Indoor Cat: JPM, AI, 777

Summary

Money Stuff: The Podcast

Episode: Indoor Cat: JPM, AI, 777
Date: October 24, 2025
Hosts: Matt Levine & Katie Greifeld

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Episode Overview

This episode revolves around three major topics in the world of finance and Wall Street gossip: the grand opening of JPMorgan's massive new headquarters, the encroachment of AI on junior banking roles, and a string of credit "cockroach" scandals including the saga of 777 Partners. Matt Levine and Katie Greifeld deliver their signature blend of droll observation, insider anecdotes, and technical clarity as they break down why these stories matter—and what they reveal about how money moves (and occasionally vanishes) on Wall Street.

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Segment 1: JPMorgan’s New HQ — Big Buildings, Bigger Symbolism

Timestamps: 02:04 – 14:11

Key Discussion Points

• Katie recaps field reporting at JP Morgan's ribbon-cutting for their headquarters at 270 Park Avenue, describing herself as “an indoor cat” who’d rather be in a studio than “screaming at a camera” in the wild.
• Discussion of the building’s size, design, and unique features:
  • 60 stories, nearly 1,400 ft tall, six years to build
  • Designed by Lord Norman Foster (of Apple Park fame)
  • Lobby raised 80 feet off the ground for outdoor space
  • Amenities: a reservation-only pub named Morgan’s (complete with imported Guinness taps), a fitness center (controversial with Jamie Dimon), and notable architectural overhangs.
• The building is part of a larger JP Morgan “district” in Midtown, now approaching 6 million square feet of office space.
• The symbolism of the building—its permanence and monolithic presence—sparks both admiration and anxiety.

Noteworthy Quotes

• On building attendance:
  Matt Levine: “Boy, you’re an indoor cat.” (02:12)
  Katie Greifeld: “Boy, do I love sitting behind a desk and screaming at a camera.” (02:14)

• On the building’s grandeur and urban impact:
  Katie Greifeld: “It’s nearly 1400ft tall… the ceilings are super high. The lobby is raised 80ft off the ground…” (06:01)

• On office architecture panic:
  Matt Levine: “I find the overhang slightly alarming… if you’re on that overhang, it’s like, yeah, there’s a big building above me.” (06:28)

• On office amenities and the pub:
  Katie Greifeld: “JP Morgan imported the parts needed to pour a proper pint of Guinness at Morgan’s, so just know it’s quality.” (08:34)

• On the bank HQ arms race:
  Matt Levine: “All told, JP Morgan has nearly 6 million square feet of office space, which is almost as much as Goldman has in all of north and South America. So the physical footprint of JP Morgan is pretty stunning.” (11:29)

• On the HQ as monument to ephemeral work:
  Matt Levine: “He’s [Jamie Dimon] got on record as saying … it’s a monument to … it’s something permanent. You know, what do we do? We push paper all day.” (13:56)

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Segment 2: AI vs. Junior Bankers — The Great Pitchbook Replacement

Timestamps: 16:50 – 26:35

Key Discussion Points

• AI’s incursion into banking, especially via OpenAI’s “Project Mercury,” which tasks ex-bankers with training AI to build LBO (Leverage Buyout) models and produce “pitchbooks” with perfect formatting.
• The joke (with a hint of seriousness) that meticulous pitchbook formatting is a stand-in for banker competence—and thus must be replicated by AI.
• The tension bankers feel about automating away entry-level work, with some participating in their own disruption for $150/hr.
• The question of whether automating modeling is “hollowing out the bench” and undermining career training for future senior bankers.
• Broader implications: Are we losing essential skills by skipping grunt work, and is this a finance story or just a life story?

Noteworthy Quotes

• On AI replacing analysts:
  Matt Levine: “What you don’t want when you fire all the analysts and replace them with AI, what you don’t want is to be annoyed at the formatting of the output.” (17:14)

• On formatting (and banks) as organizational psychology:
  Matt Levine: “It’s a signaling thing… if they give you bad formatting, then you worry about what else is in the pitchbook that’s wrong.” (18:47) Katie Greifeld: “That sounds like broken window theory.” (19:45)

• On ex-bankers training their replacements:
  Matt Levine: “Would you like to get paid $150 an hour for a month to put everyone in your industry out of work? … I think if you went to a lot of investment banking analysts, you’d get a pretty good hit rate. They’d be like, ah, I hated it.” (21:04)

• On legacy and ego in modeling:
  Matt Levine: “The opportunity to have their LBO model enshrined perpetually as the official ChatGPT LBO model… I think that would be kind of cool.” (21:12)

• On career training and the skills gap:
  Katie Greifeld: “The idea that you’re just hollowing out the bench… you do the tough work, then that leads you to be able to do the higher level, more conceptual things.” (25:23, quoting Bridgewater CEO)

  Matt Levine: “That’s not an investment banking thing, that’s a life thing. Right. Like, you see that in school now… you use AI to do all your homework. The kids can’t read.” (26:15)

