John Mack

he sees as the future of Wall Street. So you spent more than fifty years on Wall Street, and probably the most difficult time was during this two thousand seven two thousand eight procession where Morgan Stanley came close to going under. Was that the most difficult time of your career, No question about it. I mean we were on the brink of going out of business, and you thought you had a good cash reserve for a while, but then all of a sudden people started pulling cash out, your

cash reserves went down. How close did you come to actually going bankrupt? Well, we were very close, David, to the point that Tim Geitner it Fed was trying to get us to sell to Jamie Diamond It's time, and he kept saying, that's what I want you to do. So I called Jamie and I said, look, Guitner's all over me. He says, you will, you will buy the firm. He said, I don't want your firm. I said, well go tell Geitner that and he said, John, if you forced me to do it, I wouldn't pay you two

dollars a share. So that that made it easy on me. I was not going to listen to them, and UH as a result, we called our board in and we're thinking we're going to go out of business. At one point, you're on a phone call with Ben Bernaki, the chairman of the FED, um Hank Paulson, Secretary of Treasure, and Tim Geitner, the head of the New York Fed, and they say you should file for bankruptcy and you slammed the phone down on them. Was that easy to do for me? It was easy to do. I mean, thank god,

I left out some four letter words. I said, I'll take the firm down first, and I hung up on him. Okay, I can't tell you why I did it, cause my gut it was the wrong thing to do. So now, after your retirement, you decided to write a book. It's a very good book. I've read closet and all in about your life story. So how hard is it to sit down and write about your life and go through the good and the bad things that take you along with a long time to do this. And do you

ever say why did I agree to do this? No? No, I enjoyed sitting down and working with the person who worked in me on the book. Look, I have a lot of memories, a lot of things that I did that that in talking with him, it came up of other things that I had done. So I enjoyed it. It was I got along really well my writer, and Linda Coleman was just terrific and we had fun doing it. So I enjoyed doing the book. So at the end of the book, you say something that I found to

be surprising. You talked about the fact that you've recently been diagnosed with some cognitive impairment, which you say could lead to Alzheimer's, And um, why did you put that in the book? You didn't need to put that in. No, I didn't. Christie and I talked about it and she said, look, John, you're always up front with people. Uh, you're in this book. Tell people the truth, tell them you're having some issues. So we talked about it, and I agree it's the

right thing to do. I mean, I didn't put it in there for sympathy. I didn't put it in there for you know, come over and give me a hug. I just think my personality has been upfront. I tell people what's going on. I did that when I ran Morgan Stanley. I did it at Credit Sweez, even though the Swiss didn't like me very much for doing it. I did it at Credit Sweez. That's who I am. I'm up front. I tell people what's going on. Look,

it happens. You say that maybe you thought it came from your football Injries, or maybe you fell off in a t v um. But in hindsight, is it more of a genetic kind of thing? Do you think? Or the doctors don't really know? Well, the doctors don't know it's genetic. I mean, my mother did have Alzheimer's. I just think you need information. Look, I hope my contitive skills last a long time. But life's life and just live it. And I don't. I don't think trying to

hide things. You know, if you are, if you and I didn't know each other like we know each other we go out to dinner. I don't want you to say, John, you just told me that three minutes ago. I want to put a little warning out there, you know, give me a break. I may repeat myself and and I cover myself by saying I may have already told you this. Now. Christie is your wife of more than fifty years as well years. Okay, so where did you meet her? I met her through Charlie Rose. So Charlie Rose and I

were at Duke University. He was a couple of years ahead of me, and he had moved to New York and I was in New York working at Smith Barney at the time, and he called me up and said, you know, my wife's sister is coming up. We'd like you to, you know, take her out. I thought about it a little bit and got a date for Friday night and calling it back and said, okay, we'll go out Saturday night. And uh. I got up to their apartment on uh. Mary was a beautiful woman and Christie

walked in. She took my breath away. Not only beautiful, but had a great smile. She was very warm, very friendly. If it wasn't love at first sight, it was pretty close. Let's talk about your background. So you grew up in North Carolina, but your grandfather immigrated from Lebanon, is right. But why did he go to the North Carolina? Was her big Lebanese community there or did he intend to

go to another place? There was a big Lebanese community in the South Carolina, and uh, he was going to go to Marry in South Carolina when he got off Ellis Island and he ended up in Merryon, North Carolina. He stayed the night in the train depot. No one came to pick him up. So finally a conductors said get on and pulled him on the train and took

him to Charlotte, North Carolina on that that train. And there was a Arabic family around a coffee shop at the train station, and they talked about the mix up. They gave a job. He started washing dishes. Then he became a peddler. Then he went back and got the rest of his family and they had made enough money to get a wagon and they went in the countryside selling cloth, uh you know, sewing materials, shoes, stuff like that.

