← A Book with Legs
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- [00:03]
Cole Smead
You're listening to A Book with Legs, a podcast presented by Smead Capital Management. At Smead Capital Management, we advise investors who play the long game. You can learn more@smeedcap.com or by calling your financial advisor. Welcome to A Book with Legs podcast. I'm Cole Smead, CEO and Portfolio Manager here at Smead Capital Management. At our firm, we are readers and we believe in the power of books to help shape inform investors. In this podcast we speak to great authors about their writings the late, great Charlie Munger prescribed. Using multiple mental models and analysis, we analyze their work through the lens of business markets and people. In this episode we are going to learn about the history of a company, the history of a country's banking industry and how large companies may not be successful. They've just survived numerous times. Joining us to discuss his recently published book, Greed, Scandal and the Collapse of Credit Suisse is Duncan Maven. Duncan is currently an editor for Bloomberg in London. He has worked for the Wall Street Journal, the Washington Post, Barron's magazine and Toronto's Financial Post. He has also been a chartered accountant in London and Toronto. He has a degree in history from Durham University in the uk. He has also published another book, the Pyramid of Lies, which was a UK bestselling book. Duncan, thanks for being here today.
- [01:28]
Duncan Maven
Thanks. I mean, I really appreciate it.
- [01:31]
Cole Smead
So like we were talking about before the podcast, you obviously have this, this other book you'd published, the Pyramid of Lies, which was, you'd published in the UK which is all about the Greensill saga. So that has some of the information that obviously comes into this story about Credit Suisse. But what caused you to write really this, you know, corporate history that as I mentioned to you, you don't tend to see people go the mid 19th century and start to ask questions about companies.
- [01:56]
Duncan Maven
Yeah, I mean it was, the previous book really was centered around this green salt, this company that collapsed and, and it had, it had linked up with crowdsuiss. And so I knew a bit about Crowdswiss, multibillion dollar scandal. And so I knew a little bit about Gross Suisse. And obviously as an editor at the Wall Street Journal, I'd sort of written and edited stories about Credit Suisse for years and sort of knew them as this bank that was both huge but seemed to get in trouble a lot. And actually after I'd published my first book, my, my agent, my publisher came to me and said, you know, what are you going to do next? And half kind of not really thinking too much. I said, you know, I think Credit Suisse might collapse at some point. They're going to get in real trouble. And I think we should do a book about it. And it was almost just to get them off my back a little bit. And then, you know, 18 months later in credit cease collapse, and I got another call to say, hey, you remember you said you would do this book. Well, now's the time. And so I thought, well, this is a good idea. Once I started to dig in a bit more and line up the facts, get away from the daily news and try and think big picture. How did this massive bank collapse just became this really fascinating story. And it went beyond things like tier one capital ratios and liquidity coverage ratios and into what is it about it? Why does a bank exist? Why doesn't it collapse every now and again?
- [03:20]
Cole Smead
Why.
- [03:21]
Duncan Maven
Why was this bank so big and what went wrong? And that to me was just fascinating.
- [03:25]
Cole Smead
Well, I agree, and it's interesting you put that. I actually don't even have this in my notes, but I just like the topic you just brought up is, you know, why does a bank exist? And I think really what we, you know, what I would argue, and I don't know if you'd agree on this, but really with the demise of Credit Suisse, I think it ended the prior era of banking in Europe because look, I mean, look at European banking now. It's so different than what it was in the 2000s and the 2010s. Would you, would you agree with that view that that was kind of the end of a prior era?
- [04:00]
Duncan Maven
I think there's something to that. It definitely kind of marked a moment, right. Where you'd had this period, probably. Yeah, since the late 90s, early 2000s, where the European banks were really trying to keep up with Wall street and struggled for the most part. Right. And it got them into trouble every now and again. And the financial crisis came and went. That was probably the first moment where they were really rocked and different set of regulations in the US to what came out of the crisis in Europe. And so you started to see problems. They just couldn't keep up with their American counterparts. And I think it does kind of mark the end of this really competitive, aggressive moment in European banking history. And if you look at what's left of the European banking landscape, it's kind of like one bank in each country, one big bank in each country, if that. Then none of them really are globally, you know, arguable. But, you know, none of them are sort of on the same scale as a Goldman Sachs or JP Morgan Anymore.
- [04:57]
Cole Smead
Yeah, no, I agree. The highly fragmented nature of European banking. I agree with you. I think ended with Credit Suisse. You know, maybe for a next book, you know, but we're going to get into this one in a second. But maybe for next book. I think what or Charlie is doing at UniCredit is nothing short of remarkable. And to your point, might be really the first pan European bank. But let's, let's go back to Credit Suisse. So let's start out with Alfred Escher, you know, really the father of Credit Suisse. Teach us about his background, his life and, and really kind of, you know, what, what caused him to kind of go from politics to, you know, really, you know, empire building and banking.
- [05:35]
Duncan Maven
Yes. Escher is in Switzerland, is largely seen as this kind of founding father of modern Switzerland, both kind of economically and politically. It's kind of hard to think of a parallel really where you have this one figure. He came from this pretty wealthy kind of aristocratic family, but it had kind of had bad days, good days, and it was probably kind of not at its peak. When Escher was born, he had traveled a bit and seen the world. He'd been to the US he'd sort of learned a bit about modern ways of business and modern finance, returned to Switzerland and kind of as a fairly young man had managed to get into a position where he was fairly powerful politically. He saw that Switzerland was kind of at the crossroads of Europe, but in danger of being bypassed as industrialization kind of took over across Europe. Switzerland was in between the big powers, but there was no real reason to go there. And it was quite a backward rural nation at that point. And so he decided that what Switzerland needed was to build railroads essentially and have the railroads of Europe kind of go through Switzerland. But that needed financing. And so he also realized you needed a bank. He also thought about universities and things like that. And so he set up this bank that was kind of a precursor of Credit Suisse essentially to finance the building of railroads, which in and of itself all sounds really smart, but of course, as these things, you know, tend to do, it didn't quite go as planned and you know, the money would kind of, things would blow up. And along the way Escher at one point becomes sort of. He's sort of sidelined completely and exiled to France and in fact kind of dies in relative poverty, I guess, and certainly reputationally relative poverty. Lay Derry's reputation, as I say, is kind of, you know, reinvented to some degree. And now there's a, you know, Statue of Esha in the middle of Zurich and it's kind of one of the main landmarks there.
- [07:42]
Cole Smead
Well, yeah, I think you mentioned that he was the chairman of the Goddard Tunnel Company which for a project at that time was, you know, remarkable in scope, wasn't it?
- [07:53]
Duncan Maven
Incredible. Yeah, I mean, a piece of infrastructure where they build in a tunnel through the Alps that connect Switzerland and Italy and know, incredible piece of infrastructure that was pretty much unheard of anywhere really. And, you know, financing that was critical. You know, the result of it, of course, at that time was like health and safety was not probably what it should be. So, you know, a lot of people died. It was pretty. There was lots of tragedy around it. But ultimately, you know, partly through his persistence, they did build this tunnel and it's still there today. You know, it's sort of established Switzerland as a. Helped it kind of leapfrog from being a kind of one of the most backward, most rural nations in Europe to being kind of one of the richest nations, which it still is today.
- [08:39]
Cole Smead
Yeah, he. He has got a great quote that you reference in the book, you know, so. And this is kind of really where his, I'll call it his politics and it is, you know, I'll call it his socio political view, really informed his view of what private enterprise should. He said, you know, in your book you referred to this. Escher said it is best to, quote, let private activity go unhindered as long as it does not endanger the purpose of the state. End quote. Obviously, in the end, you know, Credit Suisse did endanger the purpose of the state, which was that it could be ultimately, you know, chaotic for the Swiss economy. But I say that because, you know, at the time it was viewed to be that, you know, railroads were very important to call it the industrialization of, you know, the various Western economies. And that same thing happened in the United States with the golden spike in the middle of the 19th century. I find it really interesting though that, like, where we're going in technology and where a bank goes to fund that those two incentives might not be very aligned. We obviously had a lot of banking failures here tied to railroads because a lot of railroads failed. And based on what you wrote about Asher, he had really the same miserable success, I would argue, in railroads, didn't he?
- [09:57]
Duncan Maven
Yeah, he did, he did. I think that's exactly right. And I think you're right. The incentives and the purpose are not aligned necessarily. Right. So I think one thing to think about, I guess, is like the railroads essentially are a utility right they're kind of building them as kind of a long term project. The banks aren't necessarily long term. They're not a utility. I mean you could argue they are I guess to some degree now, but at that point this was a bank set up to provide the financing for this development which was. You've got. So whose interest is the bank working in? Is interest of the shareholders in the railroad company or is it the government or is it the shareholders of the bank? You sort of got all these conflicts set up at the start and really that kind of feeds through 160 years later. It goes all the way through credit suites, history really.
- [10:51]
Cole Smead
Yeah, because the other thing too, it's got me really jacked up right now. I don't know why I'm so interested in this idea and topic, but the railroads were a big capex cycle, as we all know. That took a lot of money to do those big projects. And anytime big capex cycles run into Wall Street, I just get scared as all hell. And so I think back to like the capex cycle of oil here in the United states in the 2010s, you know, the drill baby drill era or now the AI Capex cycle. As I was reading your book, I, I was thinking so much about capex cycles that require a lot of money. And then to your point, the interaction of the banks, their ability to raise money or finance debt for that, and I think those are the annals of time are always kind of ringing that. You talk about the Swiss VolksBank in the 30s getting, getting in trouble, you know, really. You know, it sounded like, you know, part of that was coming, you know, through the Great Depression. How did Swiss banking change at that time as banks ran into trouble during the 30s?
