Money, Hubris and Jeffrey Epstein: The Fall of Leon Black, w/ William Cohan

now we're in a period of time where anything you do on Wall Street, stocks, bonds, private credit, private equity, regular loans, you know, people are just making money hand over fist.

“Hi, everyone, from New York Magazine in the Vox Media podcast network, this is on with Kara Swisher, and I'm Kara Swisher.”

The inner workings of Wall Street are notoriously hard to parse. The jargon, the complex math, the abstract concepts, makes it feel removed from our everyday lives. That is, until things go terribly wrong. But few people do a better job at breaking it all down than author and public journalist William Cohen, Bill Cohen, to me, and to many people. His latest book, Money to Burn, is about one of Wall Street's most towering figures of the last few decades, Billionaire, Leon Black,

with his private equity and investment firm Apollo Black wrote the tides of a changing Wall Street to immense personal fortune.

He amassed a multi-billion dollar private art collection that includes work by Van Gogh, Picasso, and Sazon.

But Black's ties to convicted six criminal Jeffrey Epstein, ultimately forced him out of a company he built. Black's story now feels like a familiar one, that of a powerful individual with a huge appetite for risk, who was willing to look past Epstein's behavior when there was money to be made. I really love talking about Bill. We talk about all manner of things about Wall Street right now Wall Street is on a real high.

“But there's all these warning signs of the bond markets, tariffs, the war and Iran, and it's really important to link what's happening on Wall Street,”

including this incredible risk taking especially around AI and to wood means for regular people. All right, let's get into my conversation with Bill Cohen. Our expert question comes from Bethany McLean, a contributing editor at Vanity Fair, an author of the book, "The smartest guys in the room, the amazing rise and scandalous fall of Anron." So stick around.

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Bill, thanks for coming back on on.

Carah is always a pleasure to be with you. Thank you.

Always a pleasure. You are my guru of Wall Street just so you know. We're going to talk about a lot of things, but I want to start with your new book about the rise and fall of Leon Black. Very fat book, by the way. I was with it last night, hugging it all night. You start off as an investment banker for switching to journals and for people who don't know. So put black in context for people. Why should we care about him and what sets him apart from others who may, you know, billions in finance.

There's so many of these people. Explain him for people to understand. Yeah, so obviously, right private equity billionaires or a hundred millionaires are kind of a diamond dozen these days. I don't think there's a better business you could have been in that has both legal and can make you as much money as private equity did for the last 40 years.

It's kind of hit on more difficult times these days, but Leon was always a different breed.

And he built Apollo to be a different breed than just you run of the mill private equity firm that used other people's money borrowed money and took some equity from institutional investors and then took a company private or bought a division of a public company or whatever. Apollo was always set up to be in a position to buy other parts of the capital structure and not just the equity. And what I mean by that is if bonds were trading at a distressed level they could buy those bonds hope that the price of the bonds went up and if they did great.

If those bonds however went into bankruptcy or defaulted or even more distressed they could convert those bonds into equity and get control of the company that way. And they did that, you know, repeatedly no one else was doing that when Apollo was founded in 1990. And of course they all came out of Drexel Cara, which means they were all part of the Mike milk in junk bond machine, so they knew were all the distressed bonds were they had underwritten the bonds to begin with.

My favorite example of course is like they all they'll mountain veil resorts, you know, Leon advised George Gillette in buying veil in other assets that he owned using milk and junk bonds to do it.

And then the company ran into trouble, the junk bonds traded down Leon bought the bonds at a discount converted it to equity and ended up with veil resorts and made a fortune.

“So you talked about blacks Apollo and why it was different, but what about black what set him apart from the rest of Wall Street?”

I mean I just think he thought out of the box he was didn't want to be like the rest of Wall Street. I mean obviously he went to Drexel instead of a traditional Wall Street bank. He was hit of M&A there. When Drexel imploded he started Apollo as a different form of private equity firm to have ultimate flexibility to invest in whatever security he wanted to invest in. And everyone else was sort of just using other people's money to buy companies and take them private and then flip them for sale or go to public again, Leon was busy buying the distress securities of companies that he had once financed or been part of the financing of a Drexel and then converting that debt equity to own the company.

I mean no one else was doing that. Innovative flimplamer is what you're saying to me. I'm busy. Certainly innovative and you know obviously it's all legal you know you don't like these laws. You know what I mean he's like made those deals and then he went and took advantage of the deal. And he got a lot of criticism for that. You know the amazing thing is he was like incredible escape artists too because Drexel went down and he didn't get in trouble.

And then when they bought executive life half of credit Lee and A went down and he escaped out of that while making a fortune because he bought six billion dollars worth of first executive junk bonds for 50 cents on the dollar.

“And then you know most of those bonds traded up a lot of them were converted to equity and he bought the companies took the companies and made a fortune on in the companies.”

But we talked about with Vale. Yeah, but he was an escape artist until he got caught up with Epstein and he got stuck with the Epstein paper. So while black was getting his MBA in Harvard his father Eli is running United Brands very famous huge international conglomerate that's In right in the process of unraveling Eli dies by suicide in a very public way.

And Leon experiences its trauma. He's never shown much interest in business before all this and yet he goes into finance anyway.

