Interview With Roger Lowenstein: Masters in Business (Audio)

dive into that. I use that book extensively in my prep work for Bailout Nation, as well as another book of Rogers, which was Origins of the Crash, which talked about all the factors that led to the two thousand crash. We go into a lot of details on some of this. Some of this we really just skip over um and talked very lightly about. So it's ninety minutes. It's a fantastic conversation, and rather than me babil, I'm just gonna send you right to the podcast and broadcast without further ado,

my conversation with Roger Lowenstein. This is Master's in Business with Barry Ridholts on Bloomberg Radio. This week on Masters in Business on Bloomberg Radio, I have a special guest author, Rock Contour journalist Roger Lowenstein. You probably know him from what is actually one of my all time favorite books, When Genius Failed, The Rise and Fall of Long Term

Capital Management. But he is also the author of Buffett, Making of an American Capitalist, Origins of the Crash, which I thought was a really interesting book that I used as part of my research for Bailout Nation, End of Wall Street, While America Aged, How the pension debts ruins General Motors, and his most recent book, An Erica's Bank, The epic struggle to create the Federal Reserve. Roger Lowenstein,

Welcome to Bloomberg Barry. Always good to be on your show. Um, is this the first time we've had you on this This will well, you don't know if it's good to be always good to be with you, so it's always good to be in your company. Roger and I know each other for a few years from similar circles. We had lunch not too long ago, less lunch outside the library. I think that while you were working on that book, and we talked about your process and your research, and

I really want to get into it. But before we start talking about America's bank, let's talk a little bit about your history. You were at the Wall Street Journal for a part of a decade longer. I was at the Wall Street Journal for fifteen years. Um, you know, I always had loved being at the journal, always had kind of books in my veins. And you always knew you wanted to be a writer from early on? Or how did that evolve? Um? Early on? I can't tell

you. You You know, when I was a reporter the Cornell Daily Son, if I was thinking of books or not, But I was always what was called an egghead back in the day, and a walk that's right. That word didn't exist back in my Cornell days. And I was looking for a book, you know, as my career at the Journal went on, and I knew something about this investor out in Omaha. Who actually at the time we're talking, we're talking the early nineties, so no one knew who. Really,

I wouldn't say no one, but not like not. He wasn't the icon. He isn't on their radio and put him on them all the time. Well I think he put himself from the map. But but I was writing the Herd in the Street column for the Journal and the song which, by the way, there is a number of storied Pulitzer Prize winning journalists who have occupied it was a good chair and one was infamous. We won't mentioned, but um doing that column, and the Solomon Brothers scandal happened.

Buffett flies into New York and all of a sudden people are very interested in him, and so I pitched a book idea and did that book, did very well, went back to the General, wrote a column for a few years, and since then I've written exclusively books. So

the Buffet story is kind of fascinating. The Solomon comes in, save Solomon Brothers, works them out from their headache, subsequently does the same thing with Goldman Sachs in the financial crisis, kind of gives them a capital infusion they needed to

stay liquid. You talked a lot and wrote a lot in Origins of the Crash about the previous UH crisis, the two thousand dot com crash, But the end of Wall Street was really your story, not so much about the financial crisis, but what happened with Wall Street during

that period. Yeah, the end of Wall Street, you know, it was about the two thousand and eight mortgage bubble and everything that happened after the FED interventions that tarp all of that, and the you know the difference between that story and the one we're gonna talk about America's Bank is this was what a crisis looked like when we had a federal reserve and we had a strong federal financial presence as opposed to before. Were you just krene from your you're on your own crisis to crisis.

Maybe JP Morgan will organize a loan for you, if not Sion our maybe and and by the way, sionar to the system as well too, So we're gonna definitely spend more time talking about that. I would be remiss if I failed to mention your dad. Your father was Louis Loan Stein, and he was really a well known law professor and corporate executive who pretty much spent three

decades dissecting the excesses of Wall Street. If if he was alive today, he would be active on Twitter, he would have a blog, and he would be trashing Wall Street on a fairly regular basis. Know, I don't know about Twitter, because I remember trying to get a dad, um My dear and late father to accept photos and

texting on his cell phone and and different generation. But he seriously he was a law professor who, instead of just sticking with um, you know, the standard text that other professors were teaching, said hey, there's something going wrong in business. I don't care if it's business law or business. This is in the era of junk bond sales and

junk bond excesses. And he really he was a pioneer and saying the way the prospectuses are written isn't right, disclosures aren't right, the risks that they are being taken by mutual funds aren't right. And he was out in front very much an investor advocate. Is that a fair statement. Yeah, he was an advocate for good, fair, open, honest disclosure transparency. He also warned about the dangers of short term investing

and in ignoring the long term. The question I want to ask is how did your father's philosophy affect your your thinking? You know very much. But we both got into we sort of both edged into writing careers or authorial careers. He was a corporate lawyer for the all of my growing up, and I was a journalist and you know, at the beginning of my career, I wasn't even a business journalist. And then uh, you know, when I went to college, I wasn't even interested in business.

And then at some point I joined the Wall Street Journal around uh, nineteen seventy nine. I joined the journal. At that time, Uh, he was a chairman to become a CEO of one of his clients, path Mark, the s GC, the supermarket chain. H. At some point, uh, soon after that, he segues into Columbia University become a law professor. And by now I'm writing about finance, and as a law professor, suddenly he's writing about finance, and suddenly we're sort of doing it. Not the same things,

but similar things just happened almost simultaneous, Almost simultaneously. He wrote his his first two books before I wrote any books. But I was a financial reporter, and so you know, we really really enjoyed. We would add each other's books and it was a relationship. Um. There was no tension in it, there was no disagreement. It was just it was a pure love and also an intellectual connection which I treasured. You're listening to Masters in Business on Bloomberg Radio.

My guest this week, author Roger Lowenstein. He has a new book out called America's Bank, The Epic Struggle to create the Federal Reserve, And it's really very much a deep dive into the history and creation of the Federal Reserve. And and it's really apparent to me you spent a long time doing some really archival research on this. When we had launched a couple of summers ago, you were already a year or two into the research process, and here it is months and months later in the book

is just coming out recently. What was the research process like for digging into the creation of the Federal Reserve. So that's a good question. Because my other books were mostly contemporary stories. This is a history. Although there is some contemporary aspects relative to what just took place, but most of it is really a deep historical go back and interview wood Row Wilson. You can't interview Carter Glass, Paul Warburg, Teddy Roosevelt. These are all big characters in

the book. So you go to archives, and um, you wouldn't believe archives all of these famous people either in the library Congress or the Woodrow Wilson Library, Like you're doing White glove. Original document is white glove. Because you go into the say the Library Princeton, and um, they almost do a strip search. You can't take in you know, I can't take my cappuccino and with me because they don't want me spilling my cappuccino one hundred year old

original pieces of parchment. I can't blame them, can't really blame my. I'm not allowed to take cappuccinos, by the way, in the living room either at my house. But that's for a different reason. All the Bloomberg people in relationists the entire places waterproof so's it's quite amazing. So each of these and there were about ten different sets of archives JP the Morgan Library of different basically bankers and

