Jeffrey Walker and Bob Diamond — Engaging the One Percent
September 25, 2013
Krista Tippett spoke with Jeffrey Walker and Bob Diamond on Nantucket Island in September, 2013 as a part of the Nantucket Project. Here are select audio excerpts from that conversation that you might use to inform your own conversations on ethics, finance, and civility in economics.
VOICES FROM THE CONVERSATION
Can banks be good citizens?
Bob Diamond: Right after the complete collapse at the end of 2008, when Dodd-Frank was the legislation being proposed I was on a shuttle back and forth to Washington, on Capitol Hill and the White House. Many of us were trying to figure out where is this legislation going? and how can we be helpful? Perception was it was 'how can we lobby?' I understand that, but some of us were really trying to get us to the right place.
I was at a meeting with Larry Summers and his team and as the meeting wound up, he asked me a questions as I was walking out, he said "Bob Can banks be good citizens?" And it really struck me, because I was giving it some thought. And I was winding up for the answer, 'of course we can.' And he kind of looked at me and stared me down and said "Before you answer, no one is going to believe that you can be." And I think that is a very important question: can financial institutions be successful and be citizens?
And we gave a lot of thought to that at Barclays over the last couple years as legislation came in, in terms of thinking much more from the point of view of what's in the best interest of our customers and clients. Thinking much more from the perspective of: what are we doing to create jobs and create economic growth, thinking through decisions that have positive impacts in the communities that we live and work in. And these were things that weren't really, to be perfectly frank, they weren't the things we were considering five years before, ten years before.
So I think there is a real evolution in this and I think it's extremely healthy.
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How can we rediscover the balance of doing good and good business?
Jeffrey Walker: You can't teach ethics. It needs to be embedded in everything you do. And who you are as an individual.
I retired in the end of '07 and went and taught Harvard business school. And the largest group is a social entrepreneurship club. The kids want to give back. They want to participate. One of the most popular classes is authentic leadership, where you look at yourself, so that that you are not at Enron and 35 years old making the wrong decision. You might still, but at least you've thought about it and you know that there are others out there that understand that these are issues to think about.
So that's good and gives me heart, but what about 58-year-old guys, how are they doing? I was on a panel and we were talking about hedge fund guy Paul Tudor Jones who does amazing work at Robin Hood Foundation and the audience basically scoffed. Hedge fund guy, bad guy, right. Banker, bad guy. Wall Street, terrible people.
And so how do you get to the point where we start treating people as the individuals they are and saying each is different, different passions, different connections. And we start talking about Julian Robertson and the Clean Air initiative. He was one of the key reasons it got passed. He says, "That transaction was as fun to do as a yen trade." When he gets that kind of passion, saying "I'm going to give back as much as I'm going to do a great return on the business side and I can balance both of those." I think those are the great examples we need to continue to have.
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How do we work on the right financial laws that have input from the community, from research, and firms themselves?
Krista Tippett: Do you feel like you are being invited into the cultural imagination about what change looks like? Because this correction is happening, but is this being communicated as widely as it really should be? Do people know in the industry that leaders are talking this way. That these kind of new structures are being created? There is a cultural dialogue about what laws are being passed and regulation and then there's the 1 percent and the 99 percent. This is a real discussion about substantive, incremental change and insight.
Jeffrey Walker: What I've seen is some hope. It isn't the politicians that are going to fix things. It's not the tenured professors. It's not the one banker who stands up and says, 'OK, I'm going to really fix things.' It doesn't work like that anymore. This collaborative process starts to say, 'How do we work on the right financial act and the right financial laws that have input from the community, from research, but also have real involvement of the teams and the firms themselves?
And without that, we can rail and lobby that these guys are awful, but where's the middle way? How does Jamie Dimon sit down with the secretary of treasury along with consumer finance agencies and have an open discussion about what we are going to do now and how we are going to do this?
I have a book, The Generosity Network about how you create these walls-down relationships between donors and doers, people that actually are the same person. When you start finding those opportunities to work on something bigger than yourself, you create that opportunity to link with other people it's joyous.
The guy that invented leverage buyouts, Ray Chambers, says he had never had more fun until he retired at 46. There is a whole series of people who sit here thinking 'I don't have to give it up, but I have a way to give back that can actually increase the meaningfulness of my life.' To my mind, each person figuring out their own generosity network, that's worth thinking about.
Bob Diamond: There is a philosophy that I believe strongly in and I constantly say to myself: why aren’t I better at executing on this and why doesn’t every business follow this rule. It's something I've always referred to as the No Jerk Rule. It sounds silly, but I have an opportunity now not to be leading an organization of 141,000, but we're building a small business and it's much easier in a small business, but it applies to big businesses and it just has a very simple assumption. We all know who jerks are. We all know people that don't have ethics and do have ethics.
I've never had a problem figuring out who are the jerks and who are the good people, so why do we allow jerks in our organization? Why don't we fire them? Why don’t we set the rules very clearly that if you're not acting in the best interest of the team, you have to leave? And it's a rule I've been better at executing and worse at executing it, but one thing I know for sure is every time I took the easy way out, it came back and bit me in the butt.
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How do you get performance over time that's consistently good and built on relationships?
Krista Tippett: What seems to be one of the startling realizations after 2008 that the market was much more captive to the human condition than we had convinced ourselves. Rules do matter, but it's how people behave. Economics is changing because of this realization. It seems so basic.
Jeffrey Walker: Go back to relationships. In the days before they went public Goldman Sachs and Morgan Stanley minced partnerships, trusting relationships with clients. That went away. Everybody talks a relationship game, but it's not really true. Who's the person over 25 years they have always been there, you know who they are, the walls are down. Our best deals always came from those people that you could just call and they'd tell you the truth.
Firms are starting to look at my experience and they're bringing lots of people in to start thinking about this. How do we relate to each other? What human programs do you have? You know, are we going to learn from Google and what they're doing and actually use it in Wall Street and the finance world? How do you get teams into flow states so that they actually work well together? How do you get performance over long periods of time that's consistently good and built on relationships and clients you actually keep over multiple years. It's not a transactional business.
Krista Tippett: So, the world won't go back to the way it was. These companies won't go back to the size they were, but the industry is finding new ways to create structures that put that human core back in the business.
Jeffrey Walker: The head of a firm I'm partnering with runs Apax Partners. He's leading prevention efforts of the transmission of AIDS project with the UN, Alan Batkin at Eton Park. All of a sudden people are going 'there's something more here than just the banker or the deal person.' They've got something beyond themselves that I want to work with and that opens up and starts dropping the walls. That's an ethical relationship. It requires you to be more straight and human with another person.