1
00:00:00,880 --> 00:00:04,360
Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us

2
00:00:04,400 --> 00:00:07,520
Speaker 1: Live weekdays at one Eastern on Bloomberg dot com, the

3
00:00:07,640 --> 00:00:10,719
Speaker 1: iHeartRadio app and the Bloomberg Business app, or listening on

4
00:00:10,800 --> 00:00:12,800
Speaker 1: demand wherever you get your podcasts.

5
00:00:14,000 --> 00:00:16,600
Speaker 2: Emily, as we hear about kind of the markets feeling

6
00:00:16,680 --> 00:00:19,080
Speaker 2: very wishy washy today, we have to ask the question

7
00:00:19,160 --> 00:00:22,280
Speaker 2: whether this is ultimately about banks, about the Federal Reserve,

8
00:00:22,440 --> 00:00:24,480
Speaker 2: or about the fact that we still have a debt

9
00:00:24,480 --> 00:00:27,360
Speaker 2: ceialing issue hanging over our heads. We're getting closer to

10
00:00:27,400 --> 00:00:30,360
Speaker 2: the X state, yet progress is still very hard to find.

11
00:00:30,760 --> 00:00:32,960
Speaker 3: Absolutely, and part of it, I mean, remember the house

12
00:00:33,040 --> 00:00:35,320
Speaker 3: is out this week and they did not bother running

13
00:00:35,360 --> 00:00:38,280
Speaker 3: back to town when they heard the news that the

14
00:00:38,400 --> 00:00:40,519
Speaker 3: X date could come as soon as June first. But

15
00:00:40,600 --> 00:00:42,479
Speaker 3: you mean you have seen movement, right, It's kind of

16
00:00:42,520 --> 00:00:45,040
Speaker 3: like everything is now hinging on that May ninth meeting.

17
00:00:45,280 --> 00:00:48,360
Speaker 3: When I talk to staffers, when I talk to various

18
00:00:48,360 --> 00:00:51,360
Speaker 3: folks on the Hill, everyone just keeps saying May ninth,

19
00:00:51,479 --> 00:00:53,000
Speaker 3: May ninth, May ninth, May ninth.

20
00:00:53,040 --> 00:00:53,600
Speaker 4: I think that's the.

21
00:00:53,640 --> 00:00:56,280
Speaker 3: Day we're going to get a lot of clarity about

22
00:00:56,400 --> 00:00:59,840
Speaker 3: whether the Biden administration or Republicans are willing to give

23
00:01:00,120 --> 00:01:02,720
Speaker 3: a little bit on their sides, and we start getting

24
00:01:02,720 --> 00:01:06,720
Speaker 3: a really better idea of exactly how much we need

25
00:01:06,760 --> 00:01:09,080
Speaker 3: to panic and if there is an ability to raise

26
00:01:09,080 --> 00:01:10,880
Speaker 3: the debt limit, what does that actually look like.

27
00:01:11,240 --> 00:01:14,440
Speaker 2: So five days, five more days until they actually start

28
00:01:14,680 --> 00:01:16,880
Speaker 2: talking to each other. But Emily, I was up on

29
00:01:16,920 --> 00:01:20,920
Speaker 2: Capitol Hill earlier at the Senate Banking Committee hearing regarding

30
00:01:20,920 --> 00:01:23,399
Speaker 2: the bank failures. But I was stopping the senators trying

31
00:01:23,440 --> 00:01:26,119
Speaker 2: to get some clarity on where they exactly stand on

32
00:01:26,200 --> 00:01:29,680
Speaker 2: this issue. And I spoke with Senator Cortez Masto of Nevada,

33
00:01:29,760 --> 00:01:33,560
Speaker 2: and she was like, we shouldn't even be talking about

34
00:01:33,560 --> 00:01:36,440
Speaker 2: some of these, specifically talking about defaulting. Take a listen.

35
00:01:38,640 --> 00:01:40,959
Speaker 5: We shouldn't even have a conversation about whether or not

36
00:01:41,000 --> 00:01:44,800
Speaker 5: we're going to default. Every family, every business who has

37
00:01:44,880 --> 00:01:47,600
Speaker 5: obligations that they've incurred they have to pay them, and

38
00:01:47,680 --> 00:01:50,560
Speaker 5: so does the federal government. And to me, this is

39
00:01:51,240 --> 00:01:53,440
Speaker 5: let's figure out what we need to do to address

40
00:01:53,600 --> 00:01:55,800
Speaker 5: and ensure we don't default. But if we want to

41
00:01:55,840 --> 00:01:58,240
Speaker 5: reduce our deficit and debt, which I believe we should,

42
00:01:58,480 --> 00:01:59,880
Speaker 5: there is a process for it.

43
00:02:00,840 --> 00:02:03,720
Speaker 2: And of course she's talking about the budgetary process, which

44
00:02:03,720 --> 00:02:06,520
Speaker 2: has been the consistent line from the Biden administration and

45
00:02:06,560 --> 00:02:08,720
Speaker 2: from the Democrats. They'll negotiate it on the budget. They'll

46
00:02:08,720 --> 00:02:11,000
Speaker 2: talk about the budget. They don't want to negotiate on

47
00:02:11,040 --> 00:02:12,760
Speaker 2: the debt ceiling. They still want a clean raise.

48
00:02:12,960 --> 00:02:15,720
Speaker 3: No, absolutely, And I mean that's because everyone knows that

49
00:02:15,760 --> 00:02:18,800
Speaker 3: once you actually start getting into the budget and actually saying, hey,

50
00:02:18,880 --> 00:02:21,520
Speaker 3: we should reduce the funding from this program, that's when

51
00:02:21,560 --> 00:02:22,600
Speaker 3: you actually start.

52
00:02:22,320 --> 00:02:25,160
Speaker 4: Having people being like holed up, pulled up, pulled up. No, no, no, no, no,

53
00:02:25,240 --> 00:02:27,440
Speaker 4: we can't do that, So that's much harder to do.

54
00:02:27,560 --> 00:02:29,640
Speaker 3: I think that's kind of why we've seen things both

55
00:02:29,639 --> 00:02:31,440
Speaker 3: on the Democrat and Republican side be on.

56
00:02:31,440 --> 00:02:32,120
Speaker 4: The top line.

57
00:02:32,200 --> 00:02:35,360
Speaker 3: But Kaylie, it is so telling that you have senators

58
00:02:35,680 --> 00:02:39,679
Speaker 3: like Cortez Masto and like really basically every other Democratic

59
00:02:39,760 --> 00:02:42,520
Speaker 3: senator I think, maybe besides Joe Manchin, who have been

60
00:02:42,680 --> 00:02:45,840
Speaker 3: very much in line behind Biden. They have been really

61
00:02:45,919 --> 00:02:48,040
Speaker 3: keeping to that line. And I think it's because all

62
00:02:48,040 --> 00:02:50,760
Speaker 3: of them they're like, look, we picked our man to negotiate.

63
00:02:51,120 --> 00:02:51,720
Speaker 4: It's Biden.

64
00:02:52,280 --> 00:02:54,200
Speaker 3: We'll see what Biden says with McCarthy, and will go

65
00:02:54,240 --> 00:02:56,160
Speaker 3: from there, and you've also seen that a lot with

66
00:02:56,440 --> 00:02:59,600
Speaker 3: House Republicans. They've remained, for the most part, very much

67
00:02:59,600 --> 00:03:03,600
Speaker 3: in line behind McCarthy. And I think the real interesting

68
00:03:03,639 --> 00:03:06,000
Speaker 3: part is going to start when McCarthy and Biden go

69
00:03:06,080 --> 00:03:09,360
Speaker 3: back to their respective camps and start saying, Okay, here's

70
00:03:09,480 --> 00:03:11,720
Speaker 3: how things are beginning to look in terms of a

71
00:03:11,760 --> 00:03:12,720
Speaker 3: potential agreement.

72
00:03:12,840 --> 00:03:15,239
Speaker 4: If we even get there. Yeah, that's a big if.

73
00:03:15,240 --> 00:03:18,520
Speaker 2: And I was talking about those talks between President Biden

74
00:03:18,680 --> 00:03:22,120
Speaker 2: and Speaker McCarthy also with another Senator jd Vance, who

75
00:03:22,200 --> 00:03:25,320
Speaker 2: is a Republican. This is what he had to say

76
00:03:25,360 --> 00:03:25,799
Speaker 2: about that.

77
00:03:26,520 --> 00:03:28,120
Speaker 6: I think everything should be on the table when the

78
00:03:28,120 --> 00:03:30,440
Speaker 6: conversation between the President McCarthy. But I do think that

79
00:03:30,480 --> 00:03:34,160
Speaker 6: where McCarthy started the conversation is very close to where

80
00:03:34,200 --> 00:03:37,480
Speaker 6: it should end. Congressional Republicans moved a lot. A lot

81
00:03:37,480 --> 00:03:39,280
Speaker 6: of the guys who voted for that package had never

82
00:03:39,400 --> 00:03:42,160
Speaker 6: voted for a debt ceiling increase before. There's a lot

83
00:03:42,160 --> 00:03:45,360
Speaker 6: of I think very reasonable spinning cuts in that package,

84
00:03:45,440 --> 00:03:47,320
Speaker 6: and that's where I think that we should go. But look,

85
00:03:47,400 --> 00:03:49,440
Speaker 6: McCarthy and Biden need to have the conversation and everything

86
00:03:49,440 --> 00:03:50,240
Speaker 6: should be on the table.

87
00:03:50,640 --> 00:03:52,840
Speaker 2: That was in response to a question for me about

88
00:03:52,880 --> 00:03:55,920
Speaker 2: whether revenue raising measures should also be at play in

89
00:03:55,960 --> 00:03:59,440
Speaker 2: this deficit negotiation conversation. So let's add another voice to

90
00:03:59,480 --> 00:04:02,600
Speaker 2: this as well. Joining us now is Republican Congressman Brian

91
00:04:02,720 --> 00:04:05,840
Speaker 2: Style of Wisconsin. Congressman. Great to have you back on Bloomberg.

92
00:04:05,840 --> 00:04:08,200
Speaker 7: Thanks for joining us, Thanks for having me on.

93
00:04:08,800 --> 00:04:10,760
Speaker 2: Well, we appreciate your time, and you just heard there

94
00:04:10,800 --> 00:04:13,839
Speaker 2: some of what your Republican colleagues. Senator Vance had to say.

95
00:04:13,840 --> 00:04:16,160
Speaker 2: He thinks everything should be on the table. Would you

96
00:04:16,279 --> 00:04:19,480
Speaker 2: and your colleagues in the House be supportive of revenue

97
00:04:19,560 --> 00:04:21,240
Speaker 2: raising measures not just spending cuts.

98
00:04:22,200 --> 00:04:24,520
Speaker 7: I think the plan put forward by Republicans and the

99
00:04:24,520 --> 00:04:27,799
Speaker 7: House Representatives is a great plan. It's reasonable, it's sensible,

100
00:04:27,920 --> 00:04:30,720
Speaker 7: it lifts the debt ceiling, and it also saves tex

101
00:04:30,800 --> 00:04:33,880
Speaker 7: for money and grows the economy. I think the position

102
00:04:33,960 --> 00:04:36,520
Speaker 7: of the Biden administration and Democrats in the Senate is

103
00:04:36,520 --> 00:04:39,320
Speaker 7: incredibly dangerous and reckless. You got to remember that it

104
00:04:39,320 --> 00:04:41,440
Speaker 7: was all the way back on February one that Speaker

105
00:04:41,480 --> 00:04:44,120
Speaker 7: McCarthy and President Biden met with a promise that they

106
00:04:44,120 --> 00:04:46,919
Speaker 7: would continue those conversations. President Biden put his head in

107
00:04:46,920 --> 00:04:50,120
Speaker 7: the sand is refused to meet with Speaker McCarthy and

108
00:04:50,160 --> 00:04:53,200
Speaker 7: has put out a date of the ninth. Why not

109
00:04:53,240 --> 00:04:55,800
Speaker 7: meet today? Why not meet yesterday? Why did Biden kick

110
00:04:55,839 --> 00:04:59,160
Speaker 7: the can down the road further and further? Republicans are

111
00:04:59,200 --> 00:05:01,200
Speaker 7: at the table where the only group that has a

112
00:05:01,240 --> 00:05:04,360
Speaker 7: bill it's passed that raises the debt ceiling. The Democrats

113
00:05:04,400 --> 00:05:07,400
Speaker 7: in the Senate have not passed any form of a

114
00:05:07,440 --> 00:05:10,000
Speaker 7: debt ceiling increase. And the reason, I think is because

115
00:05:10,000 --> 00:05:12,000
Speaker 7: they don't have the votes to pass the clean debt

116
00:05:12,040 --> 00:05:14,479
Speaker 7: ceiling that they all claim they want. The Democrats control

117
00:05:14,560 --> 00:05:16,760
Speaker 7: the Senate, they could put that bill on the floor

118
00:05:16,800 --> 00:05:19,560
Speaker 7: of the Senate today. The reason they're not doing it

119
00:05:19,600 --> 00:05:22,120
Speaker 7: as Schumer knows he doesn't have the votes. Republicans in

120
00:05:22,160 --> 00:05:24,919
Speaker 7: the House have passed a reasonable and sensible solution, and

121
00:05:24,960 --> 00:05:28,520
Speaker 7: a president continues his delay tactics, refusing to even have

122
00:05:28,560 --> 00:05:31,120
Speaker 7: a conversation about how we can make sure we're protecting

123
00:05:31,160 --> 00:05:32,120
Speaker 7: the American economy.

124
00:05:32,880 --> 00:05:35,039
Speaker 3: Well, Congressman, we are going to expecting to have that

125
00:05:35,080 --> 00:05:39,200
Speaker 3: conversation on May ninth when McCarthy goes to meet with Biden.

126
00:05:39,480 --> 00:05:43,240
Speaker 3: I'm wondering, what are the expectations that House Republicans have

127
00:05:43,360 --> 00:05:47,480
Speaker 3: for McCarthy and for this meeting, are as expected to that,

128
00:05:47,640 --> 00:05:50,479
Speaker 3: you know, McCarthy, make sure that everything that was in

129
00:05:50,520 --> 00:05:52,440
Speaker 3: the bill that you guys pass winds up in a

130
00:05:52,440 --> 00:05:55,760
Speaker 3: final agreement or is there some expectation that there's going

131
00:05:55,800 --> 00:05:57,960
Speaker 3: to be a bit of give and take here to

132
00:05:58,160 --> 00:05:59,680
Speaker 3: ultimately reach a final solution.

133
00:06:01,040 --> 00:06:03,200
Speaker 7: We've been very open and honest here. We think that

134
00:06:03,320 --> 00:06:05,719
Speaker 7: this is a good plan. We're also ready to hear

135
00:06:05,880 --> 00:06:08,880
Speaker 7: out the President and come to an agreement, knowing that

136
00:06:08,920 --> 00:06:11,680
Speaker 7: we're in a perative divided government. Is to get Speaker

137
00:06:11,760 --> 00:06:15,120
Speaker 7: McCarthy to the table with President Biden. Frustrating that Biden

138
00:06:15,160 --> 00:06:18,000
Speaker 7: has dragged his feet for a few months while we're

139
00:06:18,000 --> 00:06:20,960
Speaker 7: at the precipice of a really dangerous and difficult position

140
00:06:21,040 --> 00:06:24,479
Speaker 7: of the US was to actually truly default. That said,

141
00:06:24,560 --> 00:06:26,880
Speaker 7: I think there's going to be an open conversation. But

142
00:06:27,000 --> 00:06:31,040
Speaker 7: the president's position that he can't find even one dollar

143
00:06:31,080 --> 00:06:35,040
Speaker 7: of savings, refuses to claw back unspent COVID funds, refuses

144
00:06:35,080 --> 00:06:38,279
Speaker 7: to prevent tax dollars that are going right now to

145
00:06:38,400 --> 00:06:41,280
Speaker 7: Chinese company. To not find one dollar, I think is

146
00:06:41,360 --> 00:06:45,040
Speaker 7: really disingenuous. Opening bid from the President the United States.

