America's No. 1 financial conglomerate

Chapter 333 Who is using whom?

"What company?"

When Christy asked the question, her body reacted a beat faster than her mind, and she almost stumbled and fell into Ernst's arms.

This was quite a surprise. Her two treasures, comparable to large gourds, were swaying openly in front of Ernst's eyes, like two mischievous lanterns, bumping against him so much that Ernst's eyes went blank.

Looking at the clearly visible fingerprints, Ernst had a sudden thought: Why not put the important matter aside for now and talk about it later?

But out of the corner of his eye, he glanced at the clock on the wall. The hands moved slowly and steadily, as if silently reminding him that time waits for no one.

After regaining his composure, Ernst said, "It's PayPal. If Madoff is interested, I can let you know when PayPal starts its funding round."

Christy's eyes lit up instantly, her excitement like a child seeing their favorite candy. She nodded eagerly and replied, "Great! Madoff Corporation is certainly interested in your company."

Seeing Christy's anxious look, Ernst sneered. Sure enough, the father and daughter didn't care about the investment returns at all. They just wanted to use him as a brand name to boost their image and raise their own value.

However, Ernst didn't care, because the strategic value PayPay could gain from this cooperation far outweighed the benefits of this endorsement.

The first issue is PayPay's development positioning.

If PayPaI wants to grow and expand, it absolutely cannot limit itself to being just a payment software; it must move towards becoming a lifestyle software.

Take Alipay for example. If it hadn't faced an antitrust investigation later, JPMorgan Chase would have given it a valuation of $4500 billion when it went public, a figure that would make anyone drool.

Compare this to PayPal, which was valued at only $60 billion at the same time. The difference between the two is astonishing.

It's important to know that PayPal has the largest number of users among all payment apps in the world. If it didn't have this advantage, its valuation would be in a terrible state.

So the facts are clear: Alipay's choice to focus on lifestyle apps was absolutely the right one.

In North America, however, transforming a payment app into a lifestyle app is extremely difficult.

Putting aside everything else, just getting online payment channels for everyday expenses like water, electricity, phone, and internet bills is enough to give anyone a headache; the difficulty is practically insurmountable.

The situation in the West is different from that in China, and the situation in the United States is even more chaotic.

Take water and electricity companies for example. There are at least several hundred, if not thousands, of them. In just one state, there may be dozens of water and electricity companies of all sizes.

At this stage, it's wishful thinking to completely integrate these companies' payment channels and allow users to pay all their fees in one go on PayPaI.

Let alone now, even thirty years from now in America, the process of online payment has not been fully streamlined.

Although users could pay their bills online at that time, it wasn't a universal payment method.

Take paying your electricity bill as an example. If your electricity bill is paid by a specific power company, you must use an account with a bank designated by them if you want to pay online. Accounts from other banks simply won't work.

This is like going to a restaurant where they only accept one specific denomination of currency and don't accept any other currencies.

However, this issue can at least be resolved; we can work on it gradually.

The key issue is not the payment channels, but the long-standing problem of paper bills.

To fully realize online payment of utility bills, federal legislation must be promoted.

According to U.S. laws and regulations, many important documents must be delivered in writing, and many industries require paper reports to be legally valid.

However, the downsides of paper bills are also obvious. For example, sometimes the documents in the mailbox get damaged by rain. If there are problems later and you want to claim compensation from the insurance company, the insurance company simply won't acknowledge it and will just shrug and tell you that they can't help you.

If electronic bills were legally recognized, wouldn't all these problems be solved?

Users have both paper and electronic bills, providing double protection in case of problems, which will certainly attract many users to some extent.

Ernst's influence in the government is far from sufficient to push this forward.

But Madoff was different; the resources and connections he held were unmatched by most people.

Ernst found the thought of Madoff somewhat unbelievable.

Madoff's Ponzi scheme company produced annual returns as stable as bank interest rates. Whether the market boomed or busted, it had absolutely no effect on Madoff's company; even their returns remained completely unchanged.

Such an unusual situation should have aroused suspicion long ago, but no one has investigated it thoroughly.

The Securities and Futures Commission (SFC) seemed completely blind to Madoff's situation, turning a blind eye to it.

On one occasion, the lawsuit against Madoff became so big that the Securities and Futures Commission (SFC) was forced to investigate Madoff under pressure.

Logically, if the CSRC staff had just checked Madoff's accounts, they could have discovered the irregularities in less than three minutes, but they simply didn't.

Madoff Asset Management was backed by someone, and he would never believe it if you beat him to death.

