Bill Bartmann has lived what could very well be the most astounding rags-to-riches story in American history. He has been called "The Billionaire Nobody Knows" by Inc. Magazine, and has reached as high as number 25 on the list of wealthiest Americans. He has been named the National Entrepreneur of the Year and awarded a permanent place in the Smithsonian Institution.
RIC THOMPSON: Bill, your life story is literally one of the most extraordinary stories I have ever heard. I feel that it should be a movie. You went from being bankrupt to a self-made billionaire, from eating in dumpsters to owning private jets. What is most relevant today is that you accomplished this remarkable climb during the recession caused by the savings and loan crisis. It's like déjà vu all over again.
We have another banking crisis on our hands. How about that? You're back at it again. Most people think you can only make a lot of money during a good economy. You've proven the exact opposite to be true when you have the right business for the specific economic climate that you're in. Before we get to the big news you're going to share today I think it would be both motivational and instructive to hear about how you pulled yourself out of bankruptcy and were at one point wealthier than Donald Trump.
BILL BARTMANN: In 1986 I was bankrupt. I was worse than bankrupt. I was a million dollars in the hole and in bankruptcy. I was unemployed and essentially unemployable. The IRS had towed away my automobiles. Kathy and I were living on a $10,000 credit card. Kathy, my wife of 37 years, and I had a conversation that I hope nobody ever has to have with their spouse.
As a husband and a father I was having a conversation with my wife, the mother of my children, asking her if she thought it was time for her to take our children and go back home and live with her parents because I could no longer afford to feed all four of us. That was probably the lowest point in my life. I didn't think it could get worse than that. I thought, "This is the place where they shut off your utilities at your house."
I'm not exaggerating. They did. They shut off utilities in my house. That's when Kathy and I sat at our kitchen table while living in Muskogee, Oklahoma, and saw an ad in the newspaper by the FDIC, the Federal Deposit Insurance Corporation. The FDIC was selling boxes of non-performing loans. We didn't know anything about collecting loans. We had never collected a loan in our lives.
As I told you, our credit was shot. We didn't have any money. We didn't have any wherewithal, but we were able to borrow $13,000 and we bought one box of non-performing loans. We took it home, put it on our kitchen table and started calling those customers up, treating them with dignity and respect. We asked them to pay what they could pay, given their circumstances.
We weren't being goody-two-shoes or turning the other cheek. We didn't act like they didn't have to pay. We were professional business people. We did ask them to pay as much as we thought we could get them to pay, given their circumstances. They did. Out of that first box that we paid $13,000 for, we collected $63,000. That doesn't sound like a lot of money to some people.
However, it was a $50,000 profit. We looked at each other and said, "Did we just get lucky? Were we just in the right place at the right time and lightening struck? Or is this the beginning of something?" With that, we concurred that maybe we were at the beginning of something. We took the profits we made and paid some money back to the bank that I owed a million dollars to.
We talked that bank into loaning us not $13,000 for the second package, but $100,000 for the second package. We successively bought larger and larger portfolios of loans. We started growing a company. As they say, we lathered, rinsed and repeated. We kept doing it over and over again. We started at our kitchen table. Over the course of the next 12 years we grew it into an organization of 3,900 employees and $3-1/2 billion in annual sales.
That building you see in the picture on the screen right now was our office building with 51 floors. One million square feet of that building was inhabited by our employees all doing the same thing: helping people who are upside down in debt to get out of debt. Did we do it? Absolutely, we did it. We settled 4-1/2 million delinquent debts. That's 4-1/2 million real people who had problems, just like you and me and everyone else on this call.
They were real people who found themselves upside down. It was $15 billion worth of loans. However, more important than how many dollars or how many people, we did something different and unusual. We changed the collection industry in America. We literally revolutionized the entire collection industry by teaching people how to do it right. It got us a number of kudos and acknowledgements, including one from Mother Theresa.
Those few words from a little, 86-pound woman were indeed the most powerful thing that has ever happened to me in the course of my entire life. The screen that you have in front of you now is of Clarence Thomas. These were amazing accomplishments, not that I did, but instead that were accomplishments created by our employees. They were the ones who reached out and literally changed the lives of these people.
