This is Master's in Business with Barry Ridholds on Bloomberg Radio.
This week on the podcast what Can I Say? Gary Cohne with just a stellar career at Goldman Sachs, where he spent twenty five years, rising through the ranks commodities, trading fixed income currency, eventually running equity and soon after
becoming president and chief operating officer at Goldman. Soon after, he's tapped by the White House to become Director of the National Economic Council and Chief Economic Advisor to President Trump starting at the beginning of the administration in twenty seventeen.
Really a fascinating career, a really really interesting person. We dive deep into all sorts of things about running businesses, managing risk, and then when we began talking about his public sector service, we went deep into the Tax Cuts and Job Act of twenty seventeen. If you're at all interested in that, you will find this to be an absolutely masterclass in how legislation is assembled, how it shepherded through the House, through the Senate, through all the competing
interest groups. I found this discussion just really to be absolutely fascinating, and I'm positive you will also, with no further ado from the White House and Goldman Sachs, Gary cohne Berry.
It's great to be here, it's great to have you.
So let's start out talking a little bit about your background in your career. I never would have guessed you began at US Steel. Tell us when was that and what'd you do there?
So it was a very short career at US Steel. So you know, I graduated college in eighty two and I thought it was going to take a few months off and regroup. And my dad didn't think that was part of the agenda. So he woke me up my first Monday morning home at six am through the lights on, asked me what I was going to do with the rest of my life, and I think I made some wise crack and he's a few weeks I think I
told him. I said, I think I told him, you're looking at it, and he said, yeah, not in my house. So I went out and tried to find a job locally. This is when I was still living in Cleveland, and I got a job with the home building Products division of United States Steel, which was a company the United States Steel had acquired in Cleveland called all Side. They sold replacement windows, vinyl siding, aluminum siding, gut her coil,
things like that. I ended up starting there in the summer of eighty two, and by the fall of eighty two I was gone. Now, there was one really important part of that. As part of my job training, I was sent to the big sales offices to learn how the product was sold. One of the big sales offices
was out in Long Island and Garden City. And so in my second week in the sales office and Garden City, I said to the gentleman I was working with, I said, you know, I think we're gonna work really hard Monday to Thursday, and I'm going to go in the city Friday.
And he said, that's a really good idea. So I went in the city on Friday, and that's how I found my way down to the commodities exchange, the commodities floor, and that's where I got my job, and that's how I turned my career into a financial career.
So I had a wildly incorrect assumption. I just pictured you working with the various input commodities to steal iron plus energy, plus manganese, nickel, chromium, carbon vanding, all those things, and said, hey, I could move to the commodities exchange and make a killing trading. Nothing like that, Nothing like that. How did you find your way to the comas?
So two years earlier, and now we're going back in time the summer of eighty for those of you that remember the summer of eighty the Hunt brothers at that point where were exactly we're trying to corner the gold and silver market. I was doing an internship at a local brokerage office in Cleveland, Ohio, and I did the typical internship, you know, a week in the back office, a week in equities, a week in fixed income and weekend commodities, a week in bonds, and then four weeks
wherever you'd like to go. And of course where I would like to go is where the guys are screaming and yelling in the back corner, which were the commodity guys. So I ended up being allowed to go sit with the commodity guys. And at the time they were doing the Chicago New York gold arbitrage, they had set up a gold arbitrage.
Desk, meaning that the slight difference in prices between the two exchanges, they would help bring them into line and maybe pocket a few cents exactly.
And at the time they weren't slight differences. Oh really, because the Hunt brothers when they came into the comex at the time, they were only buying one market. They were buying the Comex market. So the Comex market would move, you know, ten twenty thirty dollars, and the Chicago market would lag dramatically behind. Wow. So there were these five plus dollar disparities in the price of gold, and so they would sit there and trade. And so after a week there, I said to the guys on desk, hey,
can I open an account and do this? And they said, hey, you know, how hard could it be? Yeah, You're allowed to open an account. So I opened an account and I sat there and I traded the the New York Chicago gold arbitrage for the next sort of close to month, and I said, Wow, this is the most amazing thing I've ever seen. They're just giving away free money.
You were making cash in that.
I was making cash while I was sitting there. So I decided a point. I said, oh, I got to go to the floor of the exchange. This is really interesting. This is a really interesting opportunity. And I really did not want to go back to college. You know. I had a long discussion with my dad. You know, I said, Dad, this is silly that I go back to college. There's this unique opportunity. I don't know how long it's going to last, and I'm going to sit here and trade
this this gold arbitrage. And he said, no, no, you're going back to college. I don't care what you do. So I did the best thing I could do. I went back and did my next three years of school in two years. And then I got myself to the floor of the exchange by the end of eighty two.
And then what were you doing on the What were you trading on the floor and how did you stay? Long? Did you stay as a floor trader?
So in many respects, I got lucky in my first job offer because the COMEX had just started to trade options on futures. It was brand new. No one on the floor knew the options market. So one of the large firms there approached me and said, hey, do you know anything about options? Can you help us trade options? And I said, of course, even though I knew nothing about.
Oppos but nobody knew anything about options on futures. They're brand spanking new.
Right, no one had trade him on the floor. There were no option traders there. The big option trading firms from the other option trading exchange hadn't come down to the floor, They hadn't become members, they hadn't rented seats, so it was there was no real knowledge there. So literally, in the course of five days, I went out and tried to learn how to trade options, and I got
lucky enough to get a job. I stood behind one of the brokers for one of large firms and I was literally saying, Okay, buy that call, sell that put, go sell those futures, and he goes, what I do? Well, you locked in, you know, four dollars an ounce. He goes, how'd I do that? I said, well, here's how you do that. How do I get out of it? I said, okay, we're going to work our way out of it. And I stood behind that person for the better part of a year. And then after a year, you know, I said,
this is kind of silly. I'm sitting here telling this guy what to do. I got to figure out how to get my own seat and trade my own account. And so about a year into my experience on the floor, I went out and got a seat on the floor of the COMEX.
Do you remember what they cost back then?
About one hundred and fifty thousand.
It was a real money.
It was abstantial amount of mine. Now the good news is you could lease them. You could lease seats on a monthly basis. So I went and got a floor, and I opened up an account with a clearing member. When the clearing member guarantees your trades, and I started trading for my own account. And so I traded my own account from sort of the end of eighty three on till I left the floor in the exchange.
And that was how much later.
So I stayed on the floor till till basically nineteen ninety, and you know, ended up moving from trading options to trading more and more futures. You know, the futures markets were expanding, they were growing. It was an interesting time. But I, you know, I would trade almost anything that was bold all that day. And it was really an interesting experience learning how a fundamental terminal market works.
So I'm glad you mentioned you shifted somewhat from options to futures options. Your risk is predefined. However much you're putting up, that's as much you can lose.
Well unless you sell a naked call.
Okay, fair enough.
You sell a naked call, you right, it's no.
But inherently in futures, a whole lot more leverage, a whole lot more risk. How fundamental was that to your learning about investing, trading, risk management starting with futures?
So it was important where I found a real niche on the floor, and everyone finds their little niche on the floor, and being on the floor is an interesting environment because everyone's there for their own little specific reason. And where I found the niche is at that time, because things have changed dramatically. You know, the Futures Exchange is listed about twenty four months of future contracts. You know, the first and second delivery months traded ninety percent of
the volume. But then you had people that wanted to trade the outdated months. You know, they wanted to trade the one year forward or the eighteen month forward. Where I really specialized, where I spent my time is figuring out how to price the one year forward or the eighteen month forward and making prices in those markets. There were only two or three of us on the floor that did that. So when any of the orders came
in to buy the non active months. There were only two or three of us that would make a price, and so I carved out a unique opportunity with some other people. I wasn't the only one doing it on the floor, and it was a unique opportunity to really learn more of the fundamentals of the business. It also brought in your interest rates and interest rates expect because the forward curve is a function of interest rate.
A lot of math in your head I'm doing.
I'm doing an awful lot of math in my head on the fly. And to hedge your position, you know, how do you hedge you know, a long dated future versus a short data future. It's not one to one. There's mathematical formulas on how to hedge your book and count your months of exposure and look at your interest rate exposure, look at your underlying exposure, look at your present value of your future cash flows. It becomes much more interesting than just trading the spot month in and out.
So that's where I really learned how to trade and how to think about cash flows and think about supply demand.
It's a fairly obvious transition from the floor of the Comax to Goldman Sachs. How did you meet Goldman? How did that next step come about?
So by the time I was sort of at the end of my career in eighty eighty nine ninety, you know, I'd become a fairly large trader on the floor. And when you're a fairly large trader on the floor, that means you're taking the other side of the institutional business flow. Titutional business flow at the time was probably the biggest player was Goldman, Sachs. It was Jay Aaron Goldman, Sachs, Morgan Stanley, a little bit of Aig, a little bit of JP Morgan, you know, and then a bunch of
the funds. So I knew all of the Goldman traders because when they came in to move volume, I was there to make prices, and so we had a you know, we had a good relationship with each other.
I'm going to assume you weren't taking the other side of the trade all that often with them, or.
Oh I was taking the other side of trade all the time. Oh really, But remember we had completely different things we were trying to accomplish. Goldman had clients on the other side. They were trying to make their clients price and get hedged, and they were going to walk away from the trade. I was making a price and I may be out of it in thirty seconds or
forty seconds or fifty seconds. I was trying to figure out, you know, what was the price I needed for the next five minutes to clear the volume and move it around. And if I traded something, where can I move it? What can I what can I buy or sell against it? To make myself is risk reducing as possible. So we had different motives, and so I was able to do my job. They were able to do their job. And
that's what a terminal market does. It allows the different factors or the different people trying to get done what they need to get done, a place to meet. And so I had become closer and closer to the Goldman's acts people. I'd become closer to the AIG people. I'd become close to everyone. And in nineteen ninety Goldman had partner elections and the gentleman who was running the metals trading desk, you know, called me in the office one day and I just thought we were going to have
a conversation about the markets. And you know what I was thinking, what he was thinking, and he said to me, he said, hey, look, you know I just became partner here. I think there's a great opportunity. I'm going to really continue to build this business. And instead of you taking the other side of our business all day long and fighting with us, why don't you come up here and join us. At the time, it was the farthest thing
from my mind. But the more I thought about it, and the more I saw the trends of what was going on in the industry, and the industry had changed quite dramatically over the prior five years. It had gone from a fairly heavy retail business to a very institutional business. No individual was really trading commodity features. If you wanted that exposure, you were giving your money to a professional, a commodity trading advisor, or some hedge fund. So it
was becoming very institutionalized. So it was harder and harder to make money, or I was taking more and more risk to make the same amount of money. So when this individual, Jim Riley, came to me, I said, you know, this is not the craziest thing I've ever heard of, And he and I came to an agreement that I
could keep my seat. If I ever wanted to go back, I could do a few things to make sure that if the transition upstairs from the floor environment to the trading desk environment, that I felt like I had a safety net. Well, I never really needed that safety net, but it was nice to have that safety net.