And then that evolved into John mckinson's. John mack was my grandfather's name, and it was a clothing department store. And my father, who was an entrepreneur, decided he wanted to be totally on his own and he started a wholesale grocery business. And so they wanted you to go on that business at some point. I don't think my father did. Uh. My mother was a very strong force. She only wanted to be a doctor, and uh, I really didn't want to be a doctor. My father was

laid back and my mother was really aggressive. It was a great combination. So you were a high school football star. Well, I don't know about a star, but I was a good football You're all state, all right, I'll state you've done your homework. Okay, so all state. So you get a scholarship at Duke University to play football, and what happened to your career at Duke? Well, I thought it was a good football players I got to do if

they have some great players. And uh then in my sophomore year, I was a red shirt for one year. Then I was on like the second team, but I broke c six in my neck. I cracked it. And what happened every time I would tackle someone my left arm inside I would go dead. So Frank Bassett, who's one of the orthopedic surgeons who used to be at Duke, called the a D and said, this young man's football career is over. He has a bona fide injury. He

cannot play football any longer. So that ended my football career. But once you're on scholarship, I still had to work there. So I was a manager, you know, getting towels and setting up trips when I go play. Uh, you know, one of the teams in Florida, one of the teams in the Big Ten. So when you graduated, did you say, I want to go to Wall Street and be the CEO of Morgan Stanley. Now when I graduated, um, I need one course to finish Duke University. My scholarship had expired.

So I got a job in a local brokerage firm called First Securities in North Carolina. So that got me involved in the securities business. And there was a lady there named Fanny Mitchell, and maybe you remember she ran the job placement office at Duke University. So when the recruiters would come down, she would say, there's one guy you gotta meet is John Mack. And I would meet these recruiters and got a number of job offers, and

then I decided I like the securities business. Smith Barney wanted to open an opposite at that time in Atlanta. They offered me a job and I took it. She went to Smith Barney. What did you do there where you're like a registered investments exactly? I mean we started out in a training class and I got my brokerage license, and then I was approached by the head of the municipal bond division, why don't you come into the bond business. And I really didn't want to go down to open

an office in Atlanta. Are down in Florida, so I took that job. So I got in the bond business and I was a trader on the bond desk of the minicipals. And then at some point that led Smith Barney of getting into the corporate bond market, and I transitioned over to corporate bonds. And then from there they told me they would put me on commission, which they never did, and I got approached by a small boutique firm called Smithers, which was really known for their bond

acumen and their bond business. So I went over and became a salesman doing corporate securities corporate bonds at Smithers and Company. I've often thought to be a good trader, you have to be pretty quick in your head with numbers to make sure you get the numbers right. Is that true? Where you really know that that is true? But I think as a salesman much more so than a than a trader, that business, it's a commodity business

about relationships. So if you can build a relationship with your clients where they trust you and they go to you when they have business to do, that's how you become successful. Okay, So how did Morgan Stanley hear of you and say you should join what was then considered a white shoe firm? And the question, probably I hadn't hired a lot of Lebanese back traders before it, right,

But it's a good story. So I met with Dick Fisher, who was running that initiative to build a secondary bond business, and we went back and forth and I said, Dick, I'm flattered that you would all your job, but I don't believe a Lebanese heritage from North Carolina who went to Duke University has a chance it been making it Morgan Stanley, and he said, well, you're wrong, and if you think you come over here and you're right, when you quit, I will resign. I'm telling you you're wrong.

This is a meritocracy and you should join us. He convinced me. So in those days, Morgan Stanley was a private partnership, not a public companty, and it was a company that basically underwrote let's say a T and T bonds, but it didn't actually go out and sell them, price them, and other people would sell them. So Morgan Stanley said, we're now going to change that, and you became a trader for Morgan Stanley, became a salesman at Morgan Stanley.

That's what they need. So you did that for a while and then at some point people give you more authority and you get to be in management. Did you want to be in management or did you like to be a trader or salesman? I like success, so I thought the right way to go is managing being a manager, and that's what I wanted to do. And whether there's a lot of disagreement, were any good or not very good? I liked it and I thought I was pretty good at it. So you rose up and you ultimately are

offered the position of being the CEO of Morgan Stanley. Well, yeah, eventually, but there were there were a lot of blocks along the way to do that. But then all of a sudden you decided you needed to do a merger with Dean Witter. And why did you need to do that? Well, uh, Dean Witter was owned by Sears and they had decided to spin it off, and we had Morgan Stanley got the order from Sears to do this, this transaction to

raise money and an equity transaction. So when we met with Phil Purcell and talked about all their salesmen, their branch offices, it became apparent to me and also to Dick Fisher, that this is the way to really build a franchise because distribution is going to be more and more important and to have a connection with retail clients would be important. And that's how we made the decision.

