1 00:00:05,000 --> 00:00:08,520 Speaker 1: On this episode of Newts World. Wilbur Ross rose to 2 00:00:08,600 --> 00:00:12,680 Speaker 1: prominence as the King of Bankruptcy and then served as 3 00:00:12,800 --> 00:00:16,280 Speaker 1: US Secretary of Commerce, but few people know his story 4 00:00:16,600 --> 00:00:19,280 Speaker 1: and the lessons we can all learn from it. In 5 00:00:19,360 --> 00:00:24,320 Speaker 1: his new book, Risks and Returns, Creating Success in Business 6 00:00:24,320 --> 00:00:27,920 Speaker 1: and Life, Ross chronicles his life from his humble beginnings 7 00:00:27,920 --> 00:00:30,560 Speaker 1: in New Jersey, to his time at Yale and Harvard 8 00:00:30,600 --> 00:00:34,120 Speaker 1: Business School, to his storied fifty five year career on 9 00:00:34,159 --> 00:00:37,520 Speaker 1: Wall Street, where he helped to restructure more than four 10 00:00:37,600 --> 00:00:41,200 Speaker 1: hundred billion dollars in assets, and finally to his four 11 00:00:41,280 --> 00:00:44,520 Speaker 1: years a Secretary of Commerce under former President Donald Trump. 12 00:00:45,000 --> 00:00:48,080 Speaker 1: He's a great friend for Kostin Million, We're always delighted 13 00:00:48,080 --> 00:00:51,559 Speaker 1: to see Wilbur and Hillary, so I am really pleased 14 00:00:51,560 --> 00:00:55,160 Speaker 1: to welcome my guest, Wilburt Ross. He did serve as 15 00:00:55,200 --> 00:00:59,160 Speaker 1: Secretary of Commerce and Trump administration. His experience for fifty 16 00:00:59,200 --> 00:01:03,320 Speaker 1: five years in investment, banking, and private equity is remarkable, 17 00:01:03,680 --> 00:01:07,720 Speaker 1: and in this capacity he advised Donald Trump the Businessman 18 00:01:08,080 --> 00:01:12,160 Speaker 1: on commercial and economic affairs and helped American entrepreneurs and 19 00:01:12,400 --> 00:01:18,000 Speaker 1: businesses create jobs and economic opportunity. In twenty eleven, Bloomberg 20 00:01:18,080 --> 00:01:21,479 Speaker 1: Markets named him one of the fifty most influential people 21 00:01:21,880 --> 00:01:38,000 Speaker 1: in global finance. It is great to have you join us. 22 00:01:39,000 --> 00:01:40,600 Speaker 2: Oh, thank you, mister speaker. 23 00:01:41,319 --> 00:01:44,600 Speaker 1: And I'm delighted to report that Risk and Returns made 24 00:01:44,640 --> 00:01:48,360 Speaker 1: the USA Today bestseller list this week. So congratulations. 25 00:01:48,680 --> 00:01:49,920 Speaker 2: Well, thank you very much. 26 00:01:51,080 --> 00:01:54,720 Speaker 1: You have led a really fascinating life, and I thought 27 00:01:54,720 --> 00:01:57,560 Speaker 1: maybe we could start with your early years in some 28 00:01:57,640 --> 00:02:00,400 Speaker 1: of the lessons that your parents taught you about the 29 00:02:00,400 --> 00:02:03,360 Speaker 1: importance of hard work and dedication. What was it like 30 00:02:03,880 --> 00:02:05,200 Speaker 1: growing up in New Jersey? 31 00:02:06,280 --> 00:02:12,000 Speaker 2: Well, North Bergen was barely a middle class town, and 32 00:02:12,760 --> 00:02:15,760 Speaker 2: my dad was part of a little two man law 33 00:02:15,840 --> 00:02:19,960 Speaker 2: firm until he died at a fairly early age. And 34 00:02:20,000 --> 00:02:24,200 Speaker 2: my mom was a third grade school teacher until she 35 00:02:24,360 --> 00:02:29,400 Speaker 2: was forced to retire at seventy one by the union rules. 36 00:02:30,080 --> 00:02:32,000 Speaker 1: Obviously she must have loved teaching. 37 00:02:32,680 --> 00:02:37,400 Speaker 2: Yes, And they sent me to a Jesuit military school 38 00:02:37,760 --> 00:02:41,320 Speaker 2: or high school because it was felt then and it 39 00:02:41,360 --> 00:02:45,200 Speaker 2: was probably still true now, that I needed more discipline. 40 00:02:45,520 --> 00:02:46,160 Speaker 1: Did it'll work? 41 00:02:46,720 --> 00:02:49,919 Speaker 2: Well, I made it through life, so I guess it were. 42 00:02:51,919 --> 00:02:55,639 Speaker 1: So. You would recommend a family that has a challenged 43 00:02:55,919 --> 00:02:59,840 Speaker 1: child that something like a Jesuit military school would be 44 00:03:00,280 --> 00:03:02,079 Speaker 1: a reasonable step towards salvation. 45 00:03:02,919 --> 00:03:07,280 Speaker 2: Well, it is, and it was very good. In terms 46 00:03:07,320 --> 00:03:12,600 Speaker 2: of the educational program. They required you to take two languages, 47 00:03:13,200 --> 00:03:18,000 Speaker 2: in my case, Latin and German, and on the college boards, 48 00:03:18,040 --> 00:03:21,919 Speaker 2: I did well enough in German that Yale exempted me 49 00:03:22,000 --> 00:03:25,880 Speaker 2: from its two year language requirement. So that shows what 50 00:03:25,960 --> 00:03:27,280 Speaker 2: good teachers they were. 51 00:03:28,240 --> 00:03:31,680 Speaker 1: That's great. And your dad, as Zigner said, actually has 52 00:03:31,680 --> 00:03:35,080 Speaker 1: spent a lot of his legal career helping immigrants who 53 00:03:35,080 --> 00:03:39,680 Speaker 1: were here legally go through the process of becoming Americans. 54 00:03:39,960 --> 00:03:43,360 Speaker 2: That is true, and that taught me a lesson which 55 00:03:43,400 --> 00:03:46,480 Speaker 2: I really picked up on again when I was in 56 00:03:46,600 --> 00:03:50,480 Speaker 2: government in that once in a while I would get 57 00:03:50,520 --> 00:03:56,400 Speaker 2: to swear in newly naturalized citizens and it was heartwarming. 58 00:03:56,880 --> 00:04:00,960 Speaker 2: First of all, they know more about our history, our 59 00:04:01,120 --> 00:04:06,840 Speaker 2: constitution and all that than most college students do today. 60 00:04:07,080 --> 00:04:10,640 Speaker 2: And that's a different problem, but it's a serious one. 61 00:04:11,080 --> 00:04:15,200 Speaker 2: And they were so proud to become Americans. There would 62 00:04:15,200 --> 00:04:17,920 Speaker 2: be tears in their eyes as I swore them in 63 00:04:18,080 --> 00:04:21,840 Speaker 2: happy tears. It was a very heartwarming experience. 64 00:04:22,320 --> 00:04:23,880 Speaker 1: Did you get you go to some of those with 65 00:04:23,920 --> 00:04:24,360 Speaker 1: your dad? 66 00:04:25,040 --> 00:04:29,400 Speaker 2: Oh? Yeah, I did them, particularly in Florida and a 67 00:04:29,440 --> 00:04:34,320 Speaker 2: lot of them were Latin American people, but the important 68 00:04:34,400 --> 00:04:38,920 Speaker 2: message to me was that unlike many of our youths 69 00:04:38,960 --> 00:04:43,839 Speaker 2: today who had no idea of American history. Many of 70 00:04:43,880 --> 00:04:49,480 Speaker 2: them were asked by Midwestern University a couple of questions, 71 00:04:49,600 --> 00:04:53,800 Speaker 2: one of which was who was Andrew Jackson? You know what? 72 00:04:53,960 --> 00:04:58,159 Speaker 2: The most popular answer was, what Michael's brother? 