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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  April 2, 2017 2:30pm-3:01pm EDT

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♪ david: you started out, your father was a stockbroker. have you ever considered go into banking? jamie: i did not want to be a doctor or a lawyer. david: you had a lot of jobs, offered the ceo of home depot. jamie: i am not a hired gun. david: do you think the country is better off for having dodd-frank? jamie: the system has recovered. part of that is dodd-frank. david: you have never considered running for office, have you? >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok.
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just leave it this way. just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job running a private equity firm. how do you define leadership? what is it that makes somebody tick? jamie, let's talk about your background. your father was a stockbroker. you started out with some background in this area, and did you ever consider going into banking? jamie: i knew more what i didn't want to do. i didn't want to be a doctor or lawyer. obviously, i grew up around stockbrokers and wall street. my dad, who passed away recently, -- said you should try
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this. get the end of year report, rip out the price, analyze it, and you will be humbled, immediately. do it a couple of times. i was always in the financial world, so i went to business school. i didn't have to go to the financial world. it is fascinating. they are global. you get involved in so many policy issues. i would have had just as much fun building something else. david: you could have gone to goldman sachs, a great firm. you chose to go to work for sandy. why did you do that? jamie: he was down to earth. he offered me to go to an investment bank. i said, no. i said i would learn more at goldman sachs and these other places. he said, why don't you come be my assistant?
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you will learn a lot. he lasted about three more years. david: when he left -- jamie: i was offered a bunch of jobs to stay, but he said, we will find something, build something great. we took over a company called commercial credit. right here in baltimore. i moved down here. it had seven other little companies, a company in israel, a small international bank, a small life insurance company, and that company is the same company that became citi. over those 12 years, so these names you will recognize, we bought primerica salomon , brothers, travelers life -- and it was a conglomerate. we did a good job with shareholders and merged with citi.
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it was a hell of a run, and then he fired me. [laughter] that, i called him. he didn't call me. we met at the four seasons restaurant. i wanted to do it privately. it was on the front page of the ft. with civil war in chechnya. anyway, he was a little nervous. all i want to say is you did the wrong thing to the company. i made a lot of mistakes too, and here are some of the mistakes i made. he said thank you for sharing that with me. we had a very nice lunch. life goes on. david: so, you were in a small
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office at the seagram's building. jamie: after i got fired. this shows you how stupid corporate america gets -- the company had been set up. we had a cochairman and co-ceo. i was going to be the president and run the global corporate investment bank. because of turmoil among management, deals are very tough. we were co-heads of asset management, consumer -- and technology reported to me. they only reported to sandy and john. when he did that, i said, you guys are crazy. this will destroy the company. the second you do this, people will build trenches and stockpile ammunition. by the time you two guys figure it out, a lot of people would leave the company. they kept saying, it works for
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me. i said, it doesn't matter if it works for you. it matters if it works for the clients and employees. when you hear a ceo say, it works for me, you should question their intelligence a little bit. that's not how you should look at business. it is what works for the client ultimately. david: when you were fired and were looking for something to do, you were offered ceo of home depot? jamie: home depot, a couple of international investment banks. hank greenberg who ran aig said, why don't you come over here? you would have to have your head checked. a bunch of private equity folks. jeff bezos was looking for a president. i loved the guy. i was thinking i would never have to wear a suit again. i'm going to get a houseboat in seattle. i loved what he did. it was beyond -- i spent my whole life and financial services.
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it is like playing tennis your whole life, then going to play golf. i love the guys at home depot. i went down to have dinner with bernie marcus and arthur blank. i said, i have to confess to guys. until you called me up, i have never been in a home depot. a guy who i worked with said, jamie, you have to go to one. they did not care. they said we want you the person. we are looking for the heart, mind, and spirit. a couple of other internet companies. i figured this is my chance. how many major financial companies are there -- 30? i said this is my commercial credit. it.t a lot of my money into
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i look at business like i wear the jersey. i am not hired gun. i don't like people who talk .bout it like it is third party david: did you ever expect you would move back to new york, or you thought you were going to chicago and that would be your career? jamie: i had no idea. chicago is a great city. there is a cartoon of me sitting at an airport and the person saying to me, mr. dimon, there are no scheduled flights to new york. when i go to chicago, they did not believe i was going to move here. they said, are your kids going to school here? i said, yes, i'm staying here. i said, if i die in chicago and they ship my ashes back to new york, they would say, i told you.
