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tv   Bank CE Os Discuss Finance in the U.S.  CSPAN  October 7, 2016 10:48pm-11:53pm EDT

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confidence. you think of the u.s. economy, the u.s. economy is primarily about two-thirds driven by the consumer. two things we had to address quickly -- going in the right directions. >> will you silence your cell phones and the second was jobs. we have unemployment at 10% and clearly swift action around the various types of --. we have employment that's bouncing between 4.95% and we saw while not off the charts numbers pretty good job numbers. it's fairly robust that we have consumer that's large of a covered company.
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we see a good dynamic there and so the u.s. economy being driven by the consumer is in reasonable shape. the other side we have to pay attention to is when we talk to corporate around the u.s. there's not that same confidence. the challenge is topline growth and regulation in the challenge is a lot of the things we know and feel have led to corporations tend to be a bit more conservative in terms of inventory and conservative in terms of capital assets. all in all the u.s. economy is okay. >> jamie would you hand a corporate boardrooms? >> applied to that wages are going up than 15 million more people work and 15 million more in total and we welcome all the immigrants. if you haven't an immigrant here the corporations are doing fine and capital and small-business
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large corporate credit has been in good shape. they have plenty of liquidity and plenty of wherewithal and let me be james to the international partner add to it. i don't think it's goldilocks. i think we should be doing better so later we will talk about why it's not better. >> the corporate sector is $2 trillion of cash sitting on corporate balance sheets. >> a lot of it is being held because moody's ratings fear so if you look around the world this is 50 trillion. sunday will figure out. i think companies are being very cautious and if you look at the average credit rating the fundamental financial is that the average company is what they were as a aa company years ago. those were being much tougher and it's the aftermath of the crisis.
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>> james would bring us back the boardroom and how d.c. the economy? >> i tend to question around a little bit. if we have a goldilocks economy why are interest rates near zero? >> i think it's a recognition that things are doing fine as mike and jamie said, could do better but it's certainly not an economy that reflects a threat environment. i think that's the fundamental question and that leads to the follow-up what brings back the confidence in what brings back animal spirits and what things back a change in the consumer consumption savings. is a sense of confidence that the economy is on track and that confidence comes from the political sector which i'm sure we will talk about some and it comes from the monetary sector
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and i think you would have to look at the average is indeed say the signals you are getting is we are not doing great. in fact that translates into some campaign slogans so if that is the case then why am i going to spend? why am i going to be making the investments i should be making all this what we see in our businesses and what we see and clients balance sheets it doesn't add up. he can't connect these two dots and that's because for all the numbers that drive the economy emotion and human behavior drives it just as much. >> within elections in united states there has always been political risk. is it exaggerated or are we talking too much about politics or is there to much of a driver in the way we think about risk going forward and their places around the world that aren't directly affected by elections of the markets where you are
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putting money investment and lending and are we exaggerating the impact of politics. >> i will start. i think we have got to recognize something different is happening in many people in this room are surprised by the brexit vote. a week ago we had a vote in columbia. i think the vote there was a surprise. we have an election going on in the u.s. and what we are seeing in these elections is rather than people voting for things they are voting against things. that's different from where we have been historically, much more difficult to predict as we go forward. i think in some ways the populism and negativism began defined in different ways. it weighs on economy because when you surprise a population around these folks it undermines the confidence of investment and the confidence in inbound money
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flows and the amount of people willing to spend and hire and all those things. >> you mentioned to viewers and jamie your vocal ahead of her exit. is that the biggest event you'll have to navigate around over the next few years? >> what we said about wrecks it is what's happening which is to reduce the gdp in the uk. that's a disaster. it creates years of uncertainty. that's not a a disaster and one point we will find out that they had to do to accommodate the new rules. we don't know what that is. it's not up to us. the banks are threatening this. we will all be able to do with that. that was the issue about brexit.
