The Real Deal: My Life in Business and Philanthropy by Sandy Weill

In reading this book, you are going to enter the whirlwind world of modern Wall Street, and then banking, and you are going to love it. Sandy Weill with writer Judah Kraushaar, has successfully written the story of his life for all of us to absorb and learn from. This is a fantastic biography of a man who re-made Wall Street, and then in phase II of his career, revolutionized banking. No one before him had achieved this, and no one else might have been able to. He stands alone in his generation for his achievements.

Sandy Weill may well be the most successful businessman of the late 20th century. He continues the tradition of the corporate empire builders of the previous generation. Men like Ross Perot, Charles Revson (Revlon), CR Smith (American Airlines), W. Alton Jones (Cities Services), Peter Grace (WR Grace), and Harold Geneen of International Telephone, and Telegraph, all were very special people. Where Wyle distinguishes himself is that he did it in financial services.

In this world Weill is peerless for both the longevity of his career, and its scope. Over 40 years in an industry undergoing rapid change, this graduate of Cornell, and son of Brooklyn wound up building the largest financial services corporation in the world, the modern Citigroup. It must be noted that no one in American history, and therefore world history has enjoyed such a run, and achieved so much as Sandy Weill.

He is also the only man who has ever successfully bridged the gap between Wall Street and the banking world of the Chase Manhattans, Bank Americas, Wells Fargo and all the rest of the major banking players which up until him was a 100% “Christian Establishment” industry. Not only had it never been done successfully before, most would tell you it could not be done. What do I mean by this?

To be successful in Wall Street requires assuming a certain type of risk. Your assets are mostly people assets. It has been stated often, but is nevertheless true that your assets go up and down in the elevator every day. It is very difficult to manage a brokerage business. I know this business, and the history of Wall Street as well as a student of it for 40 years.

It is virtually impossible for a bank to buy, and successfully run a brokerage business. A lifetime in banking, and understanding the risks associated with banking, does not make one competent to transfer this knowledge to a brokerage business. Look at a few examples. The Prudential Insurance Company bought Bache, and lost billions before jettisoning the brokerage business, ultimately giving Bache away to Wachovia, who used it simply as a sales force.

General Electric, under Jack Welch, who was arguably the best corporate manager of his generation, bought Kidder Peabody the investment banking firm for a song. Welch then thought he could used the fabulous GM management template to run Kidder Peabody, and contain the risk associated with its operations – WRONG. GE wound up losing billions before jettisoning Kidder. There really have been no exceptions to the rule that “Banking can’t manage Wall Street.” Sandy Weill has been the one glaring exception to this rule.

In this achievement alone, Mr. Weill has broken the mold and remade business history. He would have achieved LEGENDARY status if he did nothing else but this. What’s even more interesting is that he did it not only once, but several times.

In the beginning of his career, Weill was successful with partners in starting a small brokerage firm. In those days, the early 1960’s, Wall Street was a segregated community involving Christian firms on one side of the divide like Merrill Lynch, Kidder Peabody, White Weld, Morgan Stanley, and hundreds of others. Then there were the Jewish firms, which included Lehman Brothers, Goldman Sachs, Salomon Brothers, the Warburg’s, and scores of others. There was token representation at each of these firms by representatives of the others, but it was rare.

This portrayal has been written beautifully in the wonderful Stephen Birmingham study of Wall Street – “Our Crowd”, and it is well worth reading about. This period is also chronicled by more brokerage firms going out of business than remaining in business. In my opinion, if Sandy Weill had only built a fabulous brokerage firm, no small feat in itself, he would still be considered one of the great businessmen, and builders of his generation.

You have no idea the waters this man navigated. He bought firm after firm, building each one, successfully integrating what he could, getting rid of dead wood, and non performing assets. He surrounded himself with some of the futures most talented business managers – Jamie Diamond comes to mind instantly who will run the Morgan Chase bank by himself next year.

The business environment Weill did this in was the most difficult any businessman could possibly work in. Wall Street was a club. For 200 years commissions were fixed, and then suddenly they were un-fixed. Turmoil came, bankruptcies were constant, and through it all, there was Sandy Weill buying firm after firm, seldom overpaying, seldom making a miss-step.

