I just wanted to say kudos to the Wall Street CEO’s (and their strategists). You got to admire how they handled themselves under the rapid fire at Capitol Hill yesterday. They were calm, smart, logical and amiable. We can all learn a lot just by watching!
Lesson number one. When asked a tough question, get nit picky with the details. When asked about the government loan to Citi and whether Citi expects to profit 100% from the upside while making the government share 90% of the downside, Pandit responded by getting really precise about the numbers and insisting that this arrangement is like an insurance. When the parliament member said that insurance was not mentioned in the documents, Pandit admitted not having enough time to read the documents properly since it was given to him over lunch (another smart move). And then time was up! I thought he played that out really well and he was actually very amiable throughout the whole grilling too!
When Pandit and Dimon were asked whether they were deliberately reducing loan in Michigan, because it was really hard to get a loan there these days, they both fell back on the general rules and said that they were not discriminating the State and that everything is treated on a case by case basis. This was very suave and diplomatic. If it were me, I would be tempted to point out that banks are now following a more stringent lending policy (as well they should) and citizens of Michigan are probably finding it hard to get loans because they don’t meet the qualifications, which is not surprising given the current state of the Michigan economy. The parliament complains about banks taking TARP money and not using it to lend money, but there is such a thing as lending responsibly.
Another important lesson is standing up and simply admitting that you made a mistake a la John Mack.
“I think the entire industry bears responsibility, and I’m sorry for it”
This is probably one of the oldest lessons of all, but it works every time. You got to admire someone (esp a banker) who will stand up and admit that he made a mistake and apologize on national TV. Morgan Stanley stocks went up!
The neatest trick of all though, is how they can go on for a long time talking very intelligently like they know what they’re saying, trying to be very cooperative and helpful, but at the end of the day, the audience is left wondering whether they were too dumb to understand what was just said, or whether their question was actually answered. They are all such incredibly smooth talkers! I wish I knew how to do that.
It is no wonder that they are paid between $600,000 to $1.5 million a year in salary alone (not including bonus) to do their job. As for the whole public anger etc over the exorbitant salary/bonus that Wall Street recieves, I’m of the camp that people don’t go into finance to save the world (those people are called doctors). Besides, if you calculated how much they’re actually earning by the hour, you’ll realize that the regular banker is not really earning that much more than the rest of us. Considering how much tedious work they have to do to just put a pitch book together, I’d say they need their bonus.