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Speaker 1: This is Master's in Business with Barry Ridholds on Bloomberg Radio.

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Speaker 2: This week on the podcast what Can I Say? Gary

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Speaker 2: Cohne with just a stellar career at Goldman Sachs, where

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Speaker 2: he spent twenty five years, rising through the ranks commodities,

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Speaker 2: trading fixed income currency, eventually running equity and soon after

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Speaker 2: becoming president and chief operating officer at Goldman. Soon after,

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Speaker 2: he's tapped by the White House to become Director of

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Speaker 2: the National Economic Council and Chief Economic Advisor to President

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Speaker 2: Trump starting at the beginning of the administration in twenty seventeen.

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Speaker 2: Really a fascinating career, a really really interesting person. We

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Speaker 2: dive deep into all sorts of things about running businesses,

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Speaker 2: managing risk, and then when we began talking about his

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Speaker 2: public sector service, we went deep into the Tax Cuts

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Speaker 2: and Job Act of twenty seventeen. If you're at all

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Speaker 2: interested in that, you will find this to be an

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Speaker 2: absolutely masterclass in how legislation is assembled, how it shepherded

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Speaker 2: through the House, through the Senate, through all the competing

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Speaker 2: interest groups. I found this discussion just really to be

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Speaker 2: absolutely fascinating, and I'm positive you will also, with no

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Speaker 2: further ado from the White House and Goldman Sachs, Gary

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Speaker 2: cohne Berry.

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Speaker 1: It's great to be here, it's great to have you.

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Speaker 2: So let's start out talking a little bit about your

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Speaker 2: background in your career. I never would have guessed you

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Speaker 2: began at US Steel. Tell us when was that and

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Speaker 2: what'd you do there?

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Speaker 1: So it was a very short career at US Steel.

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Speaker 1: So you know, I graduated college in eighty two and

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Speaker 1: I thought it was going to take a few months

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Speaker 1: off and regroup. And my dad didn't think that was

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Speaker 1: part of the agenda. So he woke me up my

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Speaker 1: first Monday morning home at six am through the lights on,

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Speaker 1: asked me what I was going to do with the

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Speaker 1: rest of my life, and I think I made some

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Speaker 1: wise crack and he's a few weeks I think I

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Speaker 1: told him. I said, I think I told him, you're

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Speaker 1: looking at it, and he said, yeah, not in my house.

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Speaker 1: So I went out and tried to find a job locally.

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Speaker 1: This is when I was still living in Cleveland, and

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Speaker 1: I got a job with the home building Products division

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Speaker 1: of United States Steel, which was a company the United

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Speaker 1: States Steel had acquired in Cleveland called all Side. They

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Speaker 1: sold replacement windows, vinyl siding, aluminum siding, gut her coil,

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Speaker 1: things like that. I ended up starting there in the

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Speaker 1: summer of eighty two, and by the fall of eighty

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Speaker 1: two I was gone. Now, there was one really important

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Speaker 1: part of that. As part of my job training, I

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Speaker 1: was sent to the big sales offices to learn how

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Speaker 1: the product was sold. One of the big sales offices

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Speaker 1: was out in Long Island and Garden City. And so

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Speaker 1: in my second week in the sales office and Garden City,

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Speaker 1: I said to the gentleman I was working with, I said,

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Speaker 1: you know, I think we're gonna work really hard Monday

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Speaker 1: to Thursday, and I'm going to go in the city Friday.

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Speaker 1: And he said, that's a really good idea. So I

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Speaker 1: went in the city on Friday, and that's how I

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Speaker 1: found my way down to the commodities exchange, the commodities floor,

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Speaker 1: and that's where I got my job, and that's how

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Speaker 1: I turned my career into a financial career.

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Speaker 2: So I had a wildly incorrect assumption. I just pictured

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Speaker 2: you working with the various input commodities to steal iron

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Speaker 2: plus energy, plus manganese, nickel, chromium, carbon vanding, all those things,

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Speaker 2: and said, hey, I could move to the commodities exchange

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Speaker 2: and make a killing trading. Nothing like that, Nothing like that.

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Speaker 2: How did you find your way to the comas?

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Speaker 1: So two years earlier, and now we're going back in

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Speaker 1: time the summer of eighty for those of you that

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Speaker 1: remember the summer of eighty the Hunt brothers at that

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Speaker 1: point where were exactly we're trying to corner the gold

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Speaker 1: and silver market. I was doing an internship at a

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Speaker 1: local brokerage office in Cleveland, Ohio, and I did the

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Speaker 1: typical internship, you know, a week in the back office,

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Speaker 1: a week in equities, a week in fixed income and

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Speaker 1: weekend commodities, a week in bonds, and then four weeks

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Speaker 1: wherever you'd like to go. And of course where I

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Speaker 1: would like to go is where the guys are screaming

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Speaker 1: and yelling in the back corner, which were the commodity guys.

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Speaker 1: So I ended up being allowed to go sit with

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Speaker 1: the commodity guys. And at the time they were doing

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Speaker 1: the Chicago New York gold arbitrage, they had set up

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Speaker 1: a gold arbitrage.

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Speaker 2: Desk, meaning that the slight difference in prices between the

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Speaker 2: two exchanges, they would help bring them into line and

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Speaker 2: maybe pocket a few cents exactly.

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Speaker 1: And at the time they weren't slight differences. Oh really,

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Speaker 1: because the Hunt brothers when they came into the comex

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Speaker 1: at the time, they were only buying one market. They

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Speaker 1: were buying the Comex market. So the Comex market would move,

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Speaker 1: you know, ten twenty thirty dollars, and the Chicago market

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Speaker 1: would lag dramatically behind. Wow. So there were these five

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Speaker 1: plus dollar disparities in the price of gold, and so

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Speaker 1: they would sit there and trade. And so after a

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Speaker 1: week there, I said to the guys on desk, hey,

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Speaker 1: can I open an account and do this? And they said, hey,

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Speaker 1: you know, how hard could it be? Yeah, You're allowed

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Speaker 1: to open an account. So I opened an account and I

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Speaker 1: sat there and I traded the the New York Chicago

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Speaker 1: gold arbitrage for the next sort of close to month,

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Speaker 1: and I said, Wow, this is the most amazing thing

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Speaker 1: I've ever seen. They're just giving away free money.

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Speaker 2: You were making cash in that.

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Speaker 1: I was making cash while I was sitting there. So

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Speaker 1: I decided a point. I said, oh, I got to

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Speaker 1: go to the floor of the exchange. This is really interesting.

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Speaker 1: This is a really interesting opportunity. And I really did

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Speaker 1: not want to go back to college. You know. I

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Speaker 1: had a long discussion with my dad. You know, I said, Dad,

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Speaker 1: this is silly that I go back to college. There's

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Speaker 1: this unique opportunity. I don't know how long it's going

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Speaker 1: to last, and I'm going to sit here and trade

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Speaker 1: this this gold arbitrage. And he said, no, no, you're

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Speaker 1: going back to college. I don't care what you do.

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Speaker 1: So I did the best thing I could do. I

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Speaker 1: went back and did my next three years of school

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Speaker 1: in two years. And then I got myself to the

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Speaker 1: floor of the exchange by the end of eighty two.

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Speaker 2: And then what were you doing on the What were

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Speaker 2: you trading on the floor and how did you stay? Long?

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Speaker 2: Did you stay as a floor trader?

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Speaker 1: So in many respects, I got lucky in my first

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Speaker 1: job offer because the COMEX had just started to trade

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Speaker 1: options on futures. It was brand new. No one on

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Speaker 1: the floor knew the options market. So one of the

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Speaker 1: large firms there approached me and said, hey, do you

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Speaker 1: know anything about options? Can you help us trade options?

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Speaker 1: And I said, of course, even though I knew nothing about.

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Speaker 2: Oppos but nobody knew anything about options on futures. They're

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Speaker 2: brand spanking new.

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Speaker 1: Right, no one had trade him on the floor. There

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Speaker 1: were no option traders there. The big option trading firms

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Speaker 1: from the other option trading exchange hadn't come down to

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Speaker 1: the floor, They hadn't become members, they hadn't rented seats,

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Speaker 1: so it was there was no real knowledge there. So literally,

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Speaker 1: in the course of five days, I went out and

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Speaker 1: tried to learn how to trade options, and I got

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Speaker 1: lucky enough to get a job. I stood behind one

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Speaker 1: of the brokers for one of large firms and I

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Speaker 1: was literally saying, Okay, buy that call, sell that put,

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Speaker 1: go sell those futures, and he goes, what I do? Well,

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Speaker 1: you locked in, you know, four dollars an ounce. He goes,

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Speaker 1: how'd I do that? I said, well, here's how you

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Speaker 1: do that. How do I get out of it? I said, okay,

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Speaker 1: we're going to work our way out of it. And

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Speaker 1: I stood behind that person for the better part of

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Speaker 1: a year. And then after a year, you know, I said,

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Speaker 1: this is kind of silly. I'm sitting here telling this

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Speaker 1: guy what to do. I got to figure out how

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Speaker 1: to get my own seat and trade my own account.

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Speaker 1: And so about a year into my experience on the floor,

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Speaker 1: I went out and got a seat on the floor

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Speaker 1: of the COMEX.

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Speaker 2: Do you remember what they cost back then?

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Speaker 1: About one hundred and fifty thousand.

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Speaker 2: It was a real money.

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Speaker 1: It was abstantial amount of mine. Now the good news

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Speaker 1: is you could lease them. You could lease seats on

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Speaker 1: a monthly basis. So I went and got a floor,

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Speaker 1: and I opened up an account with a clearing member.

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Speaker 1: When the clearing member guarantees your trades, and I started

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Speaker 1: trading for my own account. And so I traded my

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Speaker 1: own account from sort of the end of eighty three

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Speaker 1: on till I left the floor in the exchange.

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Speaker 2: And that was how much later.

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Speaker 1: So I stayed on the floor till till basically nineteen ninety,

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Speaker 1: and you know, ended up moving from trading options to

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Speaker 1: trading more and more futures. You know, the futures markets

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Speaker 1: were expanding, they were growing. It was an interesting time.

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Speaker 1: But I, you know, I would trade almost anything that

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Speaker 1: was bold all that day. And it was really an

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Speaker 1: interesting experience learning how a fundamental terminal market works.

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Speaker 2: So I'm glad you mentioned you shifted somewhat from options

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Speaker 2: to futures options. Your risk is predefined. However much you're

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Speaker 2: putting up, that's as much you can lose.

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Speaker 1: Well unless you sell a naked call.

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Speaker 2: Okay, fair enough.

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Speaker 1: You sell a naked call, you right, it's no.

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Speaker 2: But inherently in futures, a whole lot more leverage, a

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Speaker 2: whole lot more risk. How fundamental was that to your

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Speaker 2: learning about investing, trading, risk management starting with futures?

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Speaker 1: So it was important where I found a real niche

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Speaker 1: on the floor, and everyone finds their little niche on

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Speaker 1: the floor, and being on the floor is an interesting

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Speaker 1: environment because everyone's there for their own little specific reason.

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Speaker 1: And where I found the niche is at that time,

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Speaker 1: because things have changed dramatically. You know, the Futures Exchange

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Speaker 1: is listed about twenty four months of future contracts. You know,

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Speaker 1: the first and second delivery months traded ninety percent of

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Speaker 1: the volume. But then you had people that wanted to

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Speaker 1: trade the outdated months. You know, they wanted to trade

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Speaker 1: the one year forward or the eighteen month forward. Where

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Speaker 1: I really specialized, where I spent my time is figuring

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Speaker 1: out how to price the one year forward or the

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Speaker 1: eighteen month forward and making prices in those markets. There

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Speaker 1: were only two or three of us on the floor

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Speaker 1: that did that. So when any of the orders came

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Speaker 1: in to buy the non active months. There were only

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Speaker 1: two or three of us that would make a price,

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Speaker 1: and so I carved out a unique opportunity with some

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Speaker 1: other people. I wasn't the only one doing it on

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Speaker 1: the floor, and it was a unique opportunity to really

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Speaker 1: learn more of the fundamentals of the business. It also

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Speaker 1: brought in your interest rates and interest rates expect because

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Speaker 1: the forward curve is a function of interest rate.

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Speaker 2: A lot of math in your head I'm doing.

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Speaker 1: I'm doing an awful lot of math in my head

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Speaker 1: on the fly. And to hedge your position, you know,

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Speaker 1: how do you hedge you know, a long dated future

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Speaker 1: versus a short data future. It's not one to one.

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Speaker 1: There's mathematical formulas on how to hedge your book and

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Speaker 1: count your months of exposure and look at your interest

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Speaker 1: rate exposure, look at your underlying exposure, look at your

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Speaker 1: present value of your future cash flows. It becomes much

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Speaker 1: more interesting than just trading the spot month in and out.

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Speaker 1: So that's where I really learned how to trade and

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Speaker 1: how to think about cash flows and think about supply demand.

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Speaker 2: It's a fairly obvious transition from the floor of the

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Speaker 2: Comax to Goldman Sachs. How did you meet Goldman? How

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Speaker 2: did that next step come about?

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Speaker 1: So by the time I was sort of at the

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Speaker 1: end of my career in eighty eighty nine ninety, you know,

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Speaker 1: I'd become a fairly large trader on the floor. And

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Speaker 1: when you're a fairly large trader on the floor, that

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Speaker 1: means you're taking the other side of the institutional business flow.

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Speaker 1: Titutional business flow at the time was probably the biggest

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Speaker 1: player was Goldman, Sachs. It was Jay Aaron Goldman, Sachs,

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Speaker 1: Morgan Stanley, a little bit of Aig, a little bit

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Speaker 1: of JP Morgan, you know, and then a bunch of

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Speaker 1: the funds. So I knew all of the Goldman traders

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Speaker 1: because when they came in to move volume, I was

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Speaker 1: there to make prices, and so we had a you know,

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Speaker 1: we had a good relationship with each other.

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Speaker 2: I'm going to assume you weren't taking the other side

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Speaker 2: of the trade all that often with them, or.

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Speaker 1: Oh I was taking the other side of trade all

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Speaker 1: the time. Oh really, But remember we had completely different

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Speaker 1: things we were trying to accomplish. Goldman had clients on

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Speaker 1: the other side. They were trying to make their clients

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Speaker 1: price and get hedged, and they were going to walk

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Speaker 1: away from the trade. I was making a price and

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Speaker 1: I may be out of it in thirty seconds or

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Speaker 1: forty seconds or fifty seconds. I was trying to figure out,

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Speaker 1: you know, what was the price I needed for the

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Speaker 1: next five minutes to clear the volume and move it around.

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Speaker 1: And if I traded something, where can I move it?

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Speaker 1: What can I what can I buy or sell against it?

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Speaker 1: To make myself is risk reducing as possible. So we

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Speaker 1: had different motives, and so I was able to do

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Speaker 1: my job. They were able to do their job. And

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Speaker 1: that's what a terminal market does. It allows the different

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Speaker 1: factors or the different people trying to get done what

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Speaker 1: they need to get done, a place to meet. And

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Speaker 1: so I had become closer and closer to the Goldman's

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Speaker 1: acts people. I'd become closer to the AIG people. I'd

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Speaker 1: become close to everyone. And in nineteen ninety Goldman had

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Speaker 1: partner elections and the gentleman who was running the metals

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Speaker 1: trading desk, you know, called me in the office one

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Speaker 1: day and I just thought we were going to have

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Speaker 1: a conversation about the markets. And you know what I

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Speaker 1: was thinking, what he was thinking, and he said to me,

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Speaker 1: he said, hey, look, you know I just became partner here.

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Speaker 1: I think there's a great opportunity. I'm going to really

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Speaker 1: continue to build this business. And instead of you taking

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Speaker 1: the other side of our business all day long and

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Speaker 1: fighting with us, why don't you come up here and

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Speaker 1: join us. At the time, it was the farthest thing

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Speaker 1: from my mind. But the more I thought about it,

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Speaker 1: and the more I saw the trends of what was

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Speaker 1: going on in the industry, and the industry had changed

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Speaker 1: quite dramatically over the prior five years. It had gone

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Speaker 1: from a fairly heavy retail business to a very institutional business.

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Speaker 1: No individual was really trading commodity features. If you wanted

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Speaker 1: that exposure, you were giving your money to a professional,

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Speaker 1: a commodity trading advisor, or some hedge fund. So it

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Speaker 1: was becoming very institutionalized. So it was harder and harder

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Speaker 1: to make money, or I was taking more and more

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Speaker 1: risk to make the same amount of money. So when

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Speaker 1: this individual, Jim Riley, came to me, I said, you know,

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Speaker 1: this is not the craziest thing I've ever heard of,

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Speaker 1: And he and I came to an agreement that I

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Speaker 1: could keep my seat. If I ever wanted to go back,

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Speaker 1: I could do a few things to make sure that

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Speaker 1: if the transition upstairs from the floor environment to the

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Speaker 1: trading desk environment, that I felt like I had a

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Speaker 1: safety net. Well, I never really needed that safety net,

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Speaker 1: but it was nice to have that safety net.

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Speaker 2: Huh. Really quite fascinating. You then spend what the next

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Speaker 2: twenty five years at Goldman Sachs. You rose through the ranks,

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Speaker 2: eventually becoming president and COO. Pretty good decision leaving the

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Speaker 2: floor of the comments.

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Speaker 1: I think was one of my great decisions in life, really,

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Speaker 1: besides getting married and a few other things. I can't

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Speaker 1: really just tell you what other better decisions.

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Speaker 2: So you run commodities for a while at Goldman? What

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Speaker 2: was that like? And do you still like, look at

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Speaker 2: what's going on today and energy when you look around,

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Speaker 2: do you get that itch? Do you feel like I

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Speaker 2: want to I want to I want to do some

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Speaker 2: futures trading or yeah.

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Speaker 1: Look, once a commodities trader, always a commodity trader. So

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Speaker 1: I look at prices and commodities every day, and I

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Speaker 1: have views on the markets every day. I don't know

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Speaker 1: if they're sophisticated enough that I would trade future, but

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Speaker 1: you know, trading underlying equities and trading you know, equities

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Speaker 1: that have high correlation to commodities is something I'm comfortable with.

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Speaker 1: It was a unique opportunity at the time because if

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Speaker 1: you go back to that early nineties period, you know,

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Speaker 1: commodities were somewhat in a bull market. It was a

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Speaker 1: it was a pretty bull market environment, and you know,

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Speaker 1: there were a lot of hedge funds talking about how

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Speaker 1: to how they were making twenty thirty forty returns and commodities, Well,

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Speaker 1: the team at Goldman Sachs has figured out if you

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Speaker 1: bought like one gold future contract for you, you would

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Speaker 1: have made thirty percent. So you know, we we got

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Speaker 1: involved and created a benchmark, a commodity indicy at the time.

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Speaker 1: Uh so there was a way to judge yourself, did

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Speaker 1: you actually outperform the market? You know, I had the

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Speaker 1: interesting opportunity to be part of the team that built

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Speaker 1: a commodity index. I once I got done building it,

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Speaker 1: I was the one that traded that index. So I

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Speaker 1: got exposure to eighteen eighteen markets, many of which I'd

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Speaker 1: never traded in my life. So that was really unique.

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Speaker 1: It allowed me to build some new a new business allowed.

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Speaker 1: It allowed me and Goldman to expand into a lot

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Speaker 1: of new markets where there was huge business opportunities for

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Speaker 1: our clients.

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Speaker 2: Really really intriguing. So let's talk a little bit about

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Speaker 2: what makes Goldman Sachs so special. You spent most of

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Speaker 2: your career there. Why is it so unique?

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Speaker 1: So when I went to Goldman in nineteen ninety, it

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Speaker 1: was a small private partnership. I mean, it was a

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Speaker 1: really small private partnership looking back, five hundred partners oh less,

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Speaker 1: substantially less. Really, Yeah. I think the most interesting document

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Speaker 1: that I pull up from time to time is the

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Speaker 1: s one from the public filing of Goldman Sachs, which

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Speaker 1: was in the in the late nineties. If you look

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Speaker 1: at the if you look at the filing and you

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Speaker 1: look at the size of the company and the revenue,

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Speaker 1: the entire yearly revenue numbers would be a bad quarter

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Speaker 1: right now. It just tells you. And so there was

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Speaker 1: so much growth going on in Goldman when I went

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Speaker 1: there in the nineties, and I had a unique seat,

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Speaker 1: you know, in the partners there provided me a unique seat,

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Speaker 1: and they gave me enormous amount of latitude and responsibility

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Speaker 1: to keep building businesses. So, as you said, I joined

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Speaker 1: the firm as part of JERN. At that point, j

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Speaker 1: Erin still was a quasi quasi standalone business. It was

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Speaker 1: wholly owned by Goldman Sachs, but we hadn't quite integrated

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Speaker 1: into the Goldman Sax culture. So the first thing that

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Speaker 1: happened in my career there is, you know, JARN became

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Speaker 1: part of fixed income, so we became we went from

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Speaker 1: fixed income and JAR into fix fixed income currency and commodities.

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Speaker 1: That was a big move, taking these you know, crazy

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Speaker 1: commodity guys right and putting in with these very sophisticated

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Speaker 1: fixed income guys. So part of that transition and that

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Speaker 1: was that was a big move to create FICK and

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Speaker 1: it didn't happen overnight. There was a lot of natural

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Speaker 1: tension involved in that. And then even when we were

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Speaker 1: combined by name alone, we still ran ourselves independently. So

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Speaker 1: then I got the unique opportunity to be the I

360
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Speaker 1: would call it guinea pig. I was the commodity guy

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Speaker 1: they got put into running a fixed income business. I

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Speaker 1: didn't lose my responsibilit running the quantity business, but we

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Speaker 1: moved the emerging market business down to what used to

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Speaker 1: be the jir And floor. On the jir And floor

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Speaker 1: was the commodity businesses as well as the FX business.

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Speaker 1: So we had the you know, the metals business, We

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Speaker 1: had the oil business, we had the grain business, we

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Speaker 1: had the coffee business. We had a coffee roasting room,

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Speaker 1: we had a tasting room, and then we had the

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Speaker 1: FX business. And in the middle we decided which made

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Speaker 1: sense to put the emerging market debt business.

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Speaker 2: Or related currency? Yeah, commodities and made.

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Speaker 1: Sense, Yes, made sense at the time the Mexican at

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Speaker 1: the Mexican restructuring they had they had Mexican bonds with

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Speaker 1: an oil option embedded in them. You had a lot

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Speaker 1: of currency forwards trading, which made sense. So we moved

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Speaker 1: emerging markets down and I was asked to run the

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Speaker 1: emerging markets business. So I was the first sort of

379
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Speaker 1: guy that went from being a pure Jarran GUYE to

380
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Speaker 1: making that crossover to commodities and a fixed income business.

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Speaker 2: So prior to that, have you had any management experience

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Speaker 2: or leadership experience. That's a big raucous floor. And I

383
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Speaker 2: would imagine that desk was was a handful to deal with.

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Speaker 2: What was it like stepping into that role?

385
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Speaker 1: So I had been running the commodities business. So I

386
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Speaker 1: had been managing the commodities business. We had built some

387
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Speaker 1: new businesses. We had built our Golden Sex Commodity Index business,

388
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Speaker 1: so I had had, you know, a lot of responsibility

389
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Speaker 1: building a business in building it out quite well. I

390
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Speaker 1: had spent four years in London building our commodity business there.

391
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Speaker 1: So the management piece of it was not what was

392
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Speaker 1: the challenge to me. The challenge to me was I

393
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Speaker 1: had never been involved in a fixed income business, you know.

394
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Speaker 1: To me, I remember the moment, you know where where

395
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Speaker 1: I had to learn something new for the first time.

396
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Speaker 1: I spent my whole life in supply demand. So this

397
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Speaker 1: is supply, This is demand, you know, this is how

398
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Speaker 1: you look at supply demand. And all of a sudden,

399
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Speaker 1: I'm in this world where okay, we've got the you know,

400
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Speaker 1: Mexico twenty three bond trading x y Z and it's

401
00:21:53,119 --> 00:21:55,239
Speaker 1: one O two, one oh three, one oh four, Like

402
00:21:55,280 --> 00:21:57,040
Speaker 1: this thing is undervalue. We should buy it. And the

403
00:21:57,040 --> 00:21:59,240
Speaker 1: guys go, no, no, no, no, no, I go, why wouldn't we

404
00:21:59,240 --> 00:22:00,760
Speaker 1: buy it? We got to own thing that go, they

405
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Speaker 1: can turn around issue more tomorrow and like, oh man,

406
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Speaker 1: like the whole supply demand fundamentals. I had to change

407
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Speaker 1: my whole thinking.

408
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Speaker 2: There's only so much gold and silver ran right, but bonds,

409
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Speaker 2: how much.

410
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Speaker 1: You want right bond that the Government of Mexican can

411
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Speaker 1: turn around and reissue. You can open the issue or

412
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Speaker 1: reissue a new bond tomorrow, so the amount of Mexican

413
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Speaker 1: sovereign bonds can change tomorrow, which all of a sudden

414
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Speaker 1: was a whole new way of thinking about the world.

415
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Speaker 1: That the supply demand fundamentals of a commodities market are

416
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Speaker 1: not the same as the supply demand fundamentals well fixed

417
00:22:34,560 --> 00:22:37,880
Speaker 1: think of market. So you know, the opportunity to bring

418
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Speaker 1: that emerging market's desk down into the jar and world

419
00:22:42,240 --> 00:22:45,800
Speaker 1: worked out fairly well. I got the opportunity to go

420
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Speaker 1: from the emerging markets world into the mortgage world. So

421
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Speaker 1: they sent me to the next beast, which is the

422
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Speaker 1: mortgage world.

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Speaker 2: And I have to interrupt you and just point out

424
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Speaker 2: nineteen ninety when you start think about the timing, you're

425
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Speaker 2: halfway through an eighteen year equity bull market, which we'll

426
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Speaker 2: talk about in a minute. You're a decade into what's

427
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Speaker 2: going to end up being a four decade fixed income bullmarket.

428
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Speaker 2: Mortgages are really starting to ramp up and becoming very tradable.

429
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Speaker 2: Your timing couldn't have been been any better. When were

430
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Speaker 2: you promoted to global cohad of equities and fixed income.

