27:38,080 --> 00:27:40,080 Speaker 1: the bank's relationship with Trump, but in a lot of 457 00:27:40,080 --> 00:27:44,960 Speaker 1: ways it's much work reaches. And starting around two dozen twelve, 458 00:27:45,520 --> 00:27:50,240 Speaker 1: Epstein's longtime bank JP Morgan decided that it could not 459 00:27:50,440 --> 00:27:53,120 Speaker 1: continue to do business with him, in part these we've been, 460 00:27:53,600 --> 00:27:56,639 Speaker 1: you know, publicly convicted of sex crimes and there are 461 00:27:56,640 --> 00:27:59,600 Speaker 1: all these rumors flying around about continued stuff that he 462 00:27:59,720 --> 00:28:03,119 Speaker 1: was doing and whether it was being a predator or 463 00:28:03,400 --> 00:28:06,520 Speaker 1: money laundering, and so they cut tout Japan Morgon cut 464 00:28:06,560 --> 00:28:11,560 Speaker 1: ties with Epstein, And within months of that decision to 465 00:28:11,640 --> 00:28:15,360 Speaker 1: cut ties with him, the banker at JP Morgan, who 466 00:28:15,400 --> 00:28:18,399 Speaker 1: had managed the Epstein relationship, left JP Morgan and was 467 00:28:18,480 --> 00:28:20,880 Speaker 1: hired by Deutsche Bank, and as far as I can tell, 468 00:28:20,920 --> 00:28:22,960 Speaker 1: one of the first things he did upon walking in 469 00:28:23,000 --> 00:28:26,520 Speaker 1: the doors at Deutsche Bank was to convince his superiors 470 00:28:26,560 --> 00:28:30,720 Speaker 1: that they should rein basically maiate a relationship with Jeffrey Epstein, 471 00:28:30,920 --> 00:28:34,280 Speaker 1: and very quickly the bank brought Epstein on as a 472 00:28:34,359 --> 00:28:38,240 Speaker 1: client and started not only lending him money but providing 473 00:28:38,280 --> 00:28:41,120 Speaker 1: all sorts of kind of account management and cash management 474 00:28:41,160 --> 00:28:45,080 Speaker 1: services to all these shell companies he was creating. And 475 00:28:45,760 --> 00:28:50,880 Speaker 1: the relationship lasted up until almost last summer, basically and 476 00:28:51,080 --> 00:28:54,680 Speaker 1: just very shortly before Epstein was arrested and charged with 477 00:28:54,920 --> 00:28:59,120 Speaker 1: operating a sex trafficking room. And again, the really remarkable 478 00:28:59,160 --> 00:29:02,000 Speaker 1: thing here is not some that they the bank was 479 00:29:02,080 --> 00:29:05,160 Speaker 1: willing to take risks on the client that other banks 480 00:29:05,160 --> 00:29:08,920 Speaker 1: found unacceptable, because that is, you know, we just we 481 00:29:08,920 --> 00:29:11,480 Speaker 1: already know that about Deutsche Bank. Was really remarkable in 482 00:29:11,480 --> 00:29:13,800 Speaker 1: this case that a number of employees up and down 483 00:29:13,840 --> 00:29:17,040 Speaker 1: the food chain at the bank rings really serious concerns 484 00:29:17,120 --> 00:29:20,720 Speaker 1: about this business. And there is their concerns about doing 485 00:29:20,800 --> 00:29:24,560 Speaker 1: business with convicted criminal. There were concerns about all the 486 00:29:24,640 --> 00:29:28,040 Speaker 1: rumors swirling around about his continued criminality, and there were 487 00:29:28,080 --> 00:29:32,000 Speaker 1: concerns from anti money laundering officers inside the bank that 488 00:29:32,120 --> 00:29:35,480 Speaker 1: he was using the bank to launder money, And time 489 00:29:35,520 --> 00:29:38,800 Speaker 1: after time, those concerns were voiced to executives of the 490 00:29:38,840 --> 00:29:42,080 Speaker 1: food chain and discussed by executives at a pretty senilor 491 00:29:42,160 --> 00:29:45,120 Speaker 1: level within the bank, and the concerns were just tossed aside. 492 00:29:45,160 --> 00:29:48,440 Speaker 1: They decided the risks were not so severe that it 493 00:29:48,480 --> 00:29:51,440 Speaker 1: would justify ending a relationship that was turning out to 494 00:29:51,480 --> 00:29:53,960 Speaker 1: be quite lucrative for the bank. So let me push 495 00:29:54,000 --> 00:29:59,520 Speaker 1: back on your earlier statement that Deutsche Bank's culture has changed, 496 00:29:59,560 --> 00:30:02,040 Speaker 1: and I'm gonn go someplace from the book that I 497 00:30:02,080 --> 00:30:05,640 Speaker 1: wasn't planning on, but I now have to based on 498 00:30:05,720 --> 00:30:10,280 Speaker 1: what you just said. Deutsche Bank is the entity that 499 00:30:10,400 --> 00:30:17,040 Speaker 1: effectively funded the construction of concentration camps at hit under Hitler, 500 00:30:17,520 --> 00:30:21,800 Speaker 1: that they were essentially Hitler's banker. They fired all of 501 00:30:21,840 --> 00:30:25,520 Speaker 1: the senior managements who were Jewish, they confiscated a lot 502 00:30:25,520 --> 00:30:29,640 Speaker 1: of Jewish assets. Deutsche Bank was a really bad actor 503 00:30:30,960 --> 00:30:33,560 Speaker 1: during the period leading up to the war and during 504 00:30:33,600 --> 00:30:36,560 Speaker 1: the war. So the question I have to ask is, 505 00:30:36,880 --> 00:30:42,280 Speaker 1: how is this morally bankrupt, corrupt entity today any different 506 00:30:42,480 --> 00:30:46,440 Speaker 1: than the bank that helped fund the Nazis. Yeah, that's 507 00:30:46,480 --> 00:30:49,720 Speaker 1: a I mean, that's a good question as and and 508 00:30:49,760 --> 00:30:52,479 Speaker 1: you're totally right first of all, that Deutsche Bank was, 509 00:30:52,720 --> 00:30:55,080 Speaker 1: as a saint the book, a party to genocide. I mean, 510 00:30:55,120 --> 00:30:58,920 Speaker 1: it was a criminal enterprise. The US wanted to dissolve 511 00:30:59,000 --> 00:31:02,440 Speaker 1: Deutsche Bank after World War Two because of its participation 512 00:31:02,520 --> 00:31:06,240 Speaker 1: in war crimes. It's CEO was tried and convicted of 513 00:31:06,280 --> 00:31:10,000 Speaker 1: being a war criminal. And I mean, look, there's I 514 00:31:10,040 --> 00:31:14,240 Speaker 1: think a danger in equating the crimes that took place 515 00:31:14,840 --> 00:31:16,920 Speaker 1: in the genocide that took place in the war, crimes 516 00:31:16,920 --> 00:31:21,000 Speaker 1: that took place with the crimes that Deutsche bankas has 517 00:31:21,080 --> 00:31:23,720 Speaker 1: committed in the past twenty years. And these the crimes 518 00:31:23,760 --> 00:31:28,440 Speaker 1: in in the Holocausts were just I think unique and 519 00:31:29,120 --> 00:31:33,040 Speaker 1: uh just uniquely awful. And I'm not sure anything they've 520 00:31:33,080 --> 00:31:36,080 Speaker 1: done today really composed that. But I also think that 521 00:31:36,080 --> 00:31:38,360 Speaker 1: that was and I'm not at all trying to defend 522 00:31:38,360 --> 00:31:41,920 Speaker 1: the bank's conduct during that period because it's indefensible, but 523 00:31:42,720 --> 00:31:46,040 Speaker 1: that was an extraordinary moment in corporate Germany. And there 524 00:31:46,040 --> 00:31:48,080 Speaker 1: are a lot most in fact, most of the big 525 00:31:48,120 --> 00:31:52,120 Speaker 1: German companies at the time participated one way or another 526 00:31:52,240 --> 00:31:56,280 Speaker 1: in genocide, and whether it was chemical companies manufacturing poison 527 00:31:56,360 --> 00:32:00,520 Speaker 1: gas or banks helping uh, you know, time as the 528 00:32:00,600 --> 00:32:03,680 Speaker 1: Nazi war effort, and a lot of those companies and 529 00:32:04,000 --> 00:32:08,320 Speaker 1: are auto manufacturers making cars or tanks or things like that, 530 00:32:08,680 --> 00:32:11,960 Speaker 1: and a lot of those companies still exist today. And 531 00:32:12,680 --> 00:32:15,480 Speaker 1: you know, so