Huh. Really quite fascinating. You then spend what the next twenty five years at Goldman Sachs. You rose through the ranks, eventually becoming president and COO. Pretty good decision leaving the floor of the comments.
I think was one of my great decisions in life, really, besides getting married and a few other things. I can't really just tell you what other better decisions.
So you run commodities for a while at Goldman? What was that like? And do you still like, look at what's going on today and energy when you look around, do you get that itch? Do you feel like I want to I want to I want to do some futures trading or yeah.
Look, once a commodities trader, always a commodity trader. So I look at prices and commodities every day, and I have views on the markets every day. I don't know if they're sophisticated enough that I would trade future, but you know, trading underlying equities and trading you know, equities that have high correlation to commodities is something I'm comfortable with. It was a unique opportunity at the time because if you go back to that early nineties period, you know,
commodities were somewhat in a bull market. It was a it was a pretty bull market environment, and you know, there were a lot of hedge funds talking about how to how they were making twenty thirty forty returns and commodities, Well, the team at Goldman Sachs has figured out if you bought like one gold future contract for you, you would have made thirty percent. So you know, we we got involved and created a benchmark, a commodity indicy at the time. Uh so there was a way to judge yourself, did
you actually outperform the market? You know, I had the interesting opportunity to be part of the team that built a commodity index. I once I got done building it, I was the one that traded that index. So I got exposure to eighteen eighteen markets, many of which I'd never traded in my life. So that was really unique. It allowed me to build some new a new business allowed. It allowed me and Goldman to expand into a lot of new markets where there was huge business opportunities for our clients.
Really really intriguing. So let's talk a little bit about what makes Goldman Sachs so special. You spent most of your career there. Why is it so unique?
So when I went to Goldman in nineteen ninety, it was a small private partnership. I mean, it was a really small private partnership looking back, five hundred partners oh less, substantially less. Really, Yeah. I think the most interesting document that I pull up from time to time is the s one from the public filing of Goldman Sachs, which
was in the in the late nineties. If you look at the if you look at the filing and you look at the size of the company and the revenue, the entire yearly revenue numbers would be a bad quarter right now. It just tells you. And so there was so much growth going on in Goldman when I went there in the nineties, and I had a unique seat, you know, in the partners there provided me a unique seat, and they gave me enormous amount of latitude and responsibility
to keep building businesses. So, as you said, I joined the firm as part of JERN. At that point, j Erin still was a quasi quasi standalone business. It was wholly owned by Goldman Sachs, but we hadn't quite integrated into the Goldman Sax culture. So the first thing that happened in my career there is, you know, JARN became part of fixed income, so we became we went from fixed income and JAR into fix fixed income currency and commodities.
That was a big move, taking these you know, crazy commodity guys right and putting in with these very sophisticated fixed income guys. So part of that transition and that was that was a big move to create FICK and it didn't happen overnight. There was a lot of natural tension involved in that. And then even when we were combined by name alone, we still ran ourselves independently. So then I got the unique opportunity to be the I would call it guinea pig. I was the commodity guy
they got put into running a fixed income business. I didn't lose my responsibilit running the quantity business, but we moved the emerging market business down to what used to be the jir And floor. On the jir And floor was the commodity businesses as well as the FX business. So we had the you know, the metals business, We had the oil business, we had the grain business, we had the coffee business. We had a coffee roasting room, we had a tasting room, and then we had the
FX business. And in the middle we decided which made sense to put the emerging market debt business.
Or related currency? Yeah, commodities and made.
Sense, Yes, made sense at the time the Mexican at the Mexican restructuring they had they had Mexican bonds with an oil option embedded in them. You had a lot of currency forwards trading, which made sense. So we moved emerging markets down and I was asked to run the emerging markets business. So I was the first sort of guy that went from being a pure Jarran GUYE to making that crossover to commodities and a fixed income business.
So prior to that, have you had any management experience or leadership experience. That's a big raucous floor. And I would imagine that desk was was a handful to deal with. What was it like stepping into that role?
So I had been running the commodities business. So I had been managing the commodities business. We had built some new businesses. We had built our Golden Sex Commodity Index business, so I had had, you know, a lot of responsibility building a business in building it out quite well. I had spent four years in London building our commodity business there. So the management piece of it was not what was
the challenge to me. The challenge to me was I had never been involved in a fixed income business, you know. To me, I remember the moment, you know where where I had to learn something new for the first time. I spent my whole life in supply demand. So this is supply, This is demand, you know, this is how you look at supply demand. And all of a sudden, I'm in this world where okay, we've got the you know, Mexico twenty three bond trading x y Z and it's one O two, one oh three, one oh four, Like
this thing is undervalue. We should buy it. And the guys go, no, no, no, no, no, I go, why wouldn't we buy it? We got to own thing that go, they can turn around issue more tomorrow and like, oh man, like the whole supply demand fundamentals. I had to change my whole thinking.
There's only so much gold and silver ran right, but bonds, how much.
You want right bond that the Government of Mexican can turn around and reissue. You can open the issue or reissue a new bond tomorrow, so the amount of Mexican sovereign bonds can change tomorrow, which all of a sudden was a whole new way of thinking about the world. That the supply demand fundamentals of a commodities market are not the same as the supply demand fundamentals well fixed think of market. So you know, the opportunity to bring that emerging market's desk down into the jar and world
worked out fairly well. I got the opportunity to go from the emerging markets world into the mortgage world. So they sent me to the next beast, which is the mortgage world.
And I have to interrupt you and just point out nineteen ninety when you start think about the timing, you're halfway through an eighteen year equity bull market, which we'll talk about in a minute. You're a decade into what's going to end up being a four decade fixed income bullmarket. Mortgages are really starting to ramp up and becoming very tradable. Your timing couldn't have been been any better. When were you promoted to global cohad of equities and fixed income.
So it when something like this. So I ended up going into the mortgage businesses end up building a big mortgage business. We end up becoming a very big trader and passed throughs. End up doing in mortgages what we've now done in all of our commodities business, what we've done in the emerging markets. We then really have a fixed income currency commodities business run as one business. So we managed to make that work. We managed to cross polinate, We run them as a business. We no longer have
fixed income guys and commodity guys. We now have a division and it's working quite well. As you're right, we had some very good markets going on in the mortgage space. We had some very good markets going on in the commodity space, and we were able to capitalize on those things. In the early two thousands, after I would say the dot com bubble had burst, you know, I was asked to go over and run the equities business.
So obviously somebody looked at you and said Hey, this guy's talented. He knows how to run a team, he knows how to manage risk, and he knows how to trade for a profit for a P and L. So clearly your background was well suited.
Yeah, look, maybe lucky, maybe good. Most likely a combination of both.
I always assume good is table stakes at a place like Goldman. Lucky never hurts.
Look, always take I'll always accept the good luck. If you want to give me some, I'll take it. So look, I had had a very good track record of building businesses from rebuilding our commodities business, emerging markets business, mortgage business.
You know, I had gone through business by business by business, and and it helped build and helped transition them into much more client facing, client friendly, bigger risk taking businesses, bigger client facilitation businesses where we had a brand and reputation on the street as the go to shop and fixing comcuracy and commodities. Our equities business was really good going into the dot com crisis, like it was a big business.
We dominated, dominated, did a lot of syndicate, a lot of underwriting, a lot of IPOs we.
Did, and then all of a sudden that world changed, and that world changed dramatically, and so I was asked the goer to the equities division. And you know, I went in knowing absolutely nothing about the equities world. But look I had done that. I knew nothing about emerging markets. I knew nothing about mortgages. I knew nothing about government bonds. I knew nothing about anything in that world. So I just said, look, it's another learning experience. I'm going to
learn about it. And realized that like we had one of the most unbelievable capital markets syndicate shops, like we could place new issues better than anyone. The problem was the new issue market and calendar was gone, and we had to transition from a new issue capital market syndicate shop to a secondary trading facilitation one delta derivatives shop.
And so I went into the equities and with some help of some some really smart people, we transitioned that business to look much more like what we had built in the fixed income, currencies and commodities business. And that was done in the early you know, the early two thousands.
And then you know, as as as we had as I had done in other businesses, and we had done, you start realizing the synergies between different businesses, and all of a sudden you realize, like the one delta or the equities business their trading specific company names, but so are the corporate bond guys. The corporate bond guys are trading company names corporate names, and a lot of the underlying factors that are affecting corporate bond trading are affecting
equity trading. So then we decided, look like, maybe we should put all of these businesses together and create a securities division, and the corporate bond people should sit on the same floor as the equities salespeople, and so they can talk about companies. You know, if you got something going on in company X, it's not just affecting the equity. It's affecting the converts, it's affecting the preferreds, it's affecting the corporate bonds. And those traders. When we started, they
were in different buildings. They didn't even know who they were, and so should we put them all on one floor? Which we did, and that's how we created the securities division.
That makes a lot of sense because you would imagine everybody is looking at the six blind men describing the elephant. Everybody's seeing a different part, and that in tell has to be useful for for the rest of the floor, whether it was preferred convertibles, corporate bonds, or equity.
Absolutely. Yeah. So I remember the first time we were on the equity desk and you know, in equity is getting sold off hard, and I said, I picked up the phone and called you know, the guy over on the on the on the corporate desk desk, and said, hey, what's going on this name? And he said nothing, like you know, no, nothing. And then all of a sudden I sat there and thinking, Okay, what what we need
to learn by this? We need to understand is this a liquidation of a big position, you know, should we should we be going out to the market and selling this and getting people into the name. We have to learn by the whole capital structure, because it is a capital structure.
