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CNBC: I read that you have a chart system? How does that work?
WILBUR ROSS: We use charts, not stock trading charts but business charts, and the way they work is, when we're looking at an industry we try to put down in paper everything we can imagine that's wrong with the industry. Usually it's quite a long list. We then go over it, and over it, and over it, and over it till we're pretty well satisfied that we've identified everything that is wrong or is very likely to go wrong. Then we start work on a second chart, which is if we have control of this industry, what would we do to fix these problems. When the two charts get more or less similar in length, that's when we get serious about investing.
CNBC: So what's more fun, looking at the problems or looking at the solutions?
WILBUR ROSS: The solutions are always more fun than identifying problems. We're basically optimists even though, we're dealing with situations than have a lot of pessimism.
CNBC: How does Wall Street perceive what you do?
WILBUR ROSS: I think different people perceive it in different ways. Some people joke that we're kind of the eraser on Wall Street's pencil and not everybody's comfortable with that. In general, I think we get along fine with the street. After all, the street is the manufacturer of the products that we deal with. Somebody has to fix them. Then there are lots of transaction fees for the street. Both when we're fixing and then when we go back out publicly they merge with another company or whatever.
CNBC: If you could explain what that phrase means, “the eraser on the pencil of Wall Street.” WILBUR ROSS: Generally speaking, companies get into bankruptcy as a kind of meritocracy. Somebody made some sort of big mistake, to get into bankruptcy, and very often, a part of the mistake is too much leverage. So part of what the pencil eraser does, is getting rid of the excess stuff that was on it. That's usually only the start of things because, it's very rare that you have a fundamentally very strong company, and yet it goes bankrupt. As a result generally you have both a bad balance sheet, and a bad business, or at least serious business problems, which need to be addressed. So it's really a question of two erasers, rather than one.
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