431
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Speaker 1: So it when something like this. So I ended up

432
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Speaker 1: going into the mortgage businesses end up building a big

433
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Speaker 1: mortgage business. We end up becoming a very big trader

434
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Speaker 1: and passed throughs. End up doing in mortgages what we've

435
00:23:36,800 --> 00:23:39,720
Speaker 1: now done in all of our commodities business, what we've

436
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Speaker 1: done in the emerging markets. We then really have a

437
00:23:43,680 --> 00:23:47,600
Speaker 1: fixed income currency commodities business run as one business. So

438
00:23:47,840 --> 00:23:52,240
Speaker 1: we managed to make that work. We managed to cross polinate,

439
00:23:53,320 --> 00:23:55,320
Speaker 1: We run them as a business. We no longer have

440
00:23:55,400 --> 00:23:57,480
Speaker 1: fixed income guys and commodity guys. We now have a

441
00:23:58,000 --> 00:24:02,119
Speaker 1: division and it's working quite well. As you're right, we

442
00:24:02,480 --> 00:24:05,760
Speaker 1: had some very good markets going on in the mortgage space.

443
00:24:05,840 --> 00:24:07,399
Speaker 1: We had some very good markets going on in the

444
00:24:07,400 --> 00:24:11,320
Speaker 1: commodity space, and we were able to capitalize on those things.

445
00:24:12,119 --> 00:24:16,960
Speaker 1: In the early two thousands, after I would say the

446
00:24:17,119 --> 00:24:21,359
Speaker 1: dot com bubble had burst, you know, I was asked

447
00:24:21,359 --> 00:24:24,080
Speaker 1: to go over and run the equities business.

448
00:24:25,359 --> 00:24:28,239
Speaker 2: So obviously somebody looked at you and said Hey, this

449
00:24:28,280 --> 00:24:30,359
Speaker 2: guy's talented. He knows how to run a team, he

450
00:24:30,400 --> 00:24:33,000
Speaker 2: knows how to manage risk, and he knows how to

451
00:24:33,480 --> 00:24:36,119
Speaker 2: trade for a profit for a P and L. So

452
00:24:36,280 --> 00:24:38,720
Speaker 2: clearly your background was well suited.

453
00:24:38,920 --> 00:24:44,320
Speaker 1: Yeah, look, maybe lucky, maybe good. Most likely a combination

454
00:24:44,400 --> 00:24:44,680
Speaker 1: of both.

455
00:24:45,640 --> 00:24:49,359
Speaker 2: I always assume good is table stakes at a place

456
00:24:49,400 --> 00:24:51,400
Speaker 2: like Goldman. Lucky never hurts.

457
00:24:51,880 --> 00:24:55,080
Speaker 1: Look, always take I'll always accept the good luck. If

458
00:24:55,160 --> 00:24:57,240
Speaker 1: you want to give me some, I'll take it. So look,

459
00:24:57,280 --> 00:25:00,359
Speaker 1: I had had a very good track record of building

460
00:25:00,480 --> 00:25:04,879
Speaker 1: businesses from rebuilding our commodities business, emerging markets business, mortgage business.

461
00:25:05,520 --> 00:25:07,840
Speaker 1: You know, I had gone through business by business by business,

462
00:25:07,840 --> 00:25:11,240
Speaker 1: and and it helped build and helped transition them into

463
00:25:11,359 --> 00:25:16,760
Speaker 1: much more client facing, client friendly, bigger risk taking businesses,

464
00:25:16,840 --> 00:25:20,359
Speaker 1: bigger client facilitation businesses where we had a brand and

465
00:25:20,440 --> 00:25:22,760
Speaker 1: reputation on the street as the go to shop and

466
00:25:22,840 --> 00:25:26,720
Speaker 1: fixing comcuracy and commodities. Our equities business was really good

467
00:25:26,840 --> 00:25:29,000
Speaker 1: going into the dot com crisis, like it was a

468
00:25:29,040 --> 00:25:29,760
Speaker 1: big business.

469
00:25:29,760 --> 00:25:32,439
Speaker 2: We dominated, dominated, did a lot of syndicate, a lot

470
00:25:32,480 --> 00:25:34,200
Speaker 2: of underwriting, a lot of IPOs we.

471
00:25:34,160 --> 00:25:36,200
Speaker 1: Did, and then all of a sudden that world changed,

472
00:25:36,400 --> 00:25:40,679
Speaker 1: and that world changed dramatically, and so I was asked

473
00:25:40,720 --> 00:25:44,280
Speaker 1: the goer to the equities division. And you know, I

474
00:25:44,720 --> 00:25:47,959
Speaker 1: went in knowing absolutely nothing about the equities world. But

475
00:25:48,080 --> 00:25:50,520
Speaker 1: look I had done that. I knew nothing about emerging markets.

476
00:25:50,520 --> 00:25:53,960
Speaker 1: I knew nothing about mortgages. I knew nothing about government bonds.

477
00:25:53,960 --> 00:25:55,919
Speaker 1: I knew nothing about anything in that world. So I

478
00:25:55,960 --> 00:25:58,080
Speaker 1: just said, look, it's another learning experience. I'm going to

479
00:25:58,160 --> 00:26:01,640
Speaker 1: learn about it. And realized that like we had one

480
00:26:01,640 --> 00:26:07,919
Speaker 1: of the most unbelievable capital markets syndicate shops, like we

481
00:26:07,960 --> 00:26:12,639
Speaker 1: could place new issues better than anyone. The problem was

482
00:26:12,840 --> 00:26:16,040
Speaker 1: the new issue market and calendar was gone, and we

483
00:26:16,119 --> 00:26:19,400
Speaker 1: had to transition from a new issue capital market syndicate

484
00:26:19,440 --> 00:26:26,480
Speaker 1: shop to a secondary trading facilitation one delta derivatives shop.

485
00:26:27,200 --> 00:26:29,720
Speaker 1: And so I went into the equities and with some

486
00:26:29,800 --> 00:26:32,399
Speaker 1: help of some some really smart people, we transitioned that

487
00:26:32,560 --> 00:26:36,439
Speaker 1: business to look much more like what we had built

488
00:26:36,720 --> 00:26:39,800
Speaker 1: in the fixed income, currencies and commodities business. And that

489
00:26:40,000 --> 00:26:43,520
Speaker 1: was done in the early you know, the early two thousands.

490
00:26:44,160 --> 00:26:47,320
Speaker 1: And then you know, as as as we had as

491
00:26:47,320 --> 00:26:49,680
Speaker 1: I had done in other businesses, and we had done,

492
00:26:50,440 --> 00:26:54,479
Speaker 1: you start realizing the synergies between different businesses, and all

493
00:26:54,520 --> 00:26:56,840
Speaker 1: of a sudden you realize, like the one delta or

494
00:26:56,880 --> 00:27:02,359
Speaker 1: the equities business their trading specific company names, but so

495
00:27:02,600 --> 00:27:05,800
Speaker 1: are the corporate bond guys. The corporate bond guys are

496
00:27:05,840 --> 00:27:08,919
Speaker 1: trading company names corporate names, and a lot of the

497
00:27:09,080 --> 00:27:13,560
Speaker 1: underlying factors that are affecting corporate bond trading are affecting

498
00:27:13,640 --> 00:27:17,560
Speaker 1: equity trading. So then we decided, look like, maybe we

499
00:27:17,600 --> 00:27:20,720
Speaker 1: should put all of these businesses together and create a

500
00:27:20,760 --> 00:27:23,840
Speaker 1: securities division, and the corporate bond people should sit on

501
00:27:23,880 --> 00:27:28,199
Speaker 1: the same floor as the equities salespeople, and so they

502
00:27:28,200 --> 00:27:31,639
Speaker 1: can talk about companies. You know, if you got something

503
00:27:31,640 --> 00:27:34,760
Speaker 1: going on in company X, it's not just affecting the equity.

504
00:27:35,080 --> 00:27:38,480
Speaker 1: It's affecting the converts, it's affecting the preferreds, it's affecting

505
00:27:38,520 --> 00:27:42,439
Speaker 1: the corporate bonds. And those traders. When we started, they

506
00:27:42,440 --> 00:27:44,400
Speaker 1: were in different buildings. They didn't even know who they were,

507
00:27:44,920 --> 00:27:46,840
Speaker 1: and so should we put them all on one floor?

508
00:27:46,880 --> 00:27:50,199
Speaker 1: Which we did, and that's how we created the securities division.

509
00:27:50,240 --> 00:27:52,560
Speaker 2: That makes a lot of sense because you would imagine

510
00:27:53,160 --> 00:27:57,240
Speaker 2: everybody is looking at the six blind men describing the elephant.

511
00:27:57,520 --> 00:28:00,480
Speaker 2: Everybody's seeing a different part, and that in tell has

512
00:28:00,480 --> 00:28:02,640
Speaker 2: to be useful for for the rest of the floor,

513
00:28:02,680 --> 00:28:06,600
Speaker 2: whether it was preferred convertibles, corporate bonds, or equity.

514
00:28:06,680 --> 00:28:09,560
Speaker 1: Absolutely. Yeah. So I remember the first time we were

515
00:28:09,560 --> 00:28:11,200
Speaker 1: on the equity desk and you know, in equity is

516
00:28:11,200 --> 00:28:13,080
Speaker 1: getting sold off hard, and I said, I picked up

517
00:28:13,119 --> 00:28:15,080
Speaker 1: the phone and called you know, the guy over on

518
00:28:15,119 --> 00:28:17,760
Speaker 1: the on the on the corporate desk desk, and said, hey,

519
00:28:17,800 --> 00:28:20,600
Speaker 1: what's going on this name? And he said nothing, like

520
00:28:20,800 --> 00:28:22,920
Speaker 1: you know, no, nothing. And then all of a sudden

521
00:28:22,920 --> 00:28:25,520
Speaker 1: I sat there and thinking, Okay, what what we need

522
00:28:25,560 --> 00:28:28,199
Speaker 1: to learn by this? We need to understand is this

523
00:28:28,320 --> 00:28:32,239
Speaker 1: a liquidation of a big position, you know, should we

524
00:28:32,400 --> 00:28:34,359
Speaker 1: should we be going out to the market and selling

525
00:28:34,359 --> 00:28:37,000
Speaker 1: this and getting people into the name. We have to

526
00:28:37,119 --> 00:28:39,480
Speaker 1: learn by the whole capital structure, because it is a

527
00:28:39,480 --> 00:28:40,760
Speaker 1: capital structure.

528
00:28:40,960 --> 00:28:44,480
Speaker 2: That's really intriguing. And you continue working your way up.

529
00:28:44,520 --> 00:28:47,560
Speaker 2: You obviously did a pretty good job there. You continue

530
00:28:47,560 --> 00:28:51,040
Speaker 2: working your way up, eventually in O six becoming appointed

531
00:28:51,600 --> 00:28:55,800
Speaker 2: president and co chief operating officer. You end up as

532
00:28:55,800 --> 00:28:59,200
Speaker 2: a member of the firm's Board of Directors, as well

533
00:28:59,240 --> 00:29:03,400
Speaker 2: as chairman of the firm wide Client and Business Standards Committee.

534
00:29:03,440 --> 00:29:05,600
Speaker 2: Tell us a little bit about what it was like

535
00:29:05,720 --> 00:29:07,760
Speaker 2: to get kicked upstairs to the C suite.

536
00:29:08,760 --> 00:29:11,479
Speaker 1: So that was two thousand and six. I you know,

537
00:29:12,200 --> 00:29:16,160
Speaker 1: it had come after we'd put all the trading businesses together.

538
00:29:16,400 --> 00:29:19,280
Speaker 1: We now had the securities business, so we had put

539
00:29:19,360 --> 00:29:21,800
Speaker 1: everything together, which which made a lot of sense. We

540
00:29:22,800 --> 00:29:26,680
Speaker 1: had done a very good job of that. Hank Paulson

541
00:29:26,720 --> 00:29:29,880
Speaker 1: had left to go become Treasury Secretary, and all of

542
00:29:29,920 --> 00:29:33,680
Speaker 1: a sudden, you know, I'm sitting in the executive office floor,

543
00:29:33,720 --> 00:29:37,880
Speaker 1: and you go from sitting on a trading desk where

544
00:29:37,920 --> 00:29:40,880
Speaker 1: you know exactly what's going on, or you think you

545
00:29:40,960 --> 00:29:43,520
Speaker 1: know exactly what's going on in every market moment to moment,

546
00:29:43,640 --> 00:29:47,040
Speaker 1: minute a minute, and all of a sudden, you're sitting

547
00:29:47,080 --> 00:29:50,560
Speaker 1: in an isolated office trying to figure out how to

548
00:29:50,640 --> 00:29:56,920
Speaker 1: run a big global firm that's not just a securities

549
00:29:56,920 --> 00:29:59,400
Speaker 1: trading business. You've got a big asset management business that

550
00:29:59,440 --> 00:30:01,800
Speaker 1: you care about. You've got a big banking business that

551
00:30:01,840 --> 00:30:04,840
Speaker 1: you care about, and you've got a lot more aspects

552
00:30:04,880 --> 00:30:07,920
Speaker 1: of the company that you care about. So you know,

553
00:30:08,400 --> 00:30:12,240
Speaker 1: it became another moment in time where I sort of

554
00:30:12,240 --> 00:30:14,160
Speaker 1: take a deep breath and say, Okay, how can I

555
00:30:14,240 --> 00:30:18,920
Speaker 1: contribute most to Goldman Sachs. And I felt like there

556
00:30:18,920 --> 00:30:21,920
Speaker 1: were a few different unique opportunities. At the time, we

557
00:30:22,000 --> 00:30:29,120
Speaker 1: did not have the strongest West Coast banking presence, so

558
00:30:29,520 --> 00:30:31,920
Speaker 1: you know, I saw what some of our competitors were doing.

559
00:30:32,040 --> 00:30:35,320
Speaker 1: You know, be honest, Morgan Stanley had a really dominant

560
00:30:35,960 --> 00:30:39,280
Speaker 1: banking presence in California and West Coast and Silicon Valley.

561
00:30:39,400 --> 00:30:41,480
Speaker 2: Mary Meeker absolutely dominated.

562
00:30:41,680 --> 00:30:43,880
Speaker 1: They had a dominant position. They really did, and it

563
00:30:43,920 --> 00:30:45,800
Speaker 1: was hard to deny that. And you know, every time

564
00:30:45,800 --> 00:30:48,120
Speaker 1: there was a big capital market steal or a big

565
00:30:48,280 --> 00:30:51,280
Speaker 1: IPO coming out of there, we were, you know, begging

566
00:30:51,400 --> 00:30:53,480
Speaker 1: to get to be the number three of a number four,

567
00:30:53,600 --> 00:30:55,720
Speaker 1: number five, And I said, you know, to the team

568
00:30:55,720 --> 00:30:57,920
Speaker 1: out there, I said, like, we've got to go build this.

569
00:30:57,920 --> 00:31:00,520
Speaker 1: This is something I can take on. So, you know,

570
00:31:00,560 --> 00:31:04,760
Speaker 1: I found niches where I felt like I could contribute

571
00:31:04,920 --> 00:31:09,440
Speaker 1: to growing the firm, helping the people in the firm,

572
00:31:10,040 --> 00:31:12,960
Speaker 1: while taking on my responsibilities to really manage the firm

573
00:31:13,040 --> 00:31:15,840
Speaker 1: and operate the firm on a day to day basis.

574
00:31:16,240 --> 00:31:18,440
Speaker 1: You know, my number one priority was operating the firm

575
00:31:18,440 --> 00:31:20,480
Speaker 1: on a day to day basis. But I felt my

576
00:31:20,720 --> 00:31:24,240
Speaker 1: my my importance to the firm and the way you

577
00:31:24,480 --> 00:31:27,440
Speaker 1: create clout and the way you create the ability for

578
00:31:27,480 --> 00:31:30,959
Speaker 1: people to listen to you and follow you. At Goldman,

579
00:31:31,120 --> 00:31:33,480
Speaker 1: is you still have to be a revenue leader or

580
00:31:33,600 --> 00:31:36,480
Speaker 1: near the revenue. I don't think you can get disconnected

581
00:31:36,520 --> 00:31:39,400
Speaker 1: from revenue. You can't be a sit in your office

582
00:31:39,560 --> 00:31:42,720
Speaker 1: manager at Goldman, at least in these times. So I

583
00:31:42,960 --> 00:31:47,320
Speaker 1: wanted to be a valuable part of the revenue driving machine,

584
00:31:47,880 --> 00:31:51,120
Speaker 1: which also made my ability to manage and drive the

585
00:31:51,240 --> 00:31:53,200
Speaker 1: organization that much more impactful.

586
00:31:53,320 --> 00:31:56,160
Speaker 2: So that's pretty unusual, isn't it. Typically when you're in

587
00:31:56,240 --> 00:32:01,960
Speaker 2: the COO president slot, you have of subordinates reporting to

588
00:32:01,960 --> 00:32:05,719
Speaker 2: you from different divisions. It's Is it unusual to roll

589
00:32:05,800 --> 00:32:07,320
Speaker 2: up your sleeves and say, hey, I'm going to help

590
00:32:07,400 --> 00:32:11,080
Speaker 2: build this out or did it just help you better

591
00:32:11,160 --> 00:32:13,560
Speaker 2: understand what everybody else was doing in the company.

592
00:32:13,640 --> 00:32:16,160
Speaker 1: I think it helped me better understand. So I spent

593
00:32:16,400 --> 00:32:18,320
Speaker 1: enormous amount of time on the road. I spent an

594
00:32:18,360 --> 00:32:21,440
Speaker 1: enormous amount of time with our coverage people. I was

595
00:32:21,760 --> 00:32:24,960
Speaker 1: out seeing clients, you know, as many days of the

596
00:32:25,040 --> 00:32:28,640
Speaker 1: year as I possibly could really without you know, without

597
00:32:28,840 --> 00:32:31,200
Speaker 1: you know, sort of putting the firm in any peril

598
00:32:31,280 --> 00:32:33,440
Speaker 1: or any jeopardy, making sure the firm was well run,

599
00:32:33,600 --> 00:32:36,000
Speaker 1: dealing with all the bigger issues of the firm. But

600
00:32:36,080 --> 00:32:38,720
Speaker 1: I felt the time I spent out of the office

601
00:32:39,120 --> 00:32:44,360
Speaker 1: in other locations, in other offices, with our senior most

602
00:32:44,400 --> 00:32:48,280
Speaker 1: people and with their clients was the most valuable thing

603
00:32:48,320 --> 00:32:49,280
Speaker 1: I could do for the firm.

604
00:32:49,440 --> 00:32:52,600
Speaker 2: You mentioned Hank Paulson, one of the few people who

605
00:32:52,640 --> 00:32:57,480
Speaker 2: comes out of the financial crisis reputation intact. So you're

606
00:32:57,640 --> 00:33:01,120
Speaker 2: you're president and COO and what to two and a

607
00:33:01,160 --> 00:33:05,480
Speaker 2: half years later? Suddenly the world starts to unravel and

608
00:33:06,160 --> 00:33:09,200
Speaker 2: everything goes to hell in the handbasket. Although I think

609
00:33:09,240 --> 00:33:12,200
Speaker 2: Goldman held up better than most, What was that era

610
00:33:12,680 --> 00:33:13,120
Speaker 2: like for you?

611
00:33:13,760 --> 00:33:16,280
Speaker 1: You know, look, it was tough. You know, it was

612
00:33:16,360 --> 00:33:20,840
Speaker 1: a tough period in time. You know, you could see

613
00:33:21,200 --> 00:33:24,920
Speaker 1: to some extent what was going on. Even though you

614
00:33:24,920 --> 00:33:28,920
Speaker 1: could see what was going on, there was certain things

615
00:33:28,960 --> 00:33:33,160
Speaker 1: you couldn't avoid. You know. You you have certain structures,

616
00:33:33,200 --> 00:33:35,479
Speaker 1: you have certain securities, you have certain assets on your

617
00:33:35,480 --> 00:33:39,160
Speaker 1: balance sheet or that you've created, and you can't uncreate them.

618
00:33:39,560 --> 00:33:42,240
Speaker 1: Even though you said, wow, what you know, I wish

619
00:33:42,360 --> 00:33:44,560
Speaker 1: we hadn't done that well. When we did it six

620
00:33:44,600 --> 00:33:47,160
Speaker 1: months or a year ago, different world, it seemed like

621
00:33:47,240 --> 00:33:50,880
Speaker 1: a rational thing to do. And you're you're sitting there,

622
00:33:50,920 --> 00:33:55,200
Speaker 1: You're watching you know, your your your fellow competitors, whether

623
00:33:55,240 --> 00:33:57,800
Speaker 1: it be a Bear Stearns or Lehman Brothers, you know,

624
00:33:57,960 --> 00:34:02,320
Speaker 1: get in trouble and you're watching what's going on, and

625
00:34:02,360 --> 00:34:07,520
Speaker 1: you're understanding the fragility of an industry. You're understanding that, Look,

626
00:34:08,239 --> 00:34:12,359
Speaker 1: you have a lot of the risks that they do.

627
00:34:12,880 --> 00:34:16,760
Speaker 1: You know, funding a a institution or funding a bank

628
00:34:17,000 --> 00:34:20,480
Speaker 1: is really important. As I always used to say to people,

629
00:34:20,520 --> 00:34:22,960
Speaker 1: you know, these banks are these financial institutions. They don't

630
00:34:23,000 --> 00:34:26,120
Speaker 1: run out of equity, they run out of liquidity. So

631
00:34:26,200 --> 00:34:30,799
Speaker 1: liquidity becomes such a crucial part of the organization. How

632
00:34:30,840 --> 00:34:33,799
Speaker 1: can you finance yourself, How can you fund yourself? How

633
00:34:33,800 --> 00:34:37,799
Speaker 1: can you make sure that you have liquidity? And how

634
00:34:37,840 --> 00:34:41,480
Speaker 1: can you reassure clients that you have liquidity? And so

635
00:34:42,000 --> 00:34:48,000
Speaker 1: we at Goldman as a team, we spent enormous amount

636
00:34:48,000 --> 00:34:50,400
Speaker 1: of time and we took our best and most important

637
00:34:50,400 --> 00:34:53,439
Speaker 1: people and said, look, drop what you're doing, make sure

638
00:34:53,480 --> 00:34:57,239
Speaker 1: that we are dealing with our own situation, and make

639
00:34:57,280 --> 00:35:00,279
Speaker 1: sure that we are doing everything we possibly can can

640
00:35:00,440 --> 00:35:03,880
Speaker 1: to make sure we have liquidity almost at any cost.

641
00:35:04,239 --> 00:35:07,279
Speaker 2: What was the date on that, because for a little context,

642
00:35:07,719 --> 00:35:12,040
Speaker 2: I want to say the market's peaked sometime October seven,

643
00:35:12,160 --> 00:35:14,759
Speaker 2: something like that. But really it didn't feel like they

644
00:35:14,800 --> 00:35:19,680
Speaker 2: were rolling over till first quarter of Wait when and

645
00:35:20,000 --> 00:35:23,279
Speaker 2: lots of competitors were doing a slow bleed and not

646
00:35:23,440 --> 00:35:26,919
Speaker 2: exactly publicizing it. When did you say, hey, this could

647
00:35:26,920 --> 00:35:29,680
Speaker 2: get really bad. We need to we need to be proactive.

648
00:35:29,960 --> 00:35:34,360
Speaker 1: Yeah, we went. I don't remember the dates exactly, but

649
00:35:34,480 --> 00:35:38,680
Speaker 1: you know, we were watching the mortgage banks, the mortgage originators.

650
00:35:39,120 --> 00:35:41,759
Speaker 1: You remember there were I think it's about thirty two

651
00:35:42,000 --> 00:35:44,680
Speaker 1: mortgage banks, mortgage regions. They didn't make it through two

652
00:35:44,719 --> 00:35:48,960
Speaker 1: thousand and eight. You know, we had done business with

653
00:35:49,280 --> 00:35:52,239
Speaker 1: basically almost all of them. They originated mortgages, they sold

654
00:35:52,280 --> 00:35:55,400
Speaker 1: them to us, We repackaged everybody sold them everyone Like

655
00:35:55,480 --> 00:35:59,400
Speaker 1: we weren't unique, but you know, just watching what was

656
00:35:59,520 --> 00:36:02,759
Speaker 1: going on on a day to day basis and having

657
00:36:02,880 --> 00:36:09,080
Speaker 1: conversations with those organizations and seeing what was going on

658
00:36:09,280 --> 00:36:11,480
Speaker 1: and understanding what was going on at the agencies and

659
00:36:11,640 --> 00:36:15,239
Speaker 1: Fanny and Freddie and understanding what their positions were and

660
00:36:15,400 --> 00:36:21,000
Speaker 1: understanding what was going on at AIG and understanding what

661
00:36:21,200 --> 00:36:25,360
Speaker 1: was going on with some of our private equity credit clients.

662
00:36:25,920 --> 00:36:28,560
Speaker 1: You know, I think there was a seminal moment. I

663
00:36:28,680 --> 00:36:34,239
Speaker 1: think it was July fourth weekend. I remember getting a

664
00:36:34,400 --> 00:36:37,359
Speaker 1: phone call at you know, like six o'clock at night

665
00:36:37,480 --> 00:36:42,279
Speaker 1: from a very large private equity firm that also ran

666
00:36:42,360 --> 00:36:45,880
Speaker 1: a big credit fund. And the credit fund had bought

667
00:36:46,280 --> 00:36:49,799
Speaker 1: a debt security from one of their private equity's own

668
00:36:49,960 --> 00:36:56,120
Speaker 1: deals and he was renegging on the deal. He was

669
00:36:56,200 --> 00:36:59,080
Speaker 1: renegging on the debt deal because he couldn't get it

670
00:36:59,239 --> 00:37:01,800
Speaker 1: funded in the secondary market. Wow, I said, you know,

671
00:37:01,880 --> 00:37:04,600
Speaker 1: you're renegging on your own deal, like this is your

672
00:37:04,760 --> 00:37:08,040
Speaker 1: paper from a company that you guys own. That was

673
00:37:08,120 --> 00:37:11,279
Speaker 1: a seminal moment, right That was a moment where I said, oh,

674
00:37:12,160 --> 00:37:16,000
Speaker 1: like the world is changing dramatically right now. When when

675
00:37:16,120 --> 00:37:19,200
Speaker 1: when someone won't fund paper from a a an in

676
00:37:19,440 --> 00:37:23,160
Speaker 1: house deal for a major private equi player. So there

677
00:37:23,200 --> 00:37:26,400
Speaker 1: were there were moments along the line, you know, and

678
00:37:26,520 --> 00:37:29,720
Speaker 1: then you get into disputes on what things are worth

679
00:37:30,000 --> 00:37:37,040
Speaker 1: and certain you know, really major companies are disputing margin

680
00:37:37,200 --> 00:37:40,840
Speaker 1: calls because they're disputing what a security is worth like,

681
00:37:40,960 --> 00:37:47,680
Speaker 1: I never in my career had a major corporate disputed

682
00:37:47,760 --> 00:37:51,040
Speaker 1: a margin call and what a security is worth, like

683
00:37:51,480 --> 00:37:55,239
Speaker 1: it really didn't matter. It really was unprecedented. It was unprecedented.

