Transcripts For BLOOMBERG The David Rubenstein Show Peer To Peer Conversations 20170409

David i dont 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, lets talk about your background a moment. You started out, your father was a stockbroker. You started out with some background in this area, and did you ever consider going into banking . Was that always what you wanted to do when you went to Harvard Business school . Jamie no, i knew more what i didnt want to do. I didnt want to be a doctor or lawyer. I wanted to be a part of building something. Obviously, i grew up around stockbrokers on wall street and stuff like that. My dad, who passed away recently, he said jamie, said you should try this. Get an annual report, rip out the part that has the price in it analyze it, and you will be , humbled, immediately. Do it a couple of times. I was always in the financial world, but to me, just building something financial. So i went to business school. I didnt have to go to the financial world. It is fascinating. Everything you read in the paper matters. They are global. You get involved in so many policy issues. So it was just a fun place to build, but i had so much fun building something else. David normally is a baker scholar, Harvard Business school, they could pick almost any job they want. You could have gone to goldman sachs, a great firm. You chose to go to work for sandy. Why did you do that . Jamie sandy was a small broker, and i found him kind of down to earth. He had offered me to go to shearson, their Investment Bank. I said, no. I said i would learn more at goldman sachs, morgan stanley, and lehman. He said, why dont you come be my assistant . I was a baker scholar. It was important to him. He said, why dont you come be my assistant . You will learn a lot. I know its going to happen. So he lasted there about three more years. You did learn a lot. David when he left jamie i was offered a bunch of jobs to stay and stuff like that, but he said, we will find something, build something great. So we took over this Little Company called commercial credit in baltimore here. One of my babies was born in sinai hospital i moved down , here. I took his Little Company. It had seven other little Companies Including like a Leasing Company in israel, a small International Bank which made bank loans that all went bankrupt a small Life Insurance , company, and that company is the same company that became citi. And over those 12 years, so we bought these names you will recognize, primerica, shearson, salomon brothers, at the property, travelers life and it was a conglomerate. They did not, we did a good job with shareholders and merged it with citi. And so it was a hell of a run, and then he fired me. [laughter] david so what jamie when he did that, id call him up one year later. I called him. He didnt call me. Time to break bread. We met at the four seasons restaurant. I wanted to do it privately. He said, no. We will do it at the four seasons restaurant. It was on the front page of the ft. Dimon, lyle have lunch. It was like civil war in chechnya. Anyway, he was a little nervous. And i said hey we will not spend , time in the past. 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. After i give him the mistakes i made, he said thank you for sharing that with me. We had a very nice lunch. It is not quite clear he did the wrong thing for the company, and life goes on. David so you then were in a small office at the seagrams building. You rent a small business. Jamie after i got fired. I was fired. This shows you how stupid Corporate America gets when you have the company had been set up that we had a cochairman and coceo. I was going to be the president and run the Global Corporate Investment Bank and other jobs. Because of turmoil among management, deals are very tough. We had triheads, coheads of asset management, coconsumer and technology reported to me. They only reported to sandy and john. When they did that, i said, you guys are crazy. This will destroy the company. The second you do this, people will build trenches and stockpiling ammunition. By the time you two guys figure it out, a lot of people would have left the company. I was the first casualty, by the way. They kept on saying, it works for me. It works for me. I said, it doesnt matter if it works for you. It matters if it works for the clients and employees. It works for me. When you hear a ceo say, it works for me, you should question their intelligence a little bit. Thats not how you should look at business. It is what works for the client ultimately. , david so when you were fired, and you were looking for something to do, you had a lot of jobs. I think you were offered ceo of home depot . Jamie home depot, a couple of Big International Investment Banks. Hank greenberg, who ran aig, said, why dont you come over here . I could go from sandy well to Hank Greenberg . You would have to have your head checked. A bunch of private equity folks. Jeff bezos called me up and was looking for a president. I loved the guy. We have been friends ever since. I was thinking i would never have to wear a suit again. I am going to get one of those houseboats in seattle. I loved what he did. It just was beyond i spent my whole life in financial services. 