147
00:06:45,560 --> 00:06:48,000
Speaker 3: So kind of reading between the lines there, Congressman, it

148
00:06:48,040 --> 00:06:50,080
Speaker 3: sounds like you are sort of saying, you know, look,

149
00:06:50,480 --> 00:06:53,479
Speaker 3: if McCarthy has to wind up giving certain provisions that

150
00:06:53,560 --> 00:06:57,440
Speaker 3: Republicans pass to ultimately get an agreement, that's not something

151
00:06:57,480 --> 00:07:00,760
Speaker 3: that immediately is going to doom a fun agreement in

152
00:07:00,800 --> 00:07:04,160
Speaker 3: the House. That Republicans do seem to have some flexibility

153
00:07:04,240 --> 00:07:06,839
Speaker 3: in what they will accept in a final agreement. Is

154
00:07:06,839 --> 00:07:08,040
Speaker 3: that a fair characterization.

155
00:07:09,320 --> 00:07:12,720
Speaker 7: I think broadly that that's accurate. Republicans, we're well aware

156
00:07:12,760 --> 00:07:15,800
Speaker 7: that this is divided government, that the president is a Democrat.

157
00:07:15,840 --> 00:07:19,480
Speaker 7: We're conservative Republicans in the House. We've put forward our plan,

158
00:07:19,560 --> 00:07:21,679
Speaker 7: we put out what we think is the right approach.

159
00:07:22,080 --> 00:07:25,160
Speaker 7: Let's now have that conversation actually get to an agreement,

160
00:07:25,240 --> 00:07:27,720
Speaker 7: because the sooner we get through this, the better off

161
00:07:27,760 --> 00:07:29,040
Speaker 7: we are for the American economy.

162
00:07:30,040 --> 00:07:33,040
Speaker 2: Well, there is a question of the clock, of course, Congressman,

163
00:07:33,080 --> 00:07:35,280
Speaker 2: because with every passing day, the X date is just

164
00:07:35,960 --> 00:07:39,040
Speaker 2: getting even closer. There has been a lot of conversation

165
00:07:39,120 --> 00:07:42,360
Speaker 2: about the potential for a short term raise. Would that

166
00:07:42,400 --> 00:07:44,600
Speaker 2: be something that would find your support if that seemed

167
00:07:44,640 --> 00:07:46,760
Speaker 2: like it was really the only option to avoid a default.

168
00:07:47,600 --> 00:07:50,560
Speaker 7: We do need to avoid a default. It's been frustrating,

169
00:07:50,640 --> 00:07:53,560
Speaker 7: as I said, that the President hasn't come and had

170
00:07:53,560 --> 00:07:57,160
Speaker 7: a meeting since February one. I'm optimistic that there's plenty

171
00:07:57,160 --> 00:07:59,320
Speaker 7: of time here. We can get to the ninth We

172
00:07:59,320 --> 00:08:00,400
Speaker 7: can have that meeting.

173
00:08:00,480 --> 00:08:00,720
Speaker 5: Now.

174
00:08:01,080 --> 00:08:03,400
Speaker 7: Let's get the deal done now. Kicking the can down

175
00:08:03,440 --> 00:08:05,840
Speaker 7: the road doesn't do a lot for international markets, do

176
00:08:06,440 --> 00:08:08,880
Speaker 7: a lot for people who need to have confidence the

177
00:08:09,000 --> 00:08:13,240
Speaker 7: United States is going to appropriate reasonably lift the debt ceiling.

178
00:08:13,560 --> 00:08:15,360
Speaker 7: We've got a plan on the table that does that.

179
00:08:15,360 --> 00:08:17,600
Speaker 7: The Senate could take up that bill tomorrow and pass

180
00:08:17,680 --> 00:08:20,160
Speaker 7: that and send it to the president. But let's get

181
00:08:20,160 --> 00:08:22,440
Speaker 7: it done now. Kicking the can down the road doesn't

182
00:08:22,440 --> 00:08:23,440
Speaker 7: do us a whole lot of good.

183
00:08:24,160 --> 00:08:26,840
Speaker 2: Well, Emily the congressman here talking about the implications for

184
00:08:26,920 --> 00:08:29,480
Speaker 2: financial markets, You already are starting to see some of

185
00:08:29,480 --> 00:08:31,880
Speaker 2: that concern showing up in the market. The Treasury auctioned

186
00:08:31,920 --> 00:08:35,480
Speaker 2: off one month treasury bills today at a record high yield,

187
00:08:35,480 --> 00:08:37,360
Speaker 2: which basically shows that no one wants to be holding

188
00:08:37,360 --> 00:08:39,480
Speaker 2: the paper that matures about a month from now, when

189
00:08:39,520 --> 00:08:42,080
Speaker 2: in theory that X date maybe there.

190
00:08:41,960 --> 00:08:44,360
Speaker 3: And that is certainly going to think add pressure to

191
00:08:44,400 --> 00:08:46,800
Speaker 3: a lot of what we're seeing in Congress and on

192
00:08:46,880 --> 00:08:49,839
Speaker 3: Capitol Hill. I mean, Congressman, I'm wondering, have you seen

193
00:08:50,160 --> 00:08:53,400
Speaker 3: the tone and tenor of the conversation change since Monday

194
00:08:53,440 --> 00:08:55,600
Speaker 3: when Secretary yell And put out that letter? Did everyone

195
00:08:55,679 --> 00:08:57,600
Speaker 3: kind of think they had more time? And now it's

196
00:08:57,600 --> 00:08:58,440
Speaker 3: a bit of a scramble.

197
00:09:00,000 --> 00:09:02,320
Speaker 7: Any of us who were kind of versed in this

198
00:09:02,559 --> 00:09:04,120
Speaker 7: don't think we have a lot of time. It's one

199
00:09:04,160 --> 00:09:06,960
Speaker 7: of the reasons I again so frustrated that President Biden's

200
00:09:06,960 --> 00:09:10,160
Speaker 7: refusing to meet until next week. Now is the moment

201
00:09:10,200 --> 00:09:12,520
Speaker 7: that we need to move and people that track these

202
00:09:12,559 --> 00:09:16,120
Speaker 7: markets give clear indications that the downgrade of debt will

203
00:09:16,280 --> 00:09:19,280
Speaker 7: would occur prior to the X date. So although many

204
00:09:19,320 --> 00:09:20,760
Speaker 7: of us are looking at the X date as a

205
00:09:20,840 --> 00:09:24,840
Speaker 7: day of actual default, the concern is even approaching that

206
00:09:25,000 --> 00:09:27,960
Speaker 7: X date may allow any of these rating agencies to

207
00:09:28,040 --> 00:09:30,640
Speaker 7: downgrade the debt in advance of that, So we don't

208
00:09:30,679 --> 00:09:32,920
Speaker 7: know what the actual date is where the true economic

209
00:09:33,000 --> 00:09:36,319
Speaker 7: consequences are going to be felt. Is why Republicans came forward,

210
00:09:36,360 --> 00:09:39,920
Speaker 7: put forward a plan, passed it, and finally the President's

211
00:09:40,080 --> 00:09:42,679
Speaker 7: agree to come to the table. But why not yesterday?

212
00:09:42,720 --> 00:09:45,720
Speaker 7: Why not tomorrow? The President's waiting and trying to run

213
00:09:45,760 --> 00:09:48,600
Speaker 7: the clock out. I think it's really dangerous and reckless

214
00:09:48,600 --> 00:09:49,559
Speaker 7: for the US economy.

215
00:09:49,920 --> 00:09:51,720
Speaker 2: Yeah, I mean we all remember well what happened in

216
00:09:51,720 --> 00:09:54,240
Speaker 2: twenty eleven. It was two weeks before the X date

217
00:09:54,280 --> 00:09:57,720
Speaker 2: in which the US credit reading was downgraded. So it's

218
00:09:57,920 --> 00:10:01,880
Speaker 2: a very good point, Congressman. Also when we consider what

219
00:10:02,040 --> 00:10:06,200
Speaker 2: the market implications are of all of these ongoing crises,

220
00:10:06,200 --> 00:10:08,280
Speaker 2: if you will, I can't help but look at what's

221
00:10:08,280 --> 00:10:10,000
Speaker 2: happening in the banks as well. We've heard from the

222
00:10:10,000 --> 00:10:13,440
Speaker 2: Biden administration, from regulators, from the Federal Reserve that the

223
00:10:13,440 --> 00:10:17,079
Speaker 2: banking system is sound and resilient. That has consistently been

224
00:10:17,120 --> 00:10:19,000
Speaker 2: the line. And yet I am looking at shares of

225
00:10:19,280 --> 00:10:21,880
Speaker 2: pack West down forty four percent on the day, Western

226
00:10:21,880 --> 00:10:25,440
Speaker 2: Alliance down thirty percent. Pac West has said its exploring

227
00:10:25,440 --> 00:10:28,880
Speaker 2: strategic options. Western Alliance has said that it is not.

228
00:10:29,600 --> 00:10:31,800
Speaker 2: But it does just very much feel like there is

229
00:10:31,840 --> 00:10:34,760
Speaker 2: still a real confidence crisis happening. Do you think more

230
00:10:34,800 --> 00:10:37,840
Speaker 2: banks could be on the verge of failing? Considering where

231
00:10:37,840 --> 00:10:39,600
Speaker 2: you are sitting in the information that you have as

232
00:10:39,640 --> 00:10:41,719
Speaker 2: a member of the House Financial Services Committee.

233
00:10:43,280 --> 00:10:46,640
Speaker 7: My concern is a is we've entered this high inflationary

234
00:10:46,760 --> 00:10:50,199
Speaker 7: environment that many people bought into the false notion that

235
00:10:50,280 --> 00:10:54,040
Speaker 7: inflation was going to be temporary and transitory. If true temporary,

236
00:10:54,280 --> 00:10:57,400
Speaker 7: if inflation would have been temporary in transittory, many of

237
00:10:57,440 --> 00:10:59,960
Speaker 7: the struggles that our banks have seen would have never occurred.

238
00:11:00,240 --> 00:11:03,480
Speaker 7: And what clearly happened is many players in the financial

239
00:11:03,480 --> 00:11:07,600
Speaker 7: industry did not prepare for interest rates to remain sticky

240
00:11:07,679 --> 00:11:10,120
Speaker 7: and high, and as we've entered this period of time,

241
00:11:10,160 --> 00:11:12,439
Speaker 7: we have a challenging environment. It's one of the reasons

242
00:11:12,480 --> 00:11:15,920
Speaker 7: I think policymakers in Washington need to take a very

243
00:11:16,000 --> 00:11:18,840
Speaker 7: serious approach to bringing inflation down. It's one of the

244
00:11:18,840 --> 00:11:23,040
Speaker 7: things that our bill, in a process of thoughtfully lifting

245
00:11:23,080 --> 00:11:25,400
Speaker 7: the debt ceiling, does is it takes an approach that

246
00:11:25,520 --> 00:11:29,080
Speaker 7: limits the spending the driving inflation, gets the permitting reforms

247
00:11:29,080 --> 00:11:31,840
Speaker 7: that we need to do things like unleashing American energy,

248
00:11:32,120 --> 00:11:35,559
Speaker 7: and grows the economy. And so I remain concerned about

249
00:11:35,640 --> 00:11:39,520
Speaker 7: the broader economic impact that high inflation is having across

250
00:11:39,520 --> 00:11:42,680
Speaker 7: our country, and it's playing out where there's mismatch between

251
00:11:43,040 --> 00:11:45,720
Speaker 7: in particular in the financial institution, the banks. What they

252
00:11:45,720 --> 00:11:49,079
Speaker 7: have on their balance sheet and where their investments are.

253
00:11:49,559 --> 00:11:51,920
Speaker 3: And when it comes to the banks and to really

254
00:11:51,920 --> 00:11:53,520
Speaker 3: what can be done. I know that most of your

255
00:11:53,559 --> 00:11:56,800
Speaker 3: colleagues have said no traditional regulation, but there does seem

256
00:11:56,800 --> 00:12:00,160
Speaker 3: to be a bipartisan interest in clying back pay day

257
00:12:00,200 --> 00:12:03,160
Speaker 3: and bonuses for bank executives. You yourself has said that

258
00:12:03,200 --> 00:12:05,480
Speaker 3: this effort is absolutely worth looking at.

259
00:12:05,720 --> 00:12:07,480
Speaker 4: Where does that currently stand.

260
00:12:08,760 --> 00:12:11,280
Speaker 7: It's part of the broader conversation about what's playing out

261
00:12:11,360 --> 00:12:15,160
Speaker 7: right now in the regulatory space in the House of

262
00:12:15,240 --> 00:12:18,600
Speaker 7: Representatives on the Financial Services Committee, where I've said, we've

263
00:12:18,640 --> 00:12:22,280
Speaker 7: had one hearing looking at at that point Silicon Valley

264
00:12:22,280 --> 00:12:25,479
Speaker 7: banks failure. We're going to have I think an opportunity

265
00:12:25,480 --> 00:12:29,000
Speaker 7: here for additional hearings and digital investigation because getting the

266
00:12:29,040 --> 00:12:31,800
Speaker 7: policy right is really important. We don't want to rush

267
00:12:31,880 --> 00:12:35,760
Speaker 7: to a solution to jam forward regulations for regulation's sake.

268
00:12:35,880 --> 00:12:37,960
Speaker 7: What we want to do is make sure that our

269
00:12:38,000 --> 00:12:40,560
Speaker 7: regulators are not asleep at the wheel, but using the

270
00:12:40,559 --> 00:12:42,880
Speaker 7: tools that they have to make sure that we maintain

271
00:12:43,160 --> 00:12:44,599
Speaker 7: sound financial institutions.

272
00:12:44,760 --> 00:12:46,640
Speaker 3: In Congress, and we only have about a minute left,

273
00:12:46,640 --> 00:12:49,320
Speaker 3: but as you are the Chair of the House Administration Committee,

274
00:12:49,400 --> 00:12:52,000
Speaker 3: I got to ask about your recent hearings on Americans

275
00:12:52,040 --> 00:12:54,880
Speaker 3: confidence in elections. What have you learned about where we're

276
00:12:54,880 --> 00:12:56,360
Speaker 3: at as a nation and what needs to be done

277
00:12:56,400 --> 00:12:57,480
Speaker 3: to increase that confidence.

278
00:12:57,480 --> 00:13:01,120
Speaker 7: Before twenty twenty four, we've seen is where we have

279
00:13:01,200 --> 00:13:05,000
Speaker 7: strong voter integrity provisions, people's confidence increases, and is that

280
00:13:05,000 --> 00:13:08,439
Speaker 7: their confidence increases are more likely to participate. So as

281
00:13:08,480 --> 00:13:10,960
Speaker 7: we look back at the state of Georgia that put

282
00:13:11,000 --> 00:13:14,760
Speaker 7: in place good voter integrity provisions, we heard some on

283
00:13:14,840 --> 00:13:17,800
Speaker 7: the left make all sorts of draconian claims about what

284
00:13:17,840 --> 00:13:21,079
Speaker 7: that law would do, where in fact, the empirical data

285
00:13:21,120 --> 00:13:23,840
Speaker 7: after the last election shows that actually it was widely

286
00:13:23,880 --> 00:13:27,520
Speaker 7: supported by all demographic groups. In polling data, voter turnout

287
00:13:27,520 --> 00:13:30,960
Speaker 7: and voter participation increased in all demographic groups and in

288
00:13:31,000 --> 00:13:35,400
Speaker 7: particular Blacks, which is really important. That everyone is participating

289
00:13:35,800 --> 00:13:37,800
Speaker 7: and people had more confidence in their elections. So I

290
00:13:37,840 --> 00:13:40,000
Speaker 7: think we have a real opportunity and to turn the

291
00:13:40,040 --> 00:13:43,520
Speaker 7: tide here look at some reasonable, sensible voter integrity provisions

292
00:13:43,520 --> 00:13:44,960
Speaker 7: and increase voter participation.

