Wednesday, 10/28/2009 Print Version |
Gov. Schwarzenegger Participates in 2009 Women's Conference Discussion
MS. ROBERTS: -- our panelists. Sheila Bair holds the title of Chairman if the FDIC, but what she really wields is influence and lots of it. Forbes Magazine recently named her the number two most powerful woman in the year for the second year running. And when she talks about the state of the US banking system, the world listens. It’s a role that has required her to use her voice both to urge reform and calm the worries of an anxious public. Just this week, the FDIC took over the 100th bank to fail this year. She is also a devoted wife, a children’s author and mother of two.
So please welcome Chairman Sheila Bair. (Applause).
Good to have you, Sheila.
Sir Richard Branson lives a life most only dream about. He is an adventurer, global entrepreneur and, what he is most proud of, humanitarian. At the tender age of 16, he founded a successful student magazine, followed by a mail-order record company. Today his Virgin Group runs over 200 companies in over 30 countries, with a presence in -- are you ready for this? In travel, tourism, mobile, broadband, TV, radio, music festivals, finance and health. That’s all. That’s it. In recent years, he has emerged as a leader in efforts to solve some of the world’s biggest environmental and social problems. He too is an author, a husband and father of two.
Please welcome Sir Richard Branson. (Applause).
Good to have you, Richard.
And he’s pretty cool to hang out backstage with, just in case you were wondering.
Arnold Schwarzenegger has faced many challenges over the course of his career, but none so great as leading your great state of California through its current economic crisis. In a state known for its natural disasters, the governor knows what it’s like to respond to wildfires and landslides while making the tough decisions that come with a shrinking budget, a divided legislature and a diverse population. He, as you know, is a successful businessman, philanthropist and father of four, and, of course, he’s married to a goddess.
Please welcome the governor of California, Arnold Schwarzenegger. (Applause).
Well, hello.
MR. BRANSON: He’s already worked out what hours today. I mean -- (Laughter).
MS. ROBERTS: Really, at least. You’ve got a bum shoulder --
MR. BRANSON: Yeah, messed up. Turned a bike over. British boy trying to be a teenager.
MS. ROBERTS: Well, we’re going to have a conversation with you talking about tough decisions. And it wasn’t a tough decision, but the best decision for you, governor, as you take a sip, the best decision, of course, was marrying Maria. Let’s just call it like it is. (Laughter and applause).
GOVERNOR SCHWARZENEGGER: Why didn’t you let me say that? (Laughter).
MR. BRANSON: That actually brings you 15,000 women. That can’t be bad. (Laughter).
GOVERNOR SCHWARZENEGGER: I know, exactly.
MS. ROBERTS: Always know your audience.
First of all, they’re looking to the three of you for advice and for insight. I want to ask you, where do you go for advice, Chairman Bair? Where do you look?
MS. BAIR: Well, I go to a variety of sources. I think that’s -- I hope that’s one of the strengths of my decision making process. I consult with my staff, I consult with my board, I consult with my fellow regulators. If it’s appropriate I sometimes I consult with my husband and my family. So I think good decision making is always involved in getting a lot of different input and making sure you understand the full ramifications of each decision more than in making a decision on that basis.
GOVERNOR SCHWARZENEGGER: It depends on what decision needs to be made. But I think for the -- probably the toughest decisions, I will end up with asking the almighty, my wife Maria. (Laughter and applause).
No two ways about that.
MS. ROBERTS: You’ve got to say it.
GOVERNOR SCHWARZENEGGER: Got you on that one.
MS. ROBERTS: Yes you did. (Laughter).
GOVERNOR SCHWARZENEGGER: No, but I think it really depends, because I think that when you’re governor you are very fortunate that you’re surrounded by a really good staff and you have -- I have a good Cabinet. I have a lot of women Cabinet members in there. And when I -- sometimes I go to the outside, like Secretary George Schultz, or ex President Bush senior, Bill Clinton I will ask sometimes for advice. I mean it is very different people --
MS. ROBERTS: You little name dropper you. (Laughter).
GOVERNOR SCHWARZENEGGER: No, but I mean you have to reach out --
MS. ROBERTS: Yes.