73 00:05:00,960 --> 00:05:04,840 Speaker 1: The power of modern culture? You were growing up during 74 00:05:04,880 --> 00:05:08,839 Speaker 1: World War Two? How did that great conflict affect you? 75 00:05:10,120 --> 00:05:12,480 Speaker 2: Well, it affected me in a couple of boys. My 76 00:05:12,600 --> 00:05:16,039 Speaker 2: father was an air raid warden, so he would put 77 00:05:16,080 --> 00:05:19,000 Speaker 2: on a little tin hat at night when there was 78 00:05:19,080 --> 00:05:23,080 Speaker 2: an air raid warning and go out in our neighborhood 79 00:05:23,120 --> 00:05:27,120 Speaker 2: and tell people turn their lights off, because it was 80 00:05:27,240 --> 00:05:30,240 Speaker 2: believed that if you let lights on and there was 81 00:05:30,320 --> 00:05:33,440 Speaker 2: a bombing attack, it would make you a bed, an 82 00:05:33,480 --> 00:05:37,560 Speaker 2: easy target. So he did that. The other strange thing 83 00:05:37,600 --> 00:05:41,920 Speaker 2: it did it was my first exposure to China in 84 00:05:42,000 --> 00:05:48,000 Speaker 2: that my mom would stand online for getting bananas. Bananas 85 00:05:48,040 --> 00:05:51,880 Speaker 2: went short supply because of the war, and I didn't 86 00:05:52,000 --> 00:05:56,039 Speaker 2: like bananas, so she kept saying to me, eat your bananas, 87 00:05:56,440 --> 00:06:00,160 Speaker 2: think about the poor starving children in China. And I 88 00:06:00,200 --> 00:06:04,080 Speaker 2: could never figure out how my eating bananas was going 89 00:06:04,160 --> 00:06:08,440 Speaker 2: to help the poor starving children in China. Still can't forget. 90 00:06:08,240 --> 00:06:10,680 Speaker 1: That my parents use the same thing. I'm with you. 91 00:06:11,040 --> 00:06:13,359 Speaker 1: I sit there thinking, I mean, if I don't eat this, 92 00:06:13,520 --> 00:06:16,760 Speaker 1: it's not going to get to China. But apparently for 93 00:06:16,839 --> 00:06:20,400 Speaker 1: our generation, it was apparently a universal thing for parents 94 00:06:20,400 --> 00:06:23,200 Speaker 1: to tell their kids, you have to eat this because 95 00:06:23,240 --> 00:06:24,880 Speaker 1: there's some starving kids somewhere. 96 00:06:25,600 --> 00:06:25,840 Speaker 2: Right. 97 00:06:26,279 --> 00:06:30,400 Speaker 1: Do you have one, I think interesting story about going 98 00:06:30,440 --> 00:06:33,960 Speaker 1: through an air raid drill and being asked, you know, 99 00:06:34,200 --> 00:06:36,320 Speaker 1: why does everyone have to sit against the wall? 100 00:06:36,720 --> 00:06:40,839 Speaker 2: Oh? Yeah, I was in kindergarten at the time, and 101 00:06:41,360 --> 00:06:44,680 Speaker 2: about every week they would have an air raid drill 102 00:06:44,720 --> 00:06:48,000 Speaker 2: and they would march us all down to the basement 103 00:06:48,080 --> 00:06:51,719 Speaker 2: of the school building and have us sit against the wall. 104 00:06:52,400 --> 00:06:56,800 Speaker 2: And at one point teacher asked, does anybody know why 105 00:06:56,839 --> 00:07:01,120 Speaker 2: we're having you sit against the wall? What came into 106 00:07:01,160 --> 00:07:03,719 Speaker 2: my mind, not trying to be a wise guy, but 107 00:07:03,920 --> 00:07:08,120 Speaker 2: just popped in, was well, I said, maybe it's to 108 00:07:08,160 --> 00:07:12,720 Speaker 2: make it easier to count the bodies. That maybe the 109 00:07:12,800 --> 00:07:17,480 Speaker 2: teacher furious and some of the other students hysterical. 110 00:07:17,520 --> 00:07:20,160 Speaker 1: And you just reached that conclusion as an act of 111 00:07:20,240 --> 00:07:26,600 Speaker 1: logic when you do get to Yale, You're not immediately 112 00:07:26,800 --> 00:07:29,800 Speaker 1: on a business track. We're your career and up in fact, 113 00:07:29,880 --> 00:07:33,200 Speaker 1: you that a very different initial sense of what you 114 00:07:33,280 --> 00:07:35,840 Speaker 1: might do with your life. Can you describe your early 115 00:07:36,320 --> 00:07:37,480 Speaker 1: career goals at Yale? 116 00:07:38,040 --> 00:07:41,880 Speaker 2: Surely I wanted to be a writer, and so you 117 00:07:41,880 --> 00:07:47,080 Speaker 2: could say that now sixty odd years later that dream 118 00:07:47,080 --> 00:07:51,280 Speaker 2: has been fulfilled. But what happened at the time was 119 00:07:51,360 --> 00:07:55,440 Speaker 2: in the second year they had a course called Daily Themes, 120 00:07:56,040 --> 00:07:59,080 Speaker 2: and you had to put into a little slot a 121 00:07:59,240 --> 00:08:04,040 Speaker 2: thousand were of fiction every day. Well, by the end 122 00:08:04,080 --> 00:08:07,600 Speaker 2: of the second week, I was out of material, so 123 00:08:07,760 --> 00:08:12,560 Speaker 2: I quit the course and gave up creative writing. And 124 00:08:12,600 --> 00:08:17,960 Speaker 2: then a faculty member who was our advisor at my 125 00:08:18,120 --> 00:08:22,760 Speaker 2: fraternity but was also part of the Yale investment team, 126 00:08:22,800 --> 00:08:26,920 Speaker 2: which was very high grad of a turn team, called 127 00:08:26,960 --> 00:08:31,080 Speaker 2: me and said he was leaving the university to go 128 00:08:31,200 --> 00:08:35,559 Speaker 2: to Wall Street and that I shouldn't waste my summer 129 00:08:36,120 --> 00:08:40,360 Speaker 2: parking cars, which I had done the prior summer. I 130 00:08:40,400 --> 00:08:45,120 Speaker 2: should instead accompany him as his clerk to Wall Street. 131 00:08:45,280 --> 00:08:49,640 Speaker 2: And I did, and once I was there, they never 132 00:08:49,720 --> 00:08:50,480 Speaker 2: wanted to leave. 133 00:08:51,559 --> 00:08:54,920 Speaker 1: But now the summer before you parked cars at the 134 00:08:54,960 --> 00:08:58,360 Speaker 1: Monmouth Park Club. What did you learn from that experience? 