That's really intriguing. And you continue working your way up. You obviously did a pretty good job there. You continue working your way up, eventually in O six becoming appointed president and co chief operating officer. You end up as a member of the firm's Board of Directors, as well as chairman of the firm wide Client and Business Standards Committee. Tell us a little bit about what it was like to get kicked upstairs to the C suite.
So that was two thousand and six. I you know, it had come after we'd put all the trading businesses together. We now had the securities business, so we had put everything together, which which made a lot of sense. We
had done a very good job of that. Hank Paulson had left to go become Treasury Secretary, and all of a sudden, you know, I'm sitting in the executive office floor, and you go from sitting on a trading desk where you know exactly what's going on, or you think you know exactly what's going on in every market moment to moment, minute a minute, and all of a sudden, you're sitting in an isolated office trying to figure out how to run a big global firm that's not just a securities
trading business. You've got a big asset management business that you care about. You've got a big banking business that you care about, and you've got a lot more aspects of the company that you care about. So you know, it became another moment in time where I sort of take a deep breath and say, Okay, how can I contribute most to Goldman Sachs. And I felt like there
were a few different unique opportunities. At the time, we did not have the strongest West Coast banking presence, so you know, I saw what some of our competitors were doing. You know, be honest, Morgan Stanley had a really dominant banking presence in California and West Coast and Silicon Valley.
Mary Meeker absolutely dominated.
They had a dominant position. They really did, and it was hard to deny that. And you know, every time there was a big capital market steal or a big IPO coming out of there, we were, you know, begging to get to be the number three of a number four, number five, And I said, you know, to the team out there, I said, like, we've got to go build this.
This is something I can take on. So, you know, I found niches where I felt like I could contribute to growing the firm, helping the people in the firm, while taking on my responsibilities to really manage the firm and operate the firm on a day to day basis. You know, my number one priority was operating the firm on a day to day basis. But I felt my my my importance to the firm and the way you create clout and the way you create the ability for
people to listen to you and follow you. At Goldman, is you still have to be a revenue leader or near the revenue. I don't think you can get disconnected from revenue. You can't be a sit in your office manager at Goldman, at least in these times. So I wanted to be a valuable part of the revenue driving machine, which also made my ability to manage and drive the organization that much more impactful.
So that's pretty unusual, isn't it. Typically when you're in the COO president slot, you have of subordinates reporting to you from different divisions. It's Is it unusual to roll up your sleeves and say, hey, I'm going to help build this out or did it just help you better understand what everybody else was doing in the company.
I think it helped me better understand. So I spent enormous amount of time on the road. I spent an enormous amount of time with our coverage people. I was out seeing clients, you know, as many days of the year as I possibly could really without you know, without you know, sort of putting the firm in any peril or any jeopardy, making sure the firm was well run,
dealing with all the bigger issues of the firm. But I felt the time I spent out of the office in other locations, in other offices, with our senior most people and with their clients was the most valuable thing I could do for the firm.
You mentioned Hank Paulson, one of the few people who comes out of the financial crisis reputation intact. So you're you're president and COO and what to two and a half years later? Suddenly the world starts to unravel and everything goes to hell in the handbasket. Although I think Goldman held up better than most, What was that era like for you?
You know, look, it was tough. You know, it was a tough period in time. You know, you could see to some extent what was going on. Even though you could see what was going on, there was certain things you couldn't avoid. You know. You you have certain structures, you have certain securities, you have certain assets on your balance sheet or that you've created, and you can't uncreate them. Even though you said, wow, what you know, I wish
we hadn't done that well. When we did it six months or a year ago, different world, it seemed like a rational thing to do. And you're you're sitting there, You're watching you know, your your your fellow competitors, whether it be a Bear Stearns or Lehman Brothers, you know, get in trouble and you're watching what's going on, and you're understanding the fragility of an industry. You're understanding that, Look, you have a lot of the risks that they do.
You know, funding a a institution or funding a bank is really important. As I always used to say to people, you know, these banks are these financial institutions. They don't run out of equity, they run out of liquidity. So liquidity becomes such a crucial part of the organization. How can you finance yourself, How can you fund yourself? How can you make sure that you have liquidity? And how
can you reassure clients that you have liquidity? And so we at Goldman as a team, we spent enormous amount of time and we took our best and most important people and said, look, drop what you're doing, make sure that we are dealing with our own situation, and make sure that we are doing everything we possibly can can to make sure we have liquidity almost at any cost.
What was the date on that, because for a little context, I want to say the market's peaked sometime October seven, something like that. But really it didn't feel like they were rolling over till first quarter of Wait when and lots of competitors were doing a slow bleed and not exactly publicizing it. When did you say, hey, this could get really bad. We need to we need to be proactive.
Yeah, we went. I don't remember the dates exactly, but you know, we were watching the mortgage banks, the mortgage originators. You remember there were I think it's about thirty two mortgage banks, mortgage regions. They didn't make it through two thousand and eight. You know, we had done business with
basically almost all of them. They originated mortgages, they sold them to us, We repackaged everybody sold them everyone Like we weren't unique, but you know, just watching what was going on on a day to day basis and having conversations with those organizations and seeing what was going on and understanding what was going on at the agencies and Fanny and Freddie and understanding what their positions were and understanding what was going on at AIG and understanding what
was going on with some of our private equity credit clients. You know, I think there was a seminal moment. I think it was July fourth weekend. I remember getting a phone call at you know, like six o'clock at night from a very large private equity firm that also ran a big credit fund. And the credit fund had bought a debt security from one of their private equity's own deals and he was renegging on the deal. He was renegging on the debt deal because he couldn't get it
funded in the secondary market. Wow, I said, you know, you're renegging on your own deal, like this is your paper from a company that you guys own. That was a seminal moment, right That was a moment where I said, oh, like the world is changing dramatically right now. When when when someone won't fund paper from a a an in
house deal for a major private equi player. So there were there were moments along the line, you know, and then you get into disputes on what things are worth and certain you know, really major companies are disputing margin calls because they're disputing what a security is worth like, I never in my career had a major corporate disputed a margin call and what a security is worth, like it really didn't matter. It really was unprecedented. It was unprecedented.
So there were there were a lot of signs along the way. The liquidity was getting tighter and tighter, and people were, you know, hoarding liquidy if they had it and protecting and if they didn't have it. And you know, we as a firm, we were conscientious of this to the point where we actually went out and issued a bunch of data inequity early on. Yeah, we went out and did that big Warren Buffet deal.
So the Warren Buffet story could be my favorite story of the whole financial crisis, because as much as people said, what was it like a nine percent or eleven percent, it was a big note. Everybody kind of forgets. Buffett offered that to Dick Fold and Lehman months before, and Fold said, no, too expensive. Yeah, it could be the single biggest eerror of the entire crisis. They might still be around, who knows.
Buffer offered it to us in the morning and said, you can let me know by five o'clock to night, and we and we said don't worry. We'll be back there and all we have to do is get our board together. We got our board together and we say done, and we did a big secondary equity raise.
Around me following that.
I remember, and the only conversation we had from people in the secondary raise is everyone said, well, I would have done the Buffett deal, and I said, the only problem is you're not Warren Buffett.
That's right, That's exactly right. And it was one of those moments where God bless Warren Buffett. It really made a huge difference to everybody, even though there was more downside in the equity market. It's hey, we're not all going to go down the drums.
Well, then a week or two later, I think it was within a week or two, that's when Treasury decided they were going to put tart money into all the banks, regardless of those that had raised Capper or not. But by the way, I don't disagree with the meaning. They were trying to infuse capital on the system and.
Not single out any specific bank which would cause a run. Right, So yeah, really it was a it was you know, I'm always reminded of the scene from Apocalypse Now where
they're surfing. Hey, one day, this war is going to end, and it's really when you were in that moment, it was really really one of a kind with all of which leads to the question, given the breath of that experience at Goldman threw everything from really the bull market and bonds and equities to the dot com implosion to the financial crisis, how did that experience set you up to become a leader in the public sector.
So a lot of those skills are very transferable. You know, my job at Goldman Net when you boil it down, was dealing with crisis or opportunity every day, and by the way, most days I was dealing with both, you know, and some opportunities became crisises, and some crisises became opportunities. So I consider myself being the crisis management or opportunity
management business. Because when you're running a very large balance sheet globally, with lots of people committing capital and lots of people making promises or commitments or underwritings, you're going to have problems. It's just the nature of the business. No matter how well intentioned people are, there's going to be mistakes and clients are going to get unhappy. And
you just have to deal with them. So, you know, having spent the last almost eleven years of my life at Goldman and I'd done it before being a crisis manager, and that's really what I did. It was a crisis manager trying to look for opportunity. You know, I think it prepared me well to go into the government because I was always trying to figure out, how do we create a solution, how do we create something that works? What is the compromise? What is the way out of
this situation? Is there? Because there's a way out of every situation. I never believed there wasn't a way out of a situation.
So let's break that down before we spend a little time in the public sector. Let's stay with crisis management because I kind of get the sense reading your background you created a I don't want to say formulas is probably overstanding it, but you seem to have created a structure where every time there's a crisis, you followed a few specific steps. So crisis shows up on your desk. What is the Gary Cone three or five step response? What's the playbook?
I don't know if there's a playbook, because they're all different, they're all different, but there's some themes that seem to be consistent. As I used to always say, is you know, we at Goldman, we're very creative in the problems we have. We'll never usually have the same problem twice because we're really good at fixing the last problem we had. We're not good at We're not as good as anticipating the next problem, but we're good at fixing the last problem.
Okay, So in my I'm gonna interrupt you and say, in my research into you, one of the things in some of the people I spoke with Gariel owned the problem, apologize for it. Here's what we're gonna do to what took place, and here's how we're going to make sure this doesn't happen again. That's what I was referring to it. Did am I putting words in your mouth? No?