GOVERNOR SCHWARZENEGGER: -- because these are the people that have been there, they have done this job before --
MS. ROBERTS: Mm-hmm. Yes.
GOVERNOR SCHWARZENEGGER: -- and so you’ve got to go and ask people like that. But then also you don’t just go to people at that level. You also go sometimes down. I would ask, for instance, a homeless person for advice. I remember when we had to move some homeless people in Sacramento to a shelter -- to a safe shelter because they were not safe where they were camping out -- so I would go to that homeless shelter and I will ask homeless people for advice, what do they need, because there’s no politician in Sacramento that will exactly know what they need.
MS. ROBERTS: True.
GOVERNOR SCHWARZENEGGER: They themselves know what they need.
MS. ROBERTS: Mm-hmm.
GOVERNOR SCHWARZENEGGER: And what we found out they want is there’s just a safe place and running water. That’s all they wanted.
MS. ROBERTS: Hmm.
GOVERNOR SCHWARZENEGGER: And so we found that place for them at the Cal Expo in Sacramento and found a great shelter for them so they could be protected. But there was an example where I ask a homeless person for advice. So it’s a variety of different people that you have to ask and rely on.
MR BRANSON: I was just thinking about the name dropping of -- (Laughter). I was lucky enough to have met -- to meet (inaudible). And he said that somebody said to him, “Why are you always name dropping, Arch Bishop?”
He said, “Well, it’s funny you should say that.” He said, “Only last week I was at Buckingham Palace, and the Queen asked me exactly the same question.” (Laughter).
Who do I look to? I mean, my wife’s in the audience, so obviously my wife. But I think that if you’re a good leader of -- a good leader, a leader is somebody who’s good at listening. And you have to surround yourself with hopefully who are better than you at the job. And be, you know, a very good delegator and all the time listening. So I mean, I think it, you know, throughout Virgin we’ve got fantastic people.
MS. ROBERTS: You do.
MR. BRANSON: And I listen a lot and learn a lot.
MS. ROBERTS: Well, I know this may come as a surprise to you, but he was not a model student when he was coming along. I know it’s shocking because he’s so conventional in so many ways. Just the opposite, if you have a number of people here in very difficult times that are trying to start their businesses and are looking to just improve their situation, what advice do you have? Because you went the unconventional route. What do you say to them that are trying to find their place?
MR. BRANSON: Well, I think you just -- you know, I wrote a book called “Screw It, Just Do It.” I mean, I think you just, you’ve got to -- (Laughter). That’s right. But I think, you know, if you’re bold and you’re brave and you, you know, get out there and then not afraid of falling on your face and try things, ultimately you will succeed. I mean, you know, you may have to, you know, pick yourself up two or three times, but ultimately you will succeed. And so you could be one of those exceptions who really, you know, doesn’t take no for an answer, and you will get there in the end.
MS. ROBERTS: What was the name of the book, again?
MR. BRANSON: Screw It, Let’s Do It.
MS. ROBERTS: All right, let’s do it.
Risk taking. Something that we all like to talk about and are all fearful of. I want you all to discuss what goes into your thought process, and are there any risks that you took that you’re like, “Ooh, I should not have gone down that road.” I mean, how do you approach it?
MS. BAIR: Well, you do need to take risks. You need to take calculated risks. You need to understand what the risks are before making a decision, but I do think --
MS. ROBERTS: (inaudible) calculated risks?
MS. BAIR: That’s -- well, I think again it gets back to talking to a lot of different people and getting a lot of input before making a decision. Any decision is going to involve risk. And sometimes lack of decision making is going to involve risk. That’s certainly what we were confronting a year ago when the markets were seizing up and inaction, not making a decision, was not an option. So you have to swallow hard and just take the best approach that is going to accomplish what you want to accomplish with a minimal amount of downside.
And we took a tremendous amount of risk last year when we joined with the Fed and the Treasury Department, and the FDIC basically got up and said we’re going to start guaranteeing all bank and bank holding company debt. It was a very bold move on our part. It was a potential huge exposure for the FDIC. It’s actually turned very well. We haven’t had any losses and we made a lot of money on the fees that we took, and it did stabilize the market. I think a lot of the leaders in the financial community think that that was one of the more singularly, more successful stabilizing programs of last year. But when we did it it was a tremendous risk for us.