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[laughter] i did not know. remember the banking industry was consolidating, so i knew if i did a good job, i would be part of that. i did not know i would be an acquirer. it is not up to me. it is also up to a board of directors. to me you make a company as good as you can and that creates all , the opportunities you have. david: which you say the u.s. economy is in reasonable shape? jamie: america has the best hand of any country on this planet, ever. ♪
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david: what would you advise to get the economy growing at a
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better clip? jamie: so there are serious issues the country has and they are not republican or democrat. they are not left or right. they are the issues we talk about, know about. immigration, inner-city school education is a disgrace. we should be ringing an alarm bell. those who do graduate are not assert qualified to have a job. those who create jobs should work together to make sure that certificates, high school, vocational, community college, colleges end up in a job. we are driving american capital and american businesses overseas every day. this inversion problem is making it advantageous for foreign companies to buy a american companies, for foreign companies to invest here, so it is more complicated. i also agree you would not have corporate tax reform without
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individual, and i would propose an expanded earned income tax credit. the democrats are right, we need more infrastructure, $150 billion a year, a drop in the bucket. i'm talking about tunnels, bridges, roads, airports. the democrats are right, but they're afraid of raising taxes to do more spending. they hear that great sucking sound in washington. this is a perfect place to get people in the room. ask republicans how can we do , this in a way that you can approve it? i believe the president took care of all those things. if the president, not democrat or republican, we would be booming. we are not booming because of all the issues we self-created that have slowed down growth. it is time for them to do something.
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by the way, wages and growth will fix wage inequality. cutting corporate taxes will help wage inequality and make it better, so we should be thoughtful about policy. that we get it right and not over politicize. david: you come to washington to meet legislators and regulators. what kind of experience is that for you? [laughter] jamie: first of all, i think it is important that business get involved in washington, so i am not a person who says you never go there. policy is set here. there are a lot of people who do care about making it a better country, and if you don't get involved -- obviously the regulatory environment for banks, not just for us. i travel and when i go to people in any city, i get an earfull about regulations.
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when you come down as a business person, the interest of the country should be put before the interest of your industry or company. [applause] jamie: businesses are asking for that one little thing to help them. i hear these horror stories. just do it right for the country. your business will be fine. it will be better off if the country is strong. fo business has to be careful. it is too self-serving. that does not appeal to the american public. that does not help politicians to get things done. earned income tax credit, those would be good things for america. [laughter] jamie: we should do that and help them at the lower end with education, all those things we need, but have corporate tax reform. david: the interview is over. [laughter] jamie: you can afford it, david. [laughter] david: the economy, you get data from all over the world that
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j.p. morgan gets. would you say the u.s. economy is in reasonable shape? jamie: where are the potholes? we did see potholes in 2007, 2008 -- there are no real potholes there. america has the best hand ever dealt of any country on the planet today, ever. ok? americans don't fully appreciate what i have to say. we have peaceful, wonderful neighbors in mexico and canada. we have the biggest military barriers ever built, the atlantic and pacific could we have all the food, water, and energy will ever need. we have the best military on the planet. and we will for his long as we have the best economy. if you are a liberal, listen to me. the chinese would love to have our economy. we have the best universities on the planet. we have a rule of law which is exceptional.
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if you don't believe me, britain, russia, brazil, argentina, china, india -- believe me, it is not quite there. we have a magnificent work ethic. we have innovation from the core of our bones. you can ask anybody in this room what we can do to be more productive. it is not just steve jobs. we have the widest and deepest financial markets the world has ever seen. i just made a list of these things. it is extraordinary. it is extraordinary. we have it today. yes, we have problems, but you travel around the world -- get in an airplane and travel around the world and go to these other countries and tell me what you think. go to europe. talk about tough regulations and bad politics. we have it all. we have done a pretty good job shooting ourselves in the foot. [applause] david: you would never consider running for office, which you?
