Watch ahead for your business, a new building for employees, international expansion, truest business lifecycle advisory, can help get you. There learn more truest outcome, slash commercial banking, truest bank member empty. I see you now thus far calling and the pumpkin spite latte is back at starbucks from that first sweater too late autumn, whether it's all a fall in just one sip order ahead on the starbucks up the their Stephen dublin before it started with today's episode. The quick reminder that just launched a membership program called for economics, radio plus as a member. you will get a weekly bonus episode of freakonomics radio, every friday plus you can listen without ads to sign up for friggin. I'm sorry

plus visit the freakonomics radio show page on apple podcasts or go to freakonomics slash, plus and now on this week's episode. Ok, it's quiz time for one point: if I asked you to name the ceo of f t X, the giant crypto currency exchange say: I'm guessing the name that comes to mind is this one sandbag mainframe they ve been freed? F t X, founder sam bagman, free jury selection is expected to begin for the much anticipated trial of sand bank men free. You said, SAM begged me read out the view. Half a point: it is true that he was ceo of empty eggs at one point before he turned thirty. He was worth more than twenty billion dollars in f t x had such massive momentum. The bangemann freed was

talked about, is potentially the world's first trillion ere. He was also good at spending money on real estate donations to the effective, altruism movement. Also gold donations. He gave publicly to democrats and privately to republicans why the secrecy, their as he later said, quote it's because reporters freak go. If you don't two republicans they're, all super liberal and I didn't want to have that fine banknotes need is now in the middle of a much bigger fight. Late last year he was booted from empty x and then arrested and he's currently on trial in new york for variety of serious fraud charges. Those are the official churches, unofficially he's been charged with olympian hubris and standard issue: stupidity. He was the head of the company here involved in everything any took money and

bent it on stuff. They had nothing to do with the business, and that is the current ceo of empty x. I'll, give you five points. If you can name him, I didn't think so do you down so I'm john ray- I am turn around specialist. My chief role is to the head or chief, restructure officer of public companies that get in a financial and other legal trouble? John ray is what you might call an emergency seo his biggest job before ftp ex enron. Today on for radium a conversation with rate about what he and and cant do as the emergency ceo at empty ex. We talk about. Why he's so willing to publicly trash sand bank been freed, and why weirdly there no place. He would rather be every ceo in america is jealous of this job.

And I think the This is broken, mix radio the podcast but explores the hidden side of everything. With your host stephen, no When you talk to John re, one thing becomes clear: very quickly is it he loves what he does. What I love about the businesses when the economy is great, there's always stupidity and fraught when the economy is poor. You ve got both those issues plus you got market impact. When interest rates rise companies, rover leverage in they're gonna end up bankruptcy, so in both good cycles in battle. ghost there's always business ray is a bankruptcy expert, but he's not an expert in any particular industry. I asked what he knew.

Bout, crypto, currency exchanges generally and after ex, specifically before he took over absolute zero, I knew of crypto hadn't really followed. It did the intricacies of it certainly did no one, think about after tax. But having said that, I have been involved in probably it doesn't industries and never been specialist in particular industry, because I'm really bankruptcy in legal process. professional, and it doesn't really matter what the particular company is. They have two x cases. A perfect example of me shooting into a case literally and no notice whatsoever, sometimes ray is brought in to try to rescue a company in trouble. Some he's brought in when a rescue isn't possible and then his mary job is to find out where all the money went and try to claw back as much as possible for the stakeholders. That's pretty much the case with the current job of tax here are just a

you, the other firms were re, has been brought in their work. Enron, as I mentioned earlier, they were a huge energy supplier and trading firm that imploded in two thousand and one there was: or tell networks the big canadian telecom company that went bankrupt into those nine. In a sort of mortgage company called red cap which went bankrupt in twenty twelve, he is, so done. Work for polaroid, pacific lumber early in industries and an infrastructure fund that invested in south africa. three reasons why you go into bankruptcy or it One is a very common problem: you're just be trimly overleveraged straight in those are frankly, if there's no other way, was this the easiest of bankruptcies. Why? Because you take all the people who let money- and you say: ok, how you own the business, you reduce the amount of debt and all of a sudden, the cash flow from the business community, run the business and not have to support that. Overleveraged balloon doubt that very simple problem it can be done on paper. Has

