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Episode Transcript

Hey there, it’s Stephen Dubner. Before we get started with today’s episode, a quick reminder that we have just launched a membership program called Freakonomics Radio Plus. As a member, you’ll get a weekly bonus episode of Freakonomics Radio every Friday. Plus, you can listen without ads. To sign up for Freakonomics Radio Plus, visit the Freakonomics Radio show page on Apple Podcasts, or go to And now, on to this week’s episode.

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Okay, it’s quiz time. For one point: if I asked you to name the C.E.O. of FTX, the giant cryptocurrency exchange, what do you say? I’m guessing the name that comes to mind is this one:

CNBC: Sam Bankman-Fried.

Dealbook Summit: Sam Bankman-Fried.

CNBC Last Call: FTX founder Sam Bankman-Fried.

CBS Mornings: Jury selection is expected to begin for the much anticipated trial of Sam Bankman-Fried.

If you said “Sam Bankman-Fried,” I’ll give you half a point. It’s true that he was the C.E.O. of FTX. At one point, before he turned 30, he was worth more than $20 billion, and FTX had such massive momentum that Bankman-Fried was being talked about as, potentially, the world’s first trillionaire. He was also good at spending money: on real estate, on donations to the “effective altruism” movement; also, political donations. He gave publicly to Democrats and privately to Republicans. Why the secrecy there? As he later said, quote, “It’s because reporters freak the f*** out if you donate to Republicans. They’re all super-liberal, and I didn’t want to have that fight.” Bankman-Fried is now in the middle of a much bigger fight: late last year, he was booted from FTX, and then arrested, and he’s currently on trial in New York for a variety of serious fraud charges. Those are the official charges. Unofficially, he’s been charged with Olympian hubris and standard-issue stupidity. 

John RAY: He was the head of the company. He was involved in everything. And he took money, and he spent it on stuff that had nothing to do with the business. 

And that is the current C.E.O. of FTX. I’ll give you five points if you can name him. Yeah, I didn’t think so. Here you go:

RAY: So, I’m John Ray. I am a turnaround specialist. My chief role is to be the head or chief restructuring officer of public companies that get into financial andor other legal trouble.

John Ray is what you might call an emergency C.E.O. His biggest job before FTX? Enron. Today on Freakonomics Radio: a conversation with Ray about what he can and can’t do as the emergency C.E.O. at FTX; we talk about why he has been so willing to publicly trash Sam Bankman-Fried; and why, weirdly, there’s no place he would rather be.

RAY: Every C.E.O. in America is jealous of this job. 

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When you talk to John Ray, one thing that becomes clear — very quickly — is that he loves what he does.

RAY: What I love about the business is when the economy is great, there’s always stupidity and fraud. When the economy is poor, you’ve got both those issues, plus you’ve got the market impacts. When interest rates rise, companies are over-leveraged. And they’re going to end up in bankruptcy. So in both good cycles and bad cycles, there’s always business.

Ray is a bankruptcy expert, but he’s not an expert in any particular industry. I asked what he knew about cryptocurrency exchanges generally and FTX specifically before he took over.

RAY: Absolutely zero. I knew of crypto — hadn’t really followed it, didn’t know the intricacies of it, certainly didn’t know anything about FTX. But having said that, I’ve been involved in probably a dozen industries, and never been a specialist in the particular industry because I’m really a bankruptcy and legal-process professional, and it doesn’t really matter what the particular company is. The FTX case is a perfect example of me parachuting into a case, literally on no notice whatsoever.

Sometimes Ray is brought in to try to rescue a company in trouble. Sometimes he’s brought in when a rescue isn’t possible; and then his primary job is to find out where all the money went, and try to claw back as much as possible for the stakeholders. That’s pretty much the case with his current job, FTX. Here are just a few of the other firms where Ray has been brought in: there was Enron, as I mentioned earlier; they were a huge energy supplier and trading firm that imploded in 2001. There was Nortel Networks, the big Canadian telecom company that went bankrupt in 2009. A Minnesota mortgage company called ResCap, which went bankrupt in 2012. He’s also done work for Polaroid, Pacific Lumber, Burlington Industries, and an infrastructure fund that invested in South Africa.