293
00:13:45,760 --> 00:13:46,280
Speaker 4: All right, a.

294
00:13:46,240 --> 00:13:49,280
Speaker 2: Really important conversation as the twenty twenty four election draws

295
00:13:49,320 --> 00:13:52,199
Speaker 2: ever closer. Congressman, thank you so very much for your

296
00:13:52,240 --> 00:13:55,360
Speaker 2: time that as a Republican Congressman Brian Style of Wisconsin, and

297
00:13:55,400 --> 00:13:58,559
Speaker 2: as Emily said, also the chair of the House Administration

298
00:13:58,760 --> 00:14:01,120
Speaker 2: Committee as well as a member of the House Financial

299
00:14:01,160 --> 00:14:04,840
Speaker 2: Services Committee. Between the dead ceiling and the banks and

300
00:14:04,880 --> 00:14:08,200
Speaker 2: all the other economic issues facing this country, certainly he

301
00:14:08,280 --> 00:14:10,320
Speaker 2: and his colleagues very busy right now, Emily.

302
00:14:10,080 --> 00:14:12,679
Speaker 3: And they're going to be remain busy for quite some time.

303
00:14:12,760 --> 00:14:15,040
Speaker 3: I mean, as we noted, as soon as we're going

304
00:14:15,000 --> 00:14:17,160
Speaker 3: to the stut limit, it gets budget time, and that's

305
00:14:17,160 --> 00:14:18,160
Speaker 3: going to last the rest.

306
00:14:17,960 --> 00:14:18,400
Speaker 1: Of the year.

307
00:14:18,640 --> 00:14:21,120
Speaker 2: That's code for me and Emily Wilkins will be busy

308
00:14:21,480 --> 00:14:23,840
Speaker 2: for most of the next couple months. Filling in for

309
00:14:23,920 --> 00:14:25,960
Speaker 2: Joe Matthew today. This is Bloomberg Sound On.

310
00:14:27,400 --> 00:14:30,800
Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch the

311
00:14:30,800 --> 00:14:33,560
Speaker 1: program live weekdays at one Eastern.

312
00:14:33,360 --> 00:14:36,760
Speaker 8: On Bloomberg Radio, the tune in app, Bloomberg dot Com, and.

313
00:14:36,760 --> 00:14:38,080
Speaker 9: The Bloomberg Business App.

314
00:14:38,240 --> 00:14:41,080
Speaker 1: You can also listen live on Amazon Alexa from our

315
00:14:41,120 --> 00:14:46,640
Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

316
00:14:46,720 --> 00:14:49,080
Speaker 2: Joe Matthew is taking the day off today, but I

317
00:14:49,160 --> 00:14:52,240
Speaker 2: am indeed Kaylee Lines filling in for him today alongside

318
00:14:52,240 --> 00:14:55,600
Speaker 2: Emily Wilkins of Bloomberg Government and Emily we were just

319
00:14:55,640 --> 00:14:58,680
Speaker 2: hearing from Charlie about our conversation we just had with

320
00:14:58,880 --> 00:15:01,840
Speaker 2: Congressman Brian Style, all the Republican from Wisconsin who talked

321
00:15:01,840 --> 00:15:04,600
Speaker 2: to us not only about banks, but also of course

322
00:15:05,080 --> 00:15:06,880
Speaker 2: about the debt ceiling, because what else do we talk

323
00:15:06,880 --> 00:15:07,520
Speaker 2: about these tests?

324
00:15:07,560 --> 00:15:08,720
Speaker 4: Ask about the debt ceiling.

325
00:15:08,760 --> 00:15:12,280
Speaker 3: It's what's driving this town right now, truly, and it

326
00:15:12,360 --> 00:15:14,920
Speaker 3: was really interesting to hear kind of his perspective. I mean,

327
00:15:15,000 --> 00:15:17,640
Speaker 3: obviously it's McCarthy who's going to be going to the

328
00:15:17,680 --> 00:15:20,400
Speaker 3: White House, McCarthy that's going to be negotiating with Biden.

329
00:15:20,480 --> 00:15:21,480
Speaker 4: But the end of the.

330
00:15:21,520 --> 00:15:24,880
Speaker 3: Day, he's going to have to rally his members to

331
00:15:25,000 --> 00:15:27,320
Speaker 3: pass whatever he and Biden agrees with, and that's not

332
00:15:27,360 --> 00:15:29,440
Speaker 3: going to be easy to do. You already have a

333
00:15:29,480 --> 00:15:32,640
Speaker 3: number of hardline conservatives who have said, look, anything other

334
00:15:32,680 --> 00:15:34,560
Speaker 3: than what we just passed, we're not going to go

335
00:15:34,640 --> 00:15:37,360
Speaker 3: for it again. And there's no way that what Republicans

336
00:15:37,400 --> 00:15:39,200
Speaker 3: passed is going to be able to actually go through

337
00:15:39,240 --> 00:15:41,840
Speaker 3: the Senate. So there needs to be compromised here. It

338
00:15:41,920 --> 00:15:44,480
Speaker 3: sounds like the congressman was aware of that, and like

339
00:15:44,520 --> 00:15:46,520
Speaker 3: he and his colleagues are aware of that as well.

340
00:15:46,600 --> 00:15:48,440
Speaker 2: Yeah, it's such a good point because we have to

341
00:15:48,480 --> 00:15:52,760
Speaker 2: consider that the passage of McCarthy's bill was not easy

342
00:15:52,760 --> 00:15:54,960
Speaker 2: for him to pull off to get all two hundred

343
00:15:54,960 --> 00:15:58,120
Speaker 2: and ultimately seventeen votes that he needed to get that

344
00:15:58,200 --> 00:16:00,680
Speaker 2: bill through. What I thought was so interesting is kind

345
00:16:00,680 --> 00:16:04,040
Speaker 2: of the contrast between what I've heard from either side

346
00:16:04,040 --> 00:16:06,440
Speaker 2: of the aisle. A congressman's style was telling us just

347
00:16:06,480 --> 00:16:09,320
Speaker 2: moments ago, Emily was that he thinks the Biden administration

348
00:16:09,440 --> 00:16:12,480
Speaker 2: is being reckless by not negotiating on this as the

349
00:16:12,560 --> 00:16:14,920
Speaker 2: X state approaches, and yet when you speak with Democrats,

350
00:16:14,920 --> 00:16:17,360
Speaker 2: their tone is very different. I was speaking with Senator

351
00:16:17,360 --> 00:16:21,120
Speaker 2: Shared Brown of Ohio earlier today. He said Republicans should

352
00:16:21,120 --> 00:16:22,200
Speaker 2: be ashamed of themselves.

353
00:16:22,240 --> 00:16:26,040
Speaker 10: Listen, three times during the Trump administration, we simply, we

354
00:16:26,120 --> 00:16:29,920
Speaker 10: simply did this, We fixed this, and they're playing their

355
00:16:29,920 --> 00:16:32,400
Speaker 10: political games from the far right and it's not good

356
00:16:32,400 --> 00:16:32,880
Speaker 10: for the country.

357
00:16:32,880 --> 00:16:34,200
Speaker 9: They should be ashamed of themselves.

358
00:16:34,440 --> 00:16:37,600
Speaker 2: That doesn't really feel like someone who is about ready

359
00:16:37,600 --> 00:16:39,440
Speaker 2: to blink on this issue, Emily.

360
00:16:39,680 --> 00:16:42,320
Speaker 3: I mean, at this point, neither side is looking like

361
00:16:42,320 --> 00:16:44,160
Speaker 3: they're going to blink, But then again, why would they

362
00:16:44,160 --> 00:16:46,320
Speaker 3: Why would you blink before you go into a negotiation.

363
00:16:46,440 --> 00:16:47,960
Speaker 3: This is the time where they're going to firm up

364
00:16:47,960 --> 00:16:52,080
Speaker 3: their positions. All the drama, all the real talk, all

365
00:16:52,160 --> 00:16:55,160
Speaker 3: of the whether we're get a short term raise or whatnot.

366
00:16:55,320 --> 00:16:56,680
Speaker 3: I think a lot of that.

367
00:16:56,760 --> 00:16:58,800
Speaker 4: Is going to crystallize on May nine.

368
00:16:59,400 --> 00:17:01,920
Speaker 2: So the build up continues to that meeting five days

369
00:17:01,920 --> 00:17:03,560
Speaker 2: from now. Let's keep it going and bring in our

370
00:17:03,600 --> 00:17:07,560
Speaker 2: Bloomberg Politics contributors Rick Davis and Jeanie shan Zeno. Thank

371
00:17:07,600 --> 00:17:10,560
Speaker 2: you guys as always for joining us. It feels like

372
00:17:10,600 --> 00:17:13,600
Speaker 2: we're having this conversation every single day. We probably will

373
00:17:13,680 --> 00:17:16,359
Speaker 2: until we do get that sat down between President Biden

374
00:17:16,400 --> 00:17:23,000
Speaker 2: and congressional leadership on Tuesday. Rick, is the President getting

375
00:17:23,040 --> 00:17:26,760
Speaker 2: to these talks in a timely manner, considering we could

376
00:17:26,800 --> 00:17:29,240
Speaker 2: be facing a next date as early as June first,

377
00:17:29,280 --> 00:17:31,639
Speaker 2: and we're all just still talking about waiting for the

378
00:17:31,640 --> 00:17:32,840
Speaker 2: meeting that hasn't happened yet.

379
00:17:34,320 --> 00:17:34,520
Speaker 9: Yeah.

380
00:17:34,520 --> 00:17:37,080
Speaker 11: Look, I mean the President has had a strategy of

381
00:17:37,119 --> 00:17:40,119
Speaker 11: not wanting to engauge, whether the House Republicans or anybody

382
00:17:40,200 --> 00:17:44,440
Speaker 11: else in a negotiation. Right he wants to acclaim that limit.

383
00:17:45,359 --> 00:17:49,639
Speaker 11: He is very experienced in this. In twenty eleven, he

384
00:17:49,800 --> 00:17:52,399
Speaker 11: was one of the principal negotiators for the Obama administration

385
00:17:52,440 --> 00:17:55,760
Speaker 11: on the debt ceiling, and it resulted in a compromise

386
00:17:55,840 --> 00:17:58,440
Speaker 11: where the Budget Control Act was enacted as a trade

387
00:17:58,480 --> 00:18:01,880
Speaker 11: off for the debt ceiling, in a very similar situation

388
00:18:01,960 --> 00:18:06,320
Speaker 11: that we have today. And so I'm sure he believes

389
00:18:06,400 --> 00:18:08,679
Speaker 11: that the closer you get to the X date, the

390
00:18:08,720 --> 00:18:12,959
Speaker 11: more likely you have as a chance of getting a

391
00:18:13,000 --> 00:18:17,359
Speaker 11: clean debt limit. And just to remind everybody, in twenty eleven,

392
00:18:17,880 --> 00:18:22,240
Speaker 11: that deal wasn't cut until seventy two hours before X date,

393
00:18:23,240 --> 00:18:26,359
Speaker 11: and it created an enormous amount of havoc in the

394
00:18:26,400 --> 00:18:30,320
Speaker 11: financial markets and resulted in a downgrade of the US debt.

395
00:18:30,400 --> 00:18:35,040
Speaker 11: So it's a very dangerous game. I agree with Congressman Styles.

396
00:18:35,359 --> 00:18:38,560
Speaker 11: There's no reason why these discussions could have happened this week,

397
00:18:38,640 --> 00:18:42,480
Speaker 11: this weekend, I mean, why wait until Tuesday? So I

398
00:18:42,480 --> 00:18:44,760
Speaker 11: think the administration is playing with fire when it comes

399
00:18:44,760 --> 00:18:48,440
Speaker 11: to looking like they're not really prioritizing this issue.

400
00:18:48,720 --> 00:18:50,359
Speaker 3: Well, Jimmy, I want to ask you a little bit

401
00:18:50,359 --> 00:18:52,440
Speaker 3: about what Biden's got to be thinking now, because this

402
00:18:52,520 --> 00:18:56,320
Speaker 3: Congressman Style pointed out, he's dealing with a divided government here.

403
00:18:56,720 --> 00:18:59,000
Speaker 3: I mean for Biden to simply say, hey, you guys

404
00:18:59,080 --> 00:19:01,240
Speaker 3: have to accept a clean dent limit or nothing else,

405
00:19:01,480 --> 00:19:02,880
Speaker 3: that doesn't really sound like it's in.

406
00:19:02,840 --> 00:19:04,800
Speaker 4: The spirit of negotiations.

407
00:19:04,840 --> 00:19:06,280
Speaker 3: I mean, do you think that we are going to

408
00:19:06,280 --> 00:19:09,560
Speaker 3: wind up seeing a change in tune from Biden around

409
00:19:09,600 --> 00:19:09,960
Speaker 3: May night?

410
00:19:11,720 --> 00:19:14,800
Speaker 12: You know, I think the Biden administration and Democrats overall

411
00:19:14,960 --> 00:19:18,000
Speaker 12: feel that it is paramount that the United States pay

412
00:19:18,000 --> 00:19:21,960
Speaker 12: its bills and then negotiate about spending going forward. That's

413
00:19:22,000 --> 00:19:24,560
Speaker 12: been their stance. That's been what Republicans and Democrats have

414
00:19:24,600 --> 00:19:26,520
Speaker 12: done in the past and agreed to do in the past,

415
00:19:26,520 --> 00:19:29,120
Speaker 12: whether it was Trump or Obama or anybody in between.

416
00:19:29,520 --> 00:19:31,560
Speaker 12: And so they feel that this is the right thing

417
00:19:31,640 --> 00:19:34,320
Speaker 12: to do. Could that change? I think? So we heard

418
00:19:34,320 --> 00:19:37,200
Speaker 12: Bernie Sanders over the weekend and he said, hey, let's

419
00:19:37,200 --> 00:19:40,280
Speaker 12: start talking now, but we got to pay our bills.

420
00:19:40,320 --> 00:19:42,359
Speaker 12: And by the way, but Republicans put in the House

421
00:19:42,400 --> 00:19:45,520
Speaker 12: put forward is draconian. There are cuts to be made,

422
00:19:45,560 --> 00:19:48,000
Speaker 12: but you know, not at the backs of veterans, not

423
00:19:48,080 --> 00:19:50,400
Speaker 12: at the back of the working poor. So there are

424
00:19:50,520 --> 00:19:53,199
Speaker 12: negotiations to be had. I must say I am not

425
00:19:53,520 --> 00:19:56,800
Speaker 12: as optimistic as many other people are that we are

426
00:19:56,800 --> 00:19:59,199
Speaker 12: going to get much clarity on May night. And I

427
00:19:59,240 --> 00:20:01,320
Speaker 12: think what you were just playing that the clip by

428
00:20:01,320 --> 00:20:05,080
Speaker 12: Shared Ground says it. All Democrats and Republicans are still

429
00:20:05,160 --> 00:20:08,359
Speaker 12: dug in where they stand. And I'm not convinced that

430
00:20:08,400 --> 00:20:09,879
Speaker 12: we're going to come out of this meeting on May

431
00:20:10,040 --> 00:20:12,560
Speaker 12: ninth with some clarity that progress going forward. And we

432
00:20:12,640 --> 00:20:14,080
Speaker 12: know how this thing is going to end up as

433
00:20:14,160 --> 00:20:18,359
Speaker 12: Rick just said seventy two hours before in twenty eleven,

434
00:20:18,560 --> 00:20:20,800
Speaker 12: and I think we may get right up that close,

435
00:20:20,840 --> 00:20:23,080
Speaker 12: if not closer, this time around. And that is a

436
00:20:23,240 --> 00:20:24,439
Speaker 12: very scary proposition.