Talk a little bit about that because he is getting his MBA in Harvard right you didn't want to go get his MBA in Harvard. You know, sort of like my father wanted me to get an MBA and I did even though I was a journalist and didn't want to do it. But I did he was a philosophy major at Dartmouth of all places. You know, Jewish kid from Park Avenue going to Dartmouth. Okay, that's not that usual is thesis at Dartmouth was incredibly interesting intellectual having nothing to do with business.

More with heart and philosophy and literature. So he goes to Harvard Business School. His father jumps out of the pan and building. Explain why he did this. He has to do with tariffs. So Cara, maybe you're not. I know we talk about tariffs today a lot.

United Brands was the largest importer of bananas from Latin American in South America. We don't grow bananas in this country. Hello, so we have to import them and the Latin American countries central American countries started putting tariffs on the bananas that were imported into this country by United Brands. Pretty much trashing United Brands income statement. Right.

That's when Leon's father and the other executives, some other executives there thought he's like, how can we make these tariffs go away?

“How about a little boxish to the Honduran finance minister? And that's what happened, you know, small potatoes by our standards today.”

But big scandal involving, you know, the discovery that Leon's father and effect was the CEO of United Brands. It okayed the payment of a bribe to the Honduras finance minister. And, you know, he's a very highly respected Park Avenue CEO and conglomerator.

Now, now he's got up in a scandal and Leon was in his second year at Harvard Business School.

His mother was an artist. His aunt was an art dealer. He had a sister who was a teacher. Suddenly he became like the guy who had to be the breadwinner for this family. And a lot of their money was lost because it was tied up in United Brands stock, which naturally plummeted upon the news of this getting out. So that's why he went into financing needed to make money.

He needed to make money. He was going to go into like film or something. But he had gotten an offer from Goldman Sachs, which he turned down. I don't know, all these guys turned down offers of Goldman Sachs. And I don't know how they did that back then. And decided to opt to go to Drexel instead.

And he had no aptitude for it per se.

I loved of a Connie Brooks book about Drexel. But, you know, this is Michael Melkin. And it was sort of the outliers place. He was known as a junk bond king.

He ultimately destroys Drexel and is destroyed by it.

“He pleats guilty to securities fraud and conspiracy charges sent to prison by I think Rudy Giuliani.”

Talk a little bit about this experience here. Because that was sort of the Google place. But it was the outsiders to the white shoe firm. So correct. Absolutely.

They were the renegades, you know, Mike Melkin before he did go to prison. Before he pled guilty to securities violations after saying he wouldn't. But he did. And then he since been pardoned, of course, by Trump. Um, created the junk bond market, which is a hugely important innovation.

It's huge a market today.

But he conceived of it and he and Drexel pulled it off that gave them incredible power.

Both financing all sorts of companies that couldn't get access to capital in the past. I mean, basically, we wouldn't have a cellular telephone industry today without Mike Melkin and his junk bonds or cable industry. And that's just those are just two small examples. They took big risks for big rewards, isn't it? Right.

He understood that investors could make more money buying junk bonds than they could. The bonds of investment grade companies said, well, boy, you're listeners with why, but. No, but they couldn't, they wouldn't let him in like these companies. No, or Michael Melkin, right? No.

So he financed the companies that other people wouldn't finance. Uh, and they also he also financed Raiders. And gave them the money like Carl, like on to buy companies. They otherwise wouldn't be able to afford. One of Leon's great innovations was the so-called.

Um, highly confident letter where Drexel would issue a highly confident letter saying it was highly confident. It could raise the money for Carl Icon to buy, you know, some company that he wanted to buy that he couldn't afford. And it was really, it was really just a puff of smoke and a cloud of dust. It was nothing really behind it, but given Melkin's prowess with raising capital from all sorts of companies, it worked.

“So what did he learn from working with him and then the implosion?”

Um, which he escaped relatively on stage. Yes, he was head of M&A at Drexel. Right. Why did he get good at it? He turned out to be good at it.

Well, why is he good at it? Because he's incredibly smart. Incredibly insightful and savvy. And I, you know, he can be good with clients. I mean, I'm out my experience is that, uh, unwallstreet having worked there for close to 20 years was that Other guys who can just turn it on with clients and just have the meeting out of the palm of their hand,

even though they seem like rough around their edges or unpleasant to everybody else who works for them, with clients, they can be mesmerizing and Leon was one of those guys and he brought in a lot of big business. He blotted a lot of deals. You know, based on largely Millkin's clients that he had financed and roasted ranks and was flying high. And then Julie Onney, as you said, came after milk in.

I mean, you know, despite he and black of remain close friends. What was the impact on him when the implosion happened? I mean, I think he told me he was devastated obviously. I mean, every, I mean, the people who worked at Drexel loved working at Drexel. So that, I mean, they were a money-making machine.

Don't forget, Mike Millkin was paid $550 million.

$550 million for an investment banker in 1987 was unheard of. So Leon was getting fabulously rich being head of M&A. So all that came crashing down after Millkin pled guilty and left the firm. And then, you know, the firm, of course, had a run on the bank in early 1990. And basically it was liquidated.

And he goes to found his own firm. Apollo would recall the new Wall Street. Well, the innovations that I talk about in the book in the last part of the book. Since 2008, Mark Rowan, who became the CEO of Apollo in 2021. Essentially, the creator, just like Millkin was the creator of the junk bond market.

Mark Rowan is the creator and the genius pretty much behind the private credit. The explosion of the private credit market in this country.

