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Speaker 1: Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: Welcome to Bloomberg Law on Bloomberg Radio. I'm Madison Mills
Speaker 3: in for June Grasso. This week. Two big headlines today,
Speaker 3: both for the top contenders so far in the twenty
Speaker 3: twenty four election. We've got former President Trump. He has
Speaker 3: a new trial date. Meanwhile, President Biden's son reaching a
Speaker 3: deal on US tax crimes, just as the President himself
Speaker 3: heads to San Francisco for meeting with experts in the
Speaker 3: AI space. We're going to cover all of that, but
Speaker 3: first let's start with the Hunter Biden news. Because the
Speaker 3: President's son will plead guilty to two misdemeanor tax crimes
Speaker 3: in an effort to avoid a separate gun charge. Joining
Speaker 3: us to discuss the news is Zoe Tellman, Bloomberg News
Speaker 3: legal reporter, and Bloomberg's Kaylee Lines on the phone with
Speaker 3: us from DC. Kaylee, I want to start off with you.
Speaker 3: Just walk me through what we know about this deal
Speaker 3: for Hunter Biden.
Speaker 4: Well, it was revealed in a filing by the district
Speaker 4: attorney in Delaware earlier today that there is a deal
Speaker 4: that has been struck with prosecutors. The Hunter Biden, the
Speaker 4: President's son, is going to plead guilty, as you said,
Speaker 4: to these two misdemeanor tax charges basically related to charges
Speaker 4: that he didn't pay taxes on time, and in doing so,
Speaker 4: will likely avoid prosecution on a gun related charge because
Speaker 4: that is going to go to what they call a
Speaker 4: diversion program. So as long as he complies with certain
Speaker 4: conditions for a period of time, that will be dismissed.
Speaker 4: In that charge in particular, is about lying about his
Speaker 4: drug use when purchasing a handgun several years ago. So
Speaker 4: that's what we know about the agreement. It seems likely
Speaker 4: that he would avoid prison time under this deal. And
Speaker 4: of course you aren't hearing much about the White House
Speaker 4: response to it, other than a statement that was put
Speaker 4: out by a spokesperson saying that the President and the
Speaker 4: First Lady love their son and support him. You are
Speaker 4: hearing a lot though, on the other side of the aisle,
Speaker 4: with Republicans like House Speaker Kevin McCarthy calling it a
Speaker 4: sweetheart deal, as has the Oversight Committee chairman in the House,
Speaker 4: Congressman James Comer, talking about a sweetheart deal and saying
Speaker 4: that Congress is going to continue to pursue his own
Speaker 4: investigation into Hunter Biden and the Biden family's dealings.
Speaker 3: And we'll talk a little bit more, Kayley, about the
Speaker 3: political ramifications here, but I want to go to you, Zoe,
Speaker 3: talk to me in terms of the legal context here.
Speaker 3: I guess, how weird is it for defendants who enter
Speaker 3: into these agreements to plead guilty. Did that seem abnormal
Speaker 3: to you?
Speaker 5: No?
Speaker 6: I mean, if a defend and is willing to accept
Speaker 6: responsibility for the crimes that they're under investigation for, the
Speaker 6: government is certainly open to entering into agreements, they have
Speaker 6: discretion to also you know, sign off on you know,
Speaker 6: these diversion programs, especially for first time offenders. There are
Speaker 6: certain types of crimes that aren't eligible, but the offense
Speaker 6: that Hunter Biden has been charged with, this gun offense,
Speaker 6: doesn't fall under that category. So the idea is by
Speaker 6: admitting responsibility but not pleading guilty, if he can stay
Speaker 6: you know, drug free, not possess any guns, you know,
Speaker 6: not commit other crimes, comply with other conditions. After a
Speaker 6: period of time, the government agrees it's not going to
Speaker 6: prosecute that particular offense. And we've been told, although it's
Speaker 6: not public yet, that the plea deal on the tax
Speaker 6: crimes will include a recommendation from prosecutors of twenty four
Speaker 6: months of probation, so he seems to be in a
Speaker 6: situation where he will not serve any jail time. Of course,
Speaker 6: it's up to the judge. Those tax crimes, although they're misdemeanors,
Speaker 6: they do carry up to a year in prison, so
Speaker 6: the judge could decide to not abide by that probation recommendation.
Speaker 6: But they're going to give it a lot of weight. So,
Speaker 6: you know, it seems like legally he is coming out
Speaker 6: of this with not so much exposure, you know, publicly
Speaker 6: pr wise, politically it's a different story.
Speaker 3: So Kaylee, come back in here. I'm curious what's next
Speaker 3: for Hunter Biden because there's also the laptop situation that
Speaker 3: you mentioned earlier as well. What would be next for
Speaker 3: him and what else is there for us to kind
Speaker 3: of learn and figure out still that we might get
Speaker 3: more information about in the coming weeks.
