Financial Tips and Preventing the Next Crisis

Financial Tips and Preventing the Next Crisis

Jason Hartman talks with Norm Champ, a partner in the New York office of Kirkland & Ellis LLP about crisis preventions. Norm goes on to give listeners financial tip. He is the author of Mastering Money: How to Beat Debt, and Be Prepared for Any Financial Crisis. He was also former director of the Division of Investment Management at the U.S. Securities and Exchange Commission (SEC).

Investor 0:00
My wife and I were drawn to you because we liked the idea of putting money down qualifying,

Jason Hartman 0:06
making sure we can cover the mortgage, you know, and have reserves like you were talking a language that was very appealing, based on what we had gone through before.

Announcer 0:16
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:07
Welcome to Episode 1434 1434. Thanks for joining me today. We’re coming to you seven days a week during this time of absolutely extreme crisis, the things that are going on in the world are nothing short of mind boggling. And I am here as your guide to help you Wade your way through it, to get through it to prosper through it. And you know, later this week, we’re going to talk in some depth about some really exciting news for you investors. And I’ll give you a hint, it’s not gonna sound like good news. But it actually is good news for most of you. Not all of you. For some of you. It’s a bit of a struggle. For some of you. It’s great news for me as a business person. Not So great for me as an investor. Great. So there you go. There’s how it kind of plays out as I see it. And that is the upcoming collapse. Actually, I shouldn’t even say upcoming, the collapse we are currently witnessing of the mortgage market. Yes. The mortgage market is in a time of crisis. We talked a little bit about it last week. We’ve got a lot more to come in depth analysis of that. This week. Our guest today is a former sec Insider. I think you’ll really like hearing what he has to say. Now. We’ve got some interviews that are in the backlog here. One of the reasons we had to go seven days a week because there’s just so much news, we got to get it out all out to you. And thank you for being such loyal listeners and referring your friends and family and telling them about the show and sharing the shows with him. So this was recorded, I believe, March 11, which it’s only April 13. Today, but in today’s world, that’s a long time ago. Okay, March 11. So, but this interview is fascinating. Nonetheless, again, just as things were starting to kind of break. I mean, there are varying levels of breaking news, right? It is what it is. But anyway, we’ll get to that in a moment here. I want to remind you that we are going to help you stock up, not on groceries, not on toilet paper. We’re going to help you stock up on cash. Cash. Yes. One of the other things you need to stock up on in this crisis mode. And if you want to be a prepper, a good prepper stuck up on some cash. Now, I’m not talking about cash in the sense that it relates to inflation, deflation, saving money, investing money, I’m not talking about it in that way. I’m talking about it in the simple sense that you want to get control have as much capital as possible going into a crisis, okay? Because as the saying goes, He who has the gold makes the rules, and the gold is the money, okay? You want to get that capital in your hands. So tomorrow, we have a funding webinar. And you can register for that at bi T dot L y Bitly. Bi t.ly slash tv for Tuesday, the number 2pm et it’s tomorrow at 2pm, Tuesday at 2pm at Eastern Time, and you can register for that. Join us for that very, very important webinar. Also, many of you are looking for home based business opportunities. Because even when you can go back to that office, you don’t want to go back because you are risking, you’re risking infection and I don’t mean from Coronavirus I mean from whatever comes next I think this is a new era, it’s a sea change, things have changed for forever, forever, the world has changed. And you want to be able to make money wherever you are. So go to Bitly bi T dot L y, slash tax profit. Notice there’s no comm in there. It’s bi T dot L y slash tax profit for home based business and the other one for the funding webinar. We plan to launch our pandemic investing webinar next week. So stay tuned for an announcement on that, again, things are changing too quickly. The thesis keeps getting modified a bit, but it will be phenomenal. You’ll like it, and it’ll be available to you. So look for an announcement on that. Okay, without further ado, let’s get to our guest today. Let’s talk about his experience. Inside the SEC, his thoughts on how to prevent the next financial crisis. interesting perspective from just a four week old interview. Yeah, that’s it.