“And that's how Wall Street has been changing.”

And that's why the subtitle includes the idea of a new Wall Street. It wasn't because of what Apollo was doing in 1990 in 2008 so much. But really, from 2008 to now, 18 years later. And this is private credit to finance things, being a bank themselves, essentially. That's right, in effect.

But without being a depository institution, without taking deposits from you and me, they get their capital from this insurance company they created called a theme,

Karen, you know, who may want to lock in a fixed rate of return for X number of years. So their money is sort of long-term capital that they then use to provide long-term financing to all sorts of companies. Talk about where the changes of the new Wall Street good for everyday people and black himself. Well, Leon, of course, he's now out of the firm.

He remains the largest shareholder. So he cares immensely what Apollo is doing. And basically, Mark Rowan has created this private credit to a juggernaut. They have about a trillion dollars of assets under management now.

850 billion of which are private credit.

So he's created a juggernaut. And of course, the rest of Wall Street, just like with milk in creating the junk bar market and the rest of Wall Street catching up, the rest of Wall Street. The alternative asset manager matters on Wall Street. The black stones, the KKRs, the Brookfields, the TPGs, have copied what Apollo

is doing and created a huge business out of it. And, you know, you will remember over probably the last nine months or so. A lot of people have been wondering whether there's a crash in the dam of the private equity tsunami, sort of speaking mixing all sorts of metaphors there. And whether or not it's a bubble or whether or not it's going to cause the next financial crisis.

And, you know, a lot of retail type investors have invested in these private credit funds wanted to get their money out and didn't realize they were limited to only 5% of their money and began making a lot of noise.

“But I think the people like Mark Rowan who are the mad scientist behind private credit”

or basically saying this is overblown, you guys are re-reacting and everybody just calm down.

But is it good for people? It's good for, you know, you put your money in these markets and it's, you know, you just kind of like the hotel California, you can check in, but you just can't check out. Yeah, are these things good for average Americans? Yeah, it's great for Apollo. Okay, we can stipulate that. It's probably good for the borrowers.

Although their capital is not cheap, but they can get the capital. It's probably more flexible capital than bank capital. So that's probably good for the borrowers by and large. There haven't been that many defaults. Is it good for the investors who invest in private credit?

Well, Apollo, of course, invests about 20% takes about 20% of each of the deals it puts together.

“So I think they wouldn't do that if those, you know, if that was ugly piece of paper.”

So I think it's probably well priced for the investors. Here's the risk era comes with the people who are getting the annuities from a theme. Like their promise, say, 5% a year on their money for seven or 10 years. And Apollo was taking that money and investing it, you know, lending it out at 10 or 11% and then probably using some leverage on top of that.

You know, the argument has been made and I explore this in the book about whether or not really what Apollo has just created is a different form of a bank. In other words, you know, they own the annuity holders just 5% a year. If somehow they don't pay that, they're in big trouble. The whole kitten caboodles in big trouble.

Or if the annuity holders, for whatever reason, even though their money is locked up for seven to 10 years, say, hey, I don't care about that. I want my money out now. They can't go to the ATM machine like they could have Silicon Valley Bank, but they can get their money out. It maybe comes to a penalty.

But if enough of them clamber for that money back, you know, the assets are tied up for seven to ten years. There could be a problem. We'll be back in a minute. Support for the show comes from Odoo.

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So we'll probably translate into a billionaire a few times over. He amasses a staggering art collection. He sits on Momus Board of Trustees. He has the trophy homes, a yacht, a jet. But one unnamed Wall Street Veteran, he spoke with said Blacks' weakness was hubris. That could be said about a lot of people on Wall Street.

Was his hubris his big problem? Again, a lot of these people have that. So, you know, my thing with Leon and I spent many, many hours stock to him. He doesn't talk to many people in the press. He's Leon, like you're this incredibly smart guy. You've created Apollo. You thesis that Dartmouth was mind-blowing. You're generally credited as being one of the smartest guys in Wall Street.

There was a cover story in business week. You know, with one word title calling you ruthless, so you're feared and envy. And people are, you know, a lot of the time, how could you do something so stupid, Leon, to get involved with Jeffrey Epstein, or to have an affair outside of your marriage.

You agreed to pay this woman $21 million and signed an NDA, and then she blows it up.

I mean, you know, I asked him that. Many times, in many different ways, and he basically said things like,

“"Life is complicated. I'm also the guy who spent $50 million each for two small Raphael drawings,”

130 million for an Edward Monk pastel." So, I mean, part of his answer was, look, there were a lot of people, wasn't just me with Jeffrey Epstein. We know that. Well, that's no excuse. No, but it's one that he uses. And there are, you know, as he pointed out to me, hundreds of rich guys within the one mile zip code area

of where we were sitting and having this conversation who had affairs outside of their marriage and who got the women to sign NDAs, and, you know, and by the way, I would know many of them he told me. And this is, you know, sort of, part of the course, again, not a great excuse. So, for you and I'll follow whether it's various missteps and scandals over the years, but eventually takes black down, is his relationship, as you know, Jeffrey Epstein.

His name comes up more than 8,000 times in the Epstein file. So, that's kind of a dumb excuse. Now, he denies any knowledge of Epstein's crime to be fair, although he did remain involved in long after his 2008 conviction in Epstein's,

“first-lessing prostitution from a minor. I think one of these things people struggle to understand”

is how Epstein got access to people like Black and Bill Gates and Bill Clinton. Talk about it, because if this is one of the smartest people I know, how is he so stupid?

