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Morgan Stanley CEO James Gorman on the debt ceiling debate and deferred compensation.
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Some look forward to working with him.
Are you worried about the debt ceiling in terms of your business and the economy -- this this is this thing where we might.
I know the Republican are pushing for a temporary sort of increased to temporarily but then we're gonna be back into the debating this again.
First off I guess I -- -- -- should there be a debt ceiling Hank Paulson.
I competed against fortress secretary says they should be one President Obama thinks they should be what do you think there should be -- that's it.
Yeah listen I I prefer I prefer having a -- I prefer having that sense of discipline.
-- like everybody else in this country including the politicians have been frustrated.
By our inability to -- this issue by the throat.
And start doing something about a for the future back competitiveness.
And we had a stops.
But the deficit reduction efforts pride that -- told the Bowles Simpson commission was a powerful.
Response to what we could do better on deficit but he says -- Obama ignored that the -- I mean his own commission he ignored what -- you thinking that I can't speak for the present child well why do you think it it got no traction and that this is politics this is this requires two party see you had the Republican -- I hate to concede something on the tech side the Democrats had to concede something on the spending side the way I sort was.
With the spending cuts that were in process already and with the growth in the economy we needed to be in notes to the full.
It was pretty straightforward of the end of tax cuts right and it -- tax increases and a B -- a spending cuts.
Pretty simple solution each Friday -- one -- -- with point eight -- point two the other canyon with one point -- point six.
Business people would get this deal done enough -- -- that this is what we do maybe that's what -- should go to Washington the do you think the Bowles Simpson is dead.
Is it will it ever come back well I think it's provided it's provided the energy of a we need bipartisan B we need both ingredients to make -- work and see we need -- since emergence because this stuff is really important that to me is hopeful Simpson was about.
Thumb like get into the back to Wall Street.
Is the era of Wall Street the super -- charge -- profits where we saw in.
Pre financial crisis is over I mean these guys that he don't invest in just except until this is it what what we have today.
Well -- to invest is Tom I think appropriately should be looking at risk adjusted returns.
So the -- -- yes the economic and if you know the era of very high eight but very -- driven returns is.
A case of what -- this is -- sticker price will be the returns Airways alone because his double the capital on these businesses they used we are always will be law.
Capital is doubled leverage has been cut by two thirds.
They facts now the question is but the quality of the returns you -- getting I would I give us more stable more predictable right and more secure.
And the compensation is -- you I I thought it was pretty shocking what I what what you guys that this week.
Is that you basically said deferred cash bonuses to your to your biggest producers for three years.
From the one did do the Dan -- suggests that it was that I know -- the activist investor.
You've been talking to whom he's been big on compensation was -- his idea.
Well firstly that's -- that's on exactly -- we're gonna sit com.
What we 82% of our employees will get it I think it's next week -- -- when the extra cash hits but this month.
Will get 100%.
That they compensation.
The remaining eighty dissent.
Had the cash is -- of the three years but over that three is 25% of it is paid in full months it's still pretty radical understood.
But Charlie 50% of it is paid out this year OK OK so it's not -- sort of a three years 50% this year 25 next year.
25 -- so it's staggered over three absolutely -- it's it's a deferred process for this seat in the economy to have its timing was impeccable.
We find a little busy and is is a big as of now taken a stake in -- and the activist investor from their point capital.
Then all of a sudden this gets announced completely irrelevant irrelevant nothing to do with each other but absolutely nothing -- with it.
Absolutely nothing don't put -- a massage and have a demo was to welcome him to the share register I'm I'm delighted to have him I like to see somebody -- also thinks the stocks you've got a forty us wind up this is a great thing.
He's a Smart Chinese figured out bold in sending is on -- -- aren't -- that's good that's a good point -- We don't knee jerk reaction to everybody's point of view on every shred their of those who get ending don't -- what was a knee jerk reaction internally did you hear from some your produces well this wasn't a major correction this was a very planned event ever -- of time and as you know.
Weeping deferring compensation for the most -- -- All my operating committee of had a 100% deferred gloss over years so this isn't a new car even here -- no you haven't heard a lot of complaints about the long short I'm short front solicit.
It gave me the money in the future give it to me now 100% of people to give it to me now.
Give me the money in the future pot of money in the future or don't give it to me dole -- -- -- -- give a lot of it in the future.
Right now that's a reality okay why do -- -- We -- it because we wanna tie.
Our employees' actions to -- -- business decisions we make -- make -- but we're aligning their interest for the interest of shareholders mall we do into business.
We're also doing it because we're digging out of this crisis that we've been in and we try to make -- we did pay people okay.