RAY: There’s three reasons why you go into bankruptcy, right? One is a very common problem: you’re just extremely overleveraged, right? And those are, frankly, if there’s no other problems, that’s the easiest of bankruptcies. Why? Because you take all the people who lent money and you say, “Okay, now you own the business.” You reduce the amount of debt. And all of a sudden the cash flow from the business can now run the business and not have to support that overleveraged, ballooned-out debt. Very simple problem, it can be done on paper. It has nothing to do with the business. What are the other reasons? My favorite reasons: fraud. Fraud can take, many, many forms, whether it’s hijacking the balance sheet or stealing money, or maybe having liabilities that you didn’t tell people about For example, I got brought into a company, it was the largest U.S. transporter of crude oil. Didn’t know anything about the shipping business, of course, but they brought me in because they had some tax liabilities that they had not disclosed. And it appeared as though they were relying on some advice that was knowingly inappropriate, and it was a massive liability. By the time we were resolved with the I.R.S., it was over $300 million worth of undisclosed liabilities to the government. And so, there you go. That’s a perfect example — nothing wrong with the underlying shipping business. But what brought it in? Fraud.

Stephen DUBNER: Okay, so you’ve got overleverage. You’ve got many types of fraud. What else?

RAY: Then there’s just plain stupidity. People operate a business poorly, and they’re just not smart about what they’re doing, and they drive the company into bankruptcy. And there’s a couple different ways they can do that. They invest in things they shouldn’t invest in — they’re way outside their core competency. It’s like when Michael Jordan decided that he wasn’t going to play basketball. Instead, he was going to play Major League Baseball. And frankly, as good of an athlete as he is, he kind of sucked at baseball. And then there’s situations where perhaps the economy changes, and the companies don’t change with that, right? They don’t keep pace with what’s happening around them. They operate a business with blinders on, and the world passes by them.

DUBNER: So other than your last reason, which was essentially lack of business flexibility, if you look at the reasons you’ve given for why a firm will need you, it sounds like FTX checked every box and then some, yes?

RAY: Fairly so. I’m not usually brought in where there’s just high leverage, and all they need is a sort of balance-sheet fix. I’m typically brought in where there’s a conflict of interest, say, with management, or there are some elements of fraud or crime. And I’m kind of unique in this sector. Many of the C.R.O.s, an acronym for chief restructuring officer, many of them are with large organizations. And when you get into the conflict scenario or the fraud scenario, a lot of the big firms have conflicts. And I’m a single guy — probably one of the few, certainly been around the longest as a single guy. I have no conflicts. So for example, when I was brought in for Enron, one of the reasons I was brought in was because we were suing every bank virtually around the world. And all the big firms, they had conflicts. They represented the banks in multiple capacities. And when you’re suing someone for multiple billions of dollars, you don’t want to know that their side hustle is some other engagement with the bank. 

In the case of Enron, the problem wasn’t just “some other engagement” the big restructuring firms may have had with the banks. It was the fact that the banks were accused of helping Enron cover up what turned out to be years of high-stakes fraud. Which is why John Ray, when he was brought in to help pay back Enron investors, sued those banks.

RAY: We recovered several billion dollars in the litigation that no one anticipated. We were hard bargainers, and we were ready to take stuff to trial. I don’t mind settling, but I always want to be ready for trial. As they say, “Plan for rain, pray for sun.”

DUBNER: I think it was 11 banks. All big international banks. Did any of those go to trial, or were they all settled?

RAY: Eventually we all settled, but we didn’t settle Citi until really the day of the trial. At the time, their then-C.E.O. had stepped down. And if you’ve been around long enough and you follow this stuff, everybody knows what happens when a new C.E.O. comes in. It’s the first thing that happens, right? I grew up going to Catholic school, and we’d go to church every Sunday, and they would hand the basket out, and they’d pass it down and everyone would throw money in. Well, when a company has a new C.E.O., he goes down to the C.F.O.’s office, and he holds out the prayer basket and says, “Throw all the stuff in here that’s going to come back to haunt me, and detract from earnings under my watch. And then we write the stuff off, and we blame it on the old guy.” So I knew that they were going to take a massive charge, right? Because that’s like the first toilet flushing that happens when the new C.E.O. comes. And I’m like, I want to be part of that big flush.

DUBNER: John, you’ve been called a lot of interesting things in the business press, a lot of descriptive labels befitting your unusual job. Do you have a favorite? 

RAY: The first label I ever got was when I was doing Enron. One of the creditors referred to me as a “pit bull.” When I get into a problem, I sink my teeth into it, and I don’t let it out of my sight until it’s resolved to my satisfaction. Very tenacious, very aggressive. But you have to be in troubled circumstances. And so, once I’m onto something, you really gotta shake me off.