nothing to do with the business world. The other reasons. My favorite reasons: fraud fraud can take many many forms or whether its hijacking the balance sheet or stealing money or be having liabilities. The union tell people about, for example, I got brought into company. It was the largest you trans transporter of crude oil didn't know anything about shipping business, of course, but they brought me in because they had some My abilities that they had not disclosed period though they were relying on some advice. that was knowingly only appropriate, and it was Ass of liability, by the time we were resolved with the irs, it was over three two million dollars of undisclosed, liabilities to the government and so there. You go that's perfect example: nothing wrong with the underlying shipping business, but what brought it in fraud

so you ve got overleveraged. You ve got many types of fraud. What else then, there's just plain stupidity: people operate a business poorly in there, just not smart about what they're doing and they drive the company, bankruptcy and there's a couple different ways: they can do that they invest in things they shouldn't invest in their way outside their core captaincy cycle Michael Jordan decided that he was going to play basketball. Instead, he was going to play. Major league baseball as good good of an athlete does, he of baseball situations, where perhaps that the me changes the company's don't change with that right. They don't keep pace with. What's happening around them, they operate a bit would blinders on in the world passes by them so other than you last reason, which was essentially lack of business flexibility. If you look at the the reasons you ve given for why a firm will need you. It's like empty ex, checked every box and then some yes,

Ok, so I'm not usually brought in aware. There's just high leverage, and all they need is a sort of a balance sheet fix, I'm typically idea and where there is a conflict of interest with management or theirs elements of fraud or crime and I'm kind of nick in this sector. Many of the sierra an acronym virtue for sharks officer many, of them are with large organisations and when you get into the conflict scenario or the fraud scenario. A lot of the big firms have conflict in I'm a single guy, probably one of the few certain been around the longest. As the single guy, I have no conflict. So, for example, when I was in four enron, one. There is that was brought in, was because we were suing every bank virtual you're around the world and all the big firms they had conflict represented the banks and multiple capacities. When you're suing someone for multiple billions of dollars. You don't want to know that

his side hustle is some other engagement with the bank in the case of enron. The problem wasn't just some other engagement, the big restructuring firms may have had with the banks. It was the fact that the banks were accused of helping enron cover up what turned out to be years of high stakes fraud, which is why John re, when he was brought in to help pay back enron. Investors sued those banks, we recovered several billion dollars in the litigation that no any anticipated. We are hard, bargainers and We were ready to take stuff to trial, I don't mind settling, but I always want to be ready for trial, as they say, plan for rain pray for son having with eleven banks, all big international banks did end those go to trial or were they all settled? Eventually, we subtle, but we didn't subtle city unsolved early the day of the trial. At the time the then ceo had stepped down, and if you ve been around long enough in you follow the stuff. Everybody

What happens when a new ceo consent as the first thing to happen tripe? I grew up going to catholic school, on church every sunday and they would hand the basket out and they pass it down and when you throw money and worth when a company has a new ceo. He goes down to the post office and he holds out the prayer basket and says through all the stuff in here? That's gonna, come back to haunt me in track from earnings under my watch? and then we write the stuff off and we blame and on the old guy. So I I knew that they were going to take a massive charge right because that's like the first toilet flushing that happens when the new ceo comes and I'm like I want to be part of their big flush with John you ve been called a lot of interesting. Things in the business press, alot of descriptive labels befitting you're unusual job. Do you have a favorite, though? First label I ever got was when I was doing and the want of the creditors For me as a pit ball. When I get into a problem, I think my teeth into

and I dont want out of my sight until its resolve, to my satisfaction very Tenacious, very aggressive, but you have to be in we'll circumstances, and so my time on the something you really get. A shake me off john rate. Was worn in nineteen fifty nine and grew up in pittsfield massachusetts towards the western edge of the state, then if you actually look up pittsfield en wikipedia some very very bizarre. Facts like I think the first baseball gamers according to their the first death, I, a secret service agent, happened in pittsfield mass lot of things there, but the house, gee town. I grew up g in general electric. They had a huge manufacturing facility in pittsfield. and they were, the towns biggest employer. My dead work for some I'm a g than he was an outside contractor gee? I was in the plumbing contracting business, house plumbing, but in a fact we gotta plumbing and then you