Speaker 4: Well, of course, what's next for him in this case
Speaker 4: is he's going to have to go to the federal
Speaker 4: court in Delaware and actually enter this police so we
Speaker 4: will have to see him appear there, and then, as
Speaker 4: Zoe was alluding to, the judge is going to have
Speaker 4: to make some decisions about how all of this is
Speaker 4: going down. But I would say there also could potentially
Speaker 4: be more coming down the pike for him. Here in Washington,
Speaker 4: I mentioned Congressman James Comer, who heads up the Oversight Committee,
Speaker 4: already had ongoing investigations into Hunter Biden, into the wider
Speaker 4: Biden family, and he really doubled down today, committed to
Speaker 4: continuing that effort despite what we're seeing come out of
Speaker 4: the Justice Department today, that those efforts are going to continue.
Speaker 4: So this is not to say that by inking this
Speaker 4: deal with prosecutors Hunter Biden has now removed all of
Speaker 4: his potential legal or investigative woes that he was facing.
Speaker 4: If anything, this may just add more fuel to the
Speaker 4: fire for Republicans to really double down.
Speaker 3: On those efforts.
Speaker 4: And this is something that his father, President Joe Biden,
Speaker 4: is going to have to contend with on the campaign
Speaker 4: trail you mentioned, Maddie. He's out in California trying to
Speaker 4: raise money for his campaign, meeting with donors, and this
Speaker 4: is definitely just a very difficult issue for him to navigate,
Speaker 4: as he doesn't want to appear that he has the
Speaker 4: thumb on the scale at the Justice Department in any
Speaker 4: way on his side case or of course, in the
Speaker 4: case the Justice Department has brought against his likely opponent
Speaker 4: in the twenty twenty four general election, former President Donald Trump.
Speaker 4: We have to consider that factor here as well.
Speaker 3: And Kelly's sticking with you on that for a second.
Speaker 3: Have we heard yet how the Biden camp is going
Speaker 3: to strategize to kind of distance themselves from the Republican
Speaker 3: narrative of Biden having his finger on the Justice Department.
Speaker 4: Really by not commenting they will not engage in conversation
Speaker 4: around this, whether you're talking about, you know, the White
Speaker 4: House Press Secretary saying no comment, or the President himself
Speaker 4: saying he's not going to comment on it. They are
Speaker 4: really trying to stay at arm's length, likely to avoid
Speaker 4: that perception that this is in the case against former
Speaker 4: President Donald Trump politically motivated, or that you know, the
Speaker 4: president is trying to protect his son from the workings
Speaker 4: of the Justice Department. So I think really the strategy
Speaker 4: is to not engage with it much at all, to
Speaker 4: let the prosecutors and the Department of Justice do its work,
Speaker 4: and for the president and the Biden campaign to stay
Speaker 4: far away from that.
Speaker 3: Yeah, definitely a very different strategy from what we continue
Speaker 3: to see from former President Trump. Zoe, talk to me
Speaker 3: about this trial date August fourteenth, walk me through the
Speaker 3: timeline on that. Did that feel kind of speedy to you?
Speaker 6: It's very speedy, and I should say not surprisingly so.
Speaker 6: The South Florida District Court has been known historically as
Speaker 6: a rocket docket. You know, cases that get brought there
Speaker 6: move to trial fast.
Speaker 7: There.
Speaker 6: That said, you know, our understanding is that this order
Speaker 6: is standard process for the court, but we haven't seen
Speaker 6: any motions from the defense yet and we're expecting some,
Speaker 6: if not, you know, quite a few from them, challenging
Speaker 6: the validity of the indictment, contesting evidence that the government
Speaker 6: wants to use, possible issues related to how classified information
Speaker 6: gets used in a future trial, and all of these
Speaker 6: are issues that are going to take weeks or months
Speaker 6: to litigate. So it's unlikely that August fourteenth remains the
Speaker 6: trial date, but it is certainly the judge, you know,
Speaker 6: at least putting down an anchor and making clear that
Speaker 6: she would like to move this along as quickly as possible.
Speaker 3: And what do we know, Zoe about the jury here
Speaker 3: is this This is going to be in Palm Beach
Speaker 3: County now correct.
Speaker 6: We're still waiting to see where the trial will take place.