politicians at the time. And what you see when you get into them is that although you can't to contemporaries interviews, there are no emails, people back then really wrote letters, and they really bared their souls and give an example of of something you can you can learn from then you couldn't learn today. Washington, d c. Obviously is a very hot, steamy town. Before the ear of air conditioning,

political spouses would take the summer off. That was true in n in the summer when the Federal Reserve Act was really reaching a peak in terms of the legislation. So Ellen Wilson, the President's rather delicate wife, holds up in New Hampshire during the summer. So he's writing her virtually every day, and you're seeing in the archives the problems he's facing the legislation, which committees and committee congress people are giving him trouble, what his strategy is. He's

telling her, don't worry. The press is writing this. They don't know what they're talking about. I'm gonna do an end run around him. People bear their souls and letters in a way that's more trustworthy than an interview, because you know, you go interview somebody, of course they're going

to tell you what they want you to know. But is his Woodrow talking to his wife, or it's Paul Warburg talking to his most trusted comrade or something, and it just opens up a window into the contemporaneous activities back years ago that that sounds like it would have normally been dinner table conversation if if the misses was in town. But since he doesn't get to come home from work, how is your day, honey, here's what happened

in Congress. He actually wrote specific details. Do these guys realize this stuff ends up in archives and libraries or is it just Hey, I'll be dead. I don't care. What's the thinking that. No, they're saving their letters, they're saving duplicates. Carter Glass, who many people may know from the Glass Steagel Act, but he's also the father, legislative father the Fed Reserve Act, a very fiery guy. He goes to the White House one day and Wilson shocks him.

Glass wants to have on this emergent legislation for this new body, the Federal Reserve. He wants to be run by bankers, not by federal appointees, not by presidential appointees. Lewis Brand, Wilson's adviser, and William Jennings Bryant, his Secretary of State, says, uh, this is a new day and new a new dawn. This agency is going to run the banking system has to be presidential appointees. Wilson lays down the line. Glass goes back to his hotel. He's shocked,

he's outraged. He's a kind of he's a conservative, doesn't he can't begins to write letters. You can see them today on the Raleigh Hotel stationary. That's where he stayed when he was in Washington. Page after page, he's exploding off the page, you know he was. He wasn't thinking then about his reputation for posterity because he sort of embarrasses himself. He's a He's finally says to somebody, I'm gonna call the president tomorrow and see if I can

get him to change his mind. No way, Wilson's gonna change his mind. Wilson's made have made up his mind. But um, they they they bear themselves in a way that that we rarely see today. And it just because there's such big characters in history. You know, if if you're a nut for that sort of stuff, it's kind of fascinating. Let me ask a broader historical question. How come in the United States was one of the last

major industrial countries to get a central bank. You look at Europe and Japan and elsewhere, just about everyone else at a central bank. Why were we so far behind the rest of the civilized world. So the thesis of the book is, this is our heritage. We rebel against the English king. Uh, we were at rebel against the central government. What's the first debate in American history. It's

Hamilton's against Jefferson. Hamilton wants a central bank. Jefferson says, no, that's like the English tyranny that as settlers pushed west and the pioneers pushed west. They're continually saying, we don't want control by New York, we don't want control by Washington. This is recreating everything that we rebelled against. And by the way, Barry, look today, look to the Tea Party today. You know they don't want a strong central legency. They

want to under the Fed right now. So in every country in Europe they sort of accepted, we have a national government, we have a national monetary system. Of course we're gonna have a central bank. But in America, you know, a good swath the population remains very touchy about it.

Ask Rand Paul, this is this is our heritage. And if you look one whose last book, by the way, was and one of the main opponents of the federal reserve legislation is Charles Lindbergh, senior father of the Aviator, real populist out in Minnesota, so who held this district until a few years ago. In our day and age, Michelle Bachman, the Tea Party Report. You know, Crusader, This

is not a coincidence. This is we have this populist, suspicious mindset in much of the country that always feared in Andrew Jackson's day, in Woodrow Wilson's day, and today that if you have a central bank, Wall Street's gonna run it, They're gonna be inco hoots against the common man and so on, and that's that's our legacy. There are people who wouldn't disagree with with those fears. Let let me ask you a question about the most surprising thing you found about the FED in your research. What

really leapt out and surprised you. You know, I was surprised at how similar the eras were. People. We had a financial cray seven. We had a bank panic, a real panic. By the way, I don't mean red lines in the computer screen. I mean people running to the street corner to take their money for fd I c pree really and every any federal supervision control of the currency. One guy in Washington. That was it. But people were some people wanted deposit insurance, some people were afraid of

moral hazard. That idea was, you know, very current JP Morgan steps in. He's kind of a hero, kind of like you know JP Morgan Chase today buying up bear Sterns. Six months later, people are accusing JP Morgan of having plotting the whole panic, and Teddy Roosevelt says, wait a second, this is getting out of hand. People are people are starting to say that every bank is something rotten in it.

Their populous fighting bankers. Uh, there's a people who want the goal standard, people who are very upset about it because they think it's too deflationary, too tough on the average farmer, average worker. The the fights between regions of the country Republicans and Democrats sounds just like today. It's it's it's hard to I was shocked at how current the debates sounded as I read them. You're listening to Masters in Business on Bloomberg Radio. My guest today is

author and journalist Roger Lowenstein. You probably know him from such books as When Genius Failed, The Rise and Full of Long Term Capital Management, as well as Buffett Making of an American Capitalist. I found Origins of the Crash about the two thousand Crash to be fascinating book, and it was tremendously helpful in my own research about compensation and stock options. And and I recall you're the first person who reported about the Hinz executive who I think

it was in had gotten a hundred million dollars. Some insane that back when a hundred million dollars was real money, it was. It was crazy. So let's talk a little bit about your your research and your writing process. Us walk us through through your process. How do you decide on a topic. Where do you begin? Well, if you let's look at the recent book America's Bank, it's a history of the founding the Federal Reserve. I was interested

in doing a history. I began that one after the last book, which was the End of Wall Street, which was a contemporary story about the mortgage crash. I wanted something historical. And as my editor and I were talking, you know, it was we were very aware of how present the Federal Reserve today had been in everything throughout you know, throughout this experience in two thousand and two

thousand and nine. And she said, at one point, you know, be interesting to look at what what the country was like before we had a FED, How we're crises handled? Why was it? The people thought, why didn't we have one until so late? Why do they think we needed one? How do they get one? And it just seemed it just seemed to fit there. Would it would be in a sense of great book end to the contemporary history we're living today. So you said you were working with

your editor and she help you shape. I mean, we're always throwing ideas back and forth and and she said, um, and she's not a financial expert per se. She's and got off. She's in my mind, the best editor there is, but she's throwing out topic ideas. And then I would go back and say, hey, is there something to this idea? And started to research, um, what went into the making of the Federal Reserve? What else has been written about it? How resident is it to today? And you know, it's

just astonished. There's this incredible, mysterious trip that bankers in the U. S. Senator take down to a remote island in Georgia. Because the thing is so controversial, they got to plot it in secret. There's a Wall Street crash very much like the crash that um that we just lived through. There are great characters, great presidents, um, financial

tycoons and so on. And at that point I go back to her and say, I think we got one here, and she says, okay, put it in paper, because you until you write a proposal, anything can sound good, uh, in a coffee shop or you know, over the dinner table. But and you're I think I wrote a proposal about is something like that? And at that point she says, wow this. You know you've got something here and let's go.