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Segment 3: Cockroach Season — Credit Blowups, “Sloppy Collateral,” and 777 Partners

Timestamps: 29:21 – 35:35

Key Discussion Points

• Recap of recent credit market scandals—dubbed "cockroach" events (“when you see one cockroach, there will be more”).
• The double-pledging of collateral emerges as a common theme in recent failures (Zions Bank, Western Alliance, 777 Partners).
• 777 Partners: A company involved in sports team investment and lottery payouts, now facing allegations (and criminal charges for its founder) of double-pledging its loan collateral.
• The “cockroach” metaphor expands to cover a proliferation of smaller credit blowups, many stemming from the opaque, indirect nature of modern lending: banks lending to lenders who lend to other lenders.
• Risks of secondary/tertiary lending and the hazards of banks being one or more steps removed from the underlying assets.
• These stories may signal late-stage exuberance in the credit cycle.

Noteworthy Quotes

• On collateral sloppiness:
  Matt Levine: “The real estate lending firm… did not actually own the mortgages that they were buying against or like they did and then they sold them… there’s all this stuff where there’s sloppiness around collateral.” (31:07) Matt Levine (on 777 Partners): “The founder was charged criminally last week… the lender called them to be like, what’s all this then? And the founder on a recorded line was like, yeah, we did do that, but it’s because our computer systems are sloppy and we’ll fix it.” (32:15)

• On late-cycle risk:
  Matt Levine: “These stories seem symptomatic of late cycle exuberance, as Mark Rowan would say, specifically like indirect lending where, because it is indirect, it is a little bit easier to get hoodwinked out of collateral.” (35:08)

• On the “cockroach” metaphor:
  Matt Levine: “When you see one cockroach, there will be more. And it’s definitely since he said that there have been a lot of these credit problems that all have similar features.” (33:18)

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Memorable Moments & Humor

• Hidden office pub banter: The hosts fantasize about recording an episode inside Morgan’s pub at JP Morgan, inviting Jamie Dimon—or, better yet, the bartender—as their special guest. (08:19-08:31)
• The eternal bank HQ arms race: “Imagine if they spent $5 billion on this building and then cut the ribbon wrong.” (04:22, Katie Greifeld)
• AI analogies and meta-commentary: Matt admits he’d be flattered if OpenAI asked him to train it to “explain finance topics the way you would,” noting “I feel like they’re already trained on my work.” (21:39-22:04)
• Self-aware journalism: Katie’s relatable nostalgia for her days as a “baby reporter just doing these bullet point fixtures” that few people read, paralleling the risk of losing foundational career skills to automation. (26:17)

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Structure Recap with Timestamps

1. JPMorgan HQ Deep Dive & Urban Impact (02:04–14:11)
2. AI Replacing Bankers & Cultural Fallout (16:50–26:35)
3. Credit Cockroaches, 777 Partners, and Collateral Sloppiness (29:21–35:35)

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Overall Tone & Takeaways

The episode dances between tongue-in-cheek observations about the foibles of finance culture (“cutting the ribbon the wrong way,” obsessing over formatting) and incisive breakdowns of major trends: the symbolic stakes of towering buildings, the subtle threats and promises of AI, and the recurring risks buried in the shadowy corners of the credit markets.

Quote to sum it up:
Matt Levine: “It’s a monument to … it’s something permanent. You know, what do we do? We push paper all day.” (13:56)

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For more details and full episodes, subscribe to Money Stuff: The Podcast or follow Matt Levine’s Money Stuff newsletter at Bloomberg.com.

Transcript

[Kelly Cavagnaro]

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[Kelly Cavagnaro]

Bloomberg Audio Studios Podcasts Radio News.

[Matt Levine]

Hello and welcome to the Money Stuff podcast, your weekly podcast where we talk about stuff related to money. I'm Matt Levine and I wrote the Money Stuff column for Bloomberg Opinion.

[Katie Greifeld]

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

[Matt Levine]

You were reporting live from the field this week?

[Katie Greifeld]

I was. I am a studio anchor. I like being in the studio.

[Matt Levine]

Boy, you're an indoor cat.

[Katie Greifeld]

Boy, do I love sitting behind a desk and screaming at a camera. But I had to go into the field this week because JP Morgan was having their ribbon cutting ceremony for their big beautiful building at 270 Park Avenue.

[Matt Levine]

One big beautiful building.

[Katie Greifeld]

One big beautiful building. They actually own a bunch of buildings in this space. I know.

[Matt Levine]

They've got like a campus.

[Katie Greifeld]

Yes, they do.

[Matt Levine]

Isn't that fun to have a campus in midtown Manhattan?

[Katie Greifeld]

It is really cool.

[Matt Levine]

Way on Park Avenue. Yeah, I joked this. I joked this week that the new J.P. morgan building had a four story gold statue of Jamie Dimon in the lobby, which you can now report.

[Katie Greifeld]

I can tell you it's not true. They do. I don't know if they had the three story. I don't know if they have this all the time, but when I was there for the ribbon cutting ceremony. They had.