Jason Hartman 6:14
Wow. This is already like a flashback Friday episode. No, not really. But you know, you get the idea, right? news is changing so quickly. It’s absolutely mind boggling. The speed at which is changing. Okay. Let’s get to our guest today if you need us Jason Hartman calm or one 800 Hartman. Here is our guest. Let’s take an inside look at the scoundrels encouragement commission, otherwise known as the SEC, the Securities and Exchange Commission. It’s my pleasure to welcome norm champ. He is partner in the New York office of Kirkland Ellis LLP, where he heads up the regulatory solutions practice in the investment funds group previously norm was Director of the Division of Investment Management at the SEC. And he is the best selling author of two books. One is going public my adventures inside the SEC and how to prevent the next devastating crisis. And then the new book mastering money, how to beat debt, build wealth and be prepared for any financial crisis. Norm. Welcome. How you doing?

Norm Champ 7:24
Great. Thanks so much for having me. Yeah, yeah, it’s good to have you.

Jason Hartman 7:27
So first off, I want to talk about the next devastating financial crisis for a moment. Can you speculate with us, you know, what will be the next recession? In other words, what will be the flavor of it? What will lead it? I don’t know that it’s going to be real estate this time around. The mortgages have been pretty tightly underwritten, coming out of the Great Recession. But you know, certainly student loan debt, auto title debt, credit card debt, you know, corporate I don’t know, sovereign debt. The next one gonna come from

Norm Champ 8:01
so great question. The first lesson of all the ones in the past is, of course, they all started with something no one expected. Right? So, you know, we usually have some cause of a recession that no one’s looking for. I do think the things you identified the debt that we have put on in the last really now 11 years, that debt is going to, I believe will lead the next recession. Now, I’m not smart enough to predict exactly which part of that debt, but it’s hard to imagine that it’s not somehow going to involve the levels of debt that both consumers and countries have taken on over the last 11 years since the crisis. I think that the prospect of what sets that debt off, I agree with you, I think mortgages are in better shape than they were in 2008. However, the FHFA has lowered the downpayment to 3%. Again, they did Just two years after the crisis, which was a real tragedy, in my view. And so there are, you know, aggressive mortgages out there, but it’s just we have a lot of debt, consumer debt had gone down after the crisis to lower levels. We’ve now set records for several years straight. governments around the world have taken on a lot of debt, something is going to set off the next recession, and it’s going to involve all of this debt.

Jason Hartman 9:22
Yeah, who knows? You know, it’s I’ll tell you one that I read an article recently about how they want to let the banks get into venture capital investing. Oh, my God, that sounds like a disaster waiting to happen. A highly risky, venture capital portfolio for a bank. There you go. But I don’t know I could be wrong. You know, they say they think it will help small businesses get access to capital and, you know, that’ll obviously stimulate the economy. But, you know, some of these ideas seem pretty crazy to me.

Norm Champ 9:57
We’ll see I you know, those jobs. You’re hearing about are really about the Volcker rule and Volcker Rule. I was involved in writing the Volcker Rule after the crisis. And it’s a very complicated rule. And so you are seeing discussions about various adjustments to it. We’ll have to see how those play out. It’s it is I agree with you. I think it’s just hard to know exactly. What sets it off. But there is an awful lot of debt around the system.

Jason Hartman 10:24
Yeah, yeah, there is. Let’s talk a little bit, you know, in part one of your book, you talk about, you know, the the spending governor, right. And you talk about debt and this concept of homeownership, which I have long said, I think is highly overrated. Personally, I’m probably like the only real estate person that ever says the homeownership rate should decline. I think it should be 50 to 55%. You know, and everybody else says it should be 70%. You know, what’s so interesting about that is that when people own homes, they’re kind of stuck, right? You know, they can’t move as easily. To where, you know, job opportunities might be, where when we get off on this American Dream idea that everybody should own the house in which they live. Now, I love real estate investing, of course. But, you know, the home in which you live is not necessarily something that needs to be owned, is it