No, you're not putting words in my mouth at all. So look, I always believe you have to own the problem. I mean, ownership is ninety percent of the battle. I never had a problem right where I would say it's not my problem, because if you're the chief operating officer, the president ome Sax, every problem is your problem. Yes it is it's my problem. It's my problem, and it's my job to make sure it gets solved. So A, I would always start with ownership. B. I would always
need the facts. So, you know, if you really want to go through the chronology of a problem, you know, okay, problem arises number one, get all of the facts into the room. Try and agree upon the facts.
You know.
One of the hardest things sometimes is agree upon the facts. You know, and in my job was to if through the facts and say not just sift through the facts from my team's perspective. I needed to talk to the other side if there was an other side, you know, I need I needed both sides of the opinion. And I always trusted, you know, in the words of Ronald Reggae, trust but verify. You've got to trust but verify everything.
So go through it. Understand the facts, Understand what what happened, own the problem, try and fix the problem, and be realistic. And I always said, if I go to the people and tell them exactly what happened, tell them the truth, tell them how we're going to rectify it, nine percent of the time it's going to solve the problem. Because really people understand there's going to be problems. They just want to understand what actually really happened.
And everyone walks away happy.
Yeah, look they walk away as happy as they can't, right, I don't. I don't want to sit here and tell you, Oh yeah, every time people walk away happy, they walk away as happy as they walk away. How about this, they walk away satisfied.
Well, these are complex problems with big money involved, and occasionally people are going to argue about hey, who has this loss or who has this profit? And sometimes that leads to disputes.
Yeah, if it's just a loss, if it's just money, sometimes those are easy to cure.
It.
I don't want to be cavalier, but if you know, if it's just a money problem, it's it's sometimes not a big deal. It's like a deal can't get done and someone blames someone for something. Okay, now we got a problem.
Now you've got personality and ego and turf war.
And why can't the deal get done? And now people are pointing fingers, Well, the deal can't get done because this happened. You didn't do this, or you did do this, or you shouldn't have done this. And now all of a sudden, it's like Okay, Now, I like money's not going to solve the problem. I've got to get people back to a position understand why the deal can't get done. Maybe the deal never could have gotten done. Maybe someone just never explained to the client. Maybe they tell the
client things that they just wanted to hear, which is which. Again, I have to own that and say, like, my team didn't do a good job. My team should have told you six weeks ago this couldn't get done, or this wasn't gonna get done, or for this to get done, these five things had to happen. And none of these five things happened.
So I don't really think of COO as a fixer. But really what you're saying is you're a free safety and anything that could go awry, you're on top.
You have to be responsible for I think it affirm like Goldman Sachs, you have to. You have to when you're in a transactionally driven business where your clients are depending upon you for advice, capital, and really the future of their company in many respects, you have to as a senior person, you have to be there as the free safety and help make sure you guide these things to the to the softest landing you can if and
when there's a problem. The good news is the vast majority of the time these things just run their course, and the teams are so good that they all happen by themselves.
You're there for the ones that aren't self repairing.
Exactly.
Really intriguing. So let's talk a little bit about that period. Your chief Economic advisor to the President. You managed the administration's economic policy agenda, and you spearhead the Wage and Tax Reform Act, which was a substantial policy success in the Trump white House and a pretty substantial rejiggering of the tax code emphasizing small businesses. LLCs tell us a little bit about what was life like in the White House.
Well, life in the White House is fascinating. It was probably, of all the things I've done in my career, the most fascinating experience I've had. And I'm very thankful that I had the opportunity, very thankful that I did it. You know, Wall Street is a good preparatory class for Washington. You know, it's it's long, arduous days, which you're used to. You know, my day was was pretty simple in many respects and pretty chaotic in other respects. But no different
than a day at Goldman Sachs. You know, I used to say my days at Goldman Sachs is about twenty percent of it I have an idea what's going to happen. About eighty percent I have no idea, and I just hope and pray it's not too crazy. And I would say the White House was pretty similar. About twenty percent of the day I sort of had an idea what was going to happen, and the rest of the day we were going to deal with the issues or the
problems or the opportunities of the day. You know, my days would start early in the morning with the Presidential Daily Brief CEEIA would come in in brief, and you know, you'd see.
What CIA comes in in brief. That So I imagine at Goldman you have great business intel. What's it like getting briefed by by the spooks.
It's it's pretty interesting. I mean, look, we've got a we've got a really interesting, you know, intelligence network around the world, and it's their job to make sure those of us discussing policy in the White House have the information we need and that we're all have the same information. And so there's a group of us that get the daily brief, and you can get it, you know, I think most of us got it fairly early in the morning,
and you can get it when you want. And so I used to start my day with it early in the morning, and that was how I started. Then, you know, I would go from there to the Most of the chiefs of staff would have a staff meeting in the morning, So the senior White House people would get together in the morning around eight am or so seven thirty or eight, discuss the issues for the day, Discuss the opportunities for the day, discuss the messaging for the day. You know,
you get done with that. Then I'd have my staff meeting around nine o'clock or whenever the senior staff meeting
was over. You know, I relate to my staff with the messages for the day that we would discuss what problems we're working on, and then we would go into our more you know, day to day agenda, depending on what we were working on from a policy standpoint, we spent a lot of time up on Capitol Hill working with various members of different committees, both in the House and the Senate, because at the end of the day, you know, a lot of what we're trying to do
is get legislation done. As we know, it takes sixty and sixty in the Senate to thirty five in the House and a presidential signature. There's ways around that during reconciliation for budget bills and things like that, but the overall legislation, you know, you're you're trying to do regular way or normal way, and you're working on trying to get legislation done. And you know, I think it's the job of the White House to drive normal way prosit
says legislation. Working with either majority or minority leaders in the Senate or in the House, you have a really intricate working relationship with them on their agenda, and you know they have a pretty good idea who stands where on what peaches of the legislation. So we're attacking, you know, the various constituents on who needs time, who needs effort, who needs persuasion.
In the head count, you know who to go to, who needs.
Hand holding, who's solidly in your camp, who's solidly against you, who's on the fence, And you know that's sort of a typical day, but intertwined in there, you're at the beck and call of the President, and the President you know, can decide at any moment of the day. Basically, he wants you here the script, and he wants you in
the oval office. He wants you some meeting, he wants you involved in something, and like you know, at a Goldman's, at your entire calendar, your entire schedule can get you know, blown up in thirty seconds or less. And that's that's what that's the way it works. And you know, one of my I think one of my important attributes is, you know, I made sure that I sat down with
the president every day. You know, I sort of knew the times the day to go in and see him, and I try to spend you know, an hour or so a day alone when he wasn't distracted with other people coming in and out, and say, hey, look, this is what we're trying to get done. Here's where we are. What are your thoughts? You know, you okay with where we're going, because you know, you always want to be on the same page as the ultimate decision.
Making, to say the least. So let's talk about probably the biggest economic legislative success of the entire administration. The TCJA tell Us a little bit about how this came together, how the parameters were formed, who was really driving the different aspects of that. It's really a fairly comprehensive package, and very different than previous tax cuts that were just hey, we're just going to play around with the different rates.
So it's very comprehensive. We started on that plan in December of sixteen, so I had agreed to join the administration sort of beginning of December of sixteen, and by the middle of December, we're already starting to talk about taxes. We know that we want to get text don and like, one of the reasons I went into this job was taxes.
I felt that we had a tax policy in the United States that was hindering growth and deterring US corporations from investing in the United States and penalizing them to do things that they actually wanted to do that were positive for the US economy and positive for US jobs. And to me, I felt this was a huge opportunity and there was an opportunity to fix this.
And let me just remind every one of the timelines. So the election November twenty sixteen, December of that year, you're teeing it up President sworn in January twentieth, and you're hitting the ground running.
We're hitting the ground running already in December, so by December me and other members of the team. At this point, it's a large team, you know, like everything, it's a large team because everyone wants to be involved.
Did you bring people over from Goldman with you or no?
I didn't bring it.
Stood up a brand new t I didn't.
I stood up a brand new team. I look, the first thing I did. Let me back up, because this is really important. The first thing I did when I accepted that that the neec Heade job is I went out and I hired a world class and I mean a world class team of experts. And I looked at it like, this is Goldman Sax, Like I need the best people in the world in each of the roles. And the NEC job is really interesting because it touches the broadest spectrum of economic policy.
And feel free to name drop who'd you stand up with that group? No?
Like, I went out and hire Jeremy Katz to be my deputy. You know, Jeremy was amazing. He'd worked in the White House before. He really knew the right people to go out and hire. He understood the roles. He understood what could get done and what couldn't get done. He knew that I really wanted to get taxes done. He told me, look, there's a woman by the name of Shahera Knight. You've got to go out and hire a Shahira if you want to get taxes done, like she here is your person. We went out, we got
Shahera hired. You know, but then you've got to go out and hire people in the healthcare space. You've got to go out and hire people in the energy space. You've got to go hires people in the technology space. You've got to go out and hire people in the agrig cultural space. Jeremy knew all those people to hire. He went out, he brought me in the best people ever.
And it was kind of interesting to me because it was interesting in really rewarding, because you know, Jeremy would bring these people in, he'd do the first and second round interviews, and then I'd meet him and Jeremy says, look, you got to meet these people. They want to meet you before they come to work for you. And I would sit down and talk to him and they were all amazing. They were amazingly talented. And I would sit there and go, guys, look, I desperately want you to
come do this job. You're leaving a big, huge, high paying job. You know I can't offer you a whole lot. They used to laugh and they go, yeah, we know you can't. But look, we believe in you, we believe in the country. We want to serve. And it's amazing how many great people were willing to serve.
And let me jump in here and just point out there have been criticisms about some Trump appointees and some of the process. The neec's reputation was really quite stellar.
I had, I had a world class team. I'd put that team up against anyone, you know. I also had, you know, my chiefest staff, my chief of communications, actually Hicky. She was over the top amazing. I mean, she was one of the two assistants that sat outside of George Bush's office. She left there, she became a crisis communications expert. She worked on some of the most you know, known crisis communication issues. She also knew Washington in and out.