I'm not sure it's I'm kind of 532 00:32:15,480 --> 00:32:19,160 Speaker 1: struggling with this answer because I don't want to it 533 00:32:19,320 --> 00:32:22,200 Speaker 1: all sound like I'm justifying or defending with the Bank's 534 00:32:22,200 --> 00:32:26,280 Speaker 1: actions during that period. H But look, they came out 535 00:32:26,280 --> 00:32:30,080 Speaker 1: of World War Two and they did change, and they played, 536 00:32:30,280 --> 00:32:33,080 Speaker 1: as I said earlier, a leading role in the reconstruction 537 00:32:33,200 --> 00:32:38,160 Speaker 1: and redevelopment of Europe. They admitted their crimes and apologists 538 00:32:38,160 --> 00:32:40,320 Speaker 1: for their crimes during the Holocaust, which does not make 539 00:32:40,320 --> 00:32:43,400 Speaker 1: it right, but at least is you know, a small 540 00:32:43,400 --> 00:32:48,280 Speaker 1: step toward making it right and serves also right. Didn't 541 00:32:48,280 --> 00:32:52,360 Speaker 1: they write some big texts? Yeah? They did, and they, 542 00:32:52,800 --> 00:32:56,520 Speaker 1: you know, like much of Germany, they and they've spent 543 00:32:56,560 --> 00:32:59,280 Speaker 1: the better part of the past century apologizing and trying 544 00:32:59,280 --> 00:33:03,440 Speaker 1: to make right the awful times that they committed. All right, 545 00:33:03,800 --> 00:33:07,320 Speaker 1: fair enough, let's let's go from Jeffrey Epstein to genocide 546 00:33:07,640 --> 00:33:10,800 Speaker 1: to something a little lighter, Let's talk about Russian money 547 00:33:10,880 --> 00:33:15,080 Speaker 1: laundering and Deutsche Bank's role. Tell us about the pair 548 00:33:15,280 --> 00:33:20,320 Speaker 1: trade situation that Deutsche Bank came up with that allowed 549 00:33:20,360 --> 00:33:26,960 Speaker 1: Russian oligarchs to move rubles into dollars pretty seamlessly. Yeah, well, 550 00:33:27,160 --> 00:33:29,600 Speaker 1: just even before we explained that. And I think it's 551 00:33:29,640 --> 00:33:33,760 Speaker 1: worth noting that Deutsche Bank for basically ever, for on 552 00:33:33,960 --> 00:33:36,480 Speaker 1: most of its existence, has been making a lot of 553 00:33:36,520 --> 00:33:40,920 Speaker 1: money by providing banking services in Russia that most of 554 00:33:40,960 --> 00:33:43,120 Speaker 1: the rest of the world, for one reason or another 555 00:33:43,200 --> 00:33:46,120 Speaker 1: did not see, did not see his particularly good idea. 556 00:33:46,240 --> 00:33:49,800 Speaker 1: And so you know, they initially were financing railroads for 557 00:33:49,840 --> 00:33:55,280 Speaker 1: the czar, and that shifted to serving the communist government. 558 00:33:55,320 --> 00:33:59,720 Speaker 1: They're basically NonStop, with the brief exception of World War 559 00:33:59,760 --> 00:34:03,600 Speaker 1: two and um, and then starting in the early two thousand, 560 00:34:03,920 --> 00:34:07,320 Speaker 1: as this new class of oligarchs emerged, Deotsche Bank was 561 00:34:07,360 --> 00:34:10,640 Speaker 1: one of the only Western banks operating in Russia and 562 00:34:10,719 --> 00:34:15,880 Speaker 1: basically assisting these Kremlin linked oligarchs in moving their money 563 00:34:16,040 --> 00:34:18,960 Speaker 1: out of out of Eastern Europe and into the Western 564 00:34:19,040 --> 00:34:22,960 Speaker 1: financial system, whether that was into uh the Eurozone or 565 00:34:23,040 --> 00:34:27,479 Speaker 1: into the US financial system, and the starts. Describe those 566 00:34:27,520 --> 00:34:31,600 Speaker 1: mirror trades. Describe those mirror trades because it's a fascinating 567 00:34:32,480 --> 00:34:35,600 Speaker 1: methodology and it's kind of shocking. No, none of the 568 00:34:35,640 --> 00:34:40,000 Speaker 1: regulators picked it up very quickly. Yes, I think the 569 00:34:40,120 --> 00:34:43,600 Speaker 1: simplest way to describe these trades is that they're called 570 00:34:43,640 --> 00:34:46,319 Speaker 1: mirror trades because there are two trades that take place 571 00:34:46,360 --> 00:34:50,680 Speaker 1: basically simultaneously that are reverse images to each other. So uh, 572 00:34:50,800 --> 00:34:53,720 Speaker 1: in Russia you would have an oligarch, and the result 573 00:34:53,760 --> 00:34:55,680 Speaker 1: of those trades is that money goes from being in 574 00:34:55,800 --> 00:35:01,120 Speaker 1: roubles to being in most likely euros. And so one example, 575 00:35:01,760 --> 00:35:06,920 Speaker 1: a Russian will basically purchase a bunch of blue shift 576 00:35:07,000 --> 00:35:10,000 Speaker 1: shares of a company, using rubles to acquire the shares, 577 00:35:10,160 --> 00:35:13,480 Speaker 1: and then, in a separate transaction that takes place simultaneously 578 00:35:13,920 --> 00:35:16,880 Speaker 1: with the same amount, a shell company head quartered in 579 00:35:16,960 --> 00:35:19,040 Speaker 1: maybe some place like Cyprus, which is part of the 580 00:35:19,040 --> 00:35:23,360 Speaker 1: Eurozone but very lately regulated, will sell the same number 581 00:35:23,360 --> 00:35:25,719 Speaker 1: of shares that were just bought by the Russian, and 582 00:35:26,040 --> 00:35:30,440 Speaker 1: the result is that the Russian has spent his rubles 583 00:35:30,480 --> 00:35:33,640 Speaker 1: buying shares, and the Russian who controls the shell company 584 00:35:33,680 --> 00:35:37,320 Speaker 1: has also liquidated those shares in Cyprus and raised the 585 00:35:37,320 --> 00:35:39,680 Speaker 1: same amount of money in euros. And so just like that, 586 00:35:39,840 --> 00:35:42,400 Speaker 1: with the help of Deutschebek moving the money back and 587 00:35:42,440 --> 00:35:45,600 Speaker 1: forth between the Russian and these shell companies, the just 588 00:35:45,800 --> 00:35:48,120 Speaker 1: like that, you've got ruble. You once at rubles, they're 589 00:35:48,120 --> 00:35:52,240 Speaker 1: now euros and your money is in the European financial system. 590 00:35:52,320 --> 00:35:56,000 Speaker 1: So it's fairly and it's much more complicated than I 591 00:35:56,040 --> 00:35:58,239 Speaker 1: just said that. The nuts and both of it are 592 00:35:58,280 --> 00:36:03,040 Speaker 1: actually pretty simple and uh kind of almost elegant in 593 00:36:03,080 --> 00:36:07,319 Speaker 1: their simplicity, I think. And again, a normal bank with 594 00:36:07,640 --> 00:36:12,040 Speaker 1: proper checks and balances and internal controls in good computer 595 00:36:12,120 --> 00:36:14,560 Speaker 1: systems would have spotted this pretty quickly because they would 596 00:36:14,600 --> 00:36:18,239 Speaker 1: have seen that there are these two simultaneous transactions offen 597 00:36:18,360 --> 00:36:22,080 Speaker 1: quite large transactions taking place instantly at the at the 598 00:36:22,160 --> 00:36:25,280 Speaker 1: exact same time, in the exact same amounts, and involving 599 00:36:25,320 --> 00:36:28,560 Speaker 1: these shell companies linked to Russians. And you know that 600 00:36:28,600 --> 00:36:30,840 Speaker 1: would raise a lot of red flags at a normal, 601 00:36:31,040 --> 00:36:34,400 Speaker 1: healthy financial institution, don't you. Bank was not a normal, 602 00:36:34,400 --> 00:36:38,120 Speaker 1: healthy financial institution. So so let's talk a little bit 603 00:36:38,160 --> 00:36:41,279 Speaker 1: about your writing process. In the book, we could talk 604 00:36:41,360 --> 00:36:46,160 Speaker 1: more about oligarchs and bed actor states and and how 605 00:36:46,239 --> 00:36:49,759 Speaker 1: Deutsche Bank UM laundered money for them, But I think 606 00:36:49,760 --> 00:36:52,319 