1 00:00:01,639 --> 00:00:06,160 Speaker 1: Now from our nation's capital. This is Bloomberg sound On. 2 00:00:07,160 --> 00:00:09,719 Speaker 1: I'm here today to announce the appointment of a special 3 00:00:09,760 --> 00:00:13,640 Speaker 1: council charging the president with a crime. Was not at options. 4 00:00:13,760 --> 00:00:18,840 Speaker 1: We first went through Russia, Russia, Russia, it was all. 5 00:00:18,600 --> 00:00:24,280 Speaker 1: We then went through the Muller Record, Bloomberg sound on Politics, 6 00:00:24,320 --> 00:00:28,840 Speaker 1: Policy and perspective from DC's top names. While higher interest rates, 7 00:00:29,000 --> 00:00:33,000 Speaker 1: slower growth, and software labor market conditions will bring down inflation, 8 00:00:33,200 --> 00:00:35,720 Speaker 1: they will also bring some pain. People were pretty you know, 9 00:00:35,840 --> 00:00:39,480 Speaker 1: in shock by those common Floomberg sound On with Joe 10 00:00:39,520 --> 00:00:44,960 Speaker 1: Matthew on Bloomberg Radio, there is another Welcome to the 11 00:00:45,000 --> 00:00:49,319 Speaker 1: fastest hour in politics, with another special council announced by 12 00:00:49,320 --> 00:00:52,640 Speaker 1: the Department of Justice to investigate Donald Trump, the documents 13 00:00:52,600 --> 00:00:55,360 Speaker 1: of mar A Lago, the effort to overturn the twenty election. 14 00:00:55,640 --> 00:00:59,000 Speaker 1: Will it be different this time? We talked with two experts, 15 00:00:59,080 --> 00:01:02,000 Speaker 1: Rebecca roy Fee of New York Law School, former District 16 00:01:02,000 --> 00:01:06,200 Speaker 1: Attorney for New York County and former Watergate prosecutor Nick 17 00:01:06,280 --> 00:01:10,480 Speaker 1: Ackerman later f t X SBF and the a b 18 00:01:10,640 --> 00:01:14,039 Speaker 1: C's of the crypto crisis, in a special conversation with 19 00:01:14,040 --> 00:01:18,280 Speaker 1: Bloomberg's Joe Wisenhal, columnist and host of the Odd Lots podcast. 20 00:01:18,319 --> 00:01:21,240 Speaker 1: Looking forward to it. I'd call it a Friday news dump, 21 00:01:21,280 --> 00:01:24,319 Speaker 1: but it happened around lunchtime. Does does that count when 22 00:01:24,319 --> 00:01:27,080 Speaker 1: it's at noon? It was to something in the afternoon. 23 00:01:27,120 --> 00:01:30,720 Speaker 1: Attorney General Merrick Garland, in a hastily scheduled announcement here 24 00:01:30,760 --> 00:01:33,440 Speaker 1: he is, I'm here today to announce the appointment of 25 00:01:33,440 --> 00:01:38,120 Speaker 1: a special council in connection with two ongoing criminal investigations 26 00:01:38,160 --> 00:01:43,800 Speaker 1: that have received significant public attention. Uh huh d J 27 00:01:44,080 --> 00:01:48,360 Speaker 1: T Donald J. Trump. Garland determined that it was in 28 00:01:48,400 --> 00:01:52,240 Speaker 1: the public interest here for yes, another special council to 29 00:01:52,280 --> 00:01:57,800 Speaker 1: oversee criminal investigations related to Trump deciding whether to bring charges, and, 30 00:01:57,840 --> 00:02:00,680 Speaker 1: as he indicated, timing is everything. Listen again, Based on 31 00:02:00,800 --> 00:02:04,920 Speaker 1: recent developments, including the former president's announcement that he has 32 00:02:04,960 --> 00:02:08,160 Speaker 1: a candidate for president in the next election and the 33 00:02:08,200 --> 00:02:11,640 Speaker 1: sitting president stated intention to be a candidate as well, 34 00:02:12,400 --> 00:02:15,240 Speaker 1: I have concluded that it is in the public interest 35 00:02:15,720 --> 00:02:21,519 Speaker 1: to appoint a special council. Yeah, so, John or Jack 36 00:02:21,960 --> 00:02:25,880 Speaker 1: as you will hear him, refer to Smith the new 37 00:02:25,919 --> 00:02:30,239 Speaker 1: special Council under the order signed today. Since eighteen he 38 00:02:30,280 --> 00:02:32,519 Speaker 1: has served as Chief prosecutor for the Special Court in 39 00:02:32,560 --> 00:02:37,400 Speaker 1: the Hague charged with investigating adjudicating war crimes in Kosovo. 40 00:02:38,160 --> 00:02:42,079 Speaker 1: He is a former acting U S Attorney. Uh. This 41 00:02:42,160 --> 00:02:45,680 Speaker 1: is going to be something. And we start our conversation 42 00:02:45,720 --> 00:02:47,560 Speaker 1: to get a sense of what this means and what 43 00:02:47,639 --> 00:02:49,760 Speaker 1: we can expect, having of course gone through the Motor 44 00:02:49,840 --> 00:02:53,440 Speaker 1: probe already had a special counsel with this same Now 45 00:02:53,520 --> 00:02:56,360 Speaker 1: former President Rebecca Royfi joins as professor of law at 46 00:02:56,400 --> 00:03:00,880 Speaker 1: New York Law School. Former assistant District attorney for your county. Rebecca, 47 00:03:00,919 --> 00:03:03,080 Speaker 1: it's really great to have you back. I have some 48 00:03:03,200 --> 00:03:06,399 Speaker 1: really pretty straightforward and simple questions for you to start with, 49 00:03:06,919 --> 00:03:09,400 Speaker 1: and and to begin with, why announce a special counsel? 50 00:03:09,440 --> 00:03:13,799 Speaker 1: People watched what happened last time. Uh, and and remember 51 00:03:13,840 --> 00:03:16,320 Speaker 1: back to ken Starr, they're not used to seeing these 52 00:03:17,280 --> 00:03:21,119 Speaker 1: lead to a lot. Why now? First of all, thanks 53 00:03:21,200 --> 00:03:23,960 Speaker 1: for having me, And yeah, you know, I think that 54 00:03:24,000 --> 00:03:28,200 Speaker 1: the purpose here is to try to create a separation 55 00:03:28,360 --> 00:03:33,720 Speaker 1: between the politically appointed Attorney general and this highly sensitive, 56 00:03:33,919 --> 00:03:38,000 Speaker 1: highly charged investigation into the former president. You raise a 57 00:03:38,040 --> 00:03:41,000 Speaker 1: good question into well, you know, how effective is that 58 00:03:41,080 --> 00:03:44,040 Speaker 1: separation actually? Will people really look at this and think 59 00:03:44,080 --> 00:03:47,840 Speaker 1: this is an independent investigation, and you know, I think 60 00:03:48,280 --> 00:03:51,840 Speaker 1: Attorney General Garland has to hope so. And I think 61 00:03:51,920 --> 00:03:54,600 Speaker 1: there are some set of people who will always assume 62 00:03:55,080 --> 00:03:59,280 Speaker 1: that any investigation into the former president is politically motivated, 63 00:03:59,320 --> 00:04:02,840 Speaker 1: as he as already and will no doubt continue to suggest. 64 00:04:03,360 --> 00:04:06,200 Speaker 1: But hopefully there are some people who will view this 65 00:04:06,360 --> 00:04:10,880 Speaker 1: as a sign that this further stage of the investigation 66 00:04:11,000 --> 00:04:13,760 Speaker 1: is being conducted by somebody who is a career prosecutor 67 00:04:13,840 --> 00:04:17,560 Speaker 1: and really doesn't have uh course in the race, and 68 00:04:17,600 --> 00:04:20,720 Speaker 1: in that way can act as a more independent, um 69 00:04:20,760 --> 00:04:25,600 Speaker 1: and hopefully more legitimate source of this investigation and if 70 00:04:25,680 --> 00:04:28,520 Speaker 1: if it ends up happening, prosecution to be clear, for 71 00:04:28,720 --> 00:04:30,800 Speaker 1: some of our listeners probably hearing about this as they're 72 00:04:30,839 --> 00:04:32,840 Speaker 1: you know, coming out of work or just beginning to 73 00:04:32,880 --> 00:04:36,520 Speaker 1: pay attention here, uh, this will this will bring oversight 74 00:04:36,800 --> 00:04:40,480 Speaker 1: to this Special Council of the two investigations the January 75 00:04:40,520 --> 00:04:44,239 Speaker 1: six insurrection of the Capitol, including any role that Trump 76 00:04:44,279 --> 00:04:47,640 Speaker 1: may have played, as well as the documents case, the 77 00:04:47,640 --> 00:04:52,640 Speaker 1: president's handling a classified documents after he left office. So 78 00:04:52,720 --> 00:04:55,000 Speaker 1: those are the two cases. Well, does that mean that 79 00:04:55,080 --> 00:04:58,480 Speaker 1: Merrick Garland will not be connected to them? Will there 80 00:04:58,520 --> 00:05:02,680 Speaker 1: be a firewall between the Special Counsel and the Attorney General. 81 00:05:03,760 --> 00:05:08,640 Speaker 1: I think a firewall is an exaggeration. The Council is 82 00:05:08,760 --> 00:05:12,320 Speaker 1: really embedded um within the Department of Justice, but there 83 00:05:12,360 --> 00:05:15,520 Speaker 1: are levels of separation that make it such that this 84 00:05:15,600 --> 00:05:22,320 Speaker 1: investigation is insulated from direct control by the Attorney General. Okay, 85 00:05:22,400 --> 00:05:25,279 Speaker 1: got it. Now what do you know about Jack Smith, 86 00:05:25,480 --> 00:05:28,120 Speaker 1: the investigator you mentioned? We have a serious contender here, 87 00:05:28,160 --> 00:05:32,680 Speaker 1: a life a lifetime prosecutor, and experienced prosecutor. But you know, 88 00:05:32,800 --> 00:05:35,280 Speaker 1: my goodness, this this sounds like deep experience when we're 89 00:05:35,279 --> 00:05:38,280 Speaker 1: talking about war crimes, and Kosovo not not the typical 90 00:05:38,440 --> 00:05:41,479 Speaker 1: candidate for such a role. Yeah, I mean, you know, 91 00:05:41,560 --> 00:05:43,440 Speaker 1: I think it's interesting. I first of all, I think 92 00:05:43,480 --> 00:05:46,360 Speaker 1: one of his strengths is that people don't know much 93 00:05:46,400 --> 00:05:48,800 Speaker 1: about him. He has a kind of anonymity, and that 94 00:05:48,880 --> 00:05:52,320 Speaker 1: makes it more likely that he will be seen as 95 00:05:52,360 --> 00:05:55,120 Speaker 1: a you know, kind of a career prosecutor who's just 96 00:05:55,200 --> 00:05:57,960 Speaker 1: doing his job, rather than somebody who has any political, 97 00:05:58,640 --> 00:06:02,400 Speaker 1: uh connection ends or investment in the outcome of the case. 98 00:06:02,400 --> 00:06:05,000 Speaker 1: So I think that's probably why they chose him. As 99 00:06:05,000 --> 00:06:07,240 Speaker 1: you said, he has a lot of experience, and I 100 00:06:07,279 --> 00:06:11,760 Speaker 1: think that that's you know, important and both for his 101 00:06:12,120 --> 00:06:15,160 Speaker 1: you know, projecting his reputation and also for actually doing 102 00:06:15,200 --> 00:06:19,760 Speaker 1: his job. And the experience in the international criminal court 103 00:06:19,920 --> 00:06:23,160 Speaker 1: is important. Of course, he's looked into, you know, war crimes, 104 00:06:23,200 --> 00:06:27,200 Speaker 1: he's looked into investigate likely investigated heads of state, and 105 00:06:27,279 --> 00:06:30,200 Speaker 1: so he has some experience with you know, how sensitive 106 00:06:30,240 --> 00:06:33,760 Speaker 1: these kinds of issues are and can be. He helped 107 00:06:33,800 --> 00:06:36,680 Speaker 1: to convict the former governor of Virginia, Bob McDonald. He's 108 00:06:36,720 --> 00:06:40,400 Speaker 1: not a stranger. It's a political corruption, if if I 109 00:06:40,400 --> 00:06:43,920 Speaker 1: can call it that. But you know, it's interesting, Rebecca. 