Norm Champ 11:17
not at all. And my main message in that chapter, and as you say, part one of the book is really, you know, trying to cut down on the outflow. So we live in a consumer society, and people are urged to spend every day, some of the things we talk about are the apps that are doing automatic Charges and all these ways that you’re, you know, urge to spend. And so the first part of the book is really let’s try to get spending down. Second part, let’s try to get income up. And then once we get there, where hopefully we’re out of debt and we have a net worth, then how to do some responsible investing for the future. Now, the I devote a whole chapter to homeownership because I couldn’t agree with you more. It is a pervasive, you know, trope in American world that we you know, you should Home, this is the route to wealth. Now, if you talk to the people that were foreclosed on in 2009 2010, after the crisis, they are not going to tell you that homeownership was the way to wealth. The argument I’m making in the chapter about the mortgage trap is that is a mortgage to own the home you live in is a financial decision, like any other now, go would know that because the government gives you guaranteed mortgages, so we have 30 year mortgages which other countries don’t have. The government gives you low interest rates and the government gives you mortgage interest deduction by going through each of those pieces and try to get people real concrete tips on how to evaluate whether a home is the right of you know, owning a home is the right decision for them. as you point out, a home restricts mobility restricts the ability, you know can be if you get in trouble can be a mortgage that really hurts your credit rating. And some of the tips I share are, you know, okay, if you know you’re going to be there in that town for five years, then homeownership may Makes sense, if you can come up with a significant down payment so that your risk of getting underwater on their mortgage is low. You know, there are circumstances where it can work. But this idea that it’s for everyone and for everybody, and it’s for every time and it’s a way to create wealth. Unfortunately, it’s just not the case. Mm hmm.

Jason Hartman 13:18
Yeah. So what are some of the ways someone can tell whether or not you know, they should buy a home? You said you have some, I guess, metrics for that. Right.

Norm Champ 13:28
Yeah. I mean, if you know you’re going to be in a certain place for you know, five years or more be you know, maybe that’s through personal or you know, some, you know, your job or if you’ve got really high confidence on some element of being there for long term then, you know, owning can be better. I think that a significant down payment is probably the single most important thing. You know, you cannot people getting into these high level mortgages are the people that got in trouble in the last crisis. You’ve got to have an emergency fund. So need to Be able to put aside enough money so that if you lose your job or health, you know, unfortunate health issue or what have you, you’ve got six months that you can, you know, put aside that you can survive on. So there’s certain things that have to be in place before you should consider it, the payment should be something that you can handle easily, not something you’re really stretching for. So it can be done, but the incentives that our government puts out there for it, distort this market, encourage people who probably shouldn’t take the plunge. And particularly on the younger side, you know, early in people, Career Mobility moving around, renting may make more sense. I always laugh when and I talked about this in books always laugh when people say, Well, if you rent, you know, that’s just throwing money away. Well, of course,

Jason Hartman 14:48
that is so right. That is that is just the dumbest idea ever, you know, like, I mean, people need to understand that you have to pay for things right. You know, If you’ve got to eat, you got to pay. You know, if you cook at home and buy groceries, you got to pay for the groceries. Well, if you have a place to live, you got to pay for it too. You know, it’s just a difference of whether you own it and pay a mortgage, or you pay a landlord for the use of that property. It’s absolutely silly a statement ever.

Norm Champ 15:21
And if you think about it, what are you doing in a mortgage? You are renting the money from the bank? Yeah, right. So, you know, if we think we’re throwing away money on rent, we’re also throwing away money on interest. So it’s not I’m not totally against it, but I’m just trying to get people to separate it from all the noise. Our government really likes to urge homeownership. I think it’s partly because it is one of the levers in the economy that the government can pull.

Jason Hartman 15:48
Government can they can get fast results with that because if they if they get people to go buy houses, then they’re gonna spend a whole bunch of money you know, improving that house You know, it does, there is a little concept, though that I think is valuable. And and that’s the concept of, you know, like the ownership society, right? Just psychologically, is how I mean this, when people sort of feel like they have a, you know, they have roots, they have an investment. A lot of times it makes them more responsible human beings. I think there is some element of that. I’m not saying it wins the day. I’m just saying it’s there. You know, thoughts on that?

