In a sea of smart phones and smartphones, a few smart watches, and more money, the next big innovation is in the banking and finance industry.
This week we’re joined by a former Goldman Sachs employee, former CFO of JP Morgan Chase, and the CEO of the world’s largest bank, Paulson & Loeb.
The following interview was conducted by email, in person at The Next Big Financial, and edited for clarity.
How did you get into finance?
What was the job description?
What did you learn from it?
What advice would you give to someone who wants to do this?
My father and grandfather were both finance people.
My father was in the Treasury Department for over 30 years and my grandfather in the Justice Department for 25 years.
What was your job description like?
I was a senior vice president at a major bank.
I did financial research and development for a large financial company, and that’s where I started working on the first financial regulations.
When did you first start doing this?
It started out with my grandfather.
My grandfather, a great guy, worked in the treasury department for the first 15 years of the war in World War II.
He was a great, smart guy.
I was the first guy in the office.
I had been a student there for years and was doing some research.
He had been doing research for about 25 years at the Treasury.
He was the guy who helped to write the Federal Reserve Act and the Securities Exchange Act.
In the late 1940s, when the economy was booming, the Fed set up a fund to manage our economy.
They were using it to manage inflation.
I became the deputy director.
And I was just kind of in charge of the fund.
My name was on the back of it.
It was very interesting because when we set up the fund, there was a lot of money floating around the world, and people were worried about the inflationary effects.
So, there were a lot people saying, “We need a fund like this to manage the money.”
We were doing this for a bank, and so we had to set up an office in London and we had a lot more money floating in that fund.
I remember one of the first rules that was put in place was that the money had to come from somewhere.
There was no central bank that we could borrow from.
We had to make sure that we had something that could be transferred to the fund to make it more liquid.
And there was no money that was available to the market.
And so the question was, what was the best way to do that?
So the next step was to try to find the people who could help.
And that’s what I started doing.
There was a very specific group of people that were there.
I called them the “creditors” because we wanted to keep the money in a separate account.
So I called the fund the “Creditors Fund.”
And they were people who were in the United States and were able to transfer money to the Treasury and then make loans to the bank, but there was nothing in the fund that could make the money that they wanted.
Then the idea was, we wanted something that was more liquid so that we wouldn’t have to worry about what the bank did with it.
I created the Creditors Bank.
I also created a fund for the Treasury that could buy things and sell them back to the United Kingdom.
We got a lot going on.
There were also people working in the insurance industry, but that was the next group of money that came into the fund and the fund was basically designed to do insurance.
It was designed to insure the U.K. against foreign events and things like that.
This is the bank that my grandfather started in the 1940s.
What was your first interaction with him?
My grandfather was a huge proponent of free trade and free enterprise.
He really believed in it.
And he really wanted to make the world a better place.
He always wanted to put the U, the United Nations and the World Bank under the same roof, because he felt that we needed to do so.
And also he believed in the principle of cooperation, so we put in the World Trade Organization and the United Nation to make a common market.
My grandfather also had this vision that he wanted to see a world that was fair.
And this was something that he really believed was going to benefit everybody, but particularly the working classes.
So we put it in a way that it would benefit everyone and that everybody would be able to get the best deal.
You started out at a bank.
Did that experience give you a lot to think about?
My family had a good run at this bank.
And it was an amazing time.
When you left, what were some of the challenges?
In the early 1950s, it was a really good time. It had