110 00:06:43,920 --> 00:06:45,800 Speaker 1: A lot of people thought she's after the mid terms. 111 00:06:45,880 --> 00:06:50,880 Speaker 1: Merrick Garland comes out with an indictment following the documents case. 112 00:06:51,920 --> 00:06:54,479 Speaker 1: Is this what's happening instead of that he made this 113 00:06:54,560 --> 00:06:57,280 Speaker 1: decision instead of to announce an indictment today to a 114 00:06:57,400 --> 00:06:59,680 Speaker 1: point a special counsel and create the distances that a 115 00:06:59,680 --> 00:07:04,080 Speaker 1: fair well, you know, I don't think that he has 116 00:07:04,440 --> 00:07:09,600 Speaker 1: decided that an indictment is necessarily um the way to go. 117 00:07:09,760 --> 00:07:11,680 Speaker 1: I don't think that. I think if you're you know, 118 00:07:11,680 --> 00:07:14,360 Speaker 1: if you're handing something over to a special counsel, I 119 00:07:14,400 --> 00:07:18,240 Speaker 1: think it's because there are you seriously think an indictment 120 00:07:18,320 --> 00:07:22,280 Speaker 1: might be warranted, and you know, I don't imagine that 121 00:07:22,280 --> 00:07:24,360 Speaker 1: he would have handed this over to Jack Smith thinking 122 00:07:24,360 --> 00:07:26,679 Speaker 1: to himself, yeah, Jack Smith will wind up this case 123 00:07:26,720 --> 00:07:29,480 Speaker 1: and do nothing. So I think it's reasonable to conclude 124 00:07:29,800 --> 00:07:32,800 Speaker 1: that the Attorney General thinks that there are, um, you know, 125 00:07:32,960 --> 00:07:37,400 Speaker 1: some serious criminal conduct and potential charges that are warranted. 126 00:07:37,480 --> 00:07:41,760 Speaker 1: But I doubt that he has reached a conclusion because 127 00:07:41,840 --> 00:07:44,040 Speaker 1: you know, he's relying on Jack Smith for his judgment 128 00:07:44,040 --> 00:07:47,360 Speaker 1: in that regard. I wonder does this slow he mentioned, 129 00:07:47,400 --> 00:07:49,960 Speaker 1: you know, this will help agents continue their work. Will 130 00:07:49,960 --> 00:07:54,040 Speaker 1: it slow things down as this architecture is put in place, 131 00:07:54,160 --> 00:07:57,240 Speaker 1: or does it accelerate the investigations that are already running. 132 00:07:58,040 --> 00:07:59,640 Speaker 1: You know, that's a great question. I don't really think 133 00:07:59,640 --> 00:08:02,520 Speaker 1: it will slow things down much. You know, obviously, the 134 00:08:03,120 --> 00:08:05,920 Speaker 1: as he explained in the press conference, some of the 135 00:08:05,960 --> 00:08:08,040 Speaker 1: investigators who have been working on this case for a 136 00:08:08,080 --> 00:08:11,440 Speaker 1: long time will continue on and they can create continuity. 137 00:08:11,520 --> 00:08:14,080 Speaker 1: So all that really needs to happen is that, uh, 138 00:08:14,120 --> 00:08:16,600 Speaker 1: the new special counsel needs to be briefed on everything 139 00:08:16,640 --> 00:08:18,920 Speaker 1: that's going on. But that really can happen at the 140 00:08:18,960 --> 00:08:22,240 Speaker 1: same time as they're progressing so my guess is if 141 00:08:22,280 --> 00:08:25,280 Speaker 1: it slows things down, it's really not by a significant amount. 142 00:08:25,480 --> 00:08:28,240 Speaker 1: And um, you know it can proceed pretty much on pace. 143 00:08:28,520 --> 00:08:31,560 Speaker 1: I want to bring people back, uh, not very long 144 00:08:31,640 --> 00:08:35,520 Speaker 1: to the former Special Counsel Robert Mueller as he was 145 00:08:35,559 --> 00:08:39,280 Speaker 1: announcing the results the Mueller Report had finally concluded. Listen, 146 00:08:39,679 --> 00:08:43,200 Speaker 1: and as that fourth in the report after that investigation, 147 00:08:43,720 --> 00:08:47,319 Speaker 1: if we had had confidence that the president clearly did 148 00:08:47,360 --> 00:08:51,640 Speaker 1: not commit a crime, we would have said so. We did, not, however, 149 00:08:51,679 --> 00:08:54,560 Speaker 1: make a determination as to whether the president did commit 150 00:08:54,600 --> 00:08:57,800 Speaker 1: a crime that day let down a lot of people 151 00:08:57,840 --> 00:09:01,679 Speaker 1: who were hoping that this would lead to an indictment 152 00:09:01,760 --> 00:09:05,400 Speaker 1: or some sort of criminal charge. He mentioned at that 153 00:09:05,480 --> 00:09:08,880 Speaker 1: time that because it was outside the scope of his 154 00:09:10,040 --> 00:09:12,600 Speaker 1: of his authority, but he would not be the one 155 00:09:12,640 --> 00:09:14,679 Speaker 1: to bring charges. Is that going to happen again? Does 156 00:09:14,679 --> 00:09:16,120 Speaker 1: this have to go back to the d o J, 157 00:09:16,320 --> 00:09:19,719 Speaker 1: back to the Attorney General for that determination. No, this 158 00:09:19,800 --> 00:09:23,960 Speaker 1: is entirely different because now Donald Trump is no longer president. 159 00:09:24,080 --> 00:09:28,760 Speaker 1: So what happened there was that the special counsel Special 160 00:09:28,760 --> 00:09:32,439 Speaker 1: Counsel Mueller had no had no power at least interpreted 161 00:09:32,520 --> 00:09:35,280 Speaker 1: his role as having no power to indict because you cannot, 162 00:09:35,400 --> 00:09:39,520 Speaker 1: at least in his interpretation, indict a sitting president. And 163 00:09:39,679 --> 00:09:43,680 Speaker 1: that's why he didn't come to any conclusion, because he figured, well, 164 00:09:43,720 --> 00:09:48,760 Speaker 1: you know, people want to know the facts, and the 165 00:09:48,800 --> 00:09:51,520 Speaker 1: exactly the proper way of holding him responsible is impeachment, 166 00:09:51,559 --> 00:09:53,400 Speaker 1: and then once he's out of office, a set of 167 00:09:53,400 --> 00:09:57,040 Speaker 1: prosecutors can proceed if they want to proceed. But of 168 00:09:57,040 --> 00:10:00,439 Speaker 1: course things are different right now because even if president, 169 00:10:00,480 --> 00:10:04,440 Speaker 1: even if the former president is a candidate, he has 170 00:10:04,480 --> 00:10:07,720 Speaker 1: announced his candidacy in his campaign, he's not the president, 171 00:10:07,800 --> 00:10:11,480 Speaker 1: and so there is no barrier to indicting him here. 172 00:10:11,600 --> 00:10:15,440 Speaker 1: And so it's well within the job description of the 173 00:10:15,440 --> 00:10:18,760 Speaker 1: special counsel to determine that charges are necessary and to 174 00:10:18,800 --> 00:10:21,680 Speaker 1: bring those charges through a grand jury. So I don't 175 00:10:21,720 --> 00:10:23,680 Speaker 1: think we would end up seeing that again. So the 176 00:10:23,760 --> 00:10:27,200 Speaker 1: talk about the timing of Donald Trump's campaign announcement this week, 177 00:10:27,240 --> 00:10:30,040 Speaker 1: he was saying, you know, he thinks he's bringing himself 178 00:10:30,080 --> 00:10:34,040 Speaker 1: some protections potentially by doing this. Legal protections means nothing 179 00:10:34,040 --> 00:10:38,840 Speaker 1: in this case, right, I mean, it means nothing. You know, 180 00:10:39,160 --> 00:10:43,520 Speaker 1: it certainly has um political meaning, and it certainly makes 181 00:10:43,559 --> 00:10:46,360 Speaker 1: the job of the special counsel harder. But in terms 182 00:10:46,440 --> 00:10:49,520 Speaker 1: of its ultimate effect on whether or you know, on 183 00:10:49,559 --> 00:10:51,920 Speaker 1: the decision whether to charge, it doesn't. It doesn't bear 184 00:10:51,960 --> 00:10:55,360 Speaker 1: on that. We're learning a lot as we as we 185 00:10:55,440 --> 00:10:57,120 Speaker 1: do this all over again. But do you have a 186 00:10:57,120 --> 00:11:00,280 Speaker 1: gut check that that this leads to something meaning full 187 00:11:00,320 --> 00:11:03,439 Speaker 1: and if it does in the throes of a presidential campaign, 188 00:11:04,640 --> 00:11:06,800 Speaker 1: you know, I, I really don't know. It's hard to 189 00:11:06,840 --> 00:11:08,960 Speaker 1: read the tea leaves. I would say that what we 190 00:11:09,080 --> 00:11:12,720 Speaker 1: can conclude is that Attorney General Garland thinks that there's 191 00:11:12,760 --> 00:11:15,760 Speaker 1: at least substantial evidence of criminal conduct here and that 192 00:11:15,840 --> 00:11:18,520 Speaker 1: it's worth an independent person taking a look at that. 193 00:11:18,760 --> 00:11:22,079 Speaker 1: Two separate cases mean two separate results, or is this 194 00:11:22,200 --> 00:11:26,320 Speaker 1: all kind of be folded into one massive investigation. My 195 00:11:26,400 --> 00:11:28,959 Speaker 1: guess is it's it's going to be one investigation, although 196 00:11:28,960 --> 00:11:32,040 Speaker 1: it is two distinct pieces of that investigation. So how 197 00:11:32,040 --> 00:11:34,360 Speaker 1: that proceeds, I'm not entirely sure either. We have a 198 00:11:34,400 --> 00:11:36,079 Speaker 1: lot to learn yet. I hope you're going to come 199 00:11:36,120 --> 00:11:38,760 Speaker 1: back and walk us through it. Rebecca. It's very great 200 00:11:38,800 --> 00:11:41,160 Speaker 1: to have you back, very helpful to hear your insights. 201 00:11:41,160 --> 00:11:43,640 Speaker 1: Rebecca roy Fee, Professor of law at New York Law School, 202 00:11:43,640 --> 00:11:46,160 Speaker 1: has been very helpful to us as we've worked our 203 00:11:46,160 --> 00:11:50,240 Speaker 1: way through a legally challenged existence. Here for Donald Trump, 204 00:11:50,559 --> 00:11:53,120 Speaker 1: the former assistant d A for New York County, and 205 00:11:53,200 --> 00:11:59,280 Speaker 1: up next former assistant US Attorney and former Watergate prosecutor 206 00:11:59,360 --> 00:12:02,200 Speaker 1: Nick Ackerman. He's been there. Does it go that far again? 207 00:12:02,320 --> 00:12:04,760 Speaker 1: We'll find out. Coming up on the fastest hour in 208 00:12:04,840 --> 00:12:08,679 Speaker 1: politics with breaking news on a Friday. This is Bloomberg 209 00:12:10,640 --> 00:12:13,720 Speaker 1: breaking news now as we learned that Elizabeth Holmes is 210 00:12:13,760 --> 00:12:18,520 Speaker 1: sentenced to eleven years for Thearo Nos fraud. The headline 211 00:12:18,600 --> 00:12:21,400 Speaker 1: just crossing the terminal now order to spend more than 212 00:12:21,440 --> 00:12:24,440 Speaker 1: eleven years in prison. Of course, this is a pregnant 213 00:12:24,440 --> 00:12:28,640 Speaker 1: Elizabeth Holmes for fraudulently building her blood testing start up 214 00:12:28,720 --> 00:12:32,319 Speaker 1: Sarous into a nine billion dollar company that collapsed in scandal. 