- [11:49]
Duncan Maven
Yeah, so I mean the really interesting thing that develops in Switzerland in the late 20s and 1930s is around this idea of bank secrecy, which is a crucial piece of the culture of Swiss banking, I think. And they've tried to sort of rewrite what that was about at different times. But essentially the Swiss banks realized that to survive alongside much bigger banks and a bigger banking industry in other countries, what did they have to offer? And the big thing they had to offer was you could put your money there and nobody knew where it was, you know, and they would never tell anybody who'd put the money there. And that kind of thing. This was sort of informal for a long time, but it became kind of formalized in the, in the 1930s. The Times Switzerland has tried to say the reason for that was because you had this wave of, you know, Nazism and other kind of extremist politics sort of washing across Europe. And this was a helpful thing to offer to clients. You know, you can come put your money in Switzerland and we won't let the Nazis get their hands on it. There is a pretty strong argument to say it was almost the other way around. Right?
- [13:00]
Cole Smead
Yeah.
- [13:01]
Duncan Maven
Anyone will. Can put our money here, no matter what your political views or what kind of things you're up to, and we won't question it. And I guess which one of those is. They're both the same thing, right? The two sides of the same coin.
- [13:14]
Cole Smead
Yeah. Well, the other thing I think of whenever I'm in Switzerland is again, Switzerland's unique in that. I mean you go to Geneva and you go to Zurich and they have very old buildings there. And they have very old buildings there because they've never been in a war, in effect.
- [13:30]
Duncan Maven
I think that that neutrality thing is really interesting because neutrality and staying kind of like out of wars and not picking sites, on the one hand sounds. Well, these, these are the good guys, right. They decide not to fight on the other hand, I think there's another way of looking at it, which is this like amorality where the Swiss, you know, politically are saying one thing, bank in their banks. I think they're essentially saying, we don't care who you are, we will do business with you. You know, we will do business with anyone who is willing to put their money here.
- [14:02]
Cole Smead
Yeah, it's a very passionless or, you know, there is no right and there is no wrong kind of view. And eventually, you know, whether, you know, whether it's right or wrong, they did end up having to choose what was right and wrong. And that ruined to your point, I think you pointed out in your book, you called it. It wasn't a. It was a. It wasn't a problem. It was a feature is how they looked at it.
- [14:26]
Duncan Maven
This was, this was like one of the best things they had to offer. Right. Like they had something to offer, which is we were asking questions. But that obviously attracts, it becomes sort of self fulfilling. Right. You attract people who have something to hide.
- [14:39]
Cole Smead
Yeah. So a broader question though. How much do you look at just that to be really what drove, you know, the big Swiss banks like Credit Suisse and ubs in the 20th century, in other words, like let's say up to 2,000. Do you think that was by far the most important reason that their customers came to them? Or, or was that not really the main storyline of their success up into.
- [15:04]
Duncan Maven
Those points, I think it's really important. I think it's hugely important. Otherwise, how else do you explain why Switzerland becomes this center of banking? You could say link to it is the idea of neutrality so that it's a relatively safe place to put your money. But the secrecy, I guess, is very similar ideas. Secrecy, I think, is really appealing to a lot of people, which means you can avoid, not just sort of, you know, it's not just bad guys trying to avoid, like, the regulators getting their money, but it's people who are trying to avoid tax as well. And arguably some of those are bad people.
- [15:42]
Cole Smead
Well, I was going to say, now that we got rid of Swiss banking, that's what crypto was made for, right?
- [15:47]
Duncan Maven
Well, exactly, exactly. It's a similar. There's. The appeal is similar, for sure. Right. But I think the. There is, you know, there are other elements of Switzerland. You know, a stable currency was appealing. Right. But again, these things all kind of go hand in hand.
- [16:02]
Cole Smead
Yeah. No, I agree. So, you know, when I was reading this story, I think a lot of Lugano. Lugano is this beautiful city in the south of Switzerland. And, you know, why do I think Lugano existed for many wealthy people? Because the Italians could come up from Milan and dump their money into Lugano and then no one had to know. And you tell a story about the Credit Swiss branch in Chiaso. So can you tell that story what happened in that and why? It seemed like it was great for the bank, but obviously it didn't end up working out.
- [16:33]
Duncan Maven
Yeah, well, it's. It's exactly as you're talking about with Lugano. Right. So there's a particular manager in a branch in this place, Chiaso. Chiasso. And it's not a, you know, not a big town, but it happens to sit on the. On the other side of a tunnel to. To Italy. And, you know, this guy is in a sort of competitive banking environment and he decides he needs to appeal to wealthy Italians who want to deposit their money in Switzerland. And so he offers them incredible rates, incredible interest rates on anything they deposit. And he's going to try. And how is he going to pay for that? He decides he'll pay for it with it, sort of. It ends up being a kind of Ponzi scheme slush fund that is invested in all sorts of weird assets that ultimately don't pay out, and the whole thing collapses. And in the meantime, this one tiny branch has become incredibly important to the bank's results. It's ridiculous. And people are turning a Blind eye to it because there's clearly something wrong. But it's generating so much revenue and the guy is becoming a bit of a star. Maybe one day he's going to be a senior executive at the bank. And then when it all blows up, of course, everybody suddenly is sort of hand wringing it almost, I think, I think off the top of my head, I think it was about a billion dollars it cost the bank, which at the time was just enormous. And I mean, it's enormous now too, but it was really enormous then and, you know, ultimately could have killed, killed Crow Suisse at that point and didn't really buy luck as much as anything else. But it's, you know, a terrible tale of, you know, how people inside the bank are willing to turn a blind eye to things that are obviously wrong if it's making money.
- [18:22]
Cole Smead
Yeah. When I think, and by the way, if I remember correctly, Texon was the company he created. And to your point, in a Ponzi scheme like fashion, you know, he did buy the debt of some real entities. It just ended up not working out for them either. So. But it, you know, to your point about this star, it's like, okay, and it gets to the idea of like what you show on your net income statement versus, you know, what's going on your balance sheet. So to your point, they're booking these profits because they're getting, you know, all these deposits and I'm sure they're showing an underwriting profit from that, that process. And I'm sure some of that is ending up in deposits with the bank, not all in Texan in some way and just causing a lot of customer flow, if you will, which, as everyone on this podcast should know, banks need deposits because that's your cost of equity in a way on a bank. And you can lend that out. But I say that because this was not a one off. This is really a recurring theme that shows up is the idea of a star in a particular location. And to your point, is that a very sustainable business?
- [19:30]
Duncan Maven
Yeah, I think you're right that this is. This kind of occurs over and over and over again with Credit Suisse. And I tried to figure out. Part of what I'm doing with the book is trying to figure out why does that happen over and over. I think part of it is they're never the biggest bank. Right. They're never the biggest bank in Switzerland. They're never the biggest asset manager. They're not as big when they try to go global. They're not as big as their global competitors. And so they're always looking for something that is going to accelerate their growth. And of course that leads you to take bigger risks. And often it means they in particular bet on star bankers who they think will deliver this like enormous kind of transformation. But more often than not, these star bankers don't have any magic, don't have any secret sauce and they end up blowing up. And I think that's a real problem. It's sort of culturally why it leads to a sort of, it becomes self reinforcing again because you have one of these guys now you got to get another one, you got to get another one and your bank never catches up because you constantly blow it up.
- [20:41]
Cole Smead
Hi, I'm Cole Smead, CEO and portfolio manager here at Smead Capital Management and host of this podcast. If you enjoy this podcast, I'd like to invite you to check out smeedcap.com at our firm. We are stock market investors. We advise investors who play the long game with a discipline that has proven success over long periods of time. Learn more about our funds@smeecap.com past performance is not indicative of future results. Investing involves risks, including loss of principal. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges and expenses. Read and consider it carefully before investing. Smead Funds Distributed Buy smeefunds Distributors LLC not affiliated when you mentioned that Italy, I think he said in 1976, you know, the Italian government wised up and started to cause issues for, you know, Credit Suisse, you know, Italian banking entities. It seems like that that was really slow to happen. Whether you think about just Italy on its face, I mean that took 30 years. I think that was a real surprising part of their story was how governments didn't really care for so long.
- [21:55]
Duncan Maven
Yeah, I think again, you know, trying to figure that out as I'm writing the book and it's like, you know, I think the reason may be maybe this is too simplistic, but the one, one thing I think is that, you know, the, the governments don't want to think about that kind of thing. You know, they don't want to think one of their banks is going to blow up. And you know, they'd rather things are just going to keep going along. And so, so long as they can do that, then for the most part they're going to try and try and encourage the banks just to keep going. I think if you look back at what KSO and, and, and Italy, so yeah, they introduced kind of currency controls and stuff because the money was flooding over the border. My sense is that things just moved a lot more slowly. Right. In the 50s, 60s, 70s, you know, the information flow was so much slower than it would be now. And in the ability to see that money move, I mean, this is like, you know, this is where we're very. In a very different world to crypto. Right. Where this is people literally with suitcases of cash handing it over in a restaurant. You know, there's not nobody sort of flicking a switch and sending millions of dollars around the world.
- [22:59]
Cole Smead
It's just like the scene like straight out of Wolf of Wall Street. Right. There's just people trafficking money on their persons and, or their briefcase, you know, into Zurich on a weekly basis.
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Duncan Maven
Yeah, they're like sitting down at restaurants in Italy and you know, the Swiss guy sits next to him, picks up the suitcase, the briefcase he's just put.
- [23:17]
Cole Smead
Down like out of a Bond movie.
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Duncan Maven
I love crazy. It's crazy. I mean, it's sort of, you know, it's hard to believe that that stuff really happened, but it did really happen. You know, it's kind of insane.