Speaker 1: people get the sense we all would have been better 607 00:36:52,360 --> 00:36:54,760 Speaker 1: off if Deutsche Bank would have been given a corporate 608 00:36:54,840 --> 00:36:57,520 Speaker 1: death penalty after World War Two. That was a mistake 609 00:36:57,600 --> 00:37:00,439 Speaker 1: and I don't want to dwell on that. Let talking 610 00:37:00,520 --> 00:37:04,799 Speaker 1: said about your writing about the book, there's an incredible 611 00:37:04,800 --> 00:37:10,200 Speaker 1: amount of detail and character development in the book, UM, 612 00:37:10,239 --> 00:37:16,600 Speaker 1: including some of my the most interesting people UM within 613 00:37:16,680 --> 00:37:19,799 Speaker 1: the book are really fleshed out. How did you go 614 00:37:19,880 --> 00:37:24,239 Speaker 1: about writing this and how much research did you put 615 00:37:24,280 --> 00:37:29,040 Speaker 1: into figuring out who this huge cast of characters were 616 00:37:29,560 --> 00:37:32,440 Speaker 1: and how they all interacted with each other. It's quite 617 00:37:33,040 --> 00:37:38,000 Speaker 1: a giant puzzle. Yeah. I mean the bottom line is 618 00:37:38,040 --> 00:37:40,760 Speaker 1: I just read a lot, and I read. I think 619 00:37:41,040 --> 00:37:43,120 Speaker 1: I did my best to read every single thing that 620 00:37:43,160 --> 00:37:47,360 Speaker 1: had been written about Deutsche Bank from the midies to 621 00:37:47,480 --> 00:37:52,480 Speaker 1: the present day. And so that was in extraordinary amount 622 00:37:52,520 --> 00:37:55,440 Speaker 1: of background research, not just in the media, but in 623 00:37:55,560 --> 00:38:01,040 Speaker 1: academic papers, in government documents, in laws of things like that. 624 00:38:01,840 --> 00:38:04,399 Speaker 1: And and then I just set out to meet as 625 00:38:04,440 --> 00:38:07,480 Speaker 1: many people as I could who have been involved for it, 626 00:38:07,560 --> 00:38:10,920 Speaker 1: worked for the bank, and that ranged from people and 627 00:38:10,920 --> 00:38:14,080 Speaker 1: then I started with people who have been at a 628 00:38:14,080 --> 00:38:18,440 Speaker 1: pretty high level inside the bank. And you know, almost 629 00:38:18,440 --> 00:38:21,239 Speaker 1: none of those people are still working there. And one 630 00:38:21,280 --> 00:38:24,000 Speaker 1: of the extraordinary things like Deutsche Bank, more than any 631 00:38:24,000 --> 00:38:26,759 Speaker 1: other bank I've ever encountered in my career, is that 632 00:38:27,160 --> 00:38:30,080 Speaker 1: almost everyone who leaves Deutsche Bank does so with a 633 00:38:30,200 --> 00:38:33,160 Speaker 1: very bitter taste in their mouths. And so a lot 634 00:38:33,200 --> 00:38:37,080 Speaker 1: of those people were willing to talk to me based 635 00:38:37,120 --> 00:38:40,240 Speaker 1: on the basically because they could. They knew that everyone 636 00:38:40,280 --> 00:38:42,680 Speaker 1: else would have their knives out, and they wanted to 637 00:38:42,960 --> 00:38:46,239 Speaker 1: protect themselves and tell their side of the story preemptively. 638 00:38:46,360 --> 00:38:50,720 Speaker 1: And so for journalists that is just a very nice 639 00:38:50,880 --> 00:38:54,560 Speaker 1: phenomenon to be experiencing, because everyone is eager to tell 640 00:38:54,600 --> 00:38:56,640 Speaker 1: their side of the story because they assume everyone else 641 00:38:56,719 --> 00:38:59,640 Speaker 1: is going to be talking. And so and there was 642 00:39:00,320 --> 00:39:02,160 Speaker 1: you know, and you just sit down with these people 643 00:39:02,160 --> 00:39:06,360 Speaker 1: over drinks or dinner or breakfast, and you you know, 644 00:39:06,440 --> 00:39:08,360 Speaker 1: you just asked them to tell you stories. And the 645 00:39:08,440 --> 00:39:12,640 Speaker 1: stories were extraordinary. And a lot of these are very 646 00:39:12,680 --> 00:39:14,920 Speaker 1: smart people, even though a lot of them made very 647 00:39:14,960 --> 00:39:18,400 Speaker 1: serious mistakes, and they've did memories and allow of them 648 00:39:18,440 --> 00:39:21,760 Speaker 1: these documents that they contempor any documents that they've kept, 649 00:39:22,560 --> 00:39:26,680 Speaker 1: and so, yeah, and I spent I don't know, many 650 00:39:26,760 --> 00:39:31,480 Speaker 1: many many hours interviewing and spending time with and scores 651 00:39:31,520 --> 00:39:35,399 Speaker 1: of these people. So let's talk about probably the only 652 00:39:35,480 --> 00:39:40,080 Speaker 1: decent character in the whole book, Bill brock Smith. Am 653 00:39:40,080 --> 00:39:44,480 Speaker 1: I pronouncing his last name right? Bro Smith? Yeah? Bro Smith? 654 00:39:44,840 --> 00:39:50,959 Speaker 1: So he is the person who essentially invented the form 655 00:39:51,040 --> 00:39:55,160 Speaker 1: of derivatives and derivative trading that Deutsche Bank built all 656 00:39:55,239 --> 00:39:59,719 Speaker 1: its initial wealth on, and he understood risk management better 657 00:39:59,760 --> 00:40:03,279 Speaker 1: than anybody else in the bank. And even after he 658 00:40:03,400 --> 00:40:07,239 Speaker 1: leaves the bank, he stays on as a consultants and 659 00:40:07,360 --> 00:40:12,920 Speaker 1: continues to internalize all of the bad behavior and feels 660 00:40:12,920 --> 00:40:17,680 Speaker 1: guilt for everything that he's not doing others are doing 661 00:40:17,719 --> 00:40:22,240 Speaker 1: and profiting on, and ultimately commits suicide for the sins 662 00:40:22,280 --> 00:40:26,680 Speaker 1: of others. How was it researching him? And tell us 663 00:40:26,760 --> 00:40:30,040 Speaker 1: about his son Val? How much he helped in the 664 00:40:30,200 --> 00:40:32,919 Speaker 1: entire process. You you wrote a big piece on Val 665 00:40:33,200 --> 00:40:36,239 Speaker 1: at the New York Times, Right, Yeah, that's right? And 666 00:40:36,600 --> 00:40:42,000 Speaker 1: Val and Val was indispensable to telling his father's story. 667 00:40:42,120 --> 00:40:46,640 Speaker 1: And he was extremely helpful in introducing me, or not 668 00:40:46,680 --> 00:40:49,319 Speaker 1: really introducing, but pointing me towards a lot of the 669 00:40:49,360 --> 00:40:52,080 Speaker 1: people his dad had worked with and shortly after his 670 00:40:52,120 --> 00:40:55,880 Speaker 1: father's death in two thousand fourteen, Val gained access to 671 00:40:56,040 --> 00:40:59,799 Speaker 1: his father's personal email accounts, which for a variety of 672 00:41:00,680 --> 00:41:02,719 Speaker 1: Bill Brokesman had been using for a lot of his 673 00:41:02,760 --> 00:41:06,200 Speaker 1: Deutsche Bank work and so and Val shared, uh, you know, 674 00:41:06,760 --> 00:41:09,839 Speaker 1: hundreds of not thousands of those emails and documents from 675 00:41:09,840 --> 00:41:13,360 Speaker 1: those email in the AHO accounts with me, And so 676 00:41:13,440 --> 00:41:15,400 Speaker 1: that provides And that's another way, by the way that 677 00:41:15,440 --> 00:41:20,160 Speaker 1: I was able to recreate some dialogue and uh, you know, 678 00:41:20,160 --> 00:41:23,440 Speaker 1: it's just you know, it was vital um. Val is 679 00:41:23,560 --> 00:41:28,839 Speaker 1: a complicated person, as are we all, and um, you know, 680 00:41:29,040 --> 00:41:32,480 Speaker 1: it's been a difficult relationship with him over the years, 681 00:41:32,560 --> 00:41:36,920 Speaker 1: but and he he was very eager to, as you 682 00:41:37,040 --> 00:41:40,360 Speaker 1: like to say, cultivate his father's legacy, and and it 683 00:41:40,440 --> 00:41:43,520 Speaker 1: was a legacy worth cultivating. And