And then uh, you do a timeline. That's a that's a for me, the most important next apt chronology of a chronology of the events. What happens, you know, when does the book start? And this book has a background period. We go into the Gold Silver debates, across a Gold Speech and all that stuff in the late nineteenth century. To set the table um, Paul Warburger is a major character. He this German financier emigrates the US, is astonished that our system is so primitive, and you know, and he

begins to lobby for the federal reserves. So when does he come in? When does he come into this country? And you go on with a timeline so that as you're getting information, you can add, you can fill it into the timeline. So things are where you want to find them when you go to you go to writing the book. So let me talk a little bit about some of your other books. Do you have any personal favorites as a finished work? Which one of those books

the finished products are you happiest with? You know, it's really for me as a writer, like asking about my which one of your children? Of course, so I like my three children best. After that, I like my six books right right now, I'm very partial to America's Bank. You know, it just came out. The history, the historical characters, Um. The process of trying to bring them alive, UM, was just enriching and fun for me. And UM, so that's because it's so new, you know, you're it's not surprising.

I would say that you mentioned origins of the crash the compensation system, and that for me was really fun to dig into what's really wrong with the compensation system and and to flush it out in a way I hope hadn't been done before. Uh, the Pension book. You know, in a way that was too early, because the idea of that book was, hey, we have a real way,

you know, we have a problem. But I think it still holds up today that these cities and states you can't just keep legislating increases saying you know, we'll take up we'll take care of it later. And that I mean, look around today, you know, Puerto Rico, Illinois, wherever you look, all these cities in California, Detroit, it's it's come home

to roost um. The Buffet book was really fun to write because I was sitting in people's living rooms, partically in Omaha, asking him about this little, um precocious kid they knew named Warren, who was telling everybody he was gonna be a millionaire back in the in the middle of the depression in Nebraska, when nobody knew what a million dollars was. Um, you know, so you liked them

all in a different way. When Genius Failed was a really tough reporting exercise because as much as everybody wants to get in on the Warren Buffet story and say, hey, it was Warren and me, you know, I helped him out on this, nobody wants to be part of the when Genius failed story. Nobody wants to be part of a hedge fund that went down. I'm Barry Ridults. You're listening to Masters in Business on Bloomberg Radio. My guest

today is author Roger Lowenstein. His latest book is America's Bank, the Epic struggle regarding the creation of the Federal Reserve. And we were talking earlier about one of my not just favorite Lowenstein books, but one of my all time

favorite finance books is When Genius Failed. And not just because it's such a fascinating story and it is an epic story of of hubrist and failure and and Nobel laureates and people being blind blindsided by their own failings and shortcomings, but the characters are so vivid and the story is so amazing, and really it was the last great opportunity for Wall Street to learn a lesson about risk,

and that was really a great missed opportunity. I recall you ending the book UM and ending UH the discussion of origins of the crash with a reference back to, Hey, if the FED didn't bail out Wall Street with the collapse of long term capital management, what lessons might the Street have learned? So I said it in the end of the book. Uh. Two things at the end of but one was I thought that the Fed on balance UM was wrong to organize the rescue because it was

a private sector rescue. So no dollars went into it. But you know, when you have the New York Federal Reserve Bank calling in the sixteen because Wall Street firms, that's some pretty heavy pressure. You can't say, I have a busy calendar. I can't make you cannot tell the New Federals or if you have busy calendar, your chief regulator. And I really thought at the time that as dire as the crisis was, that Wall Street and the economy

would have worked its way through um. And look, you don't want the government to come in unless they really really really have to judgment call. But that was my judgment. And the other thing I said at the end of the book was I made a reference to the dot com bubble, which was riding high at the time, and and this might have let air out of the bubble

before it inflated so much so much larger. But of course the real comparison, you know, and people have said this to me later on, was that when Genius failed about this collapse, his hedge fun was really a dry run and a mislesson for the mortgage crisis. For the bubble that you know so much seems similar. If you look at a firm like Bear Stearns, these seemingly well capitalized Wall Street firms with seemingly safe assets, you know, mortgage securities, triple a uh, you know, low risk rating,

all of that, and suddenly nobody wants them. All correlations go to one. Nobody wants any kind of these assets, and just in so many. In fact, I did a piece in the spring of two thousand and eight, the tenth anniversary of when ltc M began to get into trouble, uh and right around the time of Bear Sterns, because the comparisons uh were so close to the level of leverage. Well, LTCM a hundred to one, bear Sterns thirty five or forty five to one, that's still a tremendous amount of

average dicey assets. Ltc M was backwater Russian paper as amongst other stuff. Who really knew what securitized sub prime mortgages were pre crisis. That's really something we all kind of learned it once. And correlation is going to one when nobody wants when the when the proverbially, you know what hit the fan. Not only did nobody want Russian debt, nobody wanted any kind of debt other than US treasuries,

and the same thing happened. You know, look in in the fall of two thousand and eight, General Electric could not sell its paper. Nobody wanted commercial debt, nobody wanted risky paper with even this until of risk. And just like General Electric or that's just like that point general everything is a real example. You know, Goldman Sachs, which on paper was completely solvent, was running off to Warren Buffett to get capital because he was sort of the

only place that they could get capital from. And these examples are just you it was just one firm and a few firms around it. In two thousand and eight it was all of Wall Street, so that was really a missign And in terms of limits on leverage, reliance on on arithmetic risk measures, which is really a big theme in when Genius failed. These these you know, computerized value at risk measures tell you you can only you're

only gonna lose so much. Why because the computer says that's that's how much you've lost in every every previous day. What about if tomorrow is different and they didn't learn that lesson in what do you know suddenly in two thousand and eight tomorrow was different. So you had a firm bear Stearns was trading what a hundred and seventy bucks I think peaked around that and and a year later it's sold for two dollars two dollars, but they

did lobby it back up to ten dollars. My favorite picture of the entire crisis, some wise guy took a two dollar bill taped it to the front glass door of the new beautiful bear Sterns building over on Vanderbilt and forty and there's a picture of the two dollar bill with the bear Sterns logo that that is now the JP Morgan building which they got as part of the deal, that that might be one of the best assets they picked up in that deal for pennies literally

pennies on the dollar. So lost opportunity to um prevent a little moral hazard, inject a little normal risk management. What other lessons do we pick up from from lt CM that are applicable not to oh eight but today. Well, one lesson is that when interest rates are very low, uh, there's a particularly strong ten and see to look for yield elsewhere and to reach to reach you know, how often what is it hogs get fat, pigs get slaughter? Is it the diverse but reaching for a little bit,

reaching for extra yield. Uh, when the safe stuff isn't isn't paying off? Why do you think it's safe? Why do you think the other stuff is paying more yield? And the way to invest if you want to buy the risky stuff, buy it when it's down by it, when it's thirty cents in the dollars, or at least when it's being this when you're getting paid for it. That way. If you're wrong, yes you're wiped out. But