684
00:37:55,480 --> 00:37:58,760
Speaker 1: So there were there were a lot of signs along

685
00:37:58,840 --> 00:38:04,239
Speaker 1: the way. The liquidity was getting tighter and tighter, and

686
00:38:04,480 --> 00:38:07,640
Speaker 1: people were, you know, hoarding liquidy if they had it

687
00:38:08,000 --> 00:38:11,239
Speaker 1: and protecting and if they didn't have it. And you know,

688
00:38:11,320 --> 00:38:14,360
Speaker 1: we as a firm, we were conscientious of this to

689
00:38:14,440 --> 00:38:17,560
Speaker 1: the point where we actually went out and issued a

690
00:38:17,680 --> 00:38:20,080
Speaker 1: bunch of data inequity early on. Yeah, we went out

691
00:38:20,080 --> 00:38:21,359
Speaker 1: and did that big Warren Buffet deal.

692
00:38:21,760 --> 00:38:25,040
Speaker 2: So the Warren Buffet story could be my favorite story

693
00:38:25,080 --> 00:38:29,279
Speaker 2: of the whole financial crisis, because as much as people said,

694
00:38:29,360 --> 00:38:31,720
Speaker 2: what was it like a nine percent or eleven percent,

695
00:38:32,160 --> 00:38:37,000
Speaker 2: it was a big note. Everybody kind of forgets. Buffett

696
00:38:37,040 --> 00:38:40,560
Speaker 2: offered that to Dick Fold and Lehman months before, and

697
00:38:40,719 --> 00:38:43,440
Speaker 2: Fold said, no, too expensive. Yeah, it could be the

698
00:38:43,560 --> 00:38:47,120
Speaker 2: single biggest eerror of the entire crisis. They might still

699
00:38:47,160 --> 00:38:47,960
Speaker 2: be around, who knows.

700
00:38:48,080 --> 00:38:51,279
Speaker 1: Buffer offered it to us in the morning and said,

701
00:38:51,280 --> 00:38:53,080
Speaker 1: you can let me know by five o'clock to night,

702
00:38:53,719 --> 00:38:56,359
Speaker 1: and we and we said don't worry. We'll be back

703
00:38:56,400 --> 00:38:57,560
Speaker 1: there and all we have to do is get our

704
00:38:57,600 --> 00:39:00,359
Speaker 1: board together. We got our board together and we say done,

705
00:39:00,400 --> 00:39:03,240
Speaker 1: and we did a big secondary equity raise.

706
00:39:03,120 --> 00:39:04,000
Speaker 2: Around me following that.

707
00:39:04,120 --> 00:39:07,600
Speaker 1: I remember, and the only conversation we had from people

708
00:39:07,640 --> 00:39:09,680
Speaker 1: in the secondary raise is everyone said, well, I would

709
00:39:09,719 --> 00:39:11,120
Speaker 1: have done the Buffett deal, and I said, the only

710
00:39:11,160 --> 00:39:12,440
Speaker 1: problem is you're not Warren Buffett.

711
00:39:12,640 --> 00:39:15,880
Speaker 2: That's right, That's exactly right. And it was one of

712
00:39:15,920 --> 00:39:20,000
Speaker 2: those moments where God bless Warren Buffett. It really made

713
00:39:20,040 --> 00:39:22,759
Speaker 2: a huge difference to everybody, even though there was more

714
00:39:22,880 --> 00:39:27,120
Speaker 2: downside in the equity market. It's hey, we're not all

715
00:39:27,200 --> 00:39:28,040
Speaker 2: going to go down the drums.

716
00:39:28,080 --> 00:39:30,080
Speaker 1: Well, then a week or two later, I think it

717
00:39:30,120 --> 00:39:33,120
Speaker 1: was within a week or two, that's when Treasury decided

718
00:39:33,160 --> 00:39:35,080
Speaker 1: they were going to put tart money into all the banks,

719
00:39:36,120 --> 00:39:38,520
Speaker 1: regardless of those that had raised Capper or not. But

720
00:39:38,640 --> 00:39:40,600
Speaker 1: by the way, I don't disagree with the meaning. They

721
00:39:40,680 --> 00:39:43,880
Speaker 1: were trying to infuse capital on the system and.

722
00:39:43,960 --> 00:39:47,080
Speaker 2: Not single out any specific bank which would cause a run. Right,

723
00:39:47,440 --> 00:39:50,480
Speaker 2: So yeah, really it was a it was you know,

724
00:39:50,760 --> 00:39:55,359
Speaker 2: I'm always reminded of the scene from Apocalypse Now where

725
00:39:55,800 --> 00:39:59,520
Speaker 2: they're surfing. Hey, one day, this war is going to end,

726
00:40:00,280 --> 00:40:03,320
Speaker 2: and it's really when you were in that moment, it

727
00:40:03,600 --> 00:40:07,320
Speaker 2: was really really one of a kind with all of

728
00:40:07,360 --> 00:40:10,880
Speaker 2: which leads to the question, given the breath of that

729
00:40:11,080 --> 00:40:15,760
Speaker 2: experience at Goldman threw everything from really the bull market

730
00:40:15,840 --> 00:40:18,320
Speaker 2: and bonds and equities to the dot com implosion to

731
00:40:18,400 --> 00:40:21,920
Speaker 2: the financial crisis, how did that experience set you up

732
00:40:22,000 --> 00:40:24,280
Speaker 2: to become a leader in the public sector.

733
00:40:26,080 --> 00:40:28,960
Speaker 1: So a lot of those skills are very transferable. You know,

734
00:40:30,480 --> 00:40:34,160
Speaker 1: my job at Goldman Net when you boil it down,

735
00:40:35,520 --> 00:40:39,839
Speaker 1: was dealing with crisis or opportunity every day, and by

736
00:40:39,840 --> 00:40:41,960
Speaker 1: the way, most days I was dealing with both, you know,

737
00:40:42,120 --> 00:40:46,160
Speaker 1: and some opportunities became crisises, and some crisises became opportunities.

738
00:40:46,680 --> 00:40:50,759
Speaker 1: So I consider myself being the crisis management or opportunity

739
00:40:50,840 --> 00:40:54,040
Speaker 1: management business. Because when you're running a very large balance

740
00:40:54,040 --> 00:40:58,600
Speaker 1: sheet globally, with lots of people committing capital and lots

741
00:40:58,640 --> 00:41:03,960
Speaker 1: of people making promises or commitments or underwritings, you're going

742
00:41:04,040 --> 00:41:06,760
Speaker 1: to have problems. It's just the nature of the business.

743
00:41:08,360 --> 00:41:11,960
Speaker 1: No matter how well intentioned people are, there's going to

744
00:41:12,000 --> 00:41:15,520
Speaker 1: be mistakes and clients are going to get unhappy. And

745
00:41:16,000 --> 00:41:17,920
Speaker 1: you just have to deal with them. So, you know,

746
00:41:18,320 --> 00:41:22,000
Speaker 1: having spent the last almost eleven years of my life

747
00:41:22,040 --> 00:41:26,880
Speaker 1: at Goldman and I'd done it before being a crisis manager,

748
00:41:27,800 --> 00:41:29,440
Speaker 1: and that's really what I did. It was a crisis

749
00:41:29,520 --> 00:41:32,359
Speaker 1: manager trying to look for opportunity. You know, I think

750
00:41:32,400 --> 00:41:36,040
Speaker 1: it prepared me well to go into the government because

751
00:41:36,239 --> 00:41:38,120
Speaker 1: I was always trying to figure out, how do we

752
00:41:38,280 --> 00:41:40,960
Speaker 1: create a solution, how do we create something that works?

753
00:41:41,480 --> 00:41:43,880
Speaker 1: What is the compromise? What is the way out of

754
00:41:43,960 --> 00:41:46,600
Speaker 1: this situation? Is there? Because there's a way out of

755
00:41:46,640 --> 00:41:49,319
Speaker 1: every situation. I never believed there wasn't a way out

756
00:41:49,320 --> 00:41:49,760
Speaker 1: of a situation.

757
00:41:50,000 --> 00:41:52,160
Speaker 2: So let's break that down before we spend a little

758
00:41:52,360 --> 00:41:56,400
Speaker 2: time in the public sector. Let's stay with crisis management

759
00:41:56,520 --> 00:41:59,600
Speaker 2: because I kind of get the sense reading your background

760
00:42:00,280 --> 00:42:03,360
Speaker 2: you created a I don't want to say formulas is

761
00:42:03,480 --> 00:42:06,200
Speaker 2: probably overstanding it, but you seem to have created a

762
00:42:06,280 --> 00:42:10,680
Speaker 2: structure where every time there's a crisis, you followed a

763
00:42:10,760 --> 00:42:14,840
Speaker 2: few specific steps. So crisis shows up on your desk.

764
00:42:15,440 --> 00:42:19,440
Speaker 2: What is the Gary Cone three or five step response?

765
00:42:19,920 --> 00:42:20,800
Speaker 2: What's the playbook?

766
00:42:21,600 --> 00:42:24,400
Speaker 1: I don't know if there's a playbook, because they're all different,

767
00:42:24,520 --> 00:42:27,000
Speaker 1: they're all different, but there's some themes that seem to

768
00:42:27,080 --> 00:42:29,880
Speaker 1: be consistent. As I used to always say, is you know,

769
00:42:30,080 --> 00:42:34,200
Speaker 1: we at Goldman, we're very creative in the problems we have.

770
00:42:35,320 --> 00:42:38,680
Speaker 1: We'll never usually have the same problem twice because we're

771
00:42:38,680 --> 00:42:41,520
Speaker 1: really good at fixing the last problem we had. We're

772
00:42:41,560 --> 00:42:43,880
Speaker 1: not good at We're not as good as anticipating the

773
00:42:43,920 --> 00:42:45,960
Speaker 1: next problem, but we're good at fixing the last problem.

774
00:42:46,000 --> 00:42:48,440
Speaker 2: Okay, So in my I'm gonna interrupt you and say,

775
00:42:48,520 --> 00:42:52,279
Speaker 2: in my research into you, one of the things in

776
00:42:52,320 --> 00:42:56,880
Speaker 2: some of the people I spoke with Gariel owned the problem,

777
00:42:57,120 --> 00:43:00,520
Speaker 2: apologize for it. Here's what we're gonna do to what

778
00:43:00,680 --> 00:43:02,799
Speaker 2: took place, and here's how we're going to make sure

779
00:43:02,840 --> 00:43:05,279
Speaker 2: this doesn't happen again. That's what I was referring to it.

780
00:43:05,520 --> 00:43:07,600
Speaker 2: Did am I putting words in your mouth? No?

781
00:43:07,760 --> 00:43:09,600
Speaker 1: No, you're not putting words in my mouth at all.

782
00:43:09,960 --> 00:43:12,160
Speaker 1: So look, I always believe you have to own the problem.

783
00:43:12,960 --> 00:43:17,120
Speaker 1: I mean, ownership is ninety percent of the battle. I

784
00:43:17,320 --> 00:43:21,799
Speaker 1: never had a problem right where I would say it's

785
00:43:21,800 --> 00:43:25,200
Speaker 1: not my problem, because if you're the chief operating officer,

786
00:43:25,320 --> 00:43:28,200
Speaker 1: the president ome Sax, every problem is your problem. Yes

787
00:43:28,440 --> 00:43:30,839
Speaker 1: it is it's my problem. It's my problem, and it's

788
00:43:31,640 --> 00:43:35,200
Speaker 1: my job to make sure it gets solved. So A,

789
00:43:36,040 --> 00:43:40,520
Speaker 1: I would always start with ownership. B. I would always

790
00:43:40,600 --> 00:43:43,279
Speaker 1: need the facts. So, you know, if you really want

791
00:43:43,320 --> 00:43:45,799
Speaker 1: to go through the chronology of a problem, you know, okay,

792
00:43:45,920 --> 00:43:50,239
Speaker 1: problem arises number one, get all of the facts into

793
00:43:50,320 --> 00:43:52,720
Speaker 1: the room. Try and agree upon the facts.

794
00:43:52,840 --> 00:43:53,000
Speaker 2: You know.

795
00:43:53,520 --> 00:43:56,560
Speaker 1: One of the hardest things sometimes is agree upon the facts.

796
00:43:57,080 --> 00:44:00,560
Speaker 1: You know, and in my job was to if through

797
00:44:00,680 --> 00:44:03,320
Speaker 1: the facts and say not just sift through the facts

798
00:44:03,360 --> 00:44:07,680
Speaker 1: from my team's perspective. I needed to talk to the

799
00:44:07,800 --> 00:44:10,480
Speaker 1: other side if there was an other side, you know,

800
00:44:10,719 --> 00:44:13,279
Speaker 1: I need I needed both sides of the opinion. And

801
00:44:14,280 --> 00:44:17,000
Speaker 1: I always trusted, you know, in the words of Ronald Reggae,

802
00:44:17,040 --> 00:44:19,720
Speaker 1: trust but verify. You've got to trust but verify everything.

803
00:44:20,280 --> 00:44:26,560
Speaker 1: So go through it. Understand the facts, Understand what what happened,

804
00:44:27,280 --> 00:44:32,000
Speaker 1: own the problem, try and fix the problem, and be realistic.

805
00:44:32,120 --> 00:44:34,920
Speaker 1: And I always said, if I go to the people

806
00:44:35,000 --> 00:44:37,560
Speaker 1: and tell them exactly what happened, tell them the truth,

807
00:44:38,160 --> 00:44:42,839
Speaker 1: tell them how we're going to rectify it, nine percent

808
00:44:42,880 --> 00:44:45,319
Speaker 1: of the time it's going to solve the problem. Because

809
00:44:45,360 --> 00:44:47,440
Speaker 1: really people understand there's going to be problems. They just

810
00:44:47,520 --> 00:44:49,520
Speaker 1: want to understand what actually really happened.

811
00:44:49,520 --> 00:44:50,879
Speaker 2: And everyone walks away happy.

812
00:44:51,120 --> 00:44:53,600
Speaker 1: Yeah, look they walk away as happy as they can't, right,

813
00:44:53,680 --> 00:44:54,960
Speaker 1: I don't. I don't want to sit here and tell you,

814
00:44:55,000 --> 00:44:57,719
Speaker 1: Oh yeah, every time people walk away happy, they walk

815
00:44:57,760 --> 00:44:59,880
Speaker 1: away as happy as they walk away. How about this,

816
00:45:00,040 --> 00:45:01,239
Speaker 1: they walk away satisfied.

817
00:45:01,440 --> 00:45:04,520
Speaker 2: Well, these are complex problems with big money involved, and

818
00:45:04,680 --> 00:45:07,480
Speaker 2: occasionally people are going to argue about hey, who has

819
00:45:07,560 --> 00:45:11,279
Speaker 2: this loss or who has this profit? And sometimes that

820
00:45:11,440 --> 00:45:12,440
Speaker 2: leads to disputes.

821
00:45:12,560 --> 00:45:15,000
Speaker 1: Yeah, if it's just a loss, if it's just money,

822
00:45:15,160 --> 00:45:16,959
Speaker 1: sometimes those are easy to cure.

823
00:45:17,000 --> 00:45:17,040
Speaker 2: It.

824
00:45:17,239 --> 00:45:19,440
Speaker 1: I don't want to be cavalier, but if you know,

825
00:45:19,440 --> 00:45:21,880
Speaker 1: if it's just a money problem, it's it's sometimes not

826
00:45:22,000 --> 00:45:25,040
Speaker 1: a big deal. It's like a deal can't get done

827
00:45:26,920 --> 00:45:30,440
Speaker 1: and someone blames someone for something. Okay, now we got

828
00:45:30,480 --> 00:45:30,840
Speaker 1: a problem.

829
00:45:30,960 --> 00:45:33,799
Speaker 2: Now you've got personality and ego and turf war.

830
00:45:33,840 --> 00:45:36,799
Speaker 1: And why can't the deal get done? And now people

831
00:45:36,800 --> 00:45:39,440
Speaker 1: are pointing fingers, Well, the deal can't get done because

832
00:45:39,640 --> 00:45:41,880
Speaker 1: this happened. You didn't do this, or you did do this,

833
00:45:42,280 --> 00:45:43,960
Speaker 1: or you shouldn't have done this. And now all of

834
00:45:43,960 --> 00:45:47,000
Speaker 1: a sudden, it's like Okay, Now, I like money's not

835
00:45:47,000 --> 00:45:48,919
Speaker 1: going to solve the problem. I've got to get people

836
00:45:49,080 --> 00:45:52,839
Speaker 1: back to a position understand why the deal can't get done.

837
00:45:53,400 --> 00:45:55,839
Speaker 1: Maybe the deal never could have gotten done. Maybe someone

838
00:45:55,920 --> 00:45:59,160
Speaker 1: just never explained to the client. Maybe they tell the

839
00:45:59,200 --> 00:46:02,680
Speaker 1: client things that they just wanted to hear, which is which. Again,

840
00:46:02,760 --> 00:46:04,279
Speaker 1: I have to own that and say, like, my team

841
00:46:04,320 --> 00:46:06,680
Speaker 1: didn't do a good job. My team should have told

842
00:46:06,719 --> 00:46:10,120
Speaker 1: you six weeks ago this couldn't get done, or this

843
00:46:10,239 --> 00:46:11,879
Speaker 1: wasn't gonna get done, or for this to get done,

844
00:46:11,920 --> 00:46:13,920
Speaker 1: these five things had to happen. And none of these

845
00:46:13,960 --> 00:46:14,720
Speaker 1: five things happened.

846
00:46:14,840 --> 00:46:18,040
Speaker 2: So I don't really think of COO as a fixer.

847
00:46:18,320 --> 00:46:21,600
Speaker 2: But really what you're saying is you're a free safety

848
00:46:21,680 --> 00:46:24,799
Speaker 2: and anything that could go awry, you're on top.

849
00:46:24,920 --> 00:46:27,400
Speaker 1: You have to be responsible for I think it affirm

850
00:46:27,480 --> 00:46:29,880
Speaker 1: like Goldman Sachs, you have to. You have to when

851
00:46:29,880 --> 00:46:34,400
Speaker 1: you're in a transactionally driven business where your clients are

852
00:46:34,520 --> 00:46:41,040
Speaker 1: depending upon you for advice, capital, and really the future

853
00:46:41,080 --> 00:46:45,279
Speaker 1: of their company in many respects, you have to as

854
00:46:45,360 --> 00:46:48,120
Speaker 1: a senior person, you have to be there as the

855
00:46:48,160 --> 00:46:50,439
Speaker 1: free safety and help make sure you guide these things

856
00:46:50,760 --> 00:46:53,640
Speaker 1: to the to the softest landing you can if and

857
00:46:53,719 --> 00:46:56,399
Speaker 1: when there's a problem. The good news is the vast

858
00:46:56,480 --> 00:46:59,919
Speaker 1: majority of the time these things just run their course,

859
00:47:00,120 --> 00:47:02,399
Speaker 1: and the teams are so good that they all happen

860
00:47:02,480 --> 00:47:03,040
Speaker 1: by themselves.

861
00:47:04,000 --> 00:47:07,200
Speaker 2: You're there for the ones that aren't self repairing.

862
00:47:07,400 --> 00:47:07,800
Speaker 1: Exactly.

863
00:47:08,160 --> 00:47:12,720
Speaker 2: Really intriguing. So let's talk a little bit about that period.

864
00:47:13,400 --> 00:47:17,160
Speaker 2: Your chief Economic advisor to the President. You managed the

865
00:47:17,520 --> 00:47:23,200
Speaker 2: administration's economic policy agenda, and you spearhead the Wage and

866
00:47:23,480 --> 00:47:28,880
Speaker 2: Tax Reform Act, which was a substantial policy success in

867
00:47:28,960 --> 00:47:33,800
Speaker 2: the Trump white House and a pretty substantial rejiggering of

868
00:47:34,520 --> 00:47:38,520
Speaker 2: the tax code emphasizing small businesses. LLCs tell us a

869
00:47:38,560 --> 00:47:41,560
Speaker 2: little bit about what was life like in the White House.

870
00:47:42,440 --> 00:47:48,320
Speaker 1: Well, life in the White House is fascinating. It was probably,

871
00:47:48,600 --> 00:47:50,200
Speaker 1: of all the things I've done in my career, the

872
00:47:50,280 --> 00:47:53,759
Speaker 1: most fascinating experience I've had. And I'm very thankful that

873
00:47:53,880 --> 00:47:56,800
Speaker 1: I had the opportunity, very thankful that I did it.

874
00:47:58,560 --> 00:48:04,400
Speaker 1: You know, Wall Street is a good preparatory class for Washington.

875
00:48:04,680 --> 00:48:09,800
Speaker 1: You know, it's it's long, arduous days, which you're used to.

876
00:48:10,400 --> 00:48:13,799
Speaker 1: You know, my day was was pretty simple in many

877
00:48:13,880 --> 00:48:17,800
Speaker 1: respects and pretty chaotic in other respects. But no different

878
00:48:17,960 --> 00:48:21,040
Speaker 1: than a day at Goldman Sachs. You know, I used

879
00:48:21,080 --> 00:48:23,399
Speaker 1: to say my days at Goldman Sachs is about twenty

880
00:48:23,440 --> 00:48:25,239
Speaker 1: percent of it I have an idea what's going to happen.

881
00:48:25,280 --> 00:48:27,640
Speaker 1: About eighty percent I have no idea, and I just

882
00:48:27,680 --> 00:48:29,759
Speaker 1: hope and pray it's not too crazy. And I would

883
00:48:29,760 --> 00:48:32,120
Speaker 1: say the White House was pretty similar. About twenty percent

884
00:48:32,120 --> 00:48:33,560
Speaker 1: of the day I sort of had an idea what

885
00:48:33,680 --> 00:48:35,319
Speaker 1: was going to happen, and the rest of the day

886
00:48:36,200 --> 00:48:38,320
Speaker 1: we were going to deal with the issues or the

887
00:48:38,440 --> 00:48:42,160
Speaker 1: problems or the opportunities of the day. You know, my

888
00:48:42,280 --> 00:48:44,840
Speaker 1: days would start early in the morning with the Presidential

889
00:48:44,920 --> 00:48:47,480
Speaker 1: Daily Brief CEEIA would come in in brief, and you know,

890
00:48:47,680 --> 00:48:48,200
Speaker 1: you'd see.

891
00:48:48,040 --> 00:48:51,040
Speaker 2: What CIA comes in in brief. That So I imagine

892
00:48:51,080 --> 00:48:54,040
Speaker 2: at Goldman you have great business intel. What's it like

893
00:48:54,160 --> 00:48:56,160
Speaker 2: getting briefed by by the spooks.

894
00:48:56,680 --> 00:48:59,560
Speaker 1: It's it's pretty interesting. I mean, look, we've got a

895
00:49:00,360 --> 00:49:04,720
Speaker 1: we've got a really interesting, you know, intelligence network around

896
00:49:04,719 --> 00:49:08,480
Speaker 1: the world, and it's their job to make sure those

897
00:49:08,560 --> 00:49:12,120
Speaker 1: of us discussing policy in the White House have the

898
00:49:12,200 --> 00:49:15,360
Speaker 1: information we need and that we're all have the same information.

899
00:49:16,000 --> 00:49:18,680
Speaker 1: And so there's a group of us that get the

900
00:49:19,280 --> 00:49:22,719
Speaker 1: daily brief, and you can get it, you know, I

901
00:49:22,800 --> 00:49:25,360
Speaker 1: think most of us got it fairly early in the morning,

902
00:49:25,600 --> 00:49:27,040
Speaker 1: and you can get it when you want. And so

903
00:49:27,160 --> 00:49:30,680
Speaker 1: I used to start my day with it early in

904
00:49:30,719 --> 00:49:34,960
Speaker 1: the morning, and that was how I started. Then, you know,

905
00:49:35,040 --> 00:49:37,880
Speaker 1: I would go from there to the Most of the

906
00:49:39,160 --> 00:49:41,279
Speaker 1: chiefs of staff would have a staff meeting in the morning,

907
00:49:42,640 --> 00:49:45,360
Speaker 1: So the senior White House people would get together in

908
00:49:45,440 --> 00:49:48,239
Speaker 1: the morning around eight am or so seven thirty or eight,

909
00:49:49,040 --> 00:49:51,840
Speaker 1: discuss the issues for the day, Discuss the opportunities for

910
00:49:51,920 --> 00:49:56,160
Speaker 1: the day, discuss the messaging for the day. You know,

911
00:49:56,239 --> 00:49:58,920
Speaker 1: you get done with that. Then I'd have my staff

912
00:49:59,000 --> 00:50:02,000
Speaker 1: meeting around nine o'clock or whenever the senior staff meeting

913
00:50:02,120 --> 00:50:04,920
Speaker 1: was over. You know, I relate to my staff with

914
00:50:05,080 --> 00:50:07,279
Speaker 1: the messages for the day that we would discuss what

915
00:50:07,440 --> 00:50:12,560
Speaker 1: problems we're working on, and then we would go into

916
00:50:12,840 --> 00:50:16,440
Speaker 1: our more you know, day to day agenda, depending on

917
00:50:16,600 --> 00:50:20,880
Speaker 1: what we were working on from a policy standpoint, we

918
00:50:21,000 --> 00:50:23,920
Speaker 1: spent a lot of time up on Capitol Hill working

919
00:50:24,040 --> 00:50:26,879
Speaker 1: with various members of different committees, both in the House

920
00:50:26,920 --> 00:50:29,000
Speaker 1: and the Senate, because at the end of the day,

921
00:50:29,840 --> 00:50:31,480
Speaker 1: you know, a lot of what we're trying to do

922
00:50:31,840 --> 00:50:35,720
Speaker 1: is get legislation done. As we know, it takes sixty

923
00:50:35,840 --> 00:50:37,840
Speaker 1: and sixty in the Senate to thirty five in the

924
00:50:37,960 --> 00:50:42,120
Speaker 1: House and a presidential signature. There's ways around that during

925
00:50:42,200 --> 00:50:44,600
Speaker 1: reconciliation for budget bills and things like that, but the

926
00:50:44,760 --> 00:50:48,200
Speaker 1: overall legislation, you know, you're you're trying to do regular

927
00:50:48,280 --> 00:50:51,279
Speaker 1: way or normal way, and you're working on trying to

928
00:50:51,320 --> 00:50:55,480
Speaker 1: get legislation done. And you know, I think it's the

929
00:50:56,160 --> 00:50:59,919
Speaker 1: job of the White House to drive normal way prosit

930
00:51:00,080 --> 00:51:05,680
Speaker 1: says legislation. Working with either majority or minority leaders in

931
00:51:05,800 --> 00:51:10,520
Speaker 1: the Senate or in the House, you have a really

932
00:51:10,840 --> 00:51:15,920
Speaker 1: intricate working relationship with them on their agenda, and you

933
00:51:16,040 --> 00:51:19,120
Speaker 1: know they have a pretty good idea who stands where

934
00:51:19,200 --> 00:51:22,640
Speaker 1: on what peaches of the legislation. So we're attacking, you know,

935
00:51:22,880 --> 00:51:27,120
Speaker 1: the various constituents on who needs time, who needs effort,

936
00:51:27,160 --> 00:51:28,160
Speaker 1: who needs persuasion.