135 00:09:00,120 --> 00:09:02,880 Speaker 2: Learned a couple of things, all of which were very 136 00:09:02,920 --> 00:09:08,079 Speaker 2: strange lessons. The very first day, the lot boss wrote 137 00:09:08,160 --> 00:09:11,800 Speaker 2: all of us kids who were car parkers together and 138 00:09:11,840 --> 00:09:14,400 Speaker 2: he said, no, you've got to understand what the rules 139 00:09:14,440 --> 00:09:21,120 Speaker 2: are here. He said. There will inevitably be accidents, headlights broken, 140 00:09:21,320 --> 00:09:24,800 Speaker 2: things like that, especially in the rush to get cars 141 00:09:24,840 --> 00:09:27,400 Speaker 2: out at the end of the day. He said, But 142 00:09:28,040 --> 00:09:32,480 Speaker 2: if the patron leaves the track without complaining, then the 143 00:09:32,520 --> 00:09:36,560 Speaker 2: track won't have to pay to fix the damage and 144 00:09:37,040 --> 00:09:40,240 Speaker 2: you won't get set down for a week. But if 145 00:09:40,280 --> 00:09:43,880 Speaker 2: the patron notices the damage, track will pay and you'll 146 00:09:43,880 --> 00:09:46,720 Speaker 2: get set down for a week. He said. But there's 147 00:09:46,760 --> 00:09:52,040 Speaker 2: a solution. Distrack the customer. And the way he explained 148 00:09:52,040 --> 00:09:55,640 Speaker 2: to us to distract him was, if it were a convertible, 149 00:09:55,960 --> 00:09:58,920 Speaker 2: put the top up as you're going to pick him up. 150 00:10:00,320 --> 00:10:03,360 Speaker 2: Would then say what are you doing putting the top up, 151 00:10:03,600 --> 00:10:07,000 Speaker 2: and he wouldn't notice that his right front headlight was 152 00:10:07,040 --> 00:10:12,240 Speaker 2: smashed out. He said, if it wasn't a convertible, turn 153 00:10:12,320 --> 00:10:16,439 Speaker 2: the radio on real loud and turn the windshield wipers on. 154 00:10:17,040 --> 00:10:19,400 Speaker 2: The patron again will say what are you doing. It's 155 00:10:19,400 --> 00:10:23,000 Speaker 2: a sunny day, Why are you putting the windshield wipers? 156 00:10:23,200 --> 00:10:26,160 Speaker 2: Why are you're putting the radios so loud? But he 157 00:10:26,200 --> 00:10:32,640 Speaker 2: wouldn't notice the damage. So here was an executive member 158 00:10:32,679 --> 00:10:37,760 Speaker 2: of management teaching young kids how to fleece the customers 159 00:10:38,200 --> 00:10:44,319 Speaker 2: that kept the place going. In retrospect, a very bizarre experience. 160 00:10:44,760 --> 00:10:47,120 Speaker 1: Did you decide that that wasn't the way you wanted 161 00:10:47,120 --> 00:10:48,040 Speaker 1: to run your business. 162 00:10:48,600 --> 00:10:50,640 Speaker 2: No, that's absolutely true. 163 00:10:51,160 --> 00:10:55,800 Speaker 1: But you also talk about the fact that having watched 164 00:10:56,720 --> 00:11:01,600 Speaker 1: casinos and racetracks, you really have a very different attitude 165 00:11:01,640 --> 00:11:06,720 Speaker 1: about investing in that you don't gamble, You do research well. 166 00:11:06,880 --> 00:11:12,000 Speaker 2: People think I gamble every day dealing in distress securities, 167 00:11:12,480 --> 00:11:18,360 Speaker 2: but those are rational gambles. Gambling in a casino or 168 00:11:18,400 --> 00:11:23,360 Speaker 2: a racetrack is a loser's game because the odds are 169 00:11:23,480 --> 00:11:28,080 Speaker 2: set to return only seventy five percent of the money. 170 00:11:28,679 --> 00:11:32,400 Speaker 2: So whatever gets wagered twenty five percent of it's going 171 00:11:32,440 --> 00:11:36,520 Speaker 2: to get eaten up by the establishment. That's not very 172 00:11:36,559 --> 00:11:37,240 Speaker 2: good odds. 173 00:11:37,840 --> 00:11:42,800 Speaker 1: When you look at, say, distressed assets, are you calculating that, 174 00:11:43,240 --> 00:11:47,200 Speaker 1: over say one hundred activities, a certain number will in 175 00:11:47,280 --> 00:11:50,640 Speaker 1: fact fail, but that the aggregate will make money. 176 00:11:51,520 --> 00:11:55,640 Speaker 2: Well yeah, but we go in after they have failed, 177 00:11:56,160 --> 00:11:59,600 Speaker 2: so that absorbs a lot of the risk. I would 178 00:11:59,720 --> 00:12:05,080 Speaker 2: argue that a properly selected bond that's been defaulted and 179 00:12:05,280 --> 00:12:08,600 Speaker 2: is trading at twenty five cents on the dollar is 180 00:12:08,720 --> 00:12:13,200 Speaker 2: probably a safer investment than most bonds trading at par 181 00:12:13,920 --> 00:12:17,960 Speaker 2: because you have much less downside and at least in theory, 182 00:12:18,080 --> 00:12:20,920 Speaker 2: quite a little bit of upside. But what you have 183 00:12:21,000 --> 00:12:26,240 Speaker 2: to do is to change the management attitude. Companies that 184 00:12:26,280 --> 00:12:30,360 Speaker 2: have been under stressed for quite a while develop what 185 00:12:30,440 --> 00:12:35,400 Speaker 2: I call loser's mentality, bless and what's wrong with your company? 186 00:12:35,920 --> 00:12:40,960 Speaker 2: And they'll always say something extraneous. It's the union, or 187 00:12:41,000 --> 00:12:44,760 Speaker 2: it's the class action litigants, or it's the government, or 188 00:12:44,800 --> 00:12:49,520 Speaker 2: it's the Chinese. They never mention anything that's within their 189 00:12:49,559 --> 00:12:55,320 Speaker 2: own control. So usually just by bringing in someone who 190 00:12:55,360 --> 00:13:00,280 Speaker 2: knows the industry and who doesn't start with the preconception 191 00:13:00,800 --> 00:13:04,920 Speaker 2: that he can't do anything that changes the dynamics in 192 00:13:04,960 --> 00:13:05,840 Speaker 2: and of itself. 193 00:13:06,520 --> 00:13:09,720 Speaker 1: What was the difference in your mind between your approach 194 00:13:09,800 --> 00:13:11,240 Speaker 1: and Michael Milkin's approach. 195 00:13:12,160 --> 00:13:16,080 Speaker 2: Oh, well, milkn in a sense made my career in 196 00:13:16,120 --> 00:13:20,960 Speaker 2: that I was running investment banking in the US for 197 00:13:21,080 --> 00:13:25,319 Speaker 2: the Rothschild family at the point when he was developing 198 00:13:25,440 --> 00:13:32,199 Speaker 2: jump bonds, namely issuing high yielding securities that would deliberately 199 00:13:32,360 --> 00:13:36,840 Speaker 2: low quality. And I knew the Rothschilds would never want 200 00:13:36,880 --> 00:13:42,040 Speaker 2: to underwrite securities like that, but that meant that there 201 00:13:42,080 --> 00:13:47,560 Speaker 2: would be more defaults because, for example, Federated Department Stores, 202 00:13:48,080 --> 00:13:52,240 Speaker 2: a fellow named Robert Campo, a developer in Canada, made 203 00:13:52,280 --> 00:13:56,280 Speaker 2: a hostile bid. He paid six billion dollars with a 204 00:13:56,400 --> 00:14:01,520 Speaker 2: bid for it. Ninety seven percent of it was debt financed, 205 00:14:02,200 --> 00:14:06,040 Speaker 2: so he had thirty million dollars in a six billion 206 00:14:06,160 --> 00:14:11,040 Speaker 2: dollar buyout. Eighteen months later, it went bus because there 207 00:14:11,160 --> 00:14:17,880 Speaker 2: was a recession. So we helped restructure Federated, We helped 208 00:14:17,880 --> 00:14:25,040 Speaker 2: restructure Texico, PanAm TWA, a whole bunch of different companies, 209 00:14:25,080 --> 00:14:29,760 Speaker 2: the steel industry, the coal industry, but the most momentous 210 00:14:29,840 --> 00:14:34,160 Speaker 2: one was the Trump taj Mahal. And that's actually how 211 00:14:34,200 --> 00:14:35,760 Speaker 2: I met Donald Trump. 