if you're right, you really get paid for it. But but to buy a piece of potentially really risky paper to make um, you know, a couple of a hundred extra basis points, you know that, I think that's really lesson. And to think that an asset that everyone regards as safe therefore makes it safe. Look at these um mortgage securities. Okay, so standard pors moody is, you know, Fitch. They all said their trip bal a rated. But how many people really looked at the Did anyone look at the securities

behind them? Did anyone look at the homes behind them? The quality of mortgages so painfully few, you know, do your own research, look at within those securities the fact that everyone's in them might tell you, in fact that they're selling for a pretty a high price, that they're selling it a premium, and you should be extra wary. And that that was a lesson that was just skated over. And I think the other lesson is the over reliance on the I mentioned this before, Uh, the arithmetics, the

computerization of Wall Street. Um, don't get fooled by these spreadsheets and these you know, thirty page printouts. Look at the underlying asset. You know, release your inner war and buffet, so to speak. Beneath every security, there's an asset on Main Street? What are the houses really worth? Don't look at the trading patterns. The trading patterns don't tell you anything. All they do is tell you what somebody else is willing to pay for it yesterday. Because when liquidity drives up,

that's a meaning. This number, you know, there was there was an embedded red flag in the whole proposition. And I heard this repeatedly in oh four, oh five or six. This is as safe as treasuries. It's rated triple A, but it pays two fifty bases points more. Someone should have turned around and said, isn't that economically impossible. Either it's riskier and paying more, or it's not paying more and it's the same risk. How do you get this

wildly disparate spread between two triple A rated things. Everybody ignored that in the Reach for You. Barbara Reguez at f p A, the Great Mutual Fund Investor, was one of the few people who didn't ignore it. And I think two thousand and six or seven he went to the one of the meetings of one of the big credit rating houses and he said, he asked him a question, what happens what's the assumption behind your your your risk

ratings on real estate? And they said, our our assumption is that the increase in real estate values is going to taper off. And he said, well, what happens to your assumptions if they don't taper off? But if real estate prices are flat And they said, well, the models will be a little off then. And then he said, what happens to your models if in fact, real estate prices in the US fall by say two percent a year And they said, this is this is documented in

the book at the end of Wall Street. They said, then the model completely breaks down. So here's a model one of the three big rating agencies on which you know thousands of investors are relying. And the assumption is that there can't even be a two percent per year decline in real estate prices, and before the next season comes, we're having a five. That's what kind of uberses that. Forget the Great Depression where real estate prices, depending on

what data you want to use, fell fifty. Back then, mortgages were three or five year interest only you had to roll them over. But just go back to the early nine indies and you had a big real estate pulled back from the peak of the late eighties. It wasn't unthinkable to see flat real estate here in New York City. You bought something in eighty nine, you didn't get back to break even until ninety eight or so.

How could that not be? There was this myth that real estate doesn't go down, And as you say, there was a terrible real estate depression in basically nine to It hit Texas, it hit the Midwest, it hit New England and hit New York, hit Atlanta, hit Florida, um everywhere where Moody's in SMP actually operated. Yeah, so I don't know how this you know it was a sort of at this time. It's different. Uh, same thing with the tech bubble. Uh, you know, this is different new

economy all that stuff. Um. Look, it happened with the railroads in the in the eighteen sixties, seventies and eighties. Um, we have a lot of railroads today. But those original securities aren't worth anything, most of them. Uh, there's this fiber optic, television, automobiles crossing right name and industry. There was a boom and bust, and then you building on the on the survivors. Virtually all of the early computer makers, the Tandi's and so on, they're gone. Computers are here,

Both those early manufacturers aren't here. People who want to find your work outside of Amazon and Roger Lowenstein dot com. Where else can they see what you've done? You know, Barnes and Noble, Amazon, the website, Roger Lowenstein dot com, and the indie bookstores. I love to sell books in indie bookstores. There you go in independent bookstores. We've been speaking with Roger Lowenstein. Be sure and hang around for

the rest of our conversation. That will put up on the web and on Apple, iTunes, SoundCloud, and Bloomberg dot com. Check out my daily column on Bloomberg View dot com. Follow me on Twitter at rid Halts. I'm Barry rid Holts. You've been listening to Masters in Business on Bloomberg Radio. Masters in Business is brought to you by x On Mobile Energy Lives Here. Welcome back to the podcast. My guest this week is Roger Lowenstein, who is actually an author I've been reading for quite a while and I've

been a huge fan of his work. His his books are um, how do I say this and not embarrass him? They are the standard by which all financial writing is measured. There aren't a lot of people who can take a relatively dry topic and make it come to life the way you can. And you seem to pensions, uh, complex financial instruments that crash on an obscure hedge funds stop

and think about, and the Federal Reserve. These are terrible, terrible topics that you had to make a compelling pitch for a publisher to say that sounds like a great idea, and you described the pitch for America's Bank. I remember when Genius Fail came out that was relatively soon after everything kind of hit the fan, wasn't it? How deep and long was that after the collapse. That was a real rushed pace because that it was so tied to

one event. Um they that rush paste suits you because that book is so readable you don't even need an interest in finance. It's a great narrative thing of itself. That book came out excuse that they imploded in the full of course, and the book came out exactly two years later. So that's a story search it. You got

to write it. The publisher needs, you know, a good eight months to turn around, so it was it was a very fast You should get Brad Pitt to do a movie version of you know, he should call my agent. All right, well, I think Michael Lewis has him lockdown for money. Bull was not only a great book, but a fabulous movie. Everything I hear about The Big Short is that it's a great movie. But I think I would actually like you to play, you know, a lead role. Okay,

no wants to see my fat behind on screen. This when Genius failed. It's such a great story. It's it's from a purely let me gush a bit, from a purely financial perspective. It's a fascinating tale about Nobel Laurel its and complexity and value at risk and all the other we talked about, all the mathematical um illusions that create a full sense of certainty that lead people to say, yeah, we could buy this obscure paper at a hundred and one.

But the narrative about all the people is absolutely fascinating. Well, thank you the narrative people. Really, I mean you you opened up by saying you know you're right about boring topics, but you you don't make them boring. That's the people wrote, not boring, right, So that's always the key. So you know, this America's Bank about the FED, but it's not about the FED. It's about Woodward Wilson and Paul Warburg and

JP Morgan and Teddy Roosevelt. These people are fun in um and when genius failed, the narrative in way I think it was almost a template narrative for financial crisis. You had these guys who were considered the smartest guys on Earth or on Wall Street. So let's go over

some of the list. You have John mer John Merryweather, who was head of Solomon Brothers, or the head of the risk arbitrage that the risk arbitrage, the UH, the trading the high powered trading group at Solomn Brothers did this in house, left with a few of his guys such as Eric Rosenfeld, Larry hillibrand Victor Gatti Uh to start their own head shoes Stacks development in that group. I can't remember where shoes stack came from. So um but then we also had not one, but two Nobel Laureates.