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 and ken mangone. 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 got to go to one before you go to the dinner. They did not care. They said we want you the , person. We are looking for the heart, mind, and spirit. We are not interested in what you know about merchants and stuff like that. A couple of other internet companies, you make 1 billion, that type of thing. I figured this is my chance. How many major Financial Companies are there 30 . How many change their ceo in a 3, 4, 5 year. Period . Four or five . I said this is my commercial credit. It will be what we make it, and i put a lot of my money into it. Not because i thought the stock was cheap, but you know what, i am the captain. I look at business like i wear this damn jersey. I am not a hired gun. I am going to bleed for the company and handed it off to someone i believe in. I dont like people who talk about it like it is third party. This is what i do. David so when you went to bank one, 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. I love chicago by the way. It is a great city. I really did not know. 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. And in chicago, when i go to chicago, they did not believe i was going to move here. Are you moving here . Are your kids going to school here . Yes, i am really here. Im staying here. When i was in chicago i said, if i die, if i spent my whole life and to die in chicago and they ship my ashes back to new york, they would say, i told you. [laughter] jamie i did not know. I remember the Banking Industry was still kind of consolidating, so i knew if i did a good job, i would probably be part of that. I did not know i would be an acquirer, building up a bigger Regional Bank or 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 it creates all the opportunities you have. David would you say right now that the u. S. Economy is in reasonable shape . Jamie america has the best hand ever dealt of any country on this planet today, ever. David what would you advise to get the economy growing at a 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 that we kind of talk about, know about. Immigration, there was a fabulous bill that was passed. Innercity School Education is a disgrace. We should be ringing an alarm bell. Over 50 of the kids in innercity schools do not graduate, and those who do are not qualified enough to have a job. Those who create jobs should Work Together to make sure that that certificate, whether it is high school, vocational, committee college, or college, ends up in a job. We need more tax reform. We are driving American Capital and American Businesses overseas every day. This inversion problem is also making it advantageous for Foreign Companies to buy American Companies, for Foreign Companies to invest here, more than for American Companies American Companies buying American Companies to invest here so it is more complicated. , i also agree you would not have Corporate Tax reform without individual, and i would propose Something Like a greatly expanded earned income tax credit. You read a lot about infrastructure. The democrats are right, we need more infrastructure. You are talking about 150 billion more a year, a drop in the bucket. I am talking about transportation, tunnels, bridges, roads, airports. The republicans are right when they are afraid of just raising taxes to do more spending. They hear that great sucking sound in washington. Bridges to nowhere more crony , capitalism. This is a Perfect Place to get people in the room. Ask the republicans, how can we do this in a way that you can approve it to build the bridges we actually need . I believe the president took care of all those things. Not democrat or stated that the economy would be booming. We are not booming because of all the issues we selfcreated that have slowed down growth. It is time for them to do something. And by the way, wages 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 just over politicize. We really damage ourselves we do that. 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 dont get involved, that means you will be stepping over other people. Obviously the Regulatory Environment for banks, not just for us. I travel the United States of america, and when i go to people in any city, i get an earfull about regulations. Completely unrelated to banks. So there is this issue about Regulatory Burden on people in the economy, but you know, i calmed down, i do the best i can. Regulators and policymakers, i think when you come down as a business person, the interest of the country should be put before the interest of your industry or your company. And so this is a conflict [applause] jamie that one little thing that helps them. I hear these horror stories. Just do what is right right for the country. Your business will be fine. In fact your business will be better off if the country is strong. Business has to be careful. It is too selfserving. And you know, that does not appeal to the american public. That does not help politicians get things done. That is what i am saying. 