Bill, as you said, 684 00:41:43,880 --> 00:41:47,520 Speaker 1: was kind of a legendary risk manager and legendary derived 685 00:41:47,560 --> 00:41:49,960 Speaker 1: with his expert I think more important than either of 686 00:41:50,000 --> 00:41:51,919 Speaker 1: those things, though, is that he was a man who 687 00:41:52,000 --> 00:41:54,759 Speaker 1: had a conscience and had a sense of ethics and 688 00:41:54,920 --> 00:41:58,440 Speaker 1: was not afraid to stick with those and really stand 689 00:41:58,480 --> 00:42:03,560 Speaker 1: up for them when challenge colleagues. And Bink was very 690 00:42:03,680 --> 00:42:08,560 Speaker 1: short on people with strong ethical and moral compasses and 691 00:42:08,800 --> 00:42:12,400 Speaker 1: brokenly stood out. As you know, he was the conscience 692 00:42:12,440 --> 00:42:13,719 Speaker 1: of the bank in a lot of ways. That's the 693 00:42:13,719 --> 00:42:15,600 Speaker 1: way a lot of his colleagues described him to me 694 00:42:15,680 --> 00:42:19,319 Speaker 1: as and and he said he internalized a lot of 695 00:42:19,320 --> 00:42:22,399 Speaker 1: the bank's problems. And so it ends up being kind 696 00:42:22,400 --> 00:42:26,440 Speaker 1: of a tragedy in a lot of ways. Um very 697 00:42:26,480 --> 00:42:29,600 Speaker 1: much so that I I'm up to the part in 698 00:42:29,600 --> 00:42:35,239 Speaker 1: the book where so Val is the adopted steps on Um. 699 00:42:35,400 --> 00:42:41,680 Speaker 1: Bill leaves seven suicide notes for various people, including one 700 00:42:41,800 --> 00:42:44,120 Speaker 1: for Val, who's kind of been a near duell, a 701 00:42:44,160 --> 00:42:47,239 Speaker 1: little bit of a junkie and a musician. But he 702 00:42:47,400 --> 00:42:49,880 Speaker 1: finds a new purpose in life trying to clear his 703 00:42:49,960 --> 00:42:54,759 Speaker 1: father's name and through an organization guardians a piece, he 704 00:42:54,880 --> 00:42:57,520 Speaker 1: learns how to become a hacker, a little bit, set 705 00:42:57,600 --> 00:43:02,600 Speaker 1: up WiFi packet sniffing, and literally drives from California New 706 00:43:02,680 --> 00:43:07,160 Speaker 1: York in order to to set up a packet sniffing 707 00:43:07,440 --> 00:43:13,879 Speaker 1: sting to get his step mom's email passwords. They're they're 708 00:43:13,920 --> 00:43:19,680 Speaker 1: somewhat estranged. He's on a a month allowance but never 709 00:43:19,719 --> 00:43:24,799 Speaker 1: inherited any real money after his father died. Tell Us 710 00:43:25,120 --> 00:43:31,399 Speaker 1: what Val discovers in his mother's email account, Well, there 711 00:43:31,400 --> 00:43:35,080 Speaker 1: are two kind of main categories of sting, and one 712 00:43:35,320 --> 00:43:39,800 Speaker 1: is that he discovers all of these documents that pertained 713 00:43:39,800 --> 00:43:43,400 Speaker 1: at Deutsche Bank's efforts to essentially cover up some of 714 00:43:43,480 --> 00:43:48,600 Speaker 1: the reasons that Bill brooke Smith had committed suicide. And 715 00:43:48,600 --> 00:43:51,040 Speaker 1: and he finds that there is a bank the bank 716 00:43:51,280 --> 00:43:56,680 Speaker 1: had conducted this kind of very uh slipshod internal review 717 00:43:56,760 --> 00:43:59,560 Speaker 1: of the circumstances of his death and some other stuff 718 00:43:59,600 --> 00:44:02,520 Speaker 1: as well. Um, and then the secondly he finds all 719 00:44:02,520 --> 00:44:06,200 Speaker 1: these suicide notes and you know all but I think 720 00:44:06,280 --> 00:44:08,120 Speaker 1: two of them are too family members. One is to 721 00:44:08,200 --> 00:44:11,120 Speaker 1: a family friend, and but the final one is to 722 00:44:11,560 --> 00:44:14,799 Speaker 1: the bank CEO at the time, onto Chain, and it 723 00:44:14,920 --> 00:44:22,800 Speaker 1: lays out in just heartbreaking detail what Bill Brookesmith blamed 724 00:44:22,880 --> 00:44:24,799 Speaker 1: himself for. And I don't I want to spoil that 725 00:44:24,840 --> 00:44:29,600 Speaker 1: for everyone, but there's, um, it really it's it's to me, 726 00:44:29,640 --> 00:44:34,160 Speaker 1: it's really heartbreaking. It's also a testament to Val having 727 00:44:34,600 --> 00:44:38,080 Speaker 1: worked really hard to unearthed this stuff without really knowing 728 00:44:38,120 --> 00:44:40,239 Speaker 1: what the payoff was going to be. And and you know, 729 00:44:40,480 --> 00:44:47,359 Speaker 1: motivated by this stew of really complicated personal emotional, familial Uh, 730 00:44:47,480 --> 00:44:49,560 Speaker 1: factors that are you know, any of us can probably 731 00:44:49,760 --> 00:44:53,839 Speaker 1: kind of a madsine And uh, you know, Val, as 732 00:44:53,880 --> 00:44:56,600 Speaker 1: you said, it, has this terrible thonging out with his family. 733 00:44:56,719 --> 00:44:58,960 Speaker 1: Frankly had a terrible thong out with me too. And 734 00:45:00,080 --> 00:45:01,440 Speaker 1: you know, I think it is just a reminder that 735 00:45:01,520 --> 00:45:06,480 Speaker 1: whistleblowers take many different shapes, takes many different forms, and 736 00:45:06,920 --> 00:45:10,600 Speaker 1: Val is not a conventional whistleblower. But this the service 737 00:45:10,640 --> 00:45:14,000 Speaker 1: that he has provided to the public by exposing all 738 00:45:14,040 --> 00:45:18,759 Speaker 1: the Deutsche Bank stuff, I think is really undeniable and laudible. Yeah, 739 00:45:18,760 --> 00:45:22,279 Speaker 1: no doubt about that. You know, I'm reminded of what 740 00:45:22,400 --> 00:45:27,959 Speaker 1: he discovers in his stepdad's suicide note to him, essentially saying, hey, 741 00:45:28,000 --> 00:45:31,600 Speaker 1: you're the only one worthy of carrying on the approximate name, 742 00:45:31,680 --> 00:45:36,360 Speaker 1: and I'm proud of you as my son. I wonder 743 00:45:36,920 --> 00:45:41,920 Speaker 1: if that just delayed Valsworth's fears and gave him some 744 00:45:42,040 --> 00:45:45,640 Speaker 1: motivation to do all the things he did. A lot 745 00:45:45,680 --> 00:45:49,719 Speaker 1: of what we now know about Deutsche Bank and how 746 00:45:49,760 --> 00:45:52,520 Speaker 1: they hit giant losses during O eight oh nine, and 747 00:45:52,560 --> 00:45:55,400 Speaker 1: how they lied to regulators, none of that would have 748 00:45:55,480 --> 00:45:59,120 Speaker 1: come out the FED the Federal Reserve letter warning that 749 00:45:59,200 --> 00:46:01,560 Speaker 1: they were in in trouble. None of that would have 750 00:46:01,640 --> 00:46:04,080 Speaker 1: come out without Val brox Smith. Is that Is that 751 00:46:04,120 --> 00:46:07,080 Speaker 1: a fair statement? Yeah? I think, And there was a 752 00:46:07,120 --> 00:46:10,560 Speaker 1: tremendous amount that fairness. There were a lot of other 753 00:46:10,600 --> 00:46:14,400 Speaker 1: whistleblowers to be like, really helpful to me and to 754 00:46:14,440 --> 00:46:16,480 Speaker 1: other journalists and to regulators over the year. So I 755 00:46:16,520 --> 00:46:18,920 Speaker 1: don't want to give Val all the credit for that, 756 00:46:18,960 --> 00:46:23,520 Speaker 1: but there's no look, Val has been. Our ability to 757 00:46:23,600 --> 00:46:28,319 Speaker 1: understand Deutsche Bank's very ugly inner workings is you know, 758 00:46:28,560 --> 00:46:31,920 Speaker 1: in large part due to VAL's efforts to get the 759 00:46:31,960 --> 00:46:35,399 Speaker 1: stuff in the public domain. And you know, everyone can 760 00:46:35,640 --> 00:46:38,560 Speaker 1: question VAL's character and his motives and things like that, 761 00:46:38,640 --> 00:46:41,520 Speaker 1: and I frankly have from time to time myself. And 762 00:46:41,920 --> 00:46:45,279 Speaker 1: but again there's really no denying the public service that 763 00:46:45,440 --> 00:46:48,760 Speaker 1: he has provided. So you mentioned you had a falling 764 00:46:48,800 --> 00:46:53,279 Speaker 1: out with him, Um, tell us what you can about it. 765 00:46:53,360 --> 00:46:57,040 Speaker 1: What happens. Is he happy with the book? Is he unhappy? 