Influencers with Andy Serwer: Suzanne Shank
In this episode of Influencers, Andy is joined by Suzanne Shank, President and CEO of Siebert Williams Shank & Co., as they discuss changes in the muni bond market, issues of diversity in American boardrooms, and why she says the bipartisan infrastructure package will be 'invaluable' to the USA.
Video Transcript
- Congress is in a final sprint towards trillions in spending, and the tax hikes to pay for it. At the center of this high stakes moment is a deceptively simple goal, infrastructure overhaul. Lawmakers could learn a thing or two on the subject from Suzanne Shank, the president and CEO of investment bank, Siebert Williams Shank, one of the nation's leading municipal debt underwriters with a specialty in how to fund infrastructure projects.
She began her career as an engineer before she realized she could have more impact financing projects than designing them. On this episode of Influencers, Suzanne joins me to talk about her assessment of the spending package in Washington, the surge in IPOs during the pandemic, and what corporate diversity truly requires.
ANDY SERWER: Hello, everyone, and welcome to Influencers, I'm Andy Serwer. And welcome to our guest, Suzanne Shank, CEO of Siebert Williams and Shank, a Wall Street firm. Suzanne, thanks so much for joining us, nice to see you.
SUZANNE SHANK: Andy, good to see you too. And thank you for having me.
ANDY SERWER: Of course. Why don't we start off by telling people about Siebert Williams and Shank for those of us who are not so familiar with the firm. What type of banking do you do, and how big are you, for instance?
SUZANNE SHANK: Well, the firm is a full service investment bank which has become actually one of the most active underwriters of publicly traded equities, corporate investment grade debt, and municipal bonds. And we also provide strategic advisory Services and asset management. It just happens that our firm is-- we have about 135 employees, and we are both majority women-owned and majority owned by people of color.
ANDY SERWER: And one of the founders besides yourself was Muriel Siebert, a Wall Street legend who I had the pleasure of meeting years ago. Tell me about your relationship with her and how you got to know her.
SUZANNE SHANK: Yes, Mickie had a huge influence on my career. I started on Wall Street in 1987, had been working diligently at several firms moving my way up, really kept my head down and had no aspiration of becoming an entrepreneur. But Mickie Siebert approached me and another banker to start a firm wholly owned by women and minorities. And literally, we had dinner at a New York restaurant, shook hands, and started the firm the next day.
So she was a fighter, as you know, the first woman to have a seat on the exchange. She never went to college. She understood the battle of having a firm like ours exist, and we initially started really in the muni space and grew to, you know, now being a firm that is very active in most sectors of the market.
Mickie taught me so much, and you know, I really miss her. She became just such a wise advisor whenever we faced, you know, a big issue in the business. It was the first person I would pick up and call. And given her breadth of experience and her trailblazing history, you know, she always had very sage advice to share.
ANDY SERWER: And when was that dinner? What year did you start the firm?
SUZANNE SHANK: 19-- it's been 25 years actually. October 1, yes, 1996.
ANDY SERWER: Oh, congratulations on the anniversary.
SUZANNE SHANK: Yes.
ANDY SERWER: So you guys are a small bank though, compared to, of course, the giants like Goldman or Bank of America. How do you compete against Them
SUZANNE SHANK: Well, we compete differently in different sectors. So in the muni space, we actually compete head-to-head. We've done deals as small as three million, up to a little over a billion as lead manager-- as sole lead manager. And we've really built a desk and a banking team that, you know, they have resumes from all over the street. And they compete head-to-head, and we have tons of repeat business.
In the corporate space, I would say our position is one of many, many years of serving clients and building relationships. So for example, we have over 44 Fortune 500 clients where we provide commercial paper services. In that sector, we compete head-to-head with other firms, and are often told by those companies that we are their best performer.
With respect to corporate bonds and equity IPOs, prior to last year, most of the time we were a co-managing underwriter. And so what we try to do, we cover all the largest institutional investors of course, everyone does, but we also try to provide access to second and third tier investors, some of whom are minority and women-owned so that they get access to corporate bonds and equity IPOs. So we provide great diversification of investor base by having our firm be engaged.