There was pushedback in the firm, but with Parker Gilbert and Dick Fisher's leadership, we were able to convince the partners this is the right thing to do, and we did it. Your firm was a leading Wall Street firm. You could argue Dean Winter was a so called main street firm and putting the true together, I've never been done like that before. And how did you know negotiate who was going to be the CEO? Well, at that time, Dean Winter owned Discover Card, so their market cap was

dramatically larger than ours. So we based it on market cap and they had a much larger market cap. To do the deal, Purcell wanted to be in charge. That was one of the prerequisites to do the deal, that he'd be the CEO and I'd be the president of firm. And we did that deal. All right. She did that deal, and being president under somebody else was a step back. You could argue, though it's a bigger firm. How long did that last? Uh, hey, that's a good question. I

know it didn't last too long. Ultimately you said I've had enough of this and you didn't like his style, and you write about that in your book. But you ultimately said, okay, I'm out of here and so unemployed, and you tell your wife, guess what, your husband's unemployed right now. My wife is so supportive. I could have told her anything and she would. She's on my side.

It was great you know, I ended up at one point kind of going to a hedge fund and work with Art Sandberg, and I did that for a while,

but I was really flexible. And I think they call them the grumpy old men who went after the existing management at Morgan Stanley and felt like they were losing their edge and also their reputation as a really great investment bank and really led by Parker Gilbert and Louis Bernard and some of the senior partners who had retired and they owned a lot of stock, and they put a lot of pressure on Dean word or Morgan Stanley to make a change. And that's how I ended up

going back. So Phil Purcel was austed and then they came to you and to your surprise, they said come back and be the CEO. You hadn't known that you were going to be asked, correct, I didn't know that at all. So what was it like when you came back to where there are people cheering for you when you came back into Morgan Stanley. You've seen the film, yes, so you've also gotten been coming very involved with an nonprofit area. I served with you on the Duke Board,

as I mentioned earlier, Duke University board. But you also became involved with New York Presbyterian Hospital and became the chairman of the board. So what got you involved with that area. The previous senior part in Morgan Stanley was Bob Baldwin, who was on the hospital board. And he would come and see me and say, John, I want you to to go on the hospital board. And I said, Bob, I've been on hospital boards before. All they want some money, I just write you a check. No, I don't want that.

I want you to get involved. I want you on the board. And I said, okay, Well, out of respect for you, I'll go up and meet some of the people. And Christie and I went up, had a tour of the hospital and they took us to the neo natal Care Babies uh Wing And when I walked in, I was shocked. I mean, it really looked like Frankenstein's laboratory. Everything was old. Yeah, these big yellow pipes and rubber tubes coming down. Yeah, these little infants four pounds three

pounds and incovators. It kind of broke my heart and broke Christie's heart. So so we go back and uh I decided to take some of the leaders of the firm. I want you to come up, I want you to see the neo natal care. I want you to meet some of the doctors and mirasces. So we bring them up, they see it, and then out of that, uh, people want to do something to change it. And I said, look, there's no children's hospital in New York less bill a

Morgan Stanley Children's Hospital. And I think the firm put in total over time a hundred million dollars. The employees got involved in a big way, our clients got involved, and I think from a sense of philanthropy, it's one of the best things Morgan Stanley has ever done. So how did you build Morgan Stanley where you focused on underwriting, trading,

other areas that were new to Wall Street. Well, I focused on what we did really well, and what we really did extremely well was bill relationships with corporations and CEOs. We were either number one or number two in the M and A tables every year, so that was very important. And then we said, look, if we're going to be doing M and A and we have these wonderful relationships and trust, let's move into the secondary market and become

a very active securities business. So we ended up building a very large platform at the institutional level, and over time, UH, with Dean Winter, you had the retail, so we really focused on being an institutional firm with a very strong retail base. Your predecessor, Philip Percell, was famous for not meeting with a lot of people. He was a little isolated. Some people accused him of being You like to be in the trading floor, near the trading floor, being with

the customers all the time, or with your employees. Is that right? Yes? And so if you found people that were ignoring their clients or ignoring their employees people working for you, you tended to tell them what you thought

without question. What I did when I was running the division fixed income division, I would sit out on the trading floor and have I had a glass booth office so I could if I had need to have a conversation with someone, instead of going off in the conference room, we could sit in this glass office and we'd have a conversation. And Uh, I would be on the phones. I'd walk around and sit down by the best salesman or the worst salesman. What are you working on? What

