L.G.: And the guy wasn't even Nigerian, huh?
C.W.: No, no, exactly. And that's the classic, the same thing. You don't have to have all the money, you just have to have enough money so you can keep giving people back money when you promise it. That's what Bernie did. And I'm not sure but I suspect what happened here was, he had a trading strategy that went bad fairly early on in the game, and he just kept trying to trade his way out of it, and it got worse and worse and worse.
L.G.: What about the enforcement agencies? How can you explain the Securities and Exchange Commission's complete falling down on the job?
C.W.: Well, I think you explain it by a complete failure of responsibility and incompetence. It's stunning to me. As people investigate this story, you're going to start reading all kinds of things about the fact there were a lot of professional investors who had reason to believe this was not a sound investment firm for a long time, that there was sort of a suspicion in the sophisticated investment community. You're starting to hear some of these people come forward who had actually done the due diligence who had raised exactly the question you're raising, so that information is all out there.
L.G.: And some of them had gone to the S.E.C. and said "Hey, take a look at this."
C.W.: Exactly, as far back as 1999.
L.G.: And an enforcement official at the S.E.C. was somehow related to Bernie by marriage.
C.W.: I don't know the family relationship, but I'm sure in part, Bernie got a pass because he was a member of the board of the N.A.S.D. [National Association of Securities Dealers], and he was a big figure on Wall Street and so on and so on. Of course, this is one of the things that happens in a protracted period of a growth and economic prosperity, and it's a reminder that the S.E.C. exists not to be chummy with people in the business, it exists to make sure people are doing what they're supposed to be doing. I don't think there's any way of sugarcoating this. This appears to be a complete breakdown of responsibility and competence at the S.E.C.
L.G.: Do you feel like by getting out of the business when you did, in the early part of the century, that you perhaps dodged a bullet?
C.W.: Well, I'm not sure. I obviously have 25 years' worth of friends who are involved in all kinds of organizations that are going through all kinds of pain, or have gone through pain and are out of business, and I'm not sure I have any sort of existential conclusions about all that. I would say that I think at its core, the investment banking business-capital raising and providing advice to companies and governments-is a worthy business. And the vast majority of people that did it have values and morals and integrity and so on. There is a clear sense in which this thing sort of spun out of control. It happened over a period of time, it didn't happen over the last couple months. If you go back and you trace the history of real estate lending in the United States and the creation of the subprime lending industry, it was aided and abetted by many of the same congressmen who are now raising demagoguery to a new level, and certainly aided and abetted by government institutions and banks. And everybody sort of had their hands in this pot. I think the period from the late '90s to today was a period where a sense of value and balance and some core values was lost in some ways. I had a great 25 years in the industry, I met many of the people I'm closest to as friends during that period of time, but part of the reason why I and I think other people have looked and continue to look for things to do beyond the securities industry is I think there is, for a lot of people, sort of a spiritually and morally empty prosperity that characterized Wall Street.
L.G.: Did you not believe in the tenet "Greed is good"?
C.W.: [Laughs] I'll give you two perspectives on that. "Greed" is obviously a pejorative word, but the more ennobling characterization of that is "initiative and aspiration to create prosperity for ones' self and ones' family," which is another way of characterizing greed, and it is what drives the fundamental free-enterprise system in an economic democracy. So the inherent human quality to aspire to be better off and to have one's family be better off is something I think is not only good but we rely on it in our form of government. The problem is that it needs to be bounded. Unfortunately the '90s and the first part of this century was a period in which we took down all the bumpers and the barriers and had this sort of slavish mantra that the market knows best. Well, the market doesn't know best. The market needs to be policed. The market does a spectacular job of allocating capital through a price-discovery mechanism, and it relies on the self interest and the aspirations-or the greed, if you will-of individuals to do that. But it needs limits and it needs boundaries, and all the people who were supposed to be maintaining the boundaries took the boundaries down. Then people did what people do when they don't have any boundaries.
L.G.: You once told a reporter, "There were no people more self-important than investment bankers, including me." What does that mean?