Norm Champ 16:33
I totally agree. And in fact, one of the things I would like to see it I live in New York City, and we’ve been through the terrible series of scandals with the New York City Housing Authority and lack of repairs and deferred maintenance, and, you know, all these things and lead poisoning of people live there. I mean, just terrible things. You know, I would be an advocate of simply selling those properties to the people who live there because once that we move to an ownership, you know, society and ownership ability, then those folks are going to be motivated to take care of the property themselves? And so I would with you, I think that, you know, ownership there is an element of ownership that does is beneficial in some of these situations. Yeah, well, certainly, you know, just having welfare recipients get free houses, you know, they’re not gonna care about them. They don’t obviously take care of them. You know, for sure, I couldn’t agree more. Yeah. Talk to us a little about your experience at the SEC, if you would, of course, the SEC has been widely criticized, you know, many times in history, and the companies that they’re investigating exert influence over investigators a lot of times. You know, you just give us some insight into all that, if you would. Sure. So the first book that you mentioned at the top, you know, going public is all about what it’s like to go from the private sector to the Securities and Exchange Commission. I went there immediately after the global financial crisis in 2008. And was tasked with trying to remedy some of the issues that had resulted in examiners missing. Bernie Madoff, Alan Stanford despite examining them. And so, you know, we really spent a lot of time reorganizing the SEC, working on trying to get its processes better so that those kind of misses wouldn’t happen again. It is, you know, it’s a small agency, it’s only about 4500 people and they are tasked with you know, regulating what are the best is still the best capital markets in the world. And a lot of what we were trying to do was get more process in place, a lot of things had grown up over time, kind of, you know, ad hoc, and we were really trying to get more procedures in place make sure that examiner’s for instance, had a framework in which to do their jobs. You know, I think the vast majority people go there trying to do the right thing and and are dedicate it to trying to make sure that we have good markets and that we have, you know, protect investors and that we continue the great tradition of capital formation, the United States. It was a privilege to serve there. You know, it’s I, I think that there’s a lot of good, you know, there are issues, and I think they continue to work on those. But there’s also a lot of possibility. Let

Jason Hartman 19:07
me ask you so, you know, after the JOBS Act in and this massive expansion of the world of crowdfunding, and you know, is the SEC regulating any of that stuff, or maybe the proper word is regulating but punishing the bad players? I think it’s pretty neat that, you know, small players can now raise funding more easily. But of course, there’s going to be just mountains of fraud and bad actors and expect that right? Will the SEC go after these little fish? Or does it have to rise to a certain amount of size for the SEC to get interested?

Norm Champ 19:46
So it has to be a violation of the federal securities laws. And if you obviously if you offer securities and they’re unregistered, or they’re not able to take advantage of a crowdfunding provision than it is, you know, it can be illegal. They have brought many cases In fact, they bring more than 800 cases a year. And really, the vast majority of those cases, in fact, are smaller cases. So you sort of hear about the cases involving the big banks or big firms. Most of the cases actually are very, are much smaller. And, in fact, a big chunk of them are something called affinity fraud. And it’s not too far off from crowdfunding in the sense that affinity fraud is, you know, you have some money to invest. And there’s a nice young man at church group, you know, and he says, oh, I’ll invest it for you. And of course, you never see it again. Right. And that, I believe, relates to kind of fear of investing that a lot of people have because we don’t do any financial literacy education in United States. And so, what the SEC actually the plurality of the cases they bring are the affinity fraud cases. And so much of what I was trying to do in the book, mastering money is to demystify savings demystify investing, try to help people to find some ways to invest. Mutual funds are highly regular By the SEC, you know, they may not, it’s not the SEC guarantees that are going up or down. But we haven’t lost any money in frauds on mutual funds. And so I really make an effort in the book to try to direct people towards at least when they’re starting out, you know, to make sure that they invest in mutual funds, because, again, they may not go up, but you’re gonna get market exposure and your money’s not gonna get stolen.

Jason Hartman 21:21
Let’s go back to affinity fraud for a second. I mean, affinity fraud is sounds like nothing more than basically what Bernie Madoff did in the sense that I mean, he did more but he started in groups, especially Jewish groups and charities, you know, where he would be in involved and you know, become buddy buddy with everybody and, you know, they would invest with them because they think hey, you know, the person is involved in this charity with me is they’re not gonna rip me off. I know them. Right. Is that all you mean by infinity?

Norm Champ 21:52
It is. I mean, he he in particular, you’re absolutely right. He preyed on the Jewish community, but it happens in all sorts of religious community. Unity, you know, racial ethnic, it’s

Jason Hartman 22:04
a big one.