Of course they became Nobel Prize winners during um uh during the period in which LTCM was up and running. Uh well it wasn't wasn't um right? But what uh Myron Shoals didn't he win previous to No, they both won. So but look they were acclaimed to claim they had invented along with fish are black the black shows option pricing theory. So you know who could this is like getting Jonas Salt to prescribe penicillin. You know they are

you know who who could better trade risk? These guys that had amaze invented if they created the method for evaluating risky they created the modern method for evaluating a risk in an arithmetic sense, which is different, by the way, than risk the notion of uncertainty. If you look at, for instance, if you're standing at the edge of the cliff, and and you see maybe tend people the edge of the cliff, and you say, I wonder what the odds are that one of those people are going to fall

off the cliff. That's uncertainty, not risk. You can't calculate the odds. You know that the closer they get to the cliff, the higher degree of likelhood is, but there's no way of measuring it. However, if someone said to you, what's if I roll dice, what's the odds I'm gonna roll snakeheads snake guys, I can tell you it's one out of thirty six. That's the difference between how regulated arithmetic risk and uncertainty. Most things that happen in financial

markets really are given over to uncertainty. What's the risk that some company is going to have a terrible quarter? Is it one out of three, one out of four, one out of eight? Hard to measure. The conceit of these risk managers, of of of these scholars was to think that they could turn financial markets from uncertainty to risk, that it could be calculable, that they could determine down to the penny what their risk exposure was, and it turned out to be dead wrong. Isn't that the underlying

issue with all models? You know? The statistician George Box has a wonderful quote, all models are wrong, but some are useful. Once we forget that this is merely a useful model and start thinking it's true, it's reality, not just a depiction of reality, doesn't that lead us down the road to increasing the possibility of of some implosion? Yes,

because you you bet on. Look, if if you had been if you'd ask some uh, some guy with a computer model in the year two thousand, what are the odds that we would have a cataclysmic breakdown of the economic system and then unemployment would go to ten percent? He would say, we haven't had a real breakdown since the Great Depression. Unemployment hasn't been ten percent since the early nineteen eighties. You know, I would say, the odds are,

you know, one and a hundred if this happens. If you asked him now, he'd say, even money, even money, you know, isn't that? Isn't that like the hundred year floods. They always show these houses washed away on the banks of the missiles we're getting every two years. Yeah, you're right, it's maybe we need to rename the hundred of your flood.

That's very different than if you're at Las Vegas. You know what the odds are at black check and they don't change, so you can make an intelligent mathematical bet at Black Chack. Securities are different, to say the very least. So UM. John Corzine is mentioned in Long Time Capital Management in One Genius Failed. What was his involvement in uh in the hedge Fund? He had a very significant

involvement in that story. And um, this is the former CEO of Goldman Sachs and then governor and senator from New Jersey who ultimately ended up running UM. What was the company that we had a little Jersey company with a little sniff, Yeah, oh, dear lord, you'll plug it in, but pop in. We were talking about the reading glasses. This is another So he m global, m F global, very good. So I liked John a lot, and um he was a very helpful source to me when I

was researching the book. He had UM a large involvement in some ways the tragic involvement with LTCM LTCM needed this is the hedge fund. Of course. John Murraywether's hedge fund needed strong financial backers, people who would fund its trades, and they basically went to the main Wall street firms, so Mol Goldman and so Goldman was very very involved in UM backing LTC. M uh core design at the time was co chief coc Co Ceo. I believe the title was with a guy named John, Hank Paulson, UM

and Goldman. Believe it or not, it is hard to believe because it seems so Reacon was then a private firm. That's right. Everybody forgets most of these banks were private firms prior to twenty years ago. So that makes a big difference because you know, Merrill Lynch is UM lending some of their credit over to LTCM, so is Morgan Stanley. Uh So, why does it make a difference that they're a partnership and not a public because doesn't Merrill go home at night and don't worry about it when the

guys go home from Goldman. It's their capital in the line. It's a partnership. It's owned by John Corsign and Hank Paulson and the other you know senior bankers. A joint and several liability means that if the firm collapses, they don't just lose their stock options, they lose their entire everything. They are on the hook as partners untill every partner's assets are exciting. And look, let's let's you know, at Meryl Today or at at at any public securities firm.

The people who are called partners aren't really partners. Their managing directors or whatever shareholders. They own a small scintilla of the firm, but their liability is limited to that ownership. But the partners at Goldman owned it all. So the exposure to ltc M was their exposure. So what happens as lt cm UH starts to go down UH is they're scrambling around for money and they're turning to the

big Wall Street firms. John Corsign is very involved in trying to get um UH big folks on Wall Street, Warren Buffett, others to put up money. Goldman thinks about whether it should recapitalize UM ltc M. At the same time his partners are getting UH core designs. Partners at Goldman are getting more and more upset with him because they don't want more of their capital risk. And to make matters worse, Goldman has an I P. O scheduled. Okay, right in the middle of this, what do you want

to do? You know, when you have an I p O. You want to have a road show. You want to direct dress yourself up, you want to look pretty. We're a great firm. We've been around since uh you know Sam Sacks in nine ten or whatever it was. You don't really want to go on the road and say, oh, we got major exposure to the worst hedge fund implosion in history, in history. And as this is going down, core Design is battling his partners. As the FED is telling all the Wall Street banks you gotta go in.

You each got to put up a few hundred million dollars to bail out this firm, Core Design is getting it from his partners, and he really, um, he really lays his own backside on the line. At the end of the day, Goldman does join the consortium. Uh, they do bail out LTCM. Uh. The I p O is post owned, but at the moment it's canceled that nobody knows. Goldman is itself uh suffering huge losses because they owned

some of the security same securities the LTCM does. Everybody's getting everybody's Piggy the same Meryl takes a terrific loss to UH and John Corzyne is sacked and loses his loses his job, he goes into politics, and goes into politics, and and um, you know, I think we we talked about MF Global, and I wondered after that went down if some of that over reaching there was an attempt to regain some of the rehability loss luster at at

the unfortunate way his career ended at Goldman. But I really think, um, he was being a citizen of Wall Street and a citizen of the country when he said we we got to participate in this, We got to see this thing through. So he fell on his sword. Quite fascinating. There's a footnote to the rescue of Long Term Capital Management. Of all the banks on Wall Street, one refused to participate, That's right. So that was bear sterns Uh. They were the prime book broker of of LTCM.

So they said, we have too much exposure to LTCM already. We can't bail them out. We're already on in the hook as a counter party, and we have holdings and we have this, and we have that. What were the repercussions of that a decade later. Well, so that's a great you know, Wall Street parlor discussion. Jimmy Caine didn't want any more exposure than it came time to help out Bear. Was anybody going to help them? And so on?