937
00:51:28,640 --> 00:51:30,080
Speaker 2: In the head count, you know who to go to,

938
00:51:30,200 --> 00:51:30,840
Speaker 2: who needs.

939
00:51:30,680 --> 00:51:34,680
Speaker 1: Hand holding, who's solidly in your camp, who's solidly against you,

940
00:51:34,760 --> 00:51:37,960
Speaker 1: who's on the fence, And you know that's sort of

941
00:51:38,040 --> 00:51:42,279
Speaker 1: a typical day, but intertwined in there, you're at the

942
00:51:42,320 --> 00:51:46,200
Speaker 1: beck and call of the President, and the President you know,

943
00:51:46,440 --> 00:51:49,920
Speaker 1: can decide at any moment of the day. Basically, he

944
00:51:50,120 --> 00:51:53,560
Speaker 1: wants you here the script, and he wants you in

945
00:51:53,680 --> 00:51:56,160
Speaker 1: the oval office. He wants you some meeting, he wants

946
00:51:56,160 --> 00:51:59,960
Speaker 1: you involved in something, and like you know, at a Goldman's,

947
00:52:00,120 --> 00:52:03,600
Speaker 1: at your entire calendar, your entire schedule can get you know,

948
00:52:03,760 --> 00:52:07,879
Speaker 1: blown up in thirty seconds or less. And that's that's

949
00:52:07,920 --> 00:52:10,319
Speaker 1: what that's the way it works. And you know, one

950
00:52:10,360 --> 00:52:14,120
Speaker 1: of my I think one of my important attributes is,

951
00:52:14,440 --> 00:52:16,800
Speaker 1: you know, I made sure that I sat down with

952
00:52:16,880 --> 00:52:20,359
Speaker 1: the president every day. You know, I sort of knew

953
00:52:20,400 --> 00:52:23,600
Speaker 1: the times the day to go in and see him,

954
00:52:23,600 --> 00:52:25,880
Speaker 1: and I try to spend you know, an hour or

955
00:52:25,960 --> 00:52:28,560
Speaker 1: so a day alone when he wasn't distracted with other

956
00:52:28,600 --> 00:52:30,920
Speaker 1: people coming in and out, and say, hey, look, this

957
00:52:31,200 --> 00:52:34,120
Speaker 1: is what we're trying to get done. Here's where we are.

958
00:52:34,800 --> 00:52:37,439
Speaker 1: What are your thoughts? You know, you okay with where

959
00:52:37,840 --> 00:52:40,160
Speaker 1: we're going, because you know, you always want to be

960
00:52:40,280 --> 00:52:42,680
Speaker 1: on the same page as the ultimate decision.

961
00:52:42,360 --> 00:52:45,719
Speaker 2: Making, to say the least. So let's talk about probably

962
00:52:45,800 --> 00:52:51,880
Speaker 2: the biggest economic legislative success of the entire administration. The

963
00:52:52,360 --> 00:52:57,400
Speaker 2: TCJA tell Us a little bit about how this came together,

964
00:52:57,640 --> 00:53:01,600
Speaker 2: how the parameters were formed, who was really driving the

965
00:53:01,680 --> 00:53:07,560
Speaker 2: different aspects of that. It's really a fairly comprehensive package,

966
00:53:07,600 --> 00:53:10,879
Speaker 2: and very different than previous tax cuts that were just hey,

967
00:53:10,960 --> 00:53:12,799
Speaker 2: we're just going to play around with the different rates.

968
00:53:13,680 --> 00:53:21,680
Speaker 1: So it's very comprehensive. We started on that plan in

969
00:53:21,840 --> 00:53:28,920
Speaker 1: December of sixteen, so I had agreed to join the

970
00:53:29,000 --> 00:53:34,160
Speaker 1: administration sort of beginning of December of sixteen, and by

971
00:53:34,200 --> 00:53:39,040
Speaker 1: the middle of December, we're already starting to talk about taxes.

972
00:53:39,400 --> 00:53:41,719
Speaker 1: We know that we want to get text don and like,

973
00:53:41,840 --> 00:53:45,560
Speaker 1: one of the reasons I went into this job was taxes.

974
00:53:46,000 --> 00:53:48,320
Speaker 1: I felt that we had a tax policy in the

975
00:53:48,440 --> 00:53:56,799
Speaker 1: United States that was hindering growth and deterring US corporations

976
00:53:56,840 --> 00:54:00,440
Speaker 1: from investing in the United States and penalizing them to

977
00:54:00,560 --> 00:54:02,960
Speaker 1: do things that they actually wanted to do that were

978
00:54:03,080 --> 00:54:06,520
Speaker 1: positive for the US economy and positive for US jobs.

979
00:54:07,000 --> 00:54:10,560
Speaker 1: And to me, I felt this was a huge opportunity

980
00:54:10,760 --> 00:54:12,120
Speaker 1: and there was an opportunity to fix this.

981
00:54:12,680 --> 00:54:15,680
Speaker 2: And let me just remind every one of the timelines.

982
00:54:15,719 --> 00:54:20,080
Speaker 2: So the election November twenty sixteen, December of that year,

983
00:54:20,200 --> 00:54:23,719
Speaker 2: you're teeing it up President sworn in January twentieth, and

984
00:54:23,960 --> 00:54:25,160
Speaker 2: you're hitting the ground running.

985
00:54:25,320 --> 00:54:28,719
Speaker 1: We're hitting the ground running already in December, so by

986
00:54:28,800 --> 00:54:35,080
Speaker 1: December me and other members of the team. At this point,

987
00:54:35,160 --> 00:54:37,759
Speaker 1: it's a large team, you know, like everything, it's a

988
00:54:37,800 --> 00:54:39,320
Speaker 1: large team because everyone wants to be involved.

989
00:54:39,440 --> 00:54:41,800
Speaker 2: Did you bring people over from Goldman with you or no?

990
00:54:41,960 --> 00:54:42,480
Speaker 1: I didn't bring it.

991
00:54:42,719 --> 00:54:44,040
Speaker 2: Stood up a brand new t I didn't.

992
00:54:44,080 --> 00:54:45,880
Speaker 1: I stood up a brand new team. I look, the

993
00:54:46,000 --> 00:54:48,640
Speaker 1: first thing I did. Let me back up, because this

994
00:54:48,760 --> 00:54:50,960
Speaker 1: is really important. The first thing I did when I

995
00:54:51,040 --> 00:54:54,040
Speaker 1: accepted that that the neec Heade job is I went

996
00:54:54,120 --> 00:54:57,680
Speaker 1: out and I hired a world class and I mean

997
00:54:57,760 --> 00:55:01,520
Speaker 1: a world class team of experts. And I looked at

998
00:55:01,560 --> 00:55:03,800
Speaker 1: it like, this is Goldman Sax, Like I need the

999
00:55:04,000 --> 00:55:06,960
Speaker 1: best people in the world in each of the roles.

1000
00:55:07,120 --> 00:55:10,600
Speaker 1: And the NEC job is really interesting because it touches

1001
00:55:10,719 --> 00:55:13,360
Speaker 1: the broadest spectrum of economic policy.

1002
00:55:13,680 --> 00:55:16,640
Speaker 2: And feel free to name drop who'd you stand up

1003
00:55:16,680 --> 00:55:17,520
Speaker 2: with that group? No?

1004
00:55:17,840 --> 00:55:20,000
Speaker 1: Like, I went out and hire Jeremy Katz to be

1005
00:55:20,120 --> 00:55:23,000
Speaker 1: my deputy. You know, Jeremy was amazing. He'd worked in

1006
00:55:23,080 --> 00:55:27,400
Speaker 1: the White House before. He really knew the right people

1007
00:55:27,440 --> 00:55:29,800
Speaker 1: to go out and hire. He understood the roles. He

1008
00:55:29,960 --> 00:55:32,600
Speaker 1: understood what could get done and what couldn't get done.

1009
00:55:33,080 --> 00:55:35,759
Speaker 1: He knew that I really wanted to get taxes done.

1010
00:55:36,040 --> 00:55:38,120
Speaker 1: He told me, look, there's a woman by the name

1011
00:55:38,160 --> 00:55:40,200
Speaker 1: of Shahera Knight. You've got to go out and hire

1012
00:55:40,239 --> 00:55:42,719
Speaker 1: a Shahira if you want to get taxes done, like

1013
00:55:42,880 --> 00:55:45,160
Speaker 1: she here is your person. We went out, we got

1014
00:55:45,239 --> 00:55:48,480
Speaker 1: Shahera hired. You know, but then you've got to go

1015
00:55:48,600 --> 00:55:51,359
Speaker 1: out and hire people in the healthcare space. You've got

1016
00:55:51,440 --> 00:55:53,880
Speaker 1: to go out and hire people in the energy space.

1017
00:55:53,960 --> 00:55:57,160
Speaker 1: You've got to go hires people in the technology space.

1018
00:55:57,600 --> 00:55:59,520
Speaker 1: You've got to go out and hire people in the

1019
00:55:59,600 --> 00:56:03,520
Speaker 1: agrig cultural space. Jeremy knew all those people to hire.

1020
00:56:03,640 --> 00:56:06,439
Speaker 1: He went out, he brought me in the best people ever.

1021
00:56:07,000 --> 00:56:10,239
Speaker 1: And it was kind of interesting to me because it

1022
00:56:10,360 --> 00:56:13,439
Speaker 1: was interesting in really rewarding, because you know, Jeremy would

1023
00:56:13,440 --> 00:56:15,280
Speaker 1: bring these people in, he'd do the first and second

1024
00:56:15,360 --> 00:56:19,399
Speaker 1: round interviews, and then I'd meet him and Jeremy says, look,

1025
00:56:19,400 --> 00:56:20,719
Speaker 1: you got to meet these people. They want to meet

1026
00:56:20,760 --> 00:56:21,960
Speaker 1: you before they come to work for you. And I

1027
00:56:22,000 --> 00:56:23,360
Speaker 1: would sit down and talk to him and they were

1028
00:56:23,480 --> 00:56:26,200
Speaker 1: all amazing. They were amazingly talented. And I would sit

1029
00:56:26,280 --> 00:56:29,600
Speaker 1: there and go, guys, look, I desperately want you to

1030
00:56:29,680 --> 00:56:34,120
Speaker 1: come do this job. You're leaving a big, huge, high

1031
00:56:34,200 --> 00:56:36,680
Speaker 1: paying job. You know I can't offer you a whole lot.

1032
00:56:37,560 --> 00:56:39,560
Speaker 1: They used to laugh and they go, yeah, we know

1033
00:56:39,680 --> 00:56:42,360
Speaker 1: you can't. But look, we believe in you, we believe

1034
00:56:42,400 --> 00:56:44,440
Speaker 1: in the country. We want to serve. And it's amazing

1035
00:56:44,520 --> 00:56:46,719
Speaker 1: how many great people were willing to serve.

1036
00:56:47,080 --> 00:56:48,879
Speaker 2: And let me jump in here and just point out

1037
00:56:49,360 --> 00:56:53,920
Speaker 2: there have been criticisms about some Trump appointees and some

1038
00:56:54,120 --> 00:56:59,160
Speaker 2: of the process. The neec's reputation was really quite stellar.

1039
00:56:59,360 --> 00:57:01,960
Speaker 1: I had, I had a world class team. I'd put

1040
00:57:02,000 --> 00:57:04,560
Speaker 1: that team up against anyone, you know. I also had,

1041
00:57:04,719 --> 00:57:07,719
Speaker 1: you know, my chiefest staff, my chief of communications, actually Hicky.

1042
00:57:08,120 --> 00:57:11,480
Speaker 1: She was over the top amazing. I mean, she was

1043
00:57:11,719 --> 00:57:14,399
Speaker 1: one of the two assistants that sat outside of George

1044
00:57:14,440 --> 00:57:20,800
Speaker 1: Bush's office. She left there, she became a crisis communications expert.

1045
00:57:20,960 --> 00:57:24,360
Speaker 1: She worked on some of the most you know, known

1046
00:57:24,520 --> 00:57:29,360
Speaker 1: crisis communication issues. She also knew Washington in and out.

1047
00:57:29,520 --> 00:57:31,600
Speaker 1: She helped me go out and get all the right people.

1048
00:57:32,520 --> 00:57:35,280
Speaker 1: And because they knew the way the system worked, and

1049
00:57:35,400 --> 00:57:38,240
Speaker 1: I didn't. I was an outsider. They were able to

1050
00:57:38,400 --> 00:57:40,640
Speaker 1: guide me on who to hire, how to hire them,

1051
00:57:41,200 --> 00:57:45,040
Speaker 1: and how to have impact. Because you know, it's one

1052
00:57:45,040 --> 00:57:47,680
Speaker 1: of the most phenomenally interesting things we go through in

1053
00:57:47,720 --> 00:57:50,360
Speaker 1: the country that we don't really talk about. We talk

1054
00:57:50,400 --> 00:57:55,000
Speaker 1: about the peaceful transition of power, the peaceful transition of power,

1055
00:57:55,040 --> 00:57:57,360
Speaker 1: if you think about it. We don't have time to

1056
00:57:57,400 --> 00:58:00,640
Speaker 1: go through this. But at eleven fifty nine fifty nine,

1057
00:58:01,280 --> 00:58:05,360
Speaker 1: on January twentieth, the old administration walks out of the

1058
00:58:05,400 --> 00:58:07,040
Speaker 1: West Wing and walks out of the White House, and

1059
00:58:07,120 --> 00:58:10,680
Speaker 1: at twelve, at twelve o'clock on the dot, the new

1060
00:58:10,800 --> 00:58:15,440
Speaker 1: team can walk in. Much of the new team has

1061
00:58:15,520 --> 00:58:18,160
Speaker 1: never met each other. They've never seen each other, they

1062
00:58:18,240 --> 00:58:21,000
Speaker 1: don't know who they are. And we all walk into

1063
00:58:21,040 --> 00:58:22,920
Speaker 1: the West Wing or we walk into the old Executive

1064
00:58:22,920 --> 00:58:25,000
Speaker 1: office beyond, depending on where your office is, and we

1065
00:58:25,160 --> 00:58:28,880
Speaker 1: start working together as a team, not even knowing each

1066
00:58:28,880 --> 00:58:32,520
Speaker 1: other's name, not knowing what we do, not knowing our background.

1067
00:58:33,080 --> 00:58:36,840
Speaker 1: It's phenomenally interesting. So you have to know people, or

1068
00:58:36,960 --> 00:58:38,960
Speaker 1: you have to bring people on your team that can

1069
00:58:39,120 --> 00:58:42,880
Speaker 1: help you lead and without actually when they without Jeremy,

1070
00:58:43,400 --> 00:58:45,120
Speaker 1: I couldn't have got any of these things done. I mean,

1071
00:58:45,160 --> 00:58:47,160
Speaker 1: I really couldn't have. And most of the other people

1072
00:58:47,760 --> 00:58:52,240
Speaker 1: that they had me hire had been in the executive

1073
00:58:52,280 --> 00:58:55,240
Speaker 1: branch once before in their life. So I had a

1074
00:58:55,400 --> 00:58:58,480
Speaker 1: huge competitive advantage over a bunch of the other people

1075
00:58:59,080 --> 00:58:59,800
Speaker 1: that were in there.

1076
00:59:00,000 --> 00:59:03,000
Speaker 2: So let's talk about that advantage, and let's use the

1077
00:59:03,120 --> 00:59:08,200
Speaker 2: TCJA as our example. How does that come together? How

1078
00:59:08,240 --> 00:59:12,000
Speaker 2: did the different major policy posts come through? Does this

1079
00:59:12,160 --> 00:59:15,640
Speaker 2: start at the White House? Does it start with Poetus

1080
00:59:15,760 --> 00:59:18,200
Speaker 2: or do you go to the President and say, here's

1081
00:59:18,280 --> 00:59:20,600
Speaker 2: what we think we could get through Congress? Tell us

1082
00:59:20,640 --> 00:59:22,560
Speaker 2: how this begins and how does it get check?

1083
00:59:22,760 --> 00:59:27,440
Speaker 1: So tax is really unique. So the reason I'd accepted

1084
00:59:27,520 --> 00:59:30,760
Speaker 1: the job is because of tax reform and the President

1085
00:59:31,360 --> 00:59:33,080
Speaker 1: elect at the time we were starting this, and then

1086
00:59:33,080 --> 00:59:36,240
Speaker 1: the President knew that that was one of my big targets.

1087
00:59:37,200 --> 00:59:40,600
Speaker 1: So we had talked about it. Steve Minuchen and I

1088
00:59:40,720 --> 00:59:44,720
Speaker 1: had talked about it. But at the time we started

1089
00:59:44,840 --> 00:59:49,040
Speaker 1: down tax reform, the House was starting down tax reform.

1090
00:59:49,280 --> 00:59:54,200
Speaker 1: Paul Ryan was a big tax guy. So Brady and

1091
00:59:54,360 --> 00:59:57,280
Speaker 1: Ryan they were heading down their own path on what

1092
00:59:57,480 --> 00:59:59,240
Speaker 1: they thought tax reform should.

1093
00:59:58,960 --> 01:00:01,920
Speaker 2: Look like, but different. It was really Rachel if I

1094
01:00:02,080 --> 01:00:02,680
Speaker 2: remember right.

1095
01:00:02,880 --> 01:00:07,160
Speaker 1: No, No, So Brady and Ryan weren't a completely different

1096
01:00:07,280 --> 01:00:09,320
Speaker 1: place than we and the They were in a border

1097
01:00:09,360 --> 01:00:11,960
Speaker 1: adjusted tax. I mean, they wanted to do a border

1098
01:00:12,040 --> 01:00:16,320
Speaker 1: adjusted tax system. We and the White House did not

1099
01:00:17,400 --> 01:00:19,080
Speaker 1: want to do a border adjusted tax.

1100
01:00:19,120 --> 01:00:21,680
Speaker 2: And define that because I know you're very much a

1101
01:00:21,840 --> 01:00:24,760
Speaker 2: free trade advocacy, I'm a free trade advocate. Tell us

1102
01:00:24,800 --> 01:00:26,640
Speaker 2: how this conflict comes into play.

1103
01:00:26,760 --> 01:00:30,120
Speaker 1: Well, Basically, a border adjusted taxes you tax things at

1104
01:00:30,200 --> 01:00:35,400
Speaker 1: the border to equalize them. We felt that border adjustment

1105
01:00:35,520 --> 01:00:40,640
Speaker 1: tax had a really negative impact on sort of harder

1106
01:00:40,720 --> 01:00:46,040
Speaker 1: working middle class Americans, people that shop at the at

1107
01:00:46,080 --> 01:00:48,480
Speaker 1: the big box retailers, in the Walmarts, because they import

1108
01:00:48,560 --> 01:00:51,400
Speaker 1: a lot of their goods. Those goods would be taxed

1109
01:00:51,520 --> 01:00:52,240
Speaker 1: at the border.

1110
01:00:52,400 --> 01:00:56,960
Speaker 2: Walmart, Costco, Target exactly. Everything would be twenty everything would

1111
01:00:56,960 --> 01:00:57,200
Speaker 2: be twenty.

1112
01:00:57,280 --> 01:00:59,520
Speaker 1: They would put a twenty five percent border adjustment tax

1113
01:00:59,640 --> 01:00:59,920
Speaker 1: on the.

1114
01:01:00,200 --> 01:01:01,240
Speaker 2: It's a giant number.

1115
01:01:01,240 --> 01:01:03,480
Speaker 1: It's a giant number. We felt it was. It was

1116
01:01:03,600 --> 01:01:07,400
Speaker 1: really a progressive, progressive tax, I'm sorry, regressive tax. It was.

1117
01:01:07,920 --> 01:01:11,120
Speaker 1: It was a regressive tax. We did not see that

1118
01:01:11,560 --> 01:01:17,280
Speaker 1: is making sense to us. So our initial meetings were

1119
01:01:17,400 --> 01:01:22,280
Speaker 1: between you know, those of us coming into the White

1120
01:01:22,360 --> 01:01:26,680
Speaker 1: House and the House, and we went down every Monday

1121
01:01:26,760 --> 01:01:30,120
Speaker 1: night in December and January prior to the inauguration, and

1122
01:01:30,240 --> 01:01:33,000
Speaker 1: Speaker Ryan held a meeting in his conference room and

1123
01:01:33,120 --> 01:01:35,640
Speaker 1: we had you know, buffet dinners in there, and we

1124
01:01:35,720 --> 01:01:41,160
Speaker 1: were hashing out these these thoughts. Now, ultimately it came

1125
01:01:41,680 --> 01:01:44,880
Speaker 1: that the Senate was not going to do a border

1126
01:01:44,960 --> 01:01:48,520
Speaker 1: adjustment tax. Not surprising, so, but we had to get

1127
01:01:48,560 --> 01:01:51,640
Speaker 1: to the point where you know, the House and in

1128
01:01:51,840 --> 01:01:55,720
Speaker 1: in in Brady and Ryan, who were who were really

1129
01:01:55,920 --> 01:01:58,680
Speaker 1: too good tax experts, who spend an enormous amount of

1130
01:01:58,760 --> 01:02:02,760
Speaker 1: time on tax, had to give up on what they

1131
01:02:02,960 --> 01:02:07,200
Speaker 1: thought was their primary plan. I think by the time

1132
01:02:07,280 --> 01:02:13,000
Speaker 1: we got into inauguration in January, it was clear that

1133
01:02:13,200 --> 01:02:17,360
Speaker 1: border adjustment was not going to be the overall plan.

1134
01:02:18,040 --> 01:02:23,400
Speaker 1: So now we start going back to what can we

1135
01:02:23,480 --> 01:02:26,280
Speaker 1: all agree upon? And this to me is no different

1136
01:02:26,320 --> 01:02:29,280
Speaker 1: than any other deal I'd ever worked upon. Okay, let's

1137
01:02:29,320 --> 01:02:32,080
Speaker 1: not try and solve the hard issues. Let's try and

1138
01:02:32,160 --> 01:02:34,880
Speaker 1: figure out what we all can agree upon. And so

1139
01:02:35,720 --> 01:02:40,600
Speaker 1: issue by issue, we all started deciding what we are

1140
01:02:40,680 --> 01:02:43,560
Speaker 1: trying to achieve and what we were deciding we could

1141
01:02:43,600 --> 01:02:51,160
Speaker 1: agree upon and as with everything, when we started, a

1142
01:02:51,760 --> 01:02:54,080
Speaker 1: was pre inauguration, so people didn't have a lot to do.

1143
01:02:54,200 --> 01:02:56,640
Speaker 1: So there are lots of people in the room. As

1144
01:02:56,720 --> 01:03:00,360
Speaker 1: we got farther down the path, people I think to do.

1145
01:03:00,800 --> 01:03:03,200
Speaker 1: People realize this was gonna be a longer process, This

1146
01:03:03,440 --> 01:03:06,400
Speaker 1: was gonna be an arduous process. You know, less people

1147
01:03:06,520 --> 01:03:08,600
Speaker 1: started showing up to the meetings and we started getting

1148
01:03:08,640 --> 01:03:10,920
Speaker 1: to the real core group of people that knew what

1149
01:03:11,000 --> 01:03:13,480
Speaker 1: they were doing. We ended up with what they call

1150
01:03:13,640 --> 01:03:16,040
Speaker 1: the Group of Six, the group of six that was

1151
01:03:16,120 --> 01:03:17,880
Speaker 1: you know, two from the House, two from the Senate

1152
01:03:17,960 --> 01:03:19,880
Speaker 1: and Minutent, and I from the from the White House.

1153
01:03:21,960 --> 01:03:25,320
Speaker 1: So the Big Six became the Big six of we're

1154
01:03:25,400 --> 01:03:27,560
Speaker 1: going to sit down and we're going to hash out

1155
01:03:28,720 --> 01:03:32,480
Speaker 1: what we think tax policies should look like, and then

1156
01:03:32,520 --> 01:03:33,720
Speaker 1: we're going to work from there.

1157
01:03:34,080 --> 01:03:37,880
Speaker 2: So is this very typical to have this small group

1158
01:03:38,040 --> 01:03:41,600
Speaker 2: representing House, Senate, and White House, Because that's a lot

1159
01:03:41,680 --> 01:03:43,480
Speaker 2: of firepower in one room.

1160
01:03:43,800 --> 01:03:48,240
Speaker 1: It's it's not typical. And and you know, I give

1161
01:03:48,760 --> 01:03:52,480
Speaker 1: Brady and I give Ryan an enormous amount of credit

1162
01:03:53,400 --> 01:03:57,439
Speaker 1: for handling the Ways and Means Committee because technically tax

1163
01:03:57,600 --> 01:04:00,000
Speaker 1: legislation is supposed to start in the Ways and Means Committee.

