Surviving Financial Crisis, From One Who Knows Best
MICHEL MARTIN, host:
I'm Michel Martin, and this is Tell Me More from NPR News. Every so often, don't you want to talk things over with somebody who's not just smart, but wise, to explore the deeper questions behind the headlines? That's what we do in our Wisdom Watch conversations. The current financial crisis gripping the country cries out for some common sense, so we decided to visit with Chris Gardner.
Chris Gardner's life story is full of twists and turns. You know him from his autobiography, "The Pursuit of Happyness," and the film of the same name in which he was played by Will Smith. From a hard-knock childhood he went on to battle homelessness while being a single dad. Without a college degree he turned his sights on the finance industry, starting at the bottom, and he is now the owner and the CEO of his own brokerage firm, Gardner Rich, LLC. Chris Gardner is with us now in our Washington studio. Welcome. It's good to talk to you.
Mr. CHRIS GARDNER (Owner and CEO, Gardner Rich, LLC): Thank you.
MARTIN: So, do you have any money left? I have to ask after these tumultuous days. Anything left in the portfolio?
Mr. GARDNER: Yeah. You know what? I took a position a little while ago that cash is king. And that meant that I maybe missed out on the run up in real estate prices, I missed out on big runs up in the stock market, and cash is king.
MARTIN: I think a lot of people are wondering what exactly went wrong. What's your take?
Mr. GARDNER: OK. It won't get talked about a lot, but hopefully this will be the last wakeup call for Wall Street. We've seen this movie before. Big Wall Street firms all go into one area because their competitors were in that area and making a ton of money. And if Company X is over here and making all this money and we don't go, they'll have more capital than we have. They'll have market share. They'll have clients we don't have. So let's all go over here and do the same thing. That is exactly and precisely what happened.
And if you look at history, you look at what happened in the junk bond market, everybody ran over to this one particular area simply because money was being made. And I think they all acted like pigs. It's unfortunate that now we, taxpayers, American people, we're going to have to bail them out.
MARTIN: It's groupthink?
Mr. GARDNER: It's groupthink, and it's beyond groupthink. It's pig think. It's all about money. And I got to tell you this, and I'll just be very, very honest with you. My old firm, Bear Stearns, man, it hurts me to my heart to see what's happened to that firm. That firm - it's been like watching the house you grew up in burn and ain't nothing you can do about it. Now, folks talk about well, Jimmy Cayne lost a billion dollars, and this guy lost several hundred million dollars. What about those people who worked at that company their whole lives, put their stock away thinking they've got their retirement taken care of? Now, you're 55, 57 years old, that nest egg you thought you had put away is zero, and you've got to come out and find a job in an industry that is contracting, not expanding. We are about to see the creation of a whole new class of homeless people in America that I call white-collar homeless: went to school, worked hard, played by the rules, and the world changed, and they're screwed.
MARTIN: For people who don't know the story, you know what you're talking about because you were homeless at a point in your life when you were trying to play by the rules, working, and sort of things got away from you. Couple of things I want to talk about for people who don't know the story, who don't remember the story. You cut your teeth on the Dean Witter Reynolds training program. That firm no longer exists. You became a top earner at Bear Stearns & Co. That no longer exists. When you see that, how does that make you feel?
Mr. GARDNER: I'm telling you, again, it's like watching your house burn down. I had this thing I said many, many times. There are people at Bear Stearns I love like family. There were people at Bear Stearns I hate like family. OK? But they were family just the same. I hear from somebody at Bear Stearns, formerly at Bear Stearns, every single day, and they're all saying the same thing, can you help me find some work? Bright people, extremely talented, expertise, impeccable credentials, and there's no work for them.
MARTIN: Do you think that the lack of diversity in that industry is part of the reason that there is this groupthink mentality?
Mr. GARDNER: Lack of diversity, how so?
MARTIN: Demographic diversity.
Mr. GARDNER: No. It's got nothing to do with it because black folks can be as big of pigs as anybody else. OK. I mean, on the street, when it comes down to money, it was one color that's important on Wall Street - green.
MARTIN: What are the circumstances that allowed it to become as devastating as it has now become? Is it that because there was a lack of regulatory oversight? Is it that the fact that people didn't understand the instruments that people were trading in so that people couldn't control it?
Mr. GARDNER: Follow the money. Just follow the money. Money got created with the securitization of loans - car loans, home loans. And then we figured out, wait a minute, we can create a derivative product. But not only that, we can create a derivative of a derivative of a derivative. And if you just follow the money, that's all it was about. It was that simple.
MARTIN: Why weren't you tempted?
Mr. GARDNER: They're smarter than I am. And I'm like a lot of folks. I like to really understand the businesses that I invest in. For instance, if you're an investor and you want to be in the financial services business, or you want to be exposed in banking, I think that a lot of your community-based banks are going to make some very, very attractive investment opportunities because these guys minded their knitting, they stuck with businesses that they knew, and they didn't get involved in some of the more esoteric or exotic products that Wall Street was offering. And if you as an investor can look at a company and understand what they do, you got to be saying to yourself, well, I'm comfortable with that level of risk, so I'll invest here. So I think community-based banks could be a very attractive investment opportunity going forward.
MARTIN: But your basic sort of word of wisdom here is that people should be investing in things that they understand, that actually add value.
Mr. GARDNER: Invest your time before you invest your money. Always understand what it is that you're doing. And you know something else that is happening now, and this is going to be - it's kind of tricky, is, well, you get into people saying, well, I really didn't understand. Well, if you didn't understand, you should not have made the investment decision.
MARTIN: Does that also apply to these folks who have the subprime mortgages or the interest rates who are now losing their homes?
Mr. GARDNER: Absolutely. Absolutely. Let me ask you a question. Whose responsibility is it? At some point, I mean, there is something called personal responsibility and accountability. And to be all of a sudden saying, oh, my God, I just didn't understand the terms. This is public radio, I can't say what I want to say, all right? You didn't understand the terms, but you signed the contract, so therefore I got to bail you out?
MARTIN: Well, there are advocacy groups that say that many of these firms used fraud to get people to sign these terms and that they preyed on people who are naive and undereducated and presented them with information that simply wasn't true to induce them, particularly elderly people.
Mr. GARDNER: Fraud is fraud, and those people should be prosecuted. But there are, indeed, again, some people who are saying, oh, I just didn't understand. Well, whose responsibility was it?
MARTIN: What's your take on the bailout proposal? Obviously, as you and I are speaking now, it - the proposal that was before the Congress was defeated by sort of a coalition of disgruntled people, mainly Republicans, but also some Democrats. What's your take on that?
Mr. GARDNER: You know, what's kind of interesting is that - a couple things. First of all, I haven't been as close to this whole thing as I would like to have been to really say something besides stuff that gets regurgitated on television and radio. But the first reaction is maybe these people in Congress and the Senate, maybe they are, indeed, reacting to folks back home telling them no. Maybe some of the folks who said I can't support it are being responsive to their constituents who are saying no. That's number one.
Number 1-A, if I were in this position of trying to sell this bill, they're trying to sell it the wrong way. They've got it packaged. They have allowed it to get packaged as a bailout of Wall Street. If you're trying to sell this thing to regular folk, you got to make sure everybody understands, what's in this for me? And I think a lot of people in America probably would be a little bit more comfortable with, well, what's in it for all of us? OK?
MARTIN: You mentioned to me that you actually live on airplanes more than any one particular place. But if your member of Congress called you up and said, Chris, what should I do? What would you tell him?
Mr. GARDNER: Don't call me. You didn't call me before. And let's talk about all this great leadership we got going on. I mean, let's talk about this for a second. OK, now everybody wants to exhibit their leadership abilities. Who was leading us before? My new book doesn't come out until next year, but one of the principles that I'm putting forth is when this kind of environment, this kind of situation, how do we get here? Well, you know what? We drove here. Somebody was driving, and somebody is responsible. And it just kind of strikes me as funny that everyone wants to show their great leadership skills now, and how did we get here?
MARTIN: If you're just joining us, you're listening to Tell Me More from NPR News. I'm Michel Martin. I'm speaking with Chris Gardner. He's the owner and CEO of Gardner Rich, LLC. It's a brokerage firm. His autobiography is called "The Pursuit of Happyness," and Will Smith played his character in the blockbuster film of the same name.
You were telling us earlier that you think there's going to be a whole bunch of other people living the way you were at one point, which is really struggling to make ends meet.
Mr. GARDNER: They are right now.
MARTIN: Maybe it's a strange question, but what advice do you have for people who find themselves perhaps unprepared to live a hard-knock life? I bet there are some people confronting financial problems now who never thought that they would be in that situation.
Mr. GARDNER: And those are the people that I was talking about when I referred to white-collar homeless. Those people, and especially, let's talk about the people in my business for a second, on Wall Street. Too many times in my business what you do becomes who you are. And when suddenly you don't do that anymore, well, who the hell are you? Those people who have their whole lives been about what they do, and suddenly they don't do it anymore, that is devastating.
But one thing that maybe some of those people will begin to do is try to take a serious look at, well, who am I really? And I'm not just Vinny that trades the tenure on this desk here. I mean, previously, anybody who wanted to do something in size in the bond market had to call me. Well, guess what, they ain't got to call you anymore. So maybe it's time for you to reassess what else is it in you that makes you who you are, and what makes you happy.
MARTIN: How did you keep it together on those months on the street?
Mr. GARDNER: I knew...
MARTIN: Particularly with your son with you. I mean, there are a lot of men who would have walked away from the situation. There are a lot of men who would just, you know, dropped him off at a firehouse someplace and said, I can't do it.
Mr. GARDNER: I couldn't do that. I couldn't do that. I made a promise to myself at five years old. When I grow up, become a man and have children, my children are going to know who their father is. Now, sometimes in your life you get a chance to walk the walk. This was my opportunity. And as a little boy to grow up without a father - now, you read my book. You've met my stepfather. I could have become my stepfather. I could have become another alcoholic, wife-beating, child-abusing, illiterate loser, and a lot of people would have said, well, look where he's from. Poor him. He didn't have a choice. I say, B.S.
I did have a choice. I chose to embrace the light that I saw in my mom. And that's another concept that we've developed in the next book, which is this whole idea of spiritual genetics. I mean, we understand genetics. You're going to get your mom's eyes, your dad's nose, and nothing you can do about it. But the spirit of who you're going to become as a person, as a man or a woman, I believe you can choose. And I chose to embrace the light. And he asked me, how did I keep going? To answer your question specifically, man, I saw my momma keep going. Every day Momma used to say, boy, I've had to do so much with so little for so long, I can do anything with nothing.
(Soundbite of laughter)
MARTIN: Say that again. Just so I remember it. Say that again.
Mr. GARDNER: I've had to do so much with so little for so long, I can do anything with nothing. And I saw her do it, Michel. OK, it wasn't just something catchy that she said. I saw her do it. And I'll never forget one day sitting with my mom watching a Western, and she would always get to the part of the movie where she knew, and she would say, the cavalry ain't coming.
(Soundbite of laughter)
Mr. GARDNER: You think about that for a second. The cavalry ain't coming. Ain't no backup here.
MARTIN: Oh, dear.
Mr. GARDNER: And that's one of the things a lot of folks need to be thinking about right now today. The cavalry ain't coming, baby. It's you.
MARTIN: Do you think that the Congress should just skip this whole bailout thing and let these firms fail?
Mr. GARDNER: You know what, one of the basic principles of capitalism is the guys who manage their businesses and sell products that people want do well. The guys who don't manage their businesses well fail. Let me ask you a question, and I know a lot of small business people out there got to be wondering, or would say to themselves, man, I'd like a bailout. Who's going to bail me out? Let me see if I got this right. That's like saying, we tried capitalism. That didn't work, so now let's try socialism. All right?
MARTIN: Well, as I understand it, that was a point last week that there was zero lending going on pretty much anywhere in the Western hemisphere.
Mr. GARDNER: And that is the only thing that makes me think that we must do something here. It's not to bail anybody out. But if we don't free up the credit markets, the people, regular folks with businesses, can't get their business done. Let me ask you this. You've been, you know, all over this thing. Let me see if I got this right. We're being asked to put up 100 percent of the money to bail everybody out, take 100 percent of the risk. What percentage of the reward are we going to get?
MARTIN: Well, in fact, that's one of the things that they're fighting - they're arguing over several things. Who's going to value the assets that the government buys, number one, and number two, what's the return for the taxpayer? But the shareholders are already wiped out from these firms.
Mr. GARDNER: Well, the shareholders are devastated, and that's why I have a difficult time with the concept of this word, "bailout." If you were one of the employees of many, many friends of mine who worked at Lehman Brothers, ain't nothing in you that feels like you have just been bailed out. OK? You've been dumped on. You've been flushed. You ain't been bailed out.
MARTIN: One of the other things they're arguing about is whether there should be some more direct relief for homeowners, particularly people who bought into these subprime mortgages. And now the terms are such that they can't pay.
Mr. GARDNER: Let's talk about - OK, let's talk about that for a second. Who? Not just everybody. The folks who overbought that house, the folks who maybe weren't as honest and direct as they should have been in buying these properties. No, they shouldn't get bailed out. Let's talk about...
MARTIN: But how would you know? How would you know who's sort of worthy from who's not?
Mr. GARDNER: There's going to be - there should be a clear, clear requirement. Have you lost a job as a result of, indirectly, some of these kinds of shenanigans that have been going on here? You come to the head of the line. Have you or your family member lost your health? Ya'll come to the front of the line. The folks who were flipping properties and buying properties on spec, you go stand over there with them boys from Wall Street. We'll get to you.
(Soundbite of laughter)
MARTIN: Obviously, we have a lot to talk about. You've been generous with your time. But now I just wanted to know if you had a couple of words of wisdom for people as we go forward on a number of levels. One, as a family man trying to kind of maintain your family, keep your family together when you're facing these difficult times, there are a lot of people for whom this is real challenge to self. So, do you have some words of wisdom for people who are in that situation? And secondly, I don't know. Just overall.
Mr. GARDNER: Well, family first. What you have in the bank has got absolutely nothing to do with the quality of life in your home. It shouldn't. And if that's been the case, then maybe you need to reassess the whole situation. But family first. And honestly, I don't think you can be counting on the government to come and take care of you. It's going to come down to friends, family, and just some folks. It ain't going to be the Feds. There are folks still down in New Orleans waiting on the Feds to come and get them. Ain't going to happen, OK? I would say continue to believe in yourself, trust your friends, but have faith in God.
MARTIN: Chris Gardner, he's the owner and CEO of Gardner Rich, LLC. His autobiography is called "The Pursuit of Happyness." Will Smith played his character in the blockbuster film. He was with us here in our Washington, D.C. studios, and he informs us he's a got a book coming out next year, and we'll look forward to that. Maybe you'll come back and see us?
Mr. GARDNER: I will look forward to that.
MARTIN: Thank you so much for joining us.
Mr. GARDNER: Thank you, Michel.