Oh, do you mess am hearst, you graduate coom louder Science did fine and after that you enjoy for senator tat Kennedy I did. I did, and I understand you thought about running for office. I did I like working for kennedys office This was circa. Seventy nine I worked in there ass office, which is basically their constituent office, and I would say ninety five percent of the traffic that came through their people needing help or people who could not and would probably never vote. He wasn't helping people to vote for him or to raise money for him or to do him favours in that office literally help people for the sake of helping people. It was like, while he's doing this as its good, so I had caught the fever a little bit.

But re decided against running for office. Instead, he went to law school at drake, university and moyne and then move to chicago, and I interviewed three different law from triumph the same day all one day. I do everything quickly by the end of the day three offers and at the time my wife's parents live next door and a lake with at that time he was sitting federal judge in these what did you interview and I say, b and c So I saw what you need with, and I said see well we'll see was mayor brown and at the time they had just been through pen square in their client was continental bank pen square was a small oklahoma bank that collapsed in eighteen. Eighty two continental illinois was bigger bank that had taken on a lot of bad loans from pen swear. In order to prevent a catastrophic bank failure. The federal government took over continental

The law firm that re wanted to work for mayor brown had a long standing relationship with continental, and there is lots of tabloids about in a house affect the firm, its future and partners and all the other stuff. And I had to other law firms that were very, very good law firms, and so that fell just looked at me and eagles. Oh, my god, why would you do that? Like? Didn't you read the paper? Don't you understand? Other problems are going through and I that's what I kind of like about him. I said they're kind of the underdog they're going to work harder. There, to change. Things are not do things differently, the other firms after all, worthy. I want to go with the firm, that's kind of down a little bit his words failure there's opportunity for the right person that May have been the first time. John re understood that failure breeds opportunity, but it was far from the last. His next job was at waste management, the trash company the year I got there. I think we did three hundred small acquisition and in the same within the law firm, which was so so true, is that if you

waste management, the lot apartment you did everything from a to z, adultery disowning, wait what the adultery of there being a fair, the sales guy with somebody else in the office, and there would be so discrimination claim there would get filed out of it. It covered the water from very legal issue. So as such broad broad experience in nineteen, ninety eight re became general council at the clothing manufacture, fruit of the loom, best known for its underwear. A year later, the company filed for bankruptcy and re. Chosen to oversee that process. A few years, after that he got the enron job ever since. Been jumping from one disaster to next. So what's his plan for empty ex that's coming up, I'm stephen abner! You were listening, if we cannot really

Success ounds different in every business through a spanish lifecycle advisory starts with listening to understand your business now and into the future. Learn more. truest outcomes: slash commercial banking, truest bank member. After I see here, thou That's fine calling and the pumpkin spite lundy is back at starbucks from that first sweater too late autumn, whether it's all a fall in just one step order ahead on the starbucks up. in case you don't know anymore about crypto currency than John re did when he was brought into run fdx we can, you with that. Last summer we put out the three part series called: what can block chain do for you? You may want to start with episode. Number five o eight, whose called does the crypto crash mean the blockchain is over optional, but perhaps useful anyway.

Just a few months after we put out that series, in early november of twenty twenty two words started to get out that the crypto currency trading exchange, F tax was insolvent, co founder and ceo sand bank been freed, rambled, to raise money to save the firm, but he couldn't stop after ex customers from selling their crypto and cashing out. It was basically a bank run other top. Ex executives immediately quit the firms lawyers were telling bank been freed. He should declare bankruptcy and turn the pretty over to John re at eight p m on november tenth one. The lawyers sent bank been freed. The paperwork that would give full control of the company John re within think, urgency they pushed him to sign it. four in the morning on Friday november. Eleventh been freed signed

