Rob Johnson Interview with Jim Chanoswww.verbalink.com Page 2 of 12
Gillian Tett speaks about this episode in her book,
And she talks about a whole cadre of high level ministers; the people who were responsible were there. Can you set the stage for us? Can you tell us essentially the context? Why were you invitedto Washington and what was it that you were talking about thatday? Thanks.
Yes, Gillian did a very good job chronicling this episode in her book,
I was invited along with one other hedge fundmanager as well as hedge fund industry representatives torepresent the industry at the G7 Finance Ministers Conference inWashington which was being held at the World Bank in mid-Aprilof 2007.We were invited to present to the Ministers and Central Bankers onSunday, the last day of the session, basically the hedge fundindustries view point as to why hedge funds would not be, or perhaps would be, these source of future systemic risk.If you recall at that time, the Europeans, particularly the Germans,were concerned that hedge funds would be the source of futuremarket systematic upheaval if it occurred. And the Germanshappened to be chairing that spring session. So they set theagenda.And the Under Secretary of the Treasury at the time, Bob Steel,invited myself and another manager to basically make presentations as to why we thought that would not be the case.And both the other manager, who has been identified as PaulSinger, that’s public, and myself, took the opportunity to make presentations pointing out something a little bit different from whatthe Germans thought.
So in essence you came in to present a view not only that wasrepresentative of the hedge fund industry, but also a portrait of where the Achilles heel might lie in contemporary financialmarkets and financial structure?
Right. If you recall, before April of ’07 there were some very,very ominous cracks in the walls of finance that occurred. Youremember that the Bear Stearns hedge fund blow up occurred inJune. So that was still two months away. But we had had in thefall and winter of ’06-’07 the first falterings of some U.S. non- bank financials in the subprime area, New Century and others, thathad begun to stumble with large amounts of default in recent loans.