1164
01:04:00,240 --> 01:04:02,440
Speaker 1: The Ways and Means Committe is a very large committee.

1165
01:04:02,520 --> 01:04:05,520
Speaker 2: We'll start I don't know if that's the right word,

1166
01:04:05,640 --> 01:04:08,720
Speaker 2: or or at least they get handed the football at as.

1167
01:04:08,880 --> 01:04:12,000
Speaker 1: Well technically in there in the real world, if you

1168
01:04:12,240 --> 01:04:16,360
Speaker 1: if you read the little definition, the Ways and Means

1169
01:04:16,440 --> 01:04:19,560
Speaker 1: Committee is where all tax legilacation needs to start. Now,

1170
01:04:20,720 --> 01:04:25,680
Speaker 1: ultimately we handed them the football. They made some minor

1171
01:04:25,840 --> 01:04:29,680
Speaker 1: changes and it progressed. So tax legislation has to start

1172
01:04:29,720 --> 01:04:31,400
Speaker 1: in the House. It has to start in the Ways community,

1173
01:04:31,400 --> 01:04:33,560
Speaker 1: the Ways and Means Committee. The six of us got

1174
01:04:33,680 --> 01:04:40,080
Speaker 1: to a place where we had enough agreement unwhere to

1175
01:04:40,160 --> 01:04:44,480
Speaker 1: go what we thought the basic fundamentals were that we

1176
01:04:44,720 --> 01:04:48,040
Speaker 1: then you know that Brady and Ryan could then handle

1177
01:04:48,440 --> 01:04:50,320
Speaker 1: the Ways and Means Committee. We could get the Ways

1178
01:04:50,360 --> 01:04:54,560
Speaker 1: and Means Committee involved, We got them actively involved, and

1179
01:04:54,760 --> 01:04:59,920
Speaker 1: ultimately we got a piece of legislation through the House. Now,

1180
01:05:01,000 --> 01:05:03,280
Speaker 1: I don't want to say this in the wrong way,

1181
01:05:03,360 --> 01:05:06,920
Speaker 1: but the House wasn't the tougher piece. You know, the

1182
01:05:07,160 --> 01:05:09,920
Speaker 1: Republicans had a House majority, they had a decent majority,

1183
01:05:11,440 --> 01:05:14,560
Speaker 1: and we thought that we would get to the requisite

1184
01:05:14,840 --> 01:05:17,000
Speaker 1: to our thirty five votes to get through the House

1185
01:05:17,120 --> 01:05:19,120
Speaker 1: a piece of tax legislation.

1186
01:05:19,240 --> 01:05:20,040
Speaker 2: Like herding cats.

1187
01:05:20,080 --> 01:05:24,760
Speaker 1: Though right now, Look, there were some controversial things in there.

1188
01:05:25,040 --> 01:05:30,280
Speaker 1: As we all know, the salt deduction was a issue

1189
01:05:30,400 --> 01:05:34,800
Speaker 1: that people on both sides of the aisle had a

1190
01:05:34,960 --> 01:05:39,560
Speaker 1: difficult time dealing with. If you're a northern New Jersey Republican,

1191
01:05:40,840 --> 01:05:43,960
Speaker 1: you weren't happy having to vote for that, or even

1192
01:05:43,960 --> 01:05:48,120
Speaker 1: if you're a New York State Republican from Westchester, it's

1193
01:05:48,160 --> 01:05:52,200
Speaker 1: a tough vote for you to make. There were a

1194
01:05:52,320 --> 01:05:59,160
Speaker 1: bunch of major corporate changes, the deemed repatriation, which was

1195
01:05:59,240 --> 01:06:02,160
Speaker 1: one of the things that I thought was really important,

1196
01:06:02,760 --> 01:06:04,480
Speaker 1: like the White House steam manage and I thought was

1197
01:06:04,560 --> 01:06:05,120
Speaker 1: really interestant.

1198
01:06:05,120 --> 01:06:09,120
Speaker 2: So to find that for listeners subscribe corporate repatriation.

1199
01:06:09,360 --> 01:06:11,280
Speaker 1: We had a because this was a very big deal,

1200
01:06:11,400 --> 01:06:14,040
Speaker 1: this huge, huge deal. So we had a tax system

1201
01:06:14,120 --> 01:06:20,080
Speaker 1: prior to JCT's where as a US based tax payer,

1202
01:06:21,000 --> 01:06:24,800
Speaker 1: if you were earning money offshore, as long as you

1203
01:06:24,960 --> 01:06:28,880
Speaker 1: left your money offshore, you did not pay US taxes.

1204
01:06:29,080 --> 01:06:32,120
Speaker 1: The minute you brought it back into the US you

1205
01:06:32,360 --> 01:06:33,200
Speaker 1: had to pay.

1206
01:06:33,120 --> 01:06:35,400
Speaker 2: Taxes, which by the way, is very different from you

1207
01:06:35,520 --> 01:06:38,240
Speaker 2: and I as individuals. Yes, if we're US citizens and

1208
01:06:38,280 --> 01:06:40,840
Speaker 2: I'm earning my money overseas, I'm still.

1209
01:06:40,680 --> 01:06:45,160
Speaker 1: Paying You're still paying tax. So it almost forced large

1210
01:06:45,280 --> 01:06:51,880
Speaker 1: US companies to bring to leave their money offshore. And

1211
01:06:52,000 --> 01:06:54,600
Speaker 1: when you're forcing US companies to leave their money offshore,

1212
01:06:55,680 --> 01:06:58,840
Speaker 1: you're actually forcing them to make capital investment off shore,

1213
01:06:59,120 --> 01:07:03,840
Speaker 1: build factories offshore, hire people offshore, which to me was

1214
01:07:03,960 --> 01:07:08,240
Speaker 1: the complete wrong incentive. We wanted people to bring their

1215
01:07:08,320 --> 01:07:09,720
Speaker 1: money back on shore.

1216
01:07:10,360 --> 01:07:15,040
Speaker 2: So we said, to clarify, bring it back here, build factories,

1217
01:07:15,120 --> 01:07:18,960
Speaker 2: hire people, invest here in the US. Correct, And what

1218
01:07:19,280 --> 01:07:21,920
Speaker 2: was the change in tax rate so versus had it

1219
01:07:22,040 --> 01:07:23,320
Speaker 2: been earned here in the US.

1220
01:07:23,600 --> 01:07:26,040
Speaker 1: So it was not necessarily a tax rate issue. Was

1221
01:07:26,120 --> 01:07:28,520
Speaker 1: just an avoidance of tax. If I never bring it back,

1222
01:07:29,080 --> 01:07:30,000
Speaker 1: I don't pay the tax.

1223
01:07:30,160 --> 01:07:31,440
Speaker 2: So how did this change?

1224
01:07:31,480 --> 01:07:32,000
Speaker 1: So what we do?

1225
01:07:32,160 --> 01:07:33,840
Speaker 2: What was the incentive to have them bring it back?

1226
01:07:33,920 --> 01:07:37,040
Speaker 1: So what we did is we said, Okay, you can

1227
01:07:37,160 --> 01:07:39,880
Speaker 1: leave your money offshore. We're going to just deem it

1228
01:07:40,680 --> 01:07:43,280
Speaker 1: to have been repatriated, so we don't care where you

1229
01:07:43,400 --> 01:07:45,560
Speaker 1: leave your money. We're gonna We're going to give you

1230
01:07:45,720 --> 01:07:49,400
Speaker 1: five years to pay the taxes on the offshore money.

1231
01:07:49,960 --> 01:07:52,280
Speaker 1: So over the next five years, you're going to have

1232
01:07:52,480 --> 01:07:55,800
Speaker 1: to pay all of the taxes that you would have paid,

1233
01:07:56,360 --> 01:07:58,520
Speaker 1: assuming you would have brought back all your money, and

1234
01:07:58,640 --> 01:08:00,640
Speaker 1: all your foreign earnings are going to to be taxed

1235
01:08:00,680 --> 01:08:02,680
Speaker 1: as if they were earned in the United States.

1236
01:08:02,800 --> 01:08:05,160
Speaker 2: So that's the stick. Tell us about the carrot.

1237
01:08:05,560 --> 01:08:08,400
Speaker 1: Well, we gave lots of carrots. We gave lots of carrots,

1238
01:08:08,440 --> 01:08:11,080
Speaker 1: We gave lots of credits, we gave lots of incentives,

1239
01:08:11,720 --> 01:08:15,080
Speaker 1: and we gave lots of different ways for people to

1240
01:08:16,040 --> 01:08:19,560
Speaker 1: move their money in a way, but the ways that

1241
01:08:19,680 --> 01:08:22,720
Speaker 1: we gave carrots was we wanted you to invest in

1242
01:08:22,800 --> 01:08:25,920
Speaker 1: the United States where possible, and we wanted you and

1243
01:08:26,040 --> 01:08:29,080
Speaker 1: we forced you to repatriate your earnings back to the

1244
01:08:29,160 --> 01:08:32,599
Speaker 1: United States. So we gave you huge R and D credits.

1245
01:08:32,640 --> 01:08:35,479
Speaker 1: We gave you huge credits to build factories in the

1246
01:08:35,600 --> 01:08:38,320
Speaker 1: United States, we gave you credits to hire people, We

1247
01:08:38,400 --> 01:08:40,920
Speaker 1: gave you credits for everything we could. But we deemed

1248
01:08:41,000 --> 01:08:43,560
Speaker 1: you to have your worldwide earnings come back to the

1249
01:08:43,680 --> 01:08:44,240
Speaker 1: United States.

1250
01:08:44,280 --> 01:08:48,200
Speaker 2: And approximately how much capital would you guess return to

1251
01:08:48,240 --> 01:08:49,840
Speaker 2: the US, Well, lots of it.

1252
01:08:50,040 --> 01:08:52,839
Speaker 1: I mean it was brilliant trillions. It measured in trillions,

1253
01:08:52,960 --> 01:08:55,120
Speaker 1: Like I don't want to call out companies by themselves.

1254
01:08:55,120 --> 01:08:57,360
Speaker 1: But look, Apple was very clear. Apple was one of

1255
01:08:57,439 --> 01:09:01,599
Speaker 1: the largest holders of offshore capital. Into Tim Cook's credit,

1256
01:09:01,720 --> 01:09:06,040
Speaker 1: he brought back money almost instantly, and he said, he said,

1257
01:09:06,080 --> 01:09:08,760
Speaker 1: why our legislation is. Look, if this legislation passes, I

1258
01:09:08,800 --> 01:09:11,360
Speaker 1: will just bring back my money. I will pay the taxes.

1259
01:09:11,439 --> 01:09:14,720
Speaker 1: I understand what you're doing this. We had pretty good

1260
01:09:14,760 --> 01:09:19,400
Speaker 1: support from the corporate community on repatriation, and so we

1261
01:09:19,640 --> 01:09:22,920
Speaker 1: we did things like that where we said, look, you

1262
01:09:23,000 --> 01:09:26,759
Speaker 1: can no longer just hide your money and in foreign countries,

1263
01:09:27,120 --> 01:09:30,559
Speaker 1: you're a US based company, you're a US taxpayer, gonna

1264
01:09:30,600 --> 01:09:32,599
Speaker 1: you're gonna have deemed to have brought your money back.

1265
01:09:32,720 --> 01:09:36,040
Speaker 1: We don't want you to incentivize to spend your money

1266
01:09:36,080 --> 01:09:39,240
Speaker 1: offshore and build property, plant and equipment offshore.

1267
01:09:39,680 --> 01:09:42,680
Speaker 2: So let's talk about two of the other big factors

1268
01:09:43,160 --> 01:09:47,240
Speaker 2: in the TCGA. One was the shifting of the rates

1269
01:09:47,400 --> 01:09:51,519
Speaker 2: and the other was the LLC pass throughs, which really

1270
01:09:52,160 --> 01:09:56,639
Speaker 2: was a huge structural change. Rates are pretty easy. Rates

1271
01:09:56,720 --> 01:09:59,439
Speaker 2: came down, the top rates came down. Everything else kind

1272
01:09:59,479 --> 01:10:00,640
Speaker 2: of got rej little bit.

1273
01:10:01,040 --> 01:10:06,320
Speaker 1: Top rates came down, But that that that that that helped.

1274
01:10:06,439 --> 01:10:08,559
Speaker 1: If you looked at the disu It helped the bottom

1275
01:10:08,680 --> 01:10:12,920
Speaker 1: two thirds of the distribution. Top rates came down for everyone.

1276
01:10:13,360 --> 01:10:16,040
Speaker 1: But the the the thing that we did to correct

1277
01:10:16,120 --> 01:10:18,800
Speaker 1: that is we got rid of the largest loophole that

1278
01:10:18,960 --> 01:10:22,080
Speaker 1: exists in the tax code, which was the salt deduction.

1279
01:10:22,600 --> 01:10:27,160
Speaker 1: So the wealthier people and the top tax rates, they

1280
01:10:27,280 --> 01:10:31,200
Speaker 1: were subtracting from their income. They were subtracting their state tax,

1281
01:10:31,360 --> 01:10:34,400
Speaker 1: they were subtracting their state income. They were staying their

1282
01:10:34,439 --> 01:10:37,800
Speaker 1: mortgage deduction, they were, they were subtracting the real estate

1283
01:10:37,920 --> 01:10:41,200
Speaker 1: taxes they were so they were lowering the amount of

1284
01:10:41,400 --> 01:10:45,160
Speaker 1: income that they taxed. So my basic premise, and I

1285
01:10:45,240 --> 01:10:48,639
Speaker 1: think this is good tax policy, is lower the rate,

1286
01:10:48,920 --> 01:10:52,360
Speaker 1: broaden the base. So we were trying to broaden the base.

1287
01:10:52,439 --> 01:10:54,759
Speaker 1: We were trying to say, look, we're going to stop

1288
01:10:54,880 --> 01:10:58,559
Speaker 1: having you deduct all these things from your income. We're

1289
01:10:58,560 --> 01:11:00,599
Speaker 1: gonna say your income is your income, but we're going

1290
01:11:00,640 --> 01:11:03,479
Speaker 1: to charge you a smaller rate on your income. We

1291
01:11:03,640 --> 01:11:06,559
Speaker 1: tried to simplify the whole tax return. If you remember,

1292
01:11:07,160 --> 01:11:09,559
Speaker 1: there was times when you know, the President said, it's

1293
01:11:09,600 --> 01:11:11,040
Speaker 1: so simple, you can do it on the back of

1294
01:11:11,040 --> 01:11:11,639
Speaker 1: an envelope.

1295
01:11:11,720 --> 01:11:14,519
Speaker 2: We can we can have a tax return the feeling.

1296
01:11:14,960 --> 01:11:16,800
Speaker 2: I have a feeling you're you don't file on the

1297
01:11:16,840 --> 01:11:17,880
Speaker 2: back of an enveluce.

1298
01:11:17,600 --> 01:11:20,479
Speaker 1: I do not need to do Yeah, I don't follow on.

1299
01:11:20,840 --> 01:11:22,120
Speaker 1: I can't even get on a sheet of paper.

1300
01:11:22,200 --> 01:11:24,519
Speaker 2: So let's talk about the other one, and I will admit.

1301
01:11:24,680 --> 01:11:28,080
Speaker 2: So at the time of the salt deduction going away,

1302
01:11:28,600 --> 01:11:32,120
Speaker 2: I cursed you, I cursed the president. And then I

1303
01:11:32,280 --> 01:11:35,360
Speaker 2: started reading about this LLC passed through right, and my

1304
01:11:35,520 --> 01:11:38,439
Speaker 2: business is an LLC, And I'm like, oh, so wait

1305
01:11:38,479 --> 01:11:42,160
Speaker 2: a second, let's talk about this. Who created that concept.

1306
01:11:42,640 --> 01:11:46,400
Speaker 2: That's a giant shift is the way we tax small businesses.

1307
01:11:46,720 --> 01:11:49,800
Speaker 1: So here's always a big debate when you get down

1308
01:11:49,920 --> 01:11:53,200
Speaker 1: to doing taxes in the United States. So we have

1309
01:11:53,280 --> 01:11:57,320
Speaker 1: a corporate rate and then we have a rate for

1310
01:11:58,600 --> 01:12:02,479
Speaker 1: ll Caesar pastors. Now, l season pass throughs can be

1311
01:12:02,840 --> 01:12:06,800
Speaker 1: very large companies that are not corporates. We have some

1312
01:12:07,200 --> 01:12:09,720
Speaker 1: very very large pass through companies and.

1313
01:12:09,800 --> 01:12:12,720
Speaker 2: Partnership law firms, accounting firms go down the list.

1314
01:12:13,240 --> 01:12:18,960
Speaker 1: We have some even larger major training companies, major retail

1315
01:12:19,080 --> 01:12:24,240
Speaker 1: companies that are LLC's are passed through companies. So you

1316
01:12:24,479 --> 01:12:30,320
Speaker 1: have this debate about the fairness between the corporate tax

1317
01:12:30,439 --> 01:12:37,040
Speaker 1: rate and the LLC or non corporate tax rate, and

1318
01:12:38,240 --> 01:12:41,280
Speaker 1: how do you make sure there's not an arbitrage in there?

1319
01:12:42,040 --> 01:12:46,599
Speaker 1: So you're an LLC. But if I lower the corporate

1320
01:12:46,720 --> 01:12:51,040
Speaker 1: tax rate low enough, you'll just become a corporation and

1321
01:12:51,160 --> 01:12:54,840
Speaker 1: you'll pay your corporate tax rate, and then you'll find

1322
01:12:54,880 --> 01:12:59,080
Speaker 1: that you'll find ways ultimately to run your business through

1323
01:12:59,120 --> 01:13:02,400
Speaker 1: a corporation because you'll tax and centivize. So we were

1324
01:13:02,560 --> 01:13:09,600
Speaker 1: trying to create a level playing field for LLC's or

1325
01:13:10,600 --> 01:13:13,839
Speaker 1: look it still is this day. The vast, vast majority

1326
01:13:13,920 --> 01:13:18,599
Speaker 1: of LLCs in this country are small, small family businesses

1327
01:13:18,800 --> 01:13:22,600
Speaker 1: and small businesses. So we wanted small businesses to be

1328
01:13:22,760 --> 01:13:26,679
Speaker 1: taxed at a favorable rate. We want to incentivized small businesses.

1329
01:13:27,040 --> 01:13:29,320
Speaker 1: We wanted small businesses to grow, We want them to

1330
01:13:29,400 --> 01:13:35,080
Speaker 1: hire more people. So we created ways for LLC income

1331
01:13:35,520 --> 01:13:38,959
Speaker 1: and different amounts of income and income below certain threshold

1332
01:13:39,439 --> 01:13:44,560
Speaker 1: to be taxed at a preferential rate to allow LLC's

1333
01:13:45,160 --> 01:13:49,000
Speaker 1: to be very competitive and more competitive than corporations if

1334
01:13:49,040 --> 01:13:52,160
Speaker 1: you were a small LLC. So we're telling you, if

1335
01:13:52,200 --> 01:13:56,519
Speaker 1: you're a small business person today, your LLC structure should

1336
01:13:56,560 --> 01:13:59,639
Speaker 1: be incentivizing for you to grow your business and stay

1337
01:13:59,640 --> 01:14:01,760
Speaker 1: in an l We'll see you don't need to become

1338
01:14:01,840 --> 01:14:04,759
Speaker 1: a corporation to take advantage of a tax code.

1339
01:14:04,960 --> 01:14:08,960
Speaker 2: And I have a vivid recollection of New York State

1340
01:14:09,680 --> 01:14:12,479
Speaker 2: reaching out to the IRS and saying, we want to

1341
01:14:12,560 --> 01:14:16,200
Speaker 2: clarify what our rules can be with LLC, and the

1342
01:14:16,280 --> 01:14:18,320
Speaker 2: IRS said, yes, you can do this, you can do that.

1343
01:14:18,560 --> 01:14:22,160
Speaker 2: And then New York State disseminated new information, and then

1344
01:14:22,240 --> 01:14:26,320
Speaker 2: California and then Illinois, and then it just cascaded and

1345
01:14:26,640 --> 01:14:29,960
Speaker 2: suddenly a lot of Blue states, or at least small

1346
01:14:30,000 --> 01:14:33,200
Speaker 2: business owners in Blue states that were complaining about the

1347
01:14:33,320 --> 01:14:36,400
Speaker 2: salt deduction the oly Way, suddenly like, hey, this is

1348
01:14:36,720 --> 01:14:40,240
Speaker 2: not the worst thing that happened here with this tax code.

1349
01:14:40,600 --> 01:14:43,560
Speaker 2: How long did it take before people realized this is

1350
01:14:43,960 --> 01:14:47,680
Speaker 2: a really substantial change to small business because the pushback

1351
01:14:47,760 --> 01:14:49,400
Speaker 2: on salt was pretty fierce.

1352
01:14:50,080 --> 01:14:56,120
Speaker 1: Yeah. Look, I don't know. The political rhetoric today is

1353
01:14:56,320 --> 01:15:01,240
Speaker 1: still pretty high on the jac that it was a

1354
01:15:01,360 --> 01:15:04,320
Speaker 1: tax cut for the rich. I think the data does

1355
01:15:04,400 --> 01:15:07,640
Speaker 1: not tell you that. And if you look at the

1356
01:15:08,200 --> 01:15:12,240
Speaker 1: tax revenues collected in absolute dollars, and you look at

1357
01:15:12,280 --> 01:15:16,360
Speaker 1: tax collected as a percentage of GDP, it would tell

1358
01:15:16,439 --> 01:15:21,720
Speaker 1: you that the code actually worked pretty well and has

1359
01:15:21,800 --> 01:15:25,320
Speaker 1: done well to incentivize people to grow businesses, hire people,

1360
01:15:25,840 --> 01:15:30,599
Speaker 1: and pay taxes. I don't see it as a tax

1361
01:15:30,680 --> 01:15:33,439
Speaker 1: cut on the rich. You and I were talking before.

1362
01:15:34,200 --> 01:15:37,759
Speaker 1: Most of our friends are probably paying more taxes today

1363
01:15:37,960 --> 01:15:41,080
Speaker 1: than they were because they lost their large deductions by

1364
01:15:41,160 --> 01:15:43,599
Speaker 1: living in New York City, New York State, by living

1365
01:15:43,640 --> 01:15:47,360
Speaker 1: in New Jersey. Anyone lives in California, it's clearly not

1366
01:15:47,520 --> 01:15:48,760
Speaker 1: a tax cut for them.

1367
01:15:49,600 --> 01:15:54,599
Speaker 2: It really changes from industry to industry. The biggest issue

1368
01:15:54,840 --> 01:15:57,680
Speaker 2: is normally, so you pass something in twenty seventeen, it

1369
01:15:57,760 --> 01:16:00,240
Speaker 2: goes into effect twenty eighteen, and then you get five

1370
01:16:00,320 --> 01:16:03,120
Speaker 2: years of data and say, let's look at how this worked.

1371
01:16:03,760 --> 01:16:07,080
Speaker 2: We had that little snaff, we have SATA, we have

1372
01:16:07,200 --> 01:16:11,360
Speaker 2: screw so it's still a little difficult to conclusively say

1373
01:16:12,000 --> 01:16:15,080
Speaker 2: where this was. But there's some sense of the trend

1374
01:16:15,560 --> 01:16:16,280
Speaker 2: this was moving in.

1375
01:16:16,520 --> 01:16:19,719
Speaker 1: We have some screwy data, But even with the screwy data,

1376
01:16:21,320 --> 01:16:25,200
Speaker 1: I would agree with you the trend is the tax

1377
01:16:25,439 --> 01:16:30,560
Speaker 1: receipts and tax revenue have far exceeded all of the

1378
01:16:30,800 --> 01:16:37,720
Speaker 1: forecasted assumptions and all of the the the views that

1379
01:16:37,840 --> 01:16:42,360
Speaker 1: were stated when we were passing the legislation. All of

1380
01:16:42,439 --> 01:16:45,000
Speaker 1: the scare mongering that went on when we were passing

1381
01:16:45,040 --> 01:16:47,720
Speaker 1: the legislation, how this was a tax cut for the

1382
01:16:47,880 --> 01:16:52,400
Speaker 1: rich and tax receipts are going down dramatically has been unfounded.

1383
01:16:52,920 --> 01:16:57,760
Speaker 1: And many states that follow the federal government and get

1384
01:16:57,880 --> 01:17:00,880
Speaker 1: rid of the assault tax deduction, many of those states

1385
01:17:00,960 --> 01:17:04,920
Speaker 1: have found themselves in a huge surplus situation and they

1386
01:17:04,960 --> 01:17:08,759
Speaker 1: have lowered their tax rates because they have ample supply

1387
01:17:08,840 --> 01:17:11,040
Speaker 1: of tax revenue coming in by getting rid of the deduction.

1388
01:17:11,520 --> 01:17:14,480
Speaker 1: So I think, you know, it's going to be impossible

1389
01:17:14,600 --> 01:17:16,920
Speaker 1: to say for sure because of what happened in COVID,

1390
01:17:17,400 --> 01:17:20,920
Speaker 1: but I think the overwhelming data has been that the JCTA,

1391
01:17:21,120 --> 01:17:23,679
Speaker 1: THEA has done exactly what we said it would.

1392
01:17:23,520 --> 01:17:26,040
Speaker 2: Do, and this is going to come up for renewal

1393
01:17:26,920 --> 01:17:28,960
Speaker 2: in a couple of years, the end.

1394
01:17:28,880 --> 01:17:33,160
Speaker 1: Of twenty five. So now not the corporate side, the

1395
01:17:33,280 --> 01:17:35,479
Speaker 1: personal side comes up at the end of twenty fus.

1396
01:17:35,720 --> 01:17:39,240
Speaker 2: So here's the question. I mean, it's impossible to forecast

1397
01:17:39,320 --> 01:17:42,640
Speaker 2: this sort of thing. Do we think that this is

1398
01:17:43,000 --> 01:17:46,800
Speaker 2: likely to be renewed or is there something else coming?