215 00:12:32,360 --> 00:12:35,440 Speaker 1: We've been waiting for this all day. The sentence imposed 216 00:12:35,440 --> 00:12:38,520 Speaker 1: by US District Judge Edward de Villa. This came out 217 00:12:38,520 --> 00:12:41,880 Speaker 1: of San Jose, California, and a lot closer to the 218 00:12:41,880 --> 00:12:45,080 Speaker 1: fifteen year term that prosecutors asked than what Holmes lawyers 219 00:12:45,080 --> 00:12:47,840 Speaker 1: saw that they were looking for either home detention or 220 00:12:47,920 --> 00:12:50,599 Speaker 1: eighteen months in prison at most. We are going to 221 00:12:50,720 --> 00:12:54,640 Speaker 1: go straight now to Bloomberg's June Grosso, the host of 222 00:12:54,679 --> 00:12:58,439 Speaker 1: Bloomberg Law, who is with us in the clutch, June, 223 00:12:58,520 --> 00:13:00,160 Speaker 1: It's great to have you with us. A surprised by 224 00:13:00,160 --> 00:13:03,880 Speaker 1: this number. I am surprised, actually, Joe. I mean, as 225 00:13:03,920 --> 00:13:07,880 Speaker 1: you say, the prosecution asked for fifteen years. Homes made 226 00:13:07,880 --> 00:13:12,160 Speaker 1: the ridiculous request for eighteen months home detention, but the U. S. 227 00:13:12,200 --> 00:13:15,760 Speaker 1: Probation Office asked for nine years. So it's very close 228 00:13:15,800 --> 00:13:18,040 Speaker 1: to what the prosecution asked for and more than the 229 00:13:18,040 --> 00:13:20,400 Speaker 1: probation office asked for. So I think it is. It's 230 00:13:20,400 --> 00:13:22,880 Speaker 1: a tough sentence, and I think you know sentence. It's 231 00:13:22,880 --> 00:13:26,080 Speaker 1: not only punishment, but it's deterrence. And the judge is 232 00:13:26,120 --> 00:13:29,679 Speaker 1: sending a message an example to the world that startup. 233 00:13:30,320 --> 00:13:32,640 Speaker 1: What happens to a pregnant, thirty eight year old woman 234 00:13:32,640 --> 00:13:37,240 Speaker 1: facing a sentence like this? How does law enforcement handle this? Well, 235 00:13:37,400 --> 00:13:39,880 Speaker 1: First of all, I think the judge, I'm sure I 236 00:13:39,880 --> 00:13:41,760 Speaker 1: don't know what's happened at this point, but the judge, 237 00:13:41,800 --> 00:13:43,559 Speaker 1: I'm sure it is going to let her remain on 238 00:13:43,720 --> 00:13:48,000 Speaker 1: sale until she has her child. And knowing the amount 239 00:13:48,120 --> 00:13:51,800 Speaker 1: of litigation that that she has been doing in this case, 240 00:13:52,040 --> 00:13:54,600 Speaker 1: I think that will be years before she actually goes 241 00:13:54,640 --> 00:13:57,520 Speaker 1: to prison, because she's going to appeal the sentence. There 242 00:13:57,520 --> 00:14:00,920 Speaker 1: are other appeals. I mean, she has her team litigated 243 00:14:00,960 --> 00:14:04,920 Speaker 1: every single thing in this trial that's possible to litigate. 244 00:14:05,480 --> 00:14:08,719 Speaker 1: She um, she has and you know, it's curious and 245 00:14:08,920 --> 00:14:11,360 Speaker 1: you can't really a lot of people thought, well, the 246 00:14:11,440 --> 00:14:13,640 Speaker 1: judge might give her a little time off because she 247 00:14:13,720 --> 00:14:17,760 Speaker 1: has a toddler at home and she's pregnant again. Other 248 00:14:17,800 --> 00:14:20,600 Speaker 1: people said it's her choice to get pregnant, and the 249 00:14:20,680 --> 00:14:23,480 Speaker 1: judge can't really take that into consideration. So there's sort 250 00:14:23,520 --> 00:14:25,680 Speaker 1: of a split on that. But I have to tell 251 00:14:25,720 --> 00:14:28,760 Speaker 1: you that in the letters that that we're sending her, 252 00:14:28,840 --> 00:14:34,040 Speaker 1: her her how should I say, her better half, her boyfriend, 253 00:14:34,080 --> 00:14:37,640 Speaker 1: her h sent sent uh, you know, a letter with 254 00:14:37,960 --> 00:14:41,680 Speaker 1: all kinds of colored pictures of her and him and 255 00:14:41,720 --> 00:14:45,240 Speaker 1: the baby and and all this, and um, there was 256 00:14:45,680 --> 00:14:47,440 Speaker 1: to be a little tabloid e. Do you want to 257 00:14:47,440 --> 00:14:51,800 Speaker 1: be a little tabloidy for me? Okay? So, the the 258 00:14:51,920 --> 00:14:55,120 Speaker 1: US Probation Office, which there's also a question of how 259 00:14:55,200 --> 00:14:57,560 Speaker 1: much she's going to pay, the prosecution, asked for eight 260 00:14:57,600 --> 00:15:00,920 Speaker 1: hundred thousand. The Probation Office asked for five in fifty thousand, 261 00:15:00,960 --> 00:15:04,760 Speaker 1: which is supposedly more than she had, but they intimated 262 00:15:05,160 --> 00:15:08,640 Speaker 1: almost said that she's hiding some assets and that there 263 00:15:08,680 --> 00:15:12,680 Speaker 1: are family members i e. Her boyfriend who is the 264 00:15:12,800 --> 00:15:16,880 Speaker 1: heir to a hotel fortune, that are trying they're trying 265 00:15:16,920 --> 00:15:21,400 Speaker 1: to avoid subjecting those assets to the judgment of the court. 266 00:15:21,560 --> 00:15:23,760 Speaker 1: So there was a sort of a little bit of 267 00:15:23,760 --> 00:15:26,320 Speaker 1: a tabloid e element of it here. And then then 268 00:15:27,040 --> 00:15:29,160 Speaker 1: she came back for lawyers came back and said, are 269 00:15:29,200 --> 00:15:32,440 Speaker 1: you saying that she has to marry him? It gets 270 00:15:32,560 --> 00:15:39,160 Speaker 1: very very uh tabloids. Billy Evans goes as partner from 271 00:15:39,200 --> 00:15:41,920 Speaker 1: what I'm here. By the way, No, I'll try to 272 00:15:41,960 --> 00:15:44,920 Speaker 1: remember that myself. Uh. If you're just joining us, we 273 00:15:44,960 --> 00:15:48,800 Speaker 1: do have breaking news on this Elizabeth Holmes sentence. It 274 00:15:48,920 --> 00:15:52,400 Speaker 1: is just out and it's quite more severe than a 275 00:15:52,440 --> 00:15:56,840 Speaker 1: lot of people expected here. Uh when we're talking about 276 00:15:56,880 --> 00:15:59,960 Speaker 1: this going ahead as as you know, a criminal punishment, June, 277 00:16:01,200 --> 00:16:03,200 Speaker 1: I just wonder how much of this is an example 278 00:16:03,320 --> 00:16:06,080 Speaker 1: to Silicon Valley for instance. You know, there was an 279 00:16:06,120 --> 00:16:08,480 Speaker 1: idea here that the judge wanted to make an example 280 00:16:08,520 --> 00:16:11,479 Speaker 1: out of her, even as she said she was devastated 281 00:16:11,480 --> 00:16:14,600 Speaker 1: by her failings. She said she was here to stand 282 00:16:14,600 --> 00:16:18,040 Speaker 1: and take responsibility for paraos. It was her life's work. 283 00:16:18,040 --> 00:16:21,240 Speaker 1: It didn't seem to make a difference. Well, you know, 284 00:16:21,360 --> 00:16:23,360 Speaker 1: the thing that the judge is thinking about is the 285 00:16:23,440 --> 00:16:28,200 Speaker 1: hundreds of millions of dollars that she built investors out of. 286 00:16:28,760 --> 00:16:33,960 Speaker 1: And yes, it is is deterrence to say to you know, 287 00:16:34,000 --> 00:16:36,040 Speaker 1: to give her this tough sentence, and this is is 288 00:16:36,160 --> 00:16:38,440 Speaker 1: really a tough sentence to give her this sentence, and 289 00:16:38,520 --> 00:16:42,440 Speaker 1: to warn other people who are involved in startup to 290 00:16:42,800 --> 00:16:46,120 Speaker 1: you know, to not to embellish, to tell the truth 291 00:16:46,200 --> 00:16:49,400 Speaker 1: as there as they're trying to get investors. I mean, 292 00:16:49,440 --> 00:16:51,200 Speaker 1: she told all these things. I mean she did some 293 00:16:51,640 --> 00:16:54,560 Speaker 1: she did some wild things. I mean she on her 294 00:16:54,640 --> 00:16:58,240 Speaker 1: letter head took letterhead from Walgreens and write aid and 295 00:16:58,400 --> 00:17:01,960 Speaker 1: sake things. I mean, really a lot of things were done. 296 00:17:02,360 --> 00:17:04,560 Speaker 1: And it's easy to look back now and say, oh, 297 00:17:04,640 --> 00:17:08,600 Speaker 1: she's a nice woman who has a child and another coming, 298 00:17:09,000 --> 00:17:11,760 Speaker 1: but you have to remember what she did in building 299 00:17:11,800 --> 00:17:15,560 Speaker 1: up that blood testing startup into this nine billion dollar 300 00:17:15,640 --> 00:17:19,320 Speaker 1: company that collapsed in scandal. And you know, it's it 301 00:17:19,440 --> 00:17:22,280 Speaker 1: was unrealistic to think that she was going to get 302 00:17:22,280 --> 00:17:24,879 Speaker 1: home detention for that, I mean, the judge would not 303 00:17:24,920 --> 00:17:27,160 Speaker 1: be sending the right signal. And I think it will 304 00:17:27,200 --> 00:17:32,280 Speaker 1: be interesting too is to see now remember her former boyfriend, 305 00:17:32,880 --> 00:17:36,359 Speaker 1: um Sonny Belwani has also been convicted. It will be 306 00:17:36,440 --> 00:17:39,120 Speaker 1: interesting to see how much the judge gives to him, 307 00:17:39,200 --> 00:17:43,199 Speaker 1: how it compares to this. Maybe you did give her 308 00:17:43,200 --> 00:17:44,880 Speaker 1: a little bit of a break because she was Maybe 309 00:17:44,920 --> 00:17:46,800 Speaker 1: he wanted to give her fifteen years and he gave 310 00:17:46,840 --> 00:17:48,879 Speaker 1: her less. But you know, I think this was going 311 00:17:48,960 --> 00:17:52,159 Speaker 1: to be caught up in so many appeals and so 312 00:17:52,280 --> 00:17:54,920 Speaker 1: many different kinds. Any kind of motion she can make. 313 00:17:55,359 --> 00:18:01,760 Speaker 1: She has the money to spend on litigators making those motions. Juhen, 314 00:18:01,800 --> 00:18:04,000 Speaker 1: the judge asked, and I'll leave you with this A 315 00:18:04,040 --> 00:18:07,320 Speaker 1: couple of important questions as the sentence was delivered. Was 316 00:18:07,359 --> 00:18:09,800 Speaker 1: there a loss of a moral compass? Here? Was it 317 00:18:09,920 --> 00:18:15,680 Speaker 1: the intoxication of fame? What do you think? I think 318 00:18:15,720 --> 00:18:18,400 Speaker 1: it was probably a little bit of both, but mostly 319 00:18:18,920 --> 00:18:21,000 Speaker 1: a loss of a moral compass. I mean, some of 320 00:18:21,000 --> 00:18:25,840 Speaker 1: the things she did, we're just just something that an 321 00:18:25,880 --> 00:18:28,800 Speaker 1: average person when you're one to one with someone you 322 00:18:28,840 --> 00:18:30,840 Speaker 1: couldn't do. And you if you listen to some of 323 00:18:30,920 --> 00:18:33,359 Speaker 1: the especially in the belt Wanni trial. They brought in 324 00:18:33,400 --> 00:18:36,679 Speaker 1: a lot of the investors and some people who were 325 00:18:36,720 --> 00:18:40,080 Speaker 1: sick and were fooled by this machine. And it really 326 00:18:40,160 --> 00:18:42,479 Speaker 1: was tragic what she did. It was more than just 327 00:18:42,560 --> 00:18:46,320 Speaker 1: a company that failed. I mean, she hurt people and 328 00:18:46,400 --> 00:18:51,040 Speaker 1: I think she lost She just lost her moral compass. June, 329 00:18:51,040 --> 00:18:52,879 Speaker 1: thanks for jumping on. I'm sure you're going to have 330 00:18:52,880 --> 00:18:54,240 Speaker 1: a lot more to say about this. The host of 331 00:18:54,240 --> 00:18:57,920 Speaker 1: Bloomberg Lodging Grasso with us just as the news breaks 332 00:18:57,960 --> 00:19:02,720 Speaker 1: here eleven years Uh, pretty remarkable to consider here in 333 00:19:02,720 --> 00:19:06,280 Speaker 1: the Elizabeth Holmes case. We'll see obviously how this pans out. 334 00:19:06,320 --> 00:19:08,720 Speaker 1: Will have a lot more for you over the course 335 00:19:08,760 --> 00:19:11,560 Speaker 1: of the evening here on Bloomberg Radio. I'm Joe, Matthew 336 00:19:11,640 --> 00:19:14,679 Speaker 1: and Washington are other big story today came only hours 337 00:19:14,720 --> 00:19:17,760 Speaker 1: before that sentencing, and that was the announcement of a 338 00:19:17,800 --> 00:19:22,280 Speaker 1: special counsel by the Department of Justice, Attorney General Merrick Garland. 