She helped me go out and get all the right people. And because they knew the way the system worked, and I didn't. I was an outsider. They were able to guide me on who to hire, how to hire them, and how to have impact. Because you know, it's one of the most phenomenally interesting things we go through in the country that we don't really talk about. We talk about the peaceful transition of power, the peaceful transition of power, if you think about it. We don't have time to
go through this. But at eleven fifty nine fifty nine, on January twentieth, the old administration walks out of the West Wing and walks out of the White House, and at twelve, at twelve o'clock on the dot, the new team can walk in. Much of the new team has never met each other. They've never seen each other, they
don't know who they are. And we all walk into the West Wing or we walk into the old Executive office beyond, depending on where your office is, and we start working together as a team, not even knowing each other's name, not knowing what we do, not knowing our background. It's phenomenally interesting. So you have to know people, or you have to bring people on your team that can help you lead and without actually when they without Jeremy, I couldn't have got any of these things done. I mean,
I really couldn't have. And most of the other people that they had me hire had been in the executive branch once before in their life. So I had a huge competitive advantage over a bunch of the other people that were in there.
So let's talk about that advantage, and let's use the TCJA as our example. How does that come together? How did the different major policy posts come through? Does this start at the White House? Does it start with Poetus or do you go to the President and say, here's what we think we could get through Congress? Tell us how this begins and how does it get check?
So tax is really unique. So the reason I'd accepted the job is because of tax reform and the President elect at the time we were starting this, and then the President knew that that was one of my big targets. So we had talked about it. Steve Minuchen and I had talked about it. But at the time we started down tax reform, the House was starting down tax reform. Paul Ryan was a big tax guy. So Brady and Ryan they were heading down their own path on what they thought tax reform should.
Look like, but different. It was really Rachel if I remember right.
No, No, So Brady and Ryan weren't a completely different place than we and the They were in a border adjusted tax. I mean, they wanted to do a border adjusted tax system. We and the White House did not want to do a border adjusted tax.
And define that because I know you're very much a free trade advocacy, I'm a free trade advocate. Tell us how this conflict comes into play.
Well, Basically, a border adjusted taxes you tax things at the border to equalize them. We felt that border adjustment tax had a really negative impact on sort of harder working middle class Americans, people that shop at the at the big box retailers, in the Walmarts, because they import a lot of their goods. Those goods would be taxed at the border.
Walmart, Costco, Target exactly. Everything would be twenty everything would be twenty.
They would put a twenty five percent border adjustment tax on the.
It's a giant number.
It's a giant number. We felt it was. It was really a progressive, progressive tax, I'm sorry, regressive tax. It was. It was a regressive tax. We did not see that is making sense to us. So our initial meetings were between you know, those of us coming into the White House and the House, and we went down every Monday night in December and January prior to the inauguration, and Speaker Ryan held a meeting in his conference room and we had you know, buffet dinners in there, and we
were hashing out these these thoughts. Now, ultimately it came that the Senate was not going to do a border adjustment tax. Not surprising, so, but we had to get to the point where you know, the House and in in in Brady and Ryan, who were who were really too good tax experts, who spend an enormous amount of time on tax, had to give up on what they
thought was their primary plan. I think by the time we got into inauguration in January, it was clear that border adjustment was not going to be the overall plan. So now we start going back to what can we all agree upon? And this to me is no different than any other deal I'd ever worked upon. Okay, let's not try and solve the hard issues. Let's try and
figure out what we all can agree upon. And so issue by issue, we all started deciding what we are trying to achieve and what we were deciding we could agree upon and as with everything, when we started, a was pre inauguration, so people didn't have a lot to do. So there are lots of people in the room. As we got farther down the path, people I think to do. People realize this was gonna be a longer process, This
was gonna be an arduous process. You know, less people started showing up to the meetings and we started getting to the real core group of people that knew what they were doing. We ended up with what they call the Group of Six, the group of six that was you know, two from the House, two from the Senate and Minutent, and I from the from the White House.
So the Big Six became the Big six of we're going to sit down and we're going to hash out what we think tax policies should look like, and then we're going to work from there.
So is this very typical to have this small group representing House, Senate, and White House, Because that's a lot of firepower in one room.
It's it's not typical. And and you know, I give Brady and I give Ryan an enormous amount of credit for handling the Ways and Means Committee because technically tax legislation is supposed to start in the Ways and Means Committee. The Ways and Means Committe is a very large committee.
We'll start I don't know if that's the right word, or or at least they get handed the football at as.
Well technically in there in the real world, if you if you read the little definition, the Ways and Means Committee is where all tax legilacation needs to start. Now, ultimately we handed them the football. They made some minor changes and it progressed. So tax legislation has to start in the House. It has to start in the Ways community,
the Ways and Means Committee. The six of us got to a place where we had enough agreement unwhere to go what we thought the basic fundamentals were that we then you know that Brady and Ryan could then handle the Ways and Means Committee. We could get the Ways and Means Committee involved, We got them actively involved, and ultimately we got a piece of legislation through the House. Now, I don't want to say this in the wrong way,
but the House wasn't the tougher piece. You know, the Republicans had a House majority, they had a decent majority, and we thought that we would get to the requisite to our thirty five votes to get through the House a piece of tax legislation.
Like herding cats.
Though right now, Look, there were some controversial things in there. As we all know, the salt deduction was a issue that people on both sides of the aisle had a difficult time dealing with. If you're a northern New Jersey Republican, you weren't happy having to vote for that, or even if you're a New York State Republican from Westchester, it's
a tough vote for you to make. There were a bunch of major corporate changes, the deemed repatriation, which was one of the things that I thought was really important, like the White House steam manage and I thought was really interestant.
So to find that for listeners subscribe corporate repatriation.
We had a because this was a very big deal, this huge, huge deal. So we had a tax system prior to JCT's where as a US based tax payer, if you were earning money offshore, as long as you left your money offshore, you did not pay US taxes. The minute you brought it back into the US you had to pay.
Taxes, which by the way, is very different from you and I as individuals. Yes, if we're US citizens and I'm earning my money overseas, I'm still.
Paying You're still paying tax. So it almost forced large US companies to bring to leave their money offshore. And when you're forcing US companies to leave their money offshore, you're actually forcing them to make capital investment off shore, build factories offshore, hire people offshore, which to me was the complete wrong incentive. We wanted people to bring their money back on shore.
So we said, to clarify, bring it back here, build factories, hire people, invest here in the US. Correct, And what was the change in tax rate so versus had it been earned here in the US.
So it was not necessarily a tax rate issue. Was just an avoidance of tax. If I never bring it back, I don't pay the tax.
So how did this change?
So what we do?
What was the incentive to have them bring it back?
So what we did is we said, Okay, you can leave your money offshore. We're going to just deem it to have been repatriated, so we don't care where you leave your money. We're gonna We're going to give you five years to pay the taxes on the offshore money.
So over the next five years, you're going to have to pay all of the taxes that you would have paid, assuming you would have brought back all your money, and all your foreign earnings are going to to be taxed as if they were earned in the United States.
So that's the stick. Tell us about the carrot.
Well, we gave lots of carrots. We gave lots of carrots, We gave lots of credits, we gave lots of incentives, and we gave lots of different ways for people to move their money in a way, but the ways that we gave carrots was we wanted you to invest in the United States where possible, and we wanted you and we forced you to repatriate your earnings back to the United States. So we gave you huge R and D credits.
We gave you huge credits to build factories in the United States, we gave you credits to hire people, We gave you credits for everything we could. But we deemed you to have your worldwide earnings come back to the United States.
And approximately how much capital would you guess return to the US, Well, lots of it.
I mean it was brilliant trillions. It measured in trillions, Like I don't want to call out companies by themselves. But look, Apple was very clear. Apple was one of the largest holders of offshore capital. Into Tim Cook's credit, he brought back money almost instantly, and he said, he said, why our legislation is. Look, if this legislation passes, I will just bring back my money. I will pay the taxes.
I understand what you're doing this. We had pretty good support from the corporate community on repatriation, and so we we did things like that where we said, look, you can no longer just hide your money and in foreign countries, you're a US based company, you're a US taxpayer, gonna you're gonna have deemed to have brought your money back. We don't want you to incentivize to spend your money offshore and build property, plant and equipment offshore.
So let's talk about two of the other big factors in the TCGA. One was the shifting of the rates and the other was the LLC pass throughs, which really was a huge structural change. Rates are pretty easy. Rates came down, the top rates came down. Everything else kind of got rej little bit.
Top rates came down, But that that that that that helped. If you looked at the disu It helped the bottom two thirds of the distribution. Top rates came down for everyone. But the the the thing that we did to correct that is we got rid of the largest loophole that exists in the tax code, which was the salt deduction. So the wealthier people and the top tax rates, they were subtracting from their income. They were subtracting their state tax,
they were subtracting their state income. They were staying their mortgage deduction, they were, they were subtracting the real estate taxes they were so they were lowering the amount of income that they taxed. So my basic premise, and I think this is good tax policy, is lower the rate, broaden the base. So we were trying to broaden the base. We were trying to say, look, we're going to stop
having you deduct all these things from your income. We're gonna say your income is your income, but we're going to charge you a smaller rate on your income. We tried to simplify the whole tax return. If you remember, there was times when you know, the President said, it's so simple, you can do it on the back of an envelope.
We can we can have a tax return the feeling. I have a feeling you're you don't file on the back of an enveluce.
I do not need to do Yeah, I don't follow on. I can't even get on a sheet of paper.
So let's talk about the other one, and I will admit. So at the time of the salt deduction going away, I cursed you, I cursed the president. And then I started reading about this LLC passed through right, and my business is an LLC, And I'm like, oh, so wait a second, let's talk about this. Who created that concept. That's a giant shift is the way we tax small businesses.
So here's always a big debate when you get down to doing taxes in the United States. So we have a corporate rate and then we have a rate for ll Caesar pastors. Now, l season pass throughs can be very large companies that are not corporates. We have some very very large pass through companies and.
Partnership law firms, accounting firms go down the list.
We have some even larger major training companies, major retail companies that are LLC's are passed through companies. So you have this debate about the fairness between the corporate tax rate and the LLC or non corporate tax rate, and how do you make sure there's not an arbitrage in there?