[Matt Levine]

They had a live Jamie Dimon in the lobby.

[Katie Greifeld]

There was a live Jamie Dimon or a really convincing AI robot. But they also had a flagpole and they had a fan on the flag so that the flag was waving in the artificial breeze.

[Matt Levine]

Wait, wait, wait. They had an H vac system that circulated air in such a way that the endor flag waved. Or they had, like a desk fan.

[Katie Greifeld]

I could not see the fan. Everything was.

[Matt Levine]

It wasn't a desk. It wasn't like a guy with a stick with a desk pad.

[Katie Greifeld]

No, no. The fan was hidden. If it was circulating, I didn't feel any of it.

[Matt Levine]

Sure, sure.

[Katie Greifeld]

Yeah. It was specifically for the flag so that it would flap.

[Matt Levine]

That's awesome.

[Katie Greifeld]

It was awesome. And it was fine. A few people, including you, asked me, who did you interview there? And I said, no one. I was just there to be like, I'm here. Yeah, I'm inside the building. But the thing is, Matt, to prepare for.

[Matt Levine]

Were you there for, like, Jamie Dimon's physical ribbon cutting, which happened? Of course.

[Katie Greifeld]

I mean, I wasn't going to go there and not see.

[Matt Levine]

Did you get to touch the novelty scissors?

[Katie Greifeld]

No, they wouldn't let me. That close. Just crazy. But yeah. No, he held a giant pair of scissors. I believe New York Governor Kathy Hochul was next to him for that. And he cut the ribbon. So it was awesome.

[Matt Levine]

Did they have backup ribbons?

[Katie Greifeld]

They must have. They must have.

[Matt Levine]

I mean, cut to the right angle and just do it again.

[Katie Greifeld]

Imagine if they spent $5 billion on.

[Matt Levine]

This building and then cut the ribbon rod.

[Katie Greifeld]

Yeah. No, no. They were gonna to get this over the finish line properly. But, Matt, to prepare for these hits that I had to do about the building, I accumulated so much knowledge, so many facts about the building that I.

[Matt Levine]

You're going to tell us. Tell me and the listener. I'm going to step out.

[Katie Greifeld]

No, I. I need to. I need to use it somewhere. It's not. It's not knowledge that I can build on.

[Matt Levine]

You didn't use it during the hits where he.

[Katie Greifeld]

Really not as much as you would think. You always. You always over prepare and then.

[Matt Levine]

Not me.

[Katie Greifeld]

And then they ask you, like one question. I forgot what it's like to be a reporter and you have just these anchors who don't care about what you're saying. No, all my colleagues are lovely.

[Matt Levine]

So tell us some J.P. morgan facts.

[Katie Greifeld]

All right, so 270 Park Avenue is the new building. That's what we're talking about. Six years of construction.

[Matt Levine]

Yes. So that I noticed that. Yeah, it's on the walk to Grand Central.

[Katie Greifeld]

It's not over because their temporary headquarters has been at 383 Madison Avenue, which is directly across 47th Street. And now that the new headquarters quarters is open now they're going to spend a billion dollars to renovate 383 Madison. So they're going to close it in 2026, redo the exterior, redo the interior, and it'll open at the end of 2027. So we're just getting started when it comes to JP Morgan doing construction in that specific area of New York City. But let me go on, let me go on. It's 60 stories tall.

[Matt Levine]

Seems like a normal number of stories.

[Katie Greifeld]

Well, that's the thing. It's nearly 1400ft tall.

[Matt Levine]

Those are tall stories.

[Katie Greifeld]

Oh, yeah. No, the ceilings are super high. And the lobby, specifically the building itself is raised 80ft off the ground. So just has a super huge lobby. And the reason why is because they wanted to have more outdoor space outside of the building, theoretically giving space back to the city. But I don't know. I don't think you're going to be eating your sandwich up against the J.P. morgan Building necessarily. But it's a nice idea.

[Matt Levine]

Yeah. I find the overhang slightly alarming. Like, it does look like a somewhat precariously balanced building. I understand at an intellectual level that they employed good architects and the building will not topple over in a slight breeze. But if you're on that overhang, it's like, yeah, there's a big building above me.

[Katie Greifeld]

Well, those architects were there. Lord Norman Foster designed this building. He's done a bunch of famous buildings over in Europe, but he also did Apple park in Cupertino, so that's cool.

[Matt Levine]

And now J.P. morgan park in.

[Katie Greifeld]

Anyway, so I'm just getting started. So six years of construction on this building, Matt, as we've established, that included demolishing the old building that was there. So in terms of the features I know that you're dying to know, I love a feature about the amenities on the 13th floor of the building, which I did get to see. They have a pub called Morgan's. It's reservation only, so you can't just stroll.

[Matt Levine]

Can you make a reservation at 3 o' clock for the pub or you just immediately fired?

[Katie Greifeld]

That's the thing. I was thinking, like, would I be bold enough? Like, if Bloomberg had a pub that you had to make reservations at, would I ever do that? I don't know.