339 00:19:22,640 --> 00:19:27,320 Speaker 1: Uh coming forth with very little warning today in a 340 00:19:27,400 --> 00:19:29,680 Speaker 1: news briefing. I won't call it a news conference because 341 00:19:29,680 --> 00:19:33,199 Speaker 1: I don't believe there were any questions answered. That has 342 00:19:34,320 --> 00:19:36,760 Speaker 1: kept us moving through this hour. In a great conversation 343 00:19:37,280 --> 00:19:39,920 Speaker 1: with Rebecca roy Fee that we turned now for help 344 00:19:40,000 --> 00:19:43,600 Speaker 1: with Nick Ackerman, the former Watergate prosecutor, former assistant U S. 345 00:19:43,640 --> 00:19:46,919 Speaker 1: Attorney in the Southern District of New York, is with 346 00:19:47,000 --> 00:19:49,760 Speaker 1: us now. It's great to have you with us here. Nick. 347 00:19:49,760 --> 00:19:53,760 Speaker 1: I appreciate the time when you hear the term special council, 348 00:19:54,920 --> 00:19:56,880 Speaker 1: it almost makes you break out in a sweat when 349 00:19:56,880 --> 00:19:59,280 Speaker 1: you're used to these. At this point in Washington, they've 350 00:19:59,280 --> 00:20:03,440 Speaker 1: become a lot more common they were around the time Watergate. Well, 351 00:20:03,480 --> 00:20:07,280 Speaker 1: I mean Archibald Cox was really the first special water 352 00:20:07,720 --> 00:20:11,120 Speaker 1: prosecutor to be appointed in a long time. I mean, 353 00:20:11,200 --> 00:20:14,680 Speaker 1: I don't really think there was much precedent before that 354 00:20:14,800 --> 00:20:19,919 Speaker 1: for appointing a special counsel as special prosecutor. Well, so 355 00:20:19,920 --> 00:20:22,720 Speaker 1: where do you think we're going here? Um, we've got 356 00:20:22,720 --> 00:20:27,919 Speaker 1: two different cases. Will they both be investigated and resolve simultaneously? 357 00:20:28,880 --> 00:20:31,760 Speaker 1: I think they're gonna take their course as to I'm 358 00:20:31,760 --> 00:20:35,440 Speaker 1: not sure it's gonna be simultaneous. But clearly Merrick Garland 359 00:20:35,840 --> 00:20:38,560 Speaker 1: believed that there was an appearance of a conflict of 360 00:20:38,680 --> 00:20:43,080 Speaker 1: interest in the sense that he's beholden to President Biden, 361 00:20:43,119 --> 00:20:46,720 Speaker 1: that's his boss. Um, Donald Trump is running against his 362 00:20:46,840 --> 00:20:49,399 Speaker 1: boss and so I think what he really did was 363 00:20:49,480 --> 00:20:53,160 Speaker 1: put the charging decision in the hands of somebody who 364 00:20:53,240 --> 00:20:57,359 Speaker 1: was completely independent and independent of him, UM and the 365 00:20:57,440 --> 00:21:03,560 Speaker 1: department and so UM. What he's done is essentially provided 366 00:21:04,000 --> 00:21:08,080 Speaker 1: total independence to this person to make that decision, which 367 00:21:08,119 --> 00:21:12,000 Speaker 1: I think was probably the right thing to do. UM. 368 00:21:12,040 --> 00:21:15,520 Speaker 1: But it also shows the seriousness of both of these investigations. 369 00:21:16,080 --> 00:21:19,960 Speaker 1: I mean, if Garland thought that neither of these investigations 370 00:21:20,480 --> 00:21:23,840 Speaker 1: amounted to anything, he wouldn't bother to do this. So 371 00:21:24,480 --> 00:21:28,800 Speaker 1: if I were Donald Trump, this is not a positive fact. 372 00:21:29,080 --> 00:21:32,159 Speaker 1: And I also might add that this is not going 373 00:21:32,200 --> 00:21:37,000 Speaker 1: to slow down these investigations. UM. This is pretty analogous 374 00:21:37,040 --> 00:21:40,600 Speaker 1: to what I experienced when I was with Archibald Cox. 375 00:21:40,680 --> 00:21:45,280 Speaker 1: He was fired, the staff, all the assistant special prosecutors 376 00:21:45,320 --> 00:21:48,439 Speaker 1: hung in there, and Leon Jaworski came in and we 377 00:21:48,480 --> 00:21:51,160 Speaker 1: never lost a beat. I mean, he just came in, 378 00:21:51,280 --> 00:21:53,639 Speaker 1: he was briefed by all of us, he read the 379 00:21:54,240 --> 00:21:59,200 Speaker 1: grand jury testimony, were appropriate, he made the decisions. I 380 00:21:59,280 --> 00:22:02,520 Speaker 1: don't think we lost any time whatsoever, And I think 381 00:22:02,640 --> 00:22:06,000 Speaker 1: that is exactly what's happening here. So that's really important. Actually, 382 00:22:06,000 --> 00:22:08,480 Speaker 1: we were talking about that whether this would slow or 383 00:22:08,480 --> 00:22:12,280 Speaker 1: potentially accelerate the pace of these two cases. And how 384 00:22:12,280 --> 00:22:15,560 Speaker 1: long it takes to build the infrastructure of a Special 385 00:22:15,560 --> 00:22:21,280 Speaker 1: Council's office. Well, I don't think there's gonna be much infrastructure. No, No. 386 00:22:21,359 --> 00:22:24,560 Speaker 1: When Jorsky came in, he didn't bring one single person 387 00:22:24,640 --> 00:22:27,520 Speaker 1: with him. He kept the entire staff and everybody just 388 00:22:27,600 --> 00:22:30,800 Speaker 1: kept doing what they're doing. And I would imagine that's 389 00:22:30,840 --> 00:22:32,879 Speaker 1: pretty much what's going to happen here. They're not going 390 00:22:32,960 --> 00:22:35,880 Speaker 1: to start investigating this from scratch. I mean, I think 391 00:22:36,040 --> 00:22:38,920 Speaker 1: Merrick Garlin made it pretty clear that he's going to 392 00:22:39,000 --> 00:22:41,520 Speaker 1: take over what is there, that the people who are 393 00:22:41,600 --> 00:22:46,360 Speaker 1: running these investigations know what they're doing. They're all independent, um, 394 00:22:46,560 --> 00:22:50,600 Speaker 1: And simply the Special Council here is going to be 395 00:22:50,680 --> 00:22:54,720 Speaker 1: charged with ultimately making the charging decision. That's that's the 396 00:22:54,840 --> 00:22:58,360 Speaker 1: key here. This is very limited. This is not why 397 00:22:58,640 --> 00:23:02,560 Speaker 1: even um, you know the Mueller investigation. I mean, this 398 00:23:02,640 --> 00:23:06,480 Speaker 1: is something where he's stepping in to ultimately make the 399 00:23:06,560 --> 00:23:10,879 Speaker 1: decision ye or nay as to indicting on either or 400 00:23:10,880 --> 00:23:13,800 Speaker 1: both of these cases. Well, with that said, a lot 401 00:23:13,840 --> 00:23:15,760 Speaker 1: of this has been made public, right, We've been hearing 402 00:23:15,800 --> 00:23:18,639 Speaker 1: about the documents case in mar lago. Now for a 403 00:23:18,680 --> 00:23:21,680 Speaker 1: couple of months, with a lot of leaks, we've been 404 00:23:21,720 --> 00:23:26,159 Speaker 1: hearing about obviously January six and excruciating detail through the 405 00:23:26,240 --> 00:23:28,679 Speaker 1: January six Committee, and I realized d o J has 406 00:23:28,720 --> 00:23:31,200 Speaker 1: had its own track on that. But with what you've 407 00:23:31,240 --> 00:23:33,679 Speaker 1: seen and based on your experience with cases like this, 408 00:23:33,800 --> 00:23:36,000 Speaker 1: I can't ask many people that a question like this 409 00:23:36,119 --> 00:23:40,320 Speaker 1: on the planet, is there enough evidence to convict Um? 410 00:23:40,440 --> 00:23:42,840 Speaker 1: It certainly seems like there is. I mean, at least 411 00:23:42,840 --> 00:23:46,119 Speaker 1: on the January six it certainly seems like based on 412 00:23:46,160 --> 00:23:50,160 Speaker 1: what the January six Committee has done, they have presented 413 00:23:50,160 --> 00:23:55,960 Speaker 1: plenty of evidence, firsthand evidence of Trump's knowledge intent, emails 414 00:23:55,960 --> 00:23:59,280 Speaker 1: that have come out that, for example that Judge Carter 415 00:23:59,440 --> 00:24:04,320 Speaker 1: released in California against John Eastman Um. I think there's 416 00:24:04,480 --> 00:24:08,000 Speaker 1: evidence there, and you've got to look at the whole picture, though, 417 00:24:08,119 --> 00:24:11,080 Speaker 1: and that is what we don't have at this point. 418 00:24:11,119 --> 00:24:13,200 Speaker 1: I mean, the Department of Justice has a lot more 419 00:24:13,240 --> 00:24:16,080 Speaker 1: information than we do. People have been put before the 420 00:24:16,160 --> 00:24:20,520 Speaker 1: grand jury. They've got two cases that are extremely significant, 421 00:24:20,600 --> 00:24:23,960 Speaker 1: the Proud Boys and the Oathkeepers. Or you've got three 422 00:24:24,040 --> 00:24:27,920 Speaker 1: cooperating witnesses with the Oathkeepers. You've got to cooperating witnesses 423 00:24:27,960 --> 00:24:31,200 Speaker 1: with the Proud Boys. We don't know what they're telling 424 00:24:31,240 --> 00:24:33,880 Speaker 1: the Department. We don't know what they're saying about, for example, 425 00:24:34,000 --> 00:24:37,320 Speaker 1: Roger Stone, who is on the scene on January if 426 00:24:37,720 --> 00:24:40,680 Speaker 1: with both the Proud Boys and the Oathkeepers and could 427 00:24:40,760 --> 00:24:45,080 Speaker 1: be the connection to Donald Trump. We just don't know, um, 428 00:24:45,200 --> 00:24:47,800 Speaker 1: and I don't think we're gonna find out until unless 429 00:24:47,840 --> 00:24:50,679 Speaker 1: there's an indictment. This is incredible, Nick, I mean you 430 00:24:50,720 --> 00:24:53,320 Speaker 1: appreciate the politics at hand here. This is all going 431 00:24:53,359 --> 00:24:57,479 Speaker 1: to resolve in the middle of a presidential campaign. How 432 00:24:57,520 --> 00:25:00,840 Speaker 1: are we going to get through that? Well, it's just 433 00:25:00,880 --> 00:25:03,159 Speaker 1: gonna happen. I mean, how does the Department of Justice 434 00:25:03,240 --> 00:25:05,560 Speaker 1: get through that to maintain credibility? I mean, this is 435 00:25:05,560 --> 00:25:10,280 Speaker 1: gonna be the most divisive moment potentially in our history. Well, 436 00:25:10,320 --> 00:25:13,080 Speaker 1: but that's that's all the more reason to have somebody 437 00:25:13,680 --> 00:25:15,560 Speaker 1: who's if they're going to pull the trigger, it should 438 00:25:15,600 --> 00:25:18,600 Speaker 1: be somebody who's independent that makes the decision. And it's 439 00:25:18,640 --> 00:25:23,040 Speaker 1: not somebody who is in a sense subservient to the 440 00:25:23,080 --> 00:25:25,600 Speaker 1: President of the the United States who's running against Donald Trump. 