437
00:20:25,119 --> 00:20:27,440
Speaker 2: But coming back to the calculus, as you say, Genie,

438
00:20:27,520 --> 00:20:31,280
Speaker 2: it seems like most members of both parties have really

439
00:20:31,320 --> 00:20:33,800
Speaker 2: just dug in their issues, dug in their heels, you know,

440
00:20:33,840 --> 00:20:36,960
Speaker 2: they're staying with their respective positions. It seems that everybody,

441
00:20:37,480 --> 00:20:39,919
Speaker 2: whatever side of the aisle you are on, is convinced

442
00:20:39,960 --> 00:20:42,480
Speaker 2: that it's not going to be blamed on them. Who

443
00:20:42,560 --> 00:20:44,720
Speaker 2: is this playing worse for politically, Janie?

444
00:20:46,440 --> 00:20:48,960
Speaker 12: You know, I think in the end, I have to say,

445
00:20:49,000 --> 00:20:51,520
Speaker 12: I think, if you know, God forbid, the worst was

446
00:20:51,560 --> 00:20:54,159
Speaker 12: to happen. I do think the blame would be spread

447
00:20:54,240 --> 00:20:56,360
Speaker 12: far and wide in DC. But I think the president

448
00:20:56,440 --> 00:20:58,960
Speaker 12: bears the brunt. He is the president, so I think

449
00:20:59,000 --> 00:21:01,920
Speaker 12: that is always a danger for the president. But I think,

450
00:21:01,920 --> 00:21:04,080
Speaker 12: you know, the biggest news I think we heard in

451
00:21:04,119 --> 00:21:06,960
Speaker 12: the last say twenty four hours was where we heard

452
00:21:07,040 --> 00:21:09,600
Speaker 12: Jerome Powell and then out of the White House, Congress

453
00:21:09,920 --> 00:21:12,440
Speaker 12: you have to do this. And to my mind, this

454
00:21:12,480 --> 00:21:15,359
Speaker 12: is what the Biden administration is betting on. They are

455
00:21:15,480 --> 00:21:18,000
Speaker 12: trying to make the case to the American public that

456
00:21:18,280 --> 00:21:22,040
Speaker 12: it is Congress's responsibility to act on this. They control

457
00:21:22,119 --> 00:21:24,199
Speaker 12: the purse, they've got to pay the bills, and then

458
00:21:24,240 --> 00:21:26,719
Speaker 12: we negotiate. So as much as I think the president

459
00:21:26,760 --> 00:21:30,000
Speaker 12: may bear the blame, I really believe that they still

460
00:21:30,040 --> 00:21:32,480
Speaker 12: feel that they are in the in the right here

461
00:21:32,520 --> 00:21:35,600
Speaker 12: in saying Congress, it's your responsibility. And I think we

462
00:21:35,640 --> 00:21:38,600
Speaker 12: all sit here feeling like Congress, given the close numbers there,

463
00:21:38,680 --> 00:21:40,359
Speaker 12: may not have the ability to act on this.

464
00:21:40,880 --> 00:21:44,000
Speaker 3: Well, looking over to Congress, then, Rick, I'm wondering, you know,

465
00:21:44,080 --> 00:21:48,160
Speaker 3: if McCarthy winds up doing this negotiation with Biden, maybe

466
00:21:48,200 --> 00:21:51,720
Speaker 3: they do actually wind up coming to something. How difficult

467
00:21:51,720 --> 00:21:55,119
Speaker 3: will it be to get an agreement through his conference.

468
00:21:55,240 --> 00:21:56,720
Speaker 3: I mean, are you going to see everyone be able

469
00:21:56,720 --> 00:21:58,120
Speaker 3: to fall in line, or are you going to see

470
00:21:58,119 --> 00:22:01,359
Speaker 3: more people Republicans say hey, can't support this because it's

471
00:22:01,359 --> 00:22:02,399
Speaker 3: something Biden backed.

472
00:22:03,480 --> 00:22:06,439
Speaker 11: Well, I think that it's obviously going to get vetted

473
00:22:06,480 --> 00:22:09,600
Speaker 11: to his caucus before he makes an agreement with Biden.

474
00:22:09,680 --> 00:22:13,320
Speaker 11: I mean, he's got such slim margins in the GOP

475
00:22:13,720 --> 00:22:18,040
Speaker 11: caucus that he can't really afford any kind of negative reaction,

476
00:22:18,400 --> 00:22:21,160
Speaker 11: you know, beyond losing a couple of people. And so

477
00:22:21,160 --> 00:22:24,120
Speaker 11: so this is one of the reasons why these negotiations

478
00:22:24,160 --> 00:22:27,040
Speaker 11: need to take place quickly, because there's there there is

479
00:22:27,119 --> 00:22:30,560
Speaker 11: a very close margin, and there were wider margins in

480
00:22:30,920 --> 00:22:34,720
Speaker 11: twenty eleven when John Bayner went through this as speaker,

481
00:22:34,760 --> 00:22:37,560
Speaker 11: he knew he could probably put a deal together with

482
00:22:37,640 --> 00:22:40,560
Speaker 11: his own caucus and so he could negotiate on behalf

483
00:22:40,600 --> 00:22:45,520
Speaker 11: of the Republicans. McCarthy doesn't know that, and so he's

484
00:22:45,560 --> 00:22:47,600
Speaker 11: going to have to go back every night after being

485
00:22:47,600 --> 00:22:49,440
Speaker 11: in the White House and saying, are we going to

486
00:22:49,480 --> 00:22:51,879
Speaker 11: buy this? Are we going to buy that? I do

487
00:22:52,000 --> 00:22:55,520
Speaker 11: disagree that that, as Brian Style says in the interview,

488
00:22:55,600 --> 00:22:58,399
Speaker 11: we just had with him. The Republicans are flexible. I

489
00:22:58,440 --> 00:23:01,600
Speaker 11: mean they wanted to negotiating position that they laid down.

490
00:23:02,000 --> 00:23:04,760
Speaker 11: Brian Styles is very clear he'll take half a loaf.

491
00:23:04,960 --> 00:23:07,040
Speaker 11: I mean he doesn't need to get the bill. They

492
00:23:07,080 --> 00:23:10,399
Speaker 11: got to vote for a debt ceiling increase, and I

493
00:23:10,480 --> 00:23:12,880
Speaker 11: think that reflects most of the caucus. So I think

494
00:23:12,920 --> 00:23:16,520
Speaker 11: all the draconian ideas that somehow Republicans aren't going to

495
00:23:16,560 --> 00:23:20,720
Speaker 11: be in deal mode are wrong. If anything, the guy

496
00:23:20,720 --> 00:23:23,520
Speaker 11: who has not been willing to crack open the deal

497
00:23:24,520 --> 00:23:28,560
Speaker 11: opportunities has been Biden, who learned in twenty eleven is

498
00:23:28,600 --> 00:23:30,920
Speaker 11: hard to get a deal. And so you know he's

499
00:23:31,400 --> 00:23:35,320
Speaker 11: he's following his own experience, and so I think that's

500
00:23:35,400 --> 00:23:39,320
Speaker 11: part of the dynamic that brings us to where we

501
00:23:39,359 --> 00:23:40,200
Speaker 11: are today.

502
00:23:40,480 --> 00:23:44,440
Speaker 2: Which is a standoff. Rick Davis and Jeanie Shanzeno stay close.

503
00:23:44,440 --> 00:23:46,680
Speaker 2: They are Bloomberg Politics contributors. They're going to be back

504
00:23:46,680 --> 00:23:48,320
Speaker 2: with us in just a couple of minutes.

505
00:23:49,119 --> 00:23:52,600
Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch us

506
00:23:52,640 --> 00:23:57,320
Speaker 1: live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio.

507
00:23:56,640 --> 00:23:58,280
Speaker 9: App, and the Bloomberg Business App.

508
00:23:58,400 --> 00:24:00,880
Speaker 1: We're listening on demand wherever you your podcast.

509
00:24:01,880 --> 00:24:04,600
Speaker 2: Welcome back to the fastest show in politics. It's Kaye

510
00:24:04,600 --> 00:24:07,800
Speaker 2: Lions here alongside Emily Wilkins. Today, Joe Matthew is taking

511
00:24:08,240 --> 00:24:10,920
Speaker 2: an extra long weekend, Lucky for him. Emily, you and

512
00:24:11,000 --> 00:24:14,439
Speaker 2: I are toiling away talking still about the dead ceiling

513
00:24:14,440 --> 00:24:16,880
Speaker 2: and about the crisis that seems to still be permeating

514
00:24:16,920 --> 00:24:19,320
Speaker 2: through regional banks. Yet we also need to talk about

515
00:24:19,640 --> 00:24:22,320
Speaker 2: the Federal Reserve, and not necessarily just from the monetary

516
00:24:22,359 --> 00:24:26,159
Speaker 2: policy aspect after its decision yesterday, but also the composition

517
00:24:26,840 --> 00:24:29,560
Speaker 2: of the FED board, because we've gotten news in the

518
00:24:29,640 --> 00:24:33,199
Speaker 2: last twenty four hours reporting from here at Bloomberg that

519
00:24:33,280 --> 00:24:35,560
Speaker 2: we know who's actually going to start filling that empty seat.

520
00:24:35,560 --> 00:24:40,720
Speaker 3: Emily, it's exciting news to discuss it. We've got Josh

521
00:24:40,720 --> 00:24:43,920
Speaker 3: Wingrove here who relief broke that story.

522
00:24:44,200 --> 00:24:45,239
Speaker 13: Kate Davidson and I.

523
00:24:45,359 --> 00:24:48,520
Speaker 2: Yes, ex teamwork makes the dreamwork. So they say, so

524
00:24:48,560 --> 00:24:51,080
Speaker 2: what we got here? Philip Jefferson course already on the

525
00:24:51,080 --> 00:24:54,600
Speaker 2: FED in theory getting promoted to vice chair, which is

526
00:24:54,640 --> 00:24:59,320
Speaker 2: the seat Lalel Brainerd vacated, and then Audreyana Coogler will

527
00:24:59,320 --> 00:24:59,960
Speaker 2: get a board seat.

528
00:25:00,080 --> 00:25:02,479
Speaker 13: That's right, This is I don't know if you want

529
00:25:02,520 --> 00:25:05,240
Speaker 13: to call it Plan B, this is alternate plan you know,

530
00:25:05,560 --> 00:25:09,240
Speaker 13: or rewind a little bit brainer kind of vacated two spots.

531
00:25:09,320 --> 00:25:09,520
Speaker 9: Right.

532
00:25:09,600 --> 00:25:12,000
Speaker 13: So their choice initially was they were going to are

533
00:25:12,160 --> 00:25:15,440
Speaker 13: bringing one person to be a governor and vice vice

534
00:25:15,480 --> 00:25:17,520
Speaker 13: chair is sort of a special hat you put on

535
00:25:17,520 --> 00:25:19,399
Speaker 13: one of the governors around the table, right, And so

536
00:25:19,840 --> 00:25:21,840
Speaker 13: they were going to do two birds, one stone, bring

537
00:25:21,880 --> 00:25:25,320
Speaker 13: in one. But Senator Menendez really dug in here. He

538
00:25:25,480 --> 00:25:29,320
Speaker 13: called for a Latino candidate to be nominated. The Fed's

539
00:25:29,400 --> 00:25:31,640
Speaker 13: never had that before. If Cooglar is confirmed, she will

540
00:25:31,680 --> 00:25:33,720
Speaker 13: be the first Latina to serve on the FED as

541
00:25:33,760 --> 00:25:36,199
Speaker 13: a governor. And the White House really kind of went

542
00:25:36,240 --> 00:25:37,879
Speaker 13: through this process where they appeared to try to like

543
00:25:37,920 --> 00:25:41,000
Speaker 13: find another way to stick with their initial front runner,

544
00:25:41,080 --> 00:25:44,680
Speaker 13: who was Jennis Eberley of Northwestern University, former Treasury economists,

545
00:25:45,200 --> 00:25:48,440
Speaker 13: and it just didn't work. And so this scenario gives

546
00:25:48,480 --> 00:25:50,680
Speaker 13: that sort of special hat, you know, the vice your

547
00:25:50,760 --> 00:25:53,960
Speaker 13: hat over to Jefferson, of course is current governor. You

548
00:25:54,000 --> 00:25:56,160
Speaker 13: still have to be confirmed. Not a lot of worries

549
00:25:56,160 --> 00:25:58,359
Speaker 13: about that. He sailed through his confirmation process to the

550
00:25:58,359 --> 00:26:01,480
Speaker 13: board in the first place, and that governor spot not

551
00:26:01,680 --> 00:26:04,400
Speaker 13: vice chair to Coogler. So that's that's where we are

552
00:26:04,400 --> 00:26:07,080
Speaker 13: on this one. Biden's pois announced it in the coming days.

553
00:26:07,119 --> 00:26:10,600
Speaker 13: We're told this is a done deal. We should tip

554
00:26:10,600 --> 00:26:12,760
Speaker 13: our hat to other colleagues who reported that this was,

555
00:26:13,200 --> 00:26:15,359
Speaker 13: you know, moving this way. A New York Times reported

556
00:26:15,400 --> 00:26:17,119
Speaker 13: that earlier this week, as it would be as the journal,

557
00:26:17,160 --> 00:26:19,239
Speaker 13: but New York Times had at first, So tip our

558
00:26:19,240 --> 00:26:20,719
Speaker 13: hat to them. But this is a done deal. Joe

559
00:26:20,760 --> 00:26:23,680
Speaker 13: Biden's made the decision. Where this leaves the FED, I

560
00:26:23,720 --> 00:26:25,840
Speaker 13: think is an open question. You know, they wanted sort

561
00:26:25,880 --> 00:26:28,359
Speaker 13: of people in the White House, I as say, wanted

562
00:26:28,359 --> 00:26:31,360
Speaker 13: a Brainard replacement at almost a clone. If they could

563
00:26:31,359 --> 00:26:33,040
Speaker 13: have two Layel Brainerds, they would love that at the

564
00:26:33,040 --> 00:26:36,440
Speaker 13: White House. But instead they're doing this, and I think

565
00:26:36,480 --> 00:26:38,159
Speaker 13: we just don't know where that'll be in terms of

566
00:26:38,200 --> 00:26:39,600
Speaker 13: dove hawk balance on the FED.

567
00:26:40,160 --> 00:26:40,680
Speaker 4: Interesting.

568
00:26:40,800 --> 00:26:44,040
Speaker 3: So Jefferson not quite a clone, but also someone who

569
00:26:44,119 --> 00:26:45,840
Speaker 3: can get through denomination process.

570
00:26:46,080 --> 00:26:49,040
Speaker 4: How about Coogler? What sort of her outlook? Do we

571
00:26:49,080 --> 00:26:50,880
Speaker 4: have a sense if Joe Manchin is a.

572
00:26:50,880 --> 00:26:54,159
Speaker 13: Ya in a I think maybe yeah. I think there

573
00:26:54,200 --> 00:26:56,560
Speaker 13: seems to be pretty high confidence in her ability to

574
00:26:56,600 --> 00:26:59,959
Speaker 13: be confirmed her she's sort of a labor economist back

575
00:27:00,080 --> 00:27:02,440
Speaker 13: ground that of course plugs into a lot of the

576
00:27:02,480 --> 00:27:04,280
Speaker 13: lens that Joe Biden views a lot of this stuff

577
00:27:04,280 --> 00:27:05,960
Speaker 13: on right, and that we've seen this tension with the

578
00:27:05,960 --> 00:27:08,080
Speaker 13: FED when they say they're not talking about the FED,

579
00:27:08,119 --> 00:27:10,400
Speaker 13: they just want to preserve the gains in the labor market. Well,

580
00:27:10,400 --> 00:27:12,120
Speaker 13: of course that just means they don't want the FED

581
00:27:12,119 --> 00:27:13,520
Speaker 13: to hike rates and put a bunch of people out

582
00:27:13,520 --> 00:27:15,840
Speaker 13: of work to bring inmplation down. So you know, they

583
00:27:15,840 --> 00:27:18,320
Speaker 13: do comment about the FED, but one degree removed. And

584
00:27:18,359 --> 00:27:21,560
Speaker 13: so her expertise is kind of in that vein that

585
00:27:21,600 --> 00:27:25,280
Speaker 13: sort of the labor force sort of focus, and so

586
00:27:25,480 --> 00:27:27,040
Speaker 13: you know, I think she'll get a lot of support

587
00:27:27,040 --> 00:27:30,000
Speaker 13: from Democrats. Obviously she's going to get some support from

588
00:27:30,280 --> 00:27:32,639
Speaker 13: Senator Menendez one, we'd assume, given that he sort of

589
00:27:32,640 --> 00:27:34,639
Speaker 13: seems to have won the stare down here with the

590
00:27:34,640 --> 00:27:36,520
Speaker 13: White House. So we'll see. I think right now we're

591
00:27:36,560 --> 00:27:39,520
Speaker 13: expecting pretty smooth sailing on confirmation for the two of them.