You know, when I first brought up Epstein, we were having lunch in his office,

and he went over to the jacket pocket and pulled out a handwritten list of all the people who were involved with Epstein. You know, many of whom you just cited. What was he doing for all those people? That remains one of the biggest mysteries, right? You know, for Leon, of course, he passed for and Apollo commissioned what became known as "The Decorate Report", which was a deep dive into Leon's relationship with Epstein.

He said he asked for that, because he, quote unquote, knew he had done nothing wrong. The Decorate Report did not find any wrongdoing. They found that he paid $158 million. Yeah, you know, let me, let me be clear, black and sister money. He's noted in this book with her legitimate business deals related to tax and state advice.

He even told you, quote, "I've never been that sophisticated tax-wise.

They're always dumb when they need to be." A more shocking thing, he also told you you never added up how much he had paid Epstein.

“How do you square that with his financial acumen and making claims like these?”

Because it's obviously hurt his reputation, I think, probably fatally. Oh, yeah, because no one understands how a guy who could be his clever and savvy and his sharp elbowed and it's sophisticated and it's successful on Wall Street doing deals could make himself vulnerable to this guy or could have created a tax structure with a Wall Street lawyers that ended up not working and then he asked to go to Jeffrey Epstein, who's not even a lawyer.

Who's an auto-di-dact and find a solution that actually worked. And Leon and I spent a lot of time on this and I talked to many lawyers who were involved in this. You know, he did have a problem with his tax and the state planning, even though it was done by a very sophisticated lawyer who was supposedly an expert in this. He went to Epstein, Epstein, looks at the documents.

He was no tax in the state expert but and I explained it in the book. He came up with a way to have the whole document set redrafted in a new way to eliminate the potential tax liability

and that allowed for sufficient consideration for the documents to be redrafted without this problem and then ended up saving Leon $2 billion.

And you know, it has never been challenged by the IRS.

I know Ron Wyden talks about it all the time and thinks there must be something wrong with it. But Epstein's solution in just this case was very clever, very insightful. And then vetted by the Paul Wyce is the Sullivan and Cromwells, et cetera, and they all basically signed off on it. And I've never been able, I mean, I looked pretty hard. You would expect me to do to see whether there were any flaws in all that, that party line.

And you know, I would not been able to, you know, challenge it.

“But how did Black justify why he continued to work in Epstein for roughly a decade after his initial guilty play?”

And just that he was saving him a lot of money. Like, there's a lot of smart people that don't sleep with miners. Right. So here's to the justification from Leon and I laid out on the book of why he kept working with Epstein even after his guilty play for having sex with a miner.

He said one that Epstein told him that the girl/woman showed him an ID card that showed she was older than 18. So Leon said, okay, that was kind of like good enough for me. Number two is he thought, okay, he paid his penalty. Even though we now know it was incredibly lenient and kind of a joke, he paid his penalty with society.

And I believe in giving people second chances. And then he brought out to me and maybe it's true. You know, he gave Martha Stewart a second chance. He gave Altaubman a second chance. He gave Sam Waxel a second chance.

All, you know, either convicted or pled guilty to crimes. You know, he's given Mike Milkin a second chance. Senator chance and a fifth chance. So he believes in, you know, he's already told me.

“I believe in giving these people second chances there are my friends.”

I'll give them second chances. I didn't know about all of this criminal activity. Well beyond the having sex with the underage girl. So I didn't know about that. So he was a friend of mine.

He helped me solve this tax problem. He then, you know, warmed his way into Elysium, his family office. He helped me by boats and planes and artwork and sell them all in tax-efficient manners. He did not have, he had just like a agreement to work together. He did not have any written contract with all the other things that Epstein was doing for him over

many other years. And then when the Decker people totaled it up and it added up to 158 million that was apparently

news to Leon because he had never added it up before.

So he just was paying the bill. So as more details emerge about Black's tie steps. I mean, you know, as you noted, he asked the Paul's board to hire outside Council and review the relationship and the report. Exomberated him of any wrongdoing.

But and this is a big bite. You didn't buy the review findings. And I got a read which you wrote at the time of any fair. Nice try, Leon.

“You must think we're pretty stupid, gullible or insane to believe the tail you spun to the”

investigating firm. You sat down with a multiple times for this book. What would you say now? I still think that people are incredulous about the amount of money he paid. He paid to hood Jeffrey Epstein and the reason for that.

So, and I remain incredulous. And I kind of asked him myself. And he knows, he knows he read the Vanity Fair thing I wrote. And he knows I'm skeptical. It is still an incredible amount of money.

You know, one of the two main parties to this whole matter is dead. So, you know, absent any evidence to the contrary in the three million. Three million files. And I've been through a lot of them, especially when it evolved Leon. And, you know, Epstein ran to the against him and these crazy emails, Cara.

And then Leon never responded to the emails.

Two two Epstein. Two Epstein. That's right. And so, you know, despite everybody being incredulous and people are still incredulous. As a my basically, but, you know, I don't have any evidence to refute what he is saying.

Why do you think he did it? If it was not, he helped me with my taxes. He helped me with all sorts of things. He wasn't just the taxes. He helped me with all sorts of things.