Norm Champ 22:05
Yeah, it’s usually Yeah, it’s usually somehow related to an area where people feel comfortable. And my theory is that that derives from fear of investing. People are worried about, you know, putting money to work and so they turn to someone trusted like that. What I’m trying to do in the book is hopefully give people the tools to say listen, okay, got the expenses down, I got the income up, got the debt paid off. Now I have 50 Grand 100 grand to put to work. You know, one of my I kind of went out on a limb in the book and said, Listen till you get to 500 grand, I don’t think you need anything more than mutual funds. And, you know, they are in and then of course, I talked about asset allocation, but there’s no reason not to and you can to open a mutual fund account, invest in mutual funds. And those are, you know, it’s so easy. Now you can do it online, reputable firms. Again, very, there’s no risk of your money being stolen. Unfortunately.

Jason Hartman 22:57
problem is though, with any sort of fun Any, any pooled money asset mutual fund, whatever, even just a direct stock, you’ve always got the people that run the thing that skim the cream off the top, you know, and that’s not necessarily illegal, it usually isn’t. You know, you say there’s been no fraud in the mutual fund world. Well, I don’t know, people would argue with you on that one for sure. Because they may there may have been no illegal, you know, caught fraud example. But, you know, people have their hand in the cookie jar, they pay themselves giant bonuses. You know, they fly the private jet and who’s paying for that all the investors are right.

Norm Champ 23:38
Well, that’s if you look at it, I would have to I would have to take issue with that. If you look at mutual fund expense ratios, you will see that they are the lowest they’ve ever been, and they continue to plunge. So you know, and you can if you’re worried about expenses, you can invest in index funds, you can invest in ETFs that follow indices And those were really talking about, you know, we’re getting to the point in ETFs, that it’s almost zero cost products. And so, you know, I think now look fees, I don’t disagree with you that fees, you have to look at fees. And if you pull up a fund, and it’s got two or 3% fee, you know, then that’s not correct. But I think you’ll find that most of them are hovering around, you know, 1.25 and below, many below one. And those kind of fees are, you know, not going to inhibit your return. So fees are important, but they are plunging in the mutual fund industry. It’s why we’re seeing huge consolidation in the mutual fund industry. So the bigger getting bigger, and that’s because they can charge these low fees with scale. And it’s, you know, some of the smaller players are getting hurt by that.

Jason Hartman 24:45
Yeah. So the ETF, as my friend put it, well, I thought he said, you know, at least if you invest in an ETF, you’re only susceptible to the graft and corruption of the executives and the board of directors. Not the fund manager. It’s pretty good if you love the cynicism. But you know, there’s always whenever there’s a big thing and a big pool there, there are people that have to run it. And so, you know, I just wish there was some way to control that, and not allow these kind of ridiculous amounts of spending by by these folks. I mean, you know, coming out of the Great Recession, remember when the CEO of Merrill Lynch spent over a million dollars to decorate his personal office within, within the building that was in the news? And, you know, he ended up paying that money back to the company who was at john sain. I think, you know, I mean, you know, there’s always abuses like that, right? And so, you know, we’re not gonna do anything about it, but it’s, it’s just frustrating, right? It’s just kind of frustrating. But tell us about the Volcker Rule, if you would, Paul Volcker, of course, are late Fed chair the guy that many credit with breaking the back of inflation making a very unpopular move in the early Reagan era. You know what, what’s involved with the Volcker rule? You’ve got a whole chapter on it.

Norm Champ 26:11
Yeah. So the Volcker rule was intended to be a rule that effectively would replace a statute that we used to have in America that was called the Glass Steagall act. And Glass Steagall from the time of immediate post 29 crash until the 1990s. Glass Steagall kept commercial banks and investment banks IE broker dealers separate and then in the 90s, with sort of the wave of the financial supermarkets, a lot of mergers. Glass Steagall got repealed. In my book going public, I argue that we the simpler solution would have been to put Glass Steagall back in place. I’m not a huge fan of the Volcker rule because it was a more than thousand page attempt to essentially allow banks and brokerages to stay together. create this long complicated rule to try to separate the insured activities from the uninsured activity. So the whole issue with Glass Steagall or the Volcker or with the crisis, right is you don’t want banks taking bets, you know, making bets on markets or funds with taxpayer insured money, so you don’t want them making their own beds with money that the taxpayers are gonna have

Jason Hartman 27:24
to replace. Okay, so let’s just drill down on that for a minute. So, FDIC insurance, you know, $250 or $250,000 per account vesting, okay, is the insurance that was increased from 100,000, during the Great Recession. And so we’ve got this insured pool of money that the bank manages, right? They take deposits, it’s FDIC insured. Now, how do they get the other money? That they they they just have brokerage divisions? You mean simply

Norm Champ 27:57
Yes. That right. Yeah, right. Right.