Speaker 6: The judge's order had said it would actually be in
Speaker 6: her home district of Fort Pierce, Florida, and not in
Speaker 6: West Palm Beach. There are some process quirks in that
Speaker 6: district where cases that are filed in West Palm Beach
Speaker 6: can actually go to judges who sit in adjacent districts. So,
Speaker 6: you know, but either way, whether it's in Fort Pierce
Speaker 6: or West Palm Beach, Florida, you know, is a state
Speaker 6: that went for Trump in twenty twenty. You know, it
Speaker 6: is a red state, and the pool of potential jurors
Speaker 6: is likely going to include, you know, more people who
Speaker 6: voted for Donald Trump than say, if the trial were
Speaker 6: here in Washington. So you know, we don't know what
Speaker 6: that pool will look like. And you know, certainly jury's
Speaker 6: election is meant to screen people not necessarily have an opinion,
Speaker 6: but who feel that their minds are made up and
Speaker 6: they can't look at the evidence objectively, you know. And
Speaker 6: that may mean that some of the former president's political
Speaker 6: supporters are on the jury, but that certainly doesn't mean
Speaker 6: it's a you know, stacked deck at this point either way.
Speaker 3: Well, Kayleie, talk to me about the politics here. That
Speaker 3: August fourteenth date comes just ahead of a pretty important
Speaker 3: event when it comes to the twenty twenty four election.
Speaker 3: Talk to me about that.
Speaker 4: Well, it does. This trial would last for two weeks,
Speaker 4: which would mean it would still be ongoing on August
Speaker 4: twenty third, when the first Republican primary debate is scheduled
Speaker 4: to happen in Milwaukee. Granted, former President Trump hasn't actually
Speaker 4: committed to be at that debate either way, but clearly
Speaker 4: that would put this front and center on the topic
Speaker 4: for discussion for his opponents in the primary to really
Speaker 4: attack him on potentially, So there's that consideration. Also, we
Speaker 4: have to keep in mind that for months now we
Speaker 4: have expected August could the month where a potential indictment
Speaker 4: comes down in Georgia in Fulton County, where the district
Speaker 4: attorney there is looking into president former President Trump's efforts
Speaker 4: to overturn the results of the twenty twenty election in
Speaker 4: that state. So August could be a very politically legally
Speaker 4: briefe month for the former president. Again, assuming that this
Speaker 4: trial actually happens two months from now, which Zoe was
Speaker 4: just outlining, there's a very real chance that it does not.
Speaker 3: Kaylee, final thirty seconds here, what's going to be your
Speaker 3: big question heading into that debate? What do you think
Speaker 3: is going to be like the headline the next day?
Speaker 4: Well, I want to know who's going to get on
Speaker 4: the stage first of all, because you need to have
Speaker 4: a certain number of donations and people signed on to
Speaker 4: support you. And now that we're over a dozen Republican
Speaker 4: primary candidates, is the stage going to be big enough?
Speaker 4: Are we going to have to have, you know, two
Speaker 4: debates at once, and then of course, how do they
Speaker 4: approach the Trump question, whether or not they would pardon him,
Speaker 4: what they think about his actions. Those have been very
Speaker 4: difficult questions for these other candidates to navigate.
Speaker 3: Well, we're going to have you here with us to
Speaker 3: cover all of it. Kaylee, thank you so much. That
Speaker 3: was Kelly Lions and Zoe Tilman down in DC with us.
Speaker 3: You're listening to Bloomberg Law. I'm Madison Mills and this
Speaker 3: is Bloomberg.
Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: I'm Madison Mills in for June Grasso, and this is
Speaker 3: Bloomberg Law. The AI craze it's not just hitting markets,
Speaker 3: it's also definitely been hitting Washington and President Joe Biden
Speaker 3: is scheduled to meet with business leaders and experts on
Speaker 3: artificial intelligence today. This is part of a broader shift
Speaker 3: from his administration and a move from his administration pushing
Speaker 3: for news security and privacy safeguards surrounding AI. So joining
Speaker 3: us to discuss is Jackie Davilos, Bloomberg News technology reporter.
Speaker 3: We've also got Courtney Rosen, our White House reporter from
Speaker 3: Bloomberg Government on the line. From DC. Thank you both
Speaker 3: so much for being here at Courtney, I want to
Speaker 3: start with you, what do we know about this meeting
Speaker 3: and what can we expel back to the big headlines
Speaker 3: to come out of it?
Speaker 8: To be President Biden is in California this week otherwise
Speaker 8: for political fundraisers, but on the way he's having a
Speaker 8: meeting today with AI experts and leaders. And what's a
Speaker 8: little different about this meeting compared to others he's done
Speaker 8: in the past is today he's talking to researchers, he's
Speaker 8: talking to advocates. In the past, he's met with tech
Speaker 8: industry CEOs, so he's definitely getting a different perspective here
Speaker 8: on his trip to California that he got from a
Speaker 8: meeting at the White House several weeks ago on the topic.
Speaker 8: His Chief of Staff, Jeff Zience, is leading the White
Speaker 8: House's effort to respond to AI. And I would note
Speaker 8: that mister Science was on the board of META right
Speaker 8: before President Biden took office, so he definitely has experience
Speaker 8: in the tech sector.