John raised first move as emergency ceo was to file for bankruptcy in delaware, there's other cases. I've been involved in where there's weeks. I had a time where europe brought in, but it's a real case where your lily brought in within the twenty four hours. A few days later, re submitted his first written statement to the delaware bankruptcy court, I have over forty years of legal and restructuring experience. He wrote. I have been the chief restructuring officer or chief executive. All Sir, in several of the largest corporate failures in history, never in my career? Have I seen such a complete failure of corporate controls in such a complete absence

trustworthy financial information as occurred here, this situation is unprecedented shortly. After that re testified in front of congress. You have two experts: collapse appears has done from absolute concentration of control in the hands of a small group of grossly inexperienced unsophisticated visuals failed, implement virtually any of the systems. Are controls that are necessary for a company entrusted with other. Was monnier assets when you committed these bankruptcies. The way I do there is such a freedom, because you were involved, you didn't do anything wrong, so you can come in there with it. Clean heart and an open mind, and you can say what you know. There's one thing you said to congress. He said this is just old fashioned. Embezzlement. taking money from others and using it for your own purposes. This is not sophisticated at all. I think me people who knew anything about after ex we're, probably surprise birthing,

gosh? I thought it was extremely sophisticated. So what was your purpose and being that blacken wait really in your description. What because I think people were sort of look This is a condemnation of crypto. They all crypto is bad. One congressmen tried to get me to call it creepy dough and I'm sorry, not a crypto expert, I'm certainly not a regulator, but I looked at this and said: I don't think that's the issue. I think this is just someone stealing money. Really. Units of his get away of enron was very sophisticated. They was set up separate special purpose vehicles into off balance sheet. Transactions and so on and so forth, meaning when they lost they would separate to get it off the main books so that the company still look good you're saying that was a sophisticated. counting fraud, at least in this case. What were the types of in their crimes and how unsophisticated where they feel, compare this to end rather than for this. The burning made off both those companies they didn't just here-

one set of books. They had two sets of books. We don't have a set of books. We don't even have one that's the big difference, because if you took those two books new put together, you ve got the true picture of what happened very accurately recorded mind you, but Here I mean we don't have you no income statements, imbalance, she's, they don't have records of loans. They made all kinds of, and actions are not documented. This is like shattering glass and looking over the floor, trying to pick up the pieces. So how do you do that? It seems like it's kind of a rinsing act as much as anything, but if there are no records and if there were just tens, hundreds of millions of dollars flow. In and out of the main firm to associate firms to outside firms to partners, but then also these donations to political candidates. Donny. Instead, the effective, altruism movement, millions and millions and millions of dollars without record keeping. Are there enough clues

and trails to all that money to essentially recreate where the money went or are there some things that will be forever lost its her size is a daunting exercise. Essentially, what we have to do is create a recreate those books as we go. There are very primary level, and you start with you know: asset movements in and out of bank accounts and you trace. the money they came in the body that went from one area to another where it all we ended up for some outside source and you have a right to get it. You go get it. You know you sort of put humpty dumpty back together again So as far as I can tell John une generally, don't spend a lot of time, trashing the previous management when you take over a failed firm, but that's not the case with empty x and say embankment freed, you ve disk, I had him at length, as you know, the control childish not transparent. Why is this case different people have to

understanding of what happened right, unlike some bankruptcy, lot of bankruptcies are commercial parties affected right, for example, if kmart, if you will, has a trade payable, this not paid their commercial party, they need Sheila contract. They understand the industry, they knew the risks are etc. Customers are a bit different. They don't stand. What happened? We have come there's all around the world and multiple languages, the road Explanation of what happened so we ve tried to take extra steps to tell them what happened. Because really it's a shock in its unexplainable to them and you ve gotta, given the backstory, but the one thing that I'm responsible for is just increase value. Increase value increase value so that ultimately, there's less to fight about. I just figure: if I bring in an increase value velvet problems will now actually either be made lesser or solve themselves, but is the ultimate allocation in the hands of a judge in delaware. Is that the way works at the