- [23:27]
Cole Smead
So let's talk about Rainer Gut. What was his background prior to arriving at Credit Suisse?
- [23:34]
Duncan Maven
So Rainer Gut was, you know, a fairly ordinary guy, but he, he'd worked in banking again, you know, he'd had a taste of Wall Street. Right. So he had, he's a guy, a Swiss guy who'd ended up on Wall street had a sense of, wait a minute, our Swiss banks, we don't know we're going to get kind of steamrollered. And he eventually ends up back at Crowdsuisse and is ambitious for the bank to become international. And I think he's just seen what's available if he can try and match Wall Street. He is little known figure, I guess in, you know, in banking generally, but in Swiss banking, pretty well known. He was, you know, a senior, senior banker in Credit Suisse for many, many years. And really the driving force of the ambition of Credit Suisse to become an international bank.
- [24:28]
Cole Smead
Then you referenced the 1964 quote that was in British politics at the time. You know, there was a blow up in the pound. And when a politician, I can't remember the Exchequer at the time, but they referred to the gnomes of Zurich, which is just a great line and they were, they were saying that in light of the context of the quote was that, you know, it was the gnomes of Zurich that were causing trouble in the gilt market at the time. Didn't those ideas, you know, kind of Back to the old ethos of Swiss banking and what was going on in Switzerland, whether that was true or not, didn't that really drive this idea that the Swiss could control finance?
- [25:07]
Duncan Maven
Yeah, I think there was always a suspicion of the Swiss probably going back to the war, like to World War II. Right. There was this sort of suspicion that the Swiss were really immoral, would do anything for money, you know, that they wouldn't care about crashing the pound if it meant they made a bit of money on the side. And so I think. I think that's kind of. That underlies a lot of it. Whereas, you know, I mean, times are different now, right? But I think on Wall street and in the City of London at that point, there was still this idea that, you know, these were partnerships for the most part, the big financial terms of partnerships, and that there was this sort of gentlemanly way of doing business and kind of an honesty about it, whereas they felt like the Swiss was all secrecy and they were just, you know, amoral and doing whatever it took to make as much money as possible. I mean, how true that really is, I don't know.
- [25:56]
Cole Smead
You know, I agree. I agree with you. I totally. So it's funny you mentioned that because, you know, we'd be sitting here in our office and my dad, you know, it's like, let's say we have some stock that's getting beat up that day and. And he'll. He'll be kvetching to himself, saying, like, oh, you know, the hedge funds and this and that. I'm like, oh, yeah, dad, the gnomes of Zurich. Like, ha, ha, ha. Funny, funny. It's like, you know, there's this ephemeral character out there in the world who knows that what you're doing and is seeking to harm you. And that was kind of the context of the British quote. And to your point, it's like, because they're so far detached and away even from London, it's like an easy person to criticize, you know, the gnomes of Zurich. And so I still think a lot about that because, you know, I joke with people. A stock doesn't know you own it. And I think between the idea that there's someone out to get you abroad or that the stock knows you bought it, both are just kind of, you know, the way the human mind works. But, you know, to your point, there's really no validity to that. Major bank mergers picked up in the 80s and 90s. You know, there became a rationale for this idea of the universal bank, and that was Going on both in the United States and out. How did this affect the Swiss banks then?
- [27:07]
Duncan Maven
Yeah, I mean, I think the Swiss banks realized to stay relevant they had to get bigger and they had to try and match what was happening. Especially in the US where you had, you know, enormous banks being created through the, through the, especially the 90s, right. And they were, the Swiss banks were trying to do the same UBS and you know the time there were sort of three big Swiss banks and number, number one and three merged, leaving Credit Suisse kind of feeling pretty isolated and desperate. And so Credit Suisse is out for its own partner and it's partner. And the partner found really was. The big partner found was First Boston, which was similar to Credit Suisse in many ways. Kind of widely regarded as maybe a bit punchier, bit more of an exciting place to work, but not at the top table, you know, maybe just one below the top table. And you know, the two of them got together and it's like dynamite, right, because you've got these two parts of this bank that are culturally vastly different, right? You know, you have the sort of quiet white glove, Credit Suisse and you know, nobody talks about anything in their offices. And you got First Boston, which is like hard charging Wall street investment bank, similar. Even in London it had that same reput. And you put these two things together, but the two sides of the bank are constantly tearing each other apart while also desperately both trying to catch up with their rivals. I think that really sows the seeds of the downfall of the bank, to be honest. I think that's the moment where if Creative Suisse had stayed small, it would have ended up like a Julius Baer or something like that in Switzerland. Slightly boring, but ultimately fairly stable Swiss bank. Instead it becomes this giant global thing that is a bit of a mishmash of different ideas and none of which really go together very well.
- [29:05]
Cole Smead
Well, to your point. So originally their original US partner was White Weld that you mentioned in your book. And I was also having these kind of like mental dialogues with myself. There's the old, there's the economic theory of build versus buying as you write about the corporate history in this case, they always end up buying scale or buying something bigger. I had asked myself the question, what if they had just taken White Weld and built from the ground up rather than buy. But obviously that was just taken out of their hands by Merrill lynch acquiring White Weld, wasn't it?
- [29:41]
Duncan Maven
That's right, that's right. So they had this partnership with White Weld, but when White Weld was kind of up for sale. They ran off to Morgan Stanley, and so they needed to find something else. And they end up getting First Boston piece by piece. They don't do it all in one go. They sort of end up getting them because First Boston, ironically, is in a mess. And so they buy this thing.
- [30:06]
Cole Smead
Yeah. They keep losing money and they need to raise capital. And to your point, it's like the worst investment, where it's like the old saying is your first loss is your best. Well, it's like, you know, in Credit Suisse's mind, it's like, no, the fourth loss is the best because then we can fully acquire them.
- [30:21]
Duncan Maven
Yeah, let's double down and double down and double down. Every time they screw up that the view in Switzerland seems to be, look, they're getting even cheaper. Let's buy more of it. Yeah, like, well, maybe there's a reason that it's getting cheaper.
- [30:32]
Cole Smead
Yeah. So I think because it started out, it. Was it like a. Was it like a 30 or 40% partnership at the beginning in terms of a joint venture? But they obviously shared customers and information with each other, which was kind of the main part of the joint venture, let's say. Yeah, because your point. I remember that there's like. What got him to 60 was like buyout bridge loans that went bad from buyout debt that just couldn't get moved, which obviously, I mean, that's stuff still happens today where major buyout happens or take private and the banks are still left holding the paper. I know people on Wall street today who still love the Credit Suisse, First Boston, or, you know, what's referred to as the CS FB brand. But from what I know of that history, I. My read is that Credit Suisse, through the joint venture, greatly allowed people to get rashly overcompensated at Credit Suisse versus Boston. Is that your read, too? Because it just seemed like there was too much gasoline on the fire. And people love the brand because they were making out like rainmakers.
- [31:40]
Duncan Maven
Yeah, absolutely. I mean, you talk to people who work at CSFB in London or in New York in the 90s, and they loved it. And they'll tell you how it was amazing. It was this brilliant brand. I felt so proud of it. Everybody who worked there was fantastic. And you kind of point out that, yeah, because you guys got paid so much money, he wouldn't have loved it. And it appears there was hardly any regulation. Right. There was sort of a couple of guys at the top who were senior guys, guys who would Maybe check in and. And do the, you know, check. Your math was working. And. And that was. That was like the risk committee. Right. And so people loved that. They. They really look back on. People who work there, will look back on that time. Generally, when you talk to them as, like the best time of their lives, like the incredible time where they were super innovative. That, you know, innovative I get, I guess in banking always kind of scares me a little bit. But, you know, they were. They were innovative. They were taking risks, doing exciting stuff, and getting incredibly well paid for it.
- [32:37]
Cole Smead
It's funny you mentioned that, because much of that history you just said right there, and from a sentimental standpoint, my dad first got in the investment business at Drexel burnham Lambert in 1980. And so to your point, when people look back at the Drexel era, it was an incredible era. It just ended up being sustained for various reasons, but everyone was making a lot of money, to your point. So why not feel good about eras that you make a lot of money? Let's see, this then kind of begins the process of US Senator Alphonse d', Amato, who began looking into Swiss banking, you know, for all the right reasons, but for all the wrong, wrong, you know, historical occurrences, which was the idea of not only Nazi banking, but then ultimately Jewish accounts sitting on the. On the Swiss books, you know, held as deposits or assets, and yet the families and descendants of those assets had no way of touching them.
