CNBC LEADERS: James Gorman 12/21/23

SPEAKER_1 (0:00)

What do you see on the horizon for financial markets?

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David Faber (0:33)

James Gorman has led Morgan Stanley as its CEO for the last 14 years, a position he assumed when memories of the global financial crisis were still fresh in investors' minds. He proceeded to remake the firm. And as he exits Morgan Stanley, it is known as much for its asset management business as for its storied investment bank.

I sat with him for an exit interview at the firm's headquarters and asked Gorman to reflect on his years of leadership.

James Gorman (1:01)

To lead anything is a privilege.

And to be given an opportunity like this during, you know, in working life, if you happen to be in business, happen to be in financial services, it's an incredible honor. So I guess the reflective side of me would say how lucky I've been.

You try and, you know, one of our core values on the wall when you came in this morning is do the right thing. You try and do the right thing. You make some mistakes along the way. You get judged in these jobs like you do in your job, David. And, you know, you rise to that. You don't let it get to you.

But the main thing I take away is what a privilege to have led such an incredible institution. Just I'm so proud of the quality of the people, the values, the way we got through COVID. I mean, there's so many moments through it, and we'll talk about some of the business side, but it's more the human side and role of leadership. Now, a lot of people want to be leaders, but they don't want the tough bit that goes with it, which is you get to make decisions, and your decisions prove to be right or wrong over time. So the accountability, and that's something I've always sort of risen to. I like being the guy making the call. And if you like that, and you're in position to make calls that can really move institutions, in our case, obviously, Global Bank, incredible privilege of a lifetime.

David Faber (2:28)

Yeah, well, you've made plenty of those decisions, and obviously one of the key ones was repositioning sort of the business of Morgan Stanley over these last few years, particularly when it comes to asset management.

I mean, is that what people are gonna think about when they think about the Gorman era? What do you think they should think when they look back on these almost 14 years that you've been leading, Morgan Stanley?

James Gorman (2:50)

You know, we came out of the crisis as the last institution that was about to fail. We did, you know, it's like planes. I described it like planes landing at Newark Airport. And if you look out over the Hudson River from Manhattan, and you can see them on a clear day like today, at, you know, 2000 feet, 5,000, 15,000, 30,000, and then all the way back, you know, up the river.

And, you know, Bear Stearns landed and sort of crashed, landed and got scooped up by JP Morgan. Lehman landed and just crashed and they sweep the stuff off the runway. Merrill landed and got scooped up by Bank of America because it was limping down the runway. You know, GE, AIG, and so it went. And we were like coming in, we were at 3000 feet and there was still debris on the runway. We were leaking oil and, you know, that was the moment. So the ship that we, or the plane in that analogy that we took over was a really damaged vehicle, but we managed to land. And with the help of TARP and with the help of, obviously, our large investor, MUFG, we brought ourselves out of that immediate crisis zone. But just when we come out of it, we went into another crisis, which was Moody's. We're gonna downgrade to three notches.

And over the next two years, we fought this incredibly tough battle to convince them that they were looking at us from a historical perspective, not from a current or forward-looking perspective. So it was, as an institution, as I look back on it, it was more just, how do you go from survival, fragility, healing, balanced, and then strong?

And each of those have almost been different jobs along the journey, and right now, we're strong. I mean, wherever the stock is trading, and I think it was up this morning, which is kind of nice, but unambiguously, we're strong. So, but there were several different jobs, if you will, along the way that required drawing on different skills and different team members.