Jason Hartman 27:58
Yeah. Okay. To

Norm Champ 28:01
the financial. So the financial supermarkets that came along in the 90s, most notably Citibank, you know, was was one of the advocates of getting rid of Glass Steagall. The idea was, Listen, don’t make the commercial banks stand on their own. Don’t make the brokerages stand on their own. Let’s have them all in one. And so since the 90s, that’s been the case, right? You have these huge, you know, financial conglomerates that have both. There’s in banks, and through brokerages. They are making money through commissions and through underwriting and all the activities that brokers do. And you know, that’s money that the broker is made, then they can invest or do whatever they want with or distribute. But the idea is you want the commercial bank side of the business, to not use that money to do whatever it wants with because you don’t want the taxpayers to be on the hook. And I’m very much behind that. That’s why I’m in favor of reinstituting Glass Steagall. And simply separating the two Volcker Rule is effectively a compromise saying, well, we’re not going to go back to guess Glass Steagall, but we’ll write this rule to try to separate the activities. So that People are not, you know, banks are not making investment banks with taxpayer insured money. I just think it was a very complicated undertaking. I was in the room many times when it was being written. And I would prefer the simplicity of simply separating the two.

Jason Hartman 29:16
But so I think people where they have trouble understanding what this really means is that my bank, for example, you know, I have a brokerage account, one of my banks, and then I also have bank accounts, you know, just FDIC insured accounts. But the money in that brokerage account is not the bank’s money in the bank. You know, I don’t think it’s insured and the bank ever told me it was insured. So the banks not playing with insured money there are I don’t get I don’t get it. So what’s the big deal? So

Norm Champ 29:46
well, so the idea was, you’re right, you have your bank account, and you’re the bank, in theory isn’t playing with that. You have your brokerage account. And also, you know, you understand that’s not insured. The problem is if all this is Buy one institution. Right? Yeah, that and that institution gets in trouble generally. I mean, well, I was gonna say generally on the brokerage side, but it can be either side, right last time, it was really in the bank side with mortgages. Yeah, lots of times, it’s been on the brokerage side with, you know, trading losses, those kinds of things. If the institution gets in trouble, and is now beginning to violate its capital requirements or suffer other distress, then you may, you know, government may have to step in and help them because the theory was after the Oh, a, you know, crisis that you couldn’t have these banks fail, hence the term too big to fail. So if the government steps in to bail out that bank, well, you know, effectively taxpayer money is going to bail out, it doesn’t necessarily matter, you know, kind of which way it came from. Right. You know, which side And so, that’s why I think separating them out would make it much easier because you would go to your bank and they would have an account for you. They would pay you interest on it. They would lend you money for your mortgage we talked about earlier, and you would go to your brokerage and you would underwrite that those are different activities that you’re doing there. And it would also make it simpler to your point about when we’re trying to figure out what’s wrong with the institution or it has a problem. You’d be it’d be much clearer what which side of the house it was from and which side the government might have to get involved in. So, you know, you’re pointing to the very complexity that I always oppose the Volcker rule on because you’re really trying to draw a line in and they took them over 1000 pages to do so. And I still think they did a very good job.

Jason Hartman 31:28
Yeah, right. Right. Yeah. It’s it. It always gets so convoluted in, in the political world. I don’t know how, I don’t know how the powers that be. Keep track of something. And, you know, look at all the implications of something like Dodd Frank or Obamacare. I mean, these are just giant pieces of legislation and their effects are so wide ranging. It’s absolutely absurd. So, you know, when you were at the SEC, you helped stabilize trillions of dollars of investment. Capital. Tell us a little bit about that. And we got to wrap it up soon, but would love to hear more about that experience?