212 00:14:51,640 --> 00:14:53,680 Speaker 1: From a business side. Tell us about that. 213 00:14:54,600 --> 00:14:59,640 Speaker 2: Well, Trump was building a startup casino on the board 214 00:14:59,720 --> 00:15:05,680 Speaker 2: wall in Atlantic City, and he got Merrilynch and bear 215 00:15:05,800 --> 00:15:09,200 Speaker 2: Stearns to a one hundred ete eight hundred million dollars 216 00:15:09,200 --> 00:15:14,520 Speaker 2: of mortgage bonds for a venture capital type casino. Only 217 00:15:14,600 --> 00:15:18,760 Speaker 2: problem was they never made one interest payment. They defaulted 218 00:15:18,880 --> 00:15:23,400 Speaker 2: before the first coupon came due, so the bondholders were 219 00:15:23,480 --> 00:15:26,760 Speaker 2: actually a little cross with that, and they hired me 220 00:15:26,880 --> 00:15:30,320 Speaker 2: to try to get their money back. So they hired 221 00:15:30,360 --> 00:15:34,400 Speaker 2: me on the Thursday before Labor Day weekend of nineteen 222 00:15:34,520 --> 00:15:38,280 Speaker 2: ninety and as soon as Trump heard the news, he 223 00:15:38,400 --> 00:15:40,640 Speaker 2: called me. He said, you have to come down to 224 00:15:40,640 --> 00:15:44,680 Speaker 2: Atlantic City tomorrow. The last place I wanted to be 225 00:15:45,320 --> 00:15:48,600 Speaker 2: for Labor Day weekend was in Atlantic City with a 226 00:15:48,640 --> 00:15:52,720 Speaker 2: bunch of people playing slot machines. But anyhow, I went 227 00:15:52,760 --> 00:15:57,960 Speaker 2: to the haeliport and there was his chopper, unmistakable in 228 00:15:58,080 --> 00:16:03,440 Speaker 2: that in red ny all Polish type, bright red letters 229 00:16:03,680 --> 00:16:08,440 Speaker 2: Trump on the side of the plane. So I got 230 00:16:08,480 --> 00:16:12,440 Speaker 2: in it. Thirty odd minutes later, we're landing in Atlantic 231 00:16:12,520 --> 00:16:16,600 Speaker 2: City and he's there waiting to meet me in a 232 00:16:16,600 --> 00:16:20,280 Speaker 2: big stretch limo. And as I got into it, I 233 00:16:20,480 --> 00:16:24,440 Speaker 2: noticed there were two flags on the front bumper, a 234 00:16:24,640 --> 00:16:28,560 Speaker 2: US flag and a Trump flag, and the Trump flag 235 00:16:28,640 --> 00:16:34,240 Speaker 2: appeared to be slightly larger than the US flag. So 236 00:16:34,360 --> 00:16:39,360 Speaker 2: it was my first dose of seeing his pension for 237 00:16:39,840 --> 00:16:45,640 Speaker 2: attracting attention and very successfully doing so. So we go 238 00:16:45,800 --> 00:16:49,840 Speaker 2: through this mob scene with Gwynny Casino. People are having 239 00:16:49,920 --> 00:16:53,960 Speaker 2: him sign their beanie hats right on their shirt. One 240 00:16:54,000 --> 00:16:57,080 Speaker 2: woman had a bare back dress and she had him 241 00:16:57,120 --> 00:17:00,200 Speaker 2: sign her back. Now what she was going to do 242 00:17:00,000 --> 00:17:04,520 Speaker 2: with Donald J. Trump in black magic marker pencil on 243 00:17:04,560 --> 00:17:08,679 Speaker 2: her back, I'll never know, But anyhow, I think it 244 00:17:08,760 --> 00:17:11,919 Speaker 2: was all part of the build up because he knew 245 00:17:12,400 --> 00:17:16,960 Speaker 2: the bondholders were furious about the default, and he correctly 246 00:17:17,000 --> 00:17:19,600 Speaker 2: figured they might want to get rid of him. So 247 00:17:19,720 --> 00:17:23,879 Speaker 2: this was all designed to impress me and show me 248 00:17:23,960 --> 00:17:28,600 Speaker 2: how important he was to the operation. Then we went 249 00:17:28,680 --> 00:17:33,560 Speaker 2: upstairs to start negotiating, and he never called it a negotiation. 250 00:17:34,080 --> 00:17:38,760 Speaker 2: He always called it a discussion. But he began by saying, 251 00:17:39,280 --> 00:17:42,320 Speaker 2: your bonds are trading a twenty cents on the dollar, 252 00:17:42,920 --> 00:17:46,359 Speaker 2: and your clients will be lucky to get twenty cents 253 00:17:46,400 --> 00:17:49,160 Speaker 2: at the end, So why don't we just do this. 254 00:17:49,680 --> 00:17:53,320 Speaker 2: I'll personally guarantee them the twenty cents and we don't 255 00:17:53,359 --> 00:17:57,199 Speaker 2: have to have any more discussion. I said, well, Donald, 256 00:17:57,640 --> 00:18:00,920 Speaker 2: one problem is they've hired me to get them par 257 00:18:01,160 --> 00:18:04,520 Speaker 2: plus a crude interest plus one hundred percent of the 258 00:18:04,560 --> 00:18:08,639 Speaker 2: equity in your casinos. So we have a little gap 259 00:18:09,080 --> 00:18:12,960 Speaker 2: that we have to try somehow to close. Well, we 260 00:18:13,000 --> 00:18:15,919 Speaker 2: went back and forth for a couple hours and it 261 00:18:16,080 --> 00:18:20,360 Speaker 2: finally got nowhere. He was stuck at the twenty cents, 262 00:18:20,920 --> 00:18:24,240 Speaker 2: so I ultimately said, well, Donald, is that it. That's 263 00:18:24,280 --> 00:18:27,040 Speaker 2: as far as you were prepared to go at least today. 264 00:18:27,480 --> 00:18:30,600 Speaker 2: He said, yes, twenty cents. So I said, well, then 265 00:18:30,640 --> 00:18:33,520 Speaker 2: I'm not going to waste my time arguing with you. 266 00:18:34,040 --> 00:18:37,119 Speaker 2: I'll call you next week. And I walked out on him, 267 00:18:37,400 --> 00:18:41,240 Speaker 2: and he tells the story to this day because that 268 00:18:41,440 --> 00:18:44,800 Speaker 2: was the kind of tactic he was used to using 269 00:18:45,320 --> 00:18:48,960 Speaker 2: on the other people in negotiation, and he was a 270 00:18:49,000 --> 00:18:52,920 Speaker 2: little shocked to have it used on him. We then 271 00:18:53,080 --> 00:18:58,120 Speaker 2: argued for several months publicly, quite publicly, and eventually we're 272 00:18:58,160 --> 00:19:02,440 Speaker 2: getting very close to our target, but there was still 273 00:19:02,560 --> 00:19:06,119 Speaker 2: little gap. So one morning I went over to his 274 00:19:06,280 --> 00:19:10,880 Speaker 2: office and said, this is our best and final offer. 