A quick illustration will suffice. In the 1960’s, there was a substantial firm called Dupont, Glore Forgan and company. It was failing, and President Richard Nixon personally asked billionaire Ross Perot to step in and save the firm, and thus save Wall Street. It was a time when Wall Street was based on the partnership format. There were no giant corporations involved. Wall Street money was personal money – big institutional money could not invest. In spite of his enormous wealth, and management expertise, Perot was unable to save the brokerage company. Perot tried mergers, brilliant personal interventions, and over $100 million of his own cash and failed

This is the environment where Sandy Weill excelled, and had no equal. Ultimately, he built Shearson Loeb Rhoades, which he sold to American Express in 1981 for a billion dollars. He then became a high ranking officer at American Express, and took away a lesson he will never forget. It’s not about doing what’s best for the corporate interest. Sometimes it’s about politics and personal agendas of other less able people. Weill couldn’t stomach it, and he left American Express after 4 years. He could have taken his money and ran, after encountering this setback, but not Weill. Other big moves were in store for him.

He then entered the next phase of his career by engineering the purchase of Commercial Credit, taking it public and doing just about EVERYTHING RIGHT. Over the next 17 years he continued to work on building Commercial Credit, ultimately merging it into Citicorp, and forming Citigroup and creating a market value of $200 billion.

It’s all in the book with upwards of 500 pages. You see the warts and wrinkles too. Is this book objective? No book is objective; it’s always about a selective recall of a person’s life story, but what a story. You have to understand something, and I have never read it anywhere in print.

Banking in this country for 200 years excluded people who were Jewish from running banks. This was a 100% Christian dominated industry. In the 1970’s, famous Jewish financer Saul Steinberg, the man who created Leasco Data Processing, took a run at the Chemical Bank through his ownership of the Reliance Insurance Company.

Steinberg made a presentation to the Board of Directors of Chemical, telling them what he would do as the new owner. He left the building and before he got back to his office, the Board had contacted other banks, which immediately began to pull the credit lines of Reliance Insurance putting Steinberg at risk. They were teaching Steinberg a lesson, even President Nixon asked Steinberg not to take a run at the bank.

Weill knew this story well. He’s a risk taker but still conservative at heart. He new jeopardizes the balance sheet, and when it does start to get stretched, he pulls in his horns and goes conservative, and wait, and waits until it’s time to strike again.

Let’s switch to Citibank. In the early 1990’s Citibank was on the verge of bankruptcy due to foreign loans defaulting. Edmund Safra, the owner of the Republic Bank, was a banker as smart and capable as Sandy Weill. Safra considered going after a vulnerable Citibank at the time. It never happened. Safra decided and stated publicly that a person of “Syrian Jewish origin, ” would never be allowed” to acquire an American banking institution.

Sandy Weill was the man who broke the mold again, and again. In ultimately becoming Chairman of Citigroup, he became the first person of Jewish origin to lead a modern public banking empire, and his was the biggest, and the best. This is an achievement without equal in banking history, but to do it he had to knock off John Reed, who along with Walter Wriston, are the two people most responsible for bringing Citibank into the modern era of banking before Weill.

It’s all there in the book, and I will leave you to read it. You will learn how Weill took on and disposed of John Reed. He literally elbowed him out of the corporation. To do so Weill needed the backing of one of the wealthiest Arab financial backers of Citigroup. From this you will learn a very valuable lesson. Israel and the Arabs may slaughter each other in the streets, but behind the scenes, rich Arab money will always back whoever can make them money. In this case, they bet on Sandy Weill, and made a fortune.

You will love this book, I have said nothing of the philanthropy that forms much of Weill’s life, from Carnegie Hall to charitable acts too numerous to count, and it’s all in the story. It’s also the story of a man’s life which is not without blemishes. Weill came under the spotlight of now New York Governor Eliot Spitzer, who as NY Attorney General, went after Citigroup for alleged violations that you can read about. Had Spitzer pursued them more in-depth, we do not know how Sandy Weill’s career might have finished. Since Spitzer chose not to pursue them, we do know how this extraordinary man’s career did finish. Read “The Real Deal”, Weill’s career was AMAZING.