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for a whole bunch of different reasons we don't have time to go through it here. i would add to this list of why it should be better and goldilocks. i'm going to write a book one day. i'm going to go through every single one of these and use that data to look backwards but how much legal regulatory compliance and how many jobs are worthless and how incoherent certain policy was. jack welch talked about some stuff like throwing sand in the engine but we have failed to collaborate. we have failed to have proper infrastructure planning. we didn't get tpp done. we didn't get the immigration bill done which the mccain bill was out there we didn't have long-term fiscal reform and i traveled the world and i'm overwhelmed with comments by her clients about what they can't get done because of the rules and regulations and all those things are true. that's why it's 2% and not 3.5. i'm almost positive that i can't prove it. using big date in looking back 10 years from now i think it
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will be proven. >> and a chance and run for office someday? >> i said i'd love to be president but i'm not going to run. look at the politics. everyone except donald trump and this is a true story except for one in history came within the party and was really experiencing politics. every single one except donald trump. the other one which you can can understand as ike eisenhower in 1952. i guess it's very hard to hope that ex-president does the right things and drops the rhetoric about democrat and republican. who cares? they look at all the things we did. take a deep breath and talk to people and put people in those jobs who deeply experienced those matters. we now commonly comes like what happened to in brexit. if their experts get rid of them that's what we are talking about and we are doing it in a lot of
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places. facts analysis and policy matter >> the question was about places and we'll come back to politics. but to avoid about ikea. >> my slogan make america fun again. >> when you look around the world but do you find attractive? how do you bring that into your equation is you think about how you do business? have you planned for? >> jamie talks about -- and i get to talk about this. [laughter] >> i said what's the tide love the book. >> you don't want to know. >> i have an idea. where were we? brexit collects just on brexit you know we have had a lot of
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discussions but the uk the europeans, i think i totally agree with what jamie said. it's all about the survival of the union. the union has been in place for nearly 77 years and it's been a phenomenal social military economic success with challenges of course with the immigration issues that come up in recent years. that message has been lost to this narrow discussion but this discussion is tapping into a vein which exists in spain and it exists in italy and have access in a lot of parts of the european union where frankly a lot of these countries if you look over the last thousands of years it's changed hundreds of times in the configuration of what we experience today. i think the broader long-term consequences aren't
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geopolitically much -- we have 25 to 27-year-old kids working for office in london who haven't been in the uk for five years. german grads have come to work for german countries -- companies. what happens to them? today get residency? we have headquarters. what sort of resources do you have two move-in to have compliance risk? what happens to that? to the cities you might consider moving mark two goodies to have the political infrastructure around the legal and banking capabilities that you need in the city's? i think the big winner for brexit if you are going to call a winner is going to be new york in the u.s.. i think you will see more business moving to new york and that's not our design.
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that is one of the potential outcomes here. i'm very hopeful and we are getting to meet with the various benefits that this can be done in a way that continues to encourage particularly for the uk and for london as much business as possible. it works well. the rule of law is gray. the regular tory authorities are great. folks want to work and there's a huge ecosystem built around the financial sector which has been put in place over five decades. >> it sounds like all the political potential for political change, how do you think about europe generally? this is a place that you can expand your business?
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>> europe's in 19 trillion-dollar economy. it's not a discussion. it's not due you want to. of course. the u.s. is a 17 trillion-dollar economy in the third largest as china and japan. the fourth-largest is japan so it's not a question of are you interested. listen there parts of europe that are doing great. chairman are doing much better. there is then economic marigolds in the so-called eastern europe poll and hungary. europe remains in a critical part of running a global financial institution. that's not even a remote question. this is down in the weeds of okay how many risk management people do need an xyz cities in london and do you have the infrastructure and how do we deal with the fact we have all these employees who were there on a pass for situation they
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thought existed. these are the questions i'm talking about. >> market shares their and available to peep picked up an house of plumbing were were? >> if you look at our history we have been in the uk over one of years. we are fortunate in some respect in terms of the flexibility we have. we not only operate out of the uk we have a bank in ireland. we operate physically on the ground and have pipes connected in and 220 of the 27th ever countries. we have flexibility and is not a question of being in europe. it's just how we are going to be there. >> are there other parts around the world that you like a lot of? >> if you look at what's going on in asia, while growth is and what we would all like it to be we have to get our heads around that the growth paradigm in the world is a bit different now.