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, income assistance, all those things we need, but have Corporate Tax reform. David the interview is over. [laughter] jamie you can afford it, david. Ok . [laughter] david the economy, you get data from all over the world that jpmorgan gets. Would you say right now the u. S. Economy is in reasonable shape . Jamie you look at the economy, where are the potholes . We did see potholes in 2007, 2008 in leverage and mortgage. There are no real potholes there. America has the best hand ever dealt of any country on the planet today, ever. Ok . Americans dont fully appreciate what im about to say. We have peaceful, wonderful neighbors in mexico and canada. We have got the biggest military barriers ever built, the atlantic and the pacific. We have all the food, water, and energy will ever need. We have the best military on the planet. And we well, for as 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. There are great ones elsewhere, but these are the best. We still educate most of the kids who start businesses around the world. We have a rule of law which is exceptional. If you dont believe me, britain, russia, brazil, india, venezuela, 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 anyone in this room what we can do to be more productive. Ask your assistance on factory floors. It is not just steve jobs. We have the widest and deepest Financial Markets the world has ever seen. Ok . I just made a list of these things. Maybe i missed something. It is extraordinary. It is extraordinary. And we have it today. Yes, we have problems, but you know, when i hear people you travel around the world, get in an airplane and travel around the world and tell me what you think. Go to europe. Talk about tough regulations and bad politics. We have it all. We just need to fix we, we have done a pretty good job shooting ourselves in the foot. [applause] david you would never consider running for office, which you . [laughter] jamie i would love to be president of the United States of america. Ok . And until donald got elected, i said you would never have a rich businessman who has never been in politics be president , so i clearly was wrong about that. It is just too hard. I think the most people you have to be a senator, governor. It is why Michael Bloomberg would be imminently qualified. Did not do it the way a lot of people have done it. I also think by the way this collaboration what you here today is, you know, get the experts out of the room. We have heard that before. We need policy, 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 cant fix all these things by themselves. When they act like government is the only solution, remind them of the post office, the veterans affairs, department of motor vehicles. As a matter of fact, the only thing they do well is the United States military. [applause] jamie so collaboration works. If you go around the country, it works in 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 doing this, of running a bank . Jamie im not an artist, i am not a tennis player, i am not a musician, i am not a politician. This is my contribution. David so do you think the country is better off for having doddfrank now or not . Jamie yeah, look, the Banking System is far the Banking System is an enormous strain. Jpmorgan in the night we do the stress tests. We have my favorite stress test. Jpmorgan has 500 billion in capital today. That is enough capital for all the stress losses of the banks. All of them. The whole Banking System in america has recovered. Part of that is doddfrank. Doddfrank in reality does its thing. I dont know anyone who would agree with doddfrank. Barney, frank, and i agree that some of the things put in there after the fact should have not been put in, so i dont agree with all of it, but it is what it is. Unfortunately because doddfrank, it is what it is. I have to deal with it. And that is the law of the land. The only thing doddfrank did is it is not a legislation that has said acts x, it basically says make the system better, do what you have to do to do it. So the regulators have a huge amount of authority to interpret these rules. The system is better, doddfrank is partially responsible, but doddfrank you know was passed 100 democrat, 0 republicans. And none of us can possibly say you cant make things better. One day, people, rational people should sit down and say what parts work, what parts dont work, what parts should we change . Im not in favor of throwing it out or sparking ground zero. A lot of good work was done and a lot of flaws need to be fixed. [applause] david you were quoted before the brexit vote that saying you would have to move people out of london. Jamie what happened with brexit is kind of what we expected. We did not expect it to be a disaster. Brexit is a vote for the unknown that we thought would reduce the gdp of the u. K. It is going to. Forget the data that is coming out. It is pretty much going to with foreign direct investment, people opening factories, construction. It is not a disaster. We think. 5 to 1 . That will reduce the gdp of europe a little bit. Not a disaster. For the percent. 