John Ray was born in 1959 and grew up in Pittsfield, Massachusetts, towards the western edge of the state.

RAY: And if you actually look up Pittsfield in Wikipedia, you’ll find some very, very bizarre facts. Like, I think the first baseball game was recorded there. The first death of a Secret Service agent happened in Pittsfield, Mass. A lot of things there. But yeah, it was a G.E. town. I grew up. 

G.E. as in General Electric. They had a huge manufacturing facility in Pittsfield, and they were the town’s biggest employer.

RAY: My dad worked for some time at G.E., then he was an outside contractor at G.E. He’s in the plumbing contracting business. Not house plumbing, but, you know, factory kind of plumbing. 

DUBNER: And then you go to UMass Amherst. You graduate cum laude

RAY: Political science. Did fine.

DUBNER: And after that, you interned for Senator Ted Kennedy? 

RAY: I did. I did.

DUBNER: And I understand you thought about running for office? 

RAY: I did. I liked working for Kennedy’s office. This was, circa ‘79. I worked in their Boston office, which is basically their constituent office. And I would say 95 percent of the traffic that came through there — people needing help — were people who could not and would probably never vote. He wasn’t helping people to vote for him, or to raise money for him, or to do him favors. That office literally helped people for the sake of helping people. It was like, “Wow, he’s doing this because it’s good.” So I kind of caught the fever a little bit.

But Ray decided against running for office. Instead, he went to law school at Drake University, in Des Moines, and then he moved to Chicago.

RAY: And I interviewed three different law firms, right? Same day, all one day. I do everything quickly. By the end of the day, I had three offers. And at the time, my wife’s parents lived next door, had a lake house with a — at that time he was a sitting federal judge. And he said, “Who did you interview?” And I said, “A, B and C.” And so he said, “Well, which are you going to go with?” And I said “C.” Well, C was Mayer Brown. And at the time they had just been through Penn Square, and their client was Continental Bank.

Penn Square was a small Oklahoma bank that collapsed in 1982. Continental Illinois was a bigger bank that had taken on a lot of bad loans from Penn Square. In order to prevent a catastrophic bank failure, the federal government took over Continental. The law firm that Ray wanted to work for, Mayer Brown, had a longstanding relationship with Continental.

RAY: And there was lots of tabloids about, you know, how does this affect the firm and its future and its partners and all this other stuff? And I had two other law firms that were very, very good law firms. And so the federal judge looked at me and he goes, “Oh, my God, why would you do that? Like, Didn’t you read the paper? Don’t you understand all the problems they’re going through?” And I said, “That’s what I kind of like about them.” I said, “They’re kind of the underdog. They’re going to work harder. They’re going to have to change things. They’re going to do things differently. The other firms — they’re comfortable where they are. I want to go with the firm that’s kind of down a little bit.” Because where there’s failure, there’s an opportunity. For the right person. 

That may have been the first time John Ray understood that failure breeds opportunity. But it was far from the last. His next job was at Waste Management, the trash company.

RAY: The year I got there, I think we did 300 small acquisitions. And the saying within the law firm — which was so, so true — is that if you worked at Waste Management in the law department, you did everything from A to Z: adultery to zoning. 

DUBNER: Wait, what’s the adultery? 

RAY: You know, there’d be an affair the sales guy with somebody else in the office, and there would be some discrimination claim that would get filed out of it. It covered the waterfront of every legal issue. So it was such broad, broad experience.

In 1998, Ray became general counsel at the clothing manufacturer Fruit of the Loom, best known for its underwear. A year later, the company filed for bankruptcy, and Ray was chosen to oversee that process. A few years after that, he got the Enron job. Ever since, he’s been jumping from one disaster to the next. So what’s his plan for FTX? That’s coming up.

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In case you don’t know any more about cryptocurrency than John Ray did when he was brought in to run FTX, we can help you with that. Last summer, we put out a three-part series called “What Can Blockchain Do for You?” You might want to start with Episode No. 508. It was called: “Does the Crypto Crash Mean the Blockchain Is Over?” It’s optional, but perhaps useful. Anyway, just a few months after we put out that series — in early November of 2022 — word started to get out that the cryptocurrency trading exchange FTX was insolvent. Co-founder and C.E.O. Sam Bankman-Fried scrambled to raise money to save the firm, but he couldn’t stop FTX customers from selling their crypto and cashing out. It was basically a bank run. Other top FTX executives immediately quit; the firm’s lawyers were telling Bankman-Fried he should declare bankruptcy and turn the company over to John Ray. At 8 p.m. on November 10th, one of the lawyers sent Bankman-Fried the paperwork that would give full control of the company to John Ray. With increasing urgency, they pushed him to sign it. At four in the morning on Friday, November 11, Bankman-Fried signed. John Ray’s first move as emergency C.E.O. was to file for bankruptcy in Delaware.