So you're an LLC. But if I lower the corporate tax rate low enough, you'll just become a corporation and you'll pay your corporate tax rate, and then you'll find that you'll find ways ultimately to run your business through a corporation because you'll tax and centivize. So we were trying to create a level playing field for LLC's or look it still is this day. The vast, vast majority of LLCs in this country are small, small family businesses
and small businesses. So we wanted small businesses to be taxed at a favorable rate. We want to incentivized small businesses. We wanted small businesses to grow, We want them to hire more people. So we created ways for LLC income and different amounts of income and income below certain threshold to be taxed at a preferential rate to allow LLC's to be very competitive and more competitive than corporations if
you were a small LLC. So we're telling you, if you're a small business person today, your LLC structure should be incentivizing for you to grow your business and stay in an l We'll see you don't need to become a corporation to take advantage of a tax code.
And I have a vivid recollection of New York State reaching out to the IRS and saying, we want to clarify what our rules can be with LLC, and the IRS said, yes, you can do this, you can do that.
And then New York State disseminated new information, and then California and then Illinois, and then it just cascaded and suddenly a lot of Blue states, or at least small business owners in Blue states that were complaining about the salt deduction the oly Way, suddenly like, hey, this is not the worst thing that happened here with this tax code. How long did it take before people realized this is a really substantial change to small business because the pushback on salt was pretty fierce.
Yeah. Look, I don't know. The political rhetoric today is still pretty high on the jac that it was a tax cut for the rich. I think the data does not tell you that. And if you look at the tax revenues collected in absolute dollars, and you look at tax collected as a percentage of GDP, it would tell you that the code actually worked pretty well and has done well to incentivize people to grow businesses, hire people, and pay taxes. I don't see it as a tax
cut on the rich. You and I were talking before. Most of our friends are probably paying more taxes today than they were because they lost their large deductions by living in New York City, New York State, by living in New Jersey. Anyone lives in California, it's clearly not a tax cut for them.
It really changes from industry to industry. The biggest issue is normally, so you pass something in twenty seventeen, it goes into effect twenty eighteen, and then you get five years of data and say, let's look at how this worked. We had that little snaff, we have SATA, we have screw so it's still a little difficult to conclusively say where this was. But there's some sense of the trend this was moving in.
We have some screwy data, But even with the screwy data, I would agree with you the trend is the tax receipts and tax revenue have far exceeded all of the forecasted assumptions and all of the the the views that were stated when we were passing the legislation. All of the scare mongering that went on when we were passing the legislation, how this was a tax cut for the rich and tax receipts are going down dramatically has been unfounded.
And many states that follow the federal government and get rid of the assault tax deduction, many of those states have found themselves in a huge surplus situation and they have lowered their tax rates because they have ample supply of tax revenue coming in by getting rid of the deduction. So I think, you know, it's going to be impossible to say for sure because of what happened in COVID, but I think the overwhelming data has been that the JCTA, THEA has done exactly what we said it would.
Do, and this is going to come up for renewal in a couple of years, the end.
Of twenty five. So now not the corporate side, the personal side comes up at the end of twenty fus.
So here's the question. I mean, it's impossible to forecast this sort of thing. Do we think that this is likely to be renewed or is there something else coming? And really the answer to that question is what happens in twenty twenty four.
I think it's a bit what happens in twenty twenty four. But if you put a gun to my head today, I would think that ninety five percent of that tax code is getting renewed.
Really, yeah, that's quite fascinating. So we've spent a lot of time.
It's actually worked too large.
Unfortunately, by the way, I know, I'm going to get pushed back on the data. Well, the tax code showed this, and if you look at it this way, then the master that. So there's still some debate on the numbers, but by and large, you're satisfied with the results of it. I'm satisfied with this, And you think it had a positive impact on the economy.
I think it's had a positive impact on the economy. I think has a positive impact on having the money repatriated. When you talk about people are talking about people building plants in the United States, people are talking about US redomiciling our supply chain and doctors. A lot of this is happening because companies were they weren't forced, but they got taxed on the money off shore anyways, so when they brought it back, it was easy for them to
spend it back in the United States. So a lot of the effect people are seeing they have to understand the cause. The cause was okay, that money had to come back. It didn't have to come back. That money was being taxed anyways. So once it's being taxed and I'm bringing it back on shore, well, I can't spend it to build a factory in the United States. I
can't spend it to modernize these things. So I think when we look back at this with enough years of data, with the COVID blip being a blip, not that it's a blitz a blip, and.
Tax a couple of years in tax time, Yeah, for sure.
I think that we'll say, hey, this tax plan worked pretty well.
Safe to say this is your most satisfying accomplishment in the public servants space.
Absolutely absolutely, it was one hundred. It basically occupied I would say, the vast, vast majority of my time for about three hundred and sixty five days, so really two thirds. We signed it December twenty second at twelve noon and seventeen and I started working on it in December sixth team, so literally for about three hundred and sixty five days straight, my mind was thinking tax code, tax code, tax code, tax code.
Let's talk a little bit about what's going on in the world today. I want to talk about technology, but first we have to talk about what's arguably the most aggressive tightening cycle in Federal Reserve history. What's going on in the world of interest rates and FED funds.
Well, I think you just said it. We're going to the most aggressive tightening cycle we've seen, you know. I think unfortunately the FED was late to the game. But aren't they always Yeah, and they're going to stay too long. You know, it's always they come late to the party, and they the last ones to come in, the first and the last ones to leave. I guess that's what they are. But the question to me is it's more
broad than that. Right now, you know, the FED is tightened in gustrates quite considerably, and we all know there's a lag effector you know, and so the first raises they have, now we're a year or so into that cycle in.
March twenty twenty two, we're eighteen months out.
We're a year plus the into that cycle. We don't know what the full impact of these raises is. So that's number one. So for the FED to keep going I would be concerned. Now, I think we all believe
that the FED maybe has one more twenty five. I would potentially hope they'd have no more twenty fives, because with you, I'm not even sure what the effect is of the raising the rates and a longer discussion about FED policy and how effective it's been over the last two decades, but I'm not going to go there right now. What's more interesting, in my opinion, is what the FED been trying to do by raising rates and slowing down the economy, slowing down employment growth. So far, we have
not seen that. We really have seen. We've seen a little bit of job creations slow down if you look at the Jolts data, but we really we've seen a little bit of a tiny, minuscule pickup in unemployment, but that seems more like it's people coming back to the job market because savings is starting to dry.
Up, wage gains are slowing, real estate still still having a little issue, still having.
A little issue, but we're still pretty much at full employment. We're still having wage gains overall. And I think what we're seeing in I think what we all have to figure in here is we've never gone through a cycle where the federal reserve is tightening with one hand and the federal government is spending with the other hand. And so as much as the federal reserve is tiding, the
federal government continues to spend. They continue to have money to spend on infrastructure, They continue to have money to spend on the Inflation Reduction Act, they continue to have money to spend on chips. They keep rewarding big contracts. These big contracts are going to continue to put demands into the labor market. So I'm not sure we're slowing the labor market down anytime soon. What we're probably slowing
down is a housing market. So if we slow down housing market because it becomes expensive to borrow money, are we just keeping housing inflation high. I don't really know. But we're at a different time in our history where the real impacts, even if they're lagged, I'm not sure they're as meaningful as they once were.
And to put a little flesh on the environment that the Chips Act, the Inflation Act, and the Infrastructure Act came into the first CARES Act two point two trillion, the Second Cares Act eight hundred or nine hundred billion, the third CARES Act, this one under Biden another eight or nine hundred billion, so that pig is barely through the python before all of these ten year programs really hit the ground. So there's going to be an ongoing
fiscal stimulus even as the monetary stimulus comes off. Yeah.
Look, the most obvious way to look at this is we're coming up on the end of the fiscal year. We're going to have a two trillion dollar deficit for the year, you know, And it wasn't that receipts were that much lower this year. Now they were a little bit lower. Stock market performed poorly last year, so you didn't see the capital gains. But the government just continues to spend. It continues to spend on all these programs. The government's continuing to spend, and the government's continuing to
spend on things that need human capital. It doesn't matter in many respects how tight monetary policy becomes. We're going to continue to hire people. We're just gonna continue to pay more to get the people. And so I would like the federal reserve to stop. I would like the Federal Reserve to take a deep breath. You know. Right now in the tightening cycle, we've almost seen more damage in the regional banks than we have seen help for the US economy.
To say the very least, we saw a huge disruption, whether it was Silver Lake or Silicon Valley Bank, or going down the list of regional banks that got disrupted, to say nothing of the healthy banks that people got nervous and moved to big money centers.
And not only that, because of what happened in the regional banks, we now have a federal reserve that thinks that banks need more capital. So we're gonna put more capital into the biggest banks. The g cifies and the cities. They don't need more capital. But the knee jerk reaction to anything negative that ever happens in the banking sectors, Oh we need more capital. But by the way, capital doesn't prevent a bank run. You can have all the capital in the world, you can have it all. If
there's a bank run. Capital doesn't provide your depositors liquidity.
Does it do anything to raise rates on the one hand and then flood the system with capital on the other Are aren't these sort of competing monetary functions?
Well, it competes because as banks have to raise more capital, it just means they're gonna lend out less money. They're gonna take the balance sheet they have right now, and they're gonna hold more capital and they're gonna lend out less. So they're not gonna go raise additional capital per se. They're gonna take the money that they have on their accounts and they're gonna say, Okay, this is now capital
sitting in my capitol account. I'm no longer going to use it as as a way to fund growth to my to my clients where they do.
So that will slow that'll slow the economy. Even so, if you are gonna have lunch with Jerome Powell, what would you say.
To I would say, I think you've done enough. I think we've got a set of unique circumstances that your historical economists and your historical textbooks don't really account for. I think you need to let this work through the system. The federal government has already more or less appropriated these funds. They need to go out and spend them. They're going to go out and spend them. They're going to continue to keep demanding labor, whether it's labored to be bridges
and tunnels or power grids or charging stations. There's so many things where we're gonna need labor to build that. No matter how high you take interest rates, it's not going to stop that infrastructure build. It's just going to make it more expensive. Let the system normalize and see where we end up. Now, your higher rates are going to have some effect. They're going to have some unintended consequences. We've seen them already. I would say, look, it's time
to take a deep breath. You know, inflation is going to be where it is. When inflation was zero and you went to zero interest rates and you went to QE, you couldn't affect it there either't.
So this idea target, this idea.
