Charlie Munger's Brutal Opinion On Investment Banks!

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01. the view by many around the world of Wall Street as all being scuzzy and you and Warren have major investments in big banks so you obviously don't think that no they're not all scuzzy so who are the biggest perpetrators well what happens is that the people sort of lose control if you have a proprietary trading and he suddenly makes 300 million he wants more power and more and so you give him more billions to play with and he makes more you give him more and in a sense all these nice people are prisoners of the system and nobody can say no to the ever-expanding number of activities and they're all competitive and they don't like it if JPMorgan is making a lot of money and trading derivatives and they're making a smaller amount and so the envy and the internal acquisitions of power by the heavy trading proprietary people it just naturally causes some expansion that we're very good people end up in a very silly outcome I would argue that having less at Goldman because they have more of a partnership culture and they're better at controlling people and and that's why I don't like Goldman being singled out because I regard him as the best of the investment bankers and everybody is now pillar in them as if they were the worst why do you think they're being villainized I think it's an accident it's an accident it's an accent on the fact of you know on the part of lawmakers just their name came up no I think it's an accident an accident not attacking this you know quote-unquote smartest in the SEC said find something wrong with Goldman so I can step on them no I think something just popped out of the system of the myriad things they were investigating it I think it's kind of an accident they ended up in the headlights I think it's an unfortunate accident because I think the best of them worried not the worst when you look at Goldman I mean you've said their highest in morality and competence yes on Wall Street yet they are yes and they're at the focus of the SEC z'd investigation there potentially could be entangled in a criminal investigation by the Department of Justice you and Warren have a five billion dollar stake in the company what happens to Goldman well they drew a lot of headlines and they got attacked at a time when everybody was furious all investment banks of course it's it's a significant disadvantage to Goldman they've drawn all this attention and they're not perfect it isn't as though Goldman they deserve some share of the blame for recommending this irresponsible system along with all the other in banks on there to their government they like to always increase power and they thought correctly we can handle all this discretion but you shouldn't urge on your government a system of control that's so loose that only you can handle it without disaster you should have a system of government but a less skilled person can't get in trouble on earth well call them and make it through oh sure no doubt no doubt looking at the system and you know we cannot forget the lawmakers that created the system 90 senators voting in favor of repealing glass-steagall many of those senators were the ones lambaste in Goldman executives on Tuesday on the hill well there's no question about the fact that our legislators went along with a whole lot of governmental policies that were foolish probably the worst example is Fannie Mae and Freddie Mac and yet they've gotten the least attention well not only that they had a the exact system of regulation they're not talking about a specialized government body there's nothing to do but watch them and keep them sound that's what they had and of course it failed utterly see I think you have to to take away activity prerogatives from people who were using the government's credit including the people who are too big to fail that worked in glass-steagall we had a long period without scandal after we took away the powers of the banks it isn't like the country didn't have actively growing GDP during all that period of glass-steagall that system worked fine it's an accident it's an accident on the fact of you know on the part of lawmakers just their name came up no I think it's an accident an accident not attacking this you know quote-unquote smartest in the SEC said find something wrong with Goldman so I can step on them no I think something just popped out of the system of the myriad things they were investigating it I think it's kind of an accident they ended up in the headlights I think it's an unfortunate accident because I think the best of them we read not the worst when you look at Goldman I mean you've said their highest in morality and competence YES on Wall Street yet they are yes and they're at the focus of the SEC x'd investigation there potentially could be you shouldn't urge on your government a system of control that's so loose that only you can handle it without disaster you should have a system of government the a less skilled person can't get in trouble well call them and make it through oh sure no doubt no doubt looking at the system and you know we cannot forget the lawmakers that created the system 90 senators voting in favor of repealing glass-steagall many of those senators were the ones lambaste in Goldman executives on Tuesday on the hill our legislators went along with a whole lot the view by many around the world of Wall Street as all being scuzzy and you and Warren have major investments in big banks so you obviously don't think that no they're not all scuzzy so who are the biggest perpetrators well what happens is that the people sort of lose control if you have a proprietary trading and he suddenly makes 300 million he wants more power and more and so you give him more billions to play with and he makes more you give him more and in a sense see all these nice people are prisoners of the system and nobody can say no to the ever-expanding number of activities and they're all competitive and they don't like it if JP Morgan is making a lot of money and trading derivatives and they're making a smaller amount and so the envy and the internal acquisitions of power by the heavy trading proprietary people it just naturally causes an expansion that we're very good people end up in a very silly outcome I would argue that having less at Goldman because they have more of a partnership culture and they're better at controlling people and that's why I don't like Goldman being singled out because I regard them as the best of the investment bankers and everybody is not pillar in them as if they were the worst why do you think they're being villainized I think it's an accident entangled in a criminal investigation by the Department of Justice you and Warren have a five billion dollar stake in the company what happens to Goldman well they drew a lot of headlines and they got attacked at a time when everybody was furious all investment banks of course it's it's a significant disadvantage to Goldman to look drawn all this attention and they're not perfect it isn't a so Goldman they deserve some share of the blame for recommending this irresponsible system along with all the other in banks on their to their government they like to always increase power and they fought correctly we can handle all this discretion but