766 00:46:57,120 --> 00:47:00,399 Speaker 1: He doesn't come across as a bad guy. He comes 767 00:47:00,440 --> 00:47:03,799 Speaker 1: across as kind of, you know, a person having a 768 00:47:03,840 --> 00:47:07,160 Speaker 1: hard time finding his place in the world and and 769 00:47:07,200 --> 00:47:11,240 Speaker 1: a little bit of a junkie. But he does perform 770 00:47:11,280 --> 00:47:14,279 Speaker 1: a service. What what is going on with him? Um? 771 00:47:14,320 --> 00:47:19,239 Speaker 1: And how does he um? I think he. I mean, 772 00:47:19,440 --> 00:47:21,319 Speaker 1: I'm a little way of putting words in his mouth, 773 00:47:21,400 --> 00:47:26,879 Speaker 1: but my understanding that he is very he The book 774 00:47:27,360 --> 00:47:32,480 Speaker 1: accurately portrays his father's life and work, which is Look, 775 00:47:32,560 --> 00:47:36,440 Speaker 1: from my perspective, that is something that I feel really 776 00:47:36,480 --> 00:47:38,879 Speaker 1: good about it. I think he has had a lot 777 00:47:38,960 --> 00:47:44,799 Speaker 1: of trouble, uh reading my descriptions of him, and I think, 778 00:47:45,520 --> 00:47:48,520 Speaker 1: give you know, Val has been I got I start 779 00:47:48,520 --> 00:47:50,400 Speaker 1: getting to know about just a few days after his 780 00:47:50,440 --> 00:47:53,480 Speaker 1: father's death. And so I've been with him on this 781 00:47:53,560 --> 00:47:59,759 Speaker 1: journey from early until now. And you know, it's not 782 00:47:59,800 --> 00:48:01,759 Speaker 1: like I know him that well, but I know him 783 00:48:01,760 --> 00:48:04,360 Speaker 1: pretty well. I was talking to him every day, multiple 784 00:48:04,360 --> 00:48:06,360 Speaker 1: times a day for the better part of four years 785 00:48:06,520 --> 00:48:10,719 Speaker 1: and or five years. And look, it's painful, I think, 786 00:48:11,000 --> 00:48:16,160 Speaker 1: to read difficult things about yourself in the New York 787 00:48:16,200 --> 00:48:20,839 Speaker 1: Times or in a book. And there are difficult things 788 00:48:20,920 --> 00:48:24,000 Speaker 1: about him in the book, like he's a complicated, flawed person, 789 00:48:24,160 --> 00:48:26,759 Speaker 1: as are we all. But he he, as you said, 790 00:48:26,800 --> 00:48:31,160 Speaker 1: he struggled with some emotional issues themselves and abuse issues. 791 00:48:31,920 --> 00:48:36,520 Speaker 1: And I think it's hard for anyone to read those things. 792 00:48:36,520 --> 00:48:40,359 Speaker 1: So we've had, I mean me, it would be an 793 00:48:40,440 --> 00:48:43,440 Speaker 1: understatement for me to describe ballanting angry with me. He 794 00:48:43,560 --> 00:48:47,680 Speaker 1: is like furious with me. I think he would love 795 00:48:47,840 --> 00:48:53,279 Speaker 1: to destroy me probably. Uh, And it which is very 796 00:48:54,360 --> 00:48:56,600 Speaker 1: you know, that's not a diffeeling for me to have. 797 00:48:58,000 --> 00:49:00,759 Speaker 1: And it's I guess kind of just like a occupational 798 00:49:00,800 --> 00:49:02,640 Speaker 1: hazard as a journalist when you get to know a 799 00:49:02,680 --> 00:49:06,719 Speaker 1: source as well as this, and uh, it takes the 800 00:49:06,760 --> 00:49:09,880 Speaker 1: relationship can take on tones of a friendship when in 801 00:49:09,960 --> 00:49:12,400 Speaker 1: reality is not a friendship. Right, he used a source 802 00:49:12,560 --> 00:49:14,440 Speaker 1: in the subject of what I'm writing about, and I'm 803 00:49:14,480 --> 00:49:18,319 Speaker 1: a journalist, and uh, but I think it is very Look, 804 00:49:18,400 --> 00:49:22,200 Speaker 1: I've learned a lot about myself and about like my 805 00:49:22,280 --> 00:49:26,799 Speaker 1: own tradecraft in over the years working with l and 806 00:49:26,920 --> 00:49:30,640 Speaker 1: I've certainly made some mistakes along the way. And uh 807 00:49:30,760 --> 00:49:33,360 Speaker 1: so I don't want to make it sound like I 808 00:49:33,360 --> 00:49:37,720 Speaker 1: don't know there's I'm struggling a little bit here again, 809 00:49:37,920 --> 00:49:46,280 Speaker 1: because right, that's challenging. But there's no avoiding that based 810 00:49:46,280 --> 00:49:51,640 Speaker 1: on the book, what he found, the document prove, the emails, 811 00:49:51,800 --> 00:49:57,480 Speaker 1: the all of the things he found completely changes not 812 00:49:57,640 --> 00:50:02,640 Speaker 1: just the picture of at your bank, but it paints 813 00:50:03,160 --> 00:50:07,399 Speaker 1: really a full portrait of the depth of depravity that 814 00:50:07,480 --> 00:50:10,720 Speaker 1: was going on at the bank, UM during those years, 815 00:50:10,920 --> 00:50:15,879 Speaker 1: and if nothing else, I hope he's pleased that he 816 00:50:15,880 --> 00:50:21,360 Speaker 1: helped you get to a deep, dark, ugly truth about 817 00:50:21,440 --> 00:50:25,840 Speaker 1: what was once one of the biggest banks in the world. Well, 818 00:50:26,080 --> 00:50:30,399 Speaker 1: I feel similarly, and hopefully he'll listen to this, and 819 00:50:31,320 --> 00:50:33,560 Speaker 1: you know he pleased to hear that that you're reading 820 00:50:33,640 --> 00:50:36,719 Speaker 1: him the story as well. Well, Well, it's a fascinating 821 00:50:36,760 --> 00:50:40,200 Speaker 1: story and really well told. Um. Before we get to 822 00:50:40,280 --> 00:50:44,000 Speaker 1: our favorite questions, I just have to talk a little 823 00:50:44,000 --> 00:50:48,719 Speaker 1: bit about your previous book, which is somewhat similar in 824 00:50:48,800 --> 00:50:57,040 Speaker 1: its scope of dealing with finance characters and illegality and criminality. UM. 825 00:50:57,120 --> 00:50:59,920 Speaker 1: And that was the Spider Network, all about the law 826 00:51:00,000 --> 00:51:05,440 Speaker 1: I bore manipulation, and that pre dates, um, your contact 827 00:51:05,440 --> 00:51:10,279 Speaker 1: with val By by a year. You were contacted by 828 00:51:10,320 --> 00:51:15,160 Speaker 1: a currency trader named Tom Hayes, who really was a 829 00:51:15,239 --> 00:51:19,160 Speaker 1: savant when it came to this and kinda took the 830 00:51:19,239 --> 00:51:22,359 Speaker 1: blame for what a lot of other people did. Tell 831 00:51:22,440 --> 00:51:25,800 Speaker 1: us a little bit about your relationship with yet another 832 00:51:25,960 --> 00:51:29,200 Speaker 1: damaged person in the world of finance, Tom Hayes. How 833 00:51:29,200 --> 00:51:33,080 Speaker 1: did how did that come about? Well, I got to 834 00:51:33,160 --> 00:51:38,120 Speaker 1: know Tom Hayes starting in I guess early, so this 835 00:51:38,239 --> 00:51:41,040 Speaker 1: was about a year before I started my relationship with Val. 836 00:51:41,440 --> 00:51:45,360 Speaker 1: And Hayes was been for many years a very successful 837 00:51:45,400 --> 00:51:48,600 Speaker 1: interest rate trader at a succession of good thanks and 838 00:51:48,719 --> 00:51:52,680 Speaker 1: it was criminally charged in the US and arrested in 839 00:51:52,760 --> 00:51:56,840 Speaker 1: the UK at the end of for being the alleged 840 00:51:57,000 --> 00:52:03,279 Speaker 1: mastermind of the labor manipulation scandal. And I tried to 