592
00:27:40,000 --> 00:27:41,919
Speaker 13: As Sir Jane Everly, they really liked her. I wouldn't

593
00:27:41,920 --> 00:27:43,840
Speaker 13: be surprised if she surfaces on these kinds of lists

594
00:27:43,840 --> 00:27:44,359
Speaker 13: in the future.

595
00:27:45,000 --> 00:27:48,000
Speaker 2: All right, Josh, great reporting from you and the team,

596
00:27:48,040 --> 00:27:50,480
Speaker 2: which good job given everybody credit josh Win Grove, Our

597
00:27:50,480 --> 00:27:52,879
Speaker 2: Bloomberg White House Reporter, thank you so much for that.

598
00:27:52,920 --> 00:27:55,359
Speaker 2: And I think you know, as Emily as Josh Rightley

599
00:27:55,480 --> 00:27:57,760
Speaker 2: alludes to, kind of the politics around the FED are

600
00:27:57,840 --> 00:28:00,760
Speaker 2: very difficult at the moment. The Biden administration obviously wanting

601
00:28:00,880 --> 00:28:03,720
Speaker 2: the FED to maintain its independence, but also not wanting

602
00:28:03,720 --> 00:28:05,720
Speaker 2: them to totally wreck the US economy.

603
00:28:05,800 --> 00:28:05,919
Speaker 9: Oh.

604
00:28:05,960 --> 00:28:08,480
Speaker 3: I mean, there's so much concern right now on Capitol

605
00:28:08,560 --> 00:28:10,880
Speaker 3: Hill about what's going to happen with the economy, what's

606
00:28:10,880 --> 00:28:13,040
Speaker 3: going to happen with inflation, what's going to happen with jobs,

607
00:28:13,080 --> 00:28:15,280
Speaker 3: it's going to I mean, if there's just so much

608
00:28:15,520 --> 00:28:17,720
Speaker 3: I think tension here, yeah, right now, and the FED

609
00:28:17,760 --> 00:28:20,160
Speaker 3: of course is making so many moves, and I think

610
00:28:20,280 --> 00:28:22,800
Speaker 3: that kind of really opens them up for a wider

611
00:28:22,920 --> 00:28:26,000
Speaker 3: range of potential criticism. But I want to take a

612
00:28:26,040 --> 00:28:30,280
Speaker 3: minute and bring back our panel, Rick Davis, Jeanie Sheenzano.

613
00:28:30,280 --> 00:28:32,000
Speaker 4: Genie, I wanted to come to you here and I

614
00:28:32,040 --> 00:28:32,360
Speaker 4: want to.

615
00:28:32,320 --> 00:28:34,280
Speaker 3: Go back to the fact that the Cougar would be

616
00:28:34,359 --> 00:28:37,320
Speaker 3: the Central banks first Latina policy maker, it's one hundred

617
00:28:37,320 --> 00:28:41,760
Speaker 3: and nine year history. Help me out here, what exactly

618
00:28:41,800 --> 00:28:44,200
Speaker 3: does this mean. Is it simply that a glass ceiling

619
00:28:44,400 --> 00:28:49,840
Speaker 3: is now shattered, or could there be actual policy decision

620
00:28:49,920 --> 00:28:53,120
Speaker 3: making federal monetary implications.

621
00:28:54,080 --> 00:28:55,800
Speaker 12: Well, I have to say I was delighted to hear

622
00:28:55,840 --> 00:28:57,960
Speaker 12: Josh say this is going to be smooth sailing. He

623
00:28:58,080 --> 00:29:01,240
Speaker 12: believes for both of these. You can't say that a

624
00:29:01,280 --> 00:29:04,239
Speaker 12: lot about what's going on, that's right, Emily, you know,

625
00:29:04,840 --> 00:29:07,200
Speaker 12: it is stunning. It's one hundred and nine years before

626
00:29:07,200 --> 00:29:10,200
Speaker 12: we've had a Latino, you know. I think that she

627
00:29:10,360 --> 00:29:14,680
Speaker 12: has an incredibly strong background and record. I don't think

628
00:29:14,720 --> 00:29:17,640
Speaker 12: we know yet in terms of policy. Certainly it's breaking

629
00:29:17,680 --> 00:29:20,600
Speaker 12: an important ceiling, glass ceiling, but I don't know if

630
00:29:20,600 --> 00:29:23,080
Speaker 12: we know yet in terms of policy if it's going

631
00:29:23,120 --> 00:29:25,520
Speaker 12: to be a marked difference. But I would say you'd

632
00:29:25,520 --> 00:29:27,840
Speaker 12: have to imagine it's not going to be that dramatic

633
00:29:27,960 --> 00:29:31,080
Speaker 12: if it's smooth sailing. That's my guess on this.

634
00:29:31,640 --> 00:29:34,600
Speaker 2: Well, speaking of nominees that have to be confirmed, it's

635
00:29:34,640 --> 00:29:37,560
Speaker 2: the same thing that's true of Supreme Court justices. Rick,

636
00:29:37,600 --> 00:29:39,080
Speaker 2: I'm going to do what I like to call a

637
00:29:39,120 --> 00:29:41,760
Speaker 2: hard pivot here because I have to talk about the

638
00:29:41,800 --> 00:29:45,480
Speaker 2: new pro publica story on Supreme Court Justice Clarence Thomas,

639
00:29:45,520 --> 00:29:49,360
Speaker 2: who apparently sent his teenage grand nephew to a private

640
00:29:49,360 --> 00:29:52,840
Speaker 2: boarding school in Georgia, and that tuition for that school

641
00:29:53,280 --> 00:29:55,840
Speaker 2: was paid by Harlan Crowe, of course, the billionaire that

642
00:29:55,880 --> 00:29:57,800
Speaker 2: has been at the center of all of these ethics

643
00:29:58,080 --> 00:30:03,080
Speaker 2: questions around Justice Thomas. At what point do Republicans need

644
00:30:03,120 --> 00:30:06,000
Speaker 2: to change their tune around this on the ethics of

645
00:30:06,040 --> 00:30:06,400
Speaker 2: the court.

646
00:30:07,680 --> 00:30:09,720
Speaker 11: Yeah, I think this has sort of gotten to the

647
00:30:09,760 --> 00:30:13,160
Speaker 11: intolerable stage. We've heard a number of the Democrats leaders

648
00:30:13,200 --> 00:30:16,880
Speaker 11: in the Senate talking about reforms and have been pushing

649
00:30:16,880 --> 00:30:21,600
Speaker 11: that long before this scandal around Clarence Thomas has been exposed.

650
00:30:21,640 --> 00:30:24,640
Speaker 11: But this is a classic example of death by a

651
00:30:24,720 --> 00:30:27,960
Speaker 11: thousand cuts. Every single week we wake up to some

652
00:30:28,160 --> 00:30:30,840
Speaker 11: new part of the Clarence Thomas scandal as it relates

653
00:30:30,880 --> 00:30:33,920
Speaker 11: to Harlan Crowe, and every week Harlan crow goes out

654
00:30:33,960 --> 00:30:35,920
Speaker 11: and does an interview saying this is all, there is

655
00:30:35,920 --> 00:30:39,440
Speaker 11: no more, and then there's four. This is particularly scandalous

656
00:30:39,480 --> 00:30:42,320
Speaker 11: in the sense that six thousand dollars a month in

657
00:30:42,320 --> 00:30:45,880
Speaker 11: a private school in Georgia that Arlan Crowe picked up

658
00:30:45,920 --> 00:30:50,320
Speaker 11: the tab for and and the grand nephew is really

659
00:30:50,480 --> 00:30:54,200
Speaker 11: a ward of Justice Thomas.

660
00:30:53,960 --> 00:30:55,360
Speaker 9: He's been referred to.

661
00:30:55,320 --> 00:30:59,040
Speaker 11: As his other son. And so at some point in time,

662
00:30:59,160 --> 00:31:02,560
Speaker 11: Merry Ground's got a stop. And I think the pressure

663
00:31:02,600 --> 00:31:04,680
Speaker 11: is going to be on the Court to actually come

664
00:31:04,760 --> 00:31:06,440
Speaker 11: up with a new approach to ethics.

665
00:31:06,920 --> 00:31:10,000
Speaker 2: Yeah, Senator Elizabeth Warren tweeting today if the Supreme Court

666
00:31:10,040 --> 00:31:12,720
Speaker 2: won't act, Congress must because the Court needs an enforceable

667
00:31:12,760 --> 00:31:16,200
Speaker 2: code of ethics or it risks losing its credibility. We'll

668
00:31:16,200 --> 00:31:19,560
Speaker 2: see if either will act. In reality. Our Bloomberg Politics

669
00:31:19,560 --> 00:31:22,560
Speaker 2: contributors Rick Davis and Jeanie Shanzino, thanks for sticking around,

670
00:31:22,560 --> 00:31:24,960
Speaker 2: and thank you as always for joining us with your

671
00:31:25,040 --> 00:31:30,080
Speaker 2: brilliant insights from the Supreme Court to the Federal Reserve

672
00:31:30,160 --> 00:31:33,640
Speaker 2: Board composition. So much to discuss here on sound On.

673
00:31:33,680 --> 00:31:36,000
Speaker 2: We're going to keep the conversation going in just a minute,

674
00:31:36,040 --> 00:31:38,360
Speaker 2: so stay with us right here on Bloomberg.

675
00:31:39,720 --> 00:31:43,120
Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch the

676
00:31:43,120 --> 00:31:45,880
Speaker 1: program live weekdays at one Eastern.

677
00:31:45,680 --> 00:31:49,080
Speaker 8: On Bloomberg Radio, the tune in app, Bloomberg dot Com, and.

678
00:31:49,080 --> 00:31:50,440
Speaker 9: The Bloomberg Business app.

679
00:31:50,560 --> 00:31:53,400
Speaker 1: You can also listen live on Amazon Alexa from our

680
00:31:53,440 --> 00:31:57,920
Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

681
00:31:59,160 --> 00:32:01,200
Speaker 2: You know what we were doing at this time twenty

682
00:32:01,200 --> 00:32:05,000
Speaker 2: four hours ago, Emily digesting the Federal Reserve decision, which,

683
00:32:05,000 --> 00:32:08,520
Speaker 2: as expected, brought a twenty five basis point great hike,

684
00:32:08,600 --> 00:32:12,760
Speaker 2: despite the fact that you know, we're really dancing here

685
00:32:12,800 --> 00:32:16,760
Speaker 2: with the X state and a potential looming default, or

686
00:32:16,760 --> 00:32:18,400
Speaker 2: at least the risk of it here in the US

687
00:32:18,600 --> 00:32:22,680
Speaker 2: banks that are still looking not stable, despite Chairman Powell's

688
00:32:22,720 --> 00:32:25,760
Speaker 2: insistence that the banking system is sound and resilient. Just

689
00:32:25,760 --> 00:32:27,680
Speaker 2: really goes to show you how hard this needle is

690
00:32:27,720 --> 00:32:29,760
Speaker 2: to thread for policy makers at the moment.

691
00:32:30,200 --> 00:32:31,760
Speaker 3: I mean, we really have I think a lot of

692
00:32:31,840 --> 00:32:35,360
Speaker 3: outstanding questions at this point about what's coming up next

693
00:32:35,720 --> 00:32:38,280
Speaker 3: for the economy and what we can expect. But the

694
00:32:38,280 --> 00:32:41,080
Speaker 3: good news is that there are fewer question marks thanks

695
00:32:41,120 --> 00:32:44,120
Speaker 3: to the next two guests who are joining us, Bloomberg

696
00:32:44,160 --> 00:32:48,800
Speaker 3: International Economics and Policy correspondent Mike McKee and Bloomberg and

697
00:32:49,040 --> 00:32:54,280
Speaker 3: Senior Intelligence Sorry, Bloomberg Intelligence Senior Government analyst Nathan Dean.

698
00:32:55,080 --> 00:32:56,320
Speaker 4: Mike Nathan, Thank you guys.

699
00:32:56,320 --> 00:32:59,880
Speaker 3: Both so much for joining us today, Mike, I think

700
00:33:00,000 --> 00:33:01,840
Speaker 3: I just wanted to start by seeing if you can

701
00:33:01,880 --> 00:33:04,600
Speaker 3: sort of just break down the Fed's latest of both

702
00:33:04,640 --> 00:33:07,000
Speaker 3: the announcement yesterday as well as the fact that we

703
00:33:07,160 --> 00:33:10,800
Speaker 3: now know Biden's two new appointments to the Federal Reserve.

704
00:33:11,120 --> 00:33:13,840
Speaker 14: Oh two totally separate sort of topics.

705
00:33:14,080 --> 00:33:16,880
Speaker 15: Where the FED is now is they think they've gotten

706
00:33:17,120 --> 00:33:21,120
Speaker 15: the FED funds rate, their benchmark rate, to a restrictive

707
00:33:21,200 --> 00:33:25,120
Speaker 15: level where it will actually retard economic growth. It takes

708
00:33:25,160 --> 00:33:28,640
Speaker 15: a while for all of the increases that they've put

709
00:33:28,680 --> 00:33:31,400
Speaker 15: in place to affect the economy, because you don't.

710
00:33:31,200 --> 00:33:32,959
Speaker 14: Buy a house every day or a car every day,

711
00:33:33,040 --> 00:33:33,800
Speaker 14: or you're.

712
00:33:33,680 --> 00:33:35,280
Speaker 15: Not a business going to a bank for a loan

713
00:33:35,320 --> 00:33:37,520
Speaker 15: every day, So it just takes a while for all

714
00:33:37,520 --> 00:33:41,480
Speaker 15: that to accumulate, and they feel like if they are

715
00:33:42,240 --> 00:33:47,200
Speaker 15: at restrictive level then they can stop. It will be

716
00:33:47,520 --> 00:33:51,120
Speaker 15: dependent on the data to tell them whether they are

717
00:33:51,160 --> 00:33:54,320
Speaker 15: at a restrictive level or not. If inflation starts going

718
00:33:54,360 --> 00:33:57,680
Speaker 15: up again, then they will they left it open to

719
00:33:57,920 --> 00:34:01,400
Speaker 15: raise rates, and if inflation stays where it is or

720
00:34:01,480 --> 00:34:04,040
Speaker 15: starts to go down, they'll probably pause for a while,

721
00:34:04,040 --> 00:34:06,920
Speaker 15: which is kind of a weird situation because we're seeing

722
00:34:07,320 --> 00:34:10,040
Speaker 15: all these rate cuts priced into the markets today, and

723
00:34:10,080 --> 00:34:10,479
Speaker 15: I've been.

724
00:34:10,360 --> 00:34:10,960
Speaker 14: Asking about it.