441 00:25:25,640 --> 00:25:28,760 Speaker 1: I mean that that's the key here. Wow, So you say, 442 00:25:28,840 --> 00:25:32,480 Speaker 1: good call um, Yes, I think this was the right 443 00:25:32,520 --> 00:25:36,919 Speaker 1: thing to do. UM. It's sort of a hybrid on 444 00:25:36,960 --> 00:25:41,080 Speaker 1: this whole Special Council idea. UM, with the notion it's 445 00:25:41,119 --> 00:25:44,000 Speaker 1: not somebody who's coming in and start an investigation from scratch. 446 00:25:44,400 --> 00:25:48,119 Speaker 1: He's coming in basically to make a decision. He's going 447 00:25:48,160 --> 00:25:50,600 Speaker 1: to be overseeing this and you will ultimately be the 448 00:25:50,600 --> 00:25:54,639 Speaker 1: person to either pull the trigger or not. And UM, 449 00:25:54,680 --> 00:25:56,560 Speaker 1: you know, there's a lot of other stuff going on, 450 00:25:56,640 --> 00:26:00,560 Speaker 1: including this investigation in Georgia that also right, I could 451 00:26:00,600 --> 00:26:03,800 Speaker 1: have an impact on the prosecut's rail decision here with 452 00:26:03,960 --> 00:26:06,760 Speaker 1: respect to the January six material to set up a 453 00:26:06,760 --> 00:26:11,879 Speaker 1: weekly conversation with you. I hope you're all right with that. Listen, 454 00:26:11,880 --> 00:26:15,000 Speaker 1: it's an honor to have you. Nick Ackerman, former Watergate prosecutor. 455 00:26:15,040 --> 00:26:17,040 Speaker 1: Thank you Nick for being here. Former Assistant U S 456 00:26:17,040 --> 00:26:21,399 Speaker 1: Attorney Southern District of New York. Voices of experience. You 457 00:26:21,480 --> 00:26:23,199 Speaker 1: hear on this program that you're not going to hear 458 00:26:23,240 --> 00:26:26,560 Speaker 1: anywhere else. What a week it was for Crypto. This 459 00:26:26,600 --> 00:26:28,639 Speaker 1: is what I thought we'd be leading with today until 460 00:26:28,760 --> 00:26:32,320 Speaker 1: we heard about the announcement from Merrick Garland, now a 461 00:26:32,440 --> 00:26:36,800 Speaker 1: CFTC commissioner is urging whistleblowers in the crypto industry to 462 00:26:36,880 --> 00:26:39,600 Speaker 1: come forward in the aftermath of f t X, the 463 00:26:39,600 --> 00:26:44,320 Speaker 1: implosion of f t X, saying tipsters have previously received 464 00:26:44,920 --> 00:26:49,800 Speaker 1: millions of dollars for their help. Now we haven't touched 465 00:26:49,840 --> 00:26:52,399 Speaker 1: this story because it's been such a crazy week with 466 00:26:52,480 --> 00:26:56,080 Speaker 1: mid terms of the Trump announcement in our fastest hour 467 00:26:56,280 --> 00:26:59,439 Speaker 1: in politics here, but that changes right now because of 468 00:26:59,480 --> 00:27:04,119 Speaker 1: course this leads over into politics right SBF was a 469 00:27:04,160 --> 00:27:08,640 Speaker 1: big donor, but that also involves potential regulatory changes here 470 00:27:08,640 --> 00:27:11,080 Speaker 1: in Washington, not to mention the overall freak out in 471 00:27:11,119 --> 00:27:12,680 Speaker 1: the markets that have come from this, And that's why 472 00:27:12,680 --> 00:27:15,680 Speaker 1: we want to talk to our friend Joe Wise and Fall, 473 00:27:15,840 --> 00:27:19,679 Speaker 1: the co host of Bloomberg's Odd Lots podcast. The Stalwart 474 00:27:19,840 --> 00:27:22,639 Speaker 1: is back with us now, Hey, Joe, thank you for 475 00:27:22,680 --> 00:27:27,840 Speaker 1: having me as this FDx bankruptcy moves forward. And I 476 00:27:27,880 --> 00:27:30,280 Speaker 1: know that's even got its own complexity. As we keep 477 00:27:30,320 --> 00:27:33,440 Speaker 1: reading these wild tweets from Sam Bankman free, do you 478 00:27:33,480 --> 00:27:36,040 Speaker 1: have any sense yet of the amount of damage done 479 00:27:36,080 --> 00:27:37,720 Speaker 1: when you pull back and look at this and think 480 00:27:37,760 --> 00:27:39,720 Speaker 1: of the last year that crypto has had. This is 481 00:27:39,760 --> 00:27:42,720 Speaker 1: being compared to Enron, to Lehman, but a lot of 482 00:27:42,800 --> 00:27:45,680 Speaker 1: us are having trouble quantifying the damage. Maybe that's because 483 00:27:45,680 --> 00:27:47,920 Speaker 1: we're right in the middle of it. I mean, I 484 00:27:48,000 --> 00:27:50,359 Speaker 1: think it's hard to say. You know, one way to 485 00:27:50,440 --> 00:27:53,159 Speaker 1: simply think about it is just the numerous billions that 486 00:27:53,240 --> 00:27:56,320 Speaker 1: have been lost in the price of various coins. But 487 00:27:56,400 --> 00:28:00,880 Speaker 1: I think it is an existential moment for the crypto 488 00:28:01,200 --> 00:28:06,200 Speaker 1: industry specifically. It's like, look like when Enron collapsed, I 489 00:28:06,240 --> 00:28:07,840 Speaker 1: don't think anyone was like, oh, well, this is the 490 00:28:07,920 --> 00:28:12,000 Speaker 1: end of energy, right, and when Lehman collapsed, maybe, but 491 00:28:12,080 --> 00:28:13,560 Speaker 1: I don't think there are many people like, oh, this 492 00:28:13,600 --> 00:28:15,560 Speaker 1: is like the end of like banking. I mean there 493 00:28:15,640 --> 00:28:17,760 Speaker 1: was maybe there was some view that like the nature 494 00:28:17,920 --> 00:28:20,480 Speaker 1: of Wall Street was like fundamentally going to change, and 495 00:28:20,520 --> 00:28:22,879 Speaker 1: maybe it even kind of did. But I think in 496 00:28:22,960 --> 00:28:25,600 Speaker 1: this case, it's like, wait, is there like is this 497 00:28:25,720 --> 00:28:29,200 Speaker 1: the end of crypto itself? And I think that part 498 00:28:29,240 --> 00:28:31,840 Speaker 1: of like the whole crypto story has been this idea. 499 00:28:31,840 --> 00:28:34,280 Speaker 1: It's like, you know, it's an endless front run in 500 00:28:34,280 --> 00:28:36,200 Speaker 1: a way, It's like everybody wants to get in before 501 00:28:36,200 --> 00:28:38,560 Speaker 1: everyone else. It's like people wanted to get in before 502 00:28:38,600 --> 00:28:42,720 Speaker 1: the institutions and so forth, and the institutions are gonna 503 00:28:42,720 --> 00:28:45,440 Speaker 1: look at this and says, we have someone we thought 504 00:28:45,560 --> 00:28:47,880 Speaker 1: we knew and could trust. It was the professional and 505 00:28:47,880 --> 00:28:50,640 Speaker 1: had a great finance pedigree at James Street. And if 506 00:28:50,680 --> 00:28:54,960 Speaker 1: we can't trust him, who is there? And so I 507 00:28:55,000 --> 00:28:57,960 Speaker 1: think this is like an existential moment in a way 508 00:28:57,960 --> 00:28:59,880 Speaker 1: that maybe some of those others even were. Well, so 509 00:29:00,120 --> 00:29:02,520 Speaker 1: are you surprised there has not been more carnage in 510 00:29:02,680 --> 00:29:04,880 Speaker 1: you know, in the big ones in bitcoin for instance, 511 00:29:04,880 --> 00:29:07,960 Speaker 1: it hasn't fallen out of bed i am And actually 512 00:29:07,960 --> 00:29:09,640 Speaker 1: a lot of these coins are still above where they 513 00:29:09,680 --> 00:29:12,160 Speaker 1: were like in June. And this is a thing that 514 00:29:12,200 --> 00:29:15,560 Speaker 1: many people in the industry are talking about. It's like, 515 00:29:15,680 --> 00:29:17,280 Speaker 1: what are they following more? It's kind of weird and 516 00:29:17,400 --> 00:29:19,720 Speaker 1: everyone's like, you know, with the pace of the news 517 00:29:19,800 --> 00:29:22,760 Speaker 1: flow over the last two weeks, everyone is trying to 518 00:29:22,800 --> 00:29:24,640 Speaker 1: scratch their head and sort of figure out, like why 519 00:29:24,720 --> 00:29:27,880 Speaker 1: aren't coins following more? And my understanding there is no 520 00:29:27,920 --> 00:29:30,160 Speaker 1: one has any good answers. It kind of feels like 521 00:29:30,400 --> 00:29:33,960 Speaker 1: there's very little liquidity on these markets right now and 522 00:29:34,360 --> 00:29:36,440 Speaker 1: there's not many people buying, but there's also not many 523 00:29:36,480 --> 00:29:40,280 Speaker 1: people selling. Tell me more about s BF. I know 524 00:29:40,320 --> 00:29:42,640 Speaker 1: when it. When it comes down to just three letters, 525 00:29:42,680 --> 00:29:44,560 Speaker 1: you've got to be important. You have them several times 526 00:29:44,600 --> 00:29:47,600 Speaker 1: on the podcast. On one in particular, I went back 527 00:29:47,640 --> 00:29:50,000 Speaker 1: to listen again to the April two episode when You 528 00:29:50,040 --> 00:29:53,240 Speaker 1: Sat Down, in which he said this, there is a 529 00:29:53,320 --> 00:29:56,600 Speaker 1: huge tidal wave of money trying to come into the space, 530 00:29:56,720 --> 00:30:00,280 Speaker 1: is what I would say, just you know, gobbling jobs 531 00:30:00,360 --> 00:30:03,400 Speaker 1: of it, that that sort of has been desperately you know, 532 00:30:04,080 --> 00:30:07,000 Speaker 1: sort of like trying to to to like find its 533 00:30:07,000 --> 00:30:11,400 Speaker 1: way in desperate gobs and gobs. Has this collapse change 534 00:30:11,440 --> 00:30:14,800 Speaker 1: the way you listen to that statement now? I mean no, 535 00:30:15,200 --> 00:30:18,600 Speaker 1: because in a way it sort of fits with like, like, 536 00:30:18,680 --> 00:30:21,080 Speaker 1: here's the thing that I keep going back to think about. 537 00:30:21,120 --> 00:30:25,280 Speaker 1: It's like everybody sort of thought, oh, he's SPF as 538 00:30:25,320 --> 00:30:26,840 Speaker 1: a genius, and he went to M I. T. And 539 00:30:26,960 --> 00:30:30,520 Speaker 1: he was a quantitative trader at Jane Street, and maybe 540 00:30:31,080 --> 00:30:35,080 Speaker 1: the facts are true, but what he describes in that 541 00:30:35,200 --> 00:30:38,960 Speaker 1: clip is not that sophisticated. You have the gobs and 542 00:30:39,000 --> 00:30:40,600 Speaker 1: gobs of money, and so you want to get in 543 00:30:40,680 --> 00:30:42,160 Speaker 1: front of it, right. You want to be there before 544 00:30:42,200 --> 00:30:44,000 Speaker 1: the gobs and gobs of money so that the gobs 545 00:30:44,000 --> 00:30:46,240 Speaker 1: and gobs of money buy up the coins that you 546 00:30:46,280 --> 00:30:50,800 Speaker 1: bought yesterday. Excuse me? So, like, does that sound like 547 00:30:50,880 --> 00:30:57,200 Speaker 1: a trading strategy that like uh genius mathem. Find No, 548 00:30:57,320 --> 00:30:59,840 Speaker 1: it sounds like a pretty crude trading strategy. And it's 549 00:31:00,120 --> 00:31:04,480 Speaker 1: even necessarily wrong. It's just in a particularly like subtle 550 00:31:04,680 --> 00:31:09,160 Speaker 1: or sophisticated. And so what also sounds misguided when everyone 551 00:31:09,280 --> 00:31:13,120 Speaker 1: is losing billions of dollars? Now, well that's true, because yeah, 552 00:31:13,160 --> 00:31:15,240 Speaker 1: I mean it's certainly not. There aren't gobs and gobs 553 00:31:15,240 --> 00:31:17,120 Speaker 1: of money today, so us not clear that there even 554 00:31:17,120 --> 00:31:20,520 Speaker 1: gob gobs on money by April. I mean, the market 555 00:31:20,920 --> 00:31:23,800 Speaker 1: had peaked in November and we had a pretty even 556 00:31:23,840 --> 00:31:26,680 Speaker 1: By April, we had a pretty sharp sell off. But 557 00:31:26,800 --> 00:31:30,000 Speaker 1: you know what's interesting, is okay, So we published that 558 00:31:30,120 --> 00:31:32,640 Speaker 1: at the end of April. Two days later, after that 559 00:31:32,680 --> 00:31:36,160 Speaker 1: episode came out, they held Crypto Bahamas, which was a 560 00:31:36,240 --> 00:31:39,120 Speaker 1: conference that FTX put out in the Bahamas near their offices, 561 00:31:39,520 --> 00:31:42,320 Speaker 1: and he was on stage with Bill Clinton and Tony Blair. 