- [33:36]
Duncan Maven
Yeah, I mean, this bit was almost the most shocking bit to me. And it's weird because, you know, in some ways, Swiss banks and Nazis is like a cliche, right? We've all kind of heard that phrase and, you know, that idea, but I don't know that many of us really understand exactly what happened. And when you start to really look at it, it is truly shocking. Right? So on one level, the Swiss banks were taking money from the Nazis. So when the rest of the banks in Europe or around the world said, we won't deal with the Nazis, the Swiss banks were. So they would take any money and they would launder it, essentially. And so the Nazis could go and buy armaments from Spain or Portugal or whoever they were getting the armaments from. So that was one thing. There was also kind of they would help them where the. Where the Nazis had taken money or taken riches from victims of the Holocaust. So, you know, stolen paintings or jewelry or whatever. The Swiss banks would take that too. Right. So this is the kind of immorality we're talking about, but I think it gets much worse. Than that. Right. So what they also did was in the 1930s, the run up to the war, Jewish people around Europe, fearful of what the Nazis were going to do, were taking their money and depositing it in banks around Europe to try and keep it safe. And in particular, there was that appeal of the Swiss banks. They were neutral, secret. You could put your money there. And there's one really compelling story about what happens to that sort of money that I mentioned in the book. And it's this woman who. Her father was a factory owner in Eastern Europe, and he could see what was coming. And so he took his money and he put some of it in Barclays in London, some of it in a bank in Paris, and some of it in a precursor of Credit Suisse in Switzerland. And after the war, she was sort of grown up at this point. She went to Barclays, they gave her the money, she went to Paris, they gave her the money, she goes to Zurich, and they say, oh, yeah, okay, yes, that's your account number, that's your name. We now need your father's death certificate. And she's like, well, he died in Auschwitz. I don't have a death certificate. And they said, well, sorry, you know, we can't give you the money then. And what happens that the money she's deposited there over decades is they just take fees out of it. It just. They just sort of, you know, keep taking fees until there's nothing left. And in the 90s, this sort of stuff comes to light. You know, I mean, this is. What's shocking to me is that this is in my lifetime. Right? You know, this is not history. This is. This is relatively recent, my working lifetime. And when Senator Amato and others start to dig into it, even then the Swiss banks, principally Credit Suisse and ubs, try to get away with not paying up. And they sort of launch their own kind of counter offensive to block information coming out. Only when they're deeply humiliated do they admit to any of this. And in fact, they sort of end up paying a fine, which sounds like a lot of money, billions of dollars. But a lot of people who are close to this stuff say, not even close, didn't even get close to what they really owed. And in fact, that story is kind of still going on because there are still debates over how much money is in Swiss bank accounts that relates to either victims of the Holocaust or it's Nazi money. And it's. I mean, it's truly amazing, you know, that that is still a problem when.
- [37:14]
Cole Smead
It'S interesting to think about again back to like a traditional bank structure. You take in deposits and then you lend those out. And the spread between what you get on your loan assets and your deposits, which are technically liabilities, that is your call it net interest margin as we know it to be. Right. If someone has deposits with you and you don't have to pay them anything and they sit there forever, it's like a dream depositor from a bank. And your point?
- [37:39]
Duncan Maven
Free money.
- [37:40]
Cole Smead
It was free money. And these were dream depositors though it was unethical and immoral, which is bizarre to think about at one point.
- [37:49]
Duncan Maven
Just an example of how unethical they get. Right. In the 90s when there's all this sort of research into the people, it's finally starting to really dig into it. There's a security guard at a UBS goes into the basement of the building and he finds that there's a whole stash of documents, thousands and thousands of documents about to be thrown in a furnace to, to hide the extent of these, you know, Holocaust accounts linked to victims of Holocaust and so on. And he grabs a bunch of them and he sort of tries to become a whistleblower with them. And the Swiss prosecute him under their secrecy laws for, you know, exposing this, this problem. And in the end he gets asylum in the US. This is in the 1990s. Right. I mean incredible.
- [38:40]
Cole Smead
So 96 was, I think from your book was really the first main merger opportunity that came up between UBS and Credit Suisse under Rayner's leadership. You know, why didn't things progress more then? Was it just the idea of, I mean the Swiss are a very arm's length people when it comes to wealth and, and, and business relationships. I think was it just was going to come out in the press and therefore that it just too much headline risk. Was that the main idea?
- [39:14]
Duncan Maven
Yeah, I think it's, I think it's a combination of sort of, you know, and you're kind of alluding to it that these merger talks come back every couple of years really for the next year after that, for the next kind of 30 years. Yeah, it' combination of I think the egos involved. Right. So who's going to be this, you know, these two banks are kind of rivals. Which one's going to be the junior partner and therefore which chairman and which CEO is going to get the top job and which one's going to leave the bank. So I think that's a massive part of it. I think there's a fear of what the politics will bring So I think it's one of the things that was sort of a new learning for me was that, you know, we who don't live in Switzerland tend to associate Switzerland with its banks. But actually that's like one canton, right? It's sort of. In Zurich, banking is really big, but in other parts of Switzerland, people aren't as fond of the banks, right? They don't like the banks. They kind of tolerate them and it's kind of, you know, other parts of Switzerland are a little ashamed even of the banks. They, you know, they'll tolerate this kind of culture of money making so long as they don't have to think about it too much. And so the idea that, you know, a merger of these two giant banks and the bankers themselves will benefit enormously from it, you know, coming out in the media is pretty, it's pretty toxic really. And so it tends to kill the mergers before they get going.
- [40:46]
Cole Smead
We hope you're enjoying the podcast. You know, we work hard putting together this show, but we work even harder for our investors at SMEAD Capital Management. At Smee. At Smead, we believe in disciplined investing, which is why the SMEAD funds have a proven track record of long term outperformance. If you're an investor who plays the long game and want to invest in wonderful companies to build wealth, we invite you to visit smeedcap.com Past performance is not indicative of future results. Investing involves risks, including loss of principal. Please refer to the prospectus for important information about the investment company, including objectives, risks, risks, charges and expenses. Read and consider it carefully before investing. SMEAD funds distributed by Smead Funds Distributors llc. Not affiliated. My ancestors, originally from the Canton of Bern and from a town called Langenthal, or Langenthal as they'd say it there. And it's just a farming town, right? It's just like a traditional farming place. And obviously Switzerland very much protects its farmers. That's a big, you know, kind of tariff protectionist thing in this, you know, tariff environment that we currently sit in for political discussion reasons. But it has absolutely nothing to do with banking. It's like the, you know, to your point and kind of like how people think of the sexiness of Switzerland being the banks. It's like the least sexy, you know, place that you could probably be in Switzerland. And I mean, almost as, you know, most of Switzerland in my mind is very redneck. You know, they, you go to very rural, very, very, very rural. I, I had a, I had a college friend of mine who was working for a major, a National Industrial Company up in Zug. And so I went up to see him for a weekend, stayed at his place. And what did we do? We went down to the river to a swimming hole where a bunch of Swiss people would go and we would walk out and go up on the bridge and we would jump off the bridge like we would do in redneck America, like very rural America. And that is very Switzerland. The other thing too that I find interesting about rural Switzerland is it's actually a lot more like rural America beyond like bridge jumping and, you know, just kind of having fun in the summer. Everyone in Switzerland that's been conscripted has a gun. It just doesn't have a firing pin. So it's like Texas without a firing pin. And that's your point. That's the culture outside of banking.
- [43:06]
Duncan Maven
Yeah. And the, and the politics kind of reflect that as well. Right. So, you know, Switzerland has what feels like a strange political system compared to the rest of the world where, well.
- [43:16]
Cole Smead
A big democracy, they vote on everything.
- [43:18]
Duncan Maven
They vote on everything. Everything. And they, and the, the cabinet, you know, the, the ruling cabinet is usually made up of like people from different parties and they sort of cycle round the different roles. And so, yeah, it's really, it really, you know, probably much more democratic than most other countries. Which means, I think that that might be the biggest check on the bankers. Right. Like they're sort of tolerated because they bring a lot of money into the country. But don't, don't misbehave too much because, you know, the rest of the country doesn't really like it.
- [43:51]
Cole Smead
Yeah, well, so you, the other idea that got popular at Credit Suisse in the, in this happened in all banking, particularly in Europe, was the idea of the bank assurance model. Okay. So I just want to, I know it sounds really simplistic to maybe you or me, but can you explain what the bank assurance model was? And then in Credit Suisse case, what did they get involved in? Insurance.
- [44:15]
Duncan Maven
Yeah. So yeah, I mean, it's just effectively hooking up an insurance company with a bank. It's a bit about essentially. I guess the idea is that the thing that you pointed out a couple of times already, which is banks need a source of deposits, right. And that's how they, they, that's how they finance the loans and so our investments. So if you take an insurance company, it's just a massive pool of money that's just sitting there waiting to deploy. When do we deployed on something that's more useful. And so in theory, if you hook up a Bank with an insurance company, that's like the dream. You've got these long term deposits people, people are, you know, taking out insurance policies for many years. They don't need them back quickly and then you can go and lend them out to people to buy homes or build businesses or whatever it is. In theory that works really, really well.
- [45:09]
Cole Smead
Yeah, it does. And to your point, I mean, I was actually, you know, I think a lot about Buffett. Obviously. Buffett's had a lot of success investing in banks in his career and he's also been in the insurance business, you know, for many, many years. And to your point, your policy premiums that you collect are like deposits and the liabilities that you owe the insured parties or what you'd have to pay out in the future. In other words, that's your rate of return you have to beat in a way. So it's still a spread business. And you know, particularly in places like Italy, the bank assurance model became kind of popular, which as we're kind of watching these Italian entities unfold themselves with like Generali today and obviously, you know, their ownership and involvement with Media Banka, that was kind of the bank assurance model in Italy in a way. But to your point, like Wintertour, who bought who Credit Suisse bought, it worked terribly.
- [46:04]
Duncan Maven
Yeah, I think, I think, I mean, part of it is right, culturally those two businesses are totally different, right?
- [46:10]
Cole Smead
Yeah.
- [46:11]
Duncan Maven
Banking to some degree is kind of, you know, I mean, like it attracts a completely different person to work in banking than the type of person who works in insurance. They're just totally different models. And when you try and put them together, they like, who's really in charge here and what are you trying to achieve? And it never seems to work that well or you know, very rarely seems to work that well.