RAY: There’s other cases I’ve been involved in where there’s weeks ahead of time where you’re brought in. But it’s a rare case where you’re literally brought in within the 24 hours.

A few days later, Ray submitted his first written statement to the Delaware bankruptcy court. “I have over 40 years of legal and restructuring experience,” he wrote. “I have been the Chief Restructuring Officer or Chief Executive Officer in several of the largest corporate failures in history … Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here … This situation is unprecedented.” Shortly after that, Ray testified in front of Congress.

RAY CONGRESSIONAL TESTIMONY: The FTX Group’s collapse appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced, non-sophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company entrusted with other people’s money or assets.

RAY: When you come into these bankruptcies the way I do, there’s such a freedom, right? Because you weren’t involved. You didn’t do anything wrong. So you can come in there with a clean heart and an open mind, and you can say what you know.

DUBNER: Here’s one thing you said to Congress. You said, “This is just old-fashioned embezzlement, taking money from others and using it for your own purposes. This is not sophisticated at all.” I think most people who knew anything about FTX were probably surprised by that, thinking, “Oh my gosh, I thought it was extremely sophisticated.” So what was your purpose in being that black and white, really, in your description? 

RAY: Well, because I think people were sort of looking at this as a condemnation of crypto. Like, all crypto is bad. One congressman tried to get me to call it “creepy dough.” And I’m sorry, I’m not a crypto expert, I’m certainly not a regulator, but I looked at this and said, “I don’t think that’s the issue. I think this is just someone stealing money.” And not really in a sophisticated way. I mean, Enron was very sophisticated — they would set up separate special-purpose vehicles and do off-balance-sheet transactions and so on and so forth.

DUBNER: Meaning when they lost, they would separate it, get it off the main books so that the company still looked good. You’re saying that was a sophisticated accounting fraud, at least. In this case, what were the types of sins or crimes and how unsophisticated were they? 

RAY: People compare this to Enron, or they compare this to Bernie Madoff. Both those companies, they didn’t just have one set of books. They had two sets of books. We don’t have a set of books. We don’t even have one, all right? That’s the big difference. Because if you took those two books and you put them together, you’ve got the true picture of what happened — very accurately recorded, mind you. But here, I mean, we don’t have income statements and balance sheets. They don’t have records of loans they made. All kinds of transactions are not documented. This is like shattering glass and looking all over the floor trying to pick up the pieces.

DUBNER: So how do you do that? It seems like it’s kind of a forensic act as much as anything. But if there are no records and if there were just tens, hundreds of millions of dollars flowing in and out of the main firm to associate firms, to outside firms, to partners, but then also these donations to political candidates, donations to the effective-altruism movement — millions and millions and millions of dollars without recordkeeping, are there enough clues and trails to all of that money to essentially recreate where the money went? Or are there some things that will be forever lost? 

RAY: It’s an exercise. It’s a daunting exercise. Essentially, what we have to do is create or re-create those books as we go, at a very primary level. And you start with asset movements in and out of bank accounts. And you trace the money that came in. The money that went from one entity to another, where it ultimately ended up. If it’s at an outside source, and you have a right to get it, you go get it. You know, you sort of put Humpty Dumpty back together again. 

DUBNER: So as far as I can tell, John, you generally don’t spend a lot of time trashing the previous management when you take over a failed firm. But that’s not the case with FTX and Sam Bankman-Fried. You’ve described him at length as out-of-control, childish, not transparent. Why is this case different? 

RAY: People have to have an understanding of what happened, right? Unlike some bankruptcies — a lot of the bankruptcies are where it’s commercial parties affected, right? For example, if Kmart, if you will, has a trade payable that’s not paid. They’re a commercial party, they negotiated the contract, they understand the industry, they knew the risk, etc. etc. Customers are a bit different. They don’t understand what happened. We have creditors all around the world, in multiple languages. They’re owed an explanation of what happened. So we’ve tried to take extra steps to tell them what happened, because really it’s a shock, and it’s unexplainable to them, and you’ve got to give them the back story. But the one thing that I’m responsible for is just increase value, increase value, increase value. So that ultimately there’s less to fight about. I just figure if I bring in an increased value, all the problems will naturally either be made lesser or solve themselves. 