the day we put forward a plan, we try to get as many people agreeing with it. In every case, I've been involved in we ve had a consensual I am sometimes it takes a lot of negotiations, a mediation to get their theirs promise to remain, but ultimately try to get a compromise? that everybody can agree with that. Everybody is always a hundred percent happy, but people get on board four things, and then we put therefore it and ultimately the judge, their substance. Urged in some statutory tests about fairness and equity, that the judge has to apply non and that's the process. So John, if you had to predict what share of all dollars would you say, will be recovered. Oh I'm not gonna adventure. I don't know. Underestimate our ability there. What is empty ex a year, from now does exist, or is it wiped off the face of the earth? He don't it's hard to say we're lookin very strongly at restarting the exchange. There were some capabilities, the exchange that people liked there was.

certainly a need for competition within the sector, but look if there's a life for the market will determine their Frankly, then we'll do it makes sense to maximize value for creditors and, at the end of the day I dont have a pre determined I know people possessed me like what your plan then I wasted. My plan is to maximize for the growers, however plan their takes. That's what we do John, not long after this happened. I flew into atlanta and I summoned in october, and the guy came with the nice His car I'd ever been in period forget about an uber, must be one hundred and fifty thousand dollar car, and I said, what's up lake, what are you doing with this car driving newberry said? Well, I've got some t x problems right now I mean there's people I've got children, they're gonna, put you through school, they ve got a house may have mortgaged if you were a cost,

and you have money, hung up. You wanna, get it back as quickly as possible. I have occasion to actually talk want anyone to creditors and enter their personal stories? You need to be able to do. That. if you dont step in those shoes and see it That angle, you really do driving yourself of the ability to fight, We understand the problem and if you dont fully understand it, you can't solve it. I grew up in a very sort of rough and tumble background. But the other side is that there's a guy that grew up in a town like that a blue collar town where people didn't necessarily yet what they deserve, and so always in the back is fighting for their own or doc the process, obviously because there are so many countries affected in such a large process of investigating and collecting and According to the liabilities in developing a plan, listen natural slowness to that process.

And bureaucracy of that process and its hard to convince people that people. My job care about that, because or are viewed as making love of money and so on and so forth. John re doesn't come cheap. He built at thirteen hundred dollars an hour and on a job like this he brings with him a large team of lawyers and consultants. As of this recording the total bill since ft x declared bankruptcy is well over three hundred million dollars. Those fees come out of the pool that will be used to pay back creditors. Crime is very expensive. You know a lot of people get hurt and it's very expensive to fix it right, but, on the other hand, word sort of investing in a recovery. If you look at it from that perspective, do you who ever work on more than one bankruptcy at a time. I only do the time active there's another sort of troy should these guys called independent directors and they get cold

in by the law. Firms may drop em in the car, and these are about to go into bankruptcy and they form a special committee of these independence, and some of these guys have ten cases going at a time, and I just know it is like to be involved heavily in one case that mean, if you you were right, a sort of richer lifer part do in ten of them would absurd? So it sounds like there should be a bigger market. for people like you? Why isn't there? There is a very big market for it, but I think it channeled through these big firms. These big firms are can its known for managing bankruptcies and bringing in chief restructuring officers. Some of the biggest are empty. I consulting alex partner. there's an average marcel if you go the bigger firms, they ve got a pyramid mile right, which means there's ten people at the bottom and above them or five, people above them are three people and then there's one guy above him, its leverage,

Your bill in somebody out, as you know, a thousand dollars an hour, but surely Panem three hundred, that's the average model and so everybody granite gravitates that model I dont have any laboratory right bill nedda my cause, that's what I make and a lot of people come to me and say, like our you dumb, why don't you just add ten people and I've? Never to do that. If I anyone industry, whether a crypto or whether its energy retail I can hire, in class advisers best in class consultants to be met employees on any given case the best people in the world, the best judgment, the highest output people I don't have to rely on the bees and seas I got all is shortly after John re took his current job, the walls journal published an article headlined, does empty excess you see, I have the worst job in corporate amerika re thinks the journal as it backwards. He says that be an emergency ceo for whatever company is better than being irregular, see