Right. And he's a smart guy with these things. And, you know, Leon, you know, I get it. You know, you start talking, I don't know if you've done your own estate planning.

And you can't even figure out what you've done, even at the moment you leave the office of the lawyer who you've just been working with. I'm pretty clear on what I've done, actually. Okay. Well, you're smarter than the average pair. No, but it's not that.

I don't have that much money.

“But did you use change at all after you worked on this book with him?”

I mean, a lot of people have a lot of theories as to why he did this. And obviously, less waxed there. There's a whole gang of theories around him. And then Glenn Dubin and you knew that. I mean, there are plenty of people who have been unexplored.

I mean, Leon has been explored more than most people. Decker did do this report. I obviously pressed him on this repeatedly. We talked about it at length and on the record.

I remain in prejudice that he would pay $158 million to this guy.

And not realize it. And that there was not kind of like more to it. But I don't know if any of them is there that there was. Now, he obviously had women on the side. And he got in trouble with one of them.

And maybe others. There's been other allegations made against him. Not just, you know, gone Yaba, but two other women as well. And the lawsuits have been thrown out basically. Right.

So when and why did their relationship end with Epstein? Because if you read these insane emails from this guy, this verbal diarrhea had laid it in late at night. He was just constantly harassing Leon for more money. And as Leon said, he thought that the advice and what he was paying for with Epstein was tax deductible.

It turned out not to be tax deductible. So he thought he was paying with 60 cent dollars. He wasn't used paying with 100 cent dollars.

“So I think he just got pissed off at the Epstein with this relentless, you know,”

desire for more and more money. And he said, that's it. You're out of here. So why do you think Black agreed to be interviewed for this book,

given that you basically call them a liar in the pages of infinity fair?

Maybe because he knew I was going to write the book anyway. You wanted to get his story out there. I've chronicled other Wall Street firms. I was a Wall Street banker. He reached out to me, Kara.

I didn't even get a chance to call him up. He reached out to me and said, you're writing this book. I assume you want to talk to me. And I said, of course, he couldn't have been more open with his time. And on the record relentlessly on the record.

You know, you know, with Wall Street types. They don't like to be on the record. They don't like to be on the record. They don't like to be on the record. They'll tell you everything off the record.

Right. Was he trying to prove something? What motivated him?

“I think he would like a milk and like redemption.”

If you could get one. I don't think he's going to get one. Because I mean, milk and played guilty to crimes. And he was later pardoned for. That's a whole other thing.

Don't give me started. But, you know, he had prostate cancer. And he is obviously become. Been very, very hopeful to that whole cancer drive. He's also a milk and is probably smarter with the media than the on his been.

Mm-hmm. Right. They don't question a thing that he says. You know, he won't even talk to me because I don't suck at that tea. Leon has kept most of the media standoffish.

And rightly so, they've been cruel to him. Because the minute Epstein is mentioned, you know, Gates is a similar way, right? We don't know what he does. Larry Summers, all of them. So in the wake of revelations about Epstein, also revelations

that he had years long. Extra mayor to fill the Russian woman paid her millions of dollars to say quite about it. I love how people are just a math. Like, of course, you'd pay her to say quite. What else would you do? Like, if you wanted them to be quite.

But black resigned as CEO of Apollo and as chairman of the buzz board, March of 2021. And yet, he isn't exactly even canceled. He's still in the board of trustees of Momies, still has ties to the Met.

What's been the impact on him? Because the Epstein stays on people. I'm thinking of Gates Clinton. Some of us, as you said, he had to leave certain things. And, you know, Gates is trying to reemerge, right?

Yes. Come us about AI. Scary. Right. Leon has stuck on him a lot longer than pretty much everyone else.

The sum of money he paid him as we discussed is much higher than anybody else by a large margin. There was the Decker report, which is a public report. He's got Ron White. He's in the files a lot. He's in the files a lot.

But again, never answering the crazy things and never corresponding.

I mean, if Larry Summers had just not responded, he would not have been canceled. Okay. So Larry, you blew that. And then asking him for dating advice.

Yes. Nice one, Larry. Keep it classy, Larry. Yep. Don't ever change.

But, you know, Leon has Ron White and crawling up his ass. He's now got Comer crawling up his ass. He's supposed to go back and give it to me. Just for people who don't understand, the Epstein files were released by the DOJ earlier. Some of them contained even more disturbing allegations.

And we're not going to share the details, but Black strongly denies the substance of all of them. And as you said, the House oversight committee and the finance committee have been looking into black as part of their obscene investigations.

“So what is the biggest questions about his involvement?”

You know what? Well, you know, widen is just skeptical about the whole 158 and what it was for. By the way, he says it's 170, not 158. I'm not sure he gets that number, but he's sticking with it. He's been sort of going to quote, "exploring how billionaires don't pay their

Fisher taxes and he thinks that Leon is exhibit A." So that's widened widen is relentless. And Comer now is after Leon's NDA's. And he's thinking that, you know, he must have been involved, you know, kind of advice from Epstein on the NDA's. He's threatening now to hold Leon in contempt of Congress if Leon doesn't cough up these NDA's.

You know, of which their may not be other, besides the ones he's, he obviously shared that with one because that was public. Because of lawsuits, he's offered to share a second one. I don't know what that is. But Comer thinks they're all these other ones.