We -- we’re going to deposit insure. We don’t really insure bank debt, and certainly don’t insure bank holding company debt. You’re talking about several thousand companies out there. But we did and it’s successful. But, you know, the consequences of not doing anything was really that there was going to be a market meltdown and that was not a risk anybody could take.
MS. ROBERTS: Mm-hmm. And have you -- you’ve spent some time here in California --
MS. BAIR: Yes, yes.
MS. ROBERTS: -- with the governor.
MS. BAIR: Mm-hmm.
MS. ROBERTS: And the risk taking. I mean, because you’re just by nature, just by nature, Governor Schwarzenegger, you have, it seems, that in your DNA. That that does not -- you don’t shy away from that. You know the benefits that can lead to.
GOVERNOR SCHWARZENEGGER: Well, I think it’s very clear that the only way you can make it is if you take risks. And I totally agree with Richard. I think that you have to really accept that there are risks, and the more the risks and the higher the risks, the more you can accomplish and the higher you can get up there and be successful. And I think that a lot of people are afraid of failure. And I think that’s the biggest mistake.
MS. ROBERTS: Mm-hmm.
GOVERNOR SCHWARZENEGGER: And I think that you have to accept that you cannot be successful in everything, that you will fall every so often. I mean, I think -- I come from the athletic background. And a lot of my lessons I’ve learned from sports. If you go to 500 pounds and you want to lift a record, but you’ve never done it before, and you go and approach it already, I may not be able to do that, oh my God, what is if I fail? Then I will be embarrassed in front of all those people that are watching. Well, you could never lift, you could never break a world record. You’ve got to be determined. You’ve got to be able to take the risk and not just approach the weight with it’s already failure in your mind, and approach it in a positive way.
And I think that in everything like this. I think there are risks involved and I think that tough decisions have to be made, especially in politics now. Tough decisions have to be made in this financial situation.
But I think that when it comes to, you know, what advice do you give to people, I think it is if -- when it comes to business, the most important thing is that you get also familiar with numbers and with math. Because I think that a lot of people try to get into business and they’re not really good in math, and then they all of a sudden are there scrambling and they can’t figure out what the percentages are and what the decimals are and what the fractions are, and all of those things. I think that you’ve got to get really familiar with math and with numbers and not be afraid.
And there is also a double standard, a lot of times, when we raise our kids, that girls are raised differently. We don’t pay as much attention at home with having girls get good in math --
MS. ROBERTS: True.
GOVERNOR SCHWARZENEGGER: -- because we say, well, that’s not the direction they’re not -- they’re going to go anyway. We in our house try to do equal. We try to have them practice math. The boys practice math and the girls practice math and our girls are very good at math because of that now and feel very comfortable, and so Katherine, my oldest daughter now is already in business and and is an entrepreneur, and as a matter of fact, she’s selling right here at this conference her bags that she has herself designed and formed a partnership, knows exactly how many to order and what the inventories, and then what the profit margin is, what the percentage is, how much she has to pay out to the people that work for her, and all of those kind of things. She feels comfortable with numbers.
MS. ROBERTS: Hmm.
GOVERNOR SCHWARZENEGGER: And this is what I suggest, you know, to women, that they really work on the math skills all the time because they have been held back just because the way society works here that, you know, that women have not been paid as much attention to when it comes to math.
MS. ROBERTS: Don’t forget to carry the one. (Laughter). That’s my little bit of don’t forget to carry the one when you’re doing math.
MR. BRANSON: Or if you’re not good at math, find somebody to work with you who is good at math.
MS BAIR: Who is good, exactly. (Laughter and applause). I knew that was going to be good.
MS. ROBERTS: You brought up a number of excellent points I want to come back to in a moment, governor. But first, Richard, you are a part of so many different ventures. I mean, you’ve taken risks. There’s, there -- you’ve had to have had some failure. And I think sometimes people see success and they think, oh, you must have never have failed at anything.
MR BRANSON: No, I think if you haven’t failed, you -- I mean, you’ve got to fail to be successful. And we’ve obviously started lots of businesses, and some that we’ve fallen flat on our face, and we don’t talk about those -- (Laughter). And the ones that go well, we, you know, we push on with.
I think one thing on risk taking that’s important is, you know, take, you know, take bold risks and -- we once had a record company and that’s, you know, that was our principal business and I was flying all over the world, I hated the experience on flying on some of the big carriers, and then thought, you know, we’d start an airline. And -- (Laughter). All right, (inaudible), and said, “It’s Richard Branson, you know, I run a company called Virgin.”
“What?”
“And have you got a second hand (inaudible)?”
But the important thing was that when we did the deal with Boeing for that one plane, we persuaded them that we could hand the plane back at the end of the first year if it didn’t work out. So we took a big risk going into the airline business, but we protected the downside, and it wasn’t going to bring the whole record company crashing down.
So I think take bold risks, but always make sure that, you know, that if that risk goes wrong you’re not going to lose everything. You’re not going to be sleeping in the car as a result. And so, you know, step by step, take calculated risks and protect the downside is really important.
MS. ROBERTS: As Chairman Bair was saying, calculated risks.
MR. BRANSON: Yes.
MS. ROBERTS: When you speak about what you do, a lot of it takes courage. A lot of it -- you have to have a certain amount of courage and willingness to step out there. I know, Chairman Bair, that you won the John F. Kennedy profile in courage award.
MS. BAIR: Right.
MS. ROBERTS: I mean, in what areas of your life, both business and professionally do you feel that you’ve shown courage?
MS. BAIR: Right. Well, you know, the irony of that award, it was for our early recognition of the subprime mortgage problem and the foreclosure crisis that was coming.
MS. ROBERTS: Mmm.
MS. BAIR: And so many people that were going to be losing their homes said they didn’t get their loans restructured. And we had for months tried to privately engage the administration and the industry to get loans modified and couldn’t, so we went public with it. And, you know, it really, it really wasn’t so much courage, I just thought it was common sense. It was just so obvious to me that this needed to be done, so maybe it was more naiveté than courage.
But once I did go public we just go hit with the blogs and, oh, you’re helping deadbeat borrowers, and, you know, why are you doing all this? And actually I was backed up by Governor Schwarzenegger, who then kind of got on our bandwagon. It was the first state in California to give services in a room and tell them you need to start restructuring these mortgages. And then I attended a foreclosure prevention workshop in California that the governor had sponsored, and I didn’t see one deadbeat borrower there. I saw a lot of families with children who were scared to death about losing their home, and it really brought home to me the rightness of what we were advocating and continued to push for. So I think maybe when I got into that I was being more naive in terms of what the public reaction would be. But it was the right thing, and I still think is the right thing.
But again, I think it gets back to doing your homework and knowing that you’ve got a principled position that is the right position, and just moving forward with it and sticking to it. (Applause). Thank you.
MS. ROBERTS: They like you. They really do like you.
MS. BAIR: Yes.
MR. BRANSON: That’s because she’s female. I mean --
MS. ROBERTS: Oh, whoa!
MR. BRANSON: What about us men? (Laughter).
MS. ROBERTS: Know your audience, Richard. Know your audience, buddy. (Laughter).
MR. BRANSON: All right. I thought that -- (inaudible) -- know it’s a ten. I don’t even know that.
MS. ROBERTS: And all of a sudden Governor Schwarzenegger, looking at his watch a little bit, doesn’t want any part of that. You -- (Laughter).
It’s well known, the difficulties, the economic difficulties that you have here in your great state, and many of the women here are from, of course, California. You have to make some really tough decisions, and some people are going to be upset by those decisions. How do you go about with your mindset in knowing that you have to make these tough calls but realizing that it’s going to affect a great amount of people?
GOVERNOR SCHWARZENEGGER: Well first of all, let me just say that it’s always more fun, obviously, to lead in good times.
MS. ROBERTS: Sure.
GOVERNOR SCHWARZENEGGER: You know? (Laughter). I mean, when you have an abundant amount of revenues and business is booming and people are having jobs and all of this, I think everything is great. But you also have to lead, though, in tough times, and I think then leadership is more important than ever. And I think that now the whole country and I think the whole world is going through some tough times. I think that the whole world is worth one third less, and I think that people have to settle into that until the economy will come back maybe within the next two, three, or four years. I think the bounce back will be much slower this time than it was in the past it took to get out of this recession.
And this is, you know, the biggest recession that we’ve had since the Second World War, as one has to remember that. And so what happens because of that is there’s, you know, we have an economic crisis, we have a housing crisis, a mortgage crisis, a financial crisis, and especially we here in our state, we have a hundred-year-old tax system that has, you know, really been burdensome for the state, because every time when you see an economic decline of a few percentage points, then you see 20 percent of drops in the revenues.
MS. ROBERTS: Mmm.
GOVERNOR SCHWARZENEGGER: So this year alone we had to deal with $60 billion of shortfall in revenues. So when you have $60 billion within one year, then you have to make severe cuts and you have to also raise taxes. So of course that doesn’t make people happy when you raise taxes, and it doesn’t make people happy when you make those severe cuts. So then you get a lot of complaints, people are angry, they’re made at you. You see this, you know, across the board with politicians, their poll numbers are dropping now --
MS. ROBERTS: Right.
GOVERNOR SCHWARZENEGGER: -- because of the financial crisis that we’re in, and people are not happy.
So there’s all kinds of things -- so you have to still be very precise and you have to make tough decisions on making those cuts if it is in education, or if in healthcare, or in home services, or prisons, or law enforcement and so on. And you know those people are not happy, but those are the decisions you have to make because at the same time, you have to live within your means.
I mean that’s, you know, we expect people to do that and of course government has to do the same thing. We can’t go to the federal government and beg for money, because what do you do then the next year and the year after that? So you have to make the necessary cuts and have to make those tough decisions. You have to have thick skin because, like I said, the people are not going to be happy about it and then, you know -- but you move forward and on end.
It’s no different than when you are a parent and you have kids at home. You sometimes make decisions that will not make you popular immediately, but in the long run they will like you for it.
MS. ROBERTS: Mm-hmm.
GOVERNOR SCHWARZENEGGER: If I go home and I say, “You haven’t done your homework, son. You’re going to stay home for the next two days, you’re not going to go out.” My son is not going to be happy, obviously, but in the long run he’s going to happy that I made him do his homework and I disciplined him, because he’s going to get smarter and he will be more successful later on.
So the same is with the economy and with those kind of decisions that you have to make. And so you have to have also a very clear vision of where you want to go and where you want to take the state. And even if there’s an economic crisis, you still have to through the various different reforms.
We still have to go and rebuild our water infrastructure, for instance, right now in California. We’re in the middle of negotiating. As a matter of fact, I leave from here to go and rush up to Sacramento for another big meeting on water infrastructure which we have a good chance to get done within the next week. Because for four decades we didn’t do anything for the growing population here on water infrastructure. We still need political reforms. We still need educational reforms, budget reforms, and all of those things still need to continue on. That work needs to continue on.
So you’ve got to lead and you’ve got to know where you’re going. Vision is very, very important here.
MS. ROBERTS: Of course, you know that your wife has collaborated on a report, and it shows that half of the workforce, women -- half the workforce, women -- having that strong influence at home, the work that your wife has done, how does that -- how does that affect you? How does that influence any of your decision making?
GOVERNOR SCHWARZENEGGER: Well, I think that my wife did an extraordinary job with that report. I think Women’s Nation I think is something that is an eye opener for a lot of the political leaders and business leaders in this country and probably around the world, because I’ve heard -- I got phone calls from Austria and from Germany and from other countries where they’ve already read the report and said, “We’ve got to get with it too” --
MS. ROBERTS: Mm-hmm.
GOVERNOR SCHWARZENEGGER: -- over there in those countries. So I think that it will have a tremendous impact, and of course my wife, you know, is a terrific force and I want to, you know, thank her and compliment her for the extraordinary work she’s doing here with the conference, also, because, you know, we started this conference when I was elected -- (applause) -- with 3,000 people and now it’s 15,000 women in this hall. And we have the village where women display all kinds of goods, books and t-shirts and creams and wonderful -- (Laughter). You know, I mean,