Speaker 3: Corney, I want to go back to you, because you're
Speaker 3: obviously in DC, you cover the White House. Do you
Speaker 3: get a sense that this has always been a priority
Speaker 3: for the Biden administration or is this kind of a
Speaker 3: newer move for them to look into AI.
Speaker 8: It's definitely new. I didn't hear them up until a
Speaker 8: couple months ago talking about AI and press briefings or
Speaker 8: in speeches. When it really became a topic was when
Speaker 8: chat GPT became public where people could test it out,
Speaker 8: and Congress started talking about it, the White House started
Speaker 8: talking about it, and that's when we really started to
Speaker 8: see Washington zone in on AI.
Speaker 3: Yeah, that makes a lot of sense. I wonder too,
Speaker 3: what you think the regulators in Washington might be missing
Speaker 3: when it comes to AI, because there is always that
Speaker 3: kind of criticism that Washington doesn't necessarily keep up with
Speaker 3: all of the technology booms that we experience. Do you
Speaker 3: get a sense that that story is going to be
Speaker 3: a little bit different when it comes to AI.
Speaker 8: Senator Schumer, who's the Senate majority leader, is definitely trying
Speaker 8: to create a different story here. He's scheduled tomorrow to
Speaker 8: release his proposal on how to regulate AI, and today
Speaker 8: he's having a meeting with senators to talk about what
Speaker 8: the technology is, how it works, so they're educated on
Speaker 8: what it is they're going to be writing a law
Speaker 8: about or writing a bill about I should say, and.
Speaker 3: I imagine a lot of the big tech players are
Speaker 3: going to be key in that conversation. Jackie, I want
Speaker 3: to come back to you. You were talking to me
Speaker 3: earlier about how the big tech players and those big
Speaker 3: names are also the big names that we're seeing push
Speaker 3: into AI. Can you tell me a little more about that.
Speaker 5: Absolutely, and you know, related to the wave of movement
Speaker 5: coming from Capitol Hill, these big players have a lot
Speaker 5: to do with the conversation that lawmakers are ultimately going
Speaker 5: to push forward when it comes to raining in some
Speaker 5: of this technology. We had spoken with representative from Virginia
Speaker 5: Don Bayer for our show, and there was a lot
Speaker 5: of excitement about the technology, but also an acknowledgment that
Speaker 5: lawmakers don't really know where to begin. Today was interesting
Speaker 5: and that the first bipart is a bill aimed at,
Speaker 5: you know, creating some kind of guardrails around AI, was
Speaker 5: released today and what it was pretty telling and that
Speaker 5: you know, it wasn't that meaty when it came to
Speaker 5: the specifics on how to create some guardrails. That's quite
Speaker 5: a bit of a contrast when you think about how
Speaker 5: far the European Union is in starting to enact pretty
Speaker 5: specific rules when it comes to reigning in AI, some
Speaker 5: of that being you know, banning facial recognition software for example,
Speaker 5: something that wasn't explicitly called out in the bipartisan bill
Speaker 5: proposed today. So just some differences there and just how
Speaker 5: far ahead one region is from another. But here especially,
Speaker 5: you know, the big tech players are going to have
Speaker 5: a big say given lotmakers need some of that guidance.
Speaker 3: Well, Jack, you asked such a great question to one
Speaker 3: of your guests on the show. You were like, what
Speaker 3: are the conversations at dinners in San Francisco about AI?
Speaker 3: Talk to me about the answer you got on that.
Speaker 5: Yeah, you know, there's a lot of excitement, but when
Speaker 5: it comes to the dinner table of these venture capitalists
Speaker 5: and the kinds of things that excite them, it's not
Speaker 5: always you know, rooted in reality. Let's put it nicely.
Speaker 5: There is just so much potential and a lot of optimism.
Speaker 5: That's really I think the vibe that Silicon Valley always
Speaker 5: has when introducing something new to the mainstream. But it
Speaker 5: was interesting because for the first time I think in
Speaker 5: a while, social media, for example, you know, the lawmakers
Speaker 5: and companies industry, we're never really on the same page
Speaker 5: when it comes to artificial intelligence. You're really seeing more
Speaker 5: of a common tenor with the acknowledgment that, look, we
Speaker 5: have something really exciting on our hands, but also, hey,
Speaker 5: this also has so much more to go. But we
Speaker 5: really need to start putting in the rules now much
Speaker 5: more proactive, let's learn from our mistakes, and just hearing
Speaker 5: that tone coming from both sides, I think is a
Speaker 5: new shift for technology.
Speaker 3: So Courtney, come back in here. I'm curious where things
Speaker 3: stand when it comes to AI regulation from the congressional perspective. Here,
Speaker 3: I guess what inning would you say that we're in.
Speaker 3: Are we in the first inning of that regulation? Are
Speaker 3: we down in the seventh?