Um uh, you know, at the end of the day, JP Morgan Chase did come in to buy them at two dollars, at two bucks, but down from almost right and with the Fed's backing. Let's not forget it was only agreed to guarantee. You know, Carl con said it, you want a friend on Wall Street by a dog. I think if someone had thought Bear Stearns was worth uh, you know, twenty bucks, they would have paid twenty bucks

and everyone was terrified. No one want to step back. Yeah. So, although it certainly seemed to be poetic justice, I think that's the point you're arriving at it, and I agree with you. You know, suddenly the tables returned. I don't think that's the reason that that they came a cropper. I I you know, people in Wall Street, we're gonna offer whatever they thought Bear Stearns was worth, not a penny more, not a penny less on account of what

they had or hadn't done for LTCM. Wall Street just doesn't. It's it's too cold blooded, right, it's too bloodless for that to have happened. But it's still there's a touch of irony in that. Here, here's the one firm that didn't participate in that. It's very ironic. That's right to say the least um so Lehman participated didn't do them a lot of good ten years later. Now, now my

favorite footnote with Lehman. Since you brought up the gentleman name Warren Buffett, and not a lot of people knew this, I dropped this into bail outmation. I've mentioned that many times. People say, I don't I never heard that before. Is

that true? When Lehman was spending the summer looking for financing and we have the Korean finances amidst Bank of Mitsubishi and all these people who ultimately fell through, Buffett made a very credible multibillion dollar offer to Dick Fold of Lehman brothers, including and and by the time we got to oh eight, Berkshire Hathaway was essentially the Wall Street equivalent of the Good Housekeeping Seal of approval, and Fold said, look at this terrible deal. Uncle Warren is

offering us. This is awful. He's trying to steal the company. It turns out that that was a much better deal that he ultimately ended up doing with Goldman Sachs, a much bigger, better, stronger bank. Goldman got better, worse terms than Dick Fold rejected. Yes, because the when he when Buffett did the Goldman deal, although Goldman's obviously stronger firm, the conditions on Wall Street by then had become so much more die or that. But that was three months later.

It's not like it was years later, four months later. It was. Yes, it was after Lehman said no to Warren, and ultimately, now it turned out at that point Goldman was you know, everybody was saying, o our Morgan Stanley and Goldman going to be the next martl the next Lehman. At that point, Goldman was not in a position to negotiate. Obviously, had Dick Fold cut that deal, it's very unlikely that Lehman would have gone down, because you know what that

would have done for its confidence. But Dick Fold, you know, you get a better deal, and he got wrong. You know, the amazing thing is Folded Buffett a favor because between REPO one oh five and everything else. Who news knows how long it would have taken for Buffett to make his money back. Maybe he never makes it. Maybe he never makes it back. That's correct, that's correct, And so we end up with a situation that Fold, being not especially smart or or let's just say, especially arrogant about

the deal, rejects Buffett. Sends Buffett a few months later into the arms of a much better deal, which ultimately made him what was in a nine percent ten percent coupon plus a nice slug of equity that was a home run for Yes, I heard Buffett talking about it at Berkshire's annual meeting. I can't recall his last year the year before, but he started to talk about how it was ten percent and he said, you know, uh,

we get paid even when we're sleeping. Ten percent tick tick tick with the deal made him very happy, to say the least. So let's talk a little bit about Warren Buffett. And you wrote a book on him before he was the legend he is today. What was it like researching Buffett in Omaha? What was that process like? It was a lot of fun because, um, you know, some people are famous because of one thing that happens

in their career or because they're successful. But um, if you went back, um earlier in their career, you know, in their childhood, you wouldn't necessarily see that. You know, young Michael Eisner was going to be in the entertainment business. There are very few people. You know, Steve Jobs is obviously Steve Jobs from the moment. You know, he was different from the beginning, from when they were hacking phone and and most Mozart was writing symphonies. You know, from

the time he was four. Uh, Buffett was like that. He was thinking about making money, fascinated by it. Uh, you know, from the age he could talk. He walked around with a little change person you know, you know, like a Triluman's change personally, you know, strapped to his he was you know, he was selling cokes, he was selling lemonades. He was going to the race track looking for use tickets. Every so often you found one that

someone had arrently discarded. It was worth something. He was telling people as a uh, you know, a twelve year old boy, he was going to be a millionaire by the time he was thirty, or he's going to jump off the tallest building in Omaha, which I guess was tall enough to do some damage and which horrified people. But so this it wasn't by accident that he became, if you. Um. When I talked to his former fraternity brothers, they said that they would have this game at at

fraternity nights. They would gather around a semicircle and listen and ask him questions. They lobb him questions. They just like to hear him talk. He was such a good talker, such a good explainer. And then I thought of that, this is the guy who would have people come to his annual meeting because people have to hear him talk, the great explainer. Um. There was just something intrinsic and inherent about the person, uh that that has come out in his career. So it was just fun to uncover

these steps all along the way. It was all of a piece. Um. The Warren Buffett who hangs onto his stocks for so long, you know, forever being his favorite holding period. As he says, and and and often lives by. He's the guy who never changes his foods, never changes his restaurants, still lives in the same house he lived fifty years ago, still works on that street in Omaha. So the biography was a there's no Warren Buffet at work and Warren Buffett at home. It's just warn Buffett.

There's one guy. There's one guy, and you know, you'd hear about him and his wife going out to dinner and the couple of good friends are entertaining them, and after twenty minutes, Warren's often aside room reading an annual report. That's his dinner. What now today, I think Charlie Munger has really come into his own. He's really regarded as an equal partner to Buffet, although I don't know how widespread that belief either is today or certainly was ten

or twenty years ago. What was your thought process with Munger as his partner when you were researching? Uh, Buffett, I don't think Munger is or was an equal partner in the sense that overwhelmingly the bulk of the ideas that end up in the Berkshire, and I'm a shareholder, I should say full disclosure. Uh, overwhelmingly they come from Warren. But um, Charlie is unique ability and it is unique with regard to Warren is he can tell him he's fully you know what, not a lot of people can

he is fearless. I mean Warren used to call him. I think I use this line in the book The Abominable no Man. But Charlie's not afraid to say Warren, you're full of it. This is wrong, this is crazy. I don't like this. And so they just have this, you know, freewheeling relationship like you and I are talking. You know, we're not afraid. And whereas it may be one of the longest running partnerships I'm aware of, they've been working together for how long they've been working together

since the mid seventies, So you're talking forty plus years. Yeah, you're talking forty plus years? Um, how many? And they were and they were good friends from the late sixties. Uh Monger was a blue Chip Stamps at some point, I believe in the early seventies blue Chip merges into UH to Berkshire Hathaway. So they had a sort of an unofficial partnership going on, and then at some point they're in the same company and it's an official relationship.

How many people are you know? Warren's now run Brookshire. This is the fiftieth anniversary. Monger has been there for virtually all of it. You know, so the record of management consistency is unheard of, probably never to be replicated. But Monger himself is scarily bright. He has terrific instincts about business. Uh. He has a BS monitor or detector, you know, that is second to none. Great instincts, great perspective instincts. And he's not so diplomatic. In fact, he's

not diplomatic at all. That that's the beauty. He's just says what he thinks. And Warren is not like. Warren doesn't like conflict, doesn't want to hurt people's feelings. Central cent Charlie at that had given the bad news. Um. But so that that's the dynamic. There's a little Lenin and McCartney there. There each different, two geniuses in their own way. Yeah, but I I don't think it's right to look at them as um. Warren is the executive operator. He's the guy who's coming up uh with most of

the ideas. When one of the units wants to say invest more capital, that Warren's making that decision. Yes, that sounds like a good project or no, uh, you can dive it in that money back to Omaha, thank you. We'll find something better to do. With it. Those are Warren's decisions, but the tough decisions he's They have a running conversation and so Charlie is going to be in on all those. He took Sees Candy to Warren. That was because California Candy, it was an early company He's taking.

