#190: The Chairman of NY Signature Bank on COVID-19, the Economy and How to Manage in Uncertainty

Mar 25, 2020

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In today’s episode I got to speak with Scott Shay who runs the 40th largest bank in the US and has also been through the 87’ stock market crash, .com bubble, 9/11, 2008 financial crisis and now the 2020 COVID-19 pandemic.

I loved this episode because I was able to geek out about economics, the financial impact of our situation and what his thoughts are for what the future could hold. I was able to cover a lot of ground with someone who is at the ground floor of the economic impact that the pandemic is and will have on our country’s economy.

There are two truths that keep our world going round,

The belief that the future will be better than the present and past
People will leave their homes and go out and buy goods and services.

We are currently living in a reality where these two truths are in major jeopardy.

With the quarantines happening nationwide, American’s are not able to consume… therefore, leaving businesses without revenue and the profit to keep people employed who in turn can’t pay their bills, and so on.

Roughly 70% of the US’s growth is based on the American consumer… if people don’t wake up and purchase goods or services, then the entire system is vulnerable to a collapse.

The country has tons of leverage (debt). Public companies, Small Businesses, Private Equity firms and American households have been borrowing from the future to fuel their needs. This equation works just fine when you have confidence in the future and people are consuming… until there is a bump in the road…

What you will learn:

How Scott grew Signature bank from scratch to a publicly held company with 1400 employees and $50 Billion in assets
Scott’s thoughts on the economic after math of COVID-19
Why Scott decided to build the bank from scratch versus starting through acquisition
How to have conversations with different stakeholders (your bank, vendors and suppliers) while in a cash crunch
What could happen to business valuations going forward
Why we need to recalibrate the discount rate
The potential impact of a recession on Private Equity and Pension Funds
Why the 2020 recession is much different than 2008
What the government bailout might mean to small businesses and the economy
The Golden Rule of Banking
If it makes sense to acquire a company in an “efficient market”
Why we need to go back to the basics in business
Where good economic policies come from
How to get people different opinions of religion, politics and policies to talk
Why Scott wrote a book about religion in his “free time”

The Takeaway:

If you are wondering about the potential economic impacts of the country’s shut down from COVID-19 and what our new reality might look like, then listen in on today’s interview with Scott Shay.

Quotes:

“Thank god this isn’t the influenza of 1918!” - Scott Shay

“Everything in modern life is so convenient and yet, becoming more and more fragile and it’s a serious concern.” - Scott Shay

“We’re in a global economy. All these countries are, you know, bleeding with debt and we’re all intertwined with the investments we have.” - Ryan Tansom

“Are you going to have more value or not? Or is it just, in the short game, to hand off the bag to someone else?” - Ryan Tansom

Resources:

Scott Shay, official website

Scott Shay, LinkedIn

Scott Shay Ted Talk, YouTube

In Good Faith: Questioning Religion and Atheism by Scott Shay, Amazon

Antifragile: Things That Gain from Disorder (Incerto Book 3) by Nassim Nicholas Taleb

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You can also reach out to me via email at rtansom@arkona.com, on my LinkedIn, or you can call me at 612-720-6530.