Speaker 8: Where are we at sports metaphors? Congress loves that. I
Speaker 8: definitely say we're still toward the beginning of the game.
Speaker 8: They beginning too. When open ais CEO was here a
Speaker 8: couple of weeks ago talking about chat DBT, that was
Speaker 8: definitely the beginning of Congress getting interested in this topic.
Speaker 8: We saw a lot of headlines, we saw a lot
Speaker 8: of questions come out of members, and now we're starting
Speaker 8: to see them actually get to the work of drafting
Speaker 8: a bill, and like Jackie was just saying, we're not
Speaker 8: really sure what that'll look like. And it's the bill
Speaker 8: so far that has been out is not very meaty,
Speaker 8: so we'll see how that goes for sure. But Congress
Speaker 8: does love a sports analogy.
Speaker 3: They love a sports analogy, that is for sure. Jackie,
Speaker 3: talk to me about what your sources are saying when
Speaker 3: it comes to financing and how regulation might impact that.
Speaker 3: Are you hearing anyone say, you know, I'm so worried
Speaker 3: about the DC regulation story that I'm gonna hold my
Speaker 3: money for a little while and wait and see.
Speaker 5: Not so much. I think that, you know, the biggest players, Google, Microsoft,
Speaker 5: the chip makers, the cloud providers, they've all done a
Speaker 5: really good job at being proactive in engaging Capitol Hill
Speaker 5: and getting a sense of, you know, what is the sentiment,
Speaker 5: how can we shift that? And not in any nefarious way,
Speaker 5: but in a much more proactive manner in working with lawmakers.
Speaker 5: So everyone's somewhat on a similar page when it comes
Speaker 5: But when it comes to you know, the more nimble
Speaker 5: startups that don't have this like lobbying, funding and power
Speaker 5: and political capital in Washington, they do rely a lot
Speaker 5: on their you know, their biggest backers, whether it's the
Speaker 5: big vcs or you know some of these companies Microsoft, like,
Speaker 5: you know, they're backing Opening Opening, I obviously taking their
Speaker 5: own presence on Capitol Hill, but there's many other AI
Speaker 5: startups out there that have to rely on the vcs
Speaker 5: and the companies to kind of push the conversation forward
Speaker 5: for the industry on that front.
Speaker 3: Yeah, Courtney, final thirty seconds here, what is the next
Speaker 3: big thing when it comes to AI regulation? What should
Speaker 3: we be looking.
Speaker 8: Out for this summer? The White House Budget Office is
Speaker 8: set to set standards on how AI will be used
Speaker 8: in government. And we know that thousands, hundreds of thousands,
Speaker 8: millions of people interact with the US government every year,
Speaker 8: and how the US integrates AI into that experience is
Speaker 8: going to be really telling about how the Biden administration,
Speaker 8: how government sees AIM moving forward. So I would definitely
Speaker 8: be watching that.
Speaker 3: All right, Really good to know. Thank you so much,
Speaker 3: Courtney Rosen, White House reporter for Bloomberg Government. And we
Speaker 3: also Jackie Davilos, our Bloomberg News technology reporter. You're listening
Speaker 3: to Bloomberg Law coming up on the show, How the
Speaker 3: Justice Department is looking at bank mergers in a new way.
Speaker 3: I'm Madison Mills. I'm in for June Grasso, and this
Speaker 3: is Bloomberg.
Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: I'm Madison Mills in for June Grasso this week. Remember
Speaker 3: those four banks they failed a few months ago. Some
Speaker 3: called it a banking crisis, others called a turmoil. There
Speaker 3: is a lot of turmoil over how to describe it,
Speaker 3: but either way, it led to some big questions at
Speaker 3: the Justice Department, with officials now weighing a revamp over
Speaker 3: how they scrutinize bank mergers. So joining us to discuss
Speaker 3: is Leah Nylan and Bloomberg News Andy Trust, reporter down
Speaker 3: in DC for us. Leah, thanks so much for being here.
Speaker 3: What's up with the DJ here? So what's up with
Speaker 3: the Justice Department? What are they saying about what the
Speaker 3: new regulation could look like?
Speaker 9: Yeah, So the Justice Department has a dual role with
Speaker 9: banking authorities to review any bank mergers, and they look
Speaker 9: at them just like they would any other deal, to
Speaker 9: sort of see how the merger of a bank would
Speaker 9: impact folks. But for the past thirty years, since about
Speaker 9: nineteen ninety five, they've sort of limited the way that
Speaker 9: they look at them to very specific things, focused on
Speaker 9: how it would impact the concentration of deposits in specific areas.