And meanwhile, he, you know, with an NDA, you know, that means two people signed it, right? At least. And if Leon unilaterally gives it to Comer without permission from the other person who signed it, that's breaking that contract. So he can't do that.

“He's at a bit of a stand-out with Comer. Comer is, I think, also wants to run for governor of Kentucky.”

And this is, like, maybe his political stepping stone for that. He's threatened Leon with contempt of Congress. He's supposed to appear in September 3rd for an involuntary deposition. So the two of them were really at loggerheads at the moment. And literally in real time.

Where does this leave him? Leon? Yeah. He's still the largest shareholder in Apollo.

He told me he has more than a billion dollars in his philanthropy to give away.

And he struggles to give it away because there's the Leon Black Taint. He is our collection is astounding. Absolutely, one of the most incredible I've ever seen. He's on GLPs. So he's lost weight.

He looks better. He wears Ray Benz sunglasses like somebody I know on this call when he's striding the halls of Congress to go to his testimony. He hangs out in the mountains. He's got his private jet flies around the world. I mean, you know, his son Benz in the Trump administration. One of his other sons works at Apollo.

I mean, you could be worse. He's worth $15 billion. So what did you take away from this book? Why him? I love writing these incredible stories about these incredible characters. So that's one thing. I mean, I just love to get into who they are.

They're personalities and why they've done what they've done and all the supporting cast. So that was, you know, I just knew it was a great story, Cara. And then another big part of it was as we alluded to before was how Apollo has changed Wall Street because what Mark Rowan is done with the theme and this whole private credit penance. And we don't really know how it's going to play out yet.

A lot of people are very worried that it's going to lead to the next financial crisis. So for those two reasons, I wanted to write the book. I got lucky that this whole Epstein blew up.

And there was three million files that I never even thought I'd have access to.

Many of which involved Leonardo. So you were working on it before this, right, Cara? Oh, yeah. As Leon read this book. I think he's just getting his copy today.

How do you think he comes off fair and balanced? I hate those words because there are Fox News laden. But he's had his say. He explains it all in detail. He laid out the case, right?

The other side of it is dead. So this might stand for a while until the other three million files come out. Which will probably be a never thing.

Well, not never saying that.

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“So other businesses, let's get to some other stories because we, you and I text a lot and talk about different things that are happening.”

Now Wall Street is very still very bullish on artificial intelligence, despite ongoing fears of a bubble. All of the Wall Street is bullied by AI and tech, essentially. Anthropics is preparing to go public soon and hoping to be SpaceX's record-breaking IPO just a few months ago. No, not a particularly successful IPO for people got in right at the start, except the very start did great. Anthropics is also expected to tell investors that it sees more than $30 trillion of potential revenue in eye-popping figure.

Talk a little bit about what's going on with Wall Street and AI right now. A valuation bubble of epic proportions, epic proportions, absolutely insane. And if people don't get sobered up by that SpaceX IPO, then I can't help them at this point. Now, it's creating valuable infrastructure that we will need for this, I mean, AI is not going away. Just like the internet wasn't going away, we needed the infrastructure and that every company that was part of that infrastructure in building it went bankrupt.

But we still use the infrastructure. The same thing is happening, in effect, now way too much capital, as you would Scott have talked about many times, is being invested in this area at its ridiculous valuations.

So, I mean, people are just going to lose a lot of money and they never learn, they keep making the same mistakes over and over and over again.

And I'm old enough now where I've lived through 10 of these mistakes. And, you know, they just have to learn on their own care. They do the horse to water, you can't make them drink. How realistic is the $30 trillion potential revenue? Sounds like you think, not realistic. Someone, they are brought it to me. And I just said, get the fuck out of here.

“I mean, how realistic are data centers on the moon?”

Okay. Probably more realistic than this. But inevitably, as you noted, there'll be a market correction. There always is. It doesn't mean it will burst necessarily. But even former golden tax CEO Lloyd Blankfine has been signing a alarm about the quote unlimited appetite for exposure to positive AI revenue story. What if anything could prompt a course correction and what would that look like when you're thinking about it? Because we all know it's coming.

You know, people always think they know what's going to be the trigger for a correction.

Very few people know, it comes out of left field. It's probably the last thing you expect. But what always is the same, Garra, is that it triggers a loss of confidence. And since Wall Street is nothing but a confidence game, once that confidence is lost in this euphoric concept, which at the moment happens to be AI and data centers and ridiculous valuations,

then it's just like, oh my god. SpaceX is a $30 stock, suddenly.

“And what were we ever thinking by valuing it at $225 a share?”

I mean, hindsight is 2020. Investors never figure it out. You know, and now there's this move to get people to be allowed people when they're 401(k)s, and pensions to invest in private equity and private credit and all these crazy things.

Please don't do it people. I know this is not investment advice never is with me.

But please don't fall for the shiny object yet again. So what are the big signals at this moment? You know, Erin's always talking about red flags, big signals, flashing red, you know. I mean, it's going to be some sort of revenue miss or profit miss it in the video, or anthropic or SpaceX turns out to be a big old dad.

I'm telling you, SpaceX goes to $30 a share as some people have predicted, you know. Then that's going to be the wake-up call. Frankly, if I think there could be repercussions if, you know, our friends at Paramount and Warner Brothers, if that deal falls apart. Because if that deal falls apart, $31 a share plus whatever ticking fee goes away,

and Warner Brothers becomes a $10 stock? Yeah, yes, right. And Paramount's guidance becomes a $1 stock and Larry Ellison is out billions, not that he may care, oracle keeps falling. I mean, it's going to add up.