Every ceo in america is jealous of this job. They are absolutely detest. The fact that they can't do what I do so I come in theirs office. I dont like we're not using. I rejected out a bankruptcy there's a contract, there's that very favourable. I get rid of it I look at all my employees and I say god we ve got a hundred too many. I get rid of on that day. There's a business that's not making money. I go in and I just shoot it. Boom gone done now, don't make sense, does not probability success. I shoot it see. I can't do that right. They just can't do that. They will have civilian other processes, and everything happens so quickly to your taking ten years of a life of a company in what optimal It would be everything that you would want to accomplish and use link wrap this thing down to twelve. Eighteen months and you certainly turbo charge everything its dynamic its exciting

fewer you've ever a condo board right, it's really I call lowest common denominator business. The least. Jack idea gets done everything, that's a problem. I want fix like tomorrow, because that's the key is that I'm used to in most see owes they'd have to. I thirty separate meetings with each of the independent directors. Maybe at the harvard club or something and they have socialized the idea forget them to John it now that the writer Michael Louis, had been hanging around with sand bank and freed when f t x went under and he was. Writing look about him. I'm curious whether Michael's information was helpful to you in any way. Now, I'm way too busy to help Michael on his book. No, asking if there is anything in his reporting that was helpful to you, because you know you walked into this total chaos where there was no chronicling of anything and I figured he has at least been chronicling-

he probably had I witness to a lot of the bills being generated from the local restaurants, but obviously our focuses really. I collected marshalling assets and preventing further liability. So he's got an angle. I don't know what it is and wish him well in that that Michael Louis book on same bank been freed has just been published. Its called going. in it the rise and fall of a new tycoon. We are. Planning to interview louis about that book. Sometime soon. If you have questions, you would like us to ask him. Send us an email to radio at freak anomalies. Dot com If you need some Michael louis before then you might want to listen to an episode we made with him last year on the twentieth anniversary of his book money ball. That's episode, number five, twenty three! We called it did Michael just get lucky with money ball after the break more with empty is emergency ceo, john ray and we ask, would you want to?

you re. If you were city there was going bankrupt, I'm stephen governor. This is for economics, radio, we'll be right back. I tell people are real. Experience comes from several years of operating a company when the most wrestling industries in the world, so we were was transition, and that is something I find something they most people Would you download piece of an animal by control We were able to go from a very stressful industry to southern. We felt like feet. Moreover, we are in that's the hospitality and hear that

that's fine calling and the pumpkin spite lundy is back at starbucks from that first sweater too late autumn, whether it's all a fall in just one cept order ahead on the starbucks up So at one point, sandbag winfried was worth an estimated twenty four billion dollars. What's he worth now, I would the thing zero. Unless he's private away, some ass! I am not suggesting that he has, but now there's no value for him. Now are you concerned for him, I'm sort of past all that right now now it's about taking what asked us. We ve got and making sure we maximize valuing disturbing it to the creditors. Have you ever spoken with sam bank been freed now? Never well. I should say that Is it about the first forty eight hours he popped out. A couple calls that wasn't a personal dialogue was sort of a group call and there's a couple. Word spoke

by him in a very a vase of answering questions now unseen, these emails from sandbag been free. Do you november thirteen hey John I'd, be super happy to chat here, phone etc november. Fourteen actually love to talk to you, John and I dont need my counsel to talk first and ready, prepared to talk and think it would be very constructive in here full, so you don't answer those. As far as I know, no, it's pretty clear for me what happened in the company and what is wrong was- and I didn't really want- have any dialogue with him, based on what I knew at the time many years ago, I head involvement with the guy and one of the things I learned which I've cap with me. For decades now is that if you have a conversation with just one other person, you can never deny. You had the conversation and then it becomes an argument about what you said. Or he or she said now. You know longer arguing about, whether or not you ever had the conversation thou, the

yemen is down to who is more believable or who actually gets out the word: first about what was said Sophy, It does not have the conversation. You keep things cleaner. Yes, my brand, if you will is that you may not agree with me, but you're never ever unclear about what I'm telling you one criticism heard of your being so public about how poorly the company was run. Was that the more we're chaotic and absurd. You could make it sound the more that it may be to your benefit, to make your role seem even more heroic, so are you may be over selling the chaos? Look if I wanted to get fame. I have certainly been doing a very, very bad job up until now. Right because you couldn't find a picture of me on the No, you don't just wake up his sixty four and say you know what I want to be there