725
00:34:11,200 --> 00:34:13,080
Speaker 15: I'm told it's basically, and I know you'll get to

726
00:34:13,120 --> 00:34:16,440
Speaker 15: this and that selling stuff. I'm told it's basically people

727
00:34:16,440 --> 00:34:20,919
Speaker 15: who are just hedging tail risk for something really bad

728
00:34:20,960 --> 00:34:24,880
Speaker 15: happening in the banking system and or the default of

729
00:34:24,920 --> 00:34:28,480
Speaker 15: the United States government, and both of those would cause

730
00:34:28,480 --> 00:34:30,319
Speaker 15: the FED to cut rates, but it's not really a

731
00:34:30,360 --> 00:34:34,120
Speaker 15: bet that they actually are going to. And as far

732
00:34:34,160 --> 00:34:38,120
Speaker 15: as the two new members of the committee, it's good

733
00:34:38,120 --> 00:34:40,680
Speaker 15: news for the committee a that they have moved relatively

734
00:34:40,719 --> 00:34:45,000
Speaker 15: quickly to fill an open spot, but b it is

735
00:34:45,040 --> 00:34:48,440
Speaker 15: good for minority representation, which the FED likes because they

736
00:34:48,560 --> 00:34:51,799
Speaker 15: like to have different voices. And they have two economists

737
00:34:51,800 --> 00:34:55,879
Speaker 15: coming on which they also like. Who are Jefferson Phil

738
00:34:56,080 --> 00:35:00,000
Speaker 15: Jefferson's already there, but two people who are very qualified

739
00:35:00,160 --> 00:35:05,920
Speaker 15: for the job, and so it should bring some needed

740
00:35:06,040 --> 00:35:09,960
Speaker 15: expertise and help in terms of the workload to FED.

741
00:35:10,160 --> 00:35:12,719
Speaker 2: Well, and what a workload they have, as you allude to, Mike,

742
00:35:12,760 --> 00:35:15,600
Speaker 2: they're trying to deal with these kind of financial stability

743
00:35:15,600 --> 00:35:19,000
Speaker 2: concerns at the same time that they're trying to address inflation.

744
00:35:19,280 --> 00:35:21,640
Speaker 2: Really tough job, not sure one that I would want,

745
00:35:21,680 --> 00:35:23,719
Speaker 2: and we kind of got some color on how hard

746
00:35:23,760 --> 00:35:26,440
Speaker 2: that job is earlier on Bloomberg with the former Atlanta

747
00:35:26,440 --> 00:35:28,839
Speaker 2: FED president Dennis Lockart. Listen to what he said.

748
00:35:29,520 --> 00:35:33,880
Speaker 16: They're trying very hard to separate financial stability concerns system

749
00:35:34,040 --> 00:35:39,280
Speaker 16: banking system concerns from monetary policy. We'll see if conditions

750
00:35:39,480 --> 00:35:44,960
Speaker 16: force them to begin to combine financial stability concerns with

751
00:35:45,080 --> 00:35:46,719
Speaker 16: monetary policy decisions.

752
00:35:47,560 --> 00:35:49,600
Speaker 2: And this comes back to your point, Mike, that this

753
00:35:49,680 --> 00:35:51,839
Speaker 2: market is now looking at the potential maybe of rate

754
00:35:51,880 --> 00:35:54,960
Speaker 2: cuts coming as soon as this summer, even if it

755
00:35:55,040 --> 00:35:56,879
Speaker 2: is just hedging, it goes to show you that there

756
00:35:56,920 --> 00:35:59,560
Speaker 2: is still a great deal of concern out there, and

757
00:35:59,600 --> 00:36:01,879
Speaker 2: a lot of that emanates from the debt sealing debate, yes,

758
00:36:01,880 --> 00:36:04,400
Speaker 2: but Nathan, it also emanates from what is happening in

759
00:36:04,440 --> 00:36:07,919
Speaker 2: banks right now. Chairman Powell at the podium yesterday said

760
00:36:07,920 --> 00:36:10,880
Speaker 2: the banking system is sound and resilient. He also suggested

761
00:36:11,280 --> 00:36:13,640
Speaker 2: that the worst was over. That First Republic was an

762
00:36:13,680 --> 00:36:16,960
Speaker 2: important step in kind of underlining this period of severe

763
00:36:17,040 --> 00:36:19,439
Speaker 2: stress for these banks when it was you know, taken

764
00:36:19,480 --> 00:36:21,800
Speaker 2: into receivership and bought by JP Morgan at the beginning

765
00:36:22,160 --> 00:36:25,000
Speaker 2: of this week. Yet pack West Western Alliance look like

766
00:36:25,000 --> 00:36:28,000
Speaker 2: they are teetering right there on the edge. How do

767
00:36:28,000 --> 00:36:29,279
Speaker 2: you think this is going to shake out?

768
00:36:29,440 --> 00:36:32,120
Speaker 17: You know, it's actually funny because it's it's a contradiction

769
00:36:32,200 --> 00:36:35,000
Speaker 17: in thinking. You know, the regulatory thinking at the moment

770
00:36:35,200 --> 00:36:37,760
Speaker 17: is that the big banking system is safe and sound

771
00:36:38,080 --> 00:36:40,799
Speaker 17: and they have the tools in place to deal with this.

772
00:36:41,200 --> 00:36:43,400
Speaker 17: But on the flip side, you have the markets where,

773
00:36:43,440 --> 00:36:44,920
Speaker 17: like you know, if you just look at the Boomberg

774
00:36:44,920 --> 00:36:48,160
Speaker 17: criminal right now, Pack West Western Alliance and other regional

775
00:36:48,160 --> 00:36:49,520
Speaker 17: banks are struggling at the moment.

776
00:36:49,680 --> 00:36:51,760
Speaker 14: So the question is who blinks first?

777
00:36:51,960 --> 00:36:54,000
Speaker 17: And you know, I think we've seen a lot of

778
00:36:54,000 --> 00:36:56,200
Speaker 17: comments from the market today saying is there the equivalent

779
00:36:56,280 --> 00:36:59,480
Speaker 17: of this regulatory circuit breaker that can stop this or

780
00:36:59,520 --> 00:37:02,080
Speaker 17: slow this down? And it could just be the passage

781
00:37:02,080 --> 00:37:04,360
Speaker 17: of time. I mean, the regulators right now are still

782
00:37:04,400 --> 00:37:07,400
Speaker 17: just taking a wait and see approach, and you know,

783
00:37:07,480 --> 00:37:10,560
Speaker 17: there's really no emergency things that at least I'm hearing

784
00:37:10,600 --> 00:37:11,400
Speaker 17: being discussed.

785
00:37:11,120 --> 00:37:11,560
Speaker 14: At the moment.

786
00:37:11,719 --> 00:37:11,919
Speaker 18: Yeah.

787
00:37:11,920 --> 00:37:14,560
Speaker 2: Well, I was on Capitol Hill earlier this morning at

788
00:37:14,560 --> 00:37:17,840
Speaker 2: the Senate Banking Committee hearing about bank failure, specifically on

789
00:37:17,880 --> 00:37:21,200
Speaker 2: holding executives accountable. And I was standing there, you know,

790
00:37:21,280 --> 00:37:23,239
Speaker 2: trying to stop lawmakers as they went in and out.

791
00:37:23,280 --> 00:37:25,600
Speaker 2: I was speaking with Senator Catherine Kuort has mass So,

792
00:37:25,680 --> 00:37:28,200
Speaker 2: a Democrat, and I asked her, you know when we

793
00:37:28,280 --> 00:37:30,160
Speaker 2: might see some movement on something like a change to

794
00:37:30,200 --> 00:37:32,440
Speaker 2: the FDIC insurance cap. And they said, we still need

795
00:37:32,440 --> 00:37:34,719
Speaker 2: more information. We have another hearing with regulators coming up

796
00:37:34,760 --> 00:37:37,360
Speaker 2: in a couple weeks. She's worried about the moral hazard.

797
00:37:37,400 --> 00:37:40,040
Speaker 2: It just feels like the policy response is moving really

798
00:37:40,080 --> 00:37:43,480
Speaker 2: slow in comparison to how quickly the crisis in the

799
00:37:43,480 --> 00:37:44,560
Speaker 2: bank seems to be moving.

800
00:37:44,680 --> 00:37:46,400
Speaker 14: Yeah, you know that's a function of Washington.

801
00:37:46,440 --> 00:37:48,400
Speaker 17: I mean, the FDIC put out a report earlier this

802
00:37:48,400 --> 00:37:51,520
Speaker 17: week where there are three options. Keep FDAC insurance where

803
00:37:51,520 --> 00:37:53,520
Speaker 17: it is right now, two hundred and fifty thousand. You

804
00:37:53,560 --> 00:37:57,279
Speaker 17: could do an unilaterally guarantee all deposits, or you do

805
00:37:57,360 --> 00:38:00,600
Speaker 17: this like targeted approach where you guarantee business and accounts

806
00:38:00,600 --> 00:38:02,680
Speaker 17: and so forth. I think there could be momentum to

807
00:38:02,719 --> 00:38:06,480
Speaker 17: get debate business payment counts, accounts approach, but it's not

808
00:38:06,520 --> 00:38:09,080
Speaker 17: going to happen anytime soon. I mean, it's this is

809
00:38:09,080 --> 00:38:10,799
Speaker 17: a debate that's going to go on and on and on,

810
00:38:10,880 --> 00:38:13,680
Speaker 17: because in that same breath, in that discussion, you hear

811
00:38:13,719 --> 00:38:15,520
Speaker 17: from Republicans saying, well, who's going to pay for it?

812
00:38:15,800 --> 00:38:17,319
Speaker 14: And it's going to be the banks, and the big

813
00:38:17,360 --> 00:38:18,000
Speaker 14: banks are going to.

814
00:38:18,040 --> 00:38:20,400
Speaker 17: Go into Capitol Hill and say, well, we don't need

815
00:38:20,440 --> 00:38:22,640
Speaker 17: to pay more money for the deposit insurance funds. So

816
00:38:23,239 --> 00:38:25,000
Speaker 17: this is just a debate that's going to play out,

817
00:38:25,000 --> 00:38:28,160
Speaker 17: and unfortunately for the market, especially regional bank investors, right now,

818
00:38:28,320 --> 00:38:29,799
Speaker 17: they want an answer, and they want right now.

819
00:38:30,400 --> 00:38:32,640
Speaker 3: You know, Nathan, one of the pieces of legislation that

820
00:38:32,640 --> 00:38:35,960
Speaker 3: I've been closely watching on Capitol Hill is legislation that

821
00:38:36,000 --> 00:38:39,319
Speaker 3: would essentially claw back bonuses and funds from executives of

822
00:38:39,360 --> 00:38:41,480
Speaker 3: some of these failed banks. And I wanted to see

823
00:38:41,560 --> 00:38:43,840
Speaker 3: kind of what you've heard as far as momentum behind

824
00:38:43,840 --> 00:38:46,920
Speaker 3: this legislation, and also really what kind of message it

825
00:38:46,920 --> 00:38:49,680
Speaker 3: would send the markets were Congress to pass something like this.

826
00:38:49,880 --> 00:38:52,200
Speaker 17: So I think for in order to get something that

827
00:38:52,320 --> 00:38:54,360
Speaker 17: over the line and the fill thebuster line, if you,

828
00:38:54,520 --> 00:38:57,120
Speaker 17: if you so to speak, you need to see some

829
00:38:57,200 --> 00:39:00,000
Speaker 17: sort of nefarious behavior, and that's really hard to determine.

830
00:39:00,239 --> 00:39:02,439
Speaker 17: For example, you know, the regulators, as part of Dodd

831
00:39:02,440 --> 00:39:05,440
Speaker 17: Frank have a proposal out there from twenty sixteen that

832
00:39:05,520 --> 00:39:10,120
Speaker 17: would set incentive compensation limits on bankers CEO's risk takers,

833
00:39:10,160 --> 00:39:12,000
Speaker 17: and they haven't done it. You know, it's a six

834
00:39:12,040 --> 00:39:16,080
Speaker 17: agency proposal. And yes, we've seen the FDIC chairman and

835
00:39:16,200 --> 00:39:18,480
Speaker 17: SEC Chairman Gary Ginsler say that they want to do this,

836
00:39:18,920 --> 00:39:21,320
Speaker 17: but even Chairman Gensler back in January before all of

837
00:39:21,400 --> 00:39:24,560
Speaker 17: this said they really can't get an agreement. And so the

838
00:39:24,600 --> 00:39:26,640
Speaker 17: fact that there can't be in an agreement in place

839
00:39:26,640 --> 00:39:29,120
Speaker 17: to do a DoD Frank proposal that Congress told them

840
00:39:29,120 --> 00:39:31,960
Speaker 17: to do in twenty ten just sort of signals that

841
00:39:32,160 --> 00:39:33,719
Speaker 17: it's just not going to happen anytime soon.

842
00:39:34,160 --> 00:39:37,040
Speaker 2: Well, and what you know we consistently hear from lawmakers,

843
00:39:37,560 --> 00:39:40,040
Speaker 2: especially on the Republican side, is that there is existing

844
00:39:40,080 --> 00:39:42,359
Speaker 2: authority the regulators have. It's just a matter of them

845
00:39:42,680 --> 00:39:45,279
Speaker 2: exercising it. Which comes back to Michael Barr's report that

846
00:39:45,400 --> 00:39:49,200
Speaker 2: was released last week about further restrictive or more intense

847
00:39:49,200 --> 00:39:51,640
Speaker 2: supervision that could be coming for banks of a certain

848
00:39:51,680 --> 00:39:54,759
Speaker 2: size one hundred billion dollars plus in assets. But it

849
00:39:54,800 --> 00:39:57,279
Speaker 2: really just kind of speaks to the reputational issues that

850
00:39:57,520 --> 00:40:00,239
Speaker 2: is dealing with right now from a supervisory standpoint, But

851
00:40:00,239 --> 00:40:03,319
Speaker 2: then also, you know, the credibility on the monetary policy side.

852
00:40:03,360 --> 00:40:05,600
Speaker 2: To come back to the idea that Chairman Powell consistently

853
00:40:05,640 --> 00:40:08,480
Speaker 2: told you in the press conference yesterday, no cuts are

854
00:40:08,480 --> 00:40:10,440
Speaker 2: in my base case, and yet this market does not

855
00:40:10,640 --> 00:40:13,600
Speaker 2: seem to believe him at all.

856
00:40:13,840 --> 00:40:18,080
Speaker 15: I'm not sure it's the kind of credibility issue you

857
00:40:18,120 --> 00:40:19,560
Speaker 15: hear put Forth on Twitter.

858
00:40:20,560 --> 00:40:22,319
Speaker 14: I think it's more a question.

859
00:40:22,000 --> 00:40:27,080
Speaker 15: Of a market populated by traders who weren't alive or

860
00:40:27,120 --> 00:40:29,880
Speaker 15: at least not on trading desks the last time the

861
00:40:29,880 --> 00:40:33,560
Speaker 15: FED was in a rate raising mode like this, and

862
00:40:33,640 --> 00:40:36,920
Speaker 15: they don't know what it's like. We went seven years

863
00:40:36,920 --> 00:40:38,840
Speaker 15: in the Great Financial Crisis, and then a couple of

864
00:40:38,920 --> 00:40:43,000
Speaker 15: years after that because of the pandemic at zero interest rates,

865
00:40:43,080 --> 00:40:46,160
Speaker 15: and people got used to that the so called Fed

866
00:40:46,239 --> 00:40:49,600
Speaker 15: put and so people are thinking that the Fed will

867
00:40:49,640 --> 00:40:52,600
Speaker 15: react at the first sign of trouble in the economy,

868
00:40:52,640 --> 00:40:57,000
Speaker 15: and they have shown a tendency to do that. Twenty nineteen,

869
00:40:57,120 --> 00:41:00,440
Speaker 15: when we had problems at the short end, they stopped

870
00:41:00,520 --> 00:41:03,640
Speaker 15: raising rates and then shortly there after it started cutting

871
00:41:04,239 --> 00:41:06,520
Speaker 15: so there's a feeling that maybe they can push the

872
00:41:06,520 --> 00:41:08,400
Speaker 15: FED to do what they want. But the FED has,

873
00:41:08,920 --> 00:41:12,120
Speaker 15: in this case, since they started raising rates, done exactly

874
00:41:12,160 --> 00:41:14,919
Speaker 15: what they said they would do. And now they say

875
00:41:14,920 --> 00:41:18,000
Speaker 15: they're going to keep rates where they are, and I

876
00:41:18,080 --> 00:41:23,440
Speaker 15: think that you can probably believe them. Inflation scares a

877
00:41:23,520 --> 00:41:27,800
Speaker 15: central banker more than anything else, and they're scared about

878
00:41:27,840 --> 00:41:30,359
Speaker 15: what could happen if they give up on that. They

879
00:41:30,360 --> 00:41:33,959
Speaker 15: also don't think that cutting interest rates necessarily is going

880
00:41:34,000 --> 00:41:36,719
Speaker 15: to the kind of cut they could make is going

881
00:41:36,760 --> 00:41:37,520
Speaker 15: to do anything.