1399
01:17:46,880 --> 01:17:49,519
Speaker 2: And really the answer to that question is what happens

1400
01:17:49,600 --> 01:17:50,479
Speaker 2: in twenty twenty four.

1401
01:17:52,120 --> 01:17:56,720
Speaker 1: I think it's a bit what happens in twenty twenty four.

1402
01:17:58,040 --> 01:17:59,960
Speaker 1: But if you put a gun to my head today,

1403
01:18:00,280 --> 01:18:02,680
Speaker 1: I would think that ninety five percent of that tax

1404
01:18:02,760 --> 01:18:03,679
Speaker 1: code is getting renewed.

1405
01:18:04,120 --> 01:18:07,680
Speaker 2: Really, yeah, that's quite fascinating. So we've spent a lot

1406
01:18:07,720 --> 01:18:07,960
Speaker 2: of time.

1407
01:18:08,200 --> 01:18:10,639
Speaker 1: It's actually worked too large.

1408
01:18:11,160 --> 01:18:13,080
Speaker 2: Unfortunately, by the way, I know, I'm going to get

1409
01:18:13,080 --> 01:18:16,280
Speaker 2: pushed back on the data. Well, the tax code showed this,

1410
01:18:16,439 --> 01:18:17,760
Speaker 2: and if you look at it this way, then the

1411
01:18:17,880 --> 01:18:21,200
Speaker 2: master that. So there's still some debate on the numbers,

1412
01:18:21,320 --> 01:18:25,120
Speaker 2: but by and large, you're satisfied with the results of it.

1413
01:18:25,240 --> 01:18:27,120
Speaker 2: I'm satisfied with this, And you think it had a

1414
01:18:27,160 --> 01:18:28,679
Speaker 2: positive impact on the economy.

1415
01:18:28,760 --> 01:18:30,639
Speaker 1: I think it's had a positive impact on the economy.

1416
01:18:31,120 --> 01:18:34,080
Speaker 1: I think has a positive impact on having the money repatriated.

1417
01:18:34,479 --> 01:18:38,559
Speaker 1: When you talk about people are talking about people building

1418
01:18:39,160 --> 01:18:41,880
Speaker 1: plants in the United States, people are talking about US

1419
01:18:41,960 --> 01:18:45,760
Speaker 1: redomiciling our supply chain and doctors. A lot of this

1420
01:18:45,960 --> 01:18:49,640
Speaker 1: is happening because companies were they weren't forced, but they

1421
01:18:49,720 --> 01:18:51,840
Speaker 1: got taxed on the money off shore anyways, so when

1422
01:18:51,840 --> 01:18:54,560
Speaker 1: they brought it back, it was easy for them to

1423
01:18:54,680 --> 01:18:56,680
Speaker 1: spend it back in the United States. So a lot

1424
01:18:56,760 --> 01:19:00,000
Speaker 1: of the effect people are seeing they have to understand

1425
01:19:00,160 --> 01:19:02,800
Speaker 1: the cause. The cause was okay, that money had to

1426
01:19:02,880 --> 01:19:04,479
Speaker 1: come back. It didn't have to come back. That money

1427
01:19:04,560 --> 01:19:06,960
Speaker 1: was being taxed anyways. So once it's being taxed and

1428
01:19:07,000 --> 01:19:09,880
Speaker 1: I'm bringing it back on shore, well, I can't spend

1429
01:19:09,960 --> 01:19:11,680
Speaker 1: it to build a factory in the United States. I

1430
01:19:11,800 --> 01:19:15,519
Speaker 1: can't spend it to modernize these things. So I think

1431
01:19:15,600 --> 01:19:18,880
Speaker 1: when we look back at this with enough years of data,

1432
01:19:19,000 --> 01:19:21,840
Speaker 1: with the COVID blip being a blip, not that it's

1433
01:19:21,880 --> 01:19:22,920
Speaker 1: a blitz a blip, and.

1434
01:19:22,960 --> 01:19:25,920
Speaker 2: Tax a couple of years in tax time, Yeah, for sure.

1435
01:19:26,040 --> 01:19:29,960
Speaker 1: I think that we'll say, hey, this tax plan worked

1436
01:19:30,240 --> 01:19:30,880
Speaker 1: pretty well.

1437
01:19:31,479 --> 01:19:36,200
Speaker 2: Safe to say this is your most satisfying accomplishment in

1438
01:19:36,560 --> 01:19:38,120
Speaker 2: the public servants space.

1439
01:19:38,320 --> 01:19:44,600
Speaker 1: Absolutely absolutely, it was one hundred. It basically occupied I

1440
01:19:44,640 --> 01:19:47,560
Speaker 1: would say, the vast, vast majority of my time for

1441
01:19:47,720 --> 01:19:51,599
Speaker 1: about three hundred and sixty five days, so really two thirds.

1442
01:19:51,680 --> 01:19:56,320
Speaker 1: We signed it December twenty second at twelve noon and

1443
01:19:56,760 --> 01:20:00,320
Speaker 1: seventeen and I started working on it in December sixth team,

1444
01:20:00,520 --> 01:20:03,559
Speaker 1: so literally for about three hundred and sixty five days straight,

1445
01:20:05,240 --> 01:20:08,760
Speaker 1: my mind was thinking tax code, tax code, tax code,

1446
01:20:08,760 --> 01:20:09,280
Speaker 1: tax code.

1447
01:20:10,040 --> 01:20:12,240
Speaker 2: Let's talk a little bit about what's going on in

1448
01:20:12,320 --> 01:20:15,120
Speaker 2: the world today. I want to talk about technology, but

1449
01:20:15,200 --> 01:20:18,960
Speaker 2: first we have to talk about what's arguably the most

1450
01:20:19,000 --> 01:20:23,240
Speaker 2: aggressive tightening cycle in Federal Reserve history. What's going on

1451
01:20:23,520 --> 01:20:26,280
Speaker 2: in the world of interest rates and FED funds.

1452
01:20:27,560 --> 01:20:29,760
Speaker 1: Well, I think you just said it. We're going to

1453
01:20:29,880 --> 01:20:34,400
Speaker 1: the most aggressive tightening cycle we've seen, you know. I

1454
01:20:34,520 --> 01:20:37,519
Speaker 1: think unfortunately the FED was late to the game. But

1455
01:20:37,920 --> 01:20:40,960
Speaker 1: aren't they always Yeah, and they're going to stay too long.

1456
01:20:41,160 --> 01:20:43,080
Speaker 1: You know, it's always they come late to the party,

1457
01:20:43,120 --> 01:20:45,320
Speaker 1: and they the last ones to come in, the first

1458
01:20:45,439 --> 01:20:47,240
Speaker 1: and the last ones to leave. I guess that's what

1459
01:20:47,360 --> 01:20:52,800
Speaker 1: they are. But the question to me is it's more

1460
01:20:52,840 --> 01:20:55,640
Speaker 1: broad than that. Right now, you know, the FED is

1461
01:20:55,720 --> 01:20:59,599
Speaker 1: tightened in gustrates quite considerably, and we all know there's

1462
01:20:59,600 --> 01:21:05,040
Speaker 1: a lag effector you know, and so the first raises

1463
01:21:05,120 --> 01:21:07,760
Speaker 1: they have, now we're a year or so into that

1464
01:21:07,920 --> 01:21:08,640
Speaker 1: cycle in.

1465
01:21:08,720 --> 01:21:11,280
Speaker 2: March twenty twenty two, we're eighteen months out.

1466
01:21:11,439 --> 01:21:15,240
Speaker 1: We're a year plus the into that cycle. We don't

1467
01:21:15,320 --> 01:21:19,160
Speaker 1: know what the full impact of these raises is. So

1468
01:21:19,280 --> 01:21:22,320
Speaker 1: that's number one. So for the FED to keep going

1469
01:21:23,520 --> 01:21:27,400
Speaker 1: I would be concerned. Now, I think we all believe

1470
01:21:28,200 --> 01:21:31,479
Speaker 1: that the FED maybe has one more twenty five. I

1471
01:21:31,560 --> 01:21:35,160
Speaker 1: would potentially hope they'd have no more twenty fives, because

1472
01:21:35,600 --> 01:21:38,880
Speaker 1: with you, I'm not even sure what the effect is

1473
01:21:39,760 --> 01:21:43,599
Speaker 1: of the raising the rates and a longer discussion about

1474
01:21:43,720 --> 01:21:46,760
Speaker 1: FED policy and how effective it's been over the last

1475
01:21:46,800 --> 01:21:49,599
Speaker 1: two decades, but I'm not going to go there right now.

1476
01:21:51,960 --> 01:21:58,200
Speaker 1: What's more interesting, in my opinion, is what the FED

1477
01:21:58,400 --> 01:22:01,479
Speaker 1: been trying to do by raising rates and slowing down

1478
01:22:01,520 --> 01:22:05,920
Speaker 1: the economy, slowing down employment growth. So far, we have

1479
01:22:06,080 --> 01:22:09,080
Speaker 1: not seen that. We really have seen. We've seen a

1480
01:22:09,200 --> 01:22:12,680
Speaker 1: little bit of job creations slow down if you look

1481
01:22:12,720 --> 01:22:16,040
Speaker 1: at the Jolts data, but we really we've seen a

1482
01:22:16,160 --> 01:22:19,640
Speaker 1: little bit of a tiny, minuscule pickup in unemployment, but

1483
01:22:19,720 --> 01:22:21,840
Speaker 1: that seems more like it's people coming back to the

1484
01:22:21,960 --> 01:22:26,240
Speaker 1: job market because savings is starting to dry.

1485
01:22:26,120 --> 01:22:30,280
Speaker 2: Up, wage gains are slowing, real estate still still having

1486
01:22:30,280 --> 01:22:31,759
Speaker 2: a little issue, still having.

1487
01:22:31,600 --> 01:22:35,680
Speaker 1: A little issue, but we're still pretty much at full employment.

1488
01:22:36,479 --> 01:22:44,600
Speaker 1: We're still having wage gains overall. And I think what

1489
01:22:44,760 --> 01:22:48,360
Speaker 1: we're seeing in I think what we all have to

1490
01:22:48,400 --> 01:22:51,960
Speaker 1: figure in here is we've never gone through a cycle

1491
01:22:52,720 --> 01:22:57,320
Speaker 1: where the federal reserve is tightening with one hand and

1492
01:22:57,439 --> 01:23:01,760
Speaker 1: the federal government is spending with the other hand. And

1493
01:23:02,000 --> 01:23:04,560
Speaker 1: so as much as the federal reserve is tiding, the

1494
01:23:04,680 --> 01:23:08,160
Speaker 1: federal government continues to spend. They continue to have money

1495
01:23:08,240 --> 01:23:10,519
Speaker 1: to spend on infrastructure, They continue to have money to

1496
01:23:10,600 --> 01:23:13,200
Speaker 1: spend on the Inflation Reduction Act, they continue to have

1497
01:23:13,320 --> 01:23:17,480
Speaker 1: money to spend on chips. They keep rewarding big contracts.

1498
01:23:18,080 --> 01:23:21,560
Speaker 1: These big contracts are going to continue to put demands

1499
01:23:21,600 --> 01:23:24,759
Speaker 1: into the labor market. So I'm not sure we're slowing

1500
01:23:24,840 --> 01:23:29,599
Speaker 1: the labor market down anytime soon. What we're probably slowing

1501
01:23:29,680 --> 01:23:33,400
Speaker 1: down is a housing market. So if we slow down

1502
01:23:33,479 --> 01:23:36,800
Speaker 1: housing market because it becomes expensive to borrow money, are

1503
01:23:36,880 --> 01:23:41,000
Speaker 1: we just keeping housing inflation high. I don't really know.

1504
01:23:41,200 --> 01:23:44,320
Speaker 1: But we're at a different time in our history where

1505
01:23:44,920 --> 01:23:48,599
Speaker 1: the real impacts, even if they're lagged, I'm not sure

1506
01:23:48,720 --> 01:23:50,920
Speaker 1: they're as meaningful as they once were.

1507
01:23:51,640 --> 01:23:55,160
Speaker 2: And to put a little flesh on the environment that

1508
01:23:55,400 --> 01:23:59,120
Speaker 2: the Chips Act, the Inflation Act, and the Infrastructure Act

1509
01:23:59,160 --> 01:24:02,679
Speaker 2: came into the first CARES Act two point two trillion,

1510
01:24:03,120 --> 01:24:06,479
Speaker 2: the Second Cares Act eight hundred or nine hundred billion,

1511
01:24:06,560 --> 01:24:09,600
Speaker 2: the third CARES Act, this one under Biden another eight

1512
01:24:09,720 --> 01:24:13,080
Speaker 2: or nine hundred billion, so that pig is barely through

1513
01:24:13,120 --> 01:24:17,759
Speaker 2: the python before all of these ten year programs really

1514
01:24:17,960 --> 01:24:20,120
Speaker 2: hit the ground. So there's going to be an ongoing

1515
01:24:20,200 --> 01:24:23,519
Speaker 2: fiscal stimulus even as the monetary stimulus comes off. Yeah.

1516
01:24:23,720 --> 01:24:25,720
Speaker 1: Look, the most obvious way to look at this is

1517
01:24:26,040 --> 01:24:27,800
Speaker 1: we're coming up on the end of the fiscal year.

1518
01:24:28,320 --> 01:24:31,080
Speaker 1: We're going to have a two trillion dollar deficit for

1519
01:24:31,160 --> 01:24:34,680
Speaker 1: the year, you know, And it wasn't that receipts were

1520
01:24:34,720 --> 01:24:36,679
Speaker 1: that much lower this year. Now they were a little

1521
01:24:36,680 --> 01:24:39,960
Speaker 1: bit lower. Stock market performed poorly last year, so you

1522
01:24:40,000 --> 01:24:44,200
Speaker 1: didn't see the capital gains. But the government just continues

1523
01:24:44,240 --> 01:24:46,519
Speaker 1: to spend. It continues to spend on all these programs.

1524
01:24:46,680 --> 01:24:51,000
Speaker 1: The government's continuing to spend, and the government's continuing to

1525
01:24:51,240 --> 01:24:56,040
Speaker 1: spend on things that need human capital. It doesn't matter

1526
01:24:56,360 --> 01:25:00,760
Speaker 1: in many respects how tight monetary policy becomes. We're going

1527
01:25:00,840 --> 01:25:02,680
Speaker 1: to continue to hire people. We're just gonna continue to

1528
01:25:02,680 --> 01:25:06,000
Speaker 1: pay more to get the people. And so I would

1529
01:25:06,120 --> 01:25:07,960
Speaker 1: like the federal reserve to stop. I would like the

1530
01:25:08,040 --> 01:25:11,120
Speaker 1: Federal Reserve to take a deep breath. You know. Right

1531
01:25:11,240 --> 01:25:15,719
Speaker 1: now in the tightening cycle, we've almost seen more damage

1532
01:25:15,720 --> 01:25:18,120
Speaker 1: in the regional banks than we have seen help for

1533
01:25:18,200 --> 01:25:19,080
Speaker 1: the US economy.

1534
01:25:20,640 --> 01:25:23,800
Speaker 2: To say the very least, we saw a huge disruption,

1535
01:25:24,000 --> 01:25:27,000
Speaker 2: whether it was Silver Lake or Silicon Valley Bank, or

1536
01:25:27,120 --> 01:25:30,320
Speaker 2: going down the list of regional banks that got disrupted,

1537
01:25:30,840 --> 01:25:33,479
Speaker 2: to say nothing of the healthy banks that people got

1538
01:25:33,600 --> 01:25:35,880
Speaker 2: nervous and moved to big money centers.

1539
01:25:36,479 --> 01:25:38,360
Speaker 1: And not only that, because of what happened in the

1540
01:25:38,400 --> 01:25:41,360
Speaker 1: regional banks, we now have a federal reserve that thinks

1541
01:25:41,400 --> 01:25:44,400
Speaker 1: that banks need more capital. So we're gonna put more

1542
01:25:44,479 --> 01:25:48,839
Speaker 1: capital into the biggest banks. The g cifies and the cities.

1543
01:25:49,600 --> 01:25:52,920
Speaker 1: They don't need more capital. But the knee jerk reaction

1544
01:25:53,080 --> 01:25:55,799
Speaker 1: to anything negative that ever happens in the banking sectors,

1545
01:25:55,840 --> 01:25:59,320
Speaker 1: Oh we need more capital. But by the way, capital

1546
01:25:59,439 --> 01:26:02,439
Speaker 1: doesn't prevent a bank run. You can have all the

1547
01:26:02,520 --> 01:26:05,720
Speaker 1: capital in the world, you can have it all. If

1548
01:26:05,760 --> 01:26:09,400
Speaker 1: there's a bank run. Capital doesn't provide your depositors liquidity.

1549
01:26:09,920 --> 01:26:12,080
Speaker 2: Does it do anything to raise rates on the one

1550
01:26:12,160 --> 01:26:15,519
Speaker 2: hand and then flood the system with capital on the

1551
01:26:15,640 --> 01:26:20,400
Speaker 2: other Are aren't these sort of competing monetary functions?

1552
01:26:20,840 --> 01:26:24,040
Speaker 1: Well, it competes because as banks have to raise more capital,

1553
01:26:24,720 --> 01:26:27,160
Speaker 1: it just means they're gonna lend out less money. They're

1554
01:26:27,160 --> 01:26:30,040
Speaker 1: gonna take the balance sheet they have right now, and

1555
01:26:30,120 --> 01:26:34,080
Speaker 1: they're gonna hold more capital and they're gonna lend out less.

1556
01:26:34,880 --> 01:26:38,800
Speaker 1: So they're not gonna go raise additional capital per se.

1557
01:26:39,200 --> 01:26:42,120
Speaker 1: They're gonna take the money that they have on their

1558
01:26:42,120 --> 01:26:44,559
Speaker 1: accounts and they're gonna say, Okay, this is now capital

1559
01:26:44,640 --> 01:26:47,000
Speaker 1: sitting in my capitol account. I'm no longer going to

1560
01:26:47,160 --> 01:26:50,880
Speaker 1: use it as as a way to fund growth to

1561
01:26:51,080 --> 01:26:52,320
Speaker 1: my to my clients where they do.

1562
01:26:52,439 --> 01:26:55,760
Speaker 2: So that will slow that'll slow the economy. Even so,

1563
01:26:55,840 --> 01:26:59,200
Speaker 2: if you are gonna have lunch with Jerome Powell, what

1564
01:26:59,280 --> 01:26:59,920
Speaker 2: would you say.

1565
01:26:59,800 --> 01:27:03,160
Speaker 1: To I would say, I think you've done enough. I

1566
01:27:03,320 --> 01:27:08,360
Speaker 1: think we've got a set of unique circumstances that your

1567
01:27:08,680 --> 01:27:13,280
Speaker 1: historical economists and your historical textbooks don't really account for.

1568
01:27:14,120 --> 01:27:16,920
Speaker 1: I think you need to let this work through the system.

1569
01:27:17,439 --> 01:27:22,799
Speaker 1: The federal government has already more or less appropriated these funds.

1570
01:27:23,000 --> 01:27:24,800
Speaker 1: They need to go out and spend them. They're going

1571
01:27:24,880 --> 01:27:27,440
Speaker 1: to go out and spend them. They're going to continue

1572
01:27:27,560 --> 01:27:32,080
Speaker 1: to keep demanding labor, whether it's labored to be bridges

1573
01:27:32,160 --> 01:27:36,800
Speaker 1: and tunnels or power grids or charging stations. There's so

1574
01:27:36,880 --> 01:27:40,360
Speaker 1: many things where we're gonna need labor to build that.

1575
01:27:40,640 --> 01:27:43,560
Speaker 1: No matter how high you take interest rates, it's not

1576
01:27:43,720 --> 01:27:47,720
Speaker 1: going to stop that infrastructure build. It's just going to

1577
01:27:47,760 --> 01:27:52,280
Speaker 1: make it more expensive. Let the system normalize and see

1578
01:27:52,320 --> 01:27:54,920
Speaker 1: where we end up. Now, your higher rates are going

1579
01:27:54,960 --> 01:27:57,440
Speaker 1: to have some effect. They're going to have some unintended consequences.

1580
01:27:57,479 --> 01:28:01,080
Speaker 1: We've seen them already. I would say, look, it's time

1581
01:28:01,120 --> 01:28:03,599
Speaker 1: to take a deep breath. You know, inflation is going

1582
01:28:03,720 --> 01:28:07,400
Speaker 1: to be where it is. When inflation was zero and

1583
01:28:07,640 --> 01:28:10,679
Speaker 1: you went to zero interest rates and you went to QE,

1584
01:28:11,240 --> 01:28:13,360
Speaker 1: you couldn't affect it there either't.

1585
01:28:13,400 --> 01:28:15,520
Speaker 2: So this idea target, this idea.

1586
01:28:15,320 --> 01:28:18,080
Speaker 1: That you're gonna zero it in on your two percent target,

1587
01:28:19,000 --> 01:28:20,960
Speaker 1: I just don't think you can do it. I think

1588
01:28:20,960 --> 01:28:24,360
Speaker 1: you're gonna have to take much longer looks and you're

1589
01:28:24,360 --> 01:28:27,880
Speaker 1: gonna have to look at wider windows of evaluation. So

1590
01:28:28,640 --> 01:28:30,559
Speaker 1: and Jerome pal said this, like I give him credit.

1591
01:28:30,560 --> 01:28:33,240
Speaker 1: He said, we're gonna try and get two percent through

1592
01:28:33,320 --> 01:28:35,880
Speaker 1: the cycle. Well, maybe the cycle has to be a

1593
01:28:36,040 --> 01:28:39,400
Speaker 1: much longer cycle. So if we're if we're six percent

1594
01:28:39,560 --> 01:28:42,240
Speaker 1: for a while and we're zero percent for a while,

1595
01:28:42,720 --> 01:28:44,040
Speaker 1: you know, maybe we're averaging three.

1596
01:28:45,160 --> 01:28:48,439
Speaker 2: Hum. Really interesting. You mentioned something that really struck a

1597
01:28:48,560 --> 01:28:51,960
Speaker 2: chord with me, and I have to ask about it. Uh.

1598
01:28:52,200 --> 01:28:57,120
Speaker 2: The cost of financing everything now, whether it's corporate projects

1599
01:28:57,600 --> 01:29:01,679
Speaker 2: or the federal debt is much higher. Did we miss

1600
01:29:01,920 --> 01:29:05,519
Speaker 2: a once in a lifetime opportunity to refinance federal debt

1601
01:29:06,040 --> 01:29:09,479
Speaker 2: with long term bonds in the mid twenty tens? I mean,

1602
01:29:09,520 --> 01:29:12,160
Speaker 2: when rates were nothing, there was a lot of appetite

1603
01:29:12,240 --> 01:29:16,240
Speaker 2: for thirty or even fifty year treasuries. How and I

1604
01:29:16,439 --> 01:29:19,479
Speaker 2: was told at the time that'll just encourage more spending.

1605
01:29:19,680 --> 01:29:22,599
Speaker 2: But was the trader in you was that a great

1606
01:29:22,680 --> 01:29:24,080
Speaker 2: opportunity or what?

1607
01:29:24,400 --> 01:29:26,960
Speaker 1: In the first conversation I already had with then president

1608
01:29:27,120 --> 01:29:31,560
Speaker 1: like Trump, when I was going through my views of

1609
01:29:31,640 --> 01:29:34,360
Speaker 1: the economy, I said, look, my number one concern would

1610
01:29:34,360 --> 01:29:38,200
Speaker 1: be the dollar and the debt. And if I were you,

1611
01:29:38,479 --> 01:29:40,400
Speaker 1: I would go out and replace all of our debt

1612
01:29:40,439 --> 01:29:43,040
Speaker 1: with fifteen hundred yeard debt, fifteen hundred fifty and one

1613
01:29:43,080 --> 01:29:45,519
Speaker 1: hundred years fifty fifty one hundred year debt.

1614
01:29:45,720 --> 01:29:47,360
Speaker 2: Uh huh. And what was the response to that?

1615
01:29:47,560 --> 01:29:50,880
Speaker 1: He said, that's a great idea. Can we do that? Why?

1616
01:29:51,280 --> 01:29:53,840
Speaker 1: I said, sure, I said, treasure can. I said, treasure

1617
01:29:53,840 --> 01:29:55,880
Speaker 1: can issue whatever they want to issue. I said, I

1618
01:29:56,360 --> 01:29:59,559
Speaker 1: would extend maturities on forever. I said the same thing

1619
01:29:59,560 --> 01:30:01,200
Speaker 1: I would tell a corporate client if they could do it,

1620
01:30:01,280 --> 01:30:03,519
Speaker 1: go go, go issue fifteen hundred your debt now.

1621
01:30:03,720 --> 01:30:06,960
Speaker 2: And by the way, most of the American corporations did

1622
01:30:07,040 --> 01:30:08,960
Speaker 2: exactly that. Well, they went as long as they could

1623
01:30:09,120 --> 01:30:10,040
Speaker 2: extend maturities.

1624
01:30:10,120 --> 01:30:12,000
Speaker 1: When you're in when you're in a very low interest

1625
01:30:12,080 --> 01:30:13,760
Speaker 1: rate cycle and you know you're going to need it.

1626
01:30:14,040 --> 01:30:16,360
Speaker 2: Why did that not get off the ground. It's such

1627
01:30:16,400 --> 01:30:18,400
Speaker 2: a brilliant thing to do.

1628
01:30:20,000 --> 01:30:22,800
Speaker 1: And today we're thirty three trillion dollars of debt as

1629
01:30:22,840 --> 01:30:23,880
Speaker 1: of I think Monday.

1630
01:30:24,479 --> 01:30:26,479
Speaker 2: So so why did that go nowhere?

1631
01:30:28,200 --> 01:30:28,560
Speaker 1: I don't know.

1632
01:30:28,960 --> 01:30:30,200
Speaker 2: All right, that's that's unfair.

1633
01:30:30,360 --> 01:30:32,240
Speaker 1: You just you push these things as far as you

1634
01:30:32,280 --> 01:30:35,080
Speaker 1: can push them, and you just go.

1635
01:30:35,640 --> 01:30:38,320
Speaker 2: I mean, to me, as a trader, it's the obvious

1636
01:30:38,400 --> 01:30:41,960
Speaker 2: thing to do, But Washington doesn't necessarily think like traders.