- [46:31]
Cole Smead
I agree. And to your point, I think it's versus a model where someone's focused on one or the another, the other. That focus, like for an investor has always been a much more rewarding thing for the corporate entity, you know, because to your point, I mean, if, if I'm insuring you, you pay me policy premiums, I rein that vessels at a high enough rate and broadly against all my participants that if I, you know, like using Buffett, he uses corporate equities, so he makes a much higher return on corporate equities relative to what he's got to pay out in future liabilities tied to the policy. So it's again still a spread business. And if you can make 2 or 3% over what your costs are Just like in banking, you're a genius. It's just that it tends to be a pretty competitive business like banking too. And so there's a lot of people that end up doing, you know, foolish things from time to time under the heading of, like, foolish things. To come back at the theme we talked about earlier, you know, star player at the bank. So you mentioned Alan Wheat becoming a big name at Credit Suisse versus Boston, and I. The old term that, that was very popular there, back to our kind of cultural at CSFB was you eat you, you know, you eat what you kill was the popular ethos. What did Alan Wheat do at csfb?
- [47:44]
Duncan Maven
Yeah, so Alan Wheat was really the, that was kind of. When Alan Wheat was in charge of csfb, that was really a kind of high point of this idea of having a bunch of superstars, a sort of stable of superstars. And so he would go out and hire, you know, who, who is the best derivatives guy. And now I'm going to let him, you know, run wild, create as much revenue as he can, but he's going to get paid, you know, an enormous share for it. And so he essentially went out and hired in every kind of trendy bit of banking at that time would say, I'll get the best person there is. And you know, some of these guys naturally were very kind of aggressive and also egotistical. And so it wasn't hard to go to somebody who's doing really well at Morgan Stanley and say, I'll pay you more. They were not particularly loyal. Right. They would jump ship. If you're going to pay me more, I'm going to go. And they all kind of believe in themselves, right? So they don't think it's Morgan Stanley or, or Merrill or whatever name it is behind them that's helped them achieve their enormous revenues. They think it's them, right? I think it's their particular skill set. And so Wheat goes out and he hires a bunch of guys like this and there's some degree of success, but one by one they blow up and there's trading scandals and there's people shredding documents and there's money tied up in emerging markets. When the emerging markets blow up and all sorts of things go wrong, essentially, I mean, the, the biggest name, you know, of that era was Frank Cotrone, who was, you know, to some degree, the, the biggest name in the dot com bubble. You know, Frank Catrone was like the guy in Silicon Valley. He knew everybody in Silicon Valley and he, you know, made a fortune. I mean, we're talking kind of hundreds of millions of dollars in compensation. And he's on some of the biggest IPOs at that time. And when the dot com bubble blows up, he's also kind of the most controversial figure. You know, he ends up in court. I mean, he, he was found guilty of wrongdoing at one point, then he appealed and he was cleared. But, you know, ultimately becomes the sort of poster child for, you know, greedy bankers. Dot com bubble. And that's Alan Waits. That's Alan Weeds. Crazy's First Boston.
- [50:01]
Cole Smead
Yeah, because Frank Quattrone, as you mentioned your book, he was known as the Prince of Silicon Valley. And to this day, I mean, if you look at it, Morgan Stanley, they have still have a massive legacy in tech banking to this day. I mean, they're still one of the, if not the primary banker to Silicon Valley. So to your point, even though Frank Quattrone really created a lot of that legacy, it ended up holding with the bank more than people expected. Another name you mentioned in that portion of the history was Andy Stone. You know, can you, can you teach us who Andy Stone was briefly?
- [50:35]
Duncan Maven
Yeah, I mean, Andy Stone is a sort of, well, he's a, he's a, he's a sort of kind of mini Donald Trump of the 90s, right. He's a real estate developer, you know, building stuff all over the place, flying around in private jets, living the kind of lifestyles of the rich and famous, banker lifestyle and, you know, and making a lot of money for a while, but eventually blows up like all the others do. And the bank has to kind of. There's like a sort of nasty pieing of the ways between the bank and Andy Stone too. Just as there is with Frank. You know, it becomes, I guess if you hire these people and they're massive egomaniacs, you know, which is why you hire them, that's why they're good, then you shouldn't be surprised when things go wrong and where it turns nasty.
- [51:26]
Cole Smead
And then Credit Suisse, really on the back of much of that, they go out and buy DLJ or you know, Donaldson, Lufkin, Jenrett in, I think it was August of 2000. And you even noted in your book the multiple they paid, which was three times book value. Now, CS Lewis, he has a term that I love. It's called chronological snobbery. And it's something we often can practice in our era. We look back and say, oh, they were so stupid. Or we look at us today and say, oh gosh, we're so smart. Right? And what I found interesting about you mentioning that book multiple is because between you and me, I've yet to find a bank that can regularly hold a multiple like that to have high enough returns on capital to ever justify that. Now, I'm not saying it's not impossible. I can see the world that can happen for periods, but I just can't see the world where it happens forever. I've looked back a few times because the weird part was there were many banks in the early 2000s in Europe that traded for anywhere from two times book to as high as four times book. And so to your point, there was during that environment or that period that was not an anomaly, that was actually more common than people think. But, you know, that multiple now looks very foolish to us today where, I mean, it's hard to find a bank trading for two times book or more, in fairness.
- [52:53]
Duncan Maven
Yeah, I know. I think that's a fair point, right? That it is easy to look back at it now and say, wow, that's a crazy multiple to pay for a bank in an era where many banks don't even trade a book value in Europe. But I think they clearly paid right at the top of the bubble. They clearly bought this thing right as the bubble was about to burst. And then I think essentially it's back to that idea that they're kind of doubling down again on a problem, right? So the problem is lots of star bankers who keep blowing up, and they buy dlj, which is populated with star bankers. It's like one of the most glitzy, glamorous places on Wall Street. Everybody's paid incredibly well. And again, what happens is there's a sort of civil war when they buy it, because DLJ people hate the SFB people, and they kind of all fall out. And the good guys, which is sort of inevitable, I think when people start to leave, it's like the good guys who can get jobs elsewhere, they go. And so they're sort of left overpaying for the more mediocre talent in some ways. And then that takes sort of years of cleanup from these sort of resentful former DLJ people who are being told, no, you can't. You can't run expenses the way you used to. I mean, look at an example of the kind of expense culture. It actually isn't in my book, but somebody told me afterwards the sort of expense culture they had at the time. So the early 2000, somebody said to me, you know, they recall an email going around from the HR department saying, if you. If you're Going to try and expense, you need approval upfront to expense any lunch of more than $50,000, you know, for lunch. Right. And then, and then this guy said to me, well, what was amazing was that email went round again about six months later. So everybody just ignored it. Still spending 50,000 bucks on lunch. I mean that's the sort of place we're talking about.
- [54:57]
Cole Smead
That's, that's wild. Well, and also the other thing too, obviously Ken Molis was at DLJ and he left. And obviously Ken Moles has gone off to, you know, create Mollison company and have a lot of success. So you know, some people could see the writing on the wall. But I think the other thing too is, I mean by nature investment banks are cyclical businesses, right? In good times they can boom and in bad times, you know, they can take losses and, or just run really low returns on capital. But again, these are also, I mean, investment banks, particularly on the advisory side, these are people businesses. I mean, it's the relationship that leads the profits. And I, what I don't get is it's not uncommon for people to be like, oh, we're going to do a PE roll up story or we're going to add all the scale. And then to your point, like the smartest people in the room are like, if it's all about the people, well I can go do this somewhere else. And therefore it's never a really good scale business at times.
- [55:51]
Duncan Maven
Yeah, I think that's right. And they end up in a, in a sort of cycle of, you know, as they have, as these scandals emerge. We haven't really even got into most of the really big scandals yet, but they're trying to clean them up and you know, so they bring in like John Mack to be the CEO from Morgan Stanley who's like a big personality and you know, known as Mac the Night because he likes to, for obvious reasons, you know, he cuts expenses and stuff. Although he also likes to fly around in private chats and things as well. But you know, Matt comes in and he suddenly is sort of saying, right guys, no more, no more big bonuses unless you deliver. You know, we're going to cut back on everything. And you know, these are people who've been told you're superstars so they don't like to hear that message. They don't want to be told, no, you're no longer a superstar, sorry, you were, but you're not anymore. So people who can get something somewhere else, which will inevitably be the good people start to go and you're left with more and more mediocre people or slightly less talent people or people who are more junior or whatever it is, people who are less likely to bring in revenue in any case. And so I think that sort of becomes, again, kind of this vicious cycle John did have.
- [57:01]
Cole Smead
I mean, to your point, he wanted to cut expenses. And, you know, cost income ratios are important in banking. You know, the, the num. The metric I always think about across a lot of businesses is revenue per head, which sounds overly simplistic, but in reality it teaches you about the scale of a business or not. And if I was going to compare, you know, the European banks to the US Banks, you know, you know, what's been. The biggest difference is obviously cost income is just vastly, you know, better in the US Banks, even down to the regionals in many cases, compared to the European banks. So I think you mentioned that John had even looked at merging with Barclays, which I, the. My first thought was like, well, good on Barclays for not doing that. But again, that, you know, scale has, you know, as we look back and what we see going on in European banking now, scale is an important factor in the cost income ratios. And being efficient is still something that in this history at least, wasn't very much of a focus.
- [58:04]
Duncan Maven
Yeah, I think you're right. It's a challenge they have. It's like, how do you, on the one hand, clamp down on things you think are wrong in terms of people being wasteful with money? You want to clamp down on this superstar behavior. At the same time, you want to drive revenue, which you get from spending more money and having superstars. So it's like these two things, you know, you just can't get there. And it's one thing if you sort of, you know, if you're the number one bank, then maybe you don't need to even think about that. But because they're number two or even number three, you know, they're constantly fighting, you know, to try and get. To try and be bigger while at the same time trying to cut back on expenses. It's kind of impossible.
