A power broker and his ‘Dealings’
TEXT OF INTERVIEW
Kai Ryssdal: Felix Rohatyn knows a little something about financial dealings. He’s been a power broker on Wall Street for half a century. He was in the room for some of the biggest deals ever: RGR Nabisco being bought by Kohlberg Kravis Roberts, NBC being bought by General Electric. And, somewhere along the way, he found time to help save New York City from default. That story and others are the backbone of his new memoir “Dealings.”
When we spoke I asked Felix Rohatyn about what it was like trying to keep New York on the financial map.
Felix Rohatyn: Well, we had tried to fix the finances of the city, and without going bankrupt. And in order to do that, we needed the cooperation of all kinds of people, who up to now, had not cooperated with us. Principally, the labor unions, who knew that ultimately if the city went bankrupt, their pension funds were going bankrupt. And so they began to cooperate with us, which was a first in the industry. And we were able to finance the restructuring of the city’s debt. And we got this done within two days of default.
Ryssdal: Let me fast forward now from New York City and its trouble in the 1970s to Wall Street and its troubles two-and-a-half, three years ago. There is a scene in this book: You’re sitting in your apartment about to open the morning paper, you unfold it and you see the headline “Lehman Brothers goes bankrupt.” What went through your mind?
Rohatyn: I couldn’t believe it. I mean, my whole career had been spent in this industry, where the big people didn’t really go bankrupt. That was not part of the social construct. And so the notion that Lehman would go bankrupt was just totally something unthinkable, but it happened.
Ryssdal: Is there a way that banking ever gets back to, not the way it was 60 years ago when you got into it, but where the interest of the shareholder and the customer are more paramount than they seem to be now, where it’s not all about profit and the bottom line? Can that ever happen again?
Rohatyn: Well, I think it’s difficult. We actually had a discussion at the RGR Nabisco board meeting with respect to these issues of social contracts, of taking into account issues that are more than just financial issues.
Ryssdal: And this is that very famous deal, RGR, Nabisco and Kohlberg Kravis Roberts. I mean that’s the biggest leverage buy-out in history at the time. And you were talking about this 30 years ago.
Rohatyn: Absolutely. But nobody really wanted to talk about it, you know, because it inhibited people and the standards were difficult. It wasn’t something that you could just snap your fingers and say, “OK, from now on, this what we’re going to be looking at.” But it troubled enough people, especially there was one man, I think the chairman of one of the computer companies who was absolutely convinced that you couldn’t have any equity and any fairness unless you took into account not only the price of the shares, but benefits to the stockholders, the people around the company, but maybe not necessarily of it.
Ryssdal: How do you explain the disconnect between how Wall Street is seen by the average American after this crisis, and I think, how Wall Street sees itself, which is contributing to economy and the public good?
Rohatyn: Well, and you see, probably bother are to some extent true. I mean, the investment house that says, “Why am I being pilloried in the newspapers, when I’m doing something that I think is good for the country, which is to keep this economy going.” And that’s also true until some huge banking house declares bankruptcy and almost brings the whole industry down.
Ryssdal: The latest book from Felix Rohatyn is called “Dealings.” It’s a memoir, it’s called “A Political and Financial Life.” Mr. Rohatyn, thanks so much for your time.
Rohatyn: Thank you very much.
Ryssdal: You can read some of the stories Felix Rohatyn tells in “Dealings” on the new book section on our website, The Big Book. Post your comments, hear other book interviews, shop.
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