|
Frank Newman: International Perspectives from Business and Government
By Dorothy Chan (F’
03) and Daniel Ades (F’03)
“Really listen” and “understand the reality of the situation”—this is the advice Frank Newman, Chairman Emeritus of Bankers Trust, gave to Fletcher students during a luncheon organized by the International Business Relations Program on October 11th. Easily said but rarely done, these two abilities greatly influence the outcome of experiences. Newman noted that New York Mayor Giuliani best exemplified these two principles in his handling of the September 11th tragedy: he acted in command and did what was needed. Yet he also empathized with the people and communicated to them as adults, telling them frankly what he knew and what he did not know. Mr. Newman’s praise for Mr. Giuliani is based on lessons learned from his own past experiences, dealing with difficult situations in both the private and public sectors.
Under his leadership, Mr. Newman revitalized Bank of America and Bankers Trust Corporation. Bank of America was hampered by international loan problems, while Bankers Trust was troubled by a derivatives scandal when Mr. Newman arrived at each firm. Mr. Newman was successful in turning around both companies, as evidenced by Bank of America’s current market position and Bankers Trust’s appeal as an acquisition target. In 1998, Bankers Trust merged with Deutsche Bank and Mr. Newman played an influential role in the negotiating the merger. When asked how Deutsche Bank-Bankers Trust bypassed the ugly integration process that is plaguing Daimler-Chrysler, Mr. Newman attributed the smooth incorporation to the intense planning process prior to the deal’s completion. Furthermore, since the merger was about acquiring knowledge and human capital, Deutsche Bank had a vested interest in retaining Bankers Trust staff. Nonetheless, some friction did exist, but was surmountable.
Mr. Newman offered his perspectives on recent proposed mergers between American and European companies that have failed to secure regulatory approval. He emphasized that you must keep in mind the differences in perspective. A European view of market power resulting from a merger is likely to be different than an American one. Thus, companies seeking to merge must plan accordingly and be prepared to address the divergent views.
During his tenure as the Deputy Secretary of the United States Department of Treasury, Mr. Newman handled both the Mexican financial crisis and the introduction of the re-designed US$ 100 bill, which was a response to global counterfeit operations. He also coordinated governmental agencies in dealing with various international currency exchange and economic issues, specifically elaborating on less commonly known issues involving the exchange of old with new bills in foreign countries, and the interrelation of international financial systems.
For Mr. Newman, his migration from the private to public sector took some adjustment, as “government service is very different from the business world.” Yet, he highly encourages students to go into public service because it is a “great thing for any country to have people in the government with private [sector] backgrounds.”
Since his departure from Bankers Trust, Mr. Newman leverages his extensive experience to provide advice as director of Dow Jones, Korea First Bank and four internet-based companies. He is a member of the advisory board of Renault and Nissan, a member of the Board of Trustees of the Carnegie Hall Society and a member of the Board of Overseers of Cornell University Weill Medical College.
Mr. Newman has also been actively researching the social security issue. A topic that has been of interest since his time at the Treasury, Mr. Newman views the much publicized future social security deficit as unlikely to surface in the next twenty years. In the past five years, US productivity growth has hovered around 5%. Mr. Newman argues that if productivity growth stays above 2.5% per year, there will simply be no deficit. In his view, the problem with Social Security is really a matter of administration. Furthermore, he strongly opposes the US Social Security Administration investment in Treasury bonds, hinting that the government should also invest in private companies’ and its respective bonds.
In an interesting twist, Mr. Newman turned the tables and asked students some questions, specifically how the events of September 11th altered their perspectives and whether students considered two years of a Fletcher education to be enough. A life long learner, Mr. Newman quipped that he could happily spend his days taking all the courses Fletcher has to offer.
|