ANDY SERWER: Let me ask you a few questions about the muni market because it's pretty darn interesting right now because well, for one thing, at the onset of the pandemic, investors pulled money from muni funds for fear localities with face revenue shortfalls. What was it like weathering that period of uncertainty? And what's the status of the muni market these days?
SUZANNE SHANK: Well, you should know my perspective is this was the third crisis that I had seen in the muni market since I started it in 1987. Just a couple of months after I started in the business, we had Black Monday. Then we had the Great Recession where the market shut down for a period of time. And then last year of course, with the onset of the pandemic, it brought the municipal market to a virtual standstill.
As you mentioned, we saw significant outflows from bond funds, and it led to massive wave of selling. What we did as a firm-- because our clients were all very concerned, you know, municipalities need to access the markets on a regular basis-- is we set up twice a week town halls. And we had economists, we had the head of the teachers union, we had, you know, credit rating agencies all come in and talk-- and institutional buyers-- talk about their views of the market. So that we could give our municipal clients access to information and understand better, you know, what was occurring and how quickly things might open up.
So around last May, we start to see some improvement in that continued throughout the rest of the year to now. We've now seen 27 weeks of positive inflows into the markets, and the technical strength of the market has continued allowing really, municipals to resist the swings that we saw perhaps in the Treasury market.
We think investors have a lot of cash to put to work, which has led to both low absolute rates. The 10-year MMD is below 1%. And we just think it's a great time to issue. And we see that other issuers think that's the case because this week is a really big week. There's $10 billion expected to come this week, and it's all expected to be placed, you know, quite well.
ANDY SERWER: Let me ask you about the proposed infrastructure spend by Congress, $4 trillion. Does that make sense to you? And would that impact muni markets?
SUZANNE SHANK: Yes. I think you should understand my perspective is I used to be a civil engineer. So I am pro-infrastructure. State and local government entities really provide funding for our nation's infrastructure through the municipal bond market. I think any plan that helps our country get from the D plus it's been for so many years-- I think we just emerged to C. But for us to be competitive globally, we need to get to the A, B range is going to be invaluable to our country and to our economy.
What will happen is we hope to see municipalities leverage the infrastructure bill. They will probably have to issue more bonds to match some of the funding from the federal level. So we think overall, it would be very positive to supply, and obviously, make our municipalities stronger going forward so they're not doing the emergency fixes rather than deep investment that will be impactful and positively impact our infrastructure going forward.
ANDY SERWER: Switching over to corporates, there's been a boom lately in corporate borrowing. Why is that business surging, and where do you see it headed?
SUZANNE SHANK: Well, interest rates continue to be very attractive. We're all watching the Fed and have an expectation that rates will rise. So I think companies are really going to market to take advantage of very positive conditions right now. We have been a huge beneficiary of that growth. We have been involved in more corporate transactions than ever in 2020. And it looks like the number of deals in '21 will eclipse what we did last year.
And we also have had an increasing role with joint lead manage positions for corporations, which has been very exciting for us, which means we're able to play a better role, we're able to earn more dollars on the transactions we're participating in, and we're able to satisfy our investor appetite by participating at a higher level.
And I have to tell you, this increased focus on elevating, you know, firms like ours is steeped in-- we have performed so well for many years, but it's really been, I think, a bit of a wake up with corporations that we do add value and we can serve in this capacity. And we really have to thank, I think, the social justice movement for that increased interest in engaging with firms like ours.
ANDY SERWER: I want to talk more about that. I want to ask you about IPOs also. But first, are you in Detroit and the firm is on Wall Street? You're kind of in both places. How does that work?
SUZANNE SHANK: Well, let's just say I was probably in the New York office more than Detroit pre-pandemic. I'm a 2 million-miler, I spend a lot of time on the road in front of clients, and a lot of time in our New York office, which is our largest office. We are actually duly headquartered in New York and California. We have 19 offices, we have people spread all over. That served us well during the pandemic
I've been mostly stationed here in Detroit since the pandemic, although I have been back to New York, you know, once I got vaccinated quite a bit. And so, you know, the pandemic has caused us all to operate a little differently. And you know, we're trying to be flexible with our employees. We have people coming back on a rolling basis, so to speak, so that everyone's not in at the same time.
I'm fortunate because most of our employees are vaccinated. We're studying, you know, Biden's vaccine mandate to determine what steps to take, but we're hoping we can get most if not all employees back mid-October. And I'm looking forward to getting my booster and getting back to the New York office on a regular basis.