It's like a string of whatever this opposite of string of pearls is, a string of calamity. Right, right. Well, speaking of that, just one of the people trying to get out of it, and the stock has been people consider undervalued.

Meda has also agreed to pay $17 billion to settle landmarks, social media addiction case. Other cases against Meda are still playing out in the courts. There's lots of them. Talk about why they settled and, you know, just for people don't know.

So the same attorney general who's plaguing Paramount was right in the middle of this case. He had a great kid. The big win for him. Big win for him. I have worn the Paramount people, this guy was really smart,

and he has a leverage on them.

I get it. They had to. Because they were going to lose. They were going to lose, and it could have been hundreds of billions of dollars.

17 billion sounds cheap to me.

Yeah, well, it's a lot of money. It's not a little. It's not a little, but it's a rounding error on their market cap. Right. And now I don't know what the stock is doing today.

It's probably trading up with the settlement. So, you know, Mark Zuckerberg slips the news again. Right. So for now. For now.

And by the way, it was criminal what he was doing to our children. Yes, 100%. So, explain why they did it.

“And why did Bonta and the others settle from your perspective?”

And what it means for their stock? Why they settled? Because why not? I mean, they got 17 billion. We're talking about it as a big win politically and financially for Bonta.

It gives him, I think, even more power over the elephants in the peace guy situation. Same guy. And so, this guy is riding high. And, you know, if, you know, he could have let it go to the jury. And he could have won more money.

And maybe gotten even a bigger victory. So, I don't know why you would have lost. I mean, the jury would have awarded less. So, sometimes, you know, you know, you can't let the perfect be the enemy of the good. And, you know, he comes.

We're talking with singers, praises now. Right. Right. So, what does that mean for the power of these agencies on the companies? Because just for people to note, Rob Bonta is the California Attorney General.

And he's pushing back against the governor and the mayor of Los Angeles.

And he's been very vocal about the paramount deal this week saying they're basically

leaking liars.

“I think that's pretty much what he said.”

But what happens now, because this is not just one case. There's dozens. And many people feel this is the cigarette moment for these companies. And it should be, because those crimes are similar. I mean, I hope this leads to a dramatic change in the way that algorithm works.

And not just that algorithm. Frankly, all of these crazy algorithms. I'm so sick of what I see in my ex-feed. And I don't have to get out of it. You can stop using it.

I know. I know. You've told me to do that many times. But it's my only social media. Go on thread.

So, then you're still with Mark Zuckerberg. I know. I'm a lot of it. So, I hope it leads to serious reform and it's long overdue. So, we also appear to be courteaning towards a devastating trade-worth candidate.

Canada announced it will pose retaliatory tariffs on hundreds of U.S. products, including steel and appliances and trumpets threat. And even higher taxes on the Canadian exports right now. The market hasn't reacted too much to the escalating threats. What make of that?

And is it because they assume Taco Trump always chickens out?

Or what's happening? How do you assess right now his grip on the economy if it is indeed a grip? Trump and Mark Carney don't get along. And I love Mark Carney for it because he doesn't suck up to Trump or cow touted Trump. And experience investment banker, right?

Oh my god, the guy is the gut the most incredible resumes. You know, chance is like head of the Bank of England, head of the Bank of Canada. Ex-Goldman, I mean the guy in Prime Minister, Canada. The guy is an amazing politician and leader. And he's standing up for his country.

And for Trump to pick a fight with Canada is absolutely ridiculous. And another example of Trump going off the rails is if we need another example. Tariffs are taxes on the American people. This tariff thing is ridiculous. You know, we might recall that tariffs led us into the Great Depression once upon a time.

Have we forgotten that? Yes, of course. We've forgotten that. So it would all lead my friend. Yeah, so when you think about this, when you look at these things,

tariffs, Iran, gas prices, insulation. Wall Street has done well. And I've had Wall Street cool say, hey, it's all going up. But I'm like, okay, you're not the American public necessarily. What do you see ahead with, especially with Trump?

Two words, Kara, bond market. Bond yields are backing up. You know, despite the great Scott Bessant trying to, you know, stick his finger in the deck. Very unique.

Paul, so to speak. Don't try to, second guess the bond vigilante. He's the bond market is saying something very important here. Like, deficits matter, debt matters. The Iran war matters.

The closing of the state of the home news matters. Gas oil prices going up matter. Your reckless grift matters. Your stupid ballroom matters. All these things matter.

And you're ignoring, you know, you're blowing up the American economy. You're hastening the time when the dollar is no longer the reserve currency. And you're not doing a damn thing about it.

“And you have to refinance parts of this 40 trillion of debt.”

You're going to need bond buyers to do that.

But they're going to require a higher interest rate.

And we now spend more on interest expense than we do on the military spending, which is unfathomable at one point. We spend more than a trillion dollars a year now on interest expense. And it's only going to go up higher because interest rates are going to continue to go up. Until what happens.

Until, you know, no one rings a bell at the top of the market, Cara. Until we lose confidence. And we have crisis. And then that's where Wall Street. Yeah, because they're all like it's all good.