562 00:31:43,080 --> 00:31:45,680 Speaker 1: Where he was they were wearing suits, He was wearing 563 00:31:45,680 --> 00:31:48,520 Speaker 1: T shirts, shorts and sandals, and it was sort of 564 00:31:48,520 --> 00:31:51,479 Speaker 1: the scond of moments like here's this guy and just 565 00:31:51,520 --> 00:31:54,440 Speaker 1: a week ago on a podcast. He didn't describe his 566 00:31:54,520 --> 00:31:57,640 Speaker 1: company as a Ponzi scheme. He didn't even describe crypto 567 00:31:57,680 --> 00:32:00,360 Speaker 1: as a Ponzi scheme per se, but he did describe 568 00:32:00,360 --> 00:32:02,960 Speaker 1: a pretty big element of it in terms that could 569 00:32:02,960 --> 00:32:04,920 Speaker 1: be like fairly likened to a Ponzis game. And then 570 00:32:04,920 --> 00:32:07,920 Speaker 1: a week later he's talking to two former heads of 571 00:32:07,960 --> 00:32:12,160 Speaker 1: state in the case to player former prime minister, and 572 00:32:12,960 --> 00:32:15,240 Speaker 1: you know, it's like this kind of a moment, but 573 00:32:15,320 --> 00:32:18,640 Speaker 1: I do think like it has been one blow after another. 574 00:32:18,760 --> 00:32:21,520 Speaker 1: Not long after that conversation, we had to blow up 575 00:32:21,520 --> 00:32:26,760 Speaker 1: of Luna. Three are its capital Celsius voyager Um block 576 00:32:26,840 --> 00:32:31,720 Speaker 1: Fine Voyager on life support. So it didn't take long 577 00:32:31,800 --> 00:32:34,840 Speaker 1: before those gobs and gobs of money did not materially. 578 00:32:35,000 --> 00:32:37,840 Speaker 1: He talked about the concept of yield farming I learned 579 00:32:37,880 --> 00:32:40,280 Speaker 1: about I never heard that before this happens. Maybe that 580 00:32:40,320 --> 00:32:42,720 Speaker 1: says something about me, But you know, subscribe to odd Lots, 581 00:32:42,760 --> 00:32:45,880 Speaker 1: you'll learn a lot um. He described it as a 582 00:32:45,920 --> 00:32:48,640 Speaker 1: sort of magic box. Here here's how he said it. 583 00:32:48,640 --> 00:32:51,080 Speaker 1: It's a box and you can take it token, take 584 00:32:51,120 --> 00:32:52,520 Speaker 1: a theory, and you can put it in the box 585 00:32:52,520 --> 00:32:54,840 Speaker 1: and take it out of the box like you put 586 00:32:54,840 --> 00:32:56,320 Speaker 1: it in the box, and you get like, you know, 587 00:32:56,400 --> 00:32:59,040 Speaker 1: an IOU for for having put it in the box, 588 00:32:59,040 --> 00:33:01,160 Speaker 1: and then you can redeemed that I owe you back 589 00:33:01,160 --> 00:33:03,960 Speaker 1: out for the token. So so far, what we've described 590 00:33:04,160 --> 00:33:06,200 Speaker 1: is the world's dumbest e t F or a d 591 00:33:06,360 --> 00:33:08,840 Speaker 1: R or something like that. It's a it doesn't do 592 00:33:08,880 --> 00:33:11,640 Speaker 1: anything but let you put things in it if he 593 00:33:11,720 --> 00:33:14,840 Speaker 1: so chose. And then this protocol issues a token we'll 594 00:33:14,880 --> 00:33:19,360 Speaker 1: call it whatever ex token and X token promises that 595 00:33:19,480 --> 00:33:23,880 Speaker 1: anything cool that happens because of this box is gonna 596 00:33:24,120 --> 00:33:29,520 Speaker 1: ultimately be usable by you know, governance vote of holders 597 00:33:30,280 --> 00:33:32,200 Speaker 1: X token. Are we getting closer to where things went 598 00:33:32,280 --> 00:33:37,080 Speaker 1: wrong here? Well? So I would say three things about that, 599 00:33:37,400 --> 00:33:39,840 Speaker 1: maybe four. There's a lot there that he said. So 600 00:33:39,880 --> 00:33:42,840 Speaker 1: I'll say the first thing. My thought is that at 601 00:33:42,880 --> 00:33:47,080 Speaker 1: a minimum, that's very cynical. And my interpretation of SBF 602 00:33:47,200 --> 00:33:48,880 Speaker 1: as like I sort of like what he was doing 603 00:33:49,640 --> 00:33:53,080 Speaker 1: was that he did not I never got the impression 604 00:33:53,120 --> 00:33:55,040 Speaker 1: that he was like a big crypto believer. And if 605 00:33:55,040 --> 00:33:57,120 Speaker 1: you listen to like, you know, you people who are 606 00:33:57,120 --> 00:33:58,840 Speaker 1: into crypto are like really into it, right. They think 607 00:33:58,840 --> 00:34:01,560 Speaker 1: it's gonna change the relige, Yeah, religion or it's going 608 00:34:01,600 --> 00:34:05,240 Speaker 1: to like change how corporations and governments operate. I never 609 00:34:05,280 --> 00:34:08,280 Speaker 1: got that impression from SBF. I always got the impression 610 00:34:08,280 --> 00:34:10,560 Speaker 1: that he saw a chance to make lots and lots 611 00:34:10,560 --> 00:34:12,560 Speaker 1: of money. And so when I listened to that, I 612 00:34:12,600 --> 00:34:15,800 Speaker 1: was like, Okay, here he's like describing a pretty cynical 613 00:34:16,360 --> 00:34:19,319 Speaker 1: characterization of like what crypto is right now, like a 614 00:34:19,360 --> 00:34:22,520 Speaker 1: magic money box. But doesn't matter because being in the 615 00:34:22,560 --> 00:34:25,960 Speaker 1: service of that, providing a market exchange for these boxes 616 00:34:26,440 --> 00:34:29,719 Speaker 1: is like a very profitable business, but a cynical one 617 00:34:29,800 --> 00:34:32,200 Speaker 1: because it didn't sound like someone who wants to really 618 00:34:32,239 --> 00:34:35,960 Speaker 1: make the case for like the underlying activity that's been happening. 619 00:34:36,200 --> 00:34:40,719 Speaker 1: It's also interesting that not once this sort of like 620 00:34:41,160 --> 00:34:43,880 Speaker 1: poor quality of the books. So, you know, with the 621 00:34:43,880 --> 00:34:46,360 Speaker 1: bankruptcy and we're learning, well, what did FTX and ELM 622 00:34:46,360 --> 00:34:49,080 Speaker 1: me to have as their assets? A lot of it 623 00:34:49,120 --> 00:34:52,239 Speaker 1: was exactly what was described there, which is these tokens 624 00:34:52,280 --> 00:34:56,320 Speaker 1: that they themselves controlled, are they more or less basically 625 00:34:56,840 --> 00:34:59,200 Speaker 1: and through the magic of the box, were able to 626 00:34:59,280 --> 00:35:02,440 Speaker 1: inflate the veil you beyond like any sort of like 627 00:35:02,560 --> 00:35:05,200 Speaker 1: reasonable pricing in the market. And so they're like, oh, 628 00:35:05,200 --> 00:35:09,200 Speaker 1: we have billions of UH dollars worth of assets on 629 00:35:09,200 --> 00:35:11,880 Speaker 1: our books. Okay, that's good, but the only way we 630 00:35:11,920 --> 00:35:14,719 Speaker 1: get there is via these tokens that we issue that 631 00:35:14,760 --> 00:35:17,799 Speaker 1: we are priced nominally at billions in market camp but 632 00:35:17,840 --> 00:35:22,360 Speaker 1: realistically could never be sold into the market at anywhere 633 00:35:23,040 --> 00:35:26,160 Speaker 1: near these levels. So I think that like there's quite 634 00:35:26,200 --> 00:35:30,120 Speaker 1: a bit in there in that answer that helps sort 635 00:35:30,160 --> 00:35:33,640 Speaker 1: of us understand where we are today. Absolutely, And then 636 00:35:33,640 --> 00:35:37,880 Speaker 1: of course the follow on is the reaction from Washington 637 00:35:38,040 --> 00:35:42,319 Speaker 1: what kind of regulation? I assume this accelerates the conversation, 638 00:35:42,400 --> 00:35:44,520 Speaker 1: but do they know what they're doing at the SEC 639 00:35:44,880 --> 00:35:49,880 Speaker 1: or the CFTC and preventing something like this from happening again, Yeah, 640 00:35:49,960 --> 00:35:52,279 Speaker 1: it's a really good question. I mean, I think that 641 00:35:53,520 --> 00:35:55,439 Speaker 1: I think there's two schools of thought here. So there's 642 00:35:55,480 --> 00:35:58,560 Speaker 1: one is, uh, Okay, we need to write we need 643 00:35:58,600 --> 00:36:00,560 Speaker 1: to come up with new regulation, which I guess it's 644 00:36:00,560 --> 00:36:03,200 Speaker 1: not that controversial. It's always how it is right, people 645 00:36:03,200 --> 00:36:06,319 Speaker 1: lose a lot of money and uh, then the then 646 00:36:06,360 --> 00:36:09,080 Speaker 1: the regulators come in. The flip side is that this 647 00:36:09,160 --> 00:36:13,040 Speaker 1: happened on an offshore exchange outside of the jurisdiction of 648 00:36:13,320 --> 00:36:18,239 Speaker 1: u S regulators, and the entities that were sort of 649 00:36:18,280 --> 00:36:22,440 Speaker 1: like we you know, crypto entities that are in the US, 650 00:36:23,400 --> 00:36:27,120 Speaker 1: you know, haven't had the same fate, and be like 651 00:36:27,600 --> 00:36:31,520 Speaker 1: it's a little unclear. I guess you could say, why 652 00:36:31,840 --> 00:36:35,719 Speaker 1: crypto deserves new regulations. We already have regulations. Right, You're 653 00:36:35,760 --> 00:36:38,960 Speaker 1: not allowed to steal people's money, violate terms of service. 