Speaker 9: And at a speech this morning, the head of the
Speaker 9: Anti Trust Division, that's Assistant Attorney General for antitrust, Jonathan Kanter,
Speaker 9: said that that approach is really too narrow. You know,
Speaker 9: the banking economy. It's sorry. The banking industry is really
Speaker 9: very different today than it was in nineteen ninety five,
Speaker 9: and they need to be looking at a lot more
Speaker 9: factors when they examine bank mergers. So they want to
Speaker 9: look at things like, how does this bank merger impact
Speaker 9: the sort of fees that consumers might end up paying,
Speaker 9: how does it impact small business lending? All sorts of
Speaker 9: things that really before they weren't actually paying that much
Speaker 9: attention to.
Speaker 3: So talk to me about what triggered this. Is it
Speaker 3: the case that these most recent banking issues made the
Speaker 3: Justice Department raise their eyebrows a little bit more, move
Speaker 3: a little more quickly, or was this already kind of
Speaker 3: in the works.
Speaker 9: So the Justice Department actually started looking at doing a
Speaker 9: revamp to the bank merger guidelines back in twenty twenty,
Speaker 9: and then President Biden put in place this Executive Order
Speaker 9: on Competition his first summer. This was around July of
Speaker 9: twenty twenty one. That really encouraged a lot of the
Speaker 9: agencies here in the federal government to consider how various
Speaker 9: rules and regulations they had on the books impact competition.
Speaker 9: So the Justice Department sort of used that to prod
Speaker 9: some of the other banking agencies like the Federal Reserve,
Speaker 9: the Federal Deposit Insurance Corporation, the one that helps with
Speaker 9: failed banks, and the Office of the Control of the
Speaker 9: Currency and other banking regulator who has oversight over bank
Speaker 9: mergers to really sort of rethink the way that they
Speaker 9: do bank mergers, and some of that, you know, has
Speaker 9: had some impact here in DC. You know, one of
Speaker 9: the things that the FED found when they were reviewing
Speaker 9: the failure of Silicon Valley Bank was that they had
Speaker 9: sort of waved through this merger in twenty twenty one
Speaker 9: with another bank called Boston Private Financial Holdings. It was
Speaker 9: actually a pretty big merger. It gave SVB another nine
Speaker 9: hundred million dollars, and they said, Okay, we think that
Speaker 9: this is fine. It's not going to impact the safety
Speaker 9: of stability of the financial system. But they didn't actually
Speaker 9: like check whether SBB had plans in place for how
Speaker 9: it was going to like deal with becoming a much
Speaker 9: larger bank. And they never actually checked with the people
Speaker 9: at the FED whose job as bank supervision to make
Speaker 9: sure that they had a plan for how they were
Speaker 9: going to improve their supervision of this much larger bank.
Speaker 9: So there has been a little bit of I guess,
Speaker 9: second guessing whether maybe some of these mergers that they
Speaker 9: approved recently they weren't really weren't ready for the big leagues,
Speaker 9: and maybe the FAD wasn't really ready to actively supervise
Speaker 9: them now that they're larger.
Speaker 3: Right, sounds like they got to the end there and
Speaker 3: then just had a couple of a couple of question
Speaker 3: marks they were okay with leaving open. So so talk
Speaker 3: to me, then, Leah, about what this means for the
Speaker 3: regional banks. Like when we talk about an SVB, obviously
Speaker 3: that's a bigger player. Here is the Justice Department concerned about,
Speaker 3: you know, a merger or a partnership of a smaller
Speaker 3: regional banks as well, or is it more about the
Speaker 3: big guys chomping up the little er guys.
Speaker 9: They were really emphasizing at the speech this morning that
Speaker 9: they're not trying to prejudge any of the mergers. You know,
Speaker 9: all merger investigations are very fact specific. They look at
Speaker 9: how you know, it's going to impact the specific geographic
Speaker 9: area and also you know, customers. But they did say,
Speaker 9: you know, like big banks, obviously it's it's much more
Speaker 9: of a problem for them, you know, to get bigger.
Speaker 9: And they said that they are very cognizant of the
Speaker 9: fact that we do now have a certain segment of
Speaker 9: banks that are a little bit too big to fail.
Speaker 9: That's a quote market reality that they can't just ignore.
Speaker 9: But they also said that one of the things that
Speaker 9: they were hoping this bank merger revamp might do is actually,
Speaker 9: you know, maybe make it easier for the smaller guys.
Speaker 9: You know, the focus on local deposit concentrations, which is
Speaker 9: which is what they have been looking at since nineteen
Speaker 9: ninety five, really does make it so that if you know,
Speaker 9: a small bank in one area tries to merge with
Speaker 9: another small bank, you know, it puts a lot of
Speaker 9: focus on that because you know, of this the geographic
Speaker 9: nature of it. So maybe maybe these small bank mergers
Speaker 9: aren't that big a deal, and they need to be
Speaker 9: considering some other factors, Like you know, people might not
Speaker 9: always care as much now today about whether they have
Speaker 9: a local branch, given that you can use the internet
Speaker 9: to do.