[Matt Levine]

I would definitely go to the Bloomberg Pub all the time.

[Katie Greifeld]

But, like, well, you have a certain amount of clout here. So they'd be like, oh, he's thinking his thoughts.

[Matt Levine]

I just feel like Jamie Dimon has really gone on record being like, I need everyone in the office all the time. And I understand that the pub is in the office, but still.

[Katie Greifeld]

Yeah, well, it's a great way to keep them in the office all the time.

[Matt Levine]

Although, now that I think about it, taking the clients to the JP Morgan in house pub is kind of a nice.

[Katie Greifeld]

Actually, it's not at all. It's a terrible thing.

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[Katie Greifeld]

I would love to go. Invite me, please. I'll go. I have to expense it, though. So anyway, apparently, J.P. morgan.

[Matt Levine]

Can you and I just log into the J.P. morgan?

[Katie Greifeld]

That'd be great. Let's do a podcast episode from there.

[Matt Levine]

Let's do a podcast episode from Morgan.

[Katie Greifeld]

Jamie Dimon, if you're listening, you're our special guest.

[Matt Levine]

I think that we. No, the guest would be like the bartender at Morgan's.

[Tom Keene]

Oh, true.

[Matt Levine]

He's seen some things on his 12 hours of doing it.

[Katie Greifeld]

Yeah, right. Yeah, that would be a lot of fun. Anyway, JP Morgan imported the parts needed to pour a proper pint of Guinness at Morgan's, so just know it's quality. There's also Fitness center at 270 Park Avenue. I'm reading off the notes that I printed out for tv. I was prepared to say all of this on air. So they have a fitness center. And Bloomberg News reported that this was an uphill battle. Apparently, Jamie Dimon personally dislikes in office gyms and didn't want it, but eventually he was brought over, which, again, if you're trying to get your employees to live at the office, you need a pub, but you also need a gym.

[Matt Levine]

Yeah, I'm not an in office gym.

[Katie Greifeld]

Guy, but no, I think I would be. I think I would love it. We don't have one here.

[Matt Levine]

So, like, this is all, like, very, you know, nostalgic for me because I worked at Goldman when they opened their new office on 200 West street and it did have an in. I think it has an in office gym. It's been so long.

[Katie Greifeld]

Wow.

[Matt Levine]

I think it has an in office gym where people would, you know, like, you run into, like, your boss's boss's boss in, like, you know, a state of.

[Katie Greifeld]

I would love that. Well, no, not that specifically that specifically. No. I thought you were gonna say that's the thing. People mention doing a chess press, and I feel like I would be very good at having a conversation in that scenario.

[Matt Levine]

I think you would, Yeah. I think that's why you're a TV anchor. I would be very bad at having a conversation in that scenario. But there's also the more specific locker room scenario. And so the other thing that I remember about the Goldman office is that it was very, very nice. It's brand new, it's shiny, but everyone got a little bit less space than they had in their old office. And I've read that something similar is true at JP Morgan where they have this new big office building, but because the ceilings are so high, there's less room for desks.

[Katie Greifeld]

Well, that's the thing. You have fewer floors, just 60 stories, which is, you know, that's not enough.

[Matt Levine]

Stories for all those bankers who have been trying to see and screaming into the office.

[Katie Greifeld]

Did you see the thing circulating on social media? It's like a photo of one of their trading floors and it's like, just stocked with Dell computers, which have four monitors apiece.

[Matt Levine]

I think I did see it. And they're all.

[Katie Greifeld]

Well, it's exactly as I described.

[Matt Levine]

Right. There's no. There's no one there. Right. Because it's. They haven't moved into the trading floor yet. It's like.

[Katie Greifeld]

Yeah, they've been moving people in gradually is what I understand.

[Matt Levine]

I think the trading floor is.

[Katie Greifeld]

Yeah.

[Matt Levine]

Not yet.

[Katie Greifeld]

Yeah. Shall I tell you about some of their other buildings in their campus? I need somewhere to record this, you know. Sure. When I. When I sort back through the rubble of my life, I want to remember this. Okay, so we already talked about 383 Madison Avenue. Well, get this, Matt. They bought 250 Park Avenue in 2024 for more than $300 million. Not sure what they're going to do with it right now. The plans are still in flux.

[Matt Levine]

Sneaker collection, kind of.

[Katie Greifeld]

They could keep it as is. They could knock it down and build a new office tower, which they now have some experiences. Or they could turn it into a hotel for visiting employees. That's not all. 410 Madison Avenue. They're not sure. J.P. morgan, according to Bloomberg Reporting, not sure if they're going to keep or sell 410 Madison. They bought that during the worst days of the pandemic in 2020. They've been using it basically as a project office for the headquarters construction. But all told, in these blocks that we're talking about, JP Morgan has nearly 6 million square feet of office space, which is almost as much as Goldman has in all of north and South America. So the physical footprint of JP Morgan is pretty stunning. Yeah, yeah, yeah.