DUBNER: But is the ultimate allocation in the hands of a judge in Delaware? Is that the way it works? 

RAY: At the end of the day, we put forward a plan. We try to get as many people agreeing with it. In every case I’ve been involved in, we’ve had a consensual plan. Sometimes it takes a lot of negotiation, some mediations to get there. There’s compromises to be made. But ultimately you try to get a compromise that everybody can agree with. Not everybody is always 100 percent happy, but people get on board for things. And then we put that forward. And ultimately the judge — there’s some standards and some statutory tests about fairness and equity that the judge has to opine on — and that’s the process. 

DUBNER: So, John, if you had to predict now what share of all dollars would you say will be recovered?

RAY: Oh, I am not going to venture. I don’t want to underestimate our ability there.

DUBNER: What is FTX a year or two from now? Does it exist or is it wiped off the face of the earth?

RAY: You know, it’s hard to say. We’re looking very strongly at restarting the exchange. There were some capabilities to the exchange that people liked. There was certainly a need for competition within the sector. But look, if there’s a life for it, the market will determine that, frankly. And we’ll do what makes sense to maximize value for creditors. And at the end of the day, I don’t have a predetermined plan. People always ask me, like, “What’s your plan?” And I always say, “My plan is to maximize value for the creditors however plan that takes.” That’s what we do.

DUBNER: You know, John, not long after this happened, I flew into Atlanta, and I summoned an Uber, and the guy came with the nicest car I’d ever been in. Period. Forget about an Uber. Must’ve been a $150,000 car. And I said, “What’s up? Like, what are you doing, with this car, driving an Uber?” He said, “Well, I’ve got some FTX problems right now.”

RAY: I mean, there’s people, they’ve got children, they’ve got to put them through school. They’ve got a house, may have a mortgage. If you were a customer and you have money hung up, you want to get it back as quickly as possible. When I have occasion to actually talk one-on-one to creditors and hear their personal stories — you need to be able to do that. If you don’t step in those shoes and see it from that angle, you’re really depriving yourself of the ability to fully understand the problem. And if you don’t fully understand it, you can’t solve it. Like, I grew up in a very sort of rough-and-tumble background. But the other side is that there’s a guy that grew up in a town like that — a blue-collar town where people didn’t necessarily get what they deserved. And so, always in the back is I’m fighting for that underdog. And the process, obviously — because there’s so many creditors affected and such a large process of investigating and collecting and sorting through the liabilities and developing a plan — there’s a natural slowness to that process and bureaucracy of that process, and it’s hard to convince people that people in my job care about that, because we’re all viewed as making lots of money and so on and so forth.

John Ray doesn’t come cheap. He bills at $1,300 an hour, and on a job like this, he brings with him a large team of lawyers and consultants. As of this recording, the total bill since FTX declared bankruptcy is well over $300 million. Those fees come out of the pool that will be used to pay back creditors.

RAY: Crime is very expensive. You know, a lot of people get hurt. And it’s very expensive to fix it, right? But on the other hand, we’re sort of investing in a recovery, if you look at it from that perspective.

DUBNER: Do you ever work on more than one bankruptcy at a time?

RAY: I only do one at a time — active. There’s another sort of tranche of these guys called independent directors, and they get called in by the law firms. And they drop them into companies that are about to go into bankruptcy, and they form a special committee of these independents. And some of these guys have, like, 10 cases going at a time. And I just know what it’s like to be involved heavily in one case. I mean, if you do it right, it sort of rips your life apart. Doing 10 of them would be absurd.

DUBNER: So it sounds like there should be a bigger market for people like you. Why isn’t there?

RAY: There is a very big market for it, but I think it’s channeled through these big firms. 

“These big firms” are consultants known for managing bankruptcies and bringing in chief restructuring officers. Some of the biggest are FTI Consulting, AlixPartners, and Alvarez & Marsal.