3 . That is one thing we know. The second, now we have this mound of uncertainty, and it isnt going to go away because you will be reading for the next year or two years about all the complexity. And we dont know the outcome. I usually look at best case, worst case. We will go through here. The best case, it looks a lot like today. It is fine. I give it only 10 . I can get away with that because the eurozone is angry and they want to keep the eurozone together. They are saying you will not have free access to our markets without Free Movement of people. That is exactly why people admit this people in people in britain voted against it, or brexit. There was logic for it. Their logic was why tether yourself to sclerotic europe . Brussels are passing europes that affect british citizens, and that was true. Maybe the eurozone will say, lets fix the problems for everybody, all 27 nations, not just for britain. The britain negotiate a then britain negotiates a favorable deal. What worries me the most about brexit is that it caused the eurozone itself to unravel. You have elections in france and germany, you dont know who the leadership is, the same kind of populism that youre seeing over there that we have over here. It is tough. And 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. You know what that continent has been through hundreds of years. To me keeping the union together would be a better outcome. You know, if they dont, we will deal with that too. A better outcome is to have a stronger union, not a weaker 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 am saying it in sympathy to them. Just like when i talk with our peaceful neighbors. I remind people china does not have food, water, energy. Its neighbors, north korea, philippines, japan pakistan, russia, indonesia. Tough part of the world, folks. You know, that changes peoples mindset when it comes to managing their country, etc. So europe is behind us. They still have not fixed their capital, their profitability. It is much more important to the Financial System in europe than it is here. It is 70 , 80 of the Financial System there. Here it is like 20 or 30 , but i think if i was running the european government, if you were a dictator, i would lay off at them at this point. Let them do their jobs. Pounding them eight years later , in my opinion is causing , europe to grow a lot slower than it would otherwise grow. Because things are unwinding constantly, loans, issues, and credit. I dont want to see them hurt anymore. I would like to see them get in a get strong. In a healthier economy, if you need to add capital or liquidity, do it than. In china you know, the four big banks earn twice as much as we do now. I told american politicians, i am not saying it lightly, that is my competition too. Some of them earn 40 billion a year. They may have problems with their loan books, but they are ambitious. Icb is in 60 countries. In 30, 40 years ago, it was in one. Chinese companies are going abroad, which is very smart. I think the chinese are quite smart in dealing with their situation. Their banks are banking abroad. They want their banks to be winners. They are banking abroad. They want the next jpmorgan chase. I dont want them to have it. I think we should have it. They can buy us one day. We have got to be very careful when we talk about American Business and what we want for American Business and how important it is for the success of america, and not just us. Ive put a lot of these companies in the same boat, ge, and caterpillar, and we have got to compete, and we have got to compete with some very large tough competitors globally. David you have been running a bank, cco, for jpmorgan, 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 dont do a good job at jpmorgan chase, i heard to the opportunities for our people, the company we do business with. We cant be philanthropic. We cannot grow. If i do a good job, we can do all those things. I am not an artist, i am not a tennis player, i am not a musician, i am not a politician. This is my contribution. David jamie, im sure your shareholders would be happy for you to stay forever, but you do you have any plans how long you will stay in this position . Jamie i love what i do. As long as i have the energy to do it. It does take a lot of energy. David your health is good . Jamie my health is good. Thank you. As long as the board is happy with me. I always say five years. I am 65. I do think there is a time when the right person is ready that i should leave. Maybe the board will have me as chairman for a year or two or Something Like that. I will have an afterlife. Like you i will never stop , working. 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, but i will also try to make it a better country. My wife is deeply involved with philanthropic work for innercity schools in the south bronx, trying to get those kids jobs. Jobs, jobs, jobs, and she is doing a great job of that, so i will probably help her with that and things like that. Caroline i am caroline hyde. This is the best of bloomberg technology. Where we bring you all of our top interviews from this week in tech. Coming up President Trump hosts , president xi jinping in florida. We will dive into the major issues impacting tax payers and players and startups. Plus, Trumps Administration cracks down on one of silicon valleys beloved visa programs. H1b. They increased scrutiny for computer applicants. And visa restrictions may drive top tech talent to other un