275 00:19:11,480 --> 00:19:14,919 Speaker 2: He turned it down. What it was was part plus 276 00:19:14,960 --> 00:19:19,160 Speaker 2: the crude plus fifty one percent of the stock, and 277 00:19:19,240 --> 00:19:23,159 Speaker 2: I had figured his breaking point probably would be that 278 00:19:23,240 --> 00:19:26,600 Speaker 2: he didn't want to give up majority ownership, so he 279 00:19:26,760 --> 00:19:29,879 Speaker 2: rejected it and said, well then don and we're going 280 00:19:29,920 --> 00:19:34,600 Speaker 2: to see you in court. And we parted. I went 281 00:19:34,640 --> 00:19:38,080 Speaker 2: back to my office, put out a press release Trump 282 00:19:38,119 --> 00:19:43,240 Speaker 2: taj Mahal bondholders holding a very important press conference at 283 00:19:43,240 --> 00:19:47,040 Speaker 2: the Marriotte Marquis Hotel, and we picked the marry out 284 00:19:47,040 --> 00:19:52,160 Speaker 2: because it wasn't one of his properties. So as soon 285 00:19:52,200 --> 00:19:54,359 Speaker 2: as that was on the news where he called me. 286 00:19:54,359 --> 00:19:56,399 Speaker 2: He said, what the hell is this? What are you 287 00:19:56,480 --> 00:19:59,080 Speaker 2: going to say to the people at the press countrience 288 00:19:59,200 --> 00:20:02,160 Speaker 2: and said, well, Donald, well I told you we would 289 00:20:02,160 --> 00:20:05,040 Speaker 2: see you in court. We're going to announce that we're 290 00:20:05,080 --> 00:20:10,639 Speaker 2: filing an involuntary bankruptcy petition against the taj Mahal and 291 00:20:10,800 --> 00:20:14,440 Speaker 2: by nine o'clock tomorrow morning, it's going to be in bankruptcy. 292 00:20:15,200 --> 00:20:18,760 Speaker 2: He said, well, let me get with my advisors, not 293 00:20:18,920 --> 00:20:22,160 Speaker 2: with his advisers, and me back down a little bit 294 00:20:22,280 --> 00:20:26,760 Speaker 2: of forty nine with him having fifty one percent, worked 295 00:20:26,800 --> 00:20:30,800 Speaker 2: a few more technical details, and then we had a deal. 296 00:20:31,560 --> 00:20:34,880 Speaker 2: He then said, but one more thing, And I had 297 00:20:34,920 --> 00:20:38,000 Speaker 2: spent enough time with him to know the one more 298 00:20:38,080 --> 00:20:41,840 Speaker 2: thing was usually a zinger. Well, in this case, the 299 00:20:41,920 --> 00:20:44,919 Speaker 2: one more thing was he said, you must move the 300 00:20:44,960 --> 00:20:48,960 Speaker 2: press conference to the Plaza Hotel because that was one 301 00:20:49,000 --> 00:20:53,520 Speaker 2: of his properties. So we did. We had this big 302 00:20:54,240 --> 00:20:58,200 Speaker 2: glove fest with the media, and you can imagine this 303 00:20:58,320 --> 00:21:02,320 Speaker 2: is a pretty stressful day for me. So I'm getting 304 00:21:02,359 --> 00:21:06,080 Speaker 2: in the car to be driven home and the phone rings. 305 00:21:06,920 --> 00:21:10,480 Speaker 2: This is your mother, say said, in just about that 306 00:21:10,760 --> 00:21:15,080 Speaker 2: angrier tone. I said, well him, Mom, everything okay? She said, no, 307 00:21:15,680 --> 00:21:20,240 Speaker 2: everything's not okay. I've been playing Marjon with my lady 308 00:21:20,320 --> 00:21:24,760 Speaker 2: friends while we were watching that disgraceful TV show that 309 00:21:24,840 --> 00:21:28,919 Speaker 2: you did just now the press conference with Trump, and 310 00:21:28,960 --> 00:21:32,399 Speaker 2: we all agreed that after all those mean things he 311 00:21:32,560 --> 00:21:36,679 Speaker 2: said about you, you should not make a deal with them. Yes, a, 312 00:21:36,720 --> 00:21:40,040 Speaker 2: but Mom, that's what I do. That's my job. I 313 00:21:40,200 --> 00:21:43,399 Speaker 2: was hired to do that. She said, well, if you 314 00:21:43,520 --> 00:21:47,080 Speaker 2: had only become a lawyer like I always wanted you to, 315 00:21:47,680 --> 00:21:49,920 Speaker 2: you won't have to hang around with people like that, 316 00:21:50,560 --> 00:21:53,800 Speaker 2: and she hung up. She hung up on me. She 317 00:21:54,000 --> 00:21:57,280 Speaker 2: later forgave me for the Trump part, but she never 318 00:21:57,359 --> 00:21:59,399 Speaker 2: did forgive me for not being a lawyer. 319 00:22:00,119 --> 00:22:05,040 Speaker 1: Spirical given that tough negotiation, were you surprised to end 320 00:22:05,119 --> 00:22:07,560 Speaker 1: up in the cabinet with Trump? Well? 321 00:22:08,000 --> 00:22:13,080 Speaker 2: In between what happened was this after the bonds collapsed 322 00:22:13,200 --> 00:22:16,280 Speaker 2: Carly Khan, who as you know, is a good friend 323 00:22:16,280 --> 00:22:20,280 Speaker 2: of mine and a good client, he became the biggest bondholder. 324 00:22:20,720 --> 00:22:24,600 Speaker 2: So we were both on the opposite side from Trump, 325 00:22:25,600 --> 00:22:30,520 Speaker 2: but we both became early endorsers of Trump when he 326 00:22:30,640 --> 00:22:35,520 Speaker 2: was running in twenty sixteen. And the reason was when 327 00:22:35,560 --> 00:22:40,280 Speaker 2: you were adversarial to someone in that kind of circumstance, 328 00:22:40,800 --> 00:22:43,199 Speaker 2: you get to learn what they're made of, and we 329 00:22:43,359 --> 00:22:47,200 Speaker 2: both concluded he was made of pretty good stuff. So 330 00:22:47,280 --> 00:22:52,840 Speaker 2: it changed our whole attitude toward him. And then what 331 00:22:53,000 --> 00:22:58,359 Speaker 2: happened early before the primaries. I was on squawk Box 332 00:22:59,040 --> 00:23:03,120 Speaker 2: and at the end of the discussion about the market, 333 00:23:03,720 --> 00:23:07,800 Speaker 2: they asked me, if Trump were the Republican nominee, would 334 00:23:07,840 --> 00:23:11,119 Speaker 2: you vote for him? And I said yes, absolutely, and 335 00:23:11,160 --> 00:23:15,240 Speaker 2: they were shocked because at that time Republicans were mostly 336 00:23:15,880 --> 00:23:19,080 Speaker 2: not going for Trump, and a lot of them, in fact, 337 00:23:19,160 --> 00:23:25,320 Speaker 2: were Democrats. So I then explained why, and it said, 338 00:23:25,640 --> 00:23:30,399 Speaker 2: he's the only one who understands that the plight of 339 00:23:30,560 --> 00:23:35,040 Speaker 2: middle class in lower middle class America has become so 340 00:23:35,280 --> 00:23:38,239 Speaker 2: severe that they're going to make a change. They're going 341 00:23:38,280 --> 00:23:42,080 Speaker 2: to vote for someone who's going to do something about 342 00:23:42,119 --> 00:23:47,160 Speaker 2: the fact they've been losing purchasing power for all these years, 343 00:23:47,720 --> 00:23:51,240 Speaker 2: and Trump's the only one who recognizes it. So I 344 00:23:51,359 --> 00:23:54,320 Speaker 2: think he's not only going to be the nominee. I 345 00:23:54,359 --> 00:23:57,560 Speaker 2: think he's going to be the president. Turned out it 346 00:23:57,600 --> 00:24:04,040 Speaker 2: was an accurate guess, so naturally we became pretty friendly, 347 00:24:04,680 --> 00:24:07,320 Speaker 2: and as you know, I wrote a lot of editorials 348 00:24:07,800 --> 00:24:11,760 Speaker 2: during the campaign, debated a lot of left wing think 349 00:24:11,800 --> 00:24:16,680 Speaker 2: tank people, and Lo and Behold ended up in the cabinet. 