Norm Champ 32:06
Sure. That references to something I talked about in the book, which is, you know, put in happily something that never, you know, got out into the public. It was reported much later. And, you know, I do describe in the book, but essentially, we had, after all the failures that follow eight, I got the SEC, you know, in early 2010, we had the prospect of an additional brokerage failure. And what we did there was, you know, we did not bail out that broker, but we were very instrumental in working with that broker. We had examiners on site, we monitor the situation constantly, we helped that broker find some alternatives, which in the end included selling part of itself. And so, you know, there were a lot of behind the scenes efforts going on inside the government to make sure that we didn’t have further failures, again, not with government, not the SEC has no budget for that kind of thing. So not to provide bailout money. But simply to work with institutions and try to stabilize them to make sure that we didn’t have investor losses. And I feel like, you know, so much of that activity was, was behind the scenes and was trying to make sure that we didn’t have further problems which would have further damaged investor confidence. Right. So, so much of our markets depend on investor confidence, you know, so we sort of see, you know, last Friday the Coronavirus, markets drop, you know, there’s a, there’s a big psychological element to markets and to, you know, capital raising and so, you know, we spent a lot of time on those pieces. We also spent a lot of time making sure that the SEC would be more effective at going out and working on firms and looking at them and making sure that they would spot problems with firms and I think the SEC has come a long way on that front. Yeah, good. Good. You know, one of the criticisms of just the way the system works is that you can have these sec examiners looking at a company and That company can just offer them their next job,

Jason Hartman 34:03
or their anything’s to prevent that, or, you know, a lot of times these private companies, obviously, they can pay a lot more than the government. And, you know, I can just envision this concept of these sec examiners are in the conference room of this big company asking for documents or asking them questions. And they say, Well, you know, why don’t you come work here? It’s three times the fate. Does that does that happen? Or is that a mythical idea?

Norm Champ 34:35
So people do move back and forth between government and the private sector. Right? I would say that. It is more at the more senior levels of the government. So the folks in the exam program the SEC and a lot of staff, the SEC, I would say the vast majority of them are career folks who are there for a long time. It’s a very good job has great benefits, very secure, you know, Yeah, very difficult to be fired. And you know, so I would say most people stay. And so you this sort of this idea of a constant revolving door is not your right. It’s out there. But it’s not that true. It does happen. Sure. You know, I moved from the message management industry into the government, and then out only into a law firm. There are some pretty stringent things in place. So for instance, I was unable to do anything involving the SEC for the first year that I came out. And then even after that, I’m not allowed to do anything that relates to anything that I worked on while I was at the SEC. So there are some very strict ethical rules in place. And I would also I always put down to these conversations. Remember the positive right we do want to have people inside the government who understand markets understand financial institutions can bring that knowledge to bear to help protect investors. So there is a positive to getting industry knowledge who wouldn’t want regulators with where you have people with no knowledge of the industry. Yeah.

Jason Hartman 36:00
Oh, no, I, I agree with you. But that’s when they come one direction, you know, I look sort of the exam and then you know, that could be they could be exhibit favoritism toward a given company in that, that’s the downfall of that concept. And I was kind of explaining it happening the other way, where they’re suddenly taken off the case, they’re not investigating the company anymore. And now they’re working for them. And I’m like, My God, you know, it’s just these some of these large players have so much money, they can just buy their way to freedom. It’s like buying off the prosecutor or the judge, you know, that that kind of thing concerns me, but hopefully, it’s a relatively small number of times that it ever happens. Any comments?

Norm Champ 36:43
Yeah, I think I would say relatively small. No. Right. I also think that if someone left government in order to then sort of help a company that had been, you know, auditing or something, there’s a lot of eyes out there who would see that and i think i think that would be revealed pretty quickly. So I, you know, I’m I think the benefits of some circulation between the private side and the public side outweigh the the negatives.

Jason Hartman 37:10
Okay, norm, give out your website and any final comments you have about, you know, preventing the next crisis or whatever. Let’s just wrap it up.

Norm Champ 37:19
Okay, great. Yeah. So please go to norm champ.com. And you’ll see updates on both books mastering money’s out there, you know, doing a lot of publicity for it right now. going public still on Amazon as well. I think that my last thing would be that really mastering money is kind of the path action project. I believe fervently in giving people the knowledge to manage their personal finances, try to give him some of the tips try to take away some of the fear. I’m also available to do group events and you know, bring books and that kind of thing. So we’d be happy to speak to any groups that think it might be helpful to them.

Jason Hartman 37:54
Excellent norm. Thanks for joining us. Great. Thanks so much. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website Hartman. Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss

Norm Champ 38:43
any episodes. We look forward to seeing you on the next episode.

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