Speaker 3: A lot of your banking right right. And I wonder too,
Speaker 3: when you talk about those smaller regional banks, to what
Speaker 3: extent is the kind of layover impact of the Trump
Speaker 3: administration's rollbag of some of that regulation leading to some
Speaker 3: more partnership between these smaller banks. How big of a
Speaker 3: factor is that.
Speaker 9: That's definitely a big factor they you know, when they
Speaker 9: rolled back some of those things, that made it easier
Speaker 9: for these smaller banks to get together because it the
Speaker 9: threshold for which they had greater supervision was higher. So
Speaker 9: you could maybe get together with another small bank because
Speaker 9: that's not going to push you over the limit. You
Speaker 9: might not, you know, want to get together with a
Speaker 9: medium sized bank, because I would. But so that really
Speaker 9: did lead to a lot of mergers twenty twenty one.
Speaker 9: I think I had a statistic in my story about
Speaker 9: how twenty twenty one was like the biggest year on
Speaker 9: record for bank mergers and something like a couple decades
Speaker 9: in part because of this rollback on some of the
Speaker 9: Dodd Frank regulations, and they're sort of expecting a lot
Speaker 9: more bank mergers to come later this year. You know,
Speaker 9: earlier this year it was really slow, in part because
Speaker 9: of the banking crisis. But then there were a lot
Speaker 9: of bank mergers announced in April, the month after sort
Speaker 9: of a lot of the rockiness that had already it
Speaker 9: started to shake out, So, you know, they there is
Speaker 9: still a lot of prediction that some of these smaller
Speaker 9: banks might want to merge, in part also because there
Speaker 9: are a lot of modernization efforts underway at banks. You know,
Speaker 9: like maybe you don't have that great a web app
Speaker 9: and you sort of want to get one now that
Speaker 9: a lot of people are doing like more online banking.
Speaker 3: It's so interesting because as I've been filling in for June,
Speaker 3: I've been talking with Jenry a lot about how hard
Speaker 3: it's been for companies to deal with and get mergers
Speaker 3: and acquisitions through with the current Justice Department. But it
Speaker 3: sounds like the opposite could be used to describe the
Speaker 3: situation for banks more recently.
Speaker 9: That's probably true. Actually, for a really long time, bank
Speaker 9: mergers have sort of been waved through, and there was
Speaker 9: one big banking deal earlier this year that collapsed. This
Speaker 9: was the TD Bank First Horizon deal, and that one
Speaker 9: they ended up calling off. Because the regulatory review was
Speaker 9: just sort of going on for a very long time,
Speaker 9: they didn't have much clarity about when it would end.
Speaker 9: But one thing you know that they were really emphasizing
Speaker 9: this morning is that you know, they are going to
Speaker 9: try and get through, you know, the regulatory review as
Speaker 9: quickly as possible, and you know, if there are problems,
Speaker 9: they'll they'll make that clear. They have this thing the
Speaker 9: Justice Department does called a Competitive Factors Report, in which
Speaker 9: they will go through all of the ways in which
Speaker 9: the two companies that are proposing to merge in this case,
Speaker 9: banks compete, and you know, it'll make it clear, you know,
Speaker 9: to the regular whether there is you know, a proposal
Speaker 9: that might allow this to go through, or whether they
Speaker 9: think it's something that should be blocked. But the Justice
Speaker 9: Department did say, you know, they do have an independent
Speaker 9: authority to block deals. The speech actually happened on the
Speaker 9: sixtieth anniversary of this very famous bank merger case Philadelphia
Speaker 9: National Bank, that really established that the Anti Trust Division
Speaker 9: at the Justice Department has the authority to please bank
Speaker 9: mergers just as the banking authorities do really interesting.
Speaker 3: Leah, thank you so much for coming on to talk
Speaker 3: with us about this, and also for your reporting. That
Speaker 3: was Leah Nylan, Bloomberg News anti trust reporter. You can
Speaker 3: find Leah's story along with along with her colleague Katanga
Speaker 3: Johnson on the Terminal and on Bloomberg dot Com on
Speaker 3: bank mergers facing fresh anti trust heat at the Justice Department.
Speaker 3: You're listening to Bloomberg Law coming up on the show.
Speaker 3: It's Pride month and the Supreme Court may decide on
Speaker 3: a case this month that could have big implications for
Speaker 3: the LGBTQ community. We're going to discuss that next. I'm
Speaker 3: Madison Mills in for June Grasso, and this is Bloomberg.
Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 3: This is Bloomberg Law. I'm Madison Mills in for June
Speaker 3: Grasso this week and this is Pride month, and this
Speaker 3: Pride Month of the US Supreme Court is set to
Speaker 3: decide on a First Amendment case that could have huge
Speaker 3: implications for the LGBTQ plus community. So joining us to
Speaker 3: discuss that case is Greg Store, our Supreme Court reporter
Speaker 3: and expert down in DC for us. Greg, thanks so
Speaker 3: much for hopping on the phone with us here. Talk
Speaker 3: me through the details. What is this case involving a
Speaker 3: Colorado web designer.
Speaker 7: Sure, she is a web designer who says she wants
Speaker 7: to start making pages for weddings, but she says, because
Speaker 7: of her religious beliefs, she only wants to make them
Speaker 7: for opposite sex weddings. Now, Colorado is one of about
Speaker 7: two dozen states that has a law that explicitly says
Speaker 7: so called public accommodations cannot discriminate on the basis of
Speaker 7: LGBTQ status. And so the question for the Supreme Court
Speaker 7: in this case is whether there's essentially a First Amendment
Speaker 7: carve out for that, whether her First Amendment rights her
Speaker 7: free speech rights to create the kind of web pages
Speaker 7: she wants to create and not though she doesn't want
Speaker 7: to create, whether that essentially trumps the anti discrimination law.
Speaker 3: Greg, obviously you're the expert here and not me, But
Speaker 3: why do I feel like we've already done this before?
Speaker 3: This feels really familiar to me.
Speaker 7: Yeah, there was a very similar case a couple of
Speaker 7: years ago involving a baker, also in Colorado who said
Speaker 7: he didn't want to make a wedding cake to celebrate
Speaker 7: a same sex marriage, and all these issues were front
Speaker 7: and center in that case, but then the court kind
Speaker 7: of sidestepped them. They decided it on very narrow ground,
Speaker 7: really didn't do anything with that big tension between anti
Speaker 7: discrimination principles on one hand and religious and speech rights
Speaker 7: on the other hand.
Speaker 3: So in this case it sounds like it's a little
Speaker 3: bit more specifically about free speech. And if I'm writing
Speaker 3: that description, what would you say, is the case that
Speaker 3: feels like the biggest kind of precedent for informing the
Speaker 3: court about what they might need to do in this case.
Speaker 7: Yeah, it is a case that is just about speech.
Speaker 7: The web designer Laurie Smith also had some religious rights arguments,
Speaker 7: but the Court said we don't want to hear those
Speaker 7: at least right now. You know, there are some precedents
Speaker 7: that the Court has dealt with, for example, having to
Speaker 7: do with a parade, whether a St. Patrick's Day parade
Speaker 7: could be required to allow LGBTQ in the parade. There's
Speaker 7: another case involving whether the Defense Department, where the universities
Speaker 7: had to let the Defense Department come on the campus
Speaker 7: to recruit just like other employers would, and the court
Speaker 7: was grappling with some of those issues in during the arguments.
Speaker 7: But this is also a very different court from the
Speaker 7: ones that decided those cases. So you know, this may
Speaker 7: be a court that puts itstone spin on things.
Speaker 3: And any chance that the historic twenty fifteen case that
Speaker 3: allows for same sex marriage to occur could be impacted
Speaker 3: based on this decision.
Speaker 7: Or no, not directly that case Obergerfell versus Hodges, which
Speaker 7: says it is a constitutional right that same sex couples
Speaker 7: do have a right to get married. That's not being
Speaker 7: challenged here. Certainly, supporters of that decision would say it's
Speaker 7: being watered down if if suddenly a same sex couple,
Speaker 7: the married couple doesn't have the rights in a particular
Speaker 7: state or nationwide that an opposite sex couple has. But
Speaker 7: in terms of directly affecting that ruling, no, not in
Speaker 7: this case.
Speaker 3: So what's the timeline then, in our final thirty seconds
Speaker 3: for this latest Colorado case in the Supreme Court.
Speaker 7: Well, the court is scheduled to end its term by
Speaker 7: the end of next week, so we're talking we talk
Speaker 7: again a week from week from now, or a week
Speaker 7: and a half from now, we should know the answer.
Speaker 3: And do they always do what they say? How often
Speaker 3: is the schedule right on time?
Speaker 7: It is virtually always on time. The only exception really
Speaker 7: was during the pandemic year, where there was a lot
Speaker 7: of different different situations. So I would expect a ruling
Speaker 7: by the end of next week.
Speaker 3: All right, Greg Store, thank you so much for joining
Speaker 3: on this joining us on this story. We're definitely going
Speaker 3: to be talking with you again next week to get
Speaker 3: more details on that case. For now, this is Bloomberg Law.
Speaker 3: I'm Madison Mills. I've been in for June Grasso this week.
Speaker 3: Stick with us. Subscribe to us at Bloomberg Law for
Speaker 3: more news that you need from the Supreme Court to
Speaker 3: everywhere else in the US. This is Bloomberg