- [58:50]
Cole Smead
Hey, I want to give a big shout out to everyone who's been working so hard on this show. You know, we recently hit the top 10 in investing podcasts on Apple Podcasts, and even number one in the business category in several countries. As you may know, this show is brought to you by Smead Capital Management. Smead Capital Management understands how frustrating and illogical the stock market can be. If you're searching for funds with A proven track record. Give the SMEAD funds a look. Or better yet, reach out@smeecap.com and don't forget to mention you're a fan of the podcast. Past performance is not indicative of future results. Investing involves risks, including loss of principal. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges and expenses. Read and consider it carefully before investing. SMEAD funds distributed by SMEAD Funds Distributors llc. Not affiliated. So after the great financial crisis, Credit Suisse finally had to deal with their tax dodging in effect. I remember, you know, it was the. I think it was the Treasury Department that announced an amnesty program back then. And that was some of the settlements that came out of, you know, those settlements really, you know, with the banks there. But obviously the Swiss government, they still couldn't violate Swiss banking secrecy. That was like the catch.
- [60:09]
Duncan Maven
Yeah.
- [60:09]
Cole Smead
Like you sit down with the US Government and you're like, well, I mean, we'd love to help you, but we just can't violate the law. It was like the great kind of skateboard in a way. So what was the workaround that they ultimately came to with the Swiss government?
- [60:23]
Duncan Maven
Yeah, well, you're right. There's like sort of this. You know, we know we're helping US Citizens avoid taxes, but we can't tell you who they are because if we do that, we're in trouble with our own government.
- [60:36]
Cole Smead
Government.
- [60:37]
Duncan Maven
And so essentially the US Government is saying, well, which government do you want to be more in trouble with? The one that runs the global currency or your own? And it becomes this sort of face off with the Swiss banks in the middle between the US Government and the Swiss government, really. And I think that kind of speaks a lot to the culture of the banks. I mean, it happens as well. You're talking about an era when coming out of the financial crisis, the US Government was really kind of wielding its power, financial power over the financial industry. Much more. So you sort of get the US Authorities kind of trying to clamp down on sanctions busting as well, which is kind of a similar thing. And the Swiss don't really know how to deal with it in the end, they sort of end up handing over some details, but nobody knows whether they handed over all the details. But I think the really important thing about that, you know, they end up paying fines and stuff like that. But I think the really important thing in the end on. On the tax stuff is kills a source of revenue, right? This is, this is part of their business. And so that's that the really really important thing is like they become less attractive as a, as a place to part their money because maybe it's not so secretive after all. And your sanctions are same. Right. Like they get busted for, for breaching sanctions and now that business is gone too.
- [62:05]
Cole Smead
Yeah. You can't bank Iran forever. You know what I mean?
- [62:09]
Duncan Maven
No, you can't. Like, and this is, this is a real problem for them. If that's been a part of your business model and now you're not allowed to do it, well, where are you gonna, you need something else to replace that money and there isn't any, isn't anything.
- [62:21]
Cole Smead
And I think. Yeah, because I think their legal workaround, if I remember correctly, was they handed the customer information to the government and then the government handed it to the United States. So they're, you know, they are absolved because technically they didn't, you know, give that out. It was the government who, you know, oversees them. Yeah, that, you know, but if I'm.
- [62:44]
Duncan Maven
A client, he was trying to hide my, you know, ill gotten games. It doesn't really matter. Right. It's like irrelevant how that process happened. I just do it again.
- [62:54]
Cole Smead
So, so Dugan's leading the bank right after the great financial crisis. Rohner's chairman at the time. Rohner eventually, you know, gets tired of the Dugan era as though it was, you know, any better than the prior. I mean, fun funny to say, but it's many ways true. So then TM comes in to run, you know, comes in to run Credit Suisse. You know, what was the idea behind tm? And also, you know, he's an insurance guy coming in from Prudential. He had success there. You know, how different was this coming to the top of the bank.
- [63:27]
Duncan Maven
Yeah, it's interesting, right? So just a bit more. So Rohner and Rona's an insurance, come from insurance industry, but he's a lawyer. Brady Dugan was a trader who'd worked in the bank for many years. Coming out of the financial crisis, they kind of had an opportunity to shrink the investment bank and double down on asset management, which is what UBS did pretty successfully in the end. Brady Dugan doesn't want to do that. Urs Rohner does want to do that. I kind of think it's understandable that Brady Dugan doesn't want to do it. He's a trader, you know.
- [63:59]
Cole Smead
Yeah, he's an investment bank guy.
- [64:01]
Duncan Maven
Yeah, yeah. It would be weird for him to say, you know, I'm going to be the CEO of a bank that does the stuff I don't, I don't like to do so it's sort of inevitable, I think that he's going to go, you know, they have had a series of blow ups, they've had the tax stuff, they've had sanctions breaches and had other things going wrong. And Rona turns to tjmtm, who is a fascinating, charismatic guy who big shot in London and was widely tipped as next head of the IMF or the World bank or something like that. And it was a bit of a shock that he suddenly turns up running a bank in Switzerland. Famously sort of xenophobic. Switzerland now has an African born, French speaking, kind of went to elite schools. He stands out a lot with no background in banking. And it gets off to this kind of horrible star where at a press conference somebody challenges him and says, how are you going to understand complex derivatives? And TJNT says something along the lines of, there's nothing I can't understand here. I understand math, he went to elite Parisian schools. I understand all of it. When I think about that, I think, I think he's right. He's a super smart guy, I mean incredibly smart guy. And I think he does understand all of the math. He's done complex M and A deals, he's done complex things. In asset management. There is no piece of the bank he can't possibly understand. Except the one thing I think he really doesn't understand is investment bankers. I don't think he understands the people, they're a totally different breed to the insurance people that he's worked with in the past. So, you know, an example I would give you is I think he was baffled throughout his time as CEO why was there so much gossip? Why were there so many stories about like little fights he had with people? Because when he was in the insurance industry that never happened. And I can tell you why that happens. As a journalist, I know why it happens because every M and A banker talks to journalists all the time, even the most lowly M and A banker. But you know, some guy on the, you know, low level of insurance company doesn't. No journalist talks to that guy. They only talk to the CEO and the chairman of the insurance industry. But in the banking world they talk to everybody. And so, you know, all sorts of stuff gets out. And I think Tjan didn't understand that piece of it.
- [66:27]
Cole Smead
Well, I was just going to say real quick. So I think the other, you know, again, I was also trying to think about, you know, there's personalities and how you connect with people and things like that and to your point, like, there's no question whether he was a very intelligent person, but I also got the sense, and maybe you could touch on this, that in that context, in that environment and in Switzerland, he wanted people to know how smart he was rather than wanting to connect with them. So, for example, if you're in that situation, you might say, well, insurance is no different than a derivative contract. There's two parties that want two different outcomes and one is paying one side of it and one has to pay out the other side of it, depending on how the contract falls. That is just like a derivatives contract. That's a very different discussion than saying, I know this, is that fair?
- [67:17]
Duncan Maven
I think that's right. I think he's sort of paranoid. I think definitely by the end of the time he's there, he's become kind of paranoid. I think there's like an insecurity of something. I mean, I'm not a psychologist, I probably shouldn't diagnose any of these things from afar are. But if you speak to people in Switzerland now, you'll get a lot of people who say the reason the bank collapsed was tgmtm. If you speak to some of the investment bankers, especially on Wall street, who worked at Credit Suisse for many years and ask them why they collapsed, they'll say it was TJMTM's fault. So I think that is kind of unfair only because I think the bank was a mess for many, many years before that. So I think to blame him for the bank's ultimate collapse is unfair because if it was in great shape, why did they hire him? They hired him because he was like this McKinsey guy who'd restructured a big insurance company and they wanted to restructure this thing because it was always in a mess. Now, did he get that restructuring right? I mean, clearly not right. The bank collapsed a few years later, so clearly he didn't get it right. But was it his fault? I don't know. Like, it felt to me like it was already a mess when he got there. And I think he probably made some things better and some things worse. You know, one thing I think was that that issue of speaking like that led to a lot of pretty senior people leaving and he ended up surrounded by pretty junior people, much less experienced people, who, when some of the scandals, some of which are to do with things that happened when he was the CEO, but many of which are only actually happened much earlier, but only emerged when he was CEO, when those things come to light, the team he's got around him, really doesn't have the experience to deal with them. They don't maybe have the knowledge. They're not very convincing, and so all goes wrong. So I think if you could blame him for something, it is for falling out with people and having the wrong guys around them, which is a key part of being a CEO, right, Is to build a team. So that's pretty important.
- [69:23]
Cole Smead
When the other thing I thought a lot about, because I remember when this whole saga, like, to your point, this is in our lifetime so we can directly remember back on our thoughts. You know, with him coming in, the idea was very much, okay, he will get out of investment banking. That was a theme early on in his leadership. And it reminds me of all the US Presidents that said, like, oh, if I was President, I'll get out of Vietnam right away. And what do they all do? They stayed in Vietnam. Like, they just continued to actually escalate. And in his case, they did not exit investment banking. And to your point, that continued to be really the Achilles heel of the organization over time. So it was. It was like he wasn't decisive enough on that subject, while with people, he came off very decisive. So you tell the story of, like, Iqbal Khan and how they had their falling out. I think, you know, to your point, I think he was very. He did not have a lot of trust in the people around him, and maybe that's because of what he experienced there. You know, that would be a. You know, it's not fair criticism to say he's a distrustful person. It's just that he had a lot of things that weren't fun for him in Switzerland as the person leading the bank, that made him very skeptical and paranoid. You know, if my CEO or, you know, a lieutenant of mine, you know, lived close by me to where I could walk over to their house on Saturday and grab coffee and talk about something that we're working on. I would really like that personally. But in your story, that was not good in TM's case, I mean, he did not want Khan being anywhere near him. And from what you wrote, wrote, he could pretty much look into his backyard.