350 00:24:16,840 --> 00:24:19,960 Speaker 1: I did a great job at Cours before that. When 351 00:24:20,000 --> 00:24:23,400 Speaker 1: you were in business, you earned the title King of Bankruptcy. 352 00:24:23,720 --> 00:24:25,280 Speaker 1: Now is that a good thing? 353 00:24:26,880 --> 00:24:32,080 Speaker 2: Well? Fortune magazine gave me that title, and they meant 354 00:24:32,119 --> 00:24:36,520 Speaker 2: it to be approvingly. A lot of people have thought 355 00:24:36,920 --> 00:24:42,040 Speaker 2: it was meant to be a derisive title. I didn't 356 00:24:42,080 --> 00:24:44,600 Speaker 2: invent the titles, so I didn't care about it one 357 00:24:44,640 --> 00:24:49,200 Speaker 2: way or another. But it was Fortune's way of expressing 358 00:24:49,240 --> 00:24:52,040 Speaker 2: that we had built up a very big market share 359 00:24:52,800 --> 00:24:57,200 Speaker 2: in acting on behalf of the victims. I didn't act 360 00:24:57,240 --> 00:25:02,440 Speaker 2: on behalf of companies that had default. I always represented 361 00:25:02,880 --> 00:25:05,280 Speaker 2: the bondholders or the equity. 362 00:25:05,440 --> 00:25:10,560 Speaker 1: So your interest was trying to minimize the loss to 363 00:25:10,600 --> 00:25:14,200 Speaker 1: the people who had provided resources correct. 364 00:25:14,800 --> 00:25:19,320 Speaker 2: And the stranger's part is that even though Drexel doing 365 00:25:19,400 --> 00:25:24,240 Speaker 2: all those bonds really made my life because I'd spent 366 00:25:24,280 --> 00:25:27,879 Speaker 2: a lot of time straightening them out, strangers thing is 367 00:25:28,080 --> 00:25:33,960 Speaker 2: I did Drexel's bankruptcy. Drexel went from being the most 368 00:25:34,040 --> 00:25:39,040 Speaker 2: profitable firm on Wall Street, earning five hundred million dollars 369 00:25:39,080 --> 00:25:44,000 Speaker 2: after taxes, to bust in eighteen months because of the 370 00:25:44,040 --> 00:25:48,520 Speaker 2: collapse of the junk bond market. So it was very strange. 371 00:25:48,680 --> 00:25:53,240 Speaker 2: Here the firm that helped me make a fortune, I'm 372 00:25:53,320 --> 00:25:57,080 Speaker 2: now representing their unsecured creditors. 373 00:26:13,680 --> 00:26:17,240 Speaker 1: I did not know this background, but your mother was 374 00:26:17,880 --> 00:26:22,560 Speaker 1: for fifty years a Democratic county committeewoman. Your dad was 375 00:26:22,560 --> 00:26:25,879 Speaker 1: a local elected official. So you went away and of 376 00:26:25,920 --> 00:26:29,399 Speaker 1: course in Jersey City, where Mayor Frank k ran the 377 00:26:29,400 --> 00:26:32,760 Speaker 1: place for years as a Democrat, your natural background was 378 00:26:32,760 --> 00:26:33,560 Speaker 1: as a Democrat. 379 00:26:34,320 --> 00:26:37,399 Speaker 2: Yes, And so when I first came to New York, 380 00:26:38,440 --> 00:26:43,240 Speaker 2: I got involved with Democratic politics, and it turned out 381 00:26:43,320 --> 00:26:47,879 Speaker 2: I was pretty good at fundraising. So at age twenty nine, 382 00:26:48,240 --> 00:26:51,760 Speaker 2: I was made the treasurer of the Democratic State Committee 383 00:26:52,119 --> 00:26:56,640 Speaker 2: in New York. As I got more exposure to Democrats 384 00:26:57,240 --> 00:27:02,280 Speaker 2: and as they changed from being the party of people 385 00:27:02,400 --> 00:27:06,520 Speaker 2: who worked to being the party of people who don't 386 00:27:06,560 --> 00:27:12,199 Speaker 2: want to work. I'd gradually migrated to the Republican Party, 387 00:27:13,240 --> 00:27:16,600 Speaker 2: but I didn't make the change until long after my 388 00:27:16,760 --> 00:27:20,760 Speaker 2: mother was dead, because she had enough trouble getting over 389 00:27:20,880 --> 00:27:24,240 Speaker 2: me not being a lawyer. Not being a lawyer and 390 00:27:24,320 --> 00:27:27,960 Speaker 2: being a Republican probably would have killed her prematurely. 391 00:27:28,800 --> 00:27:31,560 Speaker 1: One of the great turning points in New York was 392 00:27:31,640 --> 00:27:36,320 Speaker 1: the race between Dinkins and Julianni. Where were you at 393 00:27:36,400 --> 00:27:36,840 Speaker 1: that point? 394 00:27:37,960 --> 00:27:41,600 Speaker 2: Well, at that point I was in transition, but I 395 00:27:41,680 --> 00:27:46,040 Speaker 2: was also involved with a lot of the cultural institutions 396 00:27:46,280 --> 00:27:50,919 Speaker 2: in New York. So Punch Seltzberger, who then was running 397 00:27:50,960 --> 00:27:55,160 Speaker 2: The New York Times, myself, and a man called Marty Siegel, 398 00:27:55,640 --> 00:28:00,679 Speaker 2: who was a big pension consultant, we formed a group 399 00:28:01,480 --> 00:28:06,919 Speaker 2: that was designed to be a public private partnership where 400 00:28:07,480 --> 00:28:12,040 Speaker 2: the board of the institution would contribute half, the city 401 00:28:12,080 --> 00:28:15,760 Speaker 2: and the state each a quarter, and they would fund 402 00:28:16,000 --> 00:28:21,719 Speaker 2: incremental programmatic activity. And to try to get the political 403 00:28:21,840 --> 00:28:28,160 Speaker 2: sector behind that, we banded together all the boardheads of 404 00:28:28,200 --> 00:28:31,680 Speaker 2: the cultural institutions, not just the big ones, but even 405 00:28:31,720 --> 00:28:34,959 Speaker 2: the little ones, and we had a session in the 406 00:28:35,000 --> 00:28:39,400 Speaker 2: New York Times Auditorium, where each of the two candidates 407 00:28:39,440 --> 00:28:45,840 Speaker 2: at that point it was Dinkins and Juliani made their presentations. Well, 408 00:28:46,240 --> 00:28:51,840 Speaker 2: they had never presented anything about culture before, so it 409 00:28:51,960 --> 00:28:56,240 Speaker 2: came time you had to brief them what we thought 410 00:28:56,400 --> 00:28:59,960 Speaker 2: was the program they should do. And