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lower longer slower growth rates but if we look it what's going on in china certainly sense and feeling their affairs around the hard landing and we see those economies doing quite well. the nominal things happen in a look at what's going on in latin america right now. you look at the change of regime and what's happening in argentina and look at what's going on in brazil returning to growth next year. places like mexico where you have a phenomenal demographic around the great labor force that sits in the u.s. border and has the same energy or that same shale sitting on their side and energy independence and electricity now those things. we have to get our heads around slower growth and it's a great opportunity. >> coming back to the u.s.. >> every country is different in the growth of trade and asset management and more likely it's
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going to be really good. the job is to manage the risk in that's so i remember sitting in a risk committee one day talking about -- if the risk committee goes on too long you won't take any risk but we were talking about the bureaucracy and the problems in the issues in and the debt and the banks and is the exposure to high? i can envision myself in the risk committee in 1865 sending jpmorgan overtaxation he came back to pitch why it might be a good investment. he said it's a democracy thing and it's a high-yield country. it's undeveloped it has this racial problem and the world is going to be okay. the eurozone, country by country will grow but if it comes to someone is going to leave the eurozone that's an issue. contracts, currencies and all of us going through detailed
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analysis on how we had sat. it's how we will deal with the complexity. >> i will take questions from the audience and you can submit your questions to the app and i will screen them. i will make sure it's interesting. the issue of negative interest rates. what does that mean for your business models verses net interest margins, james? >> forget her business model for the minute. it's horrible if you are -- and that's a fundamental problem. if you want those animal spirits to come back and you want people to engage in consuming and investing than you have got to provide some sort of stimulus on the other side so they are not running on their capitol. who in this room 55 years ago we'd have a negative interest rate environment and to thought if you put together this set of economic metrics around the
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world as disappointing as some of them are and all the rest of spin going on who would have thought that would translate into abass is that interest rates would be who would put this in here? i just think it's an anomaly that is to my mind a last chance action with very uncertain -- it's in antidepressant. >> in fact long-term rates may stay at extraordinary lows for the foreseeable future and for a very long time. >> we would love to have an uproar yield curve. how does it change your business model? >> at first says the things we can control the combination of expenses and risks will be very
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disciplined. we have to be smart about where we found this and this. on the corporate side of things there is more flexibility. to move monies to their stay away from negative interest rates. the transmission mechanism to the consumers are much more difficult. in some cases it's illegal to pass on negative interest rates and in many cases we have a bit of what i would describe as a y2k problem. many cetaceans don't have the system to process negative rates today, fixed over time and in a world where people are living longer and savings are more important there's a psychological impact that again goes back to the undermining of confidence. again you pull the leverage that is his view of saving the net
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interest margins of banks in the country of negative interest rates it's a burden, it's a tax. >> is this a 10 year phenomenon of? are you ready for a long-term period of low-interest rates? >> whatever does i will deal with it. obviously you have to figure out ways to pass things on them or do certain things and increase other things and we are opening checking accounts. the used to be $300 a year now $2050 year. the average margin is down but we do that in the corporate world too. i don't buy this argument. i think you have to be very careful and the more people believe it's true the more likely we will be wrong. i think there's a huge issue around -- my own view is q.v. one worked in qe2 worked.
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no corporation is going to build new plants because of rates alone so these behavior's i'm not sure we are getting the behavior by reducing rates to keep them low. i'm not sure i believe a new normal. honestly i think that monetary policy regulatory policy has changed how all these things work. in the old days the money multiplier when they bought security and created a positive, but the positive in the bank and it was wonderful called excess reserves to be lent out and money to multiply five times. because of all these new requirements, liquidity requirements that simply can't happen. i'm not saying we should change those things. simply doesn't happen so in america today a lot of the know why do you guys have 2.5 trillion excess reserves?
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i can talk about other rules that do the same thing. i don't think the system is functioning the same. the monetary authorities are trying to figure out what these things do. fiscal policy and monetary policy i think if we got those things right i think you would have growth. the natural reaction of the businesses to grow their business. i've never met in any country i've been in including argentina mexico or brazil was bad with business people sitting around a table thing i want to shrink. there are all these questions that need to be answered that i think will lead to higher growth. >> you don't make corporate strategy based on words word just rates are and you certainly don't make them on what's going to happen next decade.
