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00:00Now when you're the head of the IMF I will recognize you. It's a lot of ego food which I take in store for the holidays. How did you get to be the head of the entire firm. It's often in those situations that a woman arises. So with synchronized swimming you came. You became a member of the national team of France. But I did European Championship and many international events. You experienced a lot of discrimination. When I interviewed with no firms where I was told back in those days that I would never make partnership because I was a woman . Would you fix your tie please. People wouldn't recognize me if my tie was fixed but I'm just starting to sweat. All right I don't consider myself a journalist and nobody else would consider myself a journalist. I began to take on the life of being an interviewer even though I have a day job running a private equity firm. How do you define leadership. What is it that makes somebody tick . Many people don't know what the IMF actually is. The International Monetary Fund was set up seventy five years ago by forty four men who decided were women. There was no woman in those days so forty four men in 1944 on the eve of the end of the Second World War with a view to avoiding major economic crisis major instability in the world which in their view led to the war. So that's the intention. Where do you get your money from. All the membership. Every number. One hundred and eighty nine members. Every member contributes to the financing of this common pot. It seemed to be an informal understanding that the World Bank would be headed by an American and the IMF by a European. And that has been the case ever since then. So is my correct. I want to believe that it's going to be headed by somebody who has the competence to do the job. Several areas of Asian that it has been a European and the fund and it has been an American at the bank. I think that's how they cut those arrangements in the early days at a time when the world looked a lot different. Well the world looks different today for example Asia is much more significant service to the people from China or Japan say what about us the emerging market economies are very interested in the institution. And China is certainly extremely interested as well. China has a representative on my management team. There is a managing director that's called M.D.. There is a first deputy managing director who is an American and I have three deputy managing directors. One is Chinese. One is Brazilian and one is Japanese. So there is a lot of diversity on the on the management team. Let's go back to how you actually came to this position. So you grew up in France. Now I assume. Yes. And what did you what did your parents do. Were they educators or they in government. They were both professors. My father was a professor of English literature at university and my mother was teaching French grammar Latin and Ancient Greek so that that's the universe that populated my childhood and a lot of literature . So when you're growing up with parents like that I guess you're really good at languages they made sure they you know all those languages. I was hopeless. I was really but actually I doubt that. So you were I assume a very good student. And were you also interested in synchronized swimming at that time and can you explain what synchronized swimming really is and how you came to be on a national team of France. The athletic activities had to do with the the riots that we had in France in 1968. You know students were taking the streets. My parents were terrified that I would do that too. So they allowed me to go to the swimming pool of the club so I could skip school and spend all my time by the pool and I enjoyed swimming. At the time and gradually you know one day after the other I became really interested in synchronized swimming which brought together girls . So it's teamwork that required music and liking of music and I'd always liked music and and and and discipline and methods . So I joined the team at the time. So was synchronized swimming . You came you became a member of the national team of France . Were you on the Olympic team as well. No because it wasn't in the Olympic sports at that time. But I did European Championship and and many international events and you still do swimming or not synchronized yes including this morning. Wow . How do you have time for that. I get up at 5:00. That probably helps. So let me go. It doesn't open until 6:00 so I'll have to do a bit of gym before that. What did you study in college . I had a very classic education. I studied you know the basic basic subjects that I suppose everybody studies which is French Math English geography history chemistry and physics plus some sports which were not so important in those days in France but very often leaders in France go to certain schools and they go to these very prestigious schools that you go to one of those schools. No I failed miserably because of this. Well because the first time I was I was in love with somebody who was going to become my husband and I did not study very hard. And the second year I did study really hard with a group of others who studied equally hard and I totally missed the date of registration to actually take the various example. You became a lawyer though and what propelled you to want to be a lawyer . The death penalty. I wanted to participate in abolishing the death penalty. When I started law school the death penalty was one of the the the tools of criminal law and for personal religious and reasons I wanted to participate in eradicating this penalty in the legal arsenal of France and well and unfortunately when I finished my mind my little school and when I graduated and could have joined that group the death penalty had been abolished. All right but you nonetheless stayed as a lawyer and if you practice in France . Yes I practice in France for a few years and I was doing like so many young lawyers in those days you had to do torture to do corporate you had to do antitrust you had to do Labour now . Luckily the French president to be elected was me to hold a socialist and that government came out with lots of very very hard labour low rules to benefit the unions and the workers and all of that. BAKER MCKENZIE Most of our clients were international culprits or American companies that has invested in France. And I was really busy so were there many women lawyers in France in those days. No no no no. One of the reasons Actually I joined back in McKinsey was because the managing partner of the Paris office was a woman and she was then a role model for me. Now for those who don't know Baker McKenzie was for many years one of the largest law firms in the world just the largest yes. And it was based in Chicago. So at some point. How did you get to be the head of the entire firm . You're a woman. It's a male firm more or less. If you're from France it's a Chicago based American firm. So how did you get elected to be the managing director of the entire firm and moved to Chicago. Again I'd love to think that it's pure merits and quality of the work I was doing. I think it's you know it's interesting actually. So I became a