841 00:52:03,280 --> 00:52:06,759 Speaker 1: get in touch with Tom very shortly after he was arrested, 842 00:52:07,120 --> 00:52:11,000 Speaker 1: and you know, I'm sure I was among many journalists 843 00:52:11,080 --> 00:52:14,040 Speaker 1: trying to do that, and I ultimately found a way 844 00:52:14,160 --> 00:52:16,960 Speaker 1: in through a friend of his and a business school 845 00:52:16,960 --> 00:52:20,640 Speaker 1: classmate of his who I spent some time with, and 846 00:52:21,320 --> 00:52:25,080 Speaker 1: she eventually introduced me. I guess see, actually gave Tom 847 00:52:25,120 --> 00:52:30,680 Speaker 1: my cell phone number and uh early, and I didn't 848 00:52:30,800 --> 00:52:34,160 Speaker 1: really expect to hear from him. But one night I 849 00:52:34,280 --> 00:52:36,880 Speaker 1: was sitting on the sofa in my apartment in London 850 00:52:37,120 --> 00:52:40,040 Speaker 1: and got a text from an unknown number that said, 851 00:52:40,200 --> 00:52:42,200 Speaker 1: I'm willing to meet with you, but I need to 852 00:52:42,200 --> 00:52:44,200 Speaker 1: be sure I can trust you. This goes much much 853 00:52:44,280 --> 00:52:48,279 Speaker 1: higher than anyone realizes, even the Department of Justice. And 854 00:52:49,280 --> 00:52:52,200 Speaker 1: so that was the start of a secret Year's man 855 00:52:52,280 --> 00:52:55,360 Speaker 1: relationship I had at Hayes that I eventually he agreed 856 00:52:55,640 --> 00:52:59,920 Speaker 1: to make it public UM after his trial in twenty 857 00:53:00,040 --> 00:53:04,560 Speaker 1: of team UM. So I mean that was he is 858 00:53:04,840 --> 00:53:09,400 Speaker 1: mildly autistic, he's got as springers and he is someone 859 00:53:09,440 --> 00:53:12,719 Speaker 1: who has It was just like a fascinating relations to 860 00:53:12,800 --> 00:53:16,920 Speaker 1: form me because he is uh, he's a genius UM. 861 00:53:16,960 --> 00:53:20,440 Speaker 1: But he's also in some wayers that's completely inept and 862 00:53:20,800 --> 00:53:24,680 Speaker 1: had really struggled. He he doesn't I couldn't even say 863 00:53:24,800 --> 00:53:28,799 Speaker 1: that he's he is uh. You know, he doesn't communicate 864 00:53:28,960 --> 00:53:33,719 Speaker 1: like people normally do in my my experience to be 865 00:53:33,800 --> 00:53:37,080 Speaker 1: on the people on Wall Street and he's on the spectrum. 866 00:53:37,120 --> 00:53:40,920 Speaker 1: He has problems reading social cues. He's problems understanding when 867 00:53:40,920 --> 00:53:43,799 Speaker 1: people are lying to him. Easy to set up a 868 00:53:43,800 --> 00:53:46,920 Speaker 1: guy like that to be the full guy. I assume 869 00:53:47,320 --> 00:53:49,719 Speaker 1: by now he's out of prison, what's he doing with 870 00:53:49,800 --> 00:53:52,680 Speaker 1: his life these days? No, he's still I mean, he 871 00:53:52,719 --> 00:53:55,719 Speaker 1: has gone from being in a maximum security prison to 872 00:53:55,840 --> 00:53:59,640 Speaker 1: being in Uh's essentially an open prison, so he can 873 00:54:00,080 --> 00:54:02,600 Speaker 1: uh is some rights to be able to go out 874 00:54:02,760 --> 00:54:07,440 Speaker 1: into um like society and have a have a job. 875 00:54:07,520 --> 00:54:09,440 Speaker 1: But he still has to go back to prison at night. 876 00:54:09,680 --> 00:54:14,839 Speaker 1: And um, so he I mean, he is by far 877 00:54:15,080 --> 00:54:19,840 Speaker 1: the person who has you know, taken the most painful 878 00:54:19,880 --> 00:54:22,960 Speaker 1: personal consequences of I think anyone in the banking industry 879 00:54:23,160 --> 00:54:27,240 Speaker 1: since the financial crisis. Um. And he is just about 880 00:54:27,280 --> 00:54:29,919 Speaker 1: the least likely person he would think to have that role. 881 00:54:29,920 --> 00:54:34,080 Speaker 1: And again he is, you know, he's someone who I 882 00:54:34,120 --> 00:54:38,279 Speaker 1: think had trouble detecting some shades of gray and it 883 00:54:38,640 --> 00:54:44,239 Speaker 1: didn't see that libra manipulation was outright illegal, and it 884 00:54:44,280 --> 00:54:46,920 Speaker 1: was kind of incentivized and encouraged by his superiors and 885 00:54:47,000 --> 00:54:50,400 Speaker 1: his colleagues to do this and it didn't and that 886 00:54:50,719 --> 00:54:53,040 Speaker 1: which is not a thing he's without blame. I mean, 887 00:54:53,040 --> 00:54:56,640 Speaker 1: he's certainly like deserved lame. I think he, in his 888 00:54:56,719 --> 00:54:58,239 Speaker 1: heart of hearts, knew what he was doing and was 889 00:54:58,280 --> 00:55:01,360 Speaker 1: not quite right. U. But the notion that this is 890 00:55:01,400 --> 00:55:05,520 Speaker 1: the man who he received initially a fourteen year prisons 891 00:55:06,160 --> 00:55:10,720 Speaker 1: um and you know that's one of his supervisors. Everybody 892 00:55:10,760 --> 00:55:14,520 Speaker 1: else who was making the same were managing nobody forget 893 00:55:14,640 --> 00:55:18,319 Speaker 1: going to prison. No one even really got into any trouble. Yeah, 894 00:55:18,320 --> 00:55:20,480 Speaker 1: I mean a few people lost their jobs, but as 895 00:55:20,640 --> 00:55:24,480 Speaker 1: is often the case in the finance industry, where institutional 896 00:55:24,560 --> 00:55:26,799 Speaker 1: memories are very short. A lot of those people got 897 00:55:26,840 --> 00:55:30,439 Speaker 1: rehired and re entered the workforce. And you know there 898 00:55:30,480 --> 00:55:33,280 Speaker 1: have been since then. So he was tried and convicted 899 00:55:33,280 --> 00:55:36,120 Speaker 1: in fifteen, and over the past five years there have 900 00:55:36,280 --> 00:55:42,920 Speaker 1: been a a smattering of other traders who have been 901 00:55:43,400 --> 00:55:47,600 Speaker 1: UM convicted and or served some time in jail, and UH, 902 00:55:48,239 --> 00:55:52,600 Speaker 1: none with sentences of anything like the magnetis of what 903 00:55:52,760 --> 00:55:57,080 Speaker 1: has got and um And I think since I wrote 904 00:55:57,120 --> 00:56:00,319 Speaker 1: that book, the public perspective, especially in the UK, which 905 00:56:00,360 --> 00:56:03,160 Speaker 1: is where allow Us took place, has really shifted towards 906 00:56:03,360 --> 00:56:07,640 Speaker 1: initially viewing Hayes as this evil mastermind, which is the 907 00:56:07,640 --> 00:56:11,040 Speaker 1: case the government made about him, to viewing him at 908 00:56:11,040 --> 00:56:14,520 Speaker 1: this point largely as a scapegoat who, while guess he 909 00:56:14,600 --> 00:56:18,040 Speaker 1: did some things wrong, has become the single, the sole 910 00:56:18,120 --> 00:56:22,160 Speaker 1: person who is paying a price for an entire institution, 911 00:56:22,200 --> 00:56:26,600 Speaker 1: for an entire industry's grade and Moufie's, which obviously is 912 00:56:26,640 --> 00:56:31,239 Speaker 1: not fair. So so, between the research and writing of 913 00:56:31,280 --> 00:56:35,360 Speaker 1: the two books, between Dark Towers and the Spider Network, 914 00:56:35,960 --> 00:56:40,840 Speaker 1: what surprised you that was parallel between uh, these two 915 00:56:41,440 --> 00:56:45,600 Speaker 1: areas of wanton criminality and what just surprised you in 916 00:56:45,680 --> 00:56:49,520 Speaker 1: general as you were doing your research. Well, I mean 917 00:56:49,640 --> 00:56:52,280 Speaker 1: what surprised me most in the research process for both 918 00:56:52,320 --> 00:56:55,000 Speaker 1: books was and I'm not sure that this this is the 919 00:56:55,040 --> 00:56:57,400 Speaker 1: answer you're looking for, but and it really