- [71:01]
Duncan Maven
Yeah, I mean, that's right. So, yeah, I think it's one thing being able to walk around the, you know, walk down the street and meet up with somebody from work that you get on with and have a coffee or a drink in your backyard. This guy, I mean, Khan's house literally overlooks his house, right? Sort of affluent part of Zurich. And So, you know, TJ likes a cigar in the evening, right. So TJNTM's out on his balcony having a cigar and he can look around and can't stare down at him. You know, it's pretty weird, right? It's a, it's a, it's, it's a, it's a very strange thing to do. I, I think they both share some responsibility for a kind of a, a really personal falling out. And you put a lot of that in the book. Because one of the points I wanted to make clear was what goes wrong at Credit Suisse? Back to something I said, right? The stars is not like liquidity coverage ratios and it's not tier one capital ratios. It is a series of scandals of silly, what feel like kind of silly behavior sometimes it's multi billion dollar scandals which essentially erode the trust between, between the staff, between the bank CEOs and the regulators, between the bank and its investors, between the politicians don't trust them, the clients don't trust them. And at the core of banking is not Tier 1 capital ratios and liquidity coverage ratios. At the core of banking is trust. Right. I give you my money because I trust that you will give it back to me or you're going to be there for me when I need a loan and all that kind of stuff. And all of this behavior falling out with your lieutenant because he lives next door to you or spying on him as they do, all of that kind of stuff erodes the trust they have with their clients and with their regulators and with their politicians. And ultimately you can't run a bank if nobody trusts you.
- [72:53]
Cole Smead
Yeah. On the idea of trust, I think you posed this and I want to ask if this is what you're getting at because I feel like you kind of gave it a wink, but. So the regional banks start collapsing in 2023, you know, really in the spring. You know, you talk about Silicon Valley bank, you talk about Signature bank, you talk about their collapses. And I obviously that's very fresh and I remember, you know, looking at that. But you talked about how you believe that the effects of social media really might have caused the first run, not only for them, but for Credit Suisse. You mentioned under the heading of trust that, you know, you know, it was put out there that there was a bank that could have be having issues out on social media and the news at the time, you know, even to follow up on, you know, that occurrence. And people started associating that with Credit Suisse. The news would run what was really poor journalism, I would argue. And I think you, you Might agree where it's like, you know, SNB won't provide any more capital, which was the Saudi national bank had already put 10% in. They were below the, you know, higher regulatory threshold of 10%. But people took that as like the Swiss National Bank. Is that fair?
- [74:07]
Duncan Maven
Yeah, yeah. I mean, I think social media has this really weird role to play. You know, obviously Silicon Valley bank, everybody knows about the kind of WhatsApp groups and the like, the sort of, you know, the idea that their deposit holders were not a broad base. They were actually a sort of club of people who all kind of knew each other. And, you know, when you put into a WhatsApp group or I'm scared about some kind of value banking, I want my money out, it kind of escalates really quickly. But that had happened, the sort of first instance of that kind of thing had happened with Credit Suisse a few months earlier, where this Australian journalist had tweeted out this thing. And this is a journalist who doesn't normally cover global investment banks. Right? He's a journalist who normally covers like the Sydney real estate market or, you know, Australian employment data, maybe, maybe, you know, that might be the most macro thing he looks at. And he tweets something like, source, credible source tells me major global investment bank on the brink. And that's it. That's all he says. And within hours, because of social media, social media decides that that's Periscoes especially, actually Chinese social media initially starts to really bid up and people start to add charts of groceries, stock price, and people retweet it, but they rewrite it. So they'll write things like abc, because the guy worked for Australian Broadcasting Corporation, abc, colon, Major Crow Suisse on the brink. Which is not what he said at all. And this thing starts to go around the world and within hours they are losing billions of dollars and tens of billions of dollars within days of customer deposits being pulled out. And that is, they have no idea what to do about that. I made the point in the book that because of this sort of cycle of scandals, they'd got in, they'd lost. All their senior executives were new. It was hardly anybody in a senior position who'd been there more than a year. And so they were sort of particularly frozen in the headlights and they just didn't know what to do. I mean, they had no idea. And there were even things like one really senior executive told me that he didn't know it was happening until his teenage son or daughter came and was like, hey, I just read on Twitter that your bank's about to collapse. And he's like, what? Then gets in touch and it's like, wow, we lost $10 billion in the last couple of hours. It's bizarre. And they have no idea what to do about it. And the really strange thing, I think is that I don't think anybody's really figured out what to do about it. Still, you know that this is a sort of digital bank run era where you can move your money in seconds, less than a second. You don't have to go and line up outside a physical branch anymore. That was 2008, right? 2008. You wanted your money out as the financial crisis hit, you went to a branch and you stood in a line and you took your money out. You don't do that anymore. You open your phone up and you move the money quick. And you know that combined with the kind of herding behavior that social media encourages is really dangerous. Right. Nobody quite knows what to do about it.
- [77:24]
Cole Smead
When I think about that more recently, you know, here, what happened in the spring with obviously Liberation Day. And you know, you look at, you know, what, how quick news moves and you know, even down to where, you know, politicians are using social media and, and you know, it's kind of like it becomes like a conspiracy and rumor game. And to your point, I've yet to see where you give humans a lot more information and they deal with filtering that very well. I think that's the one thing that I don't think we're good at, where we tend to not be good at filtering. Some are, very, very many aren't. Because what's conspiracy and rumor? What's truth? I mean, only God knows. At times I think the old saying is true is like, you know, the truth can hardly get its pants on by the time a lie is spread across the world.
- [78:12]
Duncan Maven
Right. And you know, the risk of moving your money is so low. Right. So like, why wouldn't you, you might look at that Credit Suisse tweet thing and go, I think that's nonsense. But you know what, I'm just going to move the money anyway. Right? Because why wouldn't I? I can do it in seconds, I can move it back if it turns out it's not false. But if everybody does that, it becomes self fulfilling.
- [78:36]
Cole Smead
Yeah. Yep. Your book did a really good job of explaining that the Swiss national bank and finma, they were actually on top of this pretty appropriately in 2023, like where they were kind of doing the precursor exercises. And ultimately those exercises were important to Do.
- [78:56]
Duncan Maven
Yeah, I think they were aware of. Yeah, they were aware that it was a big problem coming down the line. I think that the, the thing they didn't quite get right and I don't know whether I would have any advice on how to get it right but is how do you communicate that and who do you communicate it to? Right. So they were sort of aware that there were problems at Credit Suisse that could result in the bank collapsing. But if you say that out loud again, it's self fulfilling. So they sort of did a really communicated even to the finance minister who took over her position in January 2023. She sort of moved in. The regulators and the national Bank, Swiss national bank have been looking at this for months. She moves into her slot into a position in January 2023 and she didn't know that that was the case. Right. So she suddenly is presented on her first day of a job with kind of a file that says by the way, you're, you know, one of your biggest banks is, is in danger of collapsing and that. So that's, that's not great, you know. And I think she's been sort of widely criticized for maybe acting too quickly and not supporting the bank, not supporting Credit Suisse enough. I personally feel like that's pretty harsh. And you make decisions in real time I guess and under a lot of pressure. And if you put yourself in her shoes, she walks into this job and somebody says one of your two biggest banks is going to collapse unless you do something quickly. You could either say you've got the banks back and you'll do whatever it takes. Mario Draggy type stuff. We'll do whatever it takes to support credit suite or you could nationalize it and look how that's worked out in many countries. Or you could look at these two guys or you could leave it to crow Suisse to see if they can solve it themselves. As I said earlier, everybody's been there less than a year. The banks had scandal after scandal after scandal, disastrous run after disastrous runs, hardly made any money, doesn't seem to have a plan on how to make any money. Or you could give it to these two other guys, you know, give it to these other guys at UBS who actually are kind of running their bank quite well, seem to know what they're doing. They got a chairman who ran Morgan Stanley through the crisis and kind of, you know, to some degree kind of has a lot of experience. That's really useful. Which one of those is the right decision? I don't know. I'm not really sure I'm in a good place to judge her decision to give it to ubs, but. But I think it's understandable that she did that. That was like, I choose that option, I trust that guy to fix it.
- [81:37]
Cole Smead
Yeah. And as I mentioned to you before we started the podcast, I was in London that Sunday, the day that obviously UBS took over Credit Suisse. And as you point out in your book that ultimately the equity was sold for like three and a half billion dollars, which was, you know, to quote the Monty Python, compared to what the bank used to be. That was tis merely a flesh wound. And in many ways the stock market was telling you more about what was going on to your point about the run. But obviously the controversial part to that was the government cut out what they call the 81, which is like a hybrid security, but we all know them as Coco bonds. They were just wiped off the face of the earth. There was nothing hybrid about it. And that was maybe the most controversial thing that happened in that deal closing. And I remember looking at, you know, just the rough math, it was like a back of the envelope kind of calculation. And UBS in many respects, I would say got Credit Suisse for roughly free because there were government guarantees, at least at the beginning, that ended up not really needing to be realized. But I think you had the Lehman quote who was their chairman who brokered the deal to sell. His quote was, it's good to quote, it's good to finally have a solution, end quote. Isn't that just the most climactic statement to that story? I mean, I just took that as like it's phenomenal that that's what he said at the end.