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it's not the way you run a business. there are much more fundamental drivers around corporate strategy which is the opening of markets, demographics regulation and o. are cramond. you prosecute, scale it manages to get from scale and these are the things that drive strategy. by the way those who would predict rates for the next seniors i would ask them where were they ate years ago and how many times have the smart people in this room and others represented rates about last few years and how many times has this happened? once. >> you mentioned demographics. my children have the 60% possibility of living to 105. how do you feel about savings
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products and financial products for a generation that not only longevity but morbidity will live and work into their 80s and it goes back to the issue of savings and low interest rates. if we are not saving enough now for people who retire in 65 how do we save enough for people who grew retire when they are 85 or 90. were you thinking longer term about how demographics shape your financial products? >> very clearly the consequences of low and negative rates have significantly impacted that and it's manifested itself in a few ways. one is we see the defined benefit programs really struggling and in many cases being forced to go to new different alternative asset classes to go down and credit in a search for a yield. >> this award to search for yield? >> it does. many of those are very good professional money managers who do this for a living and going
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wide -- eyes wide open but mom and dad looking on a fixed income are forced to do that. >> the second piece around it is certainly here in the u.s. but probably in many places around the world we have to give some reforms done. the economic focused systems just don't work in many people if you are u.s. citizens in this room and depending on what age you are you are probably thinking by the time i get there to collect the check i'm not going to get that check. we need to go ahead and deal with that today. >> jamie how do you think about the demographic challenges? >> the sooner we do it the better. the plus and minus. and the declining population japan germany and italy have not been dealt with before. there'll be new products and savings and services. people wind up having to work longer and social security needs reform. fdr put social security in place an average person with 265. they worked to 65 and they lived
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at 65 and died at 65 on average. if you live to 65 you would live another seven years only part of the population now the average person retires at 62. if you make it to 65 you'll may get to 85 or 90. let's change the system. we have two do it fairly. i also want to point out part of this is generational. even if you go to 2%, say the average 2% for 30 or 40 years, that's the average household income will be up $40,000. isn't well as you don't own money outside. the huge wherewithal to take care of our people to use transport but it becomes generational about who is gaining for who? i don't know exactly how it's going to work.
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but the products we have in that it will work. >> i think the life expectancy is 58 so that's a pretty good deal. >> social security was created in 1932. the ideas that no one would ever collect but imagine if you are living and working the system we have now in place will not provide for those people. >> we have time to adjust. >> you have been talking about regulation. we had a board meeting and we spent hours talking about regulation. we want to talk about banking. we have basel iii, basel for order could call it on the table. how do you see that coming into fruition and are we able to see past the regulatory process that's been in place for seven years?
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>> whoa, no. that's the short answer. we are in an interesting place right now, let's just say that. the banking system all the numbers are out there is dramatically capitalized on a global basis. obviously by region institution. the amount of predatory change is probably equivalent to the last 50 years and maybe more. there has been an historic set of regulatory changes. unfortunately many of the jurisdictions around the world are now operating in different places. some of declared themselves like the kid in the back of the cart to their parents saying are we there yet and some of them are getting the answer yes and some
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are getting the answer we have to check with somebody else and some get the answer we are close. we have lack of harmony at the global level. we have institutions that i think feel like they have been through enormous change and are trying to adjust to the change through their fiduciary job. the short answer is no we are not there yet. we are much better regulated and with much stronger cetaceans. we have more belts and suspenders and that's a good thing for building confidence in the financial system but the lack of harmony around the jurisdictions around the world is the next phase of the problem. we could talk about this for hours and you probably don't want to do that but we have got to step back and look at the key militant impact of what has taken place between the changes
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in liquidity the changes in capital upfront the annual health tests. you see perfect stress tests and other countries and on the back and if things go badly resolution plan to make sure you don't mess up the neighborhood if you go under. the book ends with the annual health check up is a momentous change in the way thinking about how the industry is regulated for the better. we need to start digesting some of this and just see what's working and what isn't and what are the unintended consequences positive and negative and where would you adjust the dial's? >> the basel iii process may bring down europe if they go their way to asia may go their way. might you worry about that? >> we do. the concept of a level playing field is important. the global world free trade of goods and services and current
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seats etc. you want to have as level playing field as possible. it does for the first time in a long time feel like there is a real convergence emerging today and if you look at the regulations and standards being talked about out there would probably have different constraints in the u.s. then japan potentially has. i think this starts to get to a dangerous place when investor murzin customers clients do comparisons around safety and compliance. it appears at least for period of time were talking about that. >> i had one ceo told me there there -- was days long. >> that was the executive summary. >> you have the regulatory issue started. are there particular revelatory
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changes that were superfluous, damaging, harmful and at the next person were to call you and say jamie what should we be doing? >> i will mention it's clear being down here that japan, china, europe want to stop, digest and not add to capital liquidity modify some the of the things that were done to make sure they are helping the economy. the united states still wants to push for more and it's clear, i would just love to get along. i think to compromise and get something done. we want a level playing field but it's a little bit different. we will survive with that but i do think getting it done is really important. it's just another thing. again i believe out of sympathy for the european banks that for seven years they have been deleveraging and catching up for seven years. let them stop and digest.