That you're gonna zero it in on your two percent target, I just don't think you can do it. I think you're gonna have to take much longer looks and you're gonna have to look at wider windows of evaluation. So and Jerome pal said this, like I give him credit. He said, we're gonna try and get two percent through the cycle. Well, maybe the cycle has to be a much longer cycle. So if we're if we're six percent for a while and we're zero percent for a while, you know, maybe we're averaging three.
Hum. Really interesting. You mentioned something that really struck a chord with me, and I have to ask about it. Uh. The cost of financing everything now, whether it's corporate projects or the federal debt is much higher. Did we miss a once in a lifetime opportunity to refinance federal debt with long term bonds in the mid twenty tens? I mean, when rates were nothing, there was a lot of appetite
for thirty or even fifty year treasuries. How and I was told at the time that'll just encourage more spending. But was the trader in you was that a great opportunity or what?
In the first conversation I already had with then president like Trump, when I was going through my views of the economy, I said, look, my number one concern would be the dollar and the debt. And if I were you, I would go out and replace all of our debt with fifteen hundred yeard debt, fifteen hundred fifty and one hundred years fifty fifty one hundred year debt.
Uh huh. And what was the response to that?
He said, that's a great idea. Can we do that? Why? I said, sure, I said, treasure can. I said, treasure can issue whatever they want to issue. I said, I would extend maturities on forever. I said the same thing I would tell a corporate client if they could do it, go go, go issue fifteen hundred your debt now.
And by the way, most of the American corporations did exactly that. Well, they went as long as they could extend maturities.
When you're in when you're in a very low interest rate cycle and you know you're going to need it.
Why did that not get off the ground. It's such a brilliant thing to do.
And today we're thirty three trillion dollars of debt as of I think Monday.
So so why did that go nowhere?
I don't know.
All right, that's that's unfair.
You just you push these things as far as you can push them, and you just go.
I mean, to me, as a trader, it's the obvious thing to do, But Washington doesn't necessarily think like traders.
Look, I'm not blaming anyone for this, Like these things just happened. But at the end of the day, the White House doesn't borrow the money, right, it's delegated out to Treasury and Congress Treasury Borrowing Committee. You had lots of people smarter than me putting an inputs on how to do it, and you know, they they decide what maturities to go to and they tend to do what they've been doing for the last two hundred years.
All right, So let's talk a little bit about technology. You've become a fairly big investor across things like cybersecurity, blockchain, infrastructure AI. Tell us what you're seeing in the world of technology and what it's going to mean to both the government and big companies like Goldman.
Look, I think we're on another technological wave. And with every technological wave, there's really good parts of it and there's bad parts of it. So when I look at the whole AI wave that we're going through, which has been going on for a lot longer than people understand, I think it's just become in forefront of people's minds since we've seen retail products this year. So we've seen the chat gbts and we've seen the bar and everyone
understands what AI is on the retail basis. On the enterprise basis, there's been there's been AI products for a longer period of time. But with those products, you see the vulnerabilities. You have to understand the cybersecurity and and how vulnerable we are. You know, you've seen what happened to some casinos recently. You see all the vulnerabilities we have.
So as we continue to grow out our infrastructure, we continue to grow out data centers, and we continue to grow out you know, access to data, access to computing. I think we equally have to build out you know, protection, cybersecurity make our infrastructure harder and harder. You know, the White House saw this earlier in the year they put out zero Trust Zone executive orders. So there's things that
we need to do in this country. We need to harden our borders, we need to harden our edges, We need to harden our technology.
Electrical grid is very vola.
Everything is vulner what we look. We've seen pipelines, We've seen lots of cyber attacks on lots of infrastructure that none of us think is really infrastructure, whether it's hotel keys, or whether it's pipelines, whether it's slot machines. You know, we can go through all the different cyber attacks. Those are ones we know about. There's plenty more going on. That we don't know about. So I think we're underinvested as a country on cyber I think we're underinvested in
protecting ourselves. I think AI is a whole nother leg of huge opportunity, but another leg of huge vulnerabilities. As we put more and more data, you know, the system, we create more and more data, we've got more and more vulnerabilities, and we have to understand how AI can help us, how it can be useful to us. I think that's really important to us and the blockchain. To me, it's the future of settlement, it's the future of doing business. You know, we still have many many arcane processes. Now
we've quase modernized them. If you think of something as simple as stock settlement, you know, we've gone from you know, moving physical certificates to now digitally trans transacting and settling. But why are we having T plus two or settlement? Why aren't we Why are we Like we have commodity markets that that they cleared real time. We need to modernize all of this infrastructure so we can get all of the vulnerabilities and all of the risks out of
the system. We have the technology, we just have to adapt this technology but when you adapt the technology, you have to put the profile eactics around it and make sure it's secure.
You know, we talk about blockchain and so many people I hear saying, what what are we going to do with it? What purpose does it serve? Go back to the financial crisis. If we had those mortgages on something like a blockchain, who owned what house? All all that confusion, it all tracks and settles automatically, and there's a permanent public register of that.
Well even simpler, if you had the mortgages on a blockchain, you had house titles on a blockchain, we could transact houses daily. You know the idea that you buy a house on Monday and you do a title search, and then you go get a mortgage, and then you sell it to me on Tuesday, and I have to do it and I can't close for thirty days because I have to go do another title search and I have
to do all the same work. If it was done once, put it in the blockchain and we transfer it with all the all the documentation, these things become the fungibility of them becomes much greater. It's a win for everyone. You have much better collaterally, you've got much better ability to securitize, you've got much better ability to close and transact. You know, we are going to get there. You know, there's lots of natural antibodies to get there. There's lots
of natural businesses that gets disintermediated. But we've been disintermediating business is for the last two hundred years, and every time we do it, we become a stronger and bigger, most importantly, a bigger economy.
So let's talk about AI a minute. And I use a really fascinating app called Perplexity, And I know you're an investor in various AI companies, so I ask Perplexity, tell me about Gary Cones's history at Golmen Sachs. And then I did the same thing, tell me about Gary cones history at the White House, and I sent it to your assistant and the Goldman stuff perfect, The White House stuff just a run of correction crossthroughs. And it
kind of is fascinating. And by the way, this aspect of AI two months ago couldn't have done any of this. It's amazing how it just gets better and better and better over time. What do you see AI doing? Is this going to disintermediate a lot of people. The fear is people can be thrown out of or is this something that's gonna, like the internet, create a whole bunch of new jobs.
I think it's the latter. So we've lived through these seismic revolutions, right from the cotton gin to the combustion engine to the personal computer. When we lived through each of these, we've always worried about the jobs we're going to lose, Like, oh my god, the person that prints the memo and delivers the memo to everyone in the office when we have email, what's that person going to do? Well?
All those companies put that person to work doing something much more productive and much more profitable and actually much more fulfilling for the individual. So as I look at each of these seismic evolutions and companies, every company I know has gotten bigger and dramatically bigger. Whether it's the personal computer, the cell phone, the internet. You look at these,
every company has gotten dramatically bigger. Like, AIS displace some people, but I think you're going to take those people that are probably the least satisfying jobs and be able to retrain them into much more satisfying, much more fulfilling jobs. And allow these companies to become much bigger and more efficient and cover clients more effectively, and they will grow into those jobs. Just like the person that used to print the memo and deliver the memo to everyone's mailbox
in the office. Remember when we used to have little cubbies in the office. I'm old enough to remember that, pick up your mail in the morning. Like no one has a mailbox in an office anymore. That person is now doing something much more productive and the AI is going to help that. And on the flip side, think of the productivity gains or think of the things we're going to be able to change in the regulatory environment where you're gonna be able to really monitor things that
you've never been able to monitor. The regulatory environment's always been after the fact? Can AI now monitor human behavior real time? Now?
When you say regulatory from our perspective in this business securities, trading, crypto, what what is potential in the space?
So look at human behavior? You know, human behavior to me is regulatory behavior. You know in a bank, are you are your employees doing the right thing? You know? Can can you create AI? An AI overface and over something that sits on top of your organization that makes sure your employees are doing the right things or are
they doing something wrong. Like it's not going to be full proof, but it's going to help you manage your organization in a way that makes management teams smarter and say, hey, look here, there might be something bad going on.
No more bearings bank sort of hidden lawsuit.
Exactly, you know. So it's it's the old adage. And I was pretty good at this, but I wasn't full proof. Like every day at five o'clock I got an email. I was supposed to get it by five o'clock from every risk based desk. And if I didn't get it by five o'clock, you know, I didn't think about it. By five fifteen, something's wrong. By five point thirty there was a problem, like because I didn't get it because something really good happened. Because if something really good happened,
they'd called me already. So I didn't get it because something bad had happened. So I'd stay with almost one hundred percent accuracy unless literally it was oh I forgot to hit send. If I would call that desk and say, hey, I didn't get your end of day email, it's like, oh, I need to tell you something, but I would remember
to do that. Now, there are certain days I probably forget if I had an AI machine that said, hey, you didn't get all your end of day emails or you didn't get an end of day email from this desk.
And an alert it's an alert, and you can even have it reach out and tag the person. Hey, give Gary a call, right, and there's your you know exactly who's on the game.
All I'm doing is monitoring human behavior, you know. And look, I'm investing in a company that monitors is going to monitor human behavior and tell you employees are acting, you know, they're doing stuff they're supposed to do, they're doing stuff they're not supposed to do. And by the way, it may be fine, or they're doing something today that they've always done, or they're doing something that they've never done.
And it's just going to alert you to things that you're not going to see on your.
Like it's a look over here. It may not be a problem. It's like, hey, this is different today.
So let's talk a little bit about IBM. You were vice chairman there. I kind of think of IBM and AI with them playing Jeopardy and participating there. What's the future of AI at IBM?
Now, well, I'm glad you asked the question that way. So IBM has been involved in AI for fifty years.
That's amazing.