882
00:41:37,280 --> 00:41:37,720
Speaker 9: For the banks.

883
00:41:37,719 --> 00:41:39,839
Speaker 15: If they cut twenty five or fifty basis points, it's

884
00:41:39,840 --> 00:41:42,600
Speaker 15: not going to bring the underwater securities back up to

885
00:41:42,680 --> 00:41:46,080
Speaker 15: par And so you still have that issue. If that

886
00:41:46,239 --> 00:41:48,960
Speaker 15: issue is really what you're worried about.

887
00:41:48,760 --> 00:41:50,759
Speaker 2: I am so glad you brought that up, because you know,

888
00:41:50,800 --> 00:41:52,520
Speaker 2: there's a lot of finger point in going on here

889
00:41:52,520 --> 00:41:55,000
Speaker 2: in Washington, at the bank executives, at the Body Administration,

890
00:41:55,040 --> 00:41:58,160
Speaker 2: at the Federal Reserve. Everybody you know has some degree

891
00:41:58,160 --> 00:42:00,719
Speaker 2: of blame in this crisis maybe or at least you know,

892
00:42:00,840 --> 00:42:03,839
Speaker 2: has someone blaming them. And on the FED point, it's

893
00:42:03,840 --> 00:42:06,200
Speaker 2: the idea that they raised interest rates so aggressively because

894
00:42:06,200 --> 00:42:08,120
Speaker 2: they were too late to the game to fight inflation.

895
00:42:08,200 --> 00:42:09,719
Speaker 2: They didn't move quickly enough, so then all of a

896
00:42:09,719 --> 00:42:12,400
Speaker 2: sudden they had to move a lot at once, and

897
00:42:12,400 --> 00:42:14,600
Speaker 2: that is what created this kind of interest rate balance

898
00:42:14,600 --> 00:42:17,000
Speaker 2: sheet risk on the part of these regional banks. But

899
00:42:17,080 --> 00:42:19,319
Speaker 2: might just walk us through the actual transmission of what

900
00:42:19,360 --> 00:42:22,359
Speaker 2: FED policy does to these bank balance sheets and why

901
00:42:22,400 --> 00:42:24,399
Speaker 2: this may not actually be that quick of a fix

902
00:42:24,440 --> 00:42:25,920
Speaker 2: even if the FED were to turn around.

903
00:42:26,840 --> 00:42:28,560
Speaker 15: Well, Nathan, I could keep you very busy with the

904
00:42:28,600 --> 00:42:33,800
Speaker 15: history of fractional reserve banking, but basically don't. Basically, banks

905
00:42:33,800 --> 00:42:35,399
Speaker 15: don't keep all the money that you put in there.

906
00:42:35,440 --> 00:42:38,279
Speaker 15: They start as reserves at the FED or lend it out,

907
00:42:38,640 --> 00:42:41,600
Speaker 15: and if everybody at once wanted their money back, they

908
00:42:41,640 --> 00:42:45,920
Speaker 15: wouldn't have the money. And so basically what they do

909
00:42:46,239 --> 00:42:50,160
Speaker 15: is set aside a certain amount to handle what normally

910
00:42:50,239 --> 00:42:55,400
Speaker 15: would be a request for a reasonable return of cash.

911
00:42:55,480 --> 00:42:59,680
Speaker 15: And they can make money at the FED by getting

912
00:42:59,719 --> 00:43:03,440
Speaker 15: intured on reserves. They could make more money by buying

913
00:43:03,520 --> 00:43:07,319
Speaker 15: treasury bonds, and so that's what a number of them did.

914
00:43:07,840 --> 00:43:10,480
Speaker 15: And then of course, when the FED started raising interest rates,

915
00:43:10,880 --> 00:43:14,600
Speaker 15: the value of those bonds fell and then they don't

916
00:43:14,640 --> 00:43:17,160
Speaker 15: have enough money in theory to pay everybody off if

917
00:43:17,160 --> 00:43:19,680
Speaker 15: they want to come back and get their cash, and

918
00:43:19,719 --> 00:43:22,000
Speaker 15: so that's what's concerning people.

919
00:43:22,080 --> 00:43:22,239
Speaker 9: Now.

920
00:43:22,239 --> 00:43:25,400
Speaker 15: The FED has emphasized that you can go to the

921
00:43:25,400 --> 00:43:28,400
Speaker 15: discount window and get money to make that up, or

922
00:43:28,920 --> 00:43:33,080
Speaker 15: you can put the money back to the securities to

923
00:43:33,120 --> 00:43:34,680
Speaker 15: the FED. You can give them to the FED. They

924
00:43:34,719 --> 00:43:39,319
Speaker 15: will lend you par for those securities. And that in

925
00:43:39,400 --> 00:43:44,680
Speaker 15: theory should have reassured everybody that these banks would be

926
00:43:44,719 --> 00:43:47,200
Speaker 15: able to pay you if you It's not a question

927
00:43:47,360 --> 00:43:49,560
Speaker 15: like we went through in two thousand and eight in

928
00:43:49,560 --> 00:43:52,960
Speaker 15: a great financial crisis of massive bad loans on all

929
00:43:53,000 --> 00:43:56,719
Speaker 15: these banks bounces. It's more a question of a mismatch

930
00:43:56,719 --> 00:44:02,680
Speaker 15: of liabilities in their in their reserves, and so in

931
00:44:02,760 --> 00:44:06,239
Speaker 15: theory this shouldn't be the problem that it is. But

932
00:44:07,280 --> 00:44:10,160
Speaker 15: as one bank analyst told me, I mean, basically, we're

933
00:44:10,200 --> 00:44:14,440
Speaker 15: just seeing the shorts in the market. They're trying to

934
00:44:14,480 --> 00:44:17,720
Speaker 15: cull the weakest antelope from the herd.

935
00:44:18,520 --> 00:44:20,440
Speaker 2: Yeah, Emily, I think it's such a good point that

936
00:44:20,520 --> 00:44:23,560
Speaker 2: how much of this is just pure psychological right, This

937
00:44:23,680 --> 00:44:25,960
Speaker 2: idea that you have something on Twitter, you can get

938
00:44:26,000 --> 00:44:29,040
Speaker 2: the app on your phone to access the money you

939
00:44:29,080 --> 00:44:31,239
Speaker 2: have in your accounts. You can pull the funds if

940
00:44:31,280 --> 00:44:35,560
Speaker 2: you want to, and that's really hard for anyone to control. Regulators, lawmakers,

941
00:44:35,600 --> 00:44:36,320
Speaker 2: the Federal Reserve.

942
00:44:36,480 --> 00:44:38,480
Speaker 3: It is interesting, and you know, I have talked to

943
00:44:38,560 --> 00:44:41,640
Speaker 3: Financial Services Chairman Patrick McHenry. He's kind of been like,

944
00:44:41,719 --> 00:44:44,319
Speaker 3: you know, we do live in a different era right

945
00:44:44,360 --> 00:44:47,120
Speaker 3: now when it comes to banking, when it comes to

946
00:44:47,120 --> 00:44:49,200
Speaker 3: just sort of being able to instantly whip out your phone,

947
00:44:49,520 --> 00:44:51,919
Speaker 3: put the put money in, take money out, just kind

948
00:44:51,920 --> 00:44:53,640
Speaker 3: of a different way that we track and that we

949
00:44:53,760 --> 00:44:56,319
Speaker 3: interact with the financial system.

950
00:44:56,600 --> 00:44:58,920
Speaker 4: I'm kind of, you know, curious, Mike. Do you think

951
00:44:58,960 --> 00:44:59,680
Speaker 4: that there needs to be.

952
00:44:59,680 --> 00:45:02,879
Speaker 3: Some sort of updates to the Congress needs to make

953
00:45:02,880 --> 00:45:05,040
Speaker 3: to how we do things.

954
00:45:05,360 --> 00:45:08,720
Speaker 15: I will sound like Jay Powell and say that I'm

955
00:45:08,760 --> 00:45:11,240
Speaker 15: not going to give them advice. There is at argument

956
00:45:11,239 --> 00:45:13,880
Speaker 15: fair enough to be made that they change the deposit

957
00:45:13,960 --> 00:45:18,319
Speaker 15: insurance scheme, but I don't know whether that would be

958
00:45:19,320 --> 00:45:20,800
Speaker 15: the solution.

959
00:45:20,600 --> 00:45:23,720
Speaker 2: Or how quickly we could get there. As Nathan suggests,

960
00:45:23,760 --> 00:45:26,120
Speaker 2: that's something that could take some time. We could keep

961
00:45:26,160 --> 00:45:28,560
Speaker 2: this conversation going all day long, but I will let

962
00:45:28,600 --> 00:45:30,840
Speaker 2: you both go. Thank you so much for joining Us

963
00:45:30,840 --> 00:45:35,120
Speaker 2: Bloomberg's International Economics and Policy correspondent Michael McKee and Bloomberg

964
00:45:35,120 --> 00:45:39,120
Speaker 2: Intelligence Senior government analyst Nathan Dean. Really appreciate your insight

965
00:45:39,160 --> 00:45:42,000
Speaker 2: and expertise as we see continued pressure on these banks

966
00:45:42,040 --> 00:45:45,400
Speaker 2: pack West Right now down forty three percent, Western Alliance

967
00:45:45,719 --> 00:45:49,080
Speaker 2: down thirty one percent, and the question remains, can lawmakers

968
00:45:49,239 --> 00:45:51,680
Speaker 2: or regulators do anything to stem the bleeding. We'll have

969
00:45:51,719 --> 00:45:52,840
Speaker 2: more next on Sound On.

970
00:45:54,000 --> 00:45:57,480
Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch us

971
00:45:57,520 --> 00:46:01,840
Speaker 1: live weekdays at one eastern Bookmark the iHeartRadio app and

972
00:46:01,880 --> 00:46:04,880
Speaker 1: the Lowberg Business app, or listen on demand wherever you

973
00:46:04,880 --> 00:46:05,839
Speaker 1: get your podcast.

974
00:46:06,960 --> 00:46:09,800
Speaker 2: This is indeed Sound On the fastest show in politics,

975
00:46:09,880 --> 00:46:12,719
Speaker 2: live from Washington, d C. Although Joe Matthew is not

976
00:46:12,800 --> 00:46:15,480
Speaker 2: here right now, I'm Kaylee Lyons alongside Emily Wilkins of

977
00:46:15,480 --> 00:46:18,239
Speaker 2: Bloomberg Government, filling in for him today as he takes

978
00:46:18,280 --> 00:46:21,279
Speaker 2: a well deserved long weekend, and it is on the

979
00:46:21,320 --> 00:46:23,600
Speaker 2: other side of this weekend. In fact, two days after

980
00:46:23,640 --> 00:46:26,440
Speaker 2: this weekend, Emily that in theory we do get some

981
00:46:26,600 --> 00:46:29,520
Speaker 2: kind of movement on debt sealing talks because on May ninth,

982
00:46:29,680 --> 00:46:32,480
Speaker 2: which is Tuesday, President Biden will be sitting down with

983
00:46:32,560 --> 00:46:35,439
Speaker 2: congressional leadership. We'll see what they can accomplish.

984
00:46:35,800 --> 00:46:37,480
Speaker 3: I mean, I think that is the one event that

985
00:46:37,520 --> 00:46:40,239
Speaker 3: everyone in this town is simply waiting for, figuring out

986
00:46:40,440 --> 00:46:41,520
Speaker 3: what happens there.

987
00:46:41,800 --> 00:46:43,160
Speaker 4: Where do they get to go next?

988
00:46:43,320 --> 00:46:46,399
Speaker 3: And certainly, you know the big Big five, I guess

989
00:46:46,400 --> 00:46:49,000
Speaker 3: the four Congression leaders and Biden, they're all meeting. But

990
00:46:49,160 --> 00:46:50,400
Speaker 3: then all of them are going to have to go

991
00:46:50,440 --> 00:46:53,360
Speaker 3: back to their respective teams and say, hey, this is

992
00:46:53,360 --> 00:46:55,680
Speaker 3: how things are going and make sure that they really

993
00:46:55,760 --> 00:46:58,239
Speaker 3: have that buy in. And one of the people that

994
00:46:58,320 --> 00:47:00,680
Speaker 3: Kevin McCarthy is really going to have to make sure

995
00:47:00,719 --> 00:47:04,680
Speaker 3: that he's keeping in mind is Congressman Anthony Desposito. He's

996
00:47:04,680 --> 00:47:07,360
Speaker 3: a Republican from Long Island. He's one of the reasons

997
00:47:07,360 --> 00:47:09,719
Speaker 3: that McCarthy is in the majority to begin with, he

998
00:47:09,760 --> 00:47:13,120
Speaker 3: flipped a seat. Congressman, thanks so much for joining us,

999
00:47:13,160 --> 00:47:14,000
Speaker 3: Welcome to the show.

1000
00:47:15,040 --> 00:47:17,640
Speaker 19: Thanks for having me. How are you guys or excellent?

1001
00:47:17,800 --> 00:47:18,200
Speaker 4: Excellent?

1002
00:47:18,239 --> 00:47:20,640
Speaker 3: Looking forward to the weekend and maybe even looking more

1003
00:47:20,680 --> 00:47:23,520
Speaker 3: forward to May ninth. Well, here's when I want to

1004
00:47:23,520 --> 00:47:28,520
Speaker 3: see what your expectations are for Speaker McCarthy. What are

1005
00:47:28,600 --> 00:47:32,200
Speaker 3: you and your House Republican colleagues expecting when he sits

1006
00:47:32,200 --> 00:47:33,440
Speaker 3: down with Biden next week.

1007
00:47:34,280 --> 00:47:37,000
Speaker 19: Well, I really hope that all the work that we've

1008
00:47:37,040 --> 00:47:40,719
Speaker 19: put into to the negotiations will pay off next week.

1009
00:47:40,760 --> 00:47:43,160
Speaker 19: I hope that the President is coming to the table

1010
00:47:43,200 --> 00:47:47,640
Speaker 19: with an open mind and understanding that we've put, you know,

1011
00:47:47,840 --> 00:47:51,759
Speaker 19: things in place in our proposal that will move this

1012
00:47:51,920 --> 00:47:54,440
Speaker 19: nation forward. I mean, the Limit Dave Grow Act of

1013
00:47:54,440 --> 00:47:58,160
Speaker 19: twenty twenty three. It does exactly that we limit federal spending,

1014
00:47:58,239 --> 00:48:02,560
Speaker 19: we save taxpayer dollars, we grow the economy, and it's

1015
00:48:02,560 --> 00:48:05,600
Speaker 19: a responsible which I think is the most important word

1016
00:48:05,920 --> 00:48:08,200
Speaker 19: in this responsible debt limit increase.