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it's important in europe where 70% of the capitalist by banks of my capital markets. i would ask the key motive effect of these things in their hundreds of things. of course no one really knows. i view it the other way around now. i would pick up capital and reserves and operational risk capital. both -- why do you have reserves and capital in central bank's? i believe interest rate swaps are going negative and you have repo problems. one thing that is a necessary but it's so high and you can't remove it in summer is going to look at that one day and say i think the u.s. is bordered million in capital. and there are those that say what you have that capital sitting for this hypothetical hypothetical thing?
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i believe that operational risk. there's no way you can justify for duke million in capital. there may be other things but i think people should be prepared. sometimes it's a knee-jerk reaction. we are not changing anything. that's the way this particularly with banks. the bank suggested is not going to get change but rational thoughtful people when they look at all the things that happened they should modify calibrate synchronize and coordinate for the people of the nation. not for the banks. the banks will get through this somehow so i wish there was a little bit arafat to try to figure out the effects. >> the regulatory components that you think should be changed or dropped? jamie mention one of the components as part of this basel iii and basel for how important is that? >> i don't really want to get
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into which pieces have been changing because it could give the appearance of being self-serving. >> i think the points that jamie makes are legitimate questions. this has been a surge of activity in a depressed time period and there are definitely areas where there has been accessed in areas where it's been too slow. i think what i would like to see is more international harmony and let's stop and pause and digest. let's just see what we have got from there. no question over time you will find it's not working. but the financial system is demonstrably safer than it was going into the financial crisis. the returns of the banks are demonstrably lower because they carry much more capital and it
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behooves us to change or business models to reflect that reality and that could take years and sometimes a decade or more but i'm not going to get in piecing which parts we want or don't want. i would just say i think we need to absorb and digest and live with it for a bit. >> you think the european banks are in bad shape? in other words jamie says there's this idea that in europe we should hit the pause button but the -- negative interest rates and is not the best environment to be raising capital. do you think that banks are facing an unfair set of challenges? >> i think the banks have been given time and they need time to rush in and around some of these things. it's probably not in the best interest of the economies. we started down on this path in
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europe is going to take time for the condition of that and we need to see through it. >> that i digesting to talk about the cost of capital and many officials to understand you have to earn the cost of capital. jamie, your thoughts? many institutions their equity cost is double digits in the return i could we -- equity is three or 4%. it's unfortunate we have a set of conditions but it's one of the biggest challenges our fellow institutions have. >> when you look at the u.s. and i forget the source but the average return on equity and 2015 for the u.s. bank is around 8.5%. citi we were up 9.2. >> james. >> eight .5%. >> one of the question by the audience given the back to you are well capitalized why not play a greater role in europe to
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start the process consolidation and look for access to acquire interests. >> in acquiring? >> yes. >> you try first. [laughter] >> there are's planet earth and there is planet somewhere else which he is sitting on right now. i don't think there's a lot of enthusiasm for the banks getting bigger right now and i think shareholders would generally like to see you adjust your business model above the cost of capital and i think yeah. [laughter] >> if big is bad how do you consolidate in europe? >> big is not bad at all. >> there's a regulatory perception that ag is bad but you can't get consolidation. >> i don't think the facts that supported that. if you look at the balance
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sheets of some of the largest banks in the world they are bigger than they were pre-crisis so listen if you have a global economy that is growing the banking and financial sector is going to grow. it grows with gdp soap big is not bad it's how they manage and whether the regulators are attaching the right amount of capital for businesses you choose to be big in. if you choose to be big in business which is the high capital charge prosecute to the best of your ability and good luck to you. if you are in business you don't have to do that, everybody has to make their business model decisions but actual size you have this political rhetoric around size but regulatory rhetoric has not. >> james, we wake up and say if citi we think we should have 1.8 trillion in assets and 100
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countries sound good. our balance sheet and a geographical presence are all a function of our customer giant relationships. >> here's an important point. every thing we do are for clients and our people, lost everything. it's directly insula tory to that. those governments and consumers in a way that we can do a great job for them. that's why you are in business and that's why you made these decisions. their reason to upside upside in reasons you don't in every single business. >> you need scale but a lot of markets are pulling out because of her electric costs. kyc, aml. where did meeting at the imf and mark carney head of the fsb looking at ways to stop the de-risking process. some of it may be technology-driven and maybe there are changes in revelations and rules. >> we have gone through a.
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radical transformation of our company really refocusing our company but that being said we went to the price is operating in 100 countries. there are those businesses sell in our case we had certain consumer segments to your point that were below scale and around our lack of ability realistically to buy growth and a low were longer environment and hypercompetitive environment. it's tough to organically grow and we did a. disciplined capitol allocation of where we could take that n. employ it in december and meant it in some of those cases and those businesses we have tried to recycle that capitol back into other areas of our business and move away from those things that we didn't see over the immediate or longer-term. ..