You know, plenty of others over the years, but this

he was very influential. Also early on when Warren made something of a switch, not in his philosophy but in his approach in being willing to pay up more for good business as this think from paying as this think from only paying really low prices for businesses and naturally once so good and Monger's discussed that philosophy as a good business has a value that it's very hard to um either recognize or or easy to underestimate the value of a really good business that even a terrible management

team can't message the gift that keeps on giving. Uh. So you know what is it worth to be Sees Candy and Airport in those stands? Uh? Would you pay more for it than you know, Joe's candy, someone's never heard of. You would pay more for it? Now? How much more? That? That's an open question? But Munger really worked.

And now Phil Fisher, the Great Investor, was another person who worked on Buffett, who stuff Buffett read and influenced him in that regard and moved him away from the strict Ben Graham buying stuff for you know, just less in the cash value of the scurity and so on. So when you were researching this, you spend a lot of time in in Omaha, Nebraska, a lot of time.

What was that like and what was it like speaking to all these local families who had known young Warren as a it The first thing that was interesting me about Omaha was if you come from the East, and I came from New York, you think of Omaha as a complete hay seed place. Uh, you know, I think of Mutual of Omaha's the first thing that pops into my head. But I'm of the age where that show was on Sunday nights when I was a kid, and so that's been drilled into my head for however many

years of my youth. So I thought of as purely the sticks, and what I saw was it's a real city, a real downtown. Warren Buffett was not a farmer. His father was. His father was a stockbroker. And I say that because there was this tendency to to say that the street Warren Buffett is some savant who you know, wizard of oz who emerged on the planes or something. But he was not a farm boy. He was not a hay seed stockbroker's son. Grew up in an urban area or not too far from a completely an urban area,

and he roamed the streets of Omaha. He went to his father's you know, stockbroker in office. He was not uh uh some you know Carlos Castanada, uh, you know, a grarian savant or something. Um. And that was that was the thing that struck me about Omaha was and for you know, if you're in Nebraska, it's a big city. You know. He was following the baseball teams and so on, um, following the stock market and so as a kid, uh, the research in Omaha just all these people who knew him,

and the story never changed. He thought about nothing but making money morning, noon and night. And he had this infectious enthusiasm so that everybody he knew at every stage of his life got caught up in it. And I you know, for instance, this idea to you know, to to drum home, the point how it was there all along. He used to say that he liked his favorite business would be a monopoly toll bridge. Okay, so because you know monopoly toll bridge, you gotta get over the bridge.

He's the only one they can set the toll. So he's sitting pretty right. So it turns out I was interviewing. I'll never forget this his He had a friend named Bob Russell he grew up with. They were friends, particularly when he was ten twelve round there. Bob Russell's mother was still living when I when I was researching the book, and she said, and they had a house that overlooked a main thoroughfare in Omaha where trolley went by, and they had a porch and they'd sit on the porch

drink lemonades and watch the trolley. And Mrs Russell said, he used to sit there and say, if only you could set up a toll booth. Mrs Russell judge the trolley? What what? Twelve year old thanks of this? You know, it's more like give me another lemonade. But not Warren Buffett. He's thinking of setting up a toll booth on a

busy street. Uh you know when he's twelve years old, and so that that was just something in him that that that you know, And so I as I wrote the book, I sort of thought that regardless of what society he had been born into, um, you know, he would have been the numbers guy, the financial guy. He was born to do it. So before I get into some of my favorite questions, I'm compelled to ask, what's the next book we're going to see from you? The

next book will be a history. I'm going over a few ideas I am not in a position to tell you which we enjoyed this sort of deep diving. I really loved UM late nineteenth century, early twentieth century. There's a sort of a larger than life equality, Gilded Age, progressive era, UM because really everything else I've read of yours was sort of teared right off the headlines, so

very tell. If you look at those books, there's there's a lot of history and all of them, if you there's a lot of context, which requires understanding the history of the history of markets, the history of pension funds, the history of Warren Buffets goes back to Ben Graham, goes back to his father in the nineteen thirties. But

you can only put so much history in these books. Um, if you go back to the early nineteen hundreds, they're worried about inequality, you know, they're worried about big corporations, about America becoming a sterile soul is place run by far off, remote corporations. Well, thank goodness, we avoided that faith, thank god. So sound familiar. So there's something about in the old age, they're horrified all of a sudden they're millionaires,

you know, never used to have those. So these periods both hold a fascination for me, and I think they're particularly resident today. So it'll be something in that area again that sounds interesting. Let me go, because I know I can't keep you forever, although you and I could keep chatting about this stuff for a long time. Let's talk a little bit about these are questions I asked all my guests, and I always get some fascinating answers.

You mentioned your father was an influence on you. Who are some of your other early mentors hm Um, I had some very good editors, you know along the way in newspapers, um both um, Norm pearl Stein at the Journal, and Paul Steiger. So you had some real terrific rock star legends, terrific, terrific editors at the Journal. I'm hesitating that I don't want to forget anybody. You'll get an angry man. Um. You know, Warren Buffett letters were an

education in business. You know, I went to grad school with Lawrence Cunningham, who wrote that book, The Essays of Warren Buffett, which was amazing that I was in grad school saying, what why are you publishing on this? This is a law school, this is a and yet it turned out to be tremendously insightful idea before there were really a lot of that was back before you couldn't go on to Edgar and pulled down or the website and pulled down the actual letters. He bound, had them

bound published and there were a huge success. So when I was reading those letters, the contrast reading those letters and writing the herd on the street every day and being involved in how you know, the average company was doing things. And then I go back and read the letters and the contrast was such that, Um, that was also an education. I saw um that what he was preaching was so unusual in Wall Street that you know, most annual reports, they're written by consultants. Uh, they're full

of malarkey. They're spinning everything. Um. And he's just outlanded the way it is. You know, they're they're trying to game their earnings. Uh. There was just so much that was different. And and the combination of reading those letters and being involved in the everyday work a day Wall Street experience was an educational Did you get to speak to Buffett for the book? Very little? Um. Buffett didn't cooperate. Um. He said in the beginning that he said that he

didn't stop people or discourage them or encourage him. He just said, that's you know, you do what you can do. He said, it will work better for me, and it will work better for you too. Huh. And that's interesting with interesting And do you think that was right? I didn't at the time. I thought thanks a lot. I thought thanks a lot, war And he actually said, Um, he said he didn't want to give me his own stuff because he was saving it for his book and

I would cut into his sales. Come on, warrened, that's hilarious. But by the way, many a truth is spoken in jest, and he is only half joking when he says that I don't. I don't doubt it. But but to answer to your other question, I did come to agree with him because I think had had I sat down for interview after interview with him, the book would have come out in his words and with his take, and it

would have been his conception of his life. And by not talking to him and talking to everyone else around him, I got to tell the story as I would tell it, and so yes, in the end, I think it was worked best for both of us. I'm gonna have to get you as get from you his email address and and invite him to do the show the next time he's in New York, because I know he's got two hours to kill any time, any time he wants. Um. What are some of your favorite books? And I'm referring

to ones that you didn't write. What other books have you enjoyed? Uh? Finance books, boy, I'm gonna could be finance, could be other books, but just not by Roger Loans. Yeah, I'll start with you know the G eight Crash by John Kenneth galbrand Um is a book that I've always loved. Read it again and again. Boy, it reads like just a lemon drop of a book. Melts in your mouth and it and it could have been written yesterday. That's the thing that's amazing, could have been written yesterday. Um.

