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[Music]
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Robert wolf thank you so much for
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joining us today thank you look forward
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to it in addition to being chairman and
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CEO of UBS group Americas you've also
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been a member of President Obama's
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economic recovery Advisory Board from
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both these perspectives how do you find
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the how far do you think the US economy
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has recovered and what are some of your
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biggest fears and concerns for the next
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18 to 24 months well it's it's the
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question everyone's asking so I I
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appreciate you uh you focusing on really
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rebounding uh our country and its
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economy I
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think the best way to look at us is the
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glass is half full you know there would
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those that would tell you it's half
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empty I would tell you we have a ways to
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go but we've come a long way you know
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the stock market is up you know 60% you
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know from the lows you have unemployment
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which is still you know hovering around
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nine and a half 10% but you've had nine
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straight months of private sector
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employment growth which prior to that
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you had near two years of private sector
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uh employment reductions so I think
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you're you're seeing some private sector
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comeback you have you've had two years
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of a lot of productivity and efficiency
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gains by companies uh which has been
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good to their bottom line but now you're
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starting to see slowly hiring again so
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the average work week which was around
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32 and a half hours is now at 33 A5
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which equates to almost 2 million job
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equivalents being gained you to see you
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know export growth partly because the
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dollar has been a bit weaker but also
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partly because some of the emerging
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countries are growing faster than we are
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and looking to buy um our product so
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industrial production is doing a little
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better the
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consumer um you know although in more of
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a savings mode in the past which I think
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is good because you know everyone was
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over levered the consumer the household
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the Wall Street firms you know everyone
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was over levered but now we're in an
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environment where over the last two
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years as we've delevered people are now
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starting to feel a little more
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comfortable spending as the consumer
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which is you know important I think for
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this country because consumer spending
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is part of is I think something like 70%
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of our
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GDP the one business line that continues
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I think to bring a concern to everyone
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our nation is the housing market we are
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in a
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situation where foreclosures remain
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High um and I think that seems like it's
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going to stay that way for a while and
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new housing's not being built and so the
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construction
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industry my guess is still the makes up
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the highest per of
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unemployment some people call it almost
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the Foreclosure crisis do you agree with
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that characterization if so what's your
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analysis of that situation and where
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it's going to go meaning that the
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foreclosure and housing crisis brought
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us into a recession or do you mean that
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our going forward going forward that
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we're in a foreclosure
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crisis I I think um you know being a
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Wharton guy I look at supply and demand
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economics pretty
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closely my guess is there was a period
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of time we were in an over it was an
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overbuilt asset class we had a lot of
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people buying first homes that probably
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weren't ready and we had a lot of people
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buying second homes that probably
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weren't ready we were giving uh more
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leverage than people actually could
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afford and you know for the most part
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people were buying a house for 100 cents
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in the dollar and valuing it at 120
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cents in the dollar before they moved in
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that type of environment can only last
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so long so what took 10 years to build
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up unfortunately seems like it's taken
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you know a year to come back down listen
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we are still gonna have a you know a
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housing market that has new
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construction and that's going to be
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important but certainly it's going to be
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a very slow period um to get the housing
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market back I think foreclosures are you
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know it makes us all very nervous I mean
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there are some areas of our country that
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have you know the housing somewhere
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between 30 and 50% of all mortgages in
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are in foreclosed uh and a for enclosed
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uh environment I mean that's not good
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for the neighbor who's bought the house
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that's good not good for for the
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neighborhood that's not good for the
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school system you know it's better to
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have houses where people are living in