ANDY SERWER: Complicated stuff to figure out with employees for sure, Suzanne.
SUZANNE SHANK: Yes.
ANDY SERWER: Getting back to the business a little bit, though. IPOs, we've seen this incredible surge this year, even amidst the uncertainty of the pandemic. Why do you think that is?
SUZANNE SHANK: You're so right. The second quarter was the largest quarter, I think, in 20 years in terms of IPO proceeds raised and deal count. And much driven by the health care sector and biotech in particular, led the pack. So it's really been the most active we've seen in, you know, 20 years. And I think proceeds have reached $80 billion so far this year, surpassing the volume raised in all of last year.
I think low interest rates have pushed up valuations for growth companies, and the hundreds of unicorns in the pipeline are looking to take advantage of that. And I think we're seeing companies that both benefited from the pandemic as well as those that are sort of rebooting post-pandemic that has really been sparking this increased deal flow. Earlier in the year, you know, inflation concerns had investors worried that the Federal Reserve might change its policy. But after the Fed, you know, said that inflation wouldn't change over the long term, it's really been, you know, robust IPO time.
ANDY SERWER: Absolutely. I do want to drill down a little bit into diversity, and particularly on Wall Street and your business. You're the first minority and women-owned firm to rank in the top 10 of all US municipal debt underwriters. How does that unique leadership set you apart from your peers, and also impact the work that you do?
SUZANNE SHANK: Well, I think it helps give us a bit of perspective. You know, I've been in the business 33 years, and I have to tell you not all years that we tout that we were a diversity firm because it was almost used as a limiting factor, you know, against the firm despite the fact that we do billion-dollar deals, despite the fact that we have very strong investor relationships.
So what's been most encouraging to me is that the discussion around DE&I and the fact that we're both majority women-owned and majority minority-owned is not viewed to be an asset. And it's a discussion, you know, in every corporate boardroom at every level. Finance was, as you probably know, the last place people consider for diversity.
And we have constant conversations with Fortune 500 CEOs, CFOs, and treasurers about how they can be more diverse, how they can impact more diversity within their finance teams, within corporate America. And so I think we're viewed as a unique resource at this time when corporations are grappling with how to provide equal opportunity for all.
ANDY SERWER: So what are some ideas-- can you share some ideas that you share with those C-suite executives, Suzanne, in terms of trying to bring more DE&I in terms of all their constituents.
SUZANNE SHANK: Well, what we suggest is that they take a deep dive and an honest look at their. Workforce, their procurement practices, and their mentorship and sponsorship of diverse talent you can well imagine a young African-American coming into a corporation and not seeing many people that look like them, that could be pretty discouraging. People want to see people who look like them. So we really have to focus on pipeline of talent, and make dramatic change if we don't see diverse candidates in that pipeline of talent.
We also have to be honest about everyone has some form of unconscious bias. And so we really need to talk about it more, and ensure that bias and preconceived perceptions are not playing a role in advancement decisions. And you know, it's a little more than mentorship, it's sponsoring, it's giving good feedback and really making diversity a real focus.
On Wall Street in particular, we've done a horrible job. And we went backwards after the financial crisis. I think women and minorities were let go in much higher numbers than others. And I think what we learned from that is we really have to-- we see hiring at entry level to be very comparable. You know, it's pretty good for women and people of color. But as we move through the ranks, we see those numbers just declined dramatically.
And so I think the more we talk about it, the more we get diversity on corporate boards so that there's pressure to, you know. CEOs to keep this front and center, the more progress we're going to see. It's not going to happen overnight. I think we have to be patient, but I am encouraged that it's really front and center discussion at every level of corporate America.
ANDY SERWER: Yeah I like that first point in particular that you made about doing a deep dive, measuring accountability. We did that at Yahoo Finance, measured the guests that we had on our programming. And now we do that to sort of understand where we are and where we need to go in terms of diversity.
SUZANNE SHANK: Yes. And if companies look at, you know, for example, their procurement practices, we have to support Black businesses and marginalized communities in every way in the communities we serve. And so, you know, I think my firm has thrived by working with companies and municipalities who value diversity and don't use it as an exclusionary factor.
