Unusual,d something many of them go back into the finance world. You chose not to do that. I really enjoyed my business career. I had 32 years there and an opportunity to serve my country. What i really wanted to do is take my experience and apply that to address what i believe are the most pressing issues of our time. U. S. China relations and Climate Change. You getany people say on a merrygoround and cannot stop making money, but you said when you have enough money, you will do nonprofit things. What i calledhad the disease or addiction to money. When i went to Goldman Sachs, it 1974. The firm had a couple of loss years. I was interested in working on Financial Issues and working with clients. Vid when you were a goldman, you but your you were not a person who bought your private plane or had a big house in the hamptons. Hampto skiing, it is a place that is not where fancy people go. David with Climate Change, is due to what, is it has occurred with human activity . It is well documented that it is largely caused by humankind. This is no anonymous risk for Economic Security or social stability. I see climate risk as the single biggest and most certain and formidable risk that mankind faces. The Current Administration has pulled us out of the paris accord. In the government who say we do not want to take Climate Change actions that some people like you are advocating, we want out of the paris accord, what constituency are they appealing to . Who is the constituency saying lets not do something . Yvonne i i believe there are invested interest to have a different viewpoint than of average american. The average american, a High Percentage of people concerned about Climate Change, it is not their number one issue. When you look at all of the industries that have a vested interest, beginning with the oil industry and the carbonbased instance, one of the things that will be important in dealing with this problem are economic incentives. There is a whole variety of economic incentives we could put in place to put a price on eliminatingbut also the huge subsidies we pay to discover carbonbased fuels. We have no shortage of them, there is no excuse. Sit here, i think you have been to china 150 times. Hank a lot. David how did you come to deal with china so much . Hank almost by accident. I was in the Chicago Office of Goldman Sachs working with clients in the midwest, and i was not looking to move to new york. Coheadm asked me to be a of our Investment Banking division, with other individuals in new york. We were looking at how we might divide things up, we had big is this in europe and almost nothing in asia. One of the guys said, take asia, take china because it is closer to chicago and new york. I was not overly curious, but interested. Going to asia. I came back and talked to my bosses and said, i get the feeling china is about to take af, and i would like to do deep dive and look at opportunities in china. Inn i made the first trip 1991, we had five people in the hong kong office. When i left to go to treasury in in6, they had 1500 people greater china. I put the pedal to the metal. Great we have two economies, china and the united states. Leading toinevitable a real war, not a cold war . Saying china is a strategic competitor. There are compelling differences when we look at National Security interests. Some important shared interests in terms of global stability and things like Climate Change. But to get to your question, i see aserned about what i a militarization of the u. S. Toward china. National security very seriously, but National Security has bled into every aspect of the economic relationship. , i heart it and i say cold war all the time, and there is no way this is a soviet style cold war. China is very integrated into the global economy. We are looking at the number one manufacturer, the number one trader, a big exporter of capital. Worked for jon erlichman, what was that like . Hank i started in the pentagon weeks before, six the watergate breakin. David thats talk about your background. It might not have been predicted when you were growing up in illinois that you would be the treasury secretary, head of Goldman Sachs, a leader in knowledge about china. You were born in palm beach, how did you come to be born in palm beach . I really a vacation. My parents were in florida and i came prematurely, so i was born in a palm beach hospital. David your parents had a farm. You grew up on the farm, milking cows. Hank i milked some cows and bailed a lot of hay. I did a lot of weeding in the garden. David you said this is what you want to do for the rest of your life . Hank it sure was not. I love being in the outdoors. My family could go to the northwoods in canada and take canoe trips. We ate fish, we picked blueberries and have blueberry pancakes and so on. Rangerd to be a forest when i was growing up in high school. David did your parents talk you out of that . Hank no, they encourage me to do what i wanted to do. They really encouraged me to get a good education. My mom had gone to wellesley. Her father had gone to yale. Because it wasth in the northwoods, and it had small classes, focused on the undergraduate. David before you got to dartmouth, you are a High School Champion Football Player and wrestler . You were all ivy Football Player, a defensive lineman. Hank offensive. Also allamerican, and phi beta kappa. Your nickname was the hammer, what was that associated with . To be i hit pretty hard and tended to be forceful. Inid when you graduated 1968, you went to Harvard Business school. Did you have an interest in business . Hank i wanted to go to oxford and study english, but the vietnam war was in full force. I had a low number in the draft. Program i could get into at harvard, and the easiest place to get into was Harvard Business school. I wish i could tell you this had been career planning. David you graduated 1970 from Harvard Business school and went to work at the pentagon. Hank at Harvard Business school have any business background, i spent most of my time at wellesley according my wifeto be courting my to be. One class i did a fair amount of work in was taught by someone who had been a former assistant secretary of defense. He recommended me to work in the pentagon for a small Analysis Group who worked on projects for the top leaders of the pentagon. That really transformed my life. Assigned to the white house under president nixon and work for jon erlichman. What was that like . Hank i started in the pentagon, and april of 1972 six weeks before the watergate breakin. Like he did not understand the implications at the time. I was there through the election, it was a landslide victory and i got a big promotion. Erlichmansto be deputy for Economic Policy. ,hen watergate hit and blew up and i watched these people at senior positions get carried off. Erlichman got convicted after i had left, but i looked at a number of people there in deep trouble. It made a huge impression on me. The positive impression was George Schultz was secretary of the treasury, he had two guys who worked for him that i had a good working relationship. David you went back to chicago and joined Goldman Sachs. How did that come about . Hank careers are a funny thing. I have never been big on career engineering. When i graduated from dartmouth, i did not know what an investment banker was. Government that i like