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>> the automated unified utilities to make it better for us and for clients. we need governments a notch as the governance in the united states to come to a common set of goals of what we're trying to do here. and then maybe even with the penalty to be of a mistake is made. right now now people are so afraid of the customer of a mistake. were not tried to take risk to her clients
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inadvertently, we we have to protect her company to. i'm hoping we find a better balance over time. it's not going to reverse right now. i think they can do whatever they want they need to be very careful. >> the leap is that last night we had a number of young computer scientists who are leading experts in artificial intelligence that could be applied to some of these issues but it really is technology that can be applied to the services generally. eighteen months ago we are in new york and he said it was time to focus on technology. we are trying to get there. how do do you feel about technology at morgan stanley? are there particular technology you see that you like that you are employing? >> it's not like we woke up a couple years ago and somebody said this thing for technology. it is kind of an front center of
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the banking sector for a long time. maybe the most important innovation is that any might be right is the atm machine. so i don't think you approach technology as a category. you look at the business and you figure out what is the technology you need to have in place to best pursue that business on the most cost-effective basis. what do they need in terms of -- so i your doing in terms of delivering financial advice is very different from electronic trading, very different from some systems -- there's not a generic technology category. and and i think it's incumbent upon the banks to understand where customer behavior is going and
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have the capability to deliver whatever the services are in the most efficient and effective way for it. some of that us with humane humane being in some of its remote. some of the new technologies coming up are things that i think have low barriers to entry, will be functions that will be given away to clients, their algorithms which can be written by any number of people and i'm not sure what this is sustainable advantage of this are. i think there's there's a minimum cost of entry which institutions like ours will adopt in a brace. it's not they were radically change all sectors of finance. then you have to say payments are different thing consumer credit, wealth management manage is different from, equities trading is different from -- you go through the long list. everything is is affected at a different level. the more retail clients in directed activity which can be
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done electronically the more that will happen. but the more sophisticated that you have skills, don't throw don't throw the baby out with the bathwater. we talk about this every week, these issues permeate every discussion you have about every business, it's not like we shut that book and open up the technology book. >> it's part of your dna. so how much time to spend thinking about employing new technologies in the sector of yourself. >> we spend a lot of time, we have innovation centers like most silicon valley government singapore and tel aviv around the world. what we try to do is take that locally into the business. we don't try and drive it top-down technology strategy.
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what we are focused on is what we call removing frictions. the technology is all about friction. friction is money, fees, money, fees, time and aggravation and what can we be doing in terms of customer client interface, terms of firm and services, regulatory action where we can take those frictions out and make the journey as stainless as possible. it's interesting, i remember five or six years ago, we love the big, bold vision slogan, the aspirational statement and i remember we came out and going into a meeting and someone said our aspiration is to become the world's digital bank. i went home and slept on it, i came up the next and i said, that is a redundant aspiration. that in order to be a bank going forward you have to be digital. so again, it's the mindset that's there and it has to be at a local level. >> a fellow board member said i'm not a bank drama technologists. jamie, your technologist.