ANDY SERWER: Tell us about the Clear Vision Impact Fund. Where does that fund stand now, what is it, and how does it work?
SUZANNE SHANK: Well, it's a fund supported by our corporate clients that we came up with as a means to support underserved communities. After the murder of George Floyd last year and all the events that we saw erupt around the country in terms of protests, several of our corporate clients came to us and said, we'd love to figure out a solution. What can we do to help minority communities?
And so what we did was we started with five major corporations. You know all their names, Microsoft, Apple, Comcast, eBay and Constellation Brands, who are limited partners. We're the general partner. And we launched an investment vehicle that is debt-oriented that will provide capital to minority-owned businesses and underserved communities. And what we want to do is provide funds for entities that might not otherwise get, you know, bank loans easily.
We saw even with the distribution of the PPP loans that minority companies had a tougher time getting access in those early rounds. And so what we're trying to do, we don't want to take equity if we don't have to. If they can't support that, we will look at equity options. But what we hope to do is provide companies that are already operating but would grow to scale, and hopefully they're hiring and impacting disadvantaged groups, for example.
One company that we're investing in is a disaster recovery firm. Well, a lot of their employees are ex-convicts who are trying to make the transition back into the workforce. We also looked at a compounding pharmacy that is the only minority-owned registered compounding pharmacy in the country to provide them additional capital.
So it's very exciting, and I think we've just been proud to mobilize some of the world's most successful companies and supporting many of the best minds out there in our communities that have been overlooked for so long.
ANDY SERWER: It sounds like some great work. Let me switch over and ask you some more questions about the markets and the business though, Suzanne. And I want to ask you about inflation because, you know, that's a hot button topic. Is it transitory or not? What do you think?
SUZANNE SHANK: Well, I have tried not to-- our business seems to thrive when at least the bond side of the business when there's bad news in the marketplace, and we can keep interest rates very low that Spurs great issuance in terms of volume. But you know, I just hope that the Fed is very measured as we proceed. We do feel that-- and we see the data-- that inflation is a factor in the marketplace.
But I also think that we, you know, we have a huge wage shortage now. We're seeing that in several different markets in the country. And I listened to three economists speak yesterday about inflation, and they each had a slightly different twist, so I'm not sure I'm equipped to opine about views. But I think we have to strap in and expect that inflation is coming, and I hope the Fed takes a very measured approach, such that, you know, they don't move too quickly.
ANDY SERWER: Right. I mean, there's a lot on the table there for Jay Powell, tapering of course, but at the same time, inflation. Some interesting choices that he has to make. Another regulator I want to ask you about, SEC chair, Gary Gensler said recently he wants to impose greater transparency on the corporate board and municipal bond markets. Is he right that there is more transparency needed, Suzanne?
SUZANNE SHANK: Well, you know, I recently sat on the SEC fixed income market structure committee, and we felt that there was enough transparency in the marketplace. But you know, we think-- I think I'm very focused on their efforts around greater disclosure. Both the municipal bond market and the corporate market have very different disclosure requirements, and there's been a lot of talk about municipals coming up to speed to the same requirements as corporations in terms of disclosing financial conditions, which is really tough because you have municipalities that are super tiny with not a lot of resources, and it's been sort of a commoditized, you know, industry.
We saw with the financial crisis that, you know, you could not rely just on the rating agencies to determine your buying decisions. So you know, I welcome the view. I hope that the SEC engages with market participants, investors, you know, underwriters, issuers to gain the full view of next steps with respect to transparency. I personally don't believe that there's a lot of work to do in that space.
ANDY SERWER: I want to ask you about retail investors, maybe slightly out of your primary wheelhouse, but you're moving that direction if you're doing IPOs. We've seen this rise in retail investing amid the pandemic. Things are changing with SPACs, the meme stocks. What do you make of all of these phenomena? Are there positives or do we need to protect investors from themselves? What's your thinking there?
SUZANNE SHANK: You know, it's really changed now we serve only retail investors through separate managed accounts as a firm. We don't sell directly to retail. But you know, obviously as a market participant, we see the impact of retail, which has been, you know, quite significant. I think the advent of the average investor, individual gaining access to CNBC and Yahoo and other mediums gives retail investors more information. Used to be a time that institutional investors, you know, were the only ones who had hot breaking news. And now I think everyone gets hot breaking news.