654 00:36:39,560 --> 00:36:42,480 Speaker 1: If you are a broker, there's certain obligations you have, Like, 655 00:36:42,719 --> 00:36:45,560 Speaker 1: there are a lot of laws that capture all of this. 656 00:36:45,680 --> 00:36:48,560 Speaker 1: So I think there is another view out there that 657 00:36:48,760 --> 00:36:52,680 Speaker 1: rather than rushing to write new regulations specifically for crypto, 658 00:36:54,040 --> 00:36:57,239 Speaker 1: a lot we enforced the laws that we already have. 659 00:36:57,719 --> 00:37:00,239 Speaker 1: And you know, there's a widespread view that a lot 660 00:37:00,239 --> 00:37:04,799 Speaker 1: of these tokens are in fact securities. Um, so we 661 00:37:04,840 --> 00:37:07,600 Speaker 1: have a securities regulator, it's called the SEC, and there's 662 00:37:07,640 --> 00:37:10,960 Speaker 1: already things that SEC can do if it deems certain 663 00:37:10,960 --> 00:37:14,279 Speaker 1: assets to be securities in terms of disclosure requirements and 664 00:37:14,320 --> 00:37:18,160 Speaker 1: so forth. And so one view is that, well, let's 665 00:37:18,200 --> 00:37:21,000 Speaker 1: just have the uh, let's just divide these up. Maybe 666 00:37:21,000 --> 00:37:24,040 Speaker 1: some of these tokens our commodities and should be traded more, 667 00:37:24,440 --> 00:37:26,719 Speaker 1: should be regulated more by the CFTC. Maybe some our 668 00:37:26,760 --> 00:37:30,959 Speaker 1: securities trade by the SEC. Maybe the brokerages like coin 669 00:37:31,000 --> 00:37:34,160 Speaker 1: base should be like regulated like a you know, a 670 00:37:34,160 --> 00:37:36,759 Speaker 1: traditional broker like a Schwab or something like that. And 671 00:37:36,840 --> 00:37:38,520 Speaker 1: so I do think there's a view of like, well, 672 00:37:38,600 --> 00:37:41,680 Speaker 1: let's just start getting more aggressive about putting these things 673 00:37:41,760 --> 00:37:44,160 Speaker 1: in the categories that we already have loss for Did 674 00:37:44,160 --> 00:37:47,279 Speaker 1: you miss an opportunity to do your remote broadcast from 675 00:37:47,320 --> 00:37:51,400 Speaker 1: the Bahamas? It's funny, you know, uh yeah, kind of 676 00:37:51,640 --> 00:37:54,840 Speaker 1: we were invited not I bet you were. Yeah, They're like, 677 00:37:54,920 --> 00:37:56,919 Speaker 1: why don't you do a lot? We didn't make it work, 678 00:37:57,120 --> 00:38:00,200 Speaker 1: you know, we uh you know, weren't gonna like fly 679 00:38:00,280 --> 00:38:02,440 Speaker 1: all the way to the Bahamas. And just wonder if 680 00:38:02,480 --> 00:38:05,000 Speaker 1: that's a warning sign when when it's coming from the Bahamas, 681 00:38:05,040 --> 00:38:07,720 Speaker 1: you know, why do you do an episode on stage 682 00:38:07,840 --> 00:38:10,880 Speaker 1: or it didn't happen. Um, there's a reason. There's a 683 00:38:10,960 --> 00:38:15,320 Speaker 1: lot of this that's offshore. And I do feel for 684 00:38:15,400 --> 00:38:17,080 Speaker 1: a lot of you know, people have lost a lot 685 00:38:17,160 --> 00:38:20,280 Speaker 1: of money and had like their life savings completely ruined people. 686 00:38:20,960 --> 00:38:23,480 Speaker 1: But on the other hand, like you know, you're dealing 687 00:38:23,520 --> 00:38:27,240 Speaker 1: with a offshore entity outside the scope of like most 688 00:38:27,400 --> 00:38:30,200 Speaker 1: established regulators who are in the business of like sort 689 00:38:30,239 --> 00:38:37,960 Speaker 1: of like facilitating de facto casino of sorts. So the 690 00:38:37,960 --> 00:38:40,839 Speaker 1: there's some sort of uh your uh, you know, buyer 691 00:38:40,920 --> 00:38:44,600 Speaker 1: beware here spending time on a Friday with Joe Wise 692 00:38:44,680 --> 00:38:48,920 Speaker 1: and fall on the fastest hour in politics. Big questions, 693 00:38:48,960 --> 00:38:52,239 Speaker 1: by the way, about what happens with the lawmakers who 694 00:38:52,280 --> 00:38:56,480 Speaker 1: received millions of dollars from s b F campaign donations. 695 00:38:57,480 --> 00:39:00,080 Speaker 1: In the case of Dick Durbin, the Senator from Illinois, 696 00:39:00,080 --> 00:39:05,000 Speaker 1: he'll contribute the money to charity, apparently from SPF, but 697 00:39:06,000 --> 00:39:10,200 Speaker 1: next will be the hearings. Recipients of those contributions say 698 00:39:10,200 --> 00:39:14,279 Speaker 1: they are prepared to grill s BF about why his 699 00:39:14,440 --> 00:39:21,239 Speaker 1: crypto exchange suddenly crashed. He donated tens of millions of dollars, 700 00:39:21,239 --> 00:39:24,680 Speaker 1: the politicians second largest donor to the party this election 701 00:39:25,560 --> 00:39:29,239 Speaker 1: for Democrats, So standby. That'll be a show coming up. 702 00:39:29,239 --> 00:39:33,000 Speaker 1: We'll get to fed speak and the doom scroll this week. Boy, 703 00:39:33,040 --> 00:39:34,799 Speaker 1: it was one after the other, leading minute to wonder, 704 00:39:34,880 --> 00:39:36,880 Speaker 1: do you have to damage the job market? You have 705 00:39:36,960 --> 00:39:41,359 Speaker 1: to force unemployment to rise to stop inflation? And if 706 00:39:41,360 --> 00:39:43,800 Speaker 1: the answer is yes, what's the point of the dual mandate? 707 00:39:44,520 --> 00:39:48,319 Speaker 1: That's where we pick up with Joe. This is Bloomberg, 708 00:39:48,480 --> 00:39:54,960 Speaker 1: So no with Joe Matthew on Bloomberg Radio and they 709 00:39:54,960 --> 00:39:58,120 Speaker 1: asked Flever Lang and Rocky three for his prediction to 710 00:39:58,200 --> 00:40:02,040 Speaker 1: what's your prediction for the fight with prediction, Yes, prediction 711 00:40:06,040 --> 00:40:09,040 Speaker 1: m sort of like j. Powell. While higher interest rates, 712 00:40:09,200 --> 00:40:13,200 Speaker 1: slower growth, and software labor market conditions will bring down inflation, 713 00:40:13,920 --> 00:40:17,319 Speaker 1: they will also bring some pain to households and businesses. Yeah, 714 00:40:18,160 --> 00:40:21,200 Speaker 1: these are the unfortunate costs of reducing inflation, and it's 715 00:40:21,280 --> 00:40:23,279 Speaker 1: starting to look like the pain is going to be 716 00:40:23,360 --> 00:40:25,719 Speaker 1: more real. Some of the comments we heard this week, 717 00:40:26,360 --> 00:40:31,080 Speaker 1: uh from Fed officials, you know, the Bullard comments about 718 00:40:31,080 --> 00:40:34,400 Speaker 1: going to a seven handle freaked out the market. I 719 00:40:34,520 --> 00:40:37,760 Speaker 1: was more taken by Kansas City Fed President Esther George 720 00:40:38,280 --> 00:40:40,560 Speaker 1: looking at a labor market that is so tight. This 721 00:40:40,640 --> 00:40:42,480 Speaker 1: is a quote. I don't know how you continue to 722 00:40:42,520 --> 00:40:44,959 Speaker 1: bring this level of inflation down without having some real 723 00:40:45,000 --> 00:40:49,000 Speaker 1: slowing and maybe we even have contraction in the economy 724 00:40:49,040 --> 00:40:52,440 Speaker 1: to get there. I've I've asked about this before. The 725 00:40:52,480 --> 00:40:54,880 Speaker 1: fact of the matter is you might have a dual mandate, 726 00:40:55,239 --> 00:40:57,680 Speaker 1: But isn't that a false promise? You have to break 727 00:40:57,719 --> 00:41:01,279 Speaker 1: the job market to beat inflation? You know, that is 728 00:41:01,320 --> 00:41:03,600 Speaker 1: the that is the that is the widespread view of 729 00:41:03,600 --> 00:41:07,520 Speaker 1: many economists that history is pretty strict on this that 730 00:41:07,600 --> 00:41:11,160 Speaker 1: when you have extremely elevated inflation, you know that there's 731 00:41:11,239 --> 00:41:13,759 Speaker 1: no painless way to do it. That you don't get 732 00:41:13,760 --> 00:41:17,160 Speaker 1: this immaculate disinflation so to speak, that you need to 733 00:41:17,200 --> 00:41:20,560 Speaker 1: have layoffs and there need to be a meaningful number. Now, 734 00:41:21,200 --> 00:41:23,120 Speaker 1: the hope would be, I would say, the hope is, 735 00:41:23,360 --> 00:41:25,439 Speaker 1: this is a weird time. We just had a once 736 00:41:25,480 --> 00:41:31,279 Speaker 1: in a century pandemic, and we have had major disruptions 737 00:41:31,280 --> 00:41:34,480 Speaker 1: in the past. We tend to it's a historical phenomenon. 738 00:41:35,320 --> 00:41:40,880 Speaker 1: We do have higher higher inflation after wartime typically is 739 00:41:40,920 --> 00:41:44,240 Speaker 1: common because again you sort of similar story or major 740 00:41:44,320 --> 00:41:48,000 Speaker 1: disruption to supply side capacity. You have all this investment 741 00:41:48,080 --> 00:41:51,320 Speaker 1: that went into munitions and factories for the war, and 742 00:41:51,360 --> 00:41:55,520 Speaker 1: then they're not there. You know, then the soldiers come 743 00:41:55,560 --> 00:41:59,080 Speaker 1: back and then there isn't the productive capacity to supply them. 744 00:41:59,120 --> 00:42:03,200 Speaker 1: There are examples, and so the hope would be, and 745 00:42:03,280 --> 00:42:05,319 Speaker 1: so the question to some extent is, well, why do 746 00:42:05,360 --> 00:42:07,279 Speaker 1: we have this inflation. Do we have it because there 747 00:42:07,360 --> 00:42:10,600 Speaker 1: was this huge disruption to society, in which case maybe 748 00:42:10,680 --> 00:42:13,200 Speaker 1: a lot of inflation comes down to a normalization or 749 00:42:13,200 --> 00:42:16,319 Speaker 1: do we have the inflation because the Fed kept rates 750 00:42:16,360 --> 00:42:18,960 Speaker 1: too load too long and the government spend too much 751 00:42:18,960 --> 00:42:20,880 Speaker 1: money in checks and so now we have to have 752 00:42:20,920 --> 00:42:23,160 Speaker 1: the pain. I think we're still kind of in that debate, 753 00:42:23,239 --> 00:42:25,919 Speaker 1: And honestly, funny, it depends what party you're intends to 754 00:42:25,960 --> 00:42:28,640 Speaker 1: determine your answer to that question, right. I do think 755 00:42:28,680 --> 00:42:30,719 Speaker 1: there's a big political element. But on the other hand, 756 00:42:30,760 --> 00:42:32,440 Speaker 1: I will say, you know, look, there's a lot of 757 00:42:32,520 --> 00:42:37,319 Speaker 1: like sort of like mainstream democratic economists Larry Summers, Jason 758 00:42:37,360 --> 00:42:40,239 Speaker 1: Fermant among them, who are in that camp that the 759 00:42:40,239 --> 00:42:43,920 Speaker 1: Biden administration did too much. Sure that j Powell was 760 00:42:44,160 --> 00:42:47,080 Speaker 1: too easy for too long. But I will I but 761 00:42:47,320 --> 00:42:50,480 Speaker 1: these questions are always like really political. Absolutely, if you 762 00:42:50,520 --> 00:42:52,880 Speaker 1: talk to a Democrat on Capitol Hill, and unfortunately we 763 00:42:52,960 --> 00:42:56,000 Speaker 1: do this every day here sometimes uh it's you know what, 764 00:42:56,440 --> 00:42:58,360 Speaker 1: I'll tell you, this is a global problem, this is 765 00:42:58,360 --> 00:43:00,680 Speaker 1: a supply chain problem. Look at other countries. Why we're 766 00:43:00,680 --> 00:43:03,680 Speaker 1: not alone in this? And Republicans say, you know, Joe 767 00:43:03,760 --> 00:43:07,239 Speaker 1: Biden poured gasoline on the fire with the American Rescue Act, 768 00:43:07,280 --> 00:43:09,080 Speaker 1: And you tend to think the truth might be somewhere 769 00:43:09,080 --> 00:43:12,120 Speaker 1: in between. Yeah, and there a lot of you know, 770 00:43:12,400 --> 00:43:14,759 Speaker 1: I think economists don't know that. I've seen all these 771 00:43:14,800 --> 00:43:22,080 Speaker 1: studies like six transitor embedded or who knows how about 772 00:43:22,680 --> 00:43:26,480 Speaker 1: what we saw on the campaign trail. Sometimes you can 773 00:43:26,600 --> 00:43:30,200 Speaker 1: learn from the argument when when politicians are campaigning, and 774 00:43:30,239 --> 00:43:34,080 Speaker 1: certainly when voters actually go to the polls. Uh, if 775 00:43:34,120 --> 00:43:38,200 Speaker 1: people blamed if Americans blamed Democrats for this, wouldn't it 776 00:43:38,239 --> 00:43:41,440 Speaker 1: have gone worse? Well, I will say this, and again, 777 00:43:41,640 --> 00:43:43,719 Speaker 1: you know, what do I know about politics? I don't 778 00:43:43,719 --> 00:43:47,120 Speaker 1: know anything, but I will say this. You know, the 779 00:43:47,160 --> 00:43:50,160 Speaker 1: inflation is pretty bad, right, It's at the highest level 780 00:43:50,200 --> 00:43:54,440 Speaker 1: in like four decades, and the Republican Party chose to 781 00:43:54,560 --> 00:44:00,320 Speaker 1: run many candidates whose core position was like cha lunching 782 00:44:00,320 --> 00:44:03,719 Speaker 1: the results of election. It's like, yeah, that was like 783 00:44:03,719 --> 00:44:05,839 Speaker 1: a number of Republicans like made that a big thing. 