RAY: If you go to the bigger firms, they’ve got a pyramid model, right? Which means there’s 10 people at the bottom, and above them are five people, and above them are three people. And then there’s one guy above them — it’s leverage. So you’re billing somebody out at $1,000 an hour, but you’re only paying them $300. That’s the leverage model, and so everybody kind of gravitates to that model. I don’t have any leverage. Whatever I bill, net of my costs, that’s what I make. And a lot of people come to me and say, “Like, are you dumb? Why don’t you just, like, add 10 people?” And I’ve never wanted to do that. If I get into an industry — whether it’s crypto, whether it’s energy or retail — I can hire best-in-class advisors, best-in-class consultants to be my employees on any given case. The best people in the world, the best judgment, the highest-output people. I don’t have to rely on the the B’s and C’s. I got all A’s.

Shortly after John Ray took his current job, the Wall Street Journal published an article headlined: “Does FTX’s New C.E.O. Have the Worst Job in Corporate America?” Ray thinks the Journal has it backwards. He says that being an emergency C.E.O. — for whatever company — is better than being a regular C.E.O.

RAY: Every C.E.O. in America is jealous of this job. They absolutely detest the fact that they can’t do what I do. So I come in. There’s an office I don’t like? We’re not using — I reject it out of bankruptcy. There’s a contract that’s not very favorable? I get rid of it. I look at all my employees and I say, “God, we’ve got 100 too many.” I get rid of them that day. There’s a business that’s not making money? I go in, and I just shoot it. Boom. Gone. Done. Numbers don’t make sense? There’s no probability of success? I shoot it. C.E.O.s can’t do that, right? They just can’t do that. They don’t have the flexibility. They don’t have the processes. And everything happens so quickly. So you’re taking, like, 10 years of a life of a company, and what optimally would be everything that you would want to accomplish, and you shrink-wrap this thing down to 12, 18 months and you sort of, like, turbocharge everything. It’s dynamic. It’s exciting. I don’t know if you’ve ever been on a condo board, right? It’s really what I call a lowest-common-denominator business. The least objectionable idea gets done. Everything that’s a problem — I want it fixed, like, tomorrow, because that’s the cadence that I’m used to. And most C.E.O.s, they’d have to have 30 separate meetings with each of the independent directors, maybe at the Harvard Club or something. And they’d have to socialize the idea. Forget that. 

DUBNER: So, John, it turned out that the writer Michael Lewis had been hanging around with Sam Bankman-Fried when FTX went under, and he was writing a book about him. I’m curious whether Michael’s information was helpful to you in any way?

RAY: No, I’m way too busy to help Michael on his book. 

DUBNER: No, I’m asking if there was anything in his reporting that was helpful to you. Because, you know, you walked into this total chaos where there was no chronicling of anything. And I figured he’s at least been chronicling.

RAY: He probably had eyewitness to a lot of the bills being generated from the local restaurants. But obviously, our focus is really on collecting and marshaling assets and preventing further liability. So he’s got an angle. I don’t know what it is. I wish him well on that.

That Michael Lewis book on Sam Bankman-Fried, has just been published; it’s called Going Infinite: The Rise and Fall of a New Tycoon. We’re actually planning to interview Lewis about that book sometime soon. If you have questions you’d like us to ask him, send us an email to If you need some Michael Lewis before then, you might want to listen to an episode we made with him last year on the 20th anniversary of his book Moneyball. That’s episode No. 523; we called it “Did Michael Lewis Just Get Lucky With Moneyball?” After the break: more with FTX’s emergency C.E.O. John Ray, and we ask: would you want to hire Ray if you were a city that was going bankrupt?

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DUBNER: So at one point, Sam Bankman-Fried was worth an estimated $24 billion. What’s he worth now?

RAY: I would like to think zero. Unless he’s privated away some asset — I’m not suggesting that he has. But no, there’s no value for him.

DUBNER: Now, are you concerned for him? 

RAY: I’m sort of past all that right now. Now it’s about taking what assets we’ve got and making sure we maximize value and distributing it to the creditors.

DUBNER: Have you ever spoken with Sam Bankman-Fried?

RAY: No, never. Well, I shouldn’t say that. Within about the first 48 hours, he popped on a couple of calls. It wasn’t a personal dialog. It was sort of a group call. And there was a couple of words spoken by him, in a very evasive answering of questions.

DUBNER: Now, I’m seeing these emails from Sam Bankman-Fried to you. On November 13, “Hey John, I’d be super happy to chat — here, phone, etc.!” November 14, “I’d actually love to talk to you, John, and don’t need my counsel to talk first — I’m ready/prepared to talk and think it would be very constructive and helpful.” So you don’t answer those, as far as I know?

