Christine Lagarde: You Have to Pick Your Fights and Really Persist | Fortune

well good evening we are so delighted to have Madame Lagarde and I have we've tried a few times before and I want to give a good shout out to our mutual friend ambassador su chuan for convincing you to come so Andy's shared with us obviously needless to say there's a lot of financial crisis issues that we have to deal with in this conversation but as is our prerogative at most powerful women summit we want to get to know you a little bit first and Andy started that process and of course everybody knows the firsts about you the first chair of Baker & McKenzie law firm first finance minister of a g8 country first female IMF director but there are a lot of little known facts about your time here in America you did work for William Cohen where you you opened mail during the Watergate period where you got to from French Canadian citizens from Maine and you had to do impeach Nixon don't impeach Nixon that was sort of your job the other interesting thing about about you is that you spent a year at Holton Arms you were pretty daring you smoked cigarettes you use chamomile in your hair to make it blonder you ate copious amounts of yogurt but here's the most interesting fact to me you hated math and in fact yep in the yearbook you said please no more math how did someone who hates math become the most important woman on the international financial scene well thank you very much for the introduction I did and actually I think I still do but I think the way math was taught both at Holton and prior to that in in in French school were certainly not conducive to you know people not so inclined to actually like math when I when I then studied law and and economics actually a bit the lots of things that things that I liked about having a more scientific approach but I still don't like math to this day and I'm delighted that I have really fantastic economic rest's expert in modeling people who know it all about math and I listen to them and I pick their brain it gives us all hope as math leaders so you know when you went to interview for this the IMF job it wasn't just a given I mean you went through a pretty grueling process can you describe that well the process had to do with having the support of as many countries as possible and there were a few competitors to begin with the most serious one was my friend Augustin Costin who is now the governor of the Central Bank of Mexico so he was zigzagging the world in one direction and I was exacting the world in the other direction to make sure that we did not meet and yet we had to cover the same essentially the same authorities in the same countries around the world so I never travelled as extensively as I did at that time and then that was followed once the sort of the short list was was arrived at that was followed by an interview with with members of the board which was quite quite an experience because that board still today only has one to board off 24 members and there is only one woman on the board who is there are few alternates but as far as members are concerned there is only one female member and that's the u.s. representative but that day meg had to attend the article for review with Treasury and and Fed so she was not sitting at the table as a result of which I was interviewed by 24 men which was you know an interesting phenomenon when you are yourself Minister of Finance you've handled the presidency by France of the g20 you've gone through the crisis of 2008 2009 and there you are facing in the 24 very Curtiss respectful and nice men it came as a shock yeah and we have to cram I mean was it a difficult learning process to get through that it was exhausting because prior to the 24 board setting I had to spend half an hour with each of the 24 over course of two days so that was that was a bit nothing comes easy even in your life no no no and it's interesting any some career choices have been made or at least one was made for you in that the male-dominated French school that and I that turns out French politicians and bureaucrats and so forth you were turned down twice by that school talk about that but also some career choices the decisions that you've had to make along the way and what was the best advice you ever got well I think having been turned on twice first time for incompetency the second four for having missed the deadline what do you mean by that incompetence in what I was I wasn't prepared enough I hadn't studied hard enough and I was I was in love that year so I spent love life so and the second time around I missed the deadline and I think that was a you know missed you know whether that was a good turnout of things or not I don't know but twice to say that I went back a few years later and I was asked to give a speech to those young bright kids from in art and I have to say that that day I've had really really powerful you know I had flunked and there I was coming to tell them about the legalization of Society of some really obscure matter that they had no interest in actually but you know two things that I take away from that is you fail somewhere you know bounce back get on with it have a few drinks or whatever takes you away from that but move on don't don't don't don't you know start don't feel sorry about yourself don't lose confidence just move on move to something else the second time I felt exactly the same is when I I interviewed in Paris at the time for one of the top law firms and and I had all the credentials and I had done all the right things and the resume was fine and I was behaving properly and all the rest of it and the hiring partner who was also the managing partner said to me well will will will take you will take hers and associate but don't expect ever to make partnership and that was a really really very high standing you know excellent offer and I said well why is that that was back in seven in 79 and he said well because you're a woman so again you know I packed up my things and I just run I didn't want to have anything to do with these people so sometimes you have to pick you fight and and really persist but on other occasions if people don't deserve you just go move on did you get advice along the way or did you create your advice you know in those days there were not many not much by wolf mentoring coaching and support so I had I had my mother to support me and she was a she was an extraordinary support idealized your father when nearest is 60th and I constantly opposed my mother but she was nonetheless a great support and I didn't really know it but she was a role model and I constantly had my fights with her but that's we often do that daughters and mothers relationships are complicated but then I was hired by a female partner at Becca Mackenzie and she was a role model for me she was she was the strongest she was in my view the best lawyer in the in the firm and she was always discreetly in those days you had to do things quite discreetly she would support the young female associate an elegant I think he said she was she was yeah yeah always yeah you I'm gonna let you say this in French you've referred to this this or a bite the bullet