Yeah, and you sort of said it, you know, in twenty eleven Watson won a Jeopardy twenty twelve Watson Big Cast Profit Chess. So IBM has been involved in the machine learning, the AI business now for decades. We've been serving our enterprise clients and building AI products for them for the last years. What's become really prevalent recently, and the reason we're all talking about AI today is there's finally retail products out. IBM does not have a retail product,
and we're not going to have a retail product. It's not our business. Our business is to be the AI inside of companies that you may face on the retail side. So a good example is a CVS during COVID, IBM was operating the CVS call center for the millions of calls a day for COVID. How do I get my COVID vaccine? Where do I go? How do I schedule appointment? That was all IBMAI managing that, and so we are involved. We are doing a lot, but we're doing it on
an enterprise solution basis. For our clients, We've got AI and software that allows people to manage their physical building, allows them to manage what their carbon footprint, allows them to manage, you know, how efficiently their buildings running. You know what what compressors should be running, what motors should be running, what light should be turned off? How do I turn them on? When do we replace them? There's an enormous amount of technology going on in the space,
but it's done on an enterprise level. So IBM is a big AI player and we continue to build out more and more opportunities for our clients to use our enterprise AI. So it's a really interesting crossroads in the companies here.
So let's tie that together with our prior discussion on cybercrime. Can we use AI to monitor systems and alert us when their intrusions or hacks or other cyber problem?
Absolutely? Absolutely. So. You know, IBM has a a big presence at the US Open a couple weeks ago, and we did this big presentation on everything we were doing there, and we've got software and AI that was talking about all the cyber hacks going on in the US Open and how you prioritize the hacks like this is an
irrelevant hack, this is an important hack. We're going to be able to use AI to monitor the bad and the good, and it's going to be equally effective to make sure we're using it both in monitoring what's going on and well in the world and where we need to watch things and where we need to prioritize. If you're getting hacked millions of times a day, you've got to figure out what are the important hacks like You
can't get distracted by the ones that don't matter. You've got to spend your time on the hacks that are really relevant, and AI can be helpful in allowing you to do that.
Let me throw you a curveball question. When I was a kid, I had before we were diagnosing everybody with ADHD, I had ADHD with just a little bit of dyslexia thrown in, and with me it was spelling and I you know, before I had a wedding ring on, I didn't know left from right. I could tell you a story about taking my driver's test, and every time the guy says make a left, make a right, I would flash my index and thumb because I could recognize the L and what the hell are you doing? I don't
know left from right. You've been very public about having pretty severe dyslexia growing up and said it taught you. I'm gonna put quote you back to you. Hey, I learned about failure and thought of the world as that's the default and it's all upside from there. Tell us how your dyslexia affected you personally and your career.
Well, you said it, so I characterized myself as one of the world's greatest failures. You know, I knew how to fail at everything at a young age. You know, school to me was impossible. I never thought I could get out of elementary school.
There was a story about a meeting with your parents where they got some vocational advice. Would you would you share that?
Well, I you know I was in the I wasn't supposed to hear it, but I remember very clearly one of the teachers pulling my mom aside and saying, no, my mom, look, you'll be lucky if your son grows up and you can drive a truck.
That's just what a kid wants to hear. Well.
No, by the way, it was motivational. Yeah, it was motivational. Like I heard it and I said to my mom, I said, well, it's gonna be a nice truck, you know when I drive it. But in my mind, though I knew I wasn't going to drive a truck, Like I knew that I could figure certain things out that other people couldn't figure out. So you could talk to me and explain to me something, I could come up
with the answer. So I was smart enough to understand that I just couldn't sit there when they handed me a piece of paper and you know, I'll say, read this and like, okay, who won the race? When it said, you know, two people raced and so and so on in first grade, I, you know, to see if you had basic reading skills, I go, I don't know. It was there race? Like my answer to what race? My answer would have been what race?
So, given your career, both on the corporate side and the public service side, are there any residual effects from this? I'm assuming your reading skills have improved since then?
Yeah, yes, so I have become a decent technical reader. If you give me a contract, I'll be I'm pretty damn good at reading contract. So but a contract to me has total logical. You know, I know section one, what's gonna bean section one. I know it's gonna be in section two. I know it's gonna be in section three. I know it's gonna be in section four. I'm really
good at reading contract. If you give me something that I don't know what the order of it is, it's going to be difficult for me because I'm working so hard at words that it's hard for me to process where it's growing.
So technical reading much easier than books and things like that.
I don't read a lot of books, like a lot would maybe round up to zero.
Wow, that's fascinating.
I get to listen to books on tape, right, So do you enjoy that experience? Yeah, a little bit. It's still hard for me. You know, I didn't grow up as a reader, so my brain's not that condition to that, so you know, it's it's not a natural for me. But look, do I read? Do I try and read the newspapers every day? Do I try and you know, read the editor Do I read a lot of editorial pages?
Do I read a lot of news? I do read a lot of news and editorial page But you know, like there're hundreds of they're measuring hundreds.
Of right, all right, so let's jump to our favorite questions, starting with what are you streaming? If you're not reading, what do you what are you watching?
So again, I watch a lot of sort of factual stuff, and lately I've been going through sort of the Netflix library of Sports Actuals shows Full Swing, Breakpoint, the Swamp, Drive to Survive. I've been going through all the Sports.
To Survive was great. The did you see I haven't seen the one. I'm assuming you saw the one on the Chicago Bulls of Michael Jordan's.
I actually haven't. Oh oh no, I saw that one during COVID, right, but I haven't seen the Nike one yet.
It's an interesting movie. There's also one about Steph Curry. I think that's on Apple TV. And then there's another one about Magic Johnson and the LA Lakers. But that's interesting. That that that's what gets you interested, very competitive, very interesting things.
It's look, it's a it's a little bit about wedding, right, maybe tells you something about me, but it's about winning.
I picked that up. How about mentors who helped shape your career?
I think there's two big matches my grandfather for one, Oh, really what was wrong big time. So you know, as we discussed, I was highly dislikes it going up, and you know, my parents didn't know what to do with me. So, like I don't blame they were young parents, and my grandfather was convinced, like, there's nothing wrong with my grandson. He's really smart. He's gonna be fine. You don't need
to send him off, you don't need to panic. And so my grandfather really sort of put me under his wing and said, like you're gonna be fine, just just do what you need to do. And so we had a very very close relationship, and so he really got me through sort of my early childhood years all the way through high school, like he was there for me.
And then you know the guy by the name of it and I mentioned before Jim Riley, who when I went to Goldman, he was he became partner in nineteen ninety He was the one that hired me into Goldman. And you know, I became partner ninety four. And I'd become partner by sort of doing everything, sort of being the guy that everyone could go to, being the guy
could fix everything. And when I became partner. I was trying to do everything, and you know, it was one of those stories where I was trying to manage a big business. I was trying to trade a big book. I was trying to deal with clients, and I was doing a really bad job of it, like and my trading book showed it, like I was having problem in the worst trading streak of my life.
I was.
I was losing money every day, and I didn't know how to lose money every day. And I was living at London at the time, and you know, after like a week of not sleeping, you know, I waited till like seven o'clock in the morning, New York time, because I knew he'd be driving in he lived in the Island, be driving in the office, or be in the office. I called Jimmy up and I sort of gave him the woe is Me story, like me, I'm working so hard.
I've never worked this hard in my life. Like I'm I'm seeing ten clients a day, I'm dealing with the sales desk, I'm dealing with this, I'm trying to trade. My trading's horrible. I can't make money. What should I do? And he basically said, figure it out and hung up the phone.
Not even prioritized.
Just figure it figured it out, figure it out.
Click, wow, And how'd you figure it out?
No, he basically said, I got the message like, you're idiot, you can't do everything right. Like So literally five minutes later, I am call over to my office. I said, guys, I'm done trading, and I gave my trading book away and I said I'm here to see clients. I'm here to deal with problems. Come see me. And the guy took her on my trading book and said thank you very much. And the salespeople said, oh my god, you're human again. And everything was fine.
Really good decision. Our final two questions, what sort of advice would you give to a recent college grad who is interested in a career in the world of investing in finance?
So, look, a, I think it's a great place to start your career in your life, no matter where you end up, because the fundamentals of understanding finance and understanding markets and understanding a balance sheet is really important skill and it doesn't matter what you do with your life. So I'd encourage anyone who's got an interest to go into the to go into the industry. It's a tough way you to go. It's like the first couple of
years of going into financial services, it's boot camp. You know, you're working twenty four hours a day, seven days a week, you're on call. It's not fun. So I'll warn you of that. But you should do it. You should get the experience, and then you should take some risk in
your career. You know, after you've learned the fundamentals. You know, after a couple of years, just because you went into sales and trading program or just because you went in an investment banking program doesn't mean that's what you should do. And what I see so many young kids do is they get hired into X job and they stay an ex job for the next twenty or thirty years. Figure out what you really like, and then go figure out
how to get there. So, if you're hired as an investment banker, but you really want to be on a trader, go try and figure how to be a trader. You're hired as a trader and you really want to be a salesperson, go be a salesperson. You hire a salesperson, want to go be a vague baker? Figure how to be a banker. Don't just get stuck where you got hired.
Into really good advice. And our final question, what do you know about the world of investing or public service today that would have been useful to know forty or so years ago when you first landed at US Steel.
I knew nothing forty years ago, honestly so. And by the way, I learn new things every day. If you don't think you're going to learn something new in the corporate world or the investing world, you're wrong, because every day is a new day.
You know.
It's like we were talking about what the Fed's going through now, this whole set of circumstances with FED tightening and government spending. It's a whole set of new circumstances that has to be reevaluated. You know. I learned new things every day, and I think it's important that you just understand that what was true last year may not be true this year, and what you believe to be true may not be true tomorrow. And I think that's really important.
Really amazing stuff. Gary, thank you for being so generous with your time. We have been speaking with Gary Cohne, former director of the National Economic Council in the White House under President Trump. Prior to that, he was president and chief operating officer at Goldman Sachs, where he spent most of his career. If you enjoyed this conversation, well be sure and check out any of the previous five hundred or so we've done over the past nine years.
Can find those at iTunes, Spotify, YouTube, wherever you find your favorite podcasts. Sign up for my daily reading list at rit Holts dot com. Follow me on Twitter at Barry Underscore Ritolts. Follow all of the Bloomberg family of podcasts on Twitter at podcast I would be remiss if I did not thank the crack team of experts who helped me put these conversations together each week. My producer for this episode was Rob Bragg, my audio engineer with
Sarah Livesey. Attika of albron is our project manager. Sean Russo is my researcher. I'm Barry Ridholts. You've been listening to Masters and Business on Bloomberg Radio. Yeah,