RAY: No. It’s pretty clear for me what happened in the company and what his role was. And I didn’t really want to have any dialog with him based on what I knew at the time. Many years ago, I had involvement with a guy. And one of the things I learned, which I’ve kept with me for decades now, is that if you have a conversation with just one other person, you can never deny you had the conversation. And then it becomes an argument about what you said or he or she said. Now you’re no longer arguing about whether or not you ever had the conversation. Now the argument is down to who is more believable, or who actually gets out the word first about what was said. 

DUBNER: So if you can just not have the conversation, you keep things cleaner.

RAY: Yes. My brand, if you will, is that you may not agree with me, but you’re never, ever unclear about what I’m telling you.

DUBNER: One criticism I’ve heard of your being so public about how poorly the company was run, was that the more chaotic and absurd you can make it sound, the more that it may be to your benefit, to make your role seem even more heroic. So, are you maybe overselling the chaos? 

RAY: Look, if I wanted to get fame, I’ve certainly been doing a very, very bad job up until now, right? Because you couldn’t find a picture of me on the Internet. You don’t just wake up at 64 and say, “You know what? I want to be the world’s most famous guy. I want to look like a hero.” No, I don’t do that. So I’ve gone through my entire career. You barely can find that I existed as a human, and I wanted it that way.

DUBNER: As we speak, there’s word that Binance, which is the biggest crypto exchange in the world, that started in China, but they’ve moved around, that they’re now in big trouble with U.S. regulators, the Department of Justice, S.E.C. If they go under, can I interest you in another emergency C.E.O. job? You will be a crypto-exchange pro by then. Would that interest you? 

RAY: On one occasion, I’ve done back-to-back industries. And I learned enough that I probably am not a repeat guy when it comes to industries. I want new people to dislike. I want to learn different things. I have a very short attention span. I don’t hang around after these cases. I’m like a guy with, like, two machetes whipping my way through the crowd. 

DUBNER: Let’s say I’m an American city that’s got deep-rooted financial trouble — maybe my tax base is dwindling, maybe I’ve got underfunded pensions, I may be looking at bankruptcy down the road — if I’m that city, is John Ray someone I want to call for that?

RAY: Oh, absolutely. I mean, that is the total profile of a case that I would get into. So, yeah, if Chicago wants to go in, I’ll be there. 

DUBNER: Let’s say I am the mayor of Chicago, and I say, “John, my city is spiraling in some familiar ways with safety and real estate and so on.” How do you think about that job?

RAY: Cities are no different than corporations. They’re highly leveraged. In some cases, they have too many employees. They have a bad business plan. Their business plan relies too much on debt. Their income is off. Look at the city of Detroit. Detroit went through a bankruptcy, totally changed the economics of the city. And it’s really no different than a private enterprise. 

DUBNER: But I would think that in the case of a city, the creditors are people like retired transit workers who have a guaranteed pension and so on. So let’s say you want to declare bankruptcy in Chicago. How do you think about making creditors whole to some degree? 

RAY: Well, look. There’s no way that everybody comes out better off than they were in any bankruptcy. That’s very, very rare. I’ve had a number of cases we’ve made creditors whole. And in every one of those situations there has to be compromise, there has to be consensus. And really, that’s kind of the role of somebody in my job is to bring people together, show them the problem, and work with them to find a solution that perhaps maybe isn’t perfect, but it’s the best alternative for them on a long-term basis as opposed to just hitting the wall and crashing.

DUBNER: So are you okay if we call up the new mayor of Chicago and offer your services? 

RAY: Oh, absolutely. I know the city well. I lived there for 25 years, on and off. They’ve got a ballooned payroll. They’ve got a lot of legacy costs. It’s right down my alleyway.

We did call the office of new Chicago mayor Brandon Johnson to see if he’d be interested in hearing from John Ray. Shockingly, we never heard back. Thanks to John Ray for today’s conversation; he doesn’t do a lot of interviews so I’m glad he did this one. Let us know what you thought; our email is

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Freakonomics Radio is produced by Stitcher and Renbud Radio. This episode was produced by Ryan Kelley and mixed by Greg Rippin, with help from Jeremy Johnston. Our staff also includes Alina Kulman, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Jasmin Klinger, Julie Kanfer, Lyric Bowditch, Morgan Levey, Neal Carruth, Rebecca Lee Douglas, Sarah Lilley, and Zack Lapinski. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra.

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