1017
00:48:08,920 --> 00:48:11,719
Speaker 3: At the same point, I mean, this is what McCarthy

1018
00:48:11,800 --> 00:48:16,400
Speaker 3: is taking into the negotiations. Do you expect him to

1019
00:48:16,480 --> 00:48:20,600
Speaker 3: kind of come out with something that's more of a compromise, saying, Hey,

1020
00:48:20,680 --> 00:48:23,399
Speaker 3: you know, we're able to get this piece, this piece,

1021
00:48:23,400 --> 00:48:24,879
Speaker 3: and this piece, but we're going to have to give

1022
00:48:24,960 --> 00:48:27,920
Speaker 3: up these other items. Is that the expectation that you

1023
00:48:27,960 --> 00:48:29,960
Speaker 3: and your colleagues are going in with or do you

1024
00:48:30,000 --> 00:48:31,440
Speaker 3: want something else to come from this?

1025
00:48:32,320 --> 00:48:32,520
Speaker 1: Yeah?

1026
00:48:32,560 --> 00:48:34,640
Speaker 19: I have to say, I'm not really sure how this

1027
00:48:34,680 --> 00:48:36,759
Speaker 19: is going to pan out, because there has been such

1028
00:48:36,880 --> 00:48:41,320
Speaker 19: little conversation from Joe Biden and the administration. You know,

1029
00:48:41,360 --> 00:48:44,239
Speaker 19: I think the last conversation that the President had with

1030
00:48:44,320 --> 00:48:47,879
Speaker 19: Speaker McCarthy was months ago, so we don't really know

1031
00:48:47,960 --> 00:48:50,520
Speaker 19: what he's thinking or where this is headed. What I

1032
00:48:50,600 --> 00:48:53,280
Speaker 19: do know is that, you know, since he took office

1033
00:48:53,320 --> 00:48:57,160
Speaker 19: back in January of twenty one, you know, the Democrats

1034
00:48:57,160 --> 00:49:00,239
Speaker 19: have increased a ten year spending by ten trillion dollars,

1035
00:49:00,360 --> 00:49:02,280
Speaker 19: and that's something that was concerning.

1036
00:49:01,840 --> 00:49:02,399
Speaker 7: To all of us.

1037
00:49:02,400 --> 00:49:04,879
Speaker 19: I mean, anywhere you live in this country. The fact

1038
00:49:05,000 --> 00:49:08,120
Speaker 19: is is that you know, you don't give you don't

1039
00:49:08,160 --> 00:49:10,120
Speaker 19: give somebody a credit guard have the max it out

1040
00:49:10,160 --> 00:49:12,840
Speaker 19: and then you know, increase it to just continue to

1041
00:49:12,880 --> 00:49:15,560
Speaker 19: having them spend. And that's one of the biggest concerns

1042
00:49:15,560 --> 00:49:18,680
Speaker 19: that we had, and I think we worked very well

1043
00:49:18,680 --> 00:49:21,120
Speaker 19: with a lot of I give the Speaker and his

1044
00:49:21,880 --> 00:49:24,439
Speaker 19: leadership team credit because they worked with a lot of

1045
00:49:25,160 --> 00:49:28,600
Speaker 19: different individuals with different thought processes from different places throughout

1046
00:49:28,600 --> 00:49:32,839
Speaker 19: this country, and we came to an agreement. And that's

1047
00:49:32,840 --> 00:49:34,560
Speaker 19: the one that's going to be put forth this week,

1048
00:49:34,600 --> 00:49:37,080
Speaker 19: and I look forward to seeing what the President has

1049
00:49:37,080 --> 00:49:37,759
Speaker 19: to say about it.

1050
00:49:38,120 --> 00:49:40,759
Speaker 3: You know, so far, President Biden Democrats, they've been very

1051
00:49:40,800 --> 00:49:42,719
Speaker 3: dug in on their position that this needs to be

1052
00:49:42,760 --> 00:49:45,680
Speaker 3: a clean raise of the debt limit. Republicans, of course,

1053
00:49:45,680 --> 00:49:48,320
Speaker 3: have been very strongly backing the bill that you passed

1054
00:49:48,320 --> 00:49:49,040
Speaker 3: the other week.

1055
00:49:49,480 --> 00:49:51,840
Speaker 4: If there is no compromise.

1056
00:49:51,560 --> 00:49:55,200
Speaker 3: And we begin to get within days of the X state,

1057
00:49:55,840 --> 00:49:58,319
Speaker 3: are you going to be breaking from your party and

1058
00:49:58,400 --> 00:50:01,799
Speaker 3: approve either a short term debth that limit extension, or

1059
00:50:01,840 --> 00:50:04,279
Speaker 3: even go with Democrats just to make sure that we

1060
00:50:04,440 --> 00:50:05,400
Speaker 3: do not default.

1061
00:50:06,640 --> 00:50:09,960
Speaker 19: My plan right now is to watch this as it unfolds,

1062
00:50:10,560 --> 00:50:13,560
Speaker 19: speak to my colleagues, speak to leadership, and come up

1063
00:50:13,600 --> 00:50:17,080
Speaker 19: with a thoughtful plan, one that is in the best

1064
00:50:17,120 --> 00:50:20,000
Speaker 19: interest of the country that we all serve, and make

1065
00:50:20,040 --> 00:50:22,719
Speaker 19: my decision. You know, when we have all the information that.

1066
00:50:22,680 --> 00:50:27,280
Speaker 2: I need, Congressman, it's kayleie. We have here in radio

1067
00:50:27,320 --> 00:50:29,840
Speaker 2: and television what you call a heard out when the

1068
00:50:29,880 --> 00:50:31,920
Speaker 2: computer is going to take you to commercial break whether

1069
00:50:31,960 --> 00:50:34,520
Speaker 2: you want it to or not. It is hard, and

1070
00:50:34,520 --> 00:50:36,440
Speaker 2: in theory, that is kind of what the X state is.

1071
00:50:36,480 --> 00:50:39,719
Speaker 2: When the Treasury loses its ability to pay its obligations.

1072
00:50:40,120 --> 00:50:42,600
Speaker 2: That's it. What we have seen though, and there's historical

1073
00:50:42,640 --> 00:50:44,840
Speaker 2: precedent for this. If we think back to twenty eleven.

1074
00:50:44,960 --> 00:50:47,399
Speaker 2: Is it's not always actually about the X state. Weeks

1075
00:50:47,440 --> 00:50:49,520
Speaker 2: before it is when the United States had its credit

1076
00:50:49,600 --> 00:50:53,200
Speaker 2: rating downgraded. So what would your heart out be? How

1077
00:50:53,239 --> 00:50:55,440
Speaker 2: far are you willing to have this pushed?

1078
00:50:56,600 --> 00:51:00,799
Speaker 19: Well, I think, like I said, I my, the way

1079
00:51:00,800 --> 00:51:02,520
Speaker 19: I'm looking at it right now is I'm looking for

1080
00:51:03,160 --> 00:51:05,799
Speaker 19: this week to see how these negotiations go. I know

1081
00:51:05,840 --> 00:51:08,480
Speaker 19: that the Speaker has been very open and transparent with

1082
00:51:08,520 --> 00:51:11,799
Speaker 19: the entire conference, in keeping all of us in the loop,

1083
00:51:11,880 --> 00:51:14,760
Speaker 19: even the ones that you know feel differently about certain

1084
00:51:14,800 --> 00:51:17,520
Speaker 19: cuts and where we should be right now. He's been

1085
00:51:17,560 --> 00:51:20,759
Speaker 19: fully open, fully transparent, and I know that that's going

1086
00:51:20,840 --> 00:51:22,840
Speaker 19: to continue this week. And I know once he speaks

1087
00:51:22,840 --> 00:51:25,360
Speaker 19: to the President and we see where that mindset is

1088
00:51:25,400 --> 00:51:28,520
Speaker 19: at and where the Democrats feel that this should be headed,

1089
00:51:28,560 --> 00:51:32,040
Speaker 19: I think that that's when we will get together and

1090
00:51:32,480 --> 00:51:34,560
Speaker 19: you know, come up with a game plan for the

1091
00:51:34,560 --> 00:51:36,000
Speaker 19: best interest of the people that we serve.

1092
00:51:36,640 --> 00:51:38,719
Speaker 3: Congressman, I know a couple of your other colleagues in

1093
00:51:38,719 --> 00:51:42,200
Speaker 3: New York they've been hearing from constituents, and the constituents.

1094
00:51:41,719 --> 00:51:43,320
Speaker 4: Want them to work toward a compromise.

1095
00:51:43,640 --> 00:51:47,080
Speaker 3: Is this something similar to what you're hearing from your constituents.

1096
00:51:47,680 --> 00:51:49,520
Speaker 3: Do you plan to have any public town halls in

1097
00:51:49,560 --> 00:51:52,440
Speaker 3: the upcoming days to get some input from your voters.

1098
00:51:53,360 --> 00:51:56,320
Speaker 19: Yeah, we plan on doing a teletown hall, I believe

1099
00:51:56,400 --> 00:51:59,800
Speaker 19: next week. Obviously, I'm always out in the community listening

1100
00:51:59,800 --> 00:52:01,840
Speaker 19: to to the people that I serve. I mean this

1101
00:52:02,320 --> 00:52:04,920
Speaker 19: last few days, I think I've been fifteen or sixteen

1102
00:52:05,800 --> 00:52:08,880
Speaker 19: stop since I've come back from Israel with the Speaker,

1103
00:52:09,280 --> 00:52:12,640
Speaker 19: and you know, the message is clear. Obviously, people have concerns,

1104
00:52:12,920 --> 00:52:17,800
Speaker 19: but they do agree with the overall you know, basis

1105
00:52:17,840 --> 00:52:20,480
Speaker 19: of this bill that we put forward, and that is

1106
00:52:20,520 --> 00:52:23,279
Speaker 19: to limit the spending, to save tax doles, to grow

1107
00:52:23,320 --> 00:52:27,160
Speaker 19: the economy. And they understand that the debt limit may

1108
00:52:27,160 --> 00:52:29,000
Speaker 19: need to be increased, but it's got to be done

1109
00:52:29,040 --> 00:52:31,399
Speaker 19: in a responsible way. And that's what I'm hearing from

1110
00:52:31,680 --> 00:52:34,880
Speaker 19: my neighbors. They want us to run this government like

1111
00:52:34,920 --> 00:52:36,839
Speaker 19: they have to run their household. And I think that's

1112
00:52:36,880 --> 00:52:38,799
Speaker 19: what's important and that's what we need to all take

1113
00:52:38,800 --> 00:52:39,560
Speaker 19: into consideration.

1114
00:52:40,960 --> 00:52:44,120
Speaker 2: Congressman, as we talk about your constituents and your neighbors

1115
00:52:44,120 --> 00:52:46,200
Speaker 2: in New York, you know, a lot has happened in

1116
00:52:46,239 --> 00:52:48,840
Speaker 2: New York, including in recent months. The failure of a

1117
00:52:48,880 --> 00:52:50,840
Speaker 2: bank that was based their signature bank just one of

1118
00:52:50,960 --> 00:52:53,680
Speaker 2: multiple bank failures we have seen over the course of

1119
00:52:53,719 --> 00:52:56,560
Speaker 2: the last couple of months, and it looks like potentially

1120
00:52:56,560 --> 00:52:58,920
Speaker 2: there are more banks that could be on the brink

1121
00:52:59,000 --> 00:53:02,359
Speaker 2: seeking strategic options in the case of pac West. How

1122
00:53:02,400 --> 00:53:05,759
Speaker 2: worried are your constituents about the banking situation are you

1123
00:53:05,800 --> 00:53:08,120
Speaker 2: hearing from them on this issue? Do you think Congress

1124
00:53:08,160 --> 00:53:12,720
Speaker 2: has a responsibility to act to stabilize the regional banking

1125
00:53:12,719 --> 00:53:16,600
Speaker 2: sector so that Americans feel secure that their deposits are safe.

1126
00:53:16,840 --> 00:53:21,480
Speaker 19: I mean, people are concerned in general abo about deposits

1127
00:53:21,480 --> 00:53:24,040
Speaker 19: and making sure that their money is safe and available.

1128
00:53:25,239 --> 00:53:27,800
Speaker 19: I have to say that in this district it hasn't

1129
00:53:27,800 --> 00:53:31,320
Speaker 19: been one of the things that neighbors have called about

1130
00:53:31,320 --> 00:53:34,399
Speaker 19: on a regular basis, sent emails about. But I am

1131
00:53:34,400 --> 00:53:37,400
Speaker 19: confident in everything that I've heard from leadership and of

1132
00:53:37,440 --> 00:53:41,400
Speaker 19: course the Financial Services Committee that they are doing what

1133
00:53:41,480 --> 00:53:44,799
Speaker 19: they need to do to hold those accountable and make

1134
00:53:44,840 --> 00:53:48,200
Speaker 19: sure that they have proper oversight to make sure that

1135
00:53:48,520 --> 00:53:50,240
Speaker 19: Americans and their money are protected.

1136
00:53:51,080 --> 00:53:54,319
Speaker 3: Congressman, you represent, of course a district in New York City,

1137
00:53:54,320 --> 00:53:56,520
Speaker 3: and I would be very remiss if I did not

1138
00:53:56,680 --> 00:53:59,080
Speaker 3: ask you a question about salt. I know it's a

1139
00:53:59,160 --> 00:54:02,279
Speaker 3: huge issue for your constituents. I know it's something that

1140
00:54:02,360 --> 00:54:05,160
Speaker 3: Lomeers have been pushing for a while, but it seems

1141
00:54:05,160 --> 00:54:07,960
Speaker 3: to me that the dynamics have changed. You yourself and

1142
00:54:08,040 --> 00:54:11,920
Speaker 3: other New York Republicans really delivered the majority for McCarthy.

1143
00:54:12,200 --> 00:54:14,080
Speaker 3: Addressing the salt cap is one of the big things

1144
00:54:14,080 --> 00:54:16,920
Speaker 3: that your constituents want. What is the outlook on getting

1145
00:54:17,160 --> 00:54:18,479
Speaker 3: something done on that this year?

1146
00:54:19,440 --> 00:54:22,920
Speaker 19: Yeah, So you question is, you know if we have

1147
00:54:23,000 --> 00:54:25,640
Speaker 19: heard a lot about the bank industry. The answer is,

1148
00:54:25,680 --> 00:54:27,520
Speaker 19: we haven't heard much. But what we do hear about

1149
00:54:27,560 --> 00:54:30,279
Speaker 19: every single day and everywhere we go is salt and

1150
00:54:30,400 --> 00:54:35,560
Speaker 19: restoring that deduction. And myself, Congressman Laoda, Congressman Gabrino announced

1151
00:54:35,640 --> 00:54:38,439
Speaker 19: legislation a couple of weeks ago in order to get

1152
00:54:38,480 --> 00:54:41,760
Speaker 19: the ball moving to restore that deduction fully. It's something

1153
00:54:41,800 --> 00:54:47,160
Speaker 19: that we have made very very clear to leadership, to

1154
00:54:47,480 --> 00:54:51,520
Speaker 19: committee chairs that it is the most important issue that

1155
00:54:51,560 --> 00:54:54,680
Speaker 19: we are facing in New York. We have all joined

1156
00:54:55,040 --> 00:54:58,839
Speaker 19: the Bipartisan Salt Caucus with members from California, New York,

1157
00:54:58,880 --> 00:55:02,680
Speaker 19: New Jersey, Connecticut, those high tax states, and I really

1158
00:55:02,719 --> 00:55:07,080
Speaker 19: believe that we have an opportunity this Congress to make

1159
00:55:07,160 --> 00:55:10,920
Speaker 19: some serious headway and restore that deduction many of the

1160
00:55:11,160 --> 00:55:13,359
Speaker 19: of the wins that we had in twenty twenty two.

1161
00:55:14,160 --> 00:55:17,399
Speaker 19: The country was expecting this red tsunami across the nation

1162
00:55:17,600 --> 00:55:20,319
Speaker 19: and that didn't happen. But what we did see is

1163
00:55:20,360 --> 00:55:25,880
Speaker 19: that Republicans were elected in blue states, and we are

1164
00:55:25,920 --> 00:55:28,759
Speaker 19: going to use that to our advantage. And yes, I

1165
00:55:28,840 --> 00:55:32,560
Speaