Inherently Optimistic

An Interview with Steven Rattner, Founder, LLC

EDITORS’ NOTE Steven Rattner Not only do you have the competition going to sell this stuff anymore. Markets have a is also the former Counselor to the of imports, but you have downward way of being self-regulating. For the moment, Secretary of the Treasury and lead pressure on wages. Part of what the Wall Street is behaving very prudently; some auto industry advisor (popularly auto companies had to do to become would argue too prudently because many com- known as the “car czar”). He began competitive was to reduce their wage plain, rightly or wrongly, that lending standards his career as a reporter with The costs because they’re increasingly have become too tight and it’s tough for smaller Times before becoming competing against lower wage coun- or new businesses to get funding. an investment banker at Lehman tries that are producing better cars Unfortunately, The Dodd-Frank Bill was Brothers and . He that are easy to get to this country. So necessary; the structure of Wall Street did need joined Freres as a general we’re in a downward spiral on jobs remediation. You can blame Congress or the partner in 1989, and in 1997, be- and wages in sectors that are part of Administration for it, but when you have as big came Lazard’s Deputy Chairman the global competitive world. a problem as we had where there was culpabil- and Deputy CEO. In 2000, Rattner Steven Rattner The solution to the problem ity on the part of institutions and individuals, left the fi rm with three other man- is long and painful, which is that we nobody has a right to complain too loudly that aging directors to found Quadrangle Group. have to educate and retrain our workforce for Congress and the Administration stepped in to While at Quadrangle, Rattner managed the per- the kinds of jobs we do better in America than do something about it. sonal and philanthropic investments of Mayor they do in other places and where we can pay It will have some negative consequences Michael R. Bloomberg, a role that he again oc- a higher wage. A lot of those will be in the ser- for Wall Street, which is that some of the crazy cupies. He is a graduate of . vice sectors. I’d love to see manufacturing grow products and levels of leverage that Wall Street too but, while it can still be profi table, it will has used to make money have gone away and COMPANY BRIEF Founded in 2000, employ a smaller share of the workforce. So we some of the regulations will constrain Wall Quadrangle Group (www. quadranglegroup.com) have to fi nd specialized kinds of manufacturing Street’s business beyond what is necessary to is a global private investment fi rm with more or service businesses where we have that edge. be prudent. than $3 billion in assets under management. We have enormous strengths in technol- Why isn’t there an effective under- The fi rm focuses on direct investments in the ogy, media, the digital world, and fi nancial ser- standing of how much societal need is ad- communications, media, and information in- vices, and we have to build on those. dressed at the private sector level? dustries around the world and seeks to partner Is it possible to get any true action out Business has played an important role with superior management teams in companies of Washington? philanthropically. With the whole Buffett/Gates where Quadrangle’s experience, expertise, re- Washington has to lead. The economy is program of giving away half your worth, the bar lationships, and presence can create long-term not going to regenerate all by itself and simply has been raised for a lot of us. value. cutting budget defi cits and deregulating is not But the reason that isn’t recognized by going to solve this problem – government needs the public is that it has been outshadowed by What is your opinion of the U.S. economy to play an active role just as it did during the the growing income inequality and by the lev- today and is there merit to the idea that the Depression. Having worked in Washington re- els of CEO pay, which has been going up a lot U.S. has lost its edge? cently, I can attest to the fact that it’s every bit faster than pay for the average American, whose Every month, the economy grows a bit as broken as people imagine. pay is actually going down. and creates some jobs, but it’s well below the When you talk about an absence of leader- Is it diffi cult to envision real change pace of recovery that we’ve see in past business ship, people point their fi nger at the President. in this regard? cycles. That’s because we came out of this re- But you have to point your fi nger almost more Fixing income inequality is not all that cession more overleveraged at the government so at Capitol Hill, because the President can do diffi cult; we created it in part through bad tax and household level than we’ve ever been. so little without Congress that he’s not a true policy. What I worry most about is how we Households have to start saving, which means chief executive. And Congress has become compete against countries that are getting better they can’t consume as much, and government completely dysfunctional. at what they do and our inability to address that has to cut its budget defi cit, which means it Have we addressed the key issues that problem because of the gridlock in Washington, can’t consume as much. You have to get back got us into the economic crisis and are we as well as overleveraging at the household and to sustainable levels of debt and defi cits, and working to prevent it from happening public sector levels. that takes time. So that has impeded recovery. again? But beyond that, America is an incred- The second thing that has impeded recov- Some of those issues were addressed by ibly productive and efficient country that is ery is the impact of globalization on jobs and the marketplace realizing that it shouldn’t price getting more productive and efficient every wages in this country. The U.S. has been a ben- securitization paper that is a piece of junk as day. It’s still a place where people have the efi ciary of free trade, but that has come at a Triple A. So without the government doing opportunity to do well in an environment that price on the jobs and wages front. anything, a lot of those markets essentially shut is relatively free of discrimination. It’s a fairly I saw this clearly when I was serving in the down, either because the market wouldn’t ac- classless and open society, so I’m inherently government as the Head of the Auto Task Force. cept the paper or the bankers said, we’re not optimistic about it.• 76 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2012 LEADERS MAGAZINE, INC. VOLUME 35, NUMBER 2