are your clients doing? I was always involved and I had some really fun times in doing it. Um. I think in my book I talked about how you treat people. And I get off the elevator at eight o'clock in the morning, and you look over to the right and their delivery guys bringing coffee and egg sandwiches, and where of you do for breakfast? And about twenty minutes later I walked back and I go out on the trading floor and I go up to the sky and I said, how long you been here? He said about the every

minutes his hispanic, about thirty minutes. I said, if you call the person to order breakfast, He said, yes, I've called it three times. I said, give me the number. So I gave it the number, and I said, this is John mac I want you to get your ass out here. And he comes out in front of the Philly and I said, look, we're no better than he is. He's just trying to make a living. When you make him wait, you take money out of his pocket. If I ever hear about it again, you're fired. That went

around the floor like that. You don't treat people that way. And I hope that's ingrained in me before I went to Morgan Stanley. But I really learned it from Dick Fisher. He was such a gentleman and very smart and made decisions. So the person that you almost fired, did he do that again or he didn't do it again. No one did it again. So Morgan Stanley was doing quite well, and Morgan Stanley is competing principally with Goldman Sacks. I

guess was your main rival. And then all of a sudden, um, we go into a recession two thousand seven, two thousand eight. So what happened was I remember from reading from that period of time and from reading your book, you had this large cash reserve and you wanted to make sure you had a lot of cash. While people were afraid of Morgan Stanley may be going under, so they said, give me my cash back. I'm gonna put it in JP. Morgan, it's exactly right. And so all of a sudden the

cash is going all the way down. Right, at some point you say, maybe we're not going to make it. Yes, exactly right. Well, thank God for the Japanese is what I can say. What I learned is it goes back to when Morgan Stanley would bring uh brokers from whether the Mirror or Simu Toomo. It didn't make any difference, and they would in a training program at Morgan Stanley, and the Japanese who came through that training program respected

the culture of Morgan Stanley. So when we were on the brink uh they stepped up and gave us the money to stay in business. So it turned out to be a good investment for Mitsubishi because your stock is flourished since then. And after that happened, did you think that Wall Street learned any lessons? And you think this could happen again where you have enormous illiquidity problems or

liquidity problems, and Wall Street really has changed very much. Well, I think the business of All Street hasn't changed that much, but the scrutiny on capitol and capital solvency is very very focused, and I think the FED does a much better job in paying attention to the liquidity of these investment banks. Also, I think boards of directors have elevated risk management to a level that never existed when I

was there. So going through a near death experience that we went through, and other firms in some cases they actually died like unfortunately Lehman Brothers, h boards focus on risk management it's not about what deal you did. It's not about you know, we're going to open another branch office.

It's about liquidity and solvency. So after this happened and Morgan Stanley comes back and it's doing quite well, you open me decide to retire, and you handed the reins over to James Gorman, who had not been a lifer at Morgan Stanley, and in fact he had come from Merrill Lynch, who you would recruited him from there. And he was a consultant, not a trader, not an investment banking person. So was that controversial to give it to him if it were confident. I've never heard about anyone

saying had could you do that? James is smart. He knows the business. He spent time as a consultant, time at Merrill Lynch. I saw how he ran the business, our retail business. At Morgan Stanley, he was on the management committee. I got a chance to see his interface. I would go up once a week and spend time in the office up in Westchester to be with him and how he managed. As smart as he can be, can make a decision, doesn't suffer fools, and he has

a great personality he was a natural. So for a young person who now was looking at a career, would you recommend a Wall Street career today? David, Yeah, I listened. There are not many jobs you can have as a young individual where you're always always learning, and maybe not something you can write. But Wall Street lives on the news and what people are doing and what are the trends. I don't know many businesses like that. If you go in the man of actioning business, you have a sales cycle,

you hope it's doing well. But in Wall Street you have data every day that tells you not only what's going on in this country, what's going on in the world. So Ahoul, you look at your career, what do you think you're the most proud of having done help with New York Presbyterian, help Morgan Stanley recover from some of its problems. What are you most proud of? I'm most proud of where Borgans Stanley came from just a few

hundred people to where it is now. Um, I think taking the risk we took doing the Dean win Or trade, having the bumps that we had to live with. Uh, it turned out to be an unbelievable investment bank with a great culture and to have James Gorman running and now I couldn't be happier or more proud of it. So, in hindsight, if you had to do it all over again, would you have into medical school as your mother wanted? Or you're happy you became a Wall Street person to

my mother's disappointment. Thank god I came to Pall Street. Thanks for listening to hear more of my interviews. You can subscribe and download my podcast on Spotify, Apple, or wherever you listen.