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>> i agree with both. we been doing this forever, the cost of services is almost a tenth of what it was 20 years ago. we all need to use it to serve our customers. you can get alerts, move money, investment money, we are all going to have investors and use the cloud to reduce cost and block chain, it all works, it will be deployed, snack going to be an earth shattering thing, it will be a continuation of reducing costs and serving clients who want to be sir. it's it's different for every business and every product. >> and we all do the same, we collaborate and compete, that's our life, we've been doing it forever to try to reduce it. even straight through processing it reduces rates for clients. >> there's 1,000,000 things to do that or just logical that most of us have been doing since we been in business. i think most viewed this thing at every business meeting we've had. i think it's good that they
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want to disrupt it. it's called capitalism. we, collaborate or compete, either waistline. >> james we have a session have a session this afternoon on green finance, driven by climate change and there seems to be a great movement in creating instruments to deal with climate change and green finance, is that important to morgan stanley? are you creating products to facilitate funding into green initiatives? >> it out to be. be. the planet is not getting any bigger. how to figure out how to participate in this weave credit some calls sustainability institute which is really just a vehicle with a lot of outside advisors to shake us up a little bit and point us to where we should be thinking about, not as do-gooders, we do a lot of things charitably but where our clients need help and we have a
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lot of investors who want to invest in sustainable portfolios, how do you create the right product for that so it's like a lot of these activities, i don't think it is something you can ignore, the world is not getting bigger, we need to use our resources better and everybody wants to participate. we are restructuring buildings to make ourselves as a company more environmentally friendly were trying to help our clients by raising finance around it. >> is everything policymakers that facilitates your launch into this business or should they just get out of the way? is there ways to facilitate? >> we are all going to repeat the same thing. the governments need to do the right thing here. social finance, there can have
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carbon and carbon taxes, it's their responsibility, and they're doing it but that's what's going to fix the stuff. this is really the tip of an iceberg, it's for helpful but it's not going to change climate. >> i agree. >> i would just go to infrastructure than, one of the issues that we've discussed at these meetings is the lack of infrastructure, mckinsey says that we need between 50 and 60,000,000,000,000 dollars worth of infrastructure globally. are you engaged in providing that globally and are regulatory issues making it challenging for you to provide infrastructure funding? >> i think the new capital rules have made it more challenging, as you cited the mckinsey never 60 trillion of infrastructure needs over the next decade and i'm sure all of us travel the world and there is really an insatiable appetite for financing. on a lot of infrastructure projects. as we go forward in the u.s. as jamie mentioned there probably
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more effective going forward it will be some type of infrastructure projects here in the us. were absolutely engaged. if you look at big things going on right now we have a 14 billion-dollar new airport going into mexico city. we just help build a new metro rail system in panama, but the big challenge and the answer is how do we get government banks and private sector together to create the right structures to fund it? the demand around that will far exceed supply. >> so the capital charge with respect to regulatory changes and then as a government playing some role in providing some guaranty or risk coverage? >> we talked about public policy for a second. the democrats are say today we need another 50 billion per year which would probably be 100,000,000,000 per year for ten years. and republicans are no more taxation. i am sympathetic to both.
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which is, we need the better infrastructure and better roads, bridges, tunnels, i, tunnels, i don't think new york city has built a bridge or a tunnel from us 50 years. but i think the republicans are also right that sometime money gets taxed on the citizens and goes to washington and the money gets told out to their favorite members of mayors and governors and projects, i was driving by a project the other day, a little bridge, the bridges probably five times the size of this thing. it's four years in the running. don't tell me it wasn't fraud. i don't want to hear, so both sides are right, i hope hope the next president calls up the opposition party and says come over for some cocktails how can we satisfy you, how can we do this and make you comfortable that is being done right. there are 1,000,000 ideas how to do that. bank should bank should
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be part of it but public-private partnerships, the property design they all could work. and that's what you need to do and where you're going to get the benefit to society where you create productive jobs that are conducive to long-term growth. >> let me ask you the same question. a trillion to be deployed, what's the market failure? wise and isn't this capital going to infrastructure? >> you have to look at by region of the world. maybe the most exciting infrastructure story is for the next ten years ironically going to be the youngest democracies in one of the oldest which is india in the us. on on the other hand china you could argue has overbuilt a lot of infrastructure going to the second, third, fourth your cities. southeast asia, tremendously. rinsing up poor with the government there, major push on infrastructure, i think the world is beginning to wake up to
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it. how to do the financing, a lot of the projects are kept on the bank balance sheets. to sell to sell off long-term finance effectively and how much can be picked up into a private equity funds which is that we build our own, we raise the fund, but this is a tiny part of what needs to happen. i think think the next decade is very exciting. obviously an alternative investment which becomes more interesting in a much more sporty environment in this environment it starts to get more interesting. >> we have a minute and a half left. let me ask your broader question, we are in an area of anti-trade, anti-immigration and unfortunately anti-finance, as you go about the business every day you senior employees,
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clients, customers and traveling around the country, how are you telling the positive story that your institution is playing with respect to economic growth, capital formation? what story are you telling? how do you go out until your poison? what is the story you tell? >> it going back to the earlier point, were not doing these things because we wake up and want to do them. we're doing up to support our clients around the world. i can tell you in the conversation with u.s. multinational, they're looking for opportunities around the world. sometimes that growth is at home and it's not. our ability to lead and follow to those places and supported we do not see that in retreat. what is sometimes described as protectionism or people talked about globalization, it is a bit more personal than that. what we see today and we see it
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in the us, it is about how do i protect my job and in the u.k. it's how i protect my border. and that my incentives there and we have to understand in terms of what's going on we have to deal with the mentality and show the benefits of that. >> jamie, what what is your speech? >> i'm speaking for all of us i think, i am so proud of what this company, j.p. morgan of what we accomplish every day around the world. for the most part we go to towns and think of 2000 hamlets in 100 countries and god knows how many the united states where the clients actually like us. they want us, they want our capital our brainpower, and it's for middle markets, governments, will fund governments. and the customer satisfaction has never been higher.