You know, the question is whether all of them-- they seem to run in packs and move together and pile on as opposed to making the same measured investment decisions that institutions do. But there's no doubt that the retail factor is here, is here to stay, and it's going to play a significant role in how stocks, you know, move around on a daily basis.
ANDY SERWER: I want to shift gears a little bit and ask you about you because you have a pretty remarkable background, which you alluded to a little bit. But starting out, my understanding is you were reading at age three, and reading aloud to a class of fifth graders when you were in kindergarten. How did that all come about? And did that influence your approach to learning later in life?
SUZANNE SHANK: Absolutely. I was raised by a teacher. My mom I graduated from Spelman College 19 years old, became a teacher, later a school administrator, and she had me reading very early. You know, I grew up in a small town, Savannah, Georgia we didn't have all the distractions that kids have today. So reading in school were, you know, my top interest.
And I also saw my parents work, rarely take a day off to be sick, rarely take holidays, they worked long hours. And so all of that influenced me. I think it taught me the power of preparation. I had a front row seat in watching my mother as a teacher transform the lives of many students. I saw how knowledge could be a ticket to greater things. It was really others who saw in me my potential.
For example, one of them was my high school guidance counselor. My first goal in life was to be a social worker, and my counselor, L P Parrish, took me aside one day and said, you should pursue an engineering degree. You're great in math and science. And so the key for me was, she said, if you do that, you're going to get multiple job offers, and you can take care of yourself. So I took her advice.
I went off to Georgia Tech, got a degree in civil engineering. I worked at General Dynamics before going off to Wharton to business school. And it was really at Wharton that I learned about Wall Street. I had really-- I might have heard about stocks and bonds, but really had no understanding of the markets. And you know, that's how I got to Wall Street.
But I've got to tell you, my path wasn't an easy one. Most of my peers have been analysts on Wall Street before coming to Wharton, and they all had automatic jobs for the summer. I didn't. I took a subway map and pounded on doors, and that was how I got my first job on Wall Street.
ANDY SERWER: And before that though, just going back to growing up in Savannah, and you've talked about systemic racism that you faced there, including your dad being listed on your birth certificate, I guess, as a, quote, "Negro laborer" unquote. How did you navigate that? And what should be done to make sure young kids now don't have to bear those kinds of trials and tribulations?
SUZANNE SHANK: Yeah, it is quite stunning to think about the racism that I saw. And you know, I don't know if I felt it as much as I saw what my parents experienced. And they did everything they could to protect me and my exposure to it. But it certainly was front and center. You know, I think that, you know, we've come a long way. And there are some great examples of African-Americans rising in segments. But we have a long way to go until the majority of us has the opportunity ahead of us.
I was lucky to have a network of people, mentors. And so what I've tried to do personally and we try to do as a firm is provide those early exposures, that mentorship and sponsorship, provide access to the world of finance that many young people don't get. I did a program for 10 years in Detroit where we gave high school students exposure to the world of finance by working in firms and mentoring them, and it really has made a difference.
We have one young man now we just hired a Clear Vision who was one of those high school students, you know, over 20 years ago. And that's just been really exciting, but it's proof. There is story after story that if we give the opportunity, if we give the exposure, if we provide educational opportunities through scholarships, that it really will serve to change the foundation of opportunity in America.
ANDY SERWER: And final question, Suzanne. What is your advice for young people, maybe especially young women who want to have a career like yours.
SUZANNE SHANK: Well, there was no playbook for becoming a Black woman CEO on Wall Street. So I have learned that anyone who hears my story hopefully, will feel that they have the opportunity to do whatever they'd like. I would say always educate yourself, not just in the classroom, but throughout life. Being the most prepared will help you win in any room.
I would say be curious, and embrace the things that make you different because they can be your competitive advantage. Integrity is huge. Protect your integrity no matter what. And I often say lift as you climb. As you move through the world, always remember you can help others because in the end, helping others is what makes life all about.
ANDY SERWER: That's fantastic advice. Suzanne Shank, CEO of Siebert Williams and Shank. Thanks so much for joining us.
SUZANNE SHANK: Thank you so much.
ANDY SERWER: You've been watching Influencers. I'm Andy Serwer. We'll see you next time.