it was 920 00:56:57,440 --> 00:57:00,920 Speaker 1: almost it was just a fascinating journey from getting to 921 00:57:01,000 --> 00:57:03,840 Speaker 1: know these two people in these two books. So and 922 00:57:03,880 --> 00:57:07,520 Speaker 1: the one Aunt Hays, who is unlike any person I've 923 00:57:07,520 --> 00:57:09,839 Speaker 1: ever met in my life, and then val Broke Smith 924 00:57:09,880 --> 00:57:12,360 Speaker 1: in the second book, who you know is also unlike 925 00:57:12,360 --> 00:57:14,840 Speaker 1: anyone I've ever met in my life. And those are certainly, 926 00:57:15,440 --> 00:57:20,160 Speaker 1: without any question or competition, the longest running and most 927 00:57:20,280 --> 00:57:25,480 Speaker 1: intemps and you know, stressful source relationships I've ever had. 928 00:57:26,040 --> 00:57:29,920 Speaker 1: Um In fact, they're probably too the most intense stressful 929 00:57:29,960 --> 00:57:35,200 Speaker 1: relationships I've ever had period um and and you know, 930 00:57:35,360 --> 00:57:38,080 Speaker 1: you learn a lot about yourself when you're when you're 931 00:57:38,120 --> 00:57:43,520 Speaker 1: spending years interacting with complicated people and trying to figure 932 00:57:43,520 --> 00:57:47,280 Speaker 1: out how to relate to them and communicate effectively with them, 933 00:57:47,280 --> 00:57:50,080 Speaker 1: and trying to understand the world through their eyes. I 934 00:57:50,120 --> 00:57:52,360 Speaker 1: think it's one of the things I love most about 935 00:57:52,520 --> 00:57:57,560 Speaker 1: journalism and this type of storytelling is that it expands, 936 00:57:57,880 --> 00:58:01,520 Speaker 1: it's for me, I kind of expand did my way 937 00:58:01,560 --> 00:58:04,040 Speaker 1: of thinking about the range of emotions that people have. 938 00:58:04,120 --> 00:58:07,080 Speaker 1: It's really helped me, I think the or learn a 939 00:58:07,080 --> 00:58:11,240 Speaker 1: lot more about empathy and um. So it's been from 940 00:58:11,280 --> 00:58:15,000 Speaker 1: just a personal Samplin really fascinating and I think positive. 941 00:58:15,360 --> 00:58:18,040 Speaker 1: Let me ask you a quick question here that is 942 00:58:18,120 --> 00:58:22,000 Speaker 1: forward looking. You've covered some of the malfeasance around the 943 00:58:22,080 --> 00:58:26,040 Speaker 1: Cares Act. You wrote a story about hospitals getting bailouts, 944 00:58:26,880 --> 00:58:30,120 Speaker 1: executives taking big bonuses and then laying off people even 945 00:58:30,120 --> 00:58:33,560 Speaker 1: though they're not supposed to. What do you think the 946 00:58:33,680 --> 00:58:37,200 Speaker 1: book about the Cares Act malfeasance is going to be 947 00:58:37,520 --> 00:58:41,360 Speaker 1: five years from now. Is has some of the criminality 948 00:58:41,520 --> 00:58:45,720 Speaker 1: around the government bailout risen to the same levels as 949 00:58:45,840 --> 00:58:49,640 Speaker 1: Libor and Deutsche Bank? Or is this really just your 950 00:58:49,760 --> 00:58:55,000 Speaker 1: run of the mill malfeasance. Well under the third answers, 951 00:58:55,040 --> 00:58:59,200 Speaker 1: I don't know. Um. The longer answer is that, based 952 00:58:59,240 --> 00:59:02,880 Speaker 1: on what I've seen at this point with the Kars Act, 953 00:59:03,320 --> 00:59:07,400 Speaker 1: it's less about mouth seasons and the criminality and much 954 00:59:07,440 --> 00:59:11,920 Speaker 1: more about sloppiness and with like a side helping of greed, 955 00:59:12,200 --> 00:59:15,560 Speaker 1: and there's the bail The Cares Act in general was 956 00:59:15,640 --> 00:59:20,560 Speaker 1: obviously rushed through UH Congress and has been implemented in 957 00:59:20,560 --> 00:59:25,400 Speaker 1: this really tasty way on the like, which sounds bad 958 00:59:25,480 --> 00:59:28,000 Speaker 1: except when you think about the context, which is that 959 00:59:28,520 --> 00:59:31,880 Speaker 1: the Trump administration was understandably very desperate to get this 960 00:59:31,920 --> 00:59:34,280 Speaker 1: money out into the economy as quickly as possible. And 961 00:59:34,360 --> 00:59:38,120 Speaker 1: I think there's a business made that they were willing 962 00:59:38,320 --> 00:59:42,400 Speaker 1: to take some heat for, you know, some recipients getting 963 00:59:42,440 --> 00:59:45,200 Speaker 1: money that they really didn't deserve. Some recipients use them money, 964 00:59:45,240 --> 00:59:47,800 Speaker 1: and in appropriate way, it's for the fate of broadly 965 00:59:47,840 --> 00:59:50,480 Speaker 1: getting trillions of dollars into the economy very quickly. And 966 00:59:50,600 --> 00:59:55,680 Speaker 1: so I think the journalists and media plays a very 967 00:59:55,720 --> 00:59:59,360 Speaker 1: important role in accountability here in terms of writing about 968 00:59:59,520 --> 01:00:02,720 Speaker 1: missus of money or fraud and things like that. But 969 01:00:03,040 --> 01:00:06,280 Speaker 1: I also think it's important not to let those examples 970 01:00:06,560 --> 01:00:12,840 Speaker 1: of wrongdoing or UH sloppiness or an aptitude corrode all 971 01:00:13,280 --> 01:00:16,640 Speaker 1: faith in this program, or to really question the effectiveness 972 01:00:16,720 --> 01:00:20,720 Speaker 1: or utility of this program overall, because there, I mean, God, 973 01:00:20,760 --> 01:00:22,960 Speaker 1: imagine the shape behind me would be in right now, 974 01:00:23,040 --> 01:00:25,800 Speaker 1: those brillions of dollars will not being put into the autonomy. 975 01:00:26,040 --> 01:00:28,600 Speaker 1: And don't don't let the tell web the dog in 976 01:00:28,680 --> 01:00:32,000 Speaker 1: other words, Yeah, But on the other hand, this story 977 01:00:32,080 --> 01:00:34,960 Speaker 1: is not fully told. The reporting will become much clearer 978 01:00:35,240 --> 01:00:39,600 Speaker 1: as time passes. And you know, it's entirely possible there 979 01:00:39,720 --> 01:00:42,560 Speaker 1: is some serious criminality and malfeasons going on in a 980 01:00:42,640 --> 01:00:45,720 Speaker 1: Broadway that we, or at least I am not currently 981 01:00:45,760 --> 01:00:48,320 Speaker 1: aware of. And if that's the case, man, what a 982 01:00:48,400 --> 01:00:50,920 Speaker 1: story that will be. Yeah, to say the least. All right, 983 01:00:50,960 --> 01:00:53,920 Speaker 1: let's jump to our speed round. These are our favorite 984 01:00:54,000 --> 01:00:56,960 Speaker 1: questions we ask all our guests, and and this is 985 01:00:57,040 --> 01:00:59,360 Speaker 1: the part of the conversation that we're going to keep 986 01:00:59,400 --> 01:01:02,760 Speaker 1: it fast and short. And let's start with what are 987 01:01:02,760 --> 01:01:05,760 Speaker 1: you streaming these days? Give us your favorite Netflix, Amazon 988 01:01:06,680 --> 01:01:11,080 Speaker 1: shows or podcasts you're listening to. I listened to The Daily, 989 01:01:11,240 --> 01:01:13,720 Speaker 1: which is a New York Times podcast just about every day. 990 01:01:14,440 --> 01:01:19,560 Speaker 1: I just listened to a Window of Chains, which is fantastic. Uh, Netflix, 991 01:01:21,000 --> 01:01:22,960 Speaker 1: the best thing, the best show I've watched in a 992 01:01:23,040 --> 01:01:25,959 Speaker 1: long time as host, which I love. Tell us about 993 01:01:26,000 --> 01:01:31,040 Speaker 1: your mentors who helped guide your career in journalism. I'm 994 01:01:31,080 --> 01:01:34,480 Speaker 1: going back to college. I had a great professor, Jack Pitney, 995 01:01:34,640 --> 01:01:37,920 Speaker 1: who really taught me more than anyone else about writing 996 01:01:38,040 --> 01:01:42,560 Speaker 1: well and keeping things and active voice, not using ad firms, uh, 997 01:01:42,680 --> 01:01:46,800 Speaker 1: keeping sentences shortened sweet in journalism, and I think the 998 01:01:46,880 --> 01:01:50,800 Speaker 1: best mentor I've had is Bruce Orwall Is, a legendary 999 01:01:51,600 --> 01:01:54,120 Speaker 1: reporter and editor at The Wall Streets turn All who 1000 01:01:54,720 --> 01:01:58,080 Speaker 1: coached me through my relationship with Tom Hayes and to 1001 01:01:58,280 --> 01:02:01,160 Speaker 1: some extent Thal Brooke Smith as well. And he's now 1002 01:02:01,280 --> 01:02:03,720 Speaker 1: the global sports editor at the Journal. And he's just 1003 01:02:04,200 --> 01:02:07,200 Speaker 1: he's an extraordinary person and journalist. And he's been a 1004 01:02:07,280 --> 01:02:12,400 Speaker 1: mentor two dozens and dozens of really the journalists over 1005 01:02:12,440 --> 01:02:16,120 Speaker 1: the years. Fascinating. Tell us about some of your favorite books. 