and keep smiling you say it's great your teeth and smile grit your teeth you smile so that's a phrase I believe you learned during synchronized swimming a sport that you took up which is into it interestingly enough you took it up in 1968 when the schools were shut down over a student protests right but you went into synchronized swimming you've also said that as a woman you have to elbow your way in what's an example in recent years or especially at the IMF where you've had to apply both of those or either of those precepts no I'm not sure I would say elbow you weigh in because I in that there is something of you know sort of push people out of your way and I think you can very much progress and and make your way as holton would say in when you're mooyah mouth vacuum if you remember yeah for those who don't speak Latin on a day-to-day basis it's you know I'll find my way and if I don't find it I will make it so I think you can actually make your way you can you can follow your destiny without necessarily being aggressive without pushing people you can you can let other people progress as well along the way but you should not shy away from the things that you are you feel strongly about and I'll give you an example when we had you know we had to deal with Greece quite a lot in the last few years and by two years ago we had great difficulties about you know what was the next step and was the debt sustainable or not and over what period of time would it become sustainable and there was a lot of a lot of disagreement a lot of controversy a lot of political ganging on that particular topic but I knew we we were right I knew we had checked the numbers times and again and I knew that the debt sustainability analysis that we were producing was sound solid and and it was a good principle on which to build to help that country restore it the situation so I stood my ground and when Angela Merkel said Oh Christine you know how can you be so certain a debt sustainability analysis is only a debt sustainability analysis after all and I said yeah but that's where you want to anchor everything you do and if you throw you know zillion in a country you want to have a good anchoring point so that to me was a bit of a defining moment when we stood our ground other members of the troika were not necessarily as convinced as we were but it wasn't elbowing my way I was saying we've done it we've reviewed it it's it's solid in terms of analysis and we have to build around it and you got some heat for that and you got some heat for suggesting that Greek the Greek style of paying taxes probably wasn't up to snuff and you got some heat when you said that the European banks were undercapitalized let's take that sharp eye to Europe right now and tell us what needs to be done a lot needs to be done but I want to because it's easy to do to go for the Euro bashing that that's that's been the game for the last two years and they have done an awful lot for people who don't understand Europe they don't they don't understand what they've done but you know I've been finance minister for four years and they have done a lot what they need to do today is keep up keep up the work keep up the reform that they have started doing you know that's the case for product and service market it's the case for labor market it's the case particularly in the in the banking sector there's a lot of fragmentation still going on there is not a good monetary transmission going on they have to work on that they have to continue the job that they have started they will be doing a lot of what they call balance sheet assessment asset quality review stress testing and all the rest of it I don't think we should start from the basis that then they're going to do a bad job we should give them the credit of wanting to do it seriously wanting to coordinate the work from the ECB where my Mario Draghi has done an extraordinary job to rescue that zone but now that they want to do it it's going to be messy there will be obstacles there will be hiccups on the way there will be bumps on the road the media will say how terrible it is at the end of the day they will make it I'm convinced of it and I think that there is the political will the political urge to actually keep it together those people some of them have suffered in their flesh in their family from what's happened but seventy years ago they're not going to let it drop like that because of lack of courage their courage will be eventually there to to respond to the the challenges to huge challenge you bring eighteen countries together I'm talking about the euro zone here you bring eighteen countries with 18 different flags 18 different national anthems 18 different defense and you ask them to have one single currency one single set of fiscal policies that are compatible with each other and to bring their banking system and the one roof with one resolution system it's a four job yeah I'd love to go beyond this there's so much more to say about this but time is short so we do have to turn your attention a little closer to this town I thought of your tirtir your precept to grit my teeth when you had all the ministers here this weekend and you watch what was going on on the hill I wonder you know but you've also spent a lot of time here and understands the political system here were you not sure explaining it or tearing your hair out and you don't exceed ah yeah you don't understand it go ahead you know what was complicated this week actually is that we had about 300 ministers of finance and governors of central bank from all around the world and we had you know we had a focus which was essentially unconventional monetary policy and consequences for the rest of the world how do we develop anchor the recovery how do we make sure that emerging markets are going to continue to do well without suffering from tapering and da-da-da-da-da and and the only thing that was on their mind was when is this going to end what what is this discussion about the debt ceiling and it was it really completely overwhelmed the discussion and it's believe me it's difficult to explain I mean you can explain the sort of direct fiscal consequences you can try to imagine what the indirect consequences will be you can try to speculate about what a message will be on the markets you can imagine the accident you can assume that it's going to be worse than previous events but it's difficult to explain the rationale behind it and you've warned of course over the last couple days a massive disruption if Thursday passes and there isn't a deal but what if there is a deal which most likely will happen where the deadlines just pushed off for another two months another three months doesn't that create an uncertainty in the markets in and of itself what's the danger of putting off the deadline it's going to be to put Susan Collins and her friends but but and sandbag globish are yes back to the drawing board yet again because I think that it will reactivate the same sort of trepidation anxiety and and worries what's amazing is that the United States of America first largest economy in the world is still and will probably continue to be regarded as a as a