William D. Cohan
NANTUCKET, MASS.: If you get Jack Welch, Lou Gerstner and Bob Wright — three of the U.S.’s most highly respected former executives — together in a room with David Gregory, the host of NBC’s Meet the Press, and there are no television cameras around, there are bound to be some fireworks.
On a recent steamy evening in a high school gymnasium on Nantucket Island in Massachusetts, the men did not disappoint.
When Gregory asked about the continuing anger in the country directed toward Wall Street for the financial crisis and what responsibility bankers, traders and executives have for the ongoing economic turmoil, the discussion turned especially serious.
Gregory reminded the men of his previous interview with Jamie Dimon, the chairman and chief executive officer of JPMorgan Chase & Co., in the middle of the bank’s “London Whale” trading crisis, which has cost the firm almost $6 billion and counting. Gregory asked Dimon on May 13 if it was “misplaced criticism” to blame Wall Street for bringing the economy down without anyone on Wall Street having gone to jail as a result.
Dimon said the criticism was fair, and that the public had a sense that “there’s been no Old Testament justice here, that no one was punished,” he said. But he argued that blaming “everybody” was also wrong: “If you think someone did something wrong, go get those people that did something wrong and blame them. In the meantime, the rest of us should hold hands, get together — collaborate — business and government together to fix the problems. It’s going to be very hard for government to do it on its own and business can’t do it without collaborating with the government.”
Gregory asked the same question of the Aug. 13 panel on Nantucket. Welch, the former chairman and CEO of General Electric Co., answered first. “Do you think the guy leading the country could have a more balanced approach to the recklessness of some hothead businessman, rather than demonize him?” Welch asked rhetorically, his ire at President Barack Obama apparent throughout much of the discussion. “We need a leader who has a vision” he said, not someone who is focused on demonizing business leaders.
Like Dimon, Welch emphasized the importance of getting Washington to work closely with business leaders, including those on Wall Street, to get the country’s economy humming again.
Not so fast, parried Gregory, how about some accountability for those on Wall Street who steered the country into such a financial mess?
“I want to tell you something, a lot of people in the business community are totally fed up with what’s going on in the financial services industry,” Gerstner, the former chairman and CEO of International Business Machines Corp., said to widespread applause (which was a bit surprising given the high percentage of island residents who are financial service professionals).
“Nobody on this stage is going to defend everything that goes on in business,” Gerstner added, criticizing in particular the “golden parachutes” that so many “idiot CEOs get when they get fired.”
Yet he, too, took the work-with-Washington tack: “There are bad things that go on at individual companies and in some cases individual industries, but Jack’s absolutely right, the issue is, can we build a partnership between the government and the business community to work on growth in this country? If we grow, then guess what? There’s going to be something for everybody.”
But, Gregory wondered, why hasn’t Obama tried to build a bridge to business leaders? Ask them to the Rose Garden, Gregory said, and with them at his side, state unequivocally his intention to work together to solve the problems facing the economy.
Wright, the former chief of NBC Universal, suggested that Obama prefers to play to his political base rather than be seen to be extending an olive branch to business leaders. He then took a page from the playbook of Mitt Romney, the presumptive Republican presidential nominee: “Let me say one thing: Corporations are people. All these corporations are people. A lot of people got their savings wiped out. They got their stock wiped out. They got their retirement plans wiped out. It wasn’t like corporations were somehow not affected by the crisis because they are buildings and the buildings are still there. There are people inside who got really whacked.”
Wright argued that looking back and placing blame was unproductive. “At some point, you have got to say, ’We have to move forward. We can’t just keep arguing every single point looking back five, eight or 10 years,” he said. “We have to move forward. We have the most productive business entities and people in the world. We just have to get moving.”
I am starting to get convinced. Even though there has been no accountability whatsoever for the Wall Street bankers, traders and executives who brought the American economy to its knees, the situation is so dire and the time to deal with it so short that the best option available is the one that Dimon, Welch, Gerstner and Wright agree on: Put aside the partisan bickering immediately and get the nation’s true business and political leaders together to begin to solve our fiscal problems.
The former CEOs in that Nantucket gym agreed that a good place to start would be to raise taxes on the wealthy as part of a comprehensive tax and spending plan to achieve a modicum of fiscal responsibility. “Some of these problems can be fixed in a half an hour,” Wright told the audience. The clock is ticking.
Cohan, the author of Money and Power: How Goldman Sachs Came to Rule the World, is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase. He can be reached at email@example.com.