Henry Kaufman Quotes

[F]inancial markets have evolved at least as dramatically as... manufacturing, work, technology, education, and business regulation since the turn of the previous century.

[F]inancial markets can be considered one of the great wonders of the world.

Salomon's growth over the next generation would astound even its most optimistic partners. ...And as we would all see to our amazement, Salomon's rise was reflected in broader and equally dramatic transformations in the financial markets—as credit burgeoned, financial crises occasionally rocked the markets, prices and interest rates moved with new volatility, institutions underwent massive shifts, and monetary policy emerged as the dominant force in sustaining economic growth.

Billy Salomon... along with Charles Simon and Sidney Homer predicted... that research would become a critical function of the firm. ... Sidney was given a free hand in creating a bond market research operation. Years later, he wrote a... memoir... Fun with Bonds. Sidney was taken into the firm as a general partner when he was nearly 60 years old. ...such a step would be impossible today ...Sidney wrote with great clarity. ...I later came to appreciate his great historical sensibilities when he asked me to review and edit a draft of a book... A History of Interest Rates... covering 40 centuries and 40 nations.
When Sidney and I met... he was looking for an assistant to help him build a research department devoted solely to money and bond markets.

The proliferation of credit instruments, financing techniques, and vast matrices of trading and investing opportunities requires highly objective evaluations of risks and rewards, and a sense of historical perspective, if excessive risk taking is to be avoided.

[A] balance sheet is a snapshot of one moment in time, and thus presents a very limited view... To be a good banker, therefore, a business is much more than its balance sheet.

[T]he most striking feature of America's Gilded Age banking and financial markets is their lack of regulation. Wall Street was periodically upended by... colorful figures such as , Jim Fiske, and Jay Gould to manipulate prices and corner markets. The only force countervailing against such panics was a handful of more responsible investors, most notably J. P. Morgan... [who] engineered a successful rescue operation after the ... That episode inspired Congress to begin... plans for a central bank. After all, Morgan couldn't live forever.

I take great pride in being an American. Consequently, when financial excess threatens our economic moorings, and thus our extraordinary dynamic and pluralistic nation, I have often spoken out for saner behavior and more effective policies.

[F]inancial markets are... a microcosm of the people and societies they serve. ...The extremes of market movements reflect the extremes of human nature and human emotion—from optimism and elation to pessimism and despair. In financial markets—as in life—rationality prevails most of the time.

Judgements on the performance of our economy require a clearly defined objective. Too often... there are multiple and contradictory objectives. Unless we are clear on our... objectives, we are not able to evaluate performance as good or bad...

[G]ood bankers understand the shortcomings of accounting and know how to correct for them.

Often the real value of management decisions does not become apparent until many years later.
Perhaps what we should do is try to analyze the impact of decisions in any one period on longer-term performance. In the political arena, for example, why should we emphasize the skill and acumen of national policy-makers only on the new initiatives they introduce and legislate? Sometimes the events that do not materialize are more important than those that do. We should try to ascertain what decisions political leaders are undertaking that will benefit their nations subsequent to their terms in office.

In the 1890s and 1810s corporate consolidation inspired an enormous public outcry against the "trusts" (...big business). Newspapers overflowed with editorial deriding... "robber barons," and for the first time in American history the federal government stepped in to regulate... First came the ... designed to limit discriminatory railroad rates, and then the Sherman Anti-Trust Act of 1890—Congresses' first attempt to constrain monopolistic practices. In practice, both acts proved to be weak against the predominant power of big business. For decades, the courts in effect made regulatory policy in how they interpreted... these two...

The credit approval process began with the analysis of balance sheets and profit and loss statements. For those who know how to unlock their secrets, these documents can contain hidden traps, as I soon discovered—and was later reminded by some of the more spectacular credit problems of recent decades. Balance sheets tend to overstate assets and understate liabilities. Inventories commonly are assigned a large cash value after they have become obsolete, while receivables that are ostensibly current are quite often in arrears. Inadequate reserves constitute yet another common weakness that is poorly reflected... A receivable is a current asset, but it could be a slow asset.

[D]uring the ... the federal government took large strides to regulate corporate America. ...[T]he federal government managed to break up several trusts (including the , American Tobacco, and ) and to establish the Federal Trade Commission and the Federal Reserve.
In our time, business consolidation is evoking no similar reaction.