Did the media acknowledge it? Of course they did. The media acknowledged it as well. We saw all the kudos the media put on us. It went even farther than that. It created an environment in which I became the 25th wealthiest person in America, inducted into the National Entrepreneurial Hall of Fame, and awarded a permanent place in the Smithsonian Institute. Those are cool things, but better than that, it also created a company with great pay, great benefits and great perks.
We were not only able to pay two times industry standard wages, have a free on-site daycare for all of our employees, and offer a 250% 401k match program, but we were also able to take all of our employees on vacation with us. One year we rented twenty-seven 747s and flew everybody to Disney World. One year we rented an entire cruise ship. One year we took everybody to Las Vegas to watch me wrestle Hulk Hogan.
RIC THOMPSON: That's unbelievable. What a phenomenal story. I know we're going to get into the details of the business, but since most of the people on this call are not professional bankers or economists-myself included-it would be helpful if you could explain in a way that we could all understand, how the economy and the banking crisis are conspiring to create a similar business environment today to the one when you made your first fortune.
BILL BARTMANN: Let me start with the way this builds up. I think everybody who's been out there paying attention to what's going on in the economy sees that what happens first is that the economy begins to falter. That can come from any one of a number of causes. For today's purposes, it doesn't make any difference why an economy starts going south.
When it does, the thing that inevitably follows is that unemployment rises. When unemployment gets out of control and runs north of what it normally is, then a third thing happens. The third thing is that banks begin to fail. It exacerbates the condition. You have a bad economy. You have unemployment rising. Now you suddenly have banks failing. That creates a self-perpetuating mechanism.
The worse the economy is, the more unemployment rises. The more unemployment rises, the more banks fail. The more banks fail, the worse the economy gets. The worse the economy gets, the more unemployment rises, and around and around. Ultimately, you get to Step 4. That's when the government steps in. The government finally sticks a wedge inside this machine.
It's like sticking a crowbar into the gears of something. They say, "We're going to try to stop this craziness as fast as we can because obviously it's wreaking havoc on lives all over the country." That's exactly the place we ended up at right now. The government has literally done what they can to stop this crisis in its tracks. The reason the government is getting involved is all good for us.
This is coming to a point of conclusion of what we get to do about it. It's creating real-life repercussions for you, me and everyone else in the United States. It's not just the United States. This is now becoming a global crisis. When people lose their jobs and this situation exists, divorce and family problems go straight up. The number of people who have to file bankruptcy or face foreclosures on their homes goes straight up.
Each one of these situations impacts the lives of the people it affects. This isn't an academic, intellectual question. This is real. When somebody loses their job, things begin to happen inside their lives that otherwise wouldn't exist. I get passionate about this because I've been there. I have walked in these shoes. I have watched myself lose my employment or in my case, lose my company.
I went broke. I went bankrupt. I watched things disintegrate in front of me. I wasn't able to pay my bills or take care of my obligations. I wasn't able to do the things that I once upon a time was able to do. When that happens, you lose your sense of self-worth and value. You question who you are and what good you are. I'm not trying to make this melodramatic.
Anybody who's been in this environment knows what friction economic stress puts on a marriage, a relationship, and your health. In the United States right now we have the worst economic crisis we have seen as a country since the Great Depression in the 1930s. There is something different from other recessions this time around. We've had plenty of recessions in America, but this one is the Granddaddy of them all.
It is impacting people who normally are not affected by recessions. It's impacting people who went to good schools, got a good job, worked hard, showed up every single day, did the best they could do with what they had, and they still ended up unemployed. The solution is to get these people out of the hole they're in. How do we get them out of the debt they've already taken on?
These people weren't crazy, wild, spendthrift people who wanted to see how much money they could run up on a credit card. These are people who were spending within their own means once upon a time, but now their lives have changed.
RIC THOMPSON: That puts a personal face on what many view as an abstract economic issue. I know you have a major announcement. You've already been involved in this crisis for awhile now. I can't turn on CNBC or FOX Business and not see you being interviewed about it. What has your company been doing since this new banking crisis started?
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