1006 01:02:16,240 --> 01:02:18,480 Speaker 1: What are you reading now and what are some of 1007 01:02:18,640 --> 01:02:23,320 Speaker 1: your all time favorites. Um. I am right now reading 1008 01:02:23,560 --> 01:02:27,120 Speaker 1: straight Man, which is a novel um and got it. 1009 01:02:27,200 --> 01:02:31,440 Speaker 1: Cannot remember who it's by the but it's fantastic. It's 1010 01:02:31,440 --> 01:02:36,640 Speaker 1: not new. UM. I recently read Hidden Valley Road, which 1011 01:02:37,000 --> 01:02:39,560 Speaker 1: I think everyone is probably reading, which is also fantastic. 1012 01:02:39,760 --> 01:02:42,880 Speaker 1: But UM, I think right now my favorite all time 1013 01:02:43,160 --> 01:02:47,680 Speaker 1: book is a little more obscur it's called or I'll 1014 01:02:47,760 --> 01:02:51,400 Speaker 1: Dress You in Morning and morning as in like reason, 1015 01:02:51,720 --> 01:02:54,480 Speaker 1: not morning as in the time of day. And it's 1016 01:02:54,520 --> 01:02:57,800 Speaker 1: non fiction. Yeah, morning with you and It was wrinking, 1017 01:02:57,880 --> 01:03:02,360 Speaker 1: I believe, in the late sixties by a pair of journalists. Uh. 1018 01:03:02,640 --> 01:03:06,000 Speaker 1: And it's about bull fighting in Spain, and it is 1019 01:03:07,480 --> 01:03:11,480 Speaker 1: lyrical and fascinating. It it was just a wonderful, wonderful book. 1020 01:03:12,720 --> 01:03:15,080 Speaker 1: And what sort of advice would you give to a 1021 01:03:15,200 --> 01:03:19,280 Speaker 1: recent college graduate who is thinking about a career in 1022 01:03:19,880 --> 01:03:27,680 Speaker 1: either journalism or long form investigative journalism. I think, I mean, 1023 01:03:27,720 --> 01:03:30,200 Speaker 1: there's so much advice I could give to me. The 1024 01:03:30,280 --> 01:03:33,200 Speaker 1: advice that I wish I had gotten when I was 1025 01:03:33,360 --> 01:03:37,440 Speaker 1: just starting is starts. You want to be as aggressive 1026 01:03:37,520 --> 01:03:40,160 Speaker 1: and fast moving and ambitious as you can be, but 1027 01:03:40,320 --> 01:03:43,200 Speaker 1: make sure if you're finding a place to start working 1028 01:03:43,360 --> 01:03:46,000 Speaker 1: where you have a good editor and you have a 1029 01:03:46,080 --> 01:03:49,600 Speaker 1: good mentor, and where when you make mistakes and when 1030 01:03:49,640 --> 01:03:52,200 Speaker 1: you fail, you're not going to do so in such 1031 01:03:52,240 --> 01:03:55,560 Speaker 1: a spectacular way that it chapterdizes your entire career. And 1032 01:03:55,680 --> 01:03:58,400 Speaker 1: because you will make mistakes and you will fail, and 1033 01:03:58,640 --> 01:04:00,480 Speaker 1: you want to do that in kind of a obtained 1034 01:04:00,600 --> 01:04:05,200 Speaker 1: safe environment. And then a related question, I guess is 1035 01:04:05,360 --> 01:04:09,160 Speaker 1: what do you know about the world of journalism today 1036 01:04:09,240 --> 01:04:11,480 Speaker 1: that you wish you knew when you were first getting 1037 01:04:12,000 --> 01:04:17,280 Speaker 1: starting out? Yeah, I mean that's that everyone makes mistakes 1038 01:04:17,560 --> 01:04:20,560 Speaker 1: and that those mistakes can be really brave if they're 1039 01:04:20,600 --> 01:04:23,840 Speaker 1: not done. And you know, you know, you don't want 1040 01:04:23,880 --> 01:04:26,920 Speaker 1: to be like start rock climbing without ropes, and uh, 1041 01:04:27,720 --> 01:04:30,760 Speaker 1: it's the same with journalism, like you need to respect 1042 01:04:31,040 --> 01:04:33,520 Speaker 1: what you don't know and respect what you can learn 1043 01:04:33,640 --> 01:04:36,640 Speaker 1: from others. And so I think there's a temptation I 1044 01:04:36,720 --> 01:04:38,840 Speaker 1: know I certainly faced this myself where you kind of 1045 01:04:38,920 --> 01:04:41,120 Speaker 1: just you think you know everything when you're twenty two 1046 01:04:41,200 --> 01:04:43,400 Speaker 1: years old and you want to go off and just 1047 01:04:43,560 --> 01:04:46,120 Speaker 1: prove yourselves and you think you can do it, and 1048 01:04:46,160 --> 01:04:48,400 Speaker 1: the reality is maybe you can do it, but you 1049 01:04:48,720 --> 01:04:50,720 Speaker 1: you will do it so much better and in a 1050 01:04:51,040 --> 01:04:54,440 Speaker 1: much more productive way if you're doing it with someone 1051 01:04:54,720 --> 01:04:58,760 Speaker 1: who's going to make you better. And so that often means, uh, 1052 01:04:59,240 --> 01:05:01,840 Speaker 1: not get going for the goal and everything. You need 1053 01:05:01,920 --> 01:05:04,520 Speaker 1: to kind of check your ambitions a little bit and 1054 01:05:04,680 --> 01:05:07,920 Speaker 1: find an organization and individuals you can work with that 1055 01:05:08,040 --> 01:05:10,640 Speaker 1: what really that you will learn a lot from. Thanks 1056 01:05:10,760 --> 01:05:13,400 Speaker 1: David for being so generous with your time. If you 1057 01:05:13,640 --> 01:05:17,960 Speaker 1: enjoy this conversation, check out all our previous such interviews. 1058 01:05:18,720 --> 01:05:21,600 Speaker 1: We have over three hundred recorded over the past six years. 1059 01:05:22,080 --> 01:05:26,800 Speaker 1: You can find them at iTunes, Spotify, Google Podcasts, ditch 1060 01:05:26,840 --> 01:05:32,040 Speaker 1: your overcast wherever finer podcasts are sold. We love your comments, 1061 01:05:32,080 --> 01:05:36,040 Speaker 1: feedback and suggestions right to us at m IB podcast 1062 01:05:36,120 --> 01:05:38,920 Speaker 1: at Bloomberg dot net. You can check out my weekly 1063 01:05:39,000 --> 01:05:42,640 Speaker 1: column on Bloomberg dot com slash Opinion. Sign up for 1064 01:05:42,760 --> 01:05:45,880 Speaker 1: my daily reads at rid Halts dot com. Be sure 1065 01:05:45,920 --> 01:05:48,200 Speaker 1: and give the show a review at Apple iTunes. You 1066 01:05:48,280 --> 01:05:50,919 Speaker 1: can follow me on Twitter at rid Haltz. I would 1067 01:05:50,960 --> 01:05:53,040 Speaker 1: be remiss if I did not thank the crack staff 1068 01:05:53,440 --> 01:05:56,760 Speaker 1: that helps us put this conversation together each week. Tim 1069 01:05:56,840 --> 01:06:01,520 Speaker 1: Harrow is my audio engineer, Michael Boyle's my producer. Atika 1070 01:06:01,640 --> 01:06:05,280 Speaker 1: val Bron is our project manager. Michael Batnick is my 1071 01:06:05,360 --> 01:06:08,920 Speaker 1: head of research. I'm Barry rid Holts. You've been listening 1072 01:06:09,000 --> 01:06:11,640 Speaker 1: to Master's of Business on Bloomberg Radio.