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[laughter] jamie: i would love to be president of the united states of america. until donald trump -- i said you would never have a rich businessman who has never been in politics be president, so i was clearly wrong about that. it is just too hard. you have to be a senator, governor. it is why michael bloomberg would be imminently qualified. i also think by the way this collaboration -- you know, get the experts out of the room. we have heard that before. we need policy come a thoughtful people. we need analytics. we need it done right and need to do it together. 145 million people work in america, 125 million work for private enterprise. government can't do it all by themselves. i'm reminded of the post office, the department of motor vehicles. other a matter of fact, the only
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thing they do really well is the united states military. [applause] jamie: so collaboration works. if you go around the country, it works and all of these cities, all of these states. it is here for some reason we just get bogged down and maybe it is just too complicated for mankind. david: what is the greatest pleasure of running a bank? jamie: i'm not an artist, tennis , politician --n this is my contribution. ♪
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david: so you'd think the country is better off for having dodd-frank now or not? jamie: look, the banking system is in a enormous strain. we do the stress tests. j.p. morgan has $500 billion in capital today. that is enough capital -- the
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whole banking system in america has recovered. part of that is dodd-frank. i don't know anyone who would agree with dodd-frank. we agreed that some of the things put in there after the fact should not have been put in, but it is what it is. unfortunately because dodd-frank, it is what it is. i have to deal with it. that is the law of the land. it basically says make the system better, so the regulators have a huge amount of authority to interpret these rules. the system is better, dodd-frank is partially responsible, but dodd-frank was passed 100% democrat, 0% republicans. none of us can possibly say you can't make things better. one day, rational people should sit down and say what parts work, what parts don't work,
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what should be changed. a lot of good work was done and a lot of flaws need to be fixed. david: you were quoted as saying you would have to move people out of london. jamie: brexit is what we expected. brexit is a vote for the unknown that we thought would reduce the gdp. it is going to. it is pretty much going to with foreign direct investment, people opening factories, construction. it is not a disaster. we think .5% to 1%. one thing we know is they reduced the gdp. the second, now we have this uncertainty, and it isn't going to go away because you will be reading for the next year or two years about all the complexity. we don't know the outcome. i usually look at best case, worst case. the best cases it looks like today. i give it only 10%. they will not get away with that
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because the eurozone is angry and they are saying you were not have free access to our markets without free movement of people. that is why britain voted against it. there was logic for it. their logic was why tell the yourself to europe when brussels are passing europe's that affect british citizens, and that was true. maybe the eurozone will say, let's fix the problems for everybody, all 27 nations, not just britain. what worries me the most about brexit is that it causes the eurozone itself to unravel. you have elections in france and germany, you don't know who the there isp is -- populism. it is tough. if you see the eurozone unravel, that has potential catastrophic issues associated with it. maybe just a big recession, but it could be worse than that. we know what that continent has been through for hundreds of
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years. to me keeping the union together would be a better outcome. if they don't, we will deal with that too. a better outcome is a stronger union. david: what about the banks in europe or china? are you worried about the banks there? jamie: the banks in europe are way behind america. i say it with sympathy for them. just like when i talk with our peaceful neighbors. i remind people china does not have food, water, energy. its neighbors or north korea, philippines, pakistan, russia, indonesia. tough part of the world, folks. that changes people's mindset when it comes to managing their country. so europe is behind us. they still have not fixed their capital, profitability. it is much more important to the financial system in europe than here. here it is like 20% or 30%, but if i was running the european government, i would lay off at them at this point. let them do their jobs.
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pounding them eight years later is causing europe to grow a lot slower than it would otherwise grow. things are unwinding constantly, loans, issues, and credit. i don't want to see them hurt anymore. i would like to see them get strong. in a healthier economy, if you need to add capital or liquidity, do it than. in china, the four big banks earn twice as much as we do now. i told american politicians, that is my competition too. some of them earned $40 billion a year. they may have problems with their loan books, but they are ambitious. a year. chinese companies are going abroad, which is very smart. i think the chinese are quite smart in dealing with their situation. they want their banks to be winners. they are banking abroad. they want the next j.p. morgan chase. i don't want them to have it. i think we should have it. they can buy us one day. we have to be very careful when we talk about american business
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and what we want for american business and how important it is for the success of america, and not just us. i've put a lot of these companies in the same boat, ge, caterpillar. we have to compete with some tough competitors globally. david: you have been running a bank for about 16 years, so what is the greatest pleasure of running a bank? jamie: this is my contribution to making it a better world. i tell people that if i don't do a good job for j.p. morgan , i hurt the opportunities. we can't be philanthropic. if i do a good job, we can do all those things. i'm not an artist, tennis player, musician, politician. this is my contribution. david: i'm sure your shareholders would be happy for you to stay forever, but you have any plans how long you will stay in this position?
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do.e: i love what i as long as i have the energy to do it. david: your health is good? jamie: my health is good. thank you. as long as the board is happy with me. i do think there is a time when the right person is ready that i should leave. maybe i will be chairman for a year or two or something like that. i will have an afterlife. i will go on a board, teach, do something to help the government somewhere. i will be fully engaged in business and stuff like that and also try to make it a better country. my wife does inner city schools in the south bronx, trying to get those kids jobs, jobs, and she is doing a great job of that, so i will probably help her with that and things like that. ♪
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♪ cory: i am cory johnson. this is the "best of bloomberg technology." bringing you the week in tech. coming up, nine months after the historic vote, brexit is underway. we will discuss what it means to the $25 billion fintech industry. plus, samsung talks about the debut of the samsung s8.
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