safe heaven to which money can flow back when there is trouble now you know it's a bit like a rubber band when you pull you pull you call you pull it works it works it works and but who wants to take the risk of that braking so again so there's danger to even putting off the deadline till January or just reactivate the same debate over right and is there a danger to the economy the US economy and the world economy by not addressing the debt I mean not me like I don't I mean like not not you know taking steps to address the US debt did you consider that a damper on the economic growth yeah that it's a it's the most serious thing that could happen if it is not addressed if it's not tackle tackled it it will it will be very very damaging and not just for the US economy for all economies I guess I mean like an you know reform to you know bring spending and borrowing into line you could consider that you see well that's that's another debate you know I think that the most critical one is the issue of the debt ceiling okay that's an issue of you know default no default what's a technical default works a real default and so on and so forth but so that's what your that's the most urgent matter the rest the fiscal policy of the United States of America i summarize it for my simple mind as you know slow down but hurry up and describe that well so down means no brutal heavy-duty fiscal consolidation in the short run because you're going to prevent recovery from taking roots and console and strengthening but hurry up to take the measures now that are going to deal with the the long-term liabilities that will come to haunt the United States back in 2020 whether its entitlement or whether its high interests that will come to haunt the economy in the in 2020 if nothing is done before so that's why we say hurry up do it now because it will produce results in the years to come and it will address the situation that would otherwise be very difficult in 2020 there's a lot of talk about a new normal in the US and then frankly in the global economy where we're going to have even when we have economic growth it's not going to be followed by job growth do you see unemployment rates getting to pre-recession levels and at what point if you look at numbers in this country and if you look at unemployment numbers it has progressed enormously it's gone from the highest 10% down to 7.3% so granted the participation rate is probably lower and the number that we should also look at is employment numbers but there has been progress and jobs are being created it's the same in other countries not very fast in Europe and in the eurozone in particular but you know they're all signs of hope where those jobs will be what will be the job content how the economic model is going to change to you know to what a business model are we heading to I think we we are facing huge transitions at the moment and they'd better have jobs because otherwise we're not just facing economic problems will be facing social problems and you've warned about a rush to the exit for the feds what you call unconventional monetary policies eighty-five billion dollars a month in the QE program is that something you communicated to Ben Bernanke before their decision to stay the course you know central banks are independent but what I have said including in Jackson Hole where all central bankers get together is that given that the feds decisions has impact across the world it would be appropriate not just to communicate well not just to gradually phase out but also to cooperate with other central bankers so that they understand what precautions they have to take what consequences it will be for them and they can prepare better so I'm not sure they all happy to cooperate I think I think there would be well advised to do so good and I know you wanted to mention our may that IMF came out with a gender study which is the first time I believe that you've looked at the impact of gender in the world economy can you talk about Japan in particular as an interesting case study of what for cultural reasons women aren't in that economy to the level they are at other in other industrialized countries what is that done to growth in Japan I'm looking at the deal the way what could it give to growth in Japan and we we just recently published for the first time and study that is called women work and the economy but we also did a special chapter on Japan because Japan has a very specific issue they have an aging population they're not particularly immigration prone to that say the least and currently Japanese women are not participating in society as much as the average OECD country so the resources that the Japanese people can tap into are the Japanese women but fall sorts of reasons including cultural lack of institutions that can help with childcare and and a general sort of attitude of society towards female participation it's not happening now as a follow-up to that study that we published exactly a year ago I'm pleased to report that maybe not attributable to us but Prime Minister Abbey has made it part of his budget and commitment to actually really fond childcare centers in Japan and to encourage women to join the workforce they are far better educated than Japanese male they really can contribute to the growth of society and by our account and I don't claim the math credit to it but the teams are doing it the GDP of Japan could increase by about nine percent just as a result of their participation and that before the end of the decade so that's really help an important two more quick questions before we get the cane you and quick answer to this you've gone from describing quotas for women in your in terms of Europe for women board members is offensive to saying it should be a temporary measure at least correct what it done pretty Misha I'm sorry quotas for oh yeah yes we're members yes sorry honey of Europe we're back to Europe real quick yeah yeah yeah so you think they're important as a temperature but look it's working when when I was finance minister we supported a bill that went through that requires that there be at least 20 percent women on the board of companies by 2014 and they'd be 20 percent as 40 percent by 2020 devic see exceeded the threshold of 20 percent already so I think quotas should not be a long-lasting feature because we can do better than that but at least in the first stage when you have such a big step to take yes temporarily I think it's it's very helpful and we should use it it will be used by the land upon European basis since you won't answer this last question I'll ask the audience to answer it Madame Lagarde is French president dog thank you so much it's been an honor thank you

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Keywords: Fortune Magazine, Wall Street, Business News, News, Finance, Fortune Most Powerful Women Summit 2013, Talk, Interview, Speech, Washington, D.C., Leadership, Female, Equality, Freedom, Smart, Intelligent, Power, Christine Lagarde (Lawyer), IMF, International Monetary Fund (Organization), Managing Director, Economy, Fortune (Magazine)

Id: 9p1wJhUjINk

Length: 25min 8sec (1508 seconds)

Published: Tue Oct 15 2013