I'm like, not for to do. Okay, sure. Not all good. It's not. And they know it's not all good.

But they're not going to say it.

They're not going to say it. So every episode we get a question from an outside accident. It's about the insurance company, a scene, which was under Black's Apollo and went public before Apollo bought it back. Hi, I'm journalist and author Bethany McLean and former vanity fair colleague of bills. Hi, though.

So maybe San Glenn isn't the right word. But your book isn't alarmed about a scene either. Mark Walter and Guggenheim are obviously in the headlines every day now. Would Apollo Insiders view that model is having crossed a line that Apollo slash a theme don't cross? Or is Walter's empire simply a critter less carefully disclosed version of Apollo's model?

Great question. He does a great question to his Bethany's. He's explaining who Mark Walter is. Mark Walter's head of various companies in around the Guggenheim. You know, empire that owns the Dodgers, homes insurance companies, did on the Lakers until somehow Jared Kushner's brother got a hold of it with Bob Wagner.

Don't even ask me how that was possible. I don't understand it. So obviously Mark Rowan has think he thinks he's built a better mouse trap with a theme. He thinks he's solved the, you know, longstanding problem on Wall Street of borrowing short and lending long, which is, you know, one of the major reasons we have financial crises. But I do explore at the end of my book and then God bless people if they get there.

“I think it's an incredible story, Cara, but you need to get to the end to see the questions I raise about this model and whether if these annuitants who are promised five to seven percent interest a year decide they want their money back.”

It will be like a run on the bank. It will be like Selutong Valley Bank. It will be like, you know, Bear Stearns and Merrill Lynch and Lehman Brothers. And, and that it'll take down the whole private equity, you know, juggernaut for ten years. Ten years, wow, wow, look at that.

Yeah, Selutong takes to recover from these things. So it could be the same thing. It's just a more sophisticated. It could be. It could be.

Mark, of course, says it isn't. And lots of people say it isn't. And not every one of these models is the same. The good thing is here, they'd have to go through a lot of hoops to get their money out. They can't just go to their ATM machine.

We had it still still runs on the bank or runs on it. They're still the same. Lots of confidence is a loss of confidence. Yes, exactly. So the throughline through both the book and some of the other big stories of Wall Street right now.

We just talked about a seemingly bottomless appetite for risk. Despite the fact that we're not that far removed from the 2008 financial crisis. Meanwhile, Americans are getting rocked by higher gas prices, higher grocery prices, tariffs, the high cost of housing and health care. And Wall Street, as I noted, is doing okay.

How has the continued success to private credit firms like Leon Blacks, Apollo and others reshaped Wall Street's appetite for risk?

“And what does it ultimately mean for the rest of us?”

Well, we have an affordability crisis. We have a huge growing gap between the rich and poor. None of those things are good. People are up and arms about data centers at the grassroots level. And again, we keep plowing ahead with them and spending more and more capital.

Wall Street is just committed $500 billion to Nvidia.

So that Nvidia's customers can do more data center stuff. Mark Rowan would say, we are investing our private capital dollars in senior secured debt. So, you know, if you're worried about senior secured debt, you might as well just drop off a cliff. Because that means all the equity will be wiped out. All the subordinated debt will be wiped out.

All the preferred stock will be wiped out. And all these companies will be going up and flames. And his argument is, that's ridiculous. And you know, that's ridiculous. We're senior, we're secured, we're good underwriters.

Yes. Well, that's true. But, you know, Silicon Valley Bank invested in treasury securities. They still went out of business and were liquidated because it was a run on the bank. So loss of confidence is a loss of confidence.

Doesn't really matter sometimes how good your assets are. Because we can't liquidate them to meet the redemption demand. So what? Yeah. So very, very last question.

“What story or person do you think deserves more attention?”

Who are you putting your gaze on? Ken Griffin. He's the wealthiest guy in Wall Street.

He's spying up all of Florida, half of Manhattan. He's the hard collector. The guy is controlling empires. He hasn't really gotten the treatment.

“He does out his interviews to CNBC where they treat him with kid gloves.”

You know, he's never really explained himself or his businesses.

And, you know, he's one of the most powerful people on Wall Street who is not really gotten his full investigation yet. Yeah. That's true. Anyway, it's a great book.

Liam Black is these characters are really fascinating. And this is a great book. And it really appreciate all your thoughts, Bill.

“And keep listening, reading him on Puck.”

He has the best coverage. We argue a lot about things.

But we always learn from Bill, which is, I mean, arguing good ways.

But I always earn a lot and I really appreciate all you do. I appreciate you having me on. Always. Thank you. Today's show was produced by Nishat Korawa.

Michelle Aloy, Catherine Milsoff, Madeleine Leplant, Dubi, Megan Bernie, and Kaylan Lynch.

Special thanks to Rosemary Ho, Corinne Ruff,

and Julia Sharplavine. Our engineers are Fernando Aruda and Recon, and our theme music is by Tracodemix. If you're already following the show, you're keeping it classy.

If not, you're falling for that shiny object once again. Go wherever you listen to podcast search for on with Keroswisher, and hit follow. Thanks for listening to on with Keroswisher, from podium media, New York Magazine,

the Vox Media podcast network and us. We'll be back on Thursday with more. Thanks again to Odoo for supporting this show. Odoo wants to be your ultimate all-in-one, fully integrated platform to handle everything.

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