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and and but it's going to take time and
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I think as new Supply slows down which
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it is you know and pricing gets repriced
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so we're at a you know a better pricing
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for new homes and existing homes then
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you'll start people you'll start seeing
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people go back into the homes because
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they can afford it for the right reasons
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not because we're being levered you know
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as a country right turning now to the
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Housing Finance Market what do you think
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is going on with mortgage backed
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Securities um are they selling and if so
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who's buying them so we're getting a
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little technical now which is fine uh
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listen in the US for our investors
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mortgages is an asset class it is not an
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asset class all over the world it's for
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the most part a very us Centric asset
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class for our investors and my guess it
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makes up you know some somewhere between
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25 plus per of the asset class you have
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people that are in rates product which
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is usually governments and mortgages and
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you all have people which is in equity
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product and you have people uh in credit
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product and and that's really the asset
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class with you know now people getting
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into precious metals and currencies but
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that's still a smaller part of asset
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classes 90% of our mortgages are backed
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by gses so we have become a government
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run mortgage environment and I know that
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the White House led by the treasury are
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looking at gsse reform as one of their
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key mandates for
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2011 I'm not sure which way it will go
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you could see you know there's those who
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argue it should be from the public
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sector there's those that argue it
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should be
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private most agree it shouldn't be a
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combination of private and public which
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got us in trouble the first place but
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equally most agree it's going to be a
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very difficult and long term to
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transition where we are today to bring
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it to either one or the other so I think
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you know I'm a public sector guy um with
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respect to certain government run
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agencies with respect to the housing
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market okay I'm a private sector guy I
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believe in capital markets and in free
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markets and and my view is you know if
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we can find the appropriate transition
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it would be great to move housing back
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to a private sector mandate that would
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be what I think is is I don't think it's
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the government's responsibility to be
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the financier for the housing but
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there'll be it will not be without a
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difficult transition sure uh you
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referred earlier to the unemployment
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rate and of course the biggest concern
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today is jobs uh to what degree when you
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look at the current joblessness
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situation do you feel that it's a result
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of structural factors meaning these jobs
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have moved elsewhere and they're never
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going to come back and to what extent is
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it cyclical in the sense it'll respond
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to some stimuli you know that's this is
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a great question it's it's very timely
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uh we had our meeting with the president
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um a few weeks ago our public meeting
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for the president's uh economic recovery
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Advisory Board which you mentioned
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earlier we call it the perb and we spoke
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about unemployment um
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structural okay uh versus demand dreat
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driven you know I think it's both and
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I'm not hedging myself I've been a
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Trader most of my life so what I you
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know I'm not one that normally Hedges on
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ner I think in some ways there's a
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mismatch on skilled
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labor okay based on you know we're we
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we're moving in some ways into green the
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green environment and in Te technology
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and you know whenever something's
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relatively new there's going to be some
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sort of mismatch in skilled labor you
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know we we for the most part have been a
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construction and servic Le Nation for
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the last you know 20 years it's been you
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know pretty much Barb uh we have not
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been a nation that's LED you know
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recently by manufacturing and making
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things I think today you have so you
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still have a bit of a a mismatch and
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some skilled labor which is why um the
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program we announced a few weeks ago
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skills for America's future is a great
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program that's getting private companies
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to work with education and I certainly
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think Aron Duncan's done a great job in
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his role as a chairman of uh secretary
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of education but then there's also the
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demand side there is no question that we
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have a lot of good people in this
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country ready to work able to work
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talented enough to work and educated to
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work and skilled to work but we don't
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have literally the demand
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because either businesses are still
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scared that there's a possibility of a
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double dip or they're not seeing the
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Topline growth but either way you cut it
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there there's this nervousness from what
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we went by past in the last two years to
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all of a sudden reup and start hiring
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quickly again are you nervous about a
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double dip no I think that the
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foundation that the Administration has
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worked over the last year and a half uh
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specifically the work the Federal
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Reserve has done and central banks
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around the world bringing back the
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capital markets and bringing liquidity
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back into the banking system I'm not I
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think that that has really allowed us to
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move forward which is why I said to me
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the glass is half full but it's only
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half uh looking now to sort of another
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of macroeconomic area Capital controls
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used to be regarded as the kiss of death
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for countries but now that view seems to
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be changing they seem to be regarded it
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as a safeguard against destabilizing hot
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money uh what's your view about this new
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trend towards Capital controls you know
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I'm going to answer it a little
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differently I don't think protectionism
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is good anywhere I mean my view is I am
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a free markets guy I think the reason
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our industry works well and why there's
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an entrepreneurial spirit is there is
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mobility of capital
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247 that's what makes the capital
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markets go that's what makes companies
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able to finance them elves in
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multicurrency so I'm not one where ring
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fencing of capital is good anywhere um
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you know so from my perspective although
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we're looking for we we're all going to
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be compliant to the new rules and
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regulations coming out in all the jur
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different jurisdictions what our hope is
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is that there's at least a centralized
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coordinated effort to make sure that
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Capital continues to be mobile um so it
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can go to the places where it needs to
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be you know most worked
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right you know there's been some
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controversy over the capital standards
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prescribed by Basel 3 uh for example the
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other day vickram Pandit of uh uh City
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Group described them as being wildly
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excessive uh while Movin King of the
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bank of England said that the capital
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requirements don't go far enough where
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do you think the truth
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lies listen we're in an industry where
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um real Capital I.E
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Equity okay is really going to be more
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and more
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important um
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and I think we're going to be in an
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industry for the foreseeable future
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where everyone's going to have a little
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more of a buffer a little more liquidity
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a little more capital on hand certainly
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less of a mismatch of their maturities
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between their assets and the liabilities
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and we're going to be more Nimble uh
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we're going to be having balance sheet
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that's been delevered over the last two
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years somewhere my guess is 50 % as an
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industry and so you know I'm not you
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know we we still need to see where Basel
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3 comes out and where it all def you
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know where it all gets originally
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defined we have rule writing right now
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in every jurisdiction around the world
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happening you know but certainly uh you
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know being a firm that's headquartered
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in Switzerland we're not
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surprised um that Basel 3 will have you
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know more capital and they're looking at
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you know how do hybrids look and what's
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tier one R tier one common Equity so
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there's a lot of you know relatively new
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terminology contingent capital and all
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these different ideas that the industry
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has to take a real look at to make sure
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that there's a Level Playing Field
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globally I think that's the key is that
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that there's no jurisdictional Arbitrage
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the the key for us being you know one of
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the Dozen Global Financial Services
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firms there are is to make sure that
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we're all being looked upon in a similar
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way with the similar Rules of Engagement
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I I think that's exactly right the if
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you look at the one of the biggest
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challenges that the large Banks face
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today uh especially after the financial
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crisis I would say to some degree it
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involves reestablishing trust with
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customers clients Regulators uh what are
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some of the concrete steps you think
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that the large Banks can take to do that
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well one our business
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is on a
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handshake that hasn't changed the golden
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rule is your word your honor and so at
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the end of the day um over the last few
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years um our ethics have been challenged
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uh by the public by our shareholders by
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our clients for the right
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reasons and we have to make sure that
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when we sell products they're the
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appropriate products when we service our
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clients okay we're always always being
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you know giving the our best ideas and
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with what fits them
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appropriately listen I I think at the
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end of the day we have to kind of go
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back look at ourselves in the mirror and
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make sure that we're there to service
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the clients we have to make sure that we
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make sure that the public knows we
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appreciate okay for what they've done
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okay with their own hard-earned taxpayer
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money to make sure that this is an
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industry that survived
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and I think we also have to do a better
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job communicating because we have a lot
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of great people in this industry that
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are
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philanthropic and that you know
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understand social responsibility and
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that are great role models for this
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country and we're not looked upon that
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way and so we have to do a better job
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communicating that you know we are not
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defined okay by who we work for but
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we're defined by how we give back to
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this country
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and that you know I know everyone says
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you know we're an industry of greed well
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I don't look at it that way I think
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we're an industry of hopefully working
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hard being compensated appropriately and
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giving back uh to this country because
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we're in that ability we're in an
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environment that allows us to be more
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fortunate and we should make sure we
00:16:20
give back and I know that sounds a lot
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like apple pie but that's okay we have
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to start sounding a little more like
00:16:27
apple pie right well you you've played
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certainly a leadership role in building
00:16:32
the wealth management uh uh activities
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of UBS uh given today's financial and uh
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political situation what advice would
00:16:43
you give people who don't want their
00:16:45
assets to lose any more value than they
00:16:48
might have
00:16:49
already well you only should take risks
00:16:53
that align with your appetite of what
00:16:57
you a you can afford to either lose or
00:17:01
gain we call them prudent risks um we're
00:17:04
fortunate under um our wealth management
00:17:07
umbrella to have a smart group of
00:17:09
financial advisers who educate
00:17:11
themselves and we have a management team
00:17:13
who want to make sure that we're selling
00:17:15
product that makes sense for the client
00:17:19
that doesn't mean we're not
00:17:21
entrepreneurial and we have Ingenuity of
00:17:23
course we also design products so you
00:17:27
know if someone wants an acid ation that
00:17:29
includes a little more inflation type
00:17:31
product whether it's gold or precious
00:17:33
metals or different types of currencies
00:17:35
then we should make sure that we give
00:17:37
them that ability to buy that product
00:17:39
but also make sure we explain to them
00:17:41
what the product is and what the risks
00:17:44
are and I think that you know returns
00:17:48
are going to
00:17:49
be probably a little less for the
00:17:51
foreseeable future because people are
00:17:54
going to be apt to take more less risks
00:17:57
um there's a there's a nervousness about
00:17:59
the volatility in the markets and when
00:18:02
you go to an environment where the
00:18:04
markets go from north of 10,000 to 6,500
00:18:08
than back to north of 10,000 a lot of
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people rather have slow steady returns
00:18:14
than choppy markets all over the place
00:18:16
so I I do think that you know we're
00:18:19
fortunate to have a group of advisers
00:18:21
that continually educate themselves on
00:18:24
on product Innovation and new ideas but
00:18:26
it's always with the idea making sure it
00:18:29
fits the client's desires right I'd like
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to and wind up with a couple of
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questions about your personal leadership
00:18:36
Journey you know D during your career at
00:18:38
UBS and before that at Salomon Brothers
00:18:41
what is the toughest leadership
00:18:43
challenge you have faced how did you
00:18:46
deal with it and what did you learn from
00:18:48
it you know I think the toughest
00:18:50
leadership is finding a work life
00:18:52
balance um that you know like I said
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before you know I don't believe UBS
00:18:59
defines me I believe you know being a
00:19:03
grad of Wharton and being a student
00:19:05
athlete at the school and playing pen
00:19:07
football and being a father of two great
00:19:09
children and being an adviser to the
00:19:11
president and working for a great firm
00:19:14
like UBS these are things that define me
00:19:17
but it's very important to find that
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work life balance we get all caught up
00:19:21
in what's just a job and it can take
00:19:24
over your life and sometimes in actually
00:19:27
the last two and a half years have made
00:19:29
me realize you know that at times it's
00:19:32
just a job and the house is bigger than
00:19:34
the man so you can only impact it to a
00:19:37
point and you got to also make sure that
00:19:40
you have the time for the things that
00:19:42
are with you your whole life you know
00:19:44
like your school and like your family
00:19:46
and for me it has also been my
00:19:48
relationship obviously with the
00:19:49
president but I think you got to find
00:19:51
other passions and that allows you I
00:19:54
think to enjoy work even when it's not
00:19:56
going great because
00:19:59
you have those other things that are go
00:20:01
that are going great and so I think work
00:20:03
life balance for me has been the key to
00:20:06
being a leader because if you're happy
00:20:08
you actually lead well none of us are
00:20:11
good actors that's true I I had thought
00:20:14
that uh in response to this question you
00:20:16
would have spoken about some of the the
00:20:19
controversy with the IRS and how you
00:20:20
dealt with that dealt with that
00:20:22
situation any lessons to be learned from
00:20:24
that we're glad it's behind us we're
00:20:27
glad we're moving forward great one last
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question uh how do you define success
00:20:32
you know for me success is
00:20:38
defined but I think first
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how I work with my family and my wife
00:20:44
taking care of my kids do I like the way
00:20:46
we're raising them are they respectful
00:20:49
how I respect my parents and and and the
00:20:51
relationships we have with our family uh
00:20:55
you know success for me is not monetary
00:20:58
it's how I'm viewed in the community I
00:21:00
love that they call me coach they don't
00:21:02
know that I'm the UBS CEO they know me
00:21:04
as coach as I drive down in my Morano
00:21:06
with the dents in the car you know I I
00:21:10
think at the end of the day I was giving
00:21:12
a a lecture uh today to some Wharton
00:21:15
students you have to know your
00:21:17
roots and if you know your roots then
00:21:20
you always know that you have a great F
00:21:22
Foundation to to go back on and I I
00:21:25
think I've been fortunate to have a
00:21:27
great family Foundation to have a great
00:21:29
school Foundation I love coming back to
00:21:31
Penn and I love my years at Wharton and
00:21:33
I think it differentiates me because I'm
00:21:36
able to say that I'm a student athlete
00:21:38
at one of the best schools in the world
00:21:40
and uh so I think it all goes to the
00:21:43
foundation when I was in high school I
00:21:45
gave a speech called the Pyramid of life
00:21:48
and it still stands today you have the
00:21:50
foundation of the family and education
00:21:52
and then work but at the end of the day
00:21:54
it's still the
00:21:55
foundation Rob well thank you so much
00:21:57
for speaking with us well thank you it's
00:21:59
been an honor thank you