multitasking, i liked Economic Policy and Financial Issues and problemsolving. That Investment Banking might be a good thing to explore. I also determined i never wanted to live in new york. That was my view. David you are at goldman and obviously did a good job because you got promoted, and wound up being the ceo of Goldman Sachs, a job you did not aspire to. You know what it was like when we graduated from college in business school. If you wanted to run something, you did not go into financial Investment Banking, you went in because you liked the markets and wanted to work with clients on multiple projects. That is why i picked Goldman Sachs. In 1994, the firm had problems, i went off to new york. Nextd we will pick the heads of the firm, and said i will not do that, but then i called her and said i have been drafted to turn things around, but i will only be here for two years. We joked because that was 12 years and i loved it. David you became ceo and prospered well, then george w. And hecomes president , made in to you to be secretary of the treasury. You repeatedly said you were not interested. Why . Hank i enjoy doing what i was doing. Was thefamily that vmminently th ehemently opposed to the president. I knew i was doing a good job running Goldman Sachs, so i said no a few times. They kept coming back. The last time jim baker made a compelling case, and more than was ing else what hit me looked at things and said, guess what . I go around to recruit business goals, i tell people welcome change, change is your friend. Maybe it was fear of failure preventing me from serving my country. As soon as i saw that, i said i will not let that stop me. When you join the government as secretary of treasury, you expected the economy would be in reasonable shape. Hank yes. David what happened . Hank very early on, in the first meeting that i had with david, hebush at camp got his Economic Team together, he wanted me to talk about entitlement reform, that was one of the things that brought me to washington. I told him i wanted to talk about the financial crisis, i did not see one coming like we had, but i saw excesses, and i saw them in 1994, 1998. I thought we were due for turbulent in the market. David ultimately the Banking System came back, but as you look at the system today, could Something Like that happen again . Hank i hate to say this, but we have Less Authority today than we had then. David lehman was on the verge of going bankrupt, and you did have the authority to say in hindsight is there anything you could have done differently . Hank i do not think there was. We tried everything we could to get a buyer. Problem thanbigger bear stearns because they were insolvent. There was a capital hole. A loanas no way that was going to solve the problem. It would take capital or a loan guarantee. Act, we tried very hard and came very close to getting a deal done with barclays. As we look back on it, as bad as that was, that was not the worst outcome that was possible. The crisis had been grinding on for a year. We had three Financial Institutions going down the same week. Aig. N, merrill, and we had one buyer, and make of america bought merrill. , merrillought lehman would have failed in that wouldve been a bigger problem. The thing i will say about was, itas bad as it accelerated the crisis, it was a symptom not the cause. Legislationately did get through congress, but it failed in the first vote in the house. What did you think then . Hank oh boy. We had a number of terrifying moments, and that was one of them. Because, here is the best way to describe it. For months we wanted to get fiscal authorities, it was a big thing for the president to authorize this. There is no way you want to say giveve an emergency, and us these authorities, and then i get them and be naked with to prevent can do the meltdown of the Financial System. When we went to congress, the cupboard was bare. The president had to look ben bernanke in the eye and have him assure him there were no authorities the fed had, there was nothing more we could do. We had to go and get these authorities. David the legislation was but you to buy assets, ultimately decided not to buy assets. Hank i felt putting capital in banks was the only way to nationalize banks. When you do that, it is a costly thing to do, and it precipitates other Bank Failures. I wanted to avoid that, and i have this theory it was the illiquid Mortgage Securities clogging up the credit markets. If we bought them, it would increase capital and recapitalize the banks. In congress the situation worsened. Huge Bank Failures in the u. S. When i went to the president and said, guess what, illiquid asset purchases will not work. He said, you told the world that would do it. I said we made a mistake and we need to put capital in the banks and reverse ourselves, and that is what we did. David ultimately the Banking System came back, but as you look at the system today, could Something Like that happen again . Are we better able to protect against that . System isfinancial much better than it was, much less likely to start in the u. S. There is less dry tender to start a fire. I hate to stay this, but we have less authorities today than we had then. The number one problem we had by far was we had a Financial System that had outgrown our regulatory system. Our revelatory system and authorities put in place after the great depression, there was a run on banks, and we had a situation were 60 of the credit was outside of the Banking System. David you worked closely with. En bernanke then in the Current Administration there is tension between the fed and the treasury and the fed in the white house. Do you have any comment on whether the fed is sufficiently independent, and should we do anything to make it more independent . Hank the thing i am most proud came onat the solution a bipartisan basis. Times, was acted on anything this consequential was that tarp authorities and the authorities for fannie and freddie. Situation,he current i never ever want to bet against what we can do during a crisis. I do know Stephen Mnuchin is very competent and understands Financial Issues. I have a high regard for the chairman of the fed. I believe if we had a crisis, they would figure out how to work incredible career, and what you see is your legacy . Hank if we had not had the financial crisis, i set up the first Environmental Department of treasury, i raised Clean Technology funds to be housed. President bush said i could work on coming up with some standards for carbon emissions, because there were problems in the carbon market. There are plenty of things i would not do if i had not been waylaid by the financial crisis. I look back on it as the honor of my life. I served my country during a crisis and helped us get out of it. Thank you very much. Ford thank you very much your service to our country. David he grew up in a trailer. Ark in florida their modest means you not keep his parents from teaching their children to help those less fortunate. His circumstances did not get in the way of his dream to become a doctor. At duke paul farmer studied medical anthropology, merging medicine with his mission to help those in need. He took a oneyear detour to simplyhe saw friends die for lack of resources and adequate medical care. S spurred farmer degree partners in health
comparemela.com © 2020. All Rights Reserved.