- [82:58]
Duncan Maven
Yeah, yeah. After 160 years, this kind of, wow, this thing's been so broken. Finally we've got an outcome that ends it right is how it feels like almost like a relief. Right. You know, put it out of its misery. That's what it felt like to me. I mean, I think your analysis of the, of the value that UBS got crowds 3 spore is exactly right. There's this controversy over the AT1 bonds or cocoa bonds. And I don't know again, you can argue that it was in the documentation. So the cocoa bond holders should have allowed for the fact they could be wiped out or you could argue that that's never happened before, that equity holders got something and Bond Holden's got nothing. But I think ultimately UBS did get it for essentially next to nothing. I think what's interesting is whether they're paying for it a little bit now with the Swiss regulators and the Swiss politicians talking about pretty tough capital requirements which will obviously reduce their profitability. I think the integration of the two banks is probably much more challenging than. Well, I think it's probably as challenging as you'd expect. Right. Two massive banks, one of which had a very broken culture. Trying to put those two things together I think is really probably quite tough for them. So I think they got it really cheap, but it has come with a bunch of costs that are not part of the price, if you know what I mean.
- [84:32]
Cole Smead
Yeah, no, I totally agree. And to your point, I hadn't thought about that, but that's a wonderful point as they talk about, I mean that's a big discussion right now is the capital ratios going up for ubs and to your point, I mean their return on capital is going to naturally decline. And you know, I, I, the multiple of that business on a book multiple basis hasn't been built around higher capital ratios. It's very funny too because you know, here in, in the current, you know, American administration, they're about to reduce capital ratios.
- [85:01]
Duncan Maven
Yeah.
- [85:02]
Cole Smead
It's the exact opposite, you know, of what's dealt there. By the way, again, I love the history of your book because you also get so much sense of what's gone on in banking, looking back for really the last 60 years of how much fluidity there's been in banking. Like we talked about the bank assurance model. I'm really intrigued right now. And again, back to your point on the Swiss coming back to really bite UBS in a way is, you know, there's been this idea of like pan European banking. It's never really been realized and it's so interesting to watch like Germany say no, you can't buy our bank. And I think the question is will those dreams ever be realized? Or you know, in the true Swiss way, it's like, will it stay more fragmented where there's like a national champion but you're never allowed to go above that national champion. Which UBS is a national champion but obviously has a big business in Asia, big business United States. But that is the Swiss universal bank today.
- [86:02]
Duncan Maven
Yeah. I mean you think with the sort of Trump worldview on economics, that would be the key driver for European bank regulators to relax a little bit and maybe say maybe it's time we should let European banks merge. Right. I mean you got to think it's going to be tougher and tougher for European banks to compete in a world that's developing the way it's developed in the last few months.
- [86:25]
Cole Smead
I agree.
- [86:26]
Duncan Maven
But who knows? The politics of that are really, really difficult too. I don't know if the Europeans. It seems a couple of months ago the European politicians had understood the situation and were probably going to act fairly quickly in a whole bunch of different places. I'm not sure that's true anymore. They seem to have gone back to their old ways a little bit. I don't hold out a lot of hope for European bank mergers, if I'm honest.
- [86:54]
Cole Smead
Well, so it's funny you mentioned that. So I have a very different take on that. And I'll use an analogy. Okay. If I was the Pope and I want to spread Catholicism, I'm not going to do that very well through just pure apologetics and proselytization. I'm better off having a Charlemagne conquer the world or having like the Habsburg dynasty be the seat of the Holy Roman Empire. Okay. And so I run on a very different theory. My theory is that, and I'll use. I mentioned Orchel earlier and as I'm sure podcast listeners know, we own UniCredit, so this is, you know, talking my book, as they say. But I personally believe that Orchell is the modern day Charlemagne for the ecb. You know, they're kind of the Holy See of banking in a way, and he will deliver banking reform because they're better off regulating him rather than regulating hundreds of European banks separately.
- [87:56]
Duncan Maven
Yeah, I'm sure Andrea Orchel would love to be compared to Charlemagne.
- [88:04]
Cole Smead
Again for what he's done already. He's done something remarkable in the sense of European banking. What I also find interesting is people are now copying what he's been doing. Everyone seems to be like, oh, we can scale and get bigger through mergers and, and whatnot. And given the big difference, like you pointed out in the prior era was they did that at high multiples. These are going on at much lower multiples. And therefore, I would argue from a historical, and I'll call it a societal, economic perspective, doesn't carry the same risk. So we'll see to your point what the outcomes of this are. But yeah, I mean, at least here's the one thing we can say about him. He's got the best tan of any banker in Europe. Isn't that fair?
- [88:42]
Duncan Maven
He has got a really good time. He's. He's a charming, charismatic guy. He is, he is super ambitious. I. The one thing I remember was when he was going to be CEO of Santander, if you remember that.
- [88:55]
Cole Smead
Oh, yeah. Oh, yeah.
- [88:56]
Duncan Maven
You Know, they hired him and then didn't hire him because I guess they didn't decided after saying he was the guy for them. He wasn't the guy for them anymore. In the, in the interim period when he was CEO in waiting, some of the criticism was like, how can this guy who's a career investment banker run a retail bank? Right? Which is what Santa Anaire is. And he said something along the lines of, no, no, no, everybody's got me wrong. I'm just a guy who wants to run a retail bank. I love the daily grind of running a boring old retail bank. I'm paraphrasing obviously, but that was essentially his message. So then he rocks up a unicredit. And. And is he an investment banker making deals all over the place or a guy running a dull retail. I think he's at heart an investment banker, a deal maker.
- [89:44]
Cole Smead
Here's the thing I've found really shocking to your point. The risks he's taking have a certain aggression to them that I agree with you. Only a banker or a person who enjoys risk would do. But I think the one thing that I've been shocked at, and again, I, I'm. This is probably gotta be your next book. I mean, like, in all honesty, I think this is gonna be a massive 10 year story. But so I remember when we first. I'll touch on this real quick before we kind of close out is, you know, the way I first interacted with Andrea was, you know, his pay package came up. And so, you know, in a classic American way, I called up our PR person and said, let's call the news organizations. I want to, I'm really mad about this pay package. And so, you know, sure enough, you know, we talked to some reporters and they said, so we heard you're really unhappy. What are you on your. What are you unhappy about? And I said, well, you know, this pay package doesn't make any sense. They said, oh, you know, please tell us. It was like red meat, right? They're like ready to hear someone get angry. And I said, yeah, it doesn't make any sense. We're paying him so little we might lose him. And that's exactly what they didn't expect me to say, obviously, and which was true. And so, you know, in interactions, not only his public statements, but just what he says, you know, on calls, he said, listen, we got to drive our cost income ratios down. We need to run, run higher returns. That's always been what he said. Now to your point, he has said they will do deals when they get the right multiple for the bank. Well, so below book there made no sense to do deals. Now they trade it like I'll call it one and a half times book. There's other banks they could buy that trade for lower multiples and are, you know, chase cost to income ratio point or return on capital point aren't as profitable. And what I think is different than the past is banking in the era where you don't need bank locations is more of a technology scale business which is different to your point about moving money around. It's not going into a bank and, and having it shipped off through a correspondent bank service. It's really much, very much like you know, you can move your money around, therefore the location is important. And I think because of that, you know, when you move a bank onto another, I think of it more of like there's so much cost reduction because the hosting of one bank that they pay, say Amazon web services to host is, it's marginal for a new bank or the systems are marginal costs for a new bank to walk in. And that's different than the bank that has to pay for those systems, you know, from the beginning. So it's like variable expense versus fixed expense. I think a lot about that, that function. But again I think it's interesting because I think everyone has the horrors of the past mergers. But again if you compare the multiples, can this play out as badly when you're paying so much lower multiples? And I mean pet theory. I'd love to hear your two cents on this. I think he will close on Commerzbank, I think he'll close on Banco bpm and I think he'll close Alpha bank in Greece. And what that could set up is really a pan European bank that we've never seen. And by the way that's very contentious as you probably know. Like most people don't think he'll ever close Commerce Bank.
- [92:41]
Duncan Maven
Yeah, I mean I think Commerce bank will be really tough for political reasons. Right. Which are then when politics get involved, I think it's sort of, it's not necessarily rational. Right. But yeah, I don't know. He's a very determined guy. So if anyone can do it, you probably back the right guy.
- [93:00]
Cole Smead
We'll see. We will see. So next question for our listeners is Duncan, where can people follow you going forward? Are you, are you active on social media? Where's the best place for them to keep track of what your next book or story will be?
- [93:16]
Duncan Maven
Yeah, I'm on social media on Twitter, but I'm working at Bloomberg these days on a product called Bloomberg Weekend, which is kind of full of essays and ideas that are where we're trying to take the news and really push things forward and into interesting places. So you'll see me writing there and I edit. There are lots. A lot of the stories on. There are things that I think and my colleagues think are really important.
- [93:38]
Cole Smead
Awesome. Well, Duncan, thank you for your time. Your book argues heavily for investors to really study and understand the corporate histories of companies. The saying is a rising tide floats all boats, as you put it in your book. Credit Suisse was, and I'll quote, a victim of the frenzied pace of modern finance, yet it had been decades in the making. End quote quote. It's analogous to what Hemingway once said about his own bankruptcy. He said it was two ways gradually, then suddenly Go Get a copy of Meltdown by Duncan for your library. If you enjoyed this podcast, go to Apple, Spotify, YouTube, or wherever you listen to A Book With Legs, give us a review, tell others about the books and great authors like Duncan that we have the opportunity to understand and study the world with and through for our tribe. If you have a great book that you'd like to recommend, email podcastmeetcap.com that's podcastmeadcap.com you can also send your suggestions to us on X. Our handle is meedcap. Thank you for joining us for A Book with Legs podcast. We look forward to the next episode. Thank you for listening to A Book With Legs, a podcast brought to you by Smead Capital Management. The material program provided in this podcast is for informational use only and should not be construed as investment advice. You can learn more about Smead Capital Management and its products@smeedcap.com or by calling your financial advisor.