1637
01:30:42,080 --> 01:30:44,800
Speaker 1: Look, I'm not blaming anyone for this, Like these things

1638
01:30:44,920 --> 01:30:46,439
Speaker 1: just happened. But at the end of the day, the

1639
01:30:46,520 --> 01:30:49,680
Speaker 1: White House doesn't borrow the money, right, it's delegated out

1640
01:30:49,800 --> 01:30:54,599
Speaker 1: to Treasury and Congress Treasury Borrowing Committee. You had lots

1641
01:30:54,640 --> 01:30:58,280
Speaker 1: of people smarter than me putting an inputs on how

1642
01:30:58,320 --> 01:31:00,560
Speaker 1: to do it, and you know, they they decide what

1643
01:31:00,720 --> 01:31:04,080
Speaker 1: maturities to go to and they tend to do what

1644
01:31:04,160 --> 01:31:05,960
Speaker 1: they've been doing for the last two hundred years.

1645
01:31:06,439 --> 01:31:08,800
Speaker 2: All right, So let's talk a little bit about technology.

1646
01:31:09,920 --> 01:31:16,040
Speaker 2: You've become a fairly big investor across things like cybersecurity, blockchain,

1647
01:31:16,240 --> 01:31:20,120
Speaker 2: infrastructure AI. Tell us what you're seeing in the world

1648
01:31:20,240 --> 01:31:23,639
Speaker 2: of technology and what it's going to mean to both

1649
01:31:23,720 --> 01:31:26,000
Speaker 2: the government and big companies like Goldman.

1650
01:31:26,840 --> 01:31:33,160
Speaker 1: Look, I think we're on another technological wave. And with

1651
01:31:33,320 --> 01:31:36,479
Speaker 1: every technological wave, there's really good parts of it and

1652
01:31:36,520 --> 01:31:39,040
Speaker 1: there's bad parts of it. So when I look at

1653
01:31:39,080 --> 01:31:43,880
Speaker 1: the whole AI wave that we're going through, which has

1654
01:31:44,240 --> 01:31:47,320
Speaker 1: been going on for a lot longer than people understand,

1655
01:31:47,880 --> 01:31:51,320
Speaker 1: I think it's just become in forefront of people's minds

1656
01:31:51,320 --> 01:31:54,040
Speaker 1: since we've seen retail products this year. So we've seen

1657
01:31:54,160 --> 01:31:56,840
Speaker 1: the chat gbts and we've seen the bar and everyone

1658
01:31:56,960 --> 01:32:00,479
Speaker 1: understands what AI is on the retail basis. On the

1659
01:32:00,960 --> 01:32:04,320
Speaker 1: enterprise basis, there's been there's been AI products for a

1660
01:32:04,479 --> 01:32:09,720
Speaker 1: longer period of time. But with those products, you see

1661
01:32:09,760 --> 01:32:14,080
Speaker 1: the vulnerabilities. You have to understand the cybersecurity and and

1662
01:32:14,280 --> 01:32:18,120
Speaker 1: how vulnerable we are. You know, you've seen what happened

1663
01:32:18,120 --> 01:32:22,360
Speaker 1: to some casinos recently. You see all the vulnerabilities we have.

1664
01:32:23,160 --> 01:32:26,640
Speaker 1: So as we continue to grow out our infrastructure, we

1665
01:32:26,720 --> 01:32:29,479
Speaker 1: continue to grow out data centers, and we continue to

1666
01:32:29,600 --> 01:32:32,919
Speaker 1: grow out you know, access to data, access to computing.

1667
01:32:33,520 --> 01:32:37,320
Speaker 1: I think we equally have to build out you know, protection,

1668
01:32:37,800 --> 01:32:41,760
Speaker 1: cybersecurity make our infrastructure harder and harder. You know, the

1669
01:32:41,840 --> 01:32:43,800
Speaker 1: White House saw this earlier in the year they put

1670
01:32:43,800 --> 01:32:49,439
Speaker 1: out zero Trust Zone executive orders. So there's things that

1671
01:32:49,640 --> 01:32:51,920
Speaker 1: we need to do in this country. We need to

1672
01:32:52,080 --> 01:32:55,240
Speaker 1: harden our borders, we need to harden our edges, We

1673
01:32:55,320 --> 01:32:56,880
Speaker 1: need to harden our technology.

1674
01:32:56,920 --> 01:32:58,360
Speaker 2: Electrical grid is very vola.

1675
01:32:59,200 --> 01:33:02,599
Speaker 1: Everything is vulner what we look. We've seen pipelines, We've

1676
01:33:02,680 --> 01:33:06,280
Speaker 1: seen lots of cyber attacks on lots of infrastructure that

1677
01:33:06,479 --> 01:33:10,439
Speaker 1: none of us think is really infrastructure, whether it's hotel keys,

1678
01:33:11,080 --> 01:33:14,320
Speaker 1: or whether it's pipelines, whether it's slot machines. You know,

1679
01:33:14,520 --> 01:33:17,120
Speaker 1: we can go through all the different cyber attacks. Those

1680
01:33:17,160 --> 01:33:19,240
Speaker 1: are ones we know about. There's plenty more going on.

1681
01:33:19,479 --> 01:33:23,800
Speaker 1: That we don't know about. So I think we're underinvested

1682
01:33:23,880 --> 01:33:27,519
Speaker 1: as a country on cyber I think we're underinvested in

1683
01:33:27,640 --> 01:33:32,120
Speaker 1: protecting ourselves. I think AI is a whole nother leg

1684
01:33:32,880 --> 01:33:37,280
Speaker 1: of huge opportunity, but another leg of huge vulnerabilities. As

1685
01:33:37,320 --> 01:33:40,240
Speaker 1: we put more and more data, you know, the system,

1686
01:33:40,400 --> 01:33:42,680
Speaker 1: we create more and more data, we've got more and

1687
01:33:42,760 --> 01:33:45,720
Speaker 1: more vulnerabilities, and we have to understand how AI can

1688
01:33:45,800 --> 01:33:47,680
Speaker 1: help us, how it can be useful to us. I

1689
01:33:47,720 --> 01:33:50,640
Speaker 1: think that's really important to us and the blockchain. To me,

1690
01:33:51,240 --> 01:33:56,080
Speaker 1: it's the future of settlement, it's the future of doing business.

1691
01:33:56,479 --> 01:34:00,760
Speaker 1: You know, we still have many many arcane processes. Now

1692
01:34:00,800 --> 01:34:05,080
Speaker 1: we've quase modernized them. If you think of something as

1693
01:34:05,120 --> 01:34:08,080
Speaker 1: simple as stock settlement, you know, we've gone from you know,

1694
01:34:08,200 --> 01:34:13,839
Speaker 1: moving physical certificates to now digitally trans transacting and settling.

1695
01:34:14,400 --> 01:34:17,839
Speaker 1: But why are we having T plus two or settlement?

1696
01:34:17,920 --> 01:34:20,679
Speaker 1: Why aren't we Why are we Like we have commodity

1697
01:34:20,760 --> 01:34:24,680
Speaker 1: markets that that they cleared real time. We need to

1698
01:34:24,920 --> 01:34:28,760
Speaker 1: modernize all of this infrastructure so we can get all

1699
01:34:28,840 --> 01:34:31,360
Speaker 1: of the vulnerabilities and all of the risks out of

1700
01:34:31,400 --> 01:34:33,800
Speaker 1: the system. We have the technology, we just have to

1701
01:34:33,880 --> 01:34:36,920
Speaker 1: adapt this technology but when you adapt the technology, you

1702
01:34:37,040 --> 01:34:39,240
Speaker 1: have to put the profile eactics around it and make

1703
01:34:39,280 --> 01:34:40,000
Speaker 1: sure it's secure.

1704
01:34:40,280 --> 01:34:42,960
Speaker 2: You know, we talk about blockchain and so many people

1705
01:34:43,439 --> 01:34:45,760
Speaker 2: I hear saying, what what are we going to do

1706
01:34:45,880 --> 01:34:48,560
Speaker 2: with it? What purpose does it serve? Go back to

1707
01:34:48,640 --> 01:34:52,000
Speaker 2: the financial crisis. If we had those mortgages on something

1708
01:34:52,120 --> 01:34:56,320
Speaker 2: like a blockchain, who owned what house? All all that confusion,

1709
01:34:57,160 --> 01:35:00,519
Speaker 2: it all tracks and settles automatically, and there's a permanent

1710
01:35:00,640 --> 01:35:02,000
Speaker 2: public register of that.

1711
01:35:02,240 --> 01:35:05,960
Speaker 1: Well even simpler, if you had the mortgages on a blockchain,

1712
01:35:06,040 --> 01:35:09,280
Speaker 1: you had house titles on a blockchain, we could transact

1713
01:35:09,320 --> 01:35:13,560
Speaker 1: houses daily. You know the idea that you buy a

1714
01:35:13,680 --> 01:35:17,280
Speaker 1: house on Monday and you do a title search, and

1715
01:35:17,360 --> 01:35:19,479
Speaker 1: then you go get a mortgage, and then you sell

1716
01:35:19,520 --> 01:35:21,880
Speaker 1: it to me on Tuesday, and I have to do

1717
01:35:21,960 --> 01:35:23,880
Speaker 1: it and I can't close for thirty days because I

1718
01:35:23,920 --> 01:35:25,960
Speaker 1: have to go do another title search and I have

1719
01:35:26,080 --> 01:35:28,760
Speaker 1: to do all the same work. If it was done once,

1720
01:35:29,080 --> 01:35:31,600
Speaker 1: put it in the blockchain and we transfer it with

1721
01:35:31,800 --> 01:35:36,040
Speaker 1: all the all the documentation, these things become the fungibility

1722
01:35:36,080 --> 01:35:39,479
Speaker 1: of them becomes much greater. It's a win for everyone.

1723
01:35:40,080 --> 01:35:43,400
Speaker 1: You have much better collaterally, you've got much better ability

1724
01:35:43,479 --> 01:35:47,040
Speaker 1: to securitize, you've got much better ability to close and transact.

1725
01:35:47,560 --> 01:35:50,120
Speaker 1: You know, we are going to get there. You know,

1726
01:35:50,360 --> 01:35:54,040
Speaker 1: there's lots of natural antibodies to get there. There's lots

1727
01:35:54,080 --> 01:35:59,600
Speaker 1: of natural businesses that gets disintermediated. But we've been disintermediating

1728
01:35:59,600 --> 01:36:02,599
Speaker 1: business is for the last two hundred years, and every

1729
01:36:02,720 --> 01:36:05,599
Speaker 1: time we do it, we become a stronger and bigger,

1730
01:36:05,720 --> 01:36:07,479
Speaker 1: most importantly, a bigger economy.

1731
01:36:07,720 --> 01:36:10,760
Speaker 2: So let's talk about AI a minute. And I use

1732
01:36:11,560 --> 01:36:16,320
Speaker 2: a really fascinating app called Perplexity, And I know you're

1733
01:36:16,320 --> 01:36:22,400
Speaker 2: an investor in various AI companies, so I ask Perplexity,

1734
01:36:22,680 --> 01:36:26,439
Speaker 2: tell me about Gary Cones's history at Golmen Sachs. And

1735
01:36:26,520 --> 01:36:29,000
Speaker 2: then I did the same thing, tell me about Gary

1736
01:36:29,080 --> 01:36:31,479
Speaker 2: cones history at the White House, and I sent it

1737
01:36:31,560 --> 01:36:35,519
Speaker 2: to your assistant and the Goldman stuff perfect, The White

1738
01:36:35,560 --> 01:36:40,040
Speaker 2: House stuff just a run of correction crossthroughs. And it

1739
01:36:40,240 --> 01:36:44,200
Speaker 2: kind of is fascinating. And by the way, this aspect

1740
01:36:44,439 --> 01:36:47,840
Speaker 2: of AI two months ago couldn't have done any of this.

1741
01:36:48,240 --> 01:36:51,120
Speaker 2: It's amazing how it just gets better and better and

1742
01:36:51,200 --> 01:36:54,720
Speaker 2: better over time. What do you see AI doing? Is

1743
01:36:54,760 --> 01:36:57,880
Speaker 2: this going to disintermediate a lot of people. The fear

1744
01:36:57,960 --> 01:37:00,720
Speaker 2: is people can be thrown out of or is this

1745
01:37:00,880 --> 01:37:04,200
Speaker 2: something that's gonna, like the internet, create a whole bunch

1746
01:37:04,240 --> 01:37:04,880
Speaker 2: of new jobs.

1747
01:37:05,320 --> 01:37:08,880
Speaker 1: I think it's the latter. So we've lived through these

1748
01:37:08,960 --> 01:37:14,120
Speaker 1: seismic revolutions, right from the cotton gin to the combustion

1749
01:37:14,320 --> 01:37:18,519
Speaker 1: engine to the personal computer. When we lived through each

1750
01:37:18,600 --> 01:37:21,880
Speaker 1: of these, we've always worried about the jobs we're going

1751
01:37:21,960 --> 01:37:25,439
Speaker 1: to lose, Like, oh my god, the person that prints

1752
01:37:25,520 --> 01:37:28,160
Speaker 1: the memo and delivers the memo to everyone in the

1753
01:37:28,320 --> 01:37:33,519
Speaker 1: office when we have email, what's that person going to do? Well?

1754
01:37:33,640 --> 01:37:37,200
Speaker 1: All those companies put that person to work doing something

1755
01:37:37,800 --> 01:37:41,479
Speaker 1: much more productive and much more profitable and actually much

1756
01:37:41,560 --> 01:37:45,240
Speaker 1: more fulfilling for the individual. So as I look at

1757
01:37:45,400 --> 01:37:49,640
Speaker 1: each of these seismic evolutions and companies, every company I

1758
01:37:49,760 --> 01:37:53,000
Speaker 1: know has gotten bigger and dramatically bigger. Whether it's the

1759
01:37:53,080 --> 01:37:56,559
Speaker 1: personal computer, the cell phone, the internet. You look at these,

1760
01:37:57,040 --> 01:38:01,000
Speaker 1: every company has gotten dramatically bigger. Like, AIS displace some people,

1761
01:38:01,400 --> 01:38:03,160
Speaker 1: but I think you're going to take those people that

1762
01:38:03,280 --> 01:38:08,280
Speaker 1: are probably the least satisfying jobs and be able to

1763
01:38:08,479 --> 01:38:12,840
Speaker 1: retrain them into much more satisfying, much more fulfilling jobs.

1764
01:38:12,960 --> 01:38:17,080
Speaker 1: And allow these companies to become much bigger and more

1765
01:38:17,120 --> 01:38:21,840
Speaker 1: efficient and cover clients more effectively, and they will grow

1766
01:38:21,920 --> 01:38:24,360
Speaker 1: into those jobs. Just like the person that used to

1767
01:38:24,439 --> 01:38:27,519
Speaker 1: print the memo and deliver the memo to everyone's mailbox

1768
01:38:27,640 --> 01:38:29,320
Speaker 1: in the office. Remember when we used to have little

1769
01:38:29,320 --> 01:38:31,200
Speaker 1: cubbies in the office. I'm old enough to remember that,

1770
01:38:31,520 --> 01:38:33,559
Speaker 1: pick up your mail in the morning. Like no one

1771
01:38:33,640 --> 01:38:36,960
Speaker 1: has a mailbox in an office anymore. That person is

1772
01:38:37,320 --> 01:38:40,640
Speaker 1: now doing something much more productive and the AI is

1773
01:38:40,680 --> 01:38:43,080
Speaker 1: going to help that. And on the flip side, think

1774
01:38:43,160 --> 01:38:46,840
Speaker 1: of the productivity gains or think of the things we're

1775
01:38:46,880 --> 01:38:50,040
Speaker 1: going to be able to change in the regulatory environment

1776
01:38:50,160 --> 01:38:53,120
Speaker 1: where you're gonna be able to really monitor things that

1777
01:38:53,240 --> 01:38:55,960
Speaker 1: you've never been able to monitor. The regulatory environment's always

1778
01:38:56,000 --> 01:39:00,600
Speaker 1: been after the fact? Can AI now monitor human behavior

1779
01:39:00,760 --> 01:39:02,400
Speaker 1: real time? Now?

1780
01:39:02,439 --> 01:39:08,280
Speaker 2: When you say regulatory from our perspective in this business securities, trading, crypto,

1781
01:39:08,800 --> 01:39:11,840
Speaker 2: what what is potential in the space?

1782
01:39:12,160 --> 01:39:15,280
Speaker 1: So look at human behavior? You know, human behavior to

1783
01:39:15,360 --> 01:39:18,479
Speaker 1: me is regulatory behavior. You know in a bank, are

1784
01:39:18,560 --> 01:39:22,280
Speaker 1: you are your employees doing the right thing? You know?

1785
01:39:22,479 --> 01:39:27,679
Speaker 1: Can can you create AI? An AI overface and over

1786
01:39:28,280 --> 01:39:31,240
Speaker 1: something that sits on top of your organization that makes

1787
01:39:31,320 --> 01:39:34,080
Speaker 1: sure your employees are doing the right things or are

1788
01:39:34,120 --> 01:39:36,960
Speaker 1: they doing something wrong. Like it's not going to be

1789
01:39:37,080 --> 01:39:39,920
Speaker 1: full proof, but it's going to help you manage your

1790
01:39:40,160 --> 01:39:45,360
Speaker 1: organization in a way that makes management teams smarter and say, hey,

1791
01:39:45,960 --> 01:39:48,120
Speaker 1: look here, there might be something bad going on.

1792
01:39:48,400 --> 01:39:51,560
Speaker 2: No more bearings bank sort of hidden lawsuit.

1793
01:39:51,880 --> 01:39:54,840
Speaker 1: Exactly, you know. So it's it's the old adage. And

1794
01:39:55,240 --> 01:39:57,400
Speaker 1: I was pretty good at this, but I wasn't full proof.

1795
01:39:57,760 --> 01:40:00,400
Speaker 1: Like every day at five o'clock I got an email.

1796
01:40:00,560 --> 01:40:02,479
Speaker 1: I was supposed to get it by five o'clock from

1797
01:40:02,720 --> 01:40:07,720
Speaker 1: every risk based desk. And if I didn't get it

1798
01:40:07,800 --> 01:40:10,800
Speaker 1: by five o'clock, you know, I didn't think about it.

1799
01:40:10,880 --> 01:40:14,120
Speaker 1: By five fifteen, something's wrong. By five point thirty there

1800
01:40:14,240 --> 01:40:17,679
Speaker 1: was a problem, like because I didn't get it because

1801
01:40:17,720 --> 01:40:19,960
Speaker 1: something really good happened. Because if something really good happened,

1802
01:40:19,960 --> 01:40:22,639
Speaker 1: they'd called me already. So I didn't get it because

1803
01:40:22,640 --> 01:40:26,960
Speaker 1: something bad had happened. So I'd stay with almost one

1804
01:40:27,040 --> 01:40:29,880
Speaker 1: hundred percent accuracy unless literally it was oh I forgot

1805
01:40:29,960 --> 01:40:32,960
Speaker 1: to hit send. If I would call that desk and say, hey,

1806
01:40:33,000 --> 01:40:36,000
Speaker 1: I didn't get your end of day email, it's like, oh,

1807
01:40:37,120 --> 01:40:41,240
Speaker 1: I need to tell you something, but I would remember

1808
01:40:41,320 --> 01:40:43,080
Speaker 1: to do that. Now, there are certain days I probably

1809
01:40:43,120 --> 01:40:46,760
Speaker 1: forget if I had an AI machine that said, hey,

1810
01:40:47,240 --> 01:40:49,519
Speaker 1: you didn't get all your end of day emails or

1811
01:40:49,560 --> 01:40:51,800
Speaker 1: you didn't get an end of day email from this desk.

1812
01:40:53,520 --> 01:40:56,000
Speaker 2: And an alert it's an alert, and you can even

1813
01:40:56,040 --> 01:40:58,360
Speaker 2: have it reach out and tag the person. Hey, give

1814
01:40:58,439 --> 01:41:01,200
Speaker 2: Gary a call, right, and there's your you know exactly

1815
01:41:01,280 --> 01:41:02,639
Speaker 2: who's on the game.

1816
01:41:02,720 --> 01:41:05,680
Speaker 1: All I'm doing is monitoring human behavior, you know. And look,

1817
01:41:05,720 --> 01:41:07,560
Speaker 1: I'm investing in a company that monitors is going to

1818
01:41:07,640 --> 01:41:10,360
Speaker 1: monitor human behavior and tell you employees are acting, you know,

1819
01:41:10,400 --> 01:41:12,840
Speaker 1: they're doing stuff they're supposed to do, they're doing stuff

1820
01:41:12,840 --> 01:41:14,280
Speaker 1: they're not supposed to do. And by the way, it

1821
01:41:14,400 --> 01:41:17,200
Speaker 1: may be fine, or they're doing something today that they've

1822
01:41:17,240 --> 01:41:19,200
Speaker 1: always done, or they're doing something that they've never done.

1823
01:41:19,960 --> 01:41:21,400
Speaker 2: And it's just going to alert you to things that

1824
01:41:21,439 --> 01:41:22,439
Speaker 2: you're not going to see on your.

1825
01:41:22,520 --> 01:41:24,840
Speaker 1: Like it's a look over here. It may not be

1826
01:41:24,920 --> 01:41:26,960
Speaker 1: a problem. It's like, hey, this is different today.

1827
01:41:27,479 --> 01:41:30,400
Speaker 2: So let's talk a little bit about IBM. You were

1828
01:41:30,600 --> 01:41:33,519
Speaker 2: vice chairman there. I kind of think of IBM and

1829
01:41:33,960 --> 01:41:39,519
Speaker 2: AI with them playing Jeopardy and participating there. What's the

1830
01:41:39,600 --> 01:41:41,599
Speaker 2: future of AI at IBM?

1831
01:41:41,720 --> 01:41:44,479
Speaker 1: Now, well, I'm glad you asked the question that way.

1832
01:41:45,320 --> 01:41:48,439
Speaker 1: So IBM has been involved in AI for fifty years.

1833
01:41:48,680 --> 01:41:49,360
Speaker 2: That's amazing.

1834
01:41:49,640 --> 01:41:51,720
Speaker 1: Yeah, and you sort of said it, you know, in

1835
01:41:51,800 --> 01:41:56,599
Speaker 1: twenty eleven Watson won a Jeopardy twenty twelve Watson Big

1836
01:41:56,680 --> 01:42:00,800
Speaker 1: Cast Profit Chess. So IBM has been involved in the

1837
01:42:00,920 --> 01:42:06,120
Speaker 1: machine learning, the AI business now for decades. We've been

1838
01:42:06,360 --> 01:42:10,720
Speaker 1: serving our enterprise clients and building AI products for them

1839
01:42:11,080 --> 01:42:15,200
Speaker 1: for the last years. What's become really prevalent recently, and

1840
01:42:15,240 --> 01:42:18,080
Speaker 1: the reason we're all talking about AI today is there's

1841
01:42:18,200 --> 01:42:22,479
Speaker 1: finally retail products out. IBM does not have a retail product,

1842
01:42:22,560 --> 01:42:24,840
Speaker 1: and we're not going to have a retail product. It's

1843
01:42:24,960 --> 01:42:28,320
Speaker 1: not our business. Our business is to be the AI

1844
01:42:28,880 --> 01:42:33,719
Speaker 1: inside of companies that you may face on the retail side.

1845
01:42:34,400 --> 01:42:40,080
Speaker 1: So a good example is a CVS during COVID, IBM

1846
01:42:40,200 --> 01:42:45,080
Speaker 1: was operating the CVS call center for the millions of

1847
01:42:45,160 --> 01:42:47,720
Speaker 1: calls a day for COVID. How do I get my

1848
01:42:47,840 --> 01:42:51,280
Speaker 1: COVID vaccine? Where do I go? How do I schedule appointment?

1849
01:42:51,560 --> 01:42:58,040
Speaker 1: That was all IBMAI managing that, and so we are involved.

1850
01:42:58,240 --> 01:43:00,160
Speaker 1: We are doing a lot, but we're doing it on

1851
01:43:00,200 --> 01:43:04,519
Speaker 1: an enterprise solution basis. For our clients, We've got AI

1852
01:43:04,680 --> 01:43:07,799
Speaker 1: and software that allows people to manage their physical building,

1853
01:43:08,240 --> 01:43:11,800
Speaker 1: allows them to manage what their carbon footprint, allows them

1854
01:43:11,880 --> 01:43:16,240
Speaker 1: to manage, you know, how efficiently their buildings running. You

1855
01:43:16,280 --> 01:43:19,559
Speaker 1: know what what compressors should be running, what motors should

1856
01:43:19,560 --> 01:43:21,320
Speaker 1: be running, what light should be turned off? How do

1857
01:43:21,400 --> 01:43:23,240
Speaker 1: I turn them on? When do we replace them? There's

1858
01:43:23,240 --> 01:43:25,559
Speaker 1: an enormous amount of technology going on in the space,

1859
01:43:25,840 --> 01:43:29,240
Speaker 1: but it's done on an enterprise level. So IBM is

1860
01:43:29,280 --> 01:43:33,000
Speaker 1: a big AI player and we continue to build out

1861
01:43:33,400 --> 01:43:37,479
Speaker 1: more and more opportunities for our clients to use our

1862
01:43:38,000 --> 01:43:42,280
Speaker 1: enterprise AI. So it's a really interesting crossroads in the

1863
01:43:42,360 --> 01:43:42,840
Speaker 1: companies here.

1864
01:43:42,920 --> 01:43:46,440
Speaker 2: So let's tie that together with our prior discussion on cybercrime.

1865
01:43:46,960 --> 01:43:51,040
Speaker 2: Can we use AI to monitor systems and alert us

1866
01:43:51,160 --> 01:43:56,000
Speaker 2: when their intrusions or hacks or other cyber problem?