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it's not always understood by the population. the best job we can do is do the best job we can every day with every interaction. it goes way be all that. where philanthropic and we train people around the world and how to do certain things and we started a new black entrepreneur fund in detroit. these are fabulous things. you feel proud of the place and what it accomplishes. every now and then you make a mistake and it could be a doozy. in our business anyone of us it reverberates. so keep morale out, this too will pass. >> james, the final final word. >> on the doozy? [laughter] i didn't talk about that. >> listen, the exciting thing is that global economic growth needs somebody to facilitate between those who have capital and those who need it. that's the essence of what we do. you wouldn't have companies like facebook and apple, they would not exist if you didn't have access to the markets.
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so they wouldn't of existed in venture capital didn't exist. so we are managing 2,000,000,000,000 dollars of people's money.'s money. they depend upon good management of their money to get the kind of returns and get the retirement and all the other things they need. that's an incredible responsibility and an incredible privilege. the ability to do that and help companies grow to merge companies to make them more global, these are tremendous and necessary things that have to happen for the global economy to grow. if you're interested in that in finance, if that's the career you're excited about, terrific. for a lot of people is not, we understand that. this is an industry central to global economic growth. the challenge we have which jamie finished on is that we are all basically in this together.
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there's not a lot of separation, we are all the banks. the banks have to collectively raise themselves to a standard of sufficient world-class professionalism where we don't give the public a reason to take a shot at us. and we get to do the job the public needs us to do. >> ladies and gentlemen around of applause. [applause] [inaudible] >> every weekend book tv brings you 48 hours of nonfiction books and authors. here programs this weekend. saturday at 7:00 p.m. eastern, hillary clinton's email controversy is is the topic of
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an arthur panel discussion with peter schweitzer, author author of clinton cash. jerome corsi, author of partners in crime and tom, author of clean house. then at 10:00 p.m. eastern afterwards, mary thompson thompson jones details the day-to-day work of u.s. diplomats and looks at the issue of leaked diplomatic cables in her book, to the secretary, leaked embassy cables and american foreign-policy disconnect. she is interviewed by former undersecretary of democracy and global affairs during the george w. bush administration. >> i think leaks are going to be a part of government light. the speed and the multiplicity to which we communicate with each other now not only in long cables but short e-mails, text, and social media, tweets, all of that is going to be part of the body politic.
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>> is sunday at 6:45 p.m. eastern, nobel prize-winning economist joseph on the future of the euro in his book, the euro, euro, however, currency threatens the future of europe. go to booktv.org for the complete we can schedule. >> for the second time it in the fall campaign hillary clinton, donald trump are on the same stage. sunday night at washington university in st. louis, missouri. we've, missouri. we been reporting on this for the washington post. she joins us from the newsroom. thank you for being with us. >> of course, thank you for having me. >> a different format, town hall meeting format. how is a hillary clinton preparing and how is donald trump repairing? >> donald trump is doing more preparation than he did the last debate. that debate did not go well for him. and it was really a victory for clinton. trump has just not had a very good two weeks since that
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debate. he's hoping to stay on script and have a very successful debate on sunday night. and hopefully once again jumpstart his campaign. >> ravi is the campaign manager for hillary clinton already telegraphing they are expecting a much better prepared donald trump, said trying trying to lower expectations for hillary clinton? >> i think so. i think both sides are trying to manage expectation. but i think it is a fair expectation to have. this a variable with this debate is it's a town hall format. you'll have people who are going to be real voters are going to be asking the candidates questions. both of these candidates have had a lot of problems be unlikable. they are two of the least liked presidential nominees in history. so this is an opportunity for both to show they can relate to
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real people that they can care about the problems that voters have in the concerns they have. in both camps there has been a lot of talk of how these candidates who are not always the most relatable can show voters they can relate to them. >> did the debate earlier this week with governor mike pence and tim kaine have any impact on donald trump specifically are the trump campaign generally? >> i think it was a clear example of what his message could be. if he could just delivered clearly. and with a little less anger. it was a victory that they needed for morale reasons. and also once again an example of why he has made it this far. th

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