If You Ask Me: A Global Banker Reflects on Our Times

Wriston, Walter B.


Armageddon Is Late, as Usual


Mr. Wriston, would you please comment on the charges we've been hearing about how the banks are foreign centered, and they're illiquid, and they have a lot of loans to Third World countries that are going bankrupt, and how the whole banking system is on the verge of failure, or illiquidity, or something like that?

We have to have a fresh disaster every morning. If you want to give yourself a memory test, try to remember what it was last year. A few years ago everybody got excited about loans to the developing world. I read in prestigious newspapers that they were all going to go broke. The only problem with that is there hasn't been a single default on any of them.

At any given time, in any given year, out of a hundred and fifty-six members of the United Nations, six or seven are going to be in trouble. When none of them defaulted, Iran came along, and everybody said, "Ah, now the end of the world is here." It isn't. We've yet to write off our first dollar of foreign government loans, and we have an enormous amount outstanding.

The second criticism is, "Well, you rescheduled some of those loans to avoid default." That's absolutely true. What's more every E bond sold by the U.S. Government, if it followed its own laws, should have a line on it that says, "This bond cannot be repaid, unless we sell another one of like amount." We haven't reduced our debt in this country for twenty-five years; there's no way any of that debt can be paid except by "rescheduling." No government that I know of has ever totally paid down its external debt. The United States defaulted on its debt to Britain, but Finland repaid some. It goes up and down.

The liquidity of the banking system is tremendous. It runs out of everybody's ears, so I don't see any great crisis. If money-tightening continues over time, we will in fact get a semi-crunch, which is precisely what we need.

The banking system is so stable that when the Three Mile Island incident occurred, the commercial paper market didn't even blink. Think about it. It's just an enormously stable situation.

There will always be some company in trouble, there will always be some industry in trouble, there will always be some country in trouble. The function of the banker is not to be a fair-weather friend and run when the wind blows. It's to stand there on an intelligent basis and try to work it out. For thanks, we get headlines saying "RISKY LOAN." I say again, every loan is risky. The only question is: Is it within your risk-taking capabilities?

Armageddon never arrives. People with their intellectual capital invested in the end of the world are not getting a good return. But they're still waiting.

  • The document was created from a compilation of interviews and question and answer segments with Walter B. Wriston which was later compiled into "If You Ask Me: A Global Banker Reflects on Our Times" in 1980. The original speech is located in MS134.001.034.00018.
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 Title Page
If You Ask Me: A Global Banker Reflects on Our Times
I: Getting Down to Fundamentals
The Big Cop-out
You Can't Go Bail for Everyone
Risk Is What It's All About
II: Some Basic Ills of the Body Politic
Lincoln Wouldn't Have Made It
Unpredictable Is a Dangerous Country
The Pitfalls of Single-issue Politics
Expect To Get Zapped
The Perils of Legal Pollution
The Injustice of Our Tax System
Those Wonderful People Who Bring You Inflation
Stop the Presses
Silly Premises Lead to Nutty Conclusions
Easier Said Than Done
III: New York, New York
New York City Is Alive And Well
The Road Back
IV: Careers
Rx for Happiness
Good Forward Planning
Dull Job?
A Simple Matter of Survival
Making It at Citibank
What Fast Track?
No Hiding Place
V: Once Around the World Quickly
South Africa
China: A Matter of Timing
The Real Significance of Iran
Iran and the Money Markets
Fashions in Country-criticizing
VI: The Global Financial Scene
The Elusive Eurodollar
De Facto Payments Mechanism
Too Big To Move
The Foreign Exchange Game
They Can't Leave the System
Baskets of Money
Swiss Francs
The Value of a Dollar
Not a Loss Since 1897
A Rational View of LDC Loans
Free Trade Benefits Consumers
The Destructive Costs of Regulation
The Big Rip-off
A Real Entitlement
Can Regulations Prevent Bum Loans?
The Insidious Side of Controls
Competition in Regulation
VIII: The Shape of Things To Come
Not As Big As You Think
What Lobby?
Armageddon Is Late, as Usual
Some Simple Facts about Interest Rates
An Expensive Luxury
How Big Is Big?
What We Did Yesterday Won't Work Tomorrow
A Matter of Semantics
Unpredictable Is a Dangerous Country
Privacy: A Serious Problem
The Unseen Revolution
Things Are Going To Be Different
Take the Handcuffs off Everybody
The Gray Areas of Lending
No Mouse under the Rug
Thank God We Don't Have National Banking
Competition Keeps You Awake
Accounting for Loan Losses
Not a Utility
People Like It
Computer Frauds
Some Final Words on Responsibility
About the Author