You know there's a book. I read a lot of business books, and usually because I review them, most of them don't go on the small shelf of ones I'd recommend by Italian economist Pietra Rivoli, The Travels of a T Shirt, The Travels of anybody anybody wants to. Um, have fun with a book on trade on cotton. I mean really have fun. It opens up a world you never thought was there. I just just love the book. I love John Brooks's books on Wall Street. Um, well

give me a title. Uh, let's see the one the go go years about there about the sixties and once in Galconda. That on my bookshelf. Unread waiting in my que about um the nineteen thirties. Um the rob The Robber Barons by Matthew Um who what's the last name of that author? I've seen that book. I've never read that either. That's you're you're giving me homework to do. You know that's kind of a populist take, but it'll

it'll be residant today. Um, I love Roncher Now's the House of Morgan and Hamilton's and his other books My head or Research. Mike bat Nick just finished that and cannot stop raving. He's working his way through all of Churnhouse book. He's just thrilled to death. Um, so there's a you know, a starting list for for Christmas Byes House of Morgan and of course America's Bank. By the way,

did you ever get around? So when I'm working on something, I try not to read a book on the same top title because topic, because it influences your perspective, you're you're you want to stay away from it. But I adored Lords of Finance, and I'm wondering if you read that when you would? Is a great book. This book is like one of the so that's involves four central bankers,

and this is like one bank of the four. Like this is a giant digression from Lords of the AQUITAMDS Pults Prize winner, amazing, every bit deserving of a Pulletzer Prize. It is a terrific book. And talk about a guy who can tell a story and make it come to life. You should be on any Financial Readers shortlist. Really just a tremendous, tremendous book. Let me keep going through my last few questions. Um, so you've been writing professionally for thirty years? Is that right? Well, I started out at

the Newport News Times Herald in seventies. Sixty years next year. So let me ask you a question. What has changed in three hours or less since you've become a writer for for better or worse? Well, Um, finance and business are much hotter topics and the much bigues much. You know, there were no finance sections when I started. There was a Wall Street Journal and basically nothing else. There were

no financial shows, there was no Bloomberg. Um, so that's just become much more central to the way we live and work. Um. Obviously, the news business itself has become way more challenged, for you know, by the Internet. You know, listeners don't need an education that when Wren Buffett went into the business, newspapers were so called monopoly toll bridge and the only way to get to advertisers now is he is he still part of part of the Washington Post?

Is that now? That still still owns Buffalo Eeping News and he owns a local paper and Omaha, so he's still in the in the business local paper and Oma. Yeah, yeah, that's the world, the world, Harold, so m uh but um, those are the those are the biggest. I mean, the the number of news venues, the extent of the competition. You know, when I started at the Journal, which was in seventy nine, you could spend a long time with a story. Now the more competition is just so out there,

and it's that that's a lot different things. I find when I'm writing something to just do a blog post, a little throwaway two D word blog posts. I used to schedule stuff around a certain rhythm. I like this sort of thing on Tuesday nights, and I like this on Friday mornings. And I find if I do that, it's in the ether. Somebody is going to write about it beforehand, and so you can't. You have to just publish some more choices about what to read. You can't

read every blog, you can't read it. Possibly there's an overwhelming amount of stuff. So that's historically what's changed. What do you see going forward for media and journalism and book publishing in the future. You know, I think they'll be around for longer than than the word. The most pessimistic prognosticators say in indie bookstores, are you know, making a comeback? The percentage of books that are being read in print as this thing from digitally has actually leveled off,

and I think as ticked up pretty smartly. Um, you know, newspapers I don't know about I think Charlie Munger has said that that the newspaper is most loyal readers, are you know, to be found in the cemeteries or something some something like that. Newspapers are obviously evolving, people like Jeff Bezos behind the Washington Post trying to be a few vanity projects that all so you'll have the Times,

the Journal, the Post and a handful of others. Public is a nonprofit formula, and I think the person who took the Herd on the Street column after you, jesse eisener. So I think the formulas are still you know, it's still we're still experimenting with that, and we don't I don't as culainly don't know. And I don't think anyone knows what the news universe will look like, except to say that people we're still hungry, very hungry for news. A lot of people want to go on the news business.

It'll exist. We just don't know the form. We don't know what it's gonna look like. So a millennial or a recent college graduate is beginning in their career and they want to be a writer or a journalist, what sort of advice would you give them? The advice I give I get asked that a lot is have a specialty these days. I think it's very important not just

to be a journalist. You know, no all you can about finance, know all you can about sports, know all you can about ballet, know all you can about energy or global warming or whatever it is. But be someone who whatever the news venue is, is going to say we need an expert in whatever that is, and they'll be a place for you. I don't think the you know, these days, it's tough to go in and say, you know, Johnny Apple used to say the times, you've got to be able to ride a five car fatal and and

and that's true. But these days you've got to be able to do more than that. Last question, what is it you know about Wall Street and finance today that you wish you knew when you started forty years ago? You know, I don't think, I mean I know now how repetitive. It is, how how how cyclical is how everything we talked about before, how the lessons don't get learned.

But there's no way. It's not like you can transport that experience and and you know, put it into some pill and and give it to a twenty two year old and he will absorb it. On the other hand, that's what makes it fun. You know, he or she will go out and learn from the cells. And that's so UM. But what have you learned that you wish you knew when you started? What little tidbit of knowledge would have made your life easier? I guess I'm a little more cynical. I'm surprised at how often, UM, to

avoid using a three letter word, people don't tell the truth. UM. Uh surprised at how often people will spin. You know, there are a lot of slippery characters out there, and UM, I tend to be trustworthy and sometimes naive, and I'm surprised at how often, uh, people would take advantage of that. And it it would have been nice to know that starting your career. Roger, this has been great. Thank you so much for being so generous with your time. UM. We've

been speaking with Roger Lowenstein. He is the author of the new book America's Bank, The Epic Struggle to create the Federal Reserve, which you can find at Amazon, Bornes and Noble and independent booksellers everywhere. You can read more of Roger's work at Roger Lowenstein dot com. Um check out my daily column Bloombergview dot com. Follow me on Twitter at Ridholts. The blog is Ridhults dot com. I want to thank Charlie Vohmer, my producer, and Mike bat Nick,

my head of research. If you enjoy this conversation, be sure and look up or down an inch on Apple iTunes and you can see all seventy something or sixty something previous shows we've done. They're all available for download, and they're all commercial free and free. Uh. Thank you for listening. You've been listening to Masters in Business on Bloomberg Radio. Masters in Business is brought to you by Exxonmobile Energy lives here.