nobody wanted to 411 00:29:00,120 --> 00:29:03,960 Speaker 2: to brief Giuliani. So I said, well, I don't think 412 00:29:04,040 --> 00:29:07,080 Speaker 2: that's fair. At the time, I didn't care for him. 413 00:29:07,720 --> 00:29:11,040 Speaker 2: I don't think that's fair. I'll go brief him. So 414 00:29:11,080 --> 00:29:14,080 Speaker 2: I spent two hours with him, at the end of 415 00:29:14,120 --> 00:29:19,200 Speaker 2: which I said, mister Giuliani, as you probably know, the 416 00:29:19,240 --> 00:29:23,960 Speaker 2: cultural community is much to the left of your view, 417 00:29:24,720 --> 00:29:27,520 Speaker 2: so to try to get it off to a good start, 418 00:29:28,200 --> 00:29:34,680 Speaker 2: we'll give you a softball question as the number one thing, 419 00:29:34,960 --> 00:29:37,040 Speaker 2: so that you get off to a good start. What 420 00:29:37,120 --> 00:29:41,080 Speaker 2: would you like for a softball question? He said, Well, 421 00:29:41,200 --> 00:29:44,960 Speaker 2: let them ask me anything about the opera A very 422 00:29:45,000 --> 00:29:50,040 Speaker 2: surprising answer. I said anything. He said, yes, I've really 423 00:29:50,120 --> 00:29:54,280 Speaker 2: known the opera. So I reported that back, and some 424 00:29:54,880 --> 00:29:59,760 Speaker 2: young left winger from I think the Metropolitan Opera asked 425 00:29:59,800 --> 00:30:05,000 Speaker 2: him a very technical question about some obscure opera, and 426 00:30:05,000 --> 00:30:08,720 Speaker 2: he hit it right out of the ballpark, and that 427 00:30:08,960 --> 00:30:14,520 Speaker 2: changed my impression of him quite a bit. And then subsequently, 428 00:30:15,200 --> 00:30:18,959 Speaker 2: since we had developed a bit of relationship, he hired 429 00:30:19,000 --> 00:30:24,120 Speaker 2: me as an outsider to be his privatization advisor and 430 00:30:24,160 --> 00:30:27,160 Speaker 2: we sold off the TV station the city owned. We 431 00:30:27,240 --> 00:30:31,000 Speaker 2: did a lot of things, so I got quite involved 432 00:30:31,000 --> 00:30:32,360 Speaker 2: with his administration. 433 00:30:33,040 --> 00:30:35,760 Speaker 1: One of the most important things you did when you 434 00:30:35,800 --> 00:30:40,640 Speaker 1: were secretary is renegotiating NAFTA at the time, and I 435 00:30:40,680 --> 00:30:43,840 Speaker 1: want to confess upfront, I voted for NAFTA and it 436 00:30:43,920 --> 00:30:46,520 Speaker 1: turned out not to work. I mean, most of Trump's 437 00:30:46,560 --> 00:30:50,000 Speaker 1: critique of NAFTA was right, But what was it like 438 00:30:50,120 --> 00:30:53,040 Speaker 1: to negotiate with the Mexican government. I mean, you clearly, 439 00:30:53,240 --> 00:30:55,960 Speaker 1: both with the Canadians and the Mexicans, you were very 440 00:30:56,040 --> 00:30:58,960 Speaker 1: tough and you got a very good agreement from the 441 00:30:59,000 --> 00:31:00,000 Speaker 1: American perspective. 442 00:31:01,000 --> 00:31:05,920 Speaker 2: Right. Well, Bob Leinheuser was quite involved in the discussions 443 00:31:06,040 --> 00:31:11,000 Speaker 2: leading to the USMCA as well, and both he and 444 00:31:11,080 --> 00:31:14,959 Speaker 2: I felt there is no such thing as free trade. 445 00:31:15,000 --> 00:31:18,719 Speaker 2: It's a lovely concept. I wish it were the reality, 446 00:31:19,280 --> 00:31:24,360 Speaker 2: but like so many economic concepts, it just doesn't work 447 00:31:24,800 --> 00:31:28,200 Speaker 2: in real life. And the reason it doesn't is that 448 00:31:28,320 --> 00:31:34,000 Speaker 2: every country wants to outgrow what its own natural attributes 449 00:31:34,240 --> 00:31:40,240 Speaker 2: let it be, so they all become protectionists, and it 450 00:31:40,320 --> 00:31:46,040 Speaker 2: was a big mistake on our government's part, particularly letting 451 00:31:46,320 --> 00:31:51,320 Speaker 2: China into the WTO, which is not enough TO, but 452 00:31:51,720 --> 00:31:59,120 Speaker 2: to the WTO without proper enforcement mechanisms. Clinton's theory was 453 00:31:59,240 --> 00:32:03,680 Speaker 2: that if they were in WTO, they'd abide by the rules, 454 00:32:04,240 --> 00:32:07,720 Speaker 2: but he didn't have any enforcement, so they didn't and 455 00:32:07,880 --> 00:32:12,959 Speaker 2: LAFTA was a much more complicated thing. Both Canada and 456 00:32:13,120 --> 00:32:18,120 Speaker 2: Mexico are very dependent on the US, and in fact, 457 00:32:18,240 --> 00:32:25,880 Speaker 2: despite big trade balance positive with the US, Mexico runs 458 00:32:25,920 --> 00:32:31,000 Speaker 2: an overall trade deficit. We felt that there were a 459 00:32:31,080 --> 00:32:35,040 Speaker 2: number of things that could be helpful to the US. 460 00:32:35,280 --> 00:32:39,760 Speaker 2: For one thing, we decided it was better if we 461 00:32:39,800 --> 00:32:44,720 Speaker 2: had to import from somewhere, let's import from Canada or Mexico, 462 00:32:44,880 --> 00:32:49,880 Speaker 2: our neighbors, rather than from China or someone who could 463 00:32:50,000 --> 00:32:54,520 Speaker 2: become an adversary. So that was one idea we had. 464 00:32:55,040 --> 00:32:59,240 Speaker 2: But there were also a lot of things in the 465 00:32:59,320 --> 00:33:05,560 Speaker 2: old NAT that were foolish. For example, in automotive, which 466 00:33:05,600 --> 00:33:10,880 Speaker 2: is a huge export business for Mexico, what they did 467 00:33:11,040 --> 00:33:16,960 Speaker 2: was they specified particular individual parts that had to be 468 00:33:17,120 --> 00:33:22,720 Speaker 2: made in Mexico for the car to come in duty free. Well, 469 00:33:22,720 --> 00:33:27,520 Speaker 2: the problem is when you do that, you're ignoring technological change. 470 00:33:28,080 --> 00:33:31,240 Speaker 2: So by the time we came into the picture, most 471 00:33:31,320 --> 00:33:35,560 Speaker 2: of those parts weren't even used in cars anymore, but 472 00:33:35,720 --> 00:33:39,680 Speaker 2: a lot of semiconductors came in and other things. So 473 00:33:40,880 --> 00:33:44,000 Speaker 2: we changed that. We made it a rule that a 474 00:33:44,080 --> 00:33:48,719 Speaker 2: majority of the actual content of the car had to 475 00:33:48,800 --> 00:33:54,720 Speaker 2: be US produced, and that helped us a lot, and 476 00:33:54,720 --> 00:33:57,880 Speaker 2: we made similar changes with other things. Now, the problem 477 00:33:57,920 --> 00:34:01,200 Speaker 2: is Mexico has not been very good at living up 478 00:34:01,200 --> 00:34:05,040 Speaker 2: to the agreement and it comes up for renewal pretty soon. 479 00:34:05,520 --> 00:34:08,960 Speaker 1: Now would you be tougher about insisting on enforcement? 