those most famous guy. I want to look like a hero. No, I don't do that. So I've got through my entire career. You barely confined I existed as a human, and I wanted it that way as we speak there were that by gnats is the biggest crypto exchange in the world that started in china, but they moved around there now in big trouble with: u s, regulators, a department of justice, as he see if they go under Can I interest you in another emergence see yo job. You will be a crypto exchange pro by then with that interest you occasion, I've done back to back industries and I learned enough that I probably I'm not a repeat guy when it comes to industries. I want new people to dislike. I want to learn from things: divers short attention span hang around after these cases, I'm like a guy with light,

two machetes women, my way through the crowd. So let's say I am an american city. That's got deep rooted financial trouble, maybe my ex bases dwindling. Maybe I've got under. The pensions I may be looking at bankruptcy down the road. If I'm that city, is John re someone. I want to call for that. However, bearing that is the total profile of case that I would get into so yeah chicago wants to go in I'll, be there. Let's say I am the mayor of chicago, and I say John, my city is spiralling in some familiar ways with safety and real estate and so on. How do you think about that job? These are no different than corporation these are highly leverage to some case. They have too many. employees. They have a bad business plan.

A business plan. The relies too much on death. Their income is off to look at the city at Detroit detroit through a bankruptcy, totally changed the economics of the city, but it's really no different than private enterprise, but I would think that in the case of a city The creditors are people like retired transit workers who have guaranteed pension and so on so Let's say you want to declare bankruptcy in Chicago. How do you think about making creditors hold to some degree? Pollack theirs? way that everybody comes out better off than they were in any bankruptcy. That's very, very rare. I've had never of case swayed made transverse hall and in every one of those situations there has to be compromised, be consensus and really that's kind of the role of somebody my job is to bring people together, show them the problem and with them to find a solution that perhaps maybe is imperfect, but it's the best all for them on a long term basis as opposed

this hitting the wall and crashing so are ok, if we call up the new mare of chicago and offer your services Absolutely I know the city well, I lived there for twenty five years on and off they ve got the balloon payroll I've got a lotta legacy costs this right down my alleyway. We did call the office of new chicago mare, Brandon Johnson, to see if you'd be interested in hearing from John re shockingly need never heard back. Thanks to John re! For today's conversation he doesn't do a lot of interviews. So I'm glad you did this one. Let us know What you thought our email is radio at for economics. Dotcom coming up next time on the show one big reason: we don't learn enough from failures, says that we don't share them systematically enough. We kick off especial series. The brain just knows that you ve been a ban

it, makes it look like. Maybe you were incompetence serious about failure about failed relationships. I actually don't think they're a failure. as for different darwinian reasons, failures of the imagination is prepared for problems, a b c d enough and something like em comes out of the blue max you failures, determination part of my problem was. I did not ask enough questions and failures. The cut deep It was my tipping point or I just when I'm done and it broke me, but you don't have to stay broken together. We will be learning from all this failure. Our new series is called how to succeed at failing and it's one of the best things we ve made in some time that starts next week till then take care of you. And if you can someone else to an member to check out for economics, radio

Thus our new membership programme we'll get a weekly bonus episode every friday and you can hear our show ad free to sign up visit Economics, radio, show page on apple pie or go to phenomena that come slashing freakonomics radio is produced by stitcher in rent, but radio. This episode was produced by ryan Kelly and mixed by gregg ribbon withheld from Jeremy Johnston. Our staff also It's a lean common eleanor osborne elsewhere, nanda Gabriel wrought jasmine, cleaner billy camphor lyric bout, its morgan levy, neil karun, rebecca early Douglas lily and zack levinsky our theme song is MR fortune by hitchhikers all the other music was composed by luis gara. As always. Thank you for listening I'm like the guy, I'm such misery, grouch oscar, yeah when things are horrible. That's good right!

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