managing partner of the Paris office and gradually I was I was doing a decent job. I was picked up by the nominating committee who was selected me to join the executive committee and I was the first woman to be on that on that executive committee and then I went back to practice happily. But they came back to get me. By that time it was a mess. The I.T. budget was completely out of out of Florida. The knowledge management system was a complete disaster and management was not really trusted. So the nominating committee had a tough time selecting somebody and it's often in those situations that a woman arises. So I was selected as chairman of the IMF managing director position opens up. Did you really want the job. So many things in my life happened sort of out of the right timing the right people and my sense of all right let's try it let's do it so you're the head of Baker McKenzie. You're living in Chicago . Was it like a foreign situation because you really were living in the Midwest the United States you're really from France . Chicago is a fantastic city and I had lots of friends and I still have many of them today and I've truly enjoyed my six years in Chicago. All right so you were doing that and all of a sudden Nicolas Sarkozy gets elected president of France. Did you know him. It's just it was the year it was two years before that. It was she was still the president unveiled by the Prime Minister was the prime it was was in charge. And he's the one who called me. He called you to be Minister of Trade. Yeah okay she can't call you to be Minister of Trade and you went back and you served as minister of trade for a couple of years. And how did you like that job. I loved it. I really loved it . It was a massive change in my life geographically socially financially as well. I assume the income was not the same as you had which was like divided by 10. That's what it was. But I loved it because it was I think it was a job that I most enjoyed in government actually because I was selling friends around the world and I think President Chirac knew that I was this strange animal coming out of private sector and private life and corporate life. But I think he had a lot of respect for me and I had huge respect for him. When Sir Sarkozy does get elected president France he also means to be Minister of Agriculture which I had no clue about but I was prepared to learn. But you did that for just a few months. I did that for two months because then he asked me to become minister of finance. I think he asked me to be minister for agriculture because I knew that it was going to be a hot WTO potato and he wanted somebody who was acquainted with difficult international . Either did such a great job or promoted it for two months or such a bad job for two months they said give her another job at one of those two probably. You did such a good job they gave you that. I mean it was a reshuffling caused by the elections . Are you the first woman to be a finance minister of a major country in Western Europe. Yes yes I was. I was the I was the first finance minister for G7 country and one of many countries actually. So you were a lawyer by training and all of a sudden you're in charge of the finances for France. Did you have any background or were you worried about not having that kind of background or your job before it as a minister of trade help you . I think the whole background helped me. But I recognized right from the get go that I was going to have to learn enormously and and learn from the team from the Treasury Department. I had to work very hard. So you did a very good job there by all accounts and then an IMF managing director position opens up. Did you really want the job or did you have to be persuaded to move back to the United States. It's you know so many things in my life happened sort of out of the right timing the right people . And my sense of all right. Let's try it. Let's do it. You know when I returned back to France as a as a minister I had not thought for a second about my pension my compensation the reporting lines how it would work out. I just I just wanted to do it. I wanted to help the country. As finance minister I don't think that I anticipated at all that two months into the job the beginning of the financial crisis would loom as a result of the closure of the two BNP accounts. But you just roll your sleeves and work and and and team up with people who know what they're doing and who have a good moral compass. I think it's a combination of all that. Now you've done a very good job with the IMF. By all accounts one of the things that you have to worry about is not just countries that are not doing that we all need some money but the economy of the entire world because your job is to help promote stability and development and also employment. How do you think we are better prepared around the world for another financial collapse of the type we had 10 years ago. No I think we are a bit better prepared. We're better prepared because at least in certain areas we've learned the lessons. When you look at the banking system when you look at the ring of supervisors when look at the set of regulations that apply. I think that in that particular sector we are much better prepared. You know the banks around the world almost solid capital ratios liquidity ratios leverage in on all those fronts. I think we've made significant progress. There are areas though because risks tend to to sort of travel to the fringe. And if you look at other areas you know Asset Management pension funds fintech developments those are areas where I'm not sure that we have the same the same added security that we've developed in relation to the banking sector. Now there are other numbers that are much more worrying when you look at debt. The weight of debt on corporate sovereign and and households as has gone up by virtue of the stimulus and the indebtedness that had to develop as a response to the crisis. Now when the euro was created it was thought by some at the time that it might become a reserve currency. Why do you think it really has not. I think because the job is largely unfinished. It's very advanced and I think the great financial crisis has as moved the euro and its in its institutions in the direction of consolidating with a stronger backstop with a stronger set of institutions and with more unity amongst the 19 members of the euro area but did the job is not finished yet. Banking union is not yet completed and there is still too much uncertainty in the fiscal policies that should be common to all or at least to share the same objective. So let's talk about Brexit for a moment. When do you think that will be resolved and I think we will know on on on March the 30th 2019 because that's the cutoff date when either there is a brutal exit which would be extremely costly and detrimental to both the UK particularly and the EU to a lesser degree. Or there is an arrangement that deals with the period of transition into this new regime which can be a variation of free trade agreement between the UK and the European Union which can go from the Norwegian model to the Swiss model to the Canadian model and which will have to respect one thing which is a big red line for