C.W.: I do recall saying it, and I think it's true. I'm not sure I would say today there are no people more self-important. I think there is occasionally the politician and the corporate executive that rises to that level. But this is the Michael Lewis observation that when you take relatively young people and you expose them to the perquisites that one normally associates with wealth and power, and you give them amounts of money which by any other social perspective are the result of either a lifelong pursuit of something or inherent wealth, then people become very self-important. It's the old story about the guy who wakes up on third base and assumes he hit a triple. There are an awful lot of people in the securities industry that got swept up with this rising tide, and somehow believed that they'd earned it or they'd done something to deserve it or that it meant they were somehow superior or more insightful. One of the things that is a particularly poignant element of the contraction of Wall Street is a lot of these people were swept up into a position where they didn't acquire any transferable skills. And it's a long step from that step down to the next step, where they actually have to go compete in the real marketplace to do something that someone will pay them a wage for. I'm not sure I'm ready to conclude that the industry is going to become humble.
L.G.: Perish the thought!
C.W.: A lot of the self-importance has been washed away with the multiple houses and the planes and those kinds of things. You know, Lloyd, you could've made a small fortune, perhaps a large fortune, if you had said 12 months ago that by the end of 2008 there would be no major American investment bank left in existence, which is the case. We have only bank holding companies.
L.G.: Tell a complete ignoramus how I would've acted upon that to make my large fortune?
C.W.: Well, first of all you could've bet on it economically through any number of ways, but you would've become a celebrity savant. That would've been like saying, "I guarantee there will be a cure for cancer in 2008." It was inconceivable that firms like Lehman Brothers, Bear Stearns, Goldman Sachs, Morgan Stanley would either go out of business or would become bank holding companies. Just inconceivable. It's still very hard for people to process, and I think it's hard for those organizations. You're seeing this in the aftermath of this October debacle. They're still sort of groping for modus operandi in this new, more-regulated, less-leveraged environment, which presents a completely different set of economic opportunities.
L.G.: So at this point you don't envision AmeriCares as setting up free clinics for former Lehman Brothers employees?
C.W.: No, but if a Lehman Brothers employee without work, and without health insurance or was part of the working poor community in Connecticut, presented himself to our Norwalk or our Bridgeport or Danbury clinic, we'd give them the same quality of healthcare which we give to anyone else-and it's a very high quality indeed.
L.G.: Excellent. Tell me-at one point after you left your last position in business, and you were 51 years old, you were quoted somewhere as saying you were going to be working on polishing your golf game.
C.W.: That didn't last very long, as you'd well understand if you'd seen my golf game.
L.G.: You obviously made a decision that you'd made your fortune and that you were going to do something else. You were involved in your church. Tell me a little bit about your own process in terms of getting involved with AmeriCares.
C.W.: The seeds of this go back quite a while. I grew up in Rochester, New York, which is up on Lake Ontario and is certainly a more Midwestern community than it is a Northeastern community. And my parents and the people in our church and the people that we associated with had the old-fashioned value of community orientation and so on-the idea of being involved and the idea of philanthropy at some level. We didn't use that highfalutin term, it was just giving money to people who needed it. It was something that was always present in our family, so that was a fairly natural thing. So when I got to New York after graduate school, in fairly short order I began looking around for something to be involved in, became involved in a number of nonprofit organizations, one of which I'd chaired for 10 years, which is Spence Chapin, a spectacular adoption and child-service organization. I remember at one point, probably in the early '80s-I'd been pretty successful at First Boston at that point-I was up at Spence Chapin and we were doing some strategic work on setting up an adoption think tank. I went back to work thinking, Gee it would be fun to do this kind of thing full-time, and that was the first time I had the conscious thought that maybe at some point in the future, that would be a fun thing to do. That notion stayed with me and became more concrete as time went by, and I've said to a couple of people, everyone has a life list, whether it's well-defined and explicit or not, things you want to do. They made a movie out of this, with Morgan Freeman and Jack Nicholson.
L.G.:The Bucket List.
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