784 00:44:05,880 --> 00:44:09,600 Speaker 1: It's like maybe real introspectation because there is a big problem, right, 785 00:44:09,640 --> 00:44:13,799 Speaker 1: Inflation is a real issue. And in a way, you know, 786 00:44:13,880 --> 00:44:15,560 Speaker 1: I think a lot I think the Republicans sort of 787 00:44:15,600 --> 00:44:19,560 Speaker 1: assumed that that they wouldn't have to like really try 788 00:44:19,600 --> 00:44:21,640 Speaker 1: to like fight that point, because so obvious everyone's gonna 789 00:44:21,640 --> 00:44:24,000 Speaker 1: punish the Democrats for inflation. So they ended up with 790 00:44:24,040 --> 00:44:26,080 Speaker 1: like a lot of candidates that didn't really talk about 791 00:44:26,080 --> 00:44:28,440 Speaker 1: that they like talked about like Trump and changing how 792 00:44:28,480 --> 00:44:30,959 Speaker 1: people vote and stuff. If the messaging had been better, 793 00:44:31,040 --> 00:44:32,799 Speaker 1: you're saying it could have been a different result. It 794 00:44:32,800 --> 00:44:34,400 Speaker 1: could have been. I mean, it's just weird. Did the 795 00:44:34,880 --> 00:44:38,160 Speaker 1: like for as bad as inflation is? Did can anyone 796 00:44:38,239 --> 00:44:42,880 Speaker 1: point to say or Republican proposal or story about how 797 00:44:42,920 --> 00:44:44,400 Speaker 1: to address it? And I don't. I don't think I 798 00:44:44,440 --> 00:44:46,640 Speaker 1: heard any You know, I heard a lot about investigating 799 00:44:46,640 --> 00:44:49,040 Speaker 1: the White House. I heard a lot about Hunter Biden's laptop, 800 00:44:49,560 --> 00:44:51,319 Speaker 1: or you heard a lot of blame on inflation, but 801 00:44:51,320 --> 00:44:54,600 Speaker 1: maybe not. But now you don't hear a lot of solutions. 802 00:44:54,640 --> 00:44:58,440 Speaker 1: So I do wonder if like maybe Republicans were a 803 00:44:58,440 --> 00:45:02,600 Speaker 1: little bit um in retrospect, naive about the sales job 804 00:45:03,000 --> 00:45:04,520 Speaker 1: that they had to do and they should have done more. 805 00:45:04,520 --> 00:45:08,799 Speaker 1: Are these FEDE officials George Bullard doing the job by 806 00:45:08,920 --> 00:45:11,319 Speaker 1: speaking and freaking everyone out right now? Or is this 807 00:45:11,400 --> 00:45:13,239 Speaker 1: the real indicator of how bad it's going to hurt 808 00:45:13,280 --> 00:45:17,520 Speaker 1: next year? No? I mean, look, monetary policy is works 809 00:45:17,520 --> 00:45:20,480 Speaker 1: through financial markets, and paulic has talked about this a 810 00:45:20,480 --> 00:45:23,400 Speaker 1: lot that it's not really the rate per se that matters. 811 00:45:23,480 --> 00:45:26,080 Speaker 1: It's you know, if if you raise rates and the 812 00:45:26,120 --> 00:45:29,960 Speaker 1: stock market weekend and credit conditions tightened and so forth, 813 00:45:30,000 --> 00:45:33,279 Speaker 1: and that constricts demand. And so if you just talk 814 00:45:33,360 --> 00:45:35,960 Speaker 1: about it, you're conducting monetary policy. Every one of these 815 00:45:35,960 --> 00:45:39,120 Speaker 1: speeches is a conduct of monetary policy. And so trying 816 00:45:39,120 --> 00:45:41,919 Speaker 1: to like, we're in this interesting moment where it looks 817 00:45:41,920 --> 00:45:44,560 Speaker 1: like the feed is going to downshift from a series 818 00:45:44,600 --> 00:45:47,960 Speaker 1: of seventy basis point hikes to fifty basis point hikes. 819 00:45:47,960 --> 00:45:50,719 Speaker 1: And Waller had a speech this week, I think where 820 00:45:50,719 --> 00:45:52,319 Speaker 1: he liked it to take you off an airplane where 821 00:45:52,320 --> 00:45:54,080 Speaker 1: it's like you go really hard in the beginning, and 822 00:45:54,120 --> 00:45:56,040 Speaker 1: then you get to like a cruising altitude and then 823 00:45:56,040 --> 00:45:58,080 Speaker 1: you like you ease up a little bit. It doesn't 824 00:45:58,080 --> 00:46:01,520 Speaker 1: mean you're like easing by the getting off the ground 825 00:46:01,640 --> 00:46:03,400 Speaker 1: is like the really hard part that takes a lot 826 00:46:03,480 --> 00:46:05,200 Speaker 1: of like fuel and stuff like that. Then you can 827 00:46:05,239 --> 00:46:07,719 Speaker 1: glide a little bit. So, you know, we're in this 828 00:46:07,760 --> 00:46:10,839 Speaker 1: sort of interesting moment, and there are signs that inflation 829 00:46:11,160 --> 00:46:14,839 Speaker 1: is maybe cooling. You know that last CPI report was encouraging. 830 00:46:15,280 --> 00:46:18,840 Speaker 1: We've had oil prices, commodity prices coming down, some signs 831 00:46:18,880 --> 00:46:21,879 Speaker 1: that food prices maybe easing. But what the FED does 832 00:46:21,920 --> 00:46:24,319 Speaker 1: not want to see is the FED does not want 833 00:46:24,360 --> 00:46:27,040 Speaker 1: the market and investors to look at signs of easing, 834 00:46:27,480 --> 00:46:30,040 Speaker 1: look at signs of downshift, and say party time. We're 835 00:46:30,040 --> 00:46:32,480 Speaker 1: gonna go buy stocks, right, because that's the worry. I 836 00:46:32,560 --> 00:46:34,359 Speaker 1: was like, well, what do we accomplish a here if 837 00:46:34,400 --> 00:46:37,080 Speaker 1: everyone just gonna go buy stocks again and bit up 838 00:46:37,120 --> 00:46:40,399 Speaker 1: financial markets and and speculate again that we're just gonna 839 00:46:40,440 --> 00:46:41,840 Speaker 1: be right in the same boat that we were a 840 00:46:41,920 --> 00:46:44,279 Speaker 1: year ago or six months ago. So the feed is 841 00:46:44,320 --> 00:46:46,440 Speaker 1: in this position now where it's like, Okay, how can 842 00:46:46,480 --> 00:46:49,920 Speaker 1: we acknowledge that there's some shift in the general trajectory 843 00:46:50,040 --> 00:46:52,080 Speaker 1: without letting things get out of hand and for everyone 844 00:46:52,080 --> 00:46:53,680 Speaker 1: I say party time. And so I kind of think 845 00:46:53,719 --> 00:46:55,879 Speaker 1: that's what you're getting from some of these speakers, which 846 00:46:55,920 --> 00:46:58,479 Speaker 1: is like, yes, we're gonna hike a little less fast 847 00:46:58,520 --> 00:47:01,280 Speaker 1: than we have been, but don't use this as an excuse. 848 00:47:01,400 --> 00:47:04,800 Speaker 1: No more spending, you know, fifty on the bitcoin. Okay, 849 00:47:04,960 --> 00:47:07,439 Speaker 1: Like that's sort of like the message. So is Mr 850 00:47:07,480 --> 00:47:10,840 Speaker 1: T right? Yeah? I mean you know what, I hope not. Like, 851 00:47:10,920 --> 00:47:14,000 Speaker 1: here's the thing. It's like you have two camps. So 852 00:47:14,040 --> 00:47:16,280 Speaker 1: you have the camp to say, Okay, we need labor 853 00:47:16,360 --> 00:47:20,600 Speaker 1: market pain um in order to bring down inflation, and 854 00:47:20,640 --> 00:47:23,399 Speaker 1: then you have another camp to say, these fed rate 855 00:47:23,440 --> 00:47:25,520 Speaker 1: hikes are going to crush the labor market and make 856 00:47:25,560 --> 00:47:28,520 Speaker 1: things worse. Right, the Dovish viewed, it's like, and I 857 00:47:28,600 --> 00:47:30,319 Speaker 1: kind of hope that there is this middle ground where 858 00:47:30,360 --> 00:47:33,560 Speaker 1: everyone turns out to be wrong. That the hawks are wrong, 859 00:47:33,600 --> 00:47:37,800 Speaker 1: that we need higher unemployment in order to uh defeat inflation. 860 00:47:37,880 --> 00:47:39,920 Speaker 1: That would be nice. And I hope the doves are wrong, 861 00:47:40,080 --> 00:47:42,400 Speaker 1: that the higher rates and the aggressive pace of hiking 862 00:47:42,440 --> 00:47:44,439 Speaker 1: that we've seen in the series of seventy bases point 863 00:47:44,520 --> 00:47:47,800 Speaker 1: hikes crush the labor market. And so the dream scenario 864 00:47:47,960 --> 00:47:51,320 Speaker 1: is one in which inflation does come down, but also 865 00:47:51,719 --> 00:47:54,360 Speaker 1: the rate hikes never really did much to the labor side. 866 00:47:55,040 --> 00:47:57,080 Speaker 1: Way too early to say that. But I don't think 867 00:47:57,120 --> 00:47:59,480 Speaker 1: there's a I don't think that. I think it's a 868 00:47:59,560 --> 00:48:02,759 Speaker 1: non zero a chance that that's the outcome here, non 869 00:48:02,920 --> 00:48:06,520 Speaker 1: zero chance. I don't think it's zero. From your lips 870 00:48:06,560 --> 00:48:09,200 Speaker 1: to God's ears, I hope. So let's get a beer 871 00:48:09,239 --> 00:48:11,840 Speaker 1: next time I'm in New York anytime, any time I 872 00:48:11,920 --> 00:48:16,359 Speaker 1: love talking to you. I always enjoy it. The great 873 00:48:16,440 --> 00:48:22,120 Speaker 1: Joe Wisenthal. His podcast is called Odd Lots. Ours is 874 00:48:22,160 --> 00:48:25,279 Speaker 1: called sound On. You should give it a try, you know, subscribe, 875 00:48:25,360 --> 00:48:29,319 Speaker 1: share it with your friends. I can just keep thinking 876 00:48:29,320 --> 00:48:31,480 Speaker 1: of him down there in the Bahamas, you know, hanging 877 00:48:31,480 --> 00:48:34,759 Speaker 1: with SPF. It never happened, but I could use a 878 00:48:34,760 --> 00:48:37,160 Speaker 1: little time of the Bahamas, don't you think. I mean? 879 00:48:37,200 --> 00:48:40,640 Speaker 1: What a week? Not just the volatility on Wall Street 880 00:48:40,680 --> 00:48:43,600 Speaker 1: we hear about from Charlie Pellett, the scary fed speak, 881 00:48:43,680 --> 00:48:46,960 Speaker 1: whether we finally got through the mid terms, Republicans take 882 00:48:47,000 --> 00:48:51,280 Speaker 1: the House. Nancy Pelosi retires as speaker. Donald Trump announces 883 00:48:51,360 --> 00:48:54,600 Speaker 1: his next presidential campaign. I could keep going just this week. 884 00:48:54,680 --> 00:48:58,040 Speaker 1: Carry Lake loses the Arizona governor's race to Katie Hobbs. 885 00:48:58,360 --> 00:49:02,520 Speaker 1: Lawyers up for a fight. Adam Fresh concedes to Lauren Boeberg. 886 00:49:02,560 --> 00:49:04,759 Speaker 1: Did you hear that? By the way, Yeah, I'll take 887 00:49:04,840 --> 00:49:09,480 Speaker 1: up Margarita, and I'll meet you back here on Monday. 888 00:49:10,000 --> 00:49:13,239 Speaker 1: Holiday week Ahead, we'll have Rick and Jeannie on the 889 00:49:13,280 --> 00:49:16,839 Speaker 1: fastest hour in politics. Thanks for spending time with us. 890 00:49:17,480 --> 00:49:18,560 Speaker 1: This is Bloomberg