1867
01:43:56,479 --> 01:44:00,360
Speaker 1: Absolutely? Absolutely. So. You know, IBM has a a big

1868
01:44:00,439 --> 01:44:02,439
Speaker 1: presence at the US Open a couple weeks ago, and

1869
01:44:02,680 --> 01:44:05,360
Speaker 1: we did this big presentation on everything we were doing there,

1870
01:44:05,880 --> 01:44:08,559
Speaker 1: and we've got software and AI that was talking about

1871
01:44:08,640 --> 01:44:10,880
Speaker 1: all the cyber hacks going on in the US Open

1872
01:44:11,400 --> 01:44:14,320
Speaker 1: and how you prioritize the hacks like this is an

1873
01:44:14,320 --> 01:44:17,000
Speaker 1: irrelevant hack, this is an important hack. We're going to

1874
01:44:17,040 --> 01:44:20,280
Speaker 1: be able to use AI to monitor the bad and

1875
01:44:20,400 --> 01:44:23,320
Speaker 1: the good, and it's going to be equally effective to

1876
01:44:23,439 --> 01:44:25,559
Speaker 1: make sure we're using it both in monitoring what's going

1877
01:44:25,600 --> 01:44:27,479
Speaker 1: on and well in the world and where we need

1878
01:44:27,600 --> 01:44:29,960
Speaker 1: to watch things and where we need to prioritize. If

1879
01:44:30,000 --> 01:44:33,519
Speaker 1: you're getting hacked millions of times a day, you've got

1880
01:44:33,600 --> 01:44:35,720
Speaker 1: to figure out what are the important hacks like You

1881
01:44:35,800 --> 01:44:38,200
Speaker 1: can't get distracted by the ones that don't matter. You've

1882
01:44:38,240 --> 01:44:39,960
Speaker 1: got to spend your time on the hacks that are

1883
01:44:40,040 --> 01:44:43,320
Speaker 1: really relevant, and AI can be helpful in allowing you

1884
01:44:43,439 --> 01:44:43,800
Speaker 1: to do that.

1885
01:44:44,800 --> 01:44:48,280
Speaker 2: Let me throw you a curveball question. When I was

1886
01:44:48,320 --> 01:44:52,840
Speaker 2: a kid, I had before we were diagnosing everybody with ADHD,

1887
01:44:53,880 --> 01:44:57,560
Speaker 2: I had ADHD with just a little bit of dyslexia

1888
01:44:57,680 --> 01:45:01,439
Speaker 2: thrown in, and with me it was spelling and I

1889
01:45:01,920 --> 01:45:03,400
Speaker 2: you know, before I had a wedding ring on, I

1890
01:45:03,439 --> 01:45:05,920
Speaker 2: didn't know left from right. I could tell you a

1891
01:45:06,000 --> 01:45:10,160
Speaker 2: story about taking my driver's test, and every time the

1892
01:45:10,439 --> 01:45:12,400
Speaker 2: guy says make a left, make a right, I would

1893
01:45:12,840 --> 01:45:16,360
Speaker 2: flash my index and thumb because I could recognize the

1894
01:45:16,640 --> 01:45:19,120
Speaker 2: L and what the hell are you doing? I don't

1895
01:45:19,120 --> 01:45:22,280
Speaker 2: know left from right. You've been very public about having

1896
01:45:23,200 --> 01:45:27,040
Speaker 2: pretty severe dyslexia growing up and said it taught you.

1897
01:45:27,840 --> 01:45:30,720
Speaker 2: I'm gonna put quote you back to you. Hey, I

1898
01:45:30,880 --> 01:45:34,439
Speaker 2: learned about failure and thought of the world as that's

1899
01:45:34,560 --> 01:45:37,840
Speaker 2: the default and it's all upside from there. Tell us

1900
01:45:37,920 --> 01:45:42,519
Speaker 2: how your dyslexia affected you personally and your career.

1901
01:45:43,120 --> 01:45:46,160
Speaker 1: Well, you said it, so I characterized myself as one

1902
01:45:46,200 --> 01:45:48,880
Speaker 1: of the world's greatest failures. You know, I knew how

1903
01:45:48,880 --> 01:45:51,120
Speaker 1: to fail at everything at a young age. You know,

1904
01:45:51,360 --> 01:45:57,439
Speaker 1: school to me was impossible. I never thought I could

1905
01:45:57,479 --> 01:45:59,280
Speaker 1: get out of elementary school.

1906
01:45:59,720 --> 01:46:02,519
Speaker 2: There was a story about a meeting with your parents

1907
01:46:03,000 --> 01:46:05,600
Speaker 2: where they got some vocational advice. Would you would you

1908
01:46:05,720 --> 01:46:06,080
Speaker 2: share that?

1909
01:46:06,479 --> 01:46:09,400
Speaker 1: Well, I you know I was in the I wasn't

1910
01:46:09,400 --> 01:46:12,800
Speaker 1: supposed to hear it, but I remember very clearly one

1911
01:46:12,840 --> 01:46:16,439
Speaker 1: of the teachers pulling my mom aside and saying, no,

1912
01:46:16,560 --> 01:46:19,559
Speaker 1: my mom, look, you'll be lucky if your son grows

1913
01:46:19,640 --> 01:46:20,559
Speaker 1: up and you can drive a truck.

1914
01:46:21,040 --> 01:46:22,880
Speaker 2: That's just what a kid wants to hear. Well.

1915
01:46:22,920 --> 01:46:25,800
Speaker 1: No, by the way, it was motivational. Yeah, it was motivational.

1916
01:46:26,240 --> 01:46:27,920
Speaker 1: Like I heard it and I said to my mom,

1917
01:46:28,000 --> 01:46:30,000
Speaker 1: I said, well, it's gonna be a nice truck, you

1918
01:46:30,080 --> 01:46:35,200
Speaker 1: know when I drive it. But in my mind, though

1919
01:46:36,560 --> 01:46:40,000
Speaker 1: I knew I wasn't going to drive a truck, Like

1920
01:46:40,520 --> 01:46:43,640
Speaker 1: I knew that I could figure certain things out that

1921
01:46:44,760 --> 01:46:47,760
Speaker 1: other people couldn't figure out. So you could talk to

1922
01:46:47,880 --> 01:46:51,080
Speaker 1: me and explain to me something, I could come up

1923
01:46:51,120 --> 01:46:55,479
Speaker 1: with the answer. So I was smart enough to understand

1924
01:46:55,640 --> 01:46:58,640
Speaker 1: that I just couldn't sit there when they handed me

1925
01:46:58,640 --> 01:47:00,679
Speaker 1: a piece of paper and you know, I'll say, read

1926
01:47:00,760 --> 01:47:03,559
Speaker 1: this and like, okay, who won the race? When it said,

1927
01:47:04,040 --> 01:47:06,200
Speaker 1: you know, two people raced and so and so on

1928
01:47:06,479 --> 01:47:08,120
Speaker 1: in first grade, I, you know, to see if you

1929
01:47:08,160 --> 01:47:09,800
Speaker 1: had basic reading skills, I go, I don't know. It

1930
01:47:09,920 --> 01:47:13,280
Speaker 1: was there race? Like my answer to what race? My

1931
01:47:13,360 --> 01:47:14,400
Speaker 1: answer would have been what race?

1932
01:47:15,000 --> 01:47:18,560
Speaker 2: So, given your career, both on the corporate side and

1933
01:47:18,640 --> 01:47:22,760
Speaker 2: the public service side, are there any residual effects from this?

1934
01:47:22,960 --> 01:47:26,639
Speaker 2: I'm assuming your reading skills have improved since then?

1935
01:47:27,240 --> 01:47:34,519
Speaker 1: Yeah, yes, so I have become a decent technical reader.

1936
01:47:35,200 --> 01:47:38,080
Speaker 1: If you give me a contract, I'll be I'm pretty

1937
01:47:38,120 --> 01:47:41,400
Speaker 1: damn good at reading contract. So but a contract to

1938
01:47:41,439 --> 01:47:44,599
Speaker 1: me has total logical. You know, I know section one,

1939
01:47:44,720 --> 01:47:46,120
Speaker 1: what's gonna bean section one. I know it's gonna be

1940
01:47:46,120 --> 01:47:47,640
Speaker 1: in section two. I know it's gonna be in section three.

1941
01:47:47,680 --> 01:47:49,080
Speaker 1: I know it's gonna be in section four. I'm really

1942
01:47:49,080 --> 01:47:54,080
Speaker 1: good at reading contract. If you give me something that

1943
01:47:54,160 --> 01:47:56,880
Speaker 1: I don't know what the order of it is, it's

1944
01:47:56,920 --> 01:47:59,400
Speaker 1: going to be difficult for me because I'm working so

1945
01:47:59,560 --> 01:48:03,799
Speaker 1: hard at words that it's hard for me to process

1946
01:48:03,840 --> 01:48:04,800
Speaker 1: where it's growing.

1947
01:48:04,840 --> 01:48:08,439
Speaker 2: So technical reading much easier than books and things like that.

1948
01:48:08,640 --> 01:48:11,479
Speaker 1: I don't read a lot of books, like a lot

1949
01:48:11,520 --> 01:48:12,880
Speaker 1: would maybe round up to zero.

1950
01:48:13,640 --> 01:48:14,599
Speaker 2: Wow, that's fascinating.

1951
01:48:15,200 --> 01:48:17,720
Speaker 1: I get to listen to books on tape, right, So

1952
01:48:18,080 --> 01:48:22,400
Speaker 1: do you enjoy that experience? Yeah, a little bit. It's

1953
01:48:22,439 --> 01:48:24,280
Speaker 1: still hard for me. You know, I didn't grow up

1954
01:48:24,320 --> 01:48:30,320
Speaker 1: as a reader, so my brain's not that condition to that,

1955
01:48:31,920 --> 01:48:34,160
Speaker 1: so you know, it's it's not a natural for me.

1956
01:48:34,240 --> 01:48:36,679
Speaker 1: But look, do I read? Do I try and read

1957
01:48:36,680 --> 01:48:38,680
Speaker 1: the newspapers every day? Do I try and you know,

1958
01:48:38,760 --> 01:48:41,040
Speaker 1: read the editor Do I read a lot of editorial pages?

1959
01:48:41,080 --> 01:48:44,040
Speaker 1: Do I read a lot of news? I do read

1960
01:48:44,040 --> 01:48:45,920
Speaker 1: a lot of news and editorial page But you know,

1961
01:48:46,040 --> 01:48:48,840
Speaker 1: like there're hundreds of they're measuring hundreds.

1962
01:48:48,520 --> 01:48:51,479
Speaker 2: Of right, all right, so let's jump to our favorite questions,

1963
01:48:51,479 --> 01:48:54,519
Speaker 2: starting with what are you streaming? If you're not reading,

1964
01:48:54,680 --> 01:48:55,679
Speaker 2: what do you what are you watching?

1965
01:48:56,040 --> 01:48:59,040
Speaker 1: So again, I watch a lot of sort of factual stuff,

1966
01:48:59,680 --> 01:49:03,480
Speaker 1: and lately I've been going through sort of the Netflix

1967
01:49:03,960 --> 01:49:11,719
Speaker 1: library of Sports Actuals shows Full Swing, Breakpoint, the Swamp,

1968
01:49:12,760 --> 01:49:15,560
Speaker 1: Drive to Survive. I've been going through all the Sports.

1969
01:49:15,760 --> 01:49:19,479
Speaker 2: To Survive was great. The did you see I haven't

1970
01:49:19,479 --> 01:49:21,160
Speaker 2: seen the one. I'm assuming you saw the one on

1971
01:49:21,200 --> 01:49:23,440
Speaker 2: the Chicago Bulls of Michael Jordan's.

1972
01:49:23,120 --> 01:49:26,599
Speaker 1: I actually haven't. Oh oh no, I saw that one

1973
01:49:26,840 --> 01:49:30,360
Speaker 1: during COVID, right, but I haven't seen the Nike one yet.

1974
01:49:31,840 --> 01:49:35,080
Speaker 2: It's an interesting movie. There's also one about Steph Curry.

1975
01:49:35,640 --> 01:49:37,880
Speaker 2: I think that's on Apple TV. And then there's another

1976
01:49:37,920 --> 01:49:42,599
Speaker 2: one about Magic Johnson and the LA Lakers. But that's interesting.

1977
01:49:42,680 --> 01:49:48,160
Speaker 2: That that that's what gets you interested, very competitive, very

1978
01:49:48,240 --> 01:49:48,960
Speaker 2: interesting things.

1979
01:49:49,240 --> 01:49:51,320
Speaker 1: It's look, it's a it's a little bit about wedding, right,

1980
01:49:51,479 --> 01:49:54,040
Speaker 1: maybe tells you something about me, but it's about winning.

1981
01:49:54,479 --> 01:49:57,400
Speaker 2: I picked that up. How about mentors who helped shape

1982
01:49:57,439 --> 01:49:58,000
Speaker 2: your career?

1983
01:49:58,439 --> 01:50:02,360
Speaker 1: I think there's two big matches my grandfather for one, Oh,

1984
01:50:02,439 --> 01:50:05,240
Speaker 1: really what was wrong big time. So you know, as

1985
01:50:05,280 --> 01:50:07,920
Speaker 1: we discussed, I was highly dislikes it going up, and

1986
01:50:08,320 --> 01:50:11,280
Speaker 1: you know, my parents didn't know what to do with me. So,

1987
01:50:11,600 --> 01:50:15,320
Speaker 1: like I don't blame they were young parents, and my

1988
01:50:15,479 --> 01:50:19,320
Speaker 1: grandfather was convinced, like, there's nothing wrong with my grandson.

1989
01:50:19,400 --> 01:50:23,000
Speaker 1: He's really smart. He's gonna be fine. You don't need

1990
01:50:23,080 --> 01:50:25,320
Speaker 1: to send him off, you don't need to panic. And

1991
01:50:25,439 --> 01:50:27,640
Speaker 1: so my grandfather really sort of put me under his

1992
01:50:27,720 --> 01:50:29,519
Speaker 1: wing and said, like you're gonna be fine, just just

1993
01:50:29,800 --> 01:50:32,800
Speaker 1: do what you need to do. And so we had

1994
01:50:32,880 --> 01:50:39,599
Speaker 1: a very very close relationship, and so he really got

1995
01:50:39,680 --> 01:50:43,000
Speaker 1: me through sort of my early childhood years all the

1996
01:50:43,040 --> 01:50:44,880
Speaker 1: way through high school, like he was there for me.

1997
01:50:45,640 --> 01:50:48,800
Speaker 1: And then you know the guy by the name of

1998
01:50:48,840 --> 01:50:51,200
Speaker 1: it and I mentioned before Jim Riley, who when I

1999
01:50:51,280 --> 01:50:55,400
Speaker 1: went to Goldman, he was he became partner in nineteen

2000
01:50:55,479 --> 01:50:57,479
Speaker 1: ninety He was the one that hired me into Goldman.

2001
01:50:58,360 --> 01:51:02,120
Speaker 1: And you know, I became partner ninety four. And I'd

2002
01:51:02,160 --> 01:51:07,639
Speaker 1: become partner by sort of doing everything, sort of being

2003
01:51:07,720 --> 01:51:10,040
Speaker 1: the guy that everyone could go to, being the guy

2004
01:51:10,160 --> 01:51:14,120
Speaker 1: could fix everything. And when I became partner. I was

2005
01:51:14,479 --> 01:51:17,320
Speaker 1: trying to do everything, and you know, it was one

2006
01:51:17,320 --> 01:51:20,560
Speaker 1: of those stories where I was trying to manage a

2007
01:51:20,600 --> 01:51:23,280
Speaker 1: big business. I was trying to trade a big book.

2008
01:51:23,920 --> 01:51:26,640
Speaker 1: I was trying to deal with clients, and I was

2009
01:51:26,680 --> 01:51:30,320
Speaker 1: doing a really bad job of it, like and my

2010
01:51:30,479 --> 01:51:33,880
Speaker 1: trading book showed it, like I was having problem in

2011
01:51:33,880 --> 01:51:35,599
Speaker 1: the worst trading streak of my life.

2012
01:51:35,640 --> 01:51:35,840
Speaker 2: I was.

2013
01:51:36,000 --> 01:51:38,040
Speaker 1: I was losing money every day, and I didn't know

2014
01:51:38,040 --> 01:51:41,559
Speaker 1: how to lose money every day. And I was living

2015
01:51:41,600 --> 01:51:43,640
Speaker 1: at London at the time, and you know, after like

2016
01:51:43,840 --> 01:51:47,080
Speaker 1: a week of not sleeping, you know, I waited till

2017
01:51:47,120 --> 01:51:49,479
Speaker 1: like seven o'clock in the morning, New York time, because

2018
01:51:49,680 --> 01:51:51,920
Speaker 1: I knew he'd be driving in he lived in the Island,

2019
01:51:52,280 --> 01:51:54,320
Speaker 1: be driving in the office, or be in the office.

2020
01:51:54,360 --> 01:51:56,720
Speaker 1: I called Jimmy up and I sort of gave him

2021
01:51:56,760 --> 01:52:01,920
Speaker 1: the woe is Me story, like me, I'm working so hard.

2022
01:52:02,040 --> 01:52:04,720
Speaker 1: I've never worked this hard in my life. Like I'm

2023
01:52:04,960 --> 01:52:08,120
Speaker 1: I'm seeing ten clients a day, I'm dealing with the

2024
01:52:08,240 --> 01:52:11,920
Speaker 1: sales desk, I'm dealing with this, I'm trying to trade.

2025
01:52:12,080 --> 01:52:15,120
Speaker 1: My trading's horrible. I can't make money. What should I do?

2026
01:52:16,320 --> 01:52:18,400
Speaker 1: And he basically said, figure it out and hung up

2027
01:52:18,439 --> 01:52:18,760
Speaker 1: the phone.

2028
01:52:20,040 --> 01:52:21,360
Speaker 2: Not even prioritized.

2029
01:52:21,720 --> 01:52:23,840
Speaker 1: Just figure it figured it out, figure it out.

2030
01:52:24,040 --> 01:52:26,519
Speaker 2: Click, wow, And how'd you figure it out?

2031
01:52:26,640 --> 01:52:30,120
Speaker 1: No, he basically said, I got the message like, you're idiot,

2032
01:52:30,160 --> 01:52:34,160
Speaker 1: you can't do everything right. Like So literally five minutes later,

2033
01:52:34,280 --> 01:52:38,280
Speaker 1: I am call over to my office. I said, guys,

2034
01:52:38,360 --> 01:52:41,719
Speaker 1: I'm done trading, and I gave my trading book away

2035
01:52:42,840 --> 01:52:44,960
Speaker 1: and I said I'm here to see clients. I'm here

2036
01:52:44,960 --> 01:52:47,519
Speaker 1: to deal with problems. Come see me. And the guy

2037
01:52:47,560 --> 01:52:50,519
Speaker 1: took her on my trading book and said thank you

2038
01:52:50,640 --> 01:52:54,160
Speaker 1: very much. And the salespeople said, oh my god, you're

2039
01:52:54,280 --> 01:52:56,800
Speaker 1: human again. And everything was fine.

2040
01:52:57,560 --> 01:53:01,160
Speaker 2: Really good decision. Our final two questions, what sort of

2041
01:53:01,240 --> 01:53:04,160
Speaker 2: advice would you give to a recent college grad who

2042
01:53:04,280 --> 01:53:07,000
Speaker 2: is interested in a career in the world of investing

2043
01:53:07,080 --> 01:53:07,679
Speaker 2: in finance?

2044
01:53:08,760 --> 01:53:11,920
Speaker 1: So, look, a, I think it's a great place to

2045
01:53:12,080 --> 01:53:14,920
Speaker 1: start your career in your life, no matter where you

2046
01:53:15,080 --> 01:53:20,480
Speaker 1: end up, because the fundamentals of understanding finance and understanding

2047
01:53:20,640 --> 01:53:25,080
Speaker 1: markets and understanding a balance sheet is really important skill

2048
01:53:25,320 --> 01:53:26,800
Speaker 1: and it doesn't matter what you do with your life.

2049
01:53:27,000 --> 01:53:30,200
Speaker 1: So I'd encourage anyone who's got an interest to go

2050
01:53:30,320 --> 01:53:33,439
Speaker 1: into the to go into the industry. It's a tough

2051
01:53:33,520 --> 01:53:35,400
Speaker 1: way you to go. It's like the first couple of

2052
01:53:35,479 --> 01:53:39,400
Speaker 1: years of going into financial services, it's boot camp. You know,

2053
01:53:39,520 --> 01:53:41,960
Speaker 1: you're working twenty four hours a day, seven days a week,

2054
01:53:42,000 --> 01:53:44,760
Speaker 1: you're on call. It's not fun. So I'll warn you

2055
01:53:44,800 --> 01:53:48,120
Speaker 1: of that. But you should do it. You should get

2056
01:53:48,160 --> 01:53:51,000
Speaker 1: the experience, and then you should take some risk in

2057
01:53:51,080 --> 01:53:53,800
Speaker 1: your career. You know, after you've learned the fundamentals. You know,

2058
01:53:53,840 --> 01:53:56,519
Speaker 1: after a couple of years, just because you went into

2059
01:53:56,600 --> 01:53:58,560
Speaker 1: sales and trading program or just because you went in

2060
01:53:58,600 --> 01:54:02,000
Speaker 1: an investment banking program doesn't mean that's what you should do.

2061
01:54:02,520 --> 01:54:05,880
Speaker 1: And what I see so many young kids do is

2062
01:54:05,960 --> 01:54:09,120
Speaker 1: they get hired into X job and they stay an

2063
01:54:09,200 --> 01:54:13,360
Speaker 1: ex job for the next twenty or thirty years. Figure

2064
01:54:13,400 --> 01:54:15,920
Speaker 1: out what you really like, and then go figure out

2065
01:54:15,960 --> 01:54:17,720
Speaker 1: how to get there. So, if you're hired as an

2066
01:54:17,720 --> 01:54:20,080
Speaker 1: investment banker, but you really want to be on a trader,

2067
01:54:20,160 --> 01:54:21,800
Speaker 1: go try and figure how to be a trader. You're

2068
01:54:21,880 --> 01:54:23,280
Speaker 1: hired as a trader and you really want to be

2069
01:54:23,360 --> 01:54:25,960
Speaker 1: a salesperson, go be a salesperson. You hire a salesperson,

2070
01:54:26,000 --> 01:54:27,400
Speaker 1: want to go be a vague baker? Figure how to

2071
01:54:27,400 --> 01:54:31,240
Speaker 1: be a banker. Don't just get stuck where you got hired.

2072
01:54:31,120 --> 01:54:34,840
Speaker 2: Into really good advice. And our final question, what do

2073
01:54:34,880 --> 01:54:38,520
Speaker 2: you know about the world of investing or public service

2074
01:54:38,600 --> 01:54:41,400
Speaker 2: today that would have been useful to know forty or

2075
01:54:41,480 --> 01:54:45,200
Speaker 2: so years ago when you first landed at US Steel.

2076
01:54:45,720 --> 01:54:50,320
Speaker 1: I knew nothing forty years ago, honestly so. And by

2077
01:54:50,360 --> 01:54:53,920
Speaker 1: the way, I learn new things every day. If you

2078
01:54:54,120 --> 01:54:57,360
Speaker 1: don't think you're going to learn something new in the

2079
01:54:57,600 --> 01:55:02,600
Speaker 1: corporate world or the investing world, you're wrong, because every

2080
01:55:02,680 --> 01:55:03,400
Speaker 1: day is a new day.

2081
01:55:03,600 --> 01:55:03,760
Speaker 2: You know.

2082
01:55:04,360 --> 01:55:06,720
Speaker 1: It's like we were talking about what the Fed's going

2083
01:55:06,760 --> 01:55:10,760
Speaker 1: through now, this whole set of circumstances with FED tightening

2084
01:55:10,840 --> 01:55:13,640
Speaker 1: and government spending. It's a whole set of new circumstances

2085
01:55:13,720 --> 01:55:17,440
Speaker 1: that has to be reevaluated. You know. I learned new

2086
01:55:17,520 --> 01:55:19,280
Speaker 1: things every day, and I think it's important that you

2087
01:55:19,480 --> 01:55:24,600
Speaker 1: just understand that what was true last year may not

2088
01:55:24,840 --> 01:55:27,240
Speaker 1: be true this year, and what you believe to be

2089
01:55:27,360 --> 01:55:29,720
Speaker 1: true may not be true tomorrow. And I think that's

2090
01:55:29,800 --> 01:55:30,680
Speaker 1: really important.

2091
01:55:30,440 --> 01:55:33,680
Speaker 2: Really amazing stuff. Gary, thank you for being so generous

2092
01:55:33,720 --> 01:55:37,000
Speaker 2: with your time. We have been speaking with Gary Cohne,

2093
01:55:37,280 --> 01:55:41,240
Speaker 2: former director of the National Economic Council in the White

2094
01:55:41,280 --> 01:55:45,360
Speaker 2: House under President Trump. Prior to that, he was president

2095
01:55:45,480 --> 01:55:49,400
Speaker 2: and chief operating officer at Goldman Sachs, where he spent

2096
01:55:49,560 --> 01:55:53,640
Speaker 2: most of his career. If you enjoyed this conversation, well

2097
01:55:53,800 --> 01:55:56,320
Speaker 2: be sure and check out any of the previous five

2098
01:55:56,480 --> 01:55:59,560
Speaker 2: hundred or so we've done over the past nine years.

2099
01:56:00,000 --> 01:56:04,400
Speaker 2: Can find those at iTunes, Spotify, YouTube, wherever you find

2100
01:56:04,480 --> 01:56:08,160
Speaker 2: your favorite podcasts. Sign up for my daily reading list

2101
01:56:08,360 --> 01:56:12,160
Speaker 2: at rit Holts dot com. Follow me on Twitter at

2102
01:56:12,520 --> 01:56:16,400
Speaker 2: Barry Underscore Ritolts. Follow all of the Bloomberg family of

2103
01:56:16,520 --> 01:56:20,760
Speaker 2: podcasts on Twitter at podcast I would be remiss if

2104
01:56:20,800 --> 01:56:23,840
Speaker 2: I did not thank the crack team of experts who

2105
01:56:23,920 --> 01:56:28,560
Speaker 2: helped me put these conversations together each week. My producer

2106
01:56:28,760 --> 01:56:33,000
Speaker 2: for this episode was Rob Bragg, my audio engineer with

2107
01:56:33,080 --> 01:56:38,760
Speaker 2: Sarah Livesey. Attika of albron is our project manager. Sean

2108
01:56:38,920 --> 01:56:43,880
Speaker 2: Russo is my researcher. I'm Barry Ridholts. You've been listening

2109
01:56:43,960 --> 01:57:00,240
Speaker 2: to Masters and Business on Bloomberg Radio. Yeah,