The fact that a force has the power to manipulate the China Securities Regulatory Commission to cooperate with a Ponzi scheme must involve countless powerful figures; just thinking about it is terrifying.

However, this formidable force presents a rare opportunity for PayPal, allowing it to push forward its decision to make electronic bills legally effective.

For the forces behind the scenes, this legislation will not only not harm their interests in the slightest, but will also allow them to gain huge benefits from it, so they should not have difficulty making a choice.

Wall Street could do this too, but it certainly wouldn't. At least not until its online payment platforms have completely taken over the market. Madoff would be a good choice.

Just when Christy thought the matter was settled, Ernst changed the subject, "However, it can't be cash financing."

Upon hearing this, Christy was stunned. Her brows furrowed, and she asked in confusion, "What do you mean? Financing isn't done with cash; are we using something else?"

Ernst did not answer directly, but instead reached out and played with the large papaya and grapes in front of him, observing Christy's reaction as he did so.

Seeing that a hint of haziness was gradually appearing in Christy's eyes, as if she had been infected by the ambiguous atmosphere, Ernst slowly said, "I am quite interested in Madoff Securities."

Upon hearing the words "Madoff Securities," Christy felt as if she had been doused with cold water, instantly snapping her out of her daze.

She abruptly stood up, sat down next to a young woman, and said decisively, "Impossible! This company is of great significance to my father; it's absolutely impossible for it to be sold!"

Ernst sneered inwardly.

Significant?

This is true.

Without this company, Madoff wouldn't be where he is today.

Madoff's rise to prominence began with Madoff Securities Trading Company, where he operated as a market maker.

Madoff's proudest and most correct decision was to push Madoff Securities to digitize its securities business.

The electronic stock trading system he helped develop was a game-changer, completely overwhelming the traditional telephone trading market makers.

With this system, Madoff Securities quickly dominated the market, and Madoff was thus hailed as a pioneer of electronic stock trading.

It was his electronic trading system that gave birth to the world's first electronic trading platform, the famous NASDAQ.

Therefore, Madoff's subsequent appointment as chairman of Nasdaq for three terms can be attributed to his advantageous position and the principle of keeping the benefits within the family.

Under his management, his securities firm gradually developed into the largest market maker on Nasdaq.

According to a report in The Wall Street Journal, at its peak in 1992, 9% of all stock transactions in the United States were completed through Madoff Securities.

This data alone is enough to illustrate the extent of Madoff's influence at the time.

Even Bill Gates, in the elite circles, cannot compare to Madoff in terms of status.

This company is indeed of great significance to Madoff, but is it really at the point where it absolutely cannot be sold?

Ernst didn't think so.

He felt that the old man had now embarked on the path of a Ponzi scheme, a sure-fire way to make money, and no longer looked down on risky industries like securities firms.

Otherwise, he wouldn't have handed the company over to his two sons to manage, and even though the company's market share has now dropped to less than 3%, he has no intention of intervening.

This clearly shows that he doesn't care about the company at all; to him, the company is dispensable.

Ernst Asset Management, on the other hand, lacked the securities trading business.

Madoff Securities was like a chosen one for Ernst Asset Management.

If Ernst Asset Management could acquire this company, it would instantly become one of the top securities firms in the United States, a major player on Nasdaq, and truly enter the system of major players.

Unlike hedge funds, private equity funds, and asset management businesses, market makers deal with a wider range of ordinary users.

Therefore, to gain a foothold in this field, your company either needs revolutionary reforms, just like Madoff seized the opportunity of electronic securities.

Either you must have a good reputation built up over a long period of time, or you can only grow and expand slowly, step by step.

Ernst looked at Christy and said firmly, "Just relay my message to Madoff. I believe he will have a different perspective."

He was absolutely certain that Madoff would be tempted after weighing the pros and cons.

After all, for Madoff, selling a company he no longer cared about would bring him a considerable amount of cash, while also establishing a deeper cooperative relationship with it. It was a sure-fire way to make money.

Seeing Ernst's confident demeanor, Christy began to waver.

She knew that Madoff hadn't been paying much attention to the brokerage business lately, but asking him to sell the company was still a huge deal.

However, since Ernst had already said so, she could only pass on the message.

So she nodded and said, "Alright, I'll pass on your message. However, I can't guarantee my father will agree."

Ernst smiled. "It's alright, just pass on the message. I'm sure Madoff, with his keen eye, won't miss this win-win opportunity."

Assets are now a burden for Madoff; as long as the scam continues, he will have inexhaustible wealth.

If the scam is exposed or the scheme collapses, all the assets will be useless; they won't belong to him.

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