many. And that's the Irish border which was agreed in this Good Friday Agreement . But if Great Britain does get out of the EU do you think that will deteriorate the European economy in a significant way. I think it will be net negative in all cases. The variability of net will depend on the brutality of the exit. The more brutal the more negative it is and I think it will be in any circumstances more severe for the UK than it will be for the rest of the European Union and within the European Union. You have a few countries that will be more exposed than others. Those that deal frequently with the UK such as Ireland probably Belgium probably the Netherlands. So have you noticed that when there's a very difficult problem sometimes the men don't want to do it they give it to women to do so. You said it not me. Well that the prime minister of Great Britain is a woman and none of the men seem to want to take that job because they know it's a very difficult no win no win situation. They're probably prepared to come and take the job afterwards. So yeah probably the case now when you're the head of the IMF two people come up for selfies they bother you. I don't recognise they recognise me. They ask yourself these and it's very nice and it's it's a lot of finger food which I did I take in store for the holidays . Let's talk about another part of the world China. Do you worry about Chinese growth going down. You have worry about Chinese debt or not. Chinese growth has been going down regularly for the last 10 years or so. Remember the days when it was a double digit. So it's gradually come down. And every time it was moving from a 10 to a 9 to an 8 to a 7 there was always trepidation and I've heard so many times that China was going to collapse. It hasn't collapsed. It has certainly helped a great deal. The global world economy at the time of the financial crisis because it was certainly one of the first if not the first country to come out with a huge package of stimulus in order to kick start the economy. So yes it is a heavily indebted. Yes . They're trying to rein that in. But at the same time it's a country that has a huge population which has massive transition issues to deal with and where the necessary reduction of growth that we're seeing by virtue of the size of this economy now has to be monitored has to be under control in order to tame any any risk of conflict. That's how I see it. What about the tariffs. President Trump has been talking about imposing tariffs and has imposed tariffs against China and some other parts of the world. You think that's a plus for the global economy or you think it's not. I think that tariffs are not a good idea in general if they impact trade. To the point that trade no longer plays the key role as an engine for growth. What do we see in the last 30 years. We see trade growing faster than growth. So it's been a driving engine for growth. We see lots of people taken out of poverty. We see the cost of living in advanced economies including in the United States lower by virtue of cheaper refrigerator cheaper television set. It's cheaper telephones and so on and so forth because they're made in countries where costs are much lower. So there has been huge benefits not only benefits but there have been huge benefits . And I don't think we can dispense of those benefits going forward. So my take on that is fix it don't break it because trade needs fixing. There's no question about it. And I think that President Trump has put the finger right where it hurts . There are issues about the trade rules and organizations that need to be addressed and dealt with. Let me ask you this. You have spoken about the fact that women should be in corporate boards more than they have been corporate boardrooms and CEOs and perhaps you think you've made a lot of progress. And why do you think women should be more represented in these positions. I think there is a very clear economic case now that more women on the board. More women on the executive committees and management teams actually generate better returns better results and better profits. So if even if you have a very very cold hard to no moral imperatives and no sympathy for women and for the principle of inclusion even if you were that person you have to consider it including woman and bringing them to the table and to all the tables . Have we made progress . Some. Yes. And when I look at the numbers it tells me that we have made progress altogether. Do we still have a long way to go. Yes as well. Did you experience a lot of discrimination because you were a woman as you were rising up in your career and do you feel you're still experiencing it today . I did experience discrimination from from the you know the first day when I interviewed with law firms where I was told back in those days that I would never make partnership because I was a woman or when I was regarded by Japanese clients. For instance in those days as a woman who can serve coffee when I was actually a practicing attorney drafting contracts and negotiating for them. And there are still instances when I walk in a room full of men and I can just tell that there is this little smile about their face which is either here she goes again. She's going to talk about woman or wonder what she has to say. It's less so the case for sure but when you're in a minority that's what you experiment. What is the greatest pleasure of being the head of the IMF working with the teams. And what's the worst part of it having to sit through meetings which endlessly repeat the same things and end up nowhere. OK. Well she didn't say interviews that ask the same questions you were nice enough not to say that . I'm sure you've been asked these questions before. But just before we wrap up. You said you're going to finish your term here. When you do finish you'll still be relatively young by most standards. So have you thought what you might do when you finish your term at the IMF. No I'll come and talk to you David . OK. You'll give me some good advice. Now when you're the head of the IMF and you go to have let's say lunch or breakfast in a restaurant in Washington or other famous cities do people come up for selfies they bother you or you can kind of go where you want to go without being bothered. No no I'm I'm recognizing. They recognize me. They also sell fees. They are very and most of the time. They're very very nice and flattering and and complimenting and and so on. And it's very nice. And it's a lot of finger food which I I take in store for the holidays. Any regrets about your career. No no regrets . Like people would say. Well thank you very much for taking the time with us and thank you for the great job you're doing at the IMF. David .

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The David Rubenstein Show: Christine Lagarde

Christine Lagarde, managing director of the International Monetary Fund, talks with David Rubenstein about how she became head of the world's largest law firm, her stint serving in top roles in the French government, and her leadership since 2011 of the IMF. The interview was taped at IMF headquarters in Washington on Sept. 19. (Source: Bloomberg)

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