480 00:34:09,960 --> 00:34:15,040 Speaker 2: Well, they changed the system. We insisted that the courts 481 00:34:15,200 --> 00:34:21,560 Speaker 2: be the ultimate resolution of disputes, but now they've decided 482 00:34:21,640 --> 00:34:25,759 Speaker 2: to make the courts be elected by the public, So 483 00:34:25,880 --> 00:34:31,799 Speaker 2: that made the courts totally political, and the probability of 484 00:34:31,880 --> 00:34:37,720 Speaker 2: an American complainant prevailing against a Mexican company under those 485 00:34:37,760 --> 00:34:42,520 Speaker 2: circumstances is pretty much zero. The other thing, they promised 486 00:34:43,040 --> 00:34:49,040 Speaker 2: to open up their hydrocarbon sector to American and other 487 00:34:49,800 --> 00:34:54,200 Speaker 2: natural gas and oil producers, and they've reneg done that. 488 00:34:54,680 --> 00:34:57,920 Speaker 2: There are a lot of problems, whether it's Trump or 489 00:34:57,960 --> 00:35:03,640 Speaker 2: it's whoever running the country, we really need a lot 490 00:35:03,680 --> 00:35:07,160 Speaker 2: of change, even from the USMCA. 491 00:35:07,600 --> 00:35:10,040 Speaker 1: Do you find the Mexicans difficult to negotiate with. 492 00:35:10,719 --> 00:35:16,919 Speaker 2: They're lovely people, and the problem is that it's such 493 00:35:16,960 --> 00:35:24,759 Speaker 2: a highly politicized society and of late, highly left wing society, 494 00:35:25,080 --> 00:35:31,319 Speaker 2: so they're intellectual and geopolitical point of view couldn't be 495 00:35:31,400 --> 00:35:37,000 Speaker 2: more different from ours. So there is a fundamental disconnect 496 00:35:37,600 --> 00:35:41,640 Speaker 2: between them and US. But one of the things that 497 00:35:41,680 --> 00:35:45,839 Speaker 2: Trump did in the negotiations he called in one day 498 00:35:45,920 --> 00:35:50,239 Speaker 2: the ambassador from Mexico because he was wanting twenty five 499 00:35:50,360 --> 00:35:54,760 Speaker 2: thousand troops on the border to help US hold down 500 00:35:55,239 --> 00:36:00,960 Speaker 2: illegal immigration. And I was there and the said, well, 501 00:36:01,320 --> 00:36:05,360 Speaker 2: I've relayed that request to the President of Mexico, but 502 00:36:05,880 --> 00:36:09,720 Speaker 2: he doesn't want to do it. And Trump said, well, 503 00:36:10,160 --> 00:36:14,560 Speaker 2: if he doesn't do it by noon today, we're going 504 00:36:14,680 --> 00:36:20,560 Speaker 2: to impose huge tariffs on everything that comes in from Mexico. 505 00:36:21,239 --> 00:36:24,840 Speaker 2: The ambassador has taking him back, and with me sitting 506 00:36:24,880 --> 00:36:29,080 Speaker 2: there and agreeing, he knew that was very likely to 507 00:36:29,120 --> 00:36:32,600 Speaker 2: be what we would try. So he said, well, let 508 00:36:32,640 --> 00:36:37,160 Speaker 2: me call the president. So he called the president of Mexico, 509 00:36:37,880 --> 00:36:42,560 Speaker 2: and Trump said, remember has to be by noontime because 510 00:36:42,600 --> 00:36:45,640 Speaker 2: I have a very important lunch date and you've got 511 00:36:45,719 --> 00:36:49,520 Speaker 2: to solve this before. Then he came back and they 512 00:36:49,560 --> 00:36:53,400 Speaker 2: gave us the twenty five thousand troops, which was a 513 00:36:53,480 --> 00:36:57,799 Speaker 2: great help, as you know, in holding down the illegal 514 00:36:58,280 --> 00:37:02,080 Speaker 2: immigration because it was keeping a lot of them over there. 515 00:37:02,880 --> 00:37:05,959 Speaker 2: And what he didn't know was it was a very 516 00:37:06,000 --> 00:37:10,760 Speaker 2: important lunch and who it was with was Melania. Trump 517 00:37:10,800 --> 00:37:13,839 Speaker 2: had been so busy he hadn't been able to have 518 00:37:13,920 --> 00:37:16,720 Speaker 2: lunch with Melanna for a couple of weeks. 519 00:37:17,080 --> 00:37:20,120 Speaker 1: And I suspect you would agree, and certainly I would 520 00:37:20,120 --> 00:37:23,560 Speaker 1: that there are moments when our wives become very important lunches. 521 00:37:24,040 --> 00:37:27,040 Speaker 2: Yes, absolutely, he wasn't kidding. 522 00:37:27,400 --> 00:37:29,799 Speaker 1: That's right, that's great. I want to thank you. You 523 00:37:29,800 --> 00:37:32,640 Speaker 1: have great friend, and I always enjoy being with you. 524 00:37:32,800 --> 00:37:36,360 Speaker 1: And you've had a remarkable career so far, and I 525 00:37:36,400 --> 00:37:40,320 Speaker 1: suspect there are more adventures ahead. Your new book, Risks 526 00:37:40,360 --> 00:37:44,200 Speaker 1: and Returns Creating Success in Business in Life, it's terrific. 527 00:37:44,480 --> 00:37:47,359 Speaker 1: It's available now on Amazon bookstores everyone. As I said, 528 00:37:47,440 --> 00:37:51,640 Speaker 1: it's now a bestseller. I really appreciate Wilberg, you're taking 529 00:37:51,680 --> 00:37:52,600 Speaker 1: the time to be with me. 530 00:37:53,040 --> 00:37:56,000 Speaker 2: Well, thank you very much. Thanks, it's good to be 531 00:37:56,120 --> 00:37:59,320 Speaker 2: on with you. Thank you for giving me so much time. 532 00:38:02,480 --> 00:38:05,120 Speaker 1: Thank you to my guest, Wilbur Ross. You can get 533 00:38:05,120 --> 00:38:08,040 Speaker 1: a link to buy his new book, Risks and Returns, 534 00:38:08,400 --> 00:38:12,200 Speaker 1: Creating Success in Business and Life on our show page 535 00:38:12,320 --> 00:38:15,759 Speaker 1: at newsworld dot com. Newtworld is produced by Ginglish three 536 00:38:15,800 --> 00:38:21,040 Speaker 1: sixty and iHeartMedia. Our executive producer is Guarnsey Sloan and 537 00:38:21,080 --> 00:38:25,280 Speaker 1: our researcher is Rachel Peterson. The artwork for the show 538 00:38:25,840 --> 00:38:29,759 Speaker 1: was created by Steve Penley. Special thanks to the team 539 00:38:29,760 --> 00:38:33,440 Speaker 1: at Gingwishtree sixty. If you've been enjoying Newtsworld, I hope 540 00:38:33,520 --> 00:38:36,000 Speaker 1: you'll go to Apple Podcasts and both rate us with 541 00:38:36,080 --> 00:38:39,440 Speaker 1: five stars and give us a review so others can 542 00:38:39,520 --> 00:38:43,239 Speaker 1: learn what it's all about. Right now, listeners of Newtsworld 543 00:38:43,520 --> 00:38:47,640 Speaker 1: can sign up for my three freeweekly columns at Gingrishtree 544 00:38:47,719 --> 00:39:04,320 Speaker 1: sixty dot com slash newsletter. I'm newt Gingrich. This is Newtsworld.