[Matt Levine]

I do appreciate that. There's a JPMorgan district in Midtown Manhattan. Yeah.

[Katie Greifeld]

I think Bloomberg News called it a neighborhood, which I think is cute.

[Matt Levine]

It's kind of pub.

[Katie Greifeld]

Yeah. City within a city. 270 Park Avenue. I'm almost done. It's going to house about 10,000 workers. All told, in terms of corporate employees, they have more than 17,000. So this is why they need all these buildings. Yeah, yeah, yeah. All right.

[Matt Levine]

Big bank.

[Katie Greifeld]

Walk past it. You know, if you find yourself near Grand Central. I do see it from. I live in Hoboken now and I run a lot, so you can see it from the waterfront and it lights up in different colors and, you know, it's a nice addition to the skyline.

[Matt Levine]

Yeah.

[Katie Greifeld]

Good on you. Okay.

[Matt Levine]

Your architecture criticism, your own record is liking it.

[Katie Greifeld]

I like the building.

[Matt Levine]

People seem to like it. Not everyone likes it.

[Katie Greifeld]

Yeah. Who doesn't like it? What are their criticisms? I want to know because, I mean, I think it's cool to get new skyscrapers. Sorry. And this one, I only see it.

[Matt Levine]

From street level, and it feels threatening to be from street level.

[Katie Greifeld]

Yeah.

[Matt Levine]

It doesn't strike me as having like, a sense of lightness or airiness. It's kind of like a massive, ominous building.

[Katie Greifeld]

I will say, the part of my brain that doesn't really understand how airplanes stay in the sky gets nervous about the way. That's what I'm saying. Yeah, it's.

[Matt Levine]

It looks like it's gonna fall over in every direction.

[Katie Greifeld]

Yeah, yeah, it's cool. It is cool.

[Matt Levine]

But like, is it cool to know, like, you want to go there every day? I don't know.

[Katie Greifeld]

I don't know.

[Matt Levine]

Actually, I have no basis for architectural criticism. It's fine. It's great. It's a big building. It's cool. It's got a pub.

[Katie Greifeld]

Yeah.

[Matt Levine]

Morgan's four story statue of Jamie Dimon.

[Katie Greifeld]

Beautiful. A waving flag.

[Matt Levine]

I mean, he's like, got on record as saying he had some funny quote. He was like, it's a monument to. It's something permanent. You know, what do we do? We push paper all day.

[Katie Greifeld]

Ye. Yeah.

[Matt Levine]

That's really good.

[Kelly Cavagnaro]

Hi, I'm Kelly Cavanaro, Managing Director, Head of North America Institutional Distribution at Janice Henderson Investors. We believe working together is the way to work better. Like combining your portfolio plans and our in depth strategy. Your valued assets and our valuable insights. Your mission and our vision working in harmony to seek the right investment opportunities. Janice Henderson Investors Investing in a brighter future together.

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[Katie Greifeld]

You could ask the question, does JP Morgan need all that space? Because AI is just going to wipe out an entire generation of junior bankers.

[Matt Levine]

Well, that's why they don't have enough space for all the bankers.

[Katie Greifeld]

Right, Right.

[Matt Levine]

They need to replace the junior bankers with AI and a monument to the last of the bankers. But yeah, there's a great story this week about OpenAI has a thing called Project Mercury.

[Katie Greifeld]

Yes.

[Matt Levine]

Taking a step back, the AI companies, the first thing they did was sort of train their models on all of the Internet to understand at some superficial level, all of human knowledge.

[Katie Greifeld]

And then you had a Reddit chatbot.

[Matt Levine]

Yeah. And now they're like, the next step is to get specialist humans to train the models to be really good at specialist things. And so they have a lot of them. They have astrophysicists and lawyers and Everyone training up the models. But the story this week was that they also have an army of former investment bankers getting paid $150 an hour to build LBO models for OpenAI so that ChatGPT can build a really good LBO model. And by really good LBO model, I mean not only that it has its formulas linked correctly and gets a correct result, but also that it has all of the percentages italicized in the right way and generally will not make an banking VP angry. Because what you don't want when you fire all the analysts and replace them with AI, what you don't want is to be annoyed at the formatting of the output. Because if you're an investment banking vp, you've spent your life getting annoyed at the formatting done by investment banking analysts and you want the AI to be a strict improvement over that.

[Katie Greifeld]

So I will say I enjoy all the please fix memes. As an outsider, I've never worked in banking. I'm a pure play journalist.

[Matt Levine]

I've never been a banking analyst, but I've been the recipient of please fix notes.

[Katie Greifeld]

Yeah. Do people really care that much about formatting?

[Matt Levine]

Well, it's a signaling thing, right? It's like your analysts come in and they're humans with hopes and dreams, and you want them to immediately become automata who you can tell to produce a pitchbook. And they will produce a perfect pitchbook. And if they produce an imperfect pitchbook, you want them to, I judge it's reinforcement learning, but you want them to quickly be trained out of that so that they produce perfect pitchbooks for you so you don't have to worry about it anymore. You want the analyst to take the work off your plate. And if they give you bad formatting, then you worry about what else is in the pitchbook that's wrong. Because you're not going to check the numbers necessarily. Right? I mean, depends. You'd like to be at a point where you can trust the analyst and not have to check the numbers. And formatting is a visible sign of something else might be wrong. And it's also like the people who get to these positions are perfectionists and they get troubled by bad formatting.

[Katie Greifeld]

Yeah, okay, fair enough. It sounds almost. Am I going to get this wrong? That sounds like broken window theory.

[Matt Levine]

It is like broken window theory.

[Katie Greifeld]

Okay, that makes sense. I really want to interview actually the 100 ex investment bankers working on this project in the pub at J.P. morgan.

[Matt Levine]

Not 100, not all 100. I have a guess.

[Katie Greifeld]

You don't want to interview all 100 of them?

[Matt Levine]

Not at once?

[Katie Greifeld]

No, just the funniest ones.

[Matt Levine]

I have a guess about what the vibe is like. It's interesting to me, like these people are clearly putting their successors out of work. Maybe they're not, but like, yeah, that's what I open the eye. That's right. That's the vision. Right. And you might think that if you went to people in some industry and said, hey, would you like to get paid $150 an hour for like three months, one month? I don't know how long this project is, but I don't think they envision a decades kind of thing. Would you like to get paid $150 an hour for a month to put everyone in your industry out of work? I think a lot of people in a lot of industries would say no. I think if you went to a lot of journalists, they'd be like, no, I don't want to put journalists out of work. But if you went to a lot of investment banking analysts, you'd get a pretty good hit rate. They'd be like, ah, I hated it. Or they'd be like, yeah, I'm out of it now, we can move on.

[Katie Greifeld]

I do feel like journalists have a certain affection for the craft of journalism, whereas a burnt out banker might not.

[Matt Levine]

I think a lot of bankers do have an appreciation for the craft of building LBO models. And I think that the opportunity to have their LBO model enshrined perpetually as the official ChatGPT LBO model, like the best practices that ChatGPT perpetuates forever, I think that would be kind of cool.

[Katie Greifeld]

Yeah, I could see that. You know, you know, it sounds like, you know, you're raising your hand a little bit.

[Matt Levine]

I take it back. I would put journalism out of work.

[Katie Greifeld]

No, no.

[Matt Levine]

I think if, like, if OpenAI came to me and said we want, whenever people ask a question about a financial topic, we want ChatGPT to explain it the way you would so spend three months training ChatGPT to do that. I'd be a little flattered you're speaking.

[Katie Greifeld]

That into the universe. It could happen. Anything could.

[Matt Levine]

I feel like they're already trained on my, like that's the thing, they're already.

[Katie Greifeld]

Just like, you do have a public.

[Matt Levine]

Body training themselves on my work, whereas the LBO models are not. The LBO model of like the best analyst at JP Morgan is not public. Right. So they gotta hire that guy and have him type it in.

[Katie Greifeld]

Let's get into some of the details of this article in terms of the application process. According to a person familiar with the matter, it involves almost no human interaction. The first step is a roughly 20 minute interview with an AI chatbot who asks questions based on the resume. And then the second phase tests candidates on their knowledge of financial statements. The final stage is a modeling test. So it's fairly involved for presumably like.

[Matt Levine]

Three months ago, they hired some HR people to train ChatGPT to hire the investment bank.

[Katie Greifeld]

It's like a way of rippling things.

[Matt Levine]

Bootstrapping. Yeah. Getting everything automated, apparently.

[Katie Greifeld]

The job expects contractors to submit one model per week. Instructions include writing prompts in simple terms, then executing the model. Participants receive feedback from a reviewer and are expected to fix any issues before their work is ultimately plugged into OpenAI systems.

[Matt Levine]

Feedback is a pencil. Please fix, please fix, please fix.

[Katie Greifeld]

For a job that isn't going to last that long. I mean, I wonder if you could do this as just a side hustle.

[Matt Levine]

I am sure that everyone doing it is doing it.

[Katie Greifeld]

You don't think anyone is just. I'm just going to devote one.

[Matt Levine]

Sorry, I shouldn't say. I feel like some of them are like current MBA students who are like, you know, I'm used to working 100 hours a week in banking and now I'm doing two to 15 minutes of homework a week in my MBA program and so I could use some free cash and something to do.

[Katie Greifeld]

It's funny you bring that up because some current MBA candidates at Harvard and MIT are participating.

[Matt Levine]

Sure. And then I think probably there are some people who like were burned out and are like, I could do a 20 hour a week job for one year.

[Katie Greifeld]

Yeah, why not?

[Matt Levine]

Why not?

[Katie Greifeld]

One of the perks here, in addition to the $150 per hour, is that contractors get early access to the AI that is being created that aims to replace these entry level tasks at investment banks. So that's pretty cool too, Right?

[Matt Levine]

I shouldn't be too cynical about this because I think a lot of investment banking analysts do think a lot about how can I automate this work so that it's just. It is button pushing and maybe in the long run that is bad for employment at investment banks, but it's not clear that it is. Right. Yeah, it's very possible that if you had the ability to push a button and produce a perfect model, you would keep the same number of assets analysts and they would run more hypothetical scenarios. And the thing people always say is move up the value chain and think more creatively and not have to just spend all their time modeling. I'M not sure that's true, but they certainly throw more spaghetti against the wall.

[Katie Greifeld]

Yeah. Maybe AI could complement the human experience rather than destroy it.

[Matt Levine]

I think it is hard for me to imagine investment banking becoming purely automated. It feels like it's a high dollar, high touch sales business and so you always need some people to shake the client's hands. And so it is very possible that AI can be complementary to that experience. Although people do worry about, you know, if the junior bankers don't ever build the models and they just push a button, do they learn less and do they, are they less intuitive about, you know, financial analysis when they become senior bankers? And I think that is a hard problem.

[Katie Greifeld]

Yeah, the idea that you're just hollowing out the bench. One of the people who has voiced a concern similar to that is actually the CEO of Bridgewater near Bardea. He said in March, we are well positioned to replace a lot of the basic tasks with machines. But what does that then mean to talent development over the long period of time? Then, he continued, you do the tough work, then that leads you to be able to do the higher level, more conceptual things. So I think that's a nice summary of the concern there.

[Matt Levine]

Yeah. And I tend to believe that you.

[Katie Greifeld]

Have to cut your teeth.

[Matt Levine]

Yeah, there's a, you know, just a period of rote learning that gives you the sort of foundation to think creatively later on. And if you just cut that out, it's hard. By the way, like, that's not an investment banking thing, that's a, that's a life thing. Right. Like you see that in school now, right?

[Katie Greifeld]

Yeah.

[Matt Levine]

You use AI to do all your homework. You never learn how to.

[Katie Greifeld]

The kids can't read.

[Matt Levine]

Kids can't read.

[Katie Greifeld]

Yeah, I mean, I just relate everything back to myself as the center of my own universe. I remember being a baby reporter and just doing these bullet point fixtures on the Bloomberg terminal that like 12 people read. But it taught me a lot and it really serviced those 12 people.

[Matt Levine]

Right. And now AI does a lot of those bullet points.

[Katie Greifeld]

That's true, though.

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[Katie Greifeld]

Okay.

[Matt Levine]

She talked about creative cockroaches for like five minutes. Okay.

[Katie Greifeld]

You talk about it in the same way that I told you everything I know about J.P. morgan's new building at 270 Park Avenue. Tell me everything you know about cockroaches.

[Matt Levine]

At this moment, part of me hates that we've just decided that they're called cockroaches. Part of me is like I keep leaning into it in the column. So whatever.

[Katie Greifeld]

That's the thing. It's already. It's in trust.

[Matt Levine]

It's a useful shorthand, but. Right. There's been a number of credit blowups and they all kind of have the same flavor, which is that someone is or maybe was or looks like they might have been double pledging collateral.

[Katie Greifeld]

It happens.

[Matt Levine]

Boring. It's collateral they didn't have. Come on, you know all these things and I think we talked about Tricolor and First brands.

[Katie Greifeld]

I'm not even sure we've definitely name dropped Them.

[Matt Levine]

And then I think last week the Zions and Western Alliance News had just come out and you mentioned it on this podcast.

[Katie Greifeld]

Thank God I did.

[Matt Levine]

Well, then I had it cut out because we didn't really talk about it.

[Katie Greifeld]

Something that's happening today on Thursday is what's going down with Western alliance and Zions. These are two regional banks, banks. And apparently they disclosed problems with loans involving allegations of fraud. And currently at like 2:23pm last I checked, the stock market was kind of freaking out about that.

[Matt Levine]

Who's fraud?

[Katie Greifeld]

Let me tell you. Okay, so Zions, apparently it disclosed a $50 million charge off for a loan underwritten by its wholly owned subsidiary, California bank and Trust Western. Their problem is, is that it said that it's dealing with a borrower that failed, quote, to provide collateral loans in first position.

[Matt Levine]

Yeah, you know, toppy market. Toppy market don't always check your collateral. Yeah, yeah.

[Katie Greifeld]

Why would you?

[Matt Levine]

Yeah, they compete to make the loans. So, like, Zions and Western alliance both announced that they sort of were exposed to what they characterized as fraud, although the people who allegedly defrauded them said they didn't defraud them. But basically they like made some loans to this real estate lending firm. And the real estate lending firm, they say did not actually own the mortgages that they were buying against or like they did and then they sold them or they did and the properties were foreclosed on or they made the loans with their second liens. There's all this stuff where there's sloppiness around collateral. And then the other story that came out, I think last week was on 777 Partners, which is a fascinating company that both buys your lottery payments. If you win the lottery and you get 20 years of payments, they'll buy them from you. And so you get cash up front. And they also buy sports teams. They own a lot of European soccer teams. They own the London Lions basketball team. And they tried to buy Everton, the big Premier League team. And there are some allegations that they were at least sloppy with the collateral that they were selling on to investors where they basically were borrowing against these future cash flows of lotteries or structured settlements. And they would maybe double pledge them, maybe didn't have all the assets that they claimed to have. And the founder was charged criminally last week in part because one of the lenders got, I think an anonymous whistleblower tip saying that they were double pledging assets. And the lender called them to be like, what's all this then? And the founder on a recorded line was like, yeah, we did do that, but it's because our computer systems are sloppy and we'll fix it.

[Katie Greifeld]

Oh, my gosh.

[Matt Levine]

After I wrote about this, I got a number of emails from readers with anecdotes about their own dealings with 777partners that I think are largely supportive of the theory that they might have actually screwed up their computer systems. There's a lot of like, yeah, they were kind of unprofessional, so you never know. But it doesn't look good to me that we may have borrowed against our collateral from two different lenders.

[Katie Greifeld]

So are you holding this up as an example of a cockroach potential?

[Matt Levine]

A reference to Jamie Dimon saying, when you see one cockroach, there will be more. And it's definitely since he said that there have been a lot of these credit problems that all have similar features.

[Katie Greifeld]

It's like if you see a misaligned margin.

[Matt Levine]

Yes.

[Katie Greifeld]

Yeah. In a deck, there might be other issues.

[Matt Levine]

Right. It's like an indicator of sloppiness. And all of these are kind of small. I mean, in the scheme of the banking system. Right. But you see one cockroach, you see more, they compound.

[Katie Greifeld]

Potentially.

[Matt Levine]

Potentially. The other thing that I think is interesting, and I read this this week, is that another thing that a lot of these cases have in common is that the problem company is essentially a lender. It's like a financing company. It's a trade finance company, or a structured settlement company, or a real estate lending firm or something. It's a lender, right? And then the people who complain about it, the people who take losses, are lenders to that lender. So it's like second order or sometimes third or fourth degree lending, where a bank lends to someone who lends to someone who lends to someone. And somewhere in that chain, problems happen. And I think we've talked about on this podcast, and I certainly write a lot about, there's been this move to banks retranching, where instead of banks making loans, private credit firms make loans, and then banks make loans to the private credit firms to make the loans. And the upside of that is that the banks have more seniority, right? They're cushioned by, like, the private credit firm takes the first loss or the, you know, the factoring firm, whoever takes the first loss. But the downside is, like, they don't get to see directly into the loan. Like, they're several steps removed from the actual car loan or the actual structured settlement or whatever. And there's just more opportunity to get this sort of cockroach situation where like you were lending against collateral. It doesn't exist.

[Katie Greifeld]

Yeah.

[Matt Levine]

Whereas like when you make a mortgage loan directly, you're like, you see the house, you know.

[Katie Greifeld]

Yeah.

[Matt Levine]

So this is all sort of indirect and I do think it's like, you know, it is both like these stories seem symptomatic of like late cycle exuberance, as Mark Rowan would say, specifically like indirect lending where because it is indirect, it is a little bit easier to get hoodwinked out of collateral.

[Katie Greifeld]

So let's not cut this out of the podcast in case we need to like reference back to it in a couple weeks time.

[Matt Levine]

Yeah, yeah, sorry. I cut out your prescient reference to Western alliance and Science last week and that was the Money Stuff Podcast. I'm Matt Levine.

[Katie Greifeld]

And I'm Katie Greifeld.

[Matt Levine]

You can find my work by subscribing to the Money stuff newsletter on bloomberg.com.

[Katie Greifeld]

And you can find me on Bloomberg TV every day on the close between 3 and 5pm Eastern.

[Matt Levine]

We'd love to hear from you. You can send an email to Moneypod@ask us a question and we might answer it on the air.

[Katie Greifeld]

You can also subscribe to our show wherever you're listening right now and leave us a review. It helps more people find the show.

[Matt Levine]

The Money Stuff Podcast is produced by Anna Mazarakis and Moses Ondam.

[Katie Greifeld]

Our theme music was composed by Blake.

[Matt Levine]

Maples, Amy Keen is our executive producer.

[Katie Greifeld]

And Sage Bauman is Bloomberg's head of podcasts.

[Matt Levine]

Thanks for listening to the Money Stuff Podcast. We'll be back next week with more stuff.

[Tom Keene]

This is Tom Keene inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter. Each and every business day. We bring you a recap of what happened overnight in Europe and Asia. The day's economic data and complete coverage of the US Market open. We cover stocks, bonds, commodities, currencies, even crypto. All the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that with lengthy conversations with our expert guests, the smartest names in economics, finance, investment and international relations. We do all this live each and every weekday, then bring you the best, best analysis in our daily podcast search for Bloomberg surveillance on YouTube, Apple, Spotify or anywhere else you listen on the east coast. Listen at lunch and on the west coast when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keene, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcasts.