FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
Remarks of CFTC Chairman Gary Gensler Before the Wharton Leadership Lecture Series
October 15, 2013
Good afternoon and hello Quakers. I thank Justin for that very kind introduction. I also want to thank my dear friend and your classmate, Scott Schneider, for suggesting to Wharton to invite me here to speak.
It is a great honor to be asked back to speak at Wharton, my alma mater.
After cartoonist, Gary Trudeau, delivered our commencement address – and my parents headed back to Baltimore – I didn’t have much on my mind other than a particular girl who was visiting and heading over to Smokey Joe’s.
So I can safely say that when I left West Philadelphia thirty-four years ago, I did not contemplate that one day I might be asked to return to share thoughts on leadership.
I have been fortunate to live a very full live – with some success and a lot of dumb luck – in both the private sector and in public service. For 18 years, I worked in the investment banking business in New York and Tokyo before joining President Clinton’s administration at the Treasury Department. Now, as Chairman of the Commodity Futures Trading Commission, I’m honored to head an agency that regulates America’s commodities and derivatives markets and to work to bring much needed reforms to the nation’s financial system.
I feel completely honored to serve this nation and to have served two presidents. I’ve been thinking about what I could say that might have some relevance to you. I could share stories about tough merger negotiations while on Wall Street or meetings in the Oval Office. The event planners, though, asked me to talk about leadership principles and experiences - some positive … some negative – that I have found most valuable since leaving Wharton. In essence, what worked and what did not?
And though the most important role I have and ever will play is as a husband and as a father of three wonderful daughters, I imagine that the organizers wish that I stick to thoughts on the world of business and politics.
Though, I hope that you will allow me to muse about some personal thoughts as well.
Here are some of the most critical lessons that I’ve learned in my career since leaving Wharton 34 years ago:
First, pursue your passions.
I have seen people in careers not passionate about their work. Don’t do that. Instead, find what you love the most and try and make a go at it.
I feel very fortunate. Neither of my parents went to college. After World War II, my dad used his mustering out pay to buy some used beat up vending machines. He later placed cigarette machines and pinball machines in local Baltimore bars. I used to travel with him when he would take the nickels out of the machines and help him count them. I guess you could say this was my first foray into business and the world of finance.
I knew from that early age that I wanted to pursue a career in business. At the same time, I felt a deep passion for politics and government, so I sought to merge those two dreams. I lost my campaign for senior class president in high school, but I kept alive my passion.
I chose to apply to the Wharton School to pursue those dreams. It was a lot easier, though, to get into college back in 1975. Nearly 25 of my high school classmates went on to the University of Pennsylvania. Not to mention, I had actually gotten a D in high school French.
At college, I once again got involved in student politics, being appointed the student representative on the University Budget Committee. I am glad to know the University still follows the tradition. Particularly, given that along with other students I actually participated in a four-day sit-in of College Hall in 1978 protesting the University’s cut of the hockey program. We were unsuccessful saving the varsity hockey program … but it did subsequently return as a club sport. Are there any Wharton Wildmen here?
I graduated from Penn with a bachelor’s degree and an MBA and followed my passion into business in New York. In 18 years on Wall Street, I became a partner at Goldman Sachs, worked in Tokyo for three years and met countless talented people. From there I moved to the Treasury Department where I could merge my experience in finance with my desire to be in public service. After President Obama was elected, I was honored to be asked to serve again in a new role.
Each of you may have different passions or dreams. Some of you may wish to be at large firms and others at small start-ups. Some will wish to pursue new technologies and some not. Some may have an interest in public service as I did, and many won’t. And some of you may have no idea what you want to do. It may take time to reveal itself, but whatever your passion is or whenever it develops, follow it.
I married an artist whose true passion was creating images. In her 20s, though, Francesca went off to Columbia for her MBA. She later was able to reconnect with her passion in her 40s. When she returned to it, she produced wonderful art that was featured in the Corcoran Gallery of Art and the Getty Museum in Los Angeles. So if your passion is art, do that!
Second, make your opportunities, and seize them.
Sometimes life presents us with great new opportunities. You should take them. Often, however, you have to make your own opportunities. That often requires a willingness to take risk.
I think that Sheryl Sandberg’s view that “careers are a jungle gym, not a ladder” is very apt. I had the great pleasure of serving with Sheryl in President Clinton’s Treasury Department. As that Administration ended, frankly, neither of us knew what we were likely to do next.
Initially I moved to Baltimore, co-authored a book, joined some boards and helped out on some campaigns. Francesca’s cancer returned and I spent increasing amounts of cherished time with my girls and her. After Francesca passed away, I became a stay-at-home dad doing the laundry, buying the groceries and making sure the dogs were fed.
When Hillary Clinton was preparing to run for president - that’s for 2008 - I told Hillary that I wanted to help her in any way I could. Hillary hesitated to let me join, though, unless I could assure her the girls would be OK. It finally took four conversations with Hillary and several months for me to persuade her that I could fulfill my responsibilities as a dad in Baltimore and commute to Arlington for her campaign every day.
As for Sheryl, after a bit of time off and some soul searching she moved to California for a job at Google, which had but 400 employees at the time and still ranked 15th among web sites. Shall we just say the rest is for the history books?
Getting to a senior role in government, as well, requires taking risk and pursuing it. Every candidate for office does so when they put their name in front of voters. So too, do those interested in appointed office. Whether one works hard for a candidate on a campaign or is an expert in a particular field, you have to actively pursue the job. A Presidential Transition or White House has hundreds of thousands of resumes to review, so the person who ends up in a senior role must actually hit the phones, schedule meetings, take risks and make their case as to why they want to serve and in what role.
Taking advantage of an opportunity can mean big changes. It might require you to move to a new place or leave a job you like. But those changes can bring you success and happiness. Follow them.
Third, find mentors.
I would not have been invited to speak here today if not for the help of mentors along the way. My first mentors were my mom and dad who encouraged me through every step of school, taught me great values and showed me what a loving lifelong relationship can be.
When I was at Penn, I sought the counsel of my professors, but particularly three with whom I became very close. One of them, Professor Jamshed Ghandi, is still a member of your faculty. He was a remarkable teacher, who was the first to clearly explain to me the role and function of financial intermediation in our economy. To this day, I remember some of the most important advice Jamshed and the others gave me. I also recall when as a result of a little wager, Professor Ghandi and I had to play a game of Jacks on the ground along Locust Walk.
Another mentor at Wharton was Dean Don Carroll and, maybe even more so, his assistant Elli Page. Each semester I wanted to take one more class than allowed. So at the start of every semester, I went to the dean’s office and begged Elli to let me talk to him. I ended up graduating with my bachelor’s and master’s is four years because Elli kept getting me signoff to take those extra classes. To this day, I don’t know if it was the dean’s signature or Elli’s forgery.
Another mentor at Wharton was a woman a year ahead of me in school and about six years my senior. We first met in Professor Ghandi’s class on financial intermediation. She had spent a summer working on Wall Street and helped get me interviews. She was furious when she found out that I went to my first job interview in jeans, for the Boston Consulting Group, no less. I didn’t own a suit and hoped it was all right if I didn’t wear one!
Straight away, she called my dad and asked permission to take me shopping. We went to Brooks Brothers and she helped me buy my first suit. Somehow I ended up getting a job at Goldman Sachs.
Goldman took a risk on a young 21-year-old kid. I made many mistakes – mistakes of youth, mistakes of inexperience and sometimes mistakes of arrogance. But I also had mentors at the firm who looked after me and gave me much-needed guidance.
One of the mentors who knew me pretty well at Goldman Sachs later became Treasury Secretary for President Clinton. I ended up working with him at Treasury, but, let me tell you, he didn’t just call me one day to offer me the job. Secretary Rubin had joined the Administration four years before I did. I stayed in touch over those years, and made sure he knew about my willingness to serve if an opportunity presented itself. He asked me to join the team as an assistant secretary and gave me the opportunity to fulfill my passion for public service.
You too will undoubtedly meet many talented people in the future who share your passions. Learn from them. Seek advice from those who have done what you want to do. Build off of those relationships.
Fourth, every time you take on a new role, right at the beginning, articulate one clear goal and write it down on a Post-it note.
All too often I have seen individuals being consumed by others’ agendas rather than their own. This is true in the private sector as well as the public sector. Beware of letting your competitors or events overwhelm how your days are spent.
Within a month of taking on a new role make sure that you clearly define your number one goal. Write it down on a Post-it note and put it in your desk drawer. Every day, open up the drawer and ask yourself “what have I done today to move forward on this goal?”
Every job includes mundane duties that, if not appropriately managed, can consume you. Every role has competitors trying to throw your organization and you off your game. Leadership, though, is about completing tasks in the face of all of these challenges and distractions, most importantly to do so towards your high priority goal – the one on your Post-it note.
Further, in pursuing your goal, know the difference between strategies and tactics. Far too often, talented people fill meetings discussing tactics without tying them to an agreed upon strategy. Tactics are critical, but only as they fit in with a well-articulated strategy.
During my first year at the CFTC, we set out a strategy of advocating that Congress enact comprehensive regulatory reform of over-the-counter derivatives, or swaps. Our tactics included giving speeches, providing Congress with legislative and technical assistance, placing opinion pieces in leading newspapers and actively working with coalitions of supporters outside of Congress.
We did not lose track of our strategy in favor of focusing on a particular tactic. We did not write op/eds for the sake of getting them published; rather, we only wrote op/eds if they fit into our larger strategy. Success depended on remaining steadfastly focused on our goals and our strategy.
Fifth, spend time learning about the practical bits of management.
Spending nearly $60,000 per year on tuition, you might be hoping to learn something about management. I might hope so, too, as your tuition has grown nearly twenty fold since I was a freshman at Wharton. Yes, tuition was only $3,430 per year in 1975! I’m not sure that would even cover your books!
I believe that one only truly learns about management, though, when finally doing it. When you get to that first management role, be sure to spend lots of time with your people. Communicate with and mentor them. Set clear goals.
Learn from those in your organization who do it well. Here are three key management lessons I learned from others along the way:
The first is simply the importance of keeping lists. I recall when I first saw Bob Rubin pull out his yellow pad and jot down a list. He was always doing it. Lists of tasks that needed to be done. Lists or relevant information that he needed for a decision. Lists of people to call. And he constantly followed-up with his staff on those lists, holding folks accountable and paying attention to the details of his lists. Try it on an iPad if you wish, but make those lists.
The other list man I learned from was Neil Armstrong. I kid you not. I met and befriended Neil Armstrong when advising an Ohio media company in the mid-1980s. As you all know, he was a remarkable man, but, when I worked with him, he also was the ultimate low ego, cool, quiet man, but under pressure, he just kept calm and got the job done.
When I once asked him if he enjoyed the views passing time on the way to the moon, he looked at me and said, “Gary, what I was always doing was reviewing in my head the next ten things I had to do on my checklist.” He was the ultimate list man, though he did admit to having enjoyed a few peeks back at the Earth along the way.
The second was from one of the best managers at Goldman Sachs. He spent a considerable amount of time on how to arrange the organization into boxes around clear lines of authority and accountability. He then spent even more time on getting the right people with the right skills for each of the “boxes.”
I kept this lesson at the forefront when I joined the CFTC with a clear goal on the Post-it note of enacting robust comprehensive swaps market reforms. That is why one of our first critical hires was an extraordinarily talented young speechwriter and former debater to help guide a public advocacy effort for reform. He’s one of your classmates, Scott Schneider.
The third lesson is the importance of identifying value drivers gating factors. Find those things in your organization that create value or are the constraint for higher performance. And then change the factor to open up the gate and create value.
Once Congress finalized financial reform in the Dodd Frank Act, at the CFTC we had to find a way to write and implement more than 60 new rules, though the agency was gravely underfunded and had never completed more than five rules in a year. We went after every gating factor we could find to move such a significant amount of reform “inventory.” We set up an entirely new team structure, new means of public openness and methods of outside regulatory consultations. Now we’ve nearly completed writing all the new Dodd-Frank rules, and financial institutions are coming into compliance with this new regulatory infrastructure. This would not have been possible had we not removed the gating factors at the CFTC.
Lastly, find a good partner.
I married Francesca, a beautiful woman I met at a party in New York four years after Wharton. We lost her to cancer seven years ago, but every minute of our 20 years of marriage was a blessing. We moved from New York to Tokyo to New York to Washington to Baltimore and had three beautiful daughters. So find a good partner in life. It does take work and a lot of communication, but life really is better with a good partner.
Before I close, I want to acknowledge that Wharton equipped me with many of the tools I needed both in the private sector and in public service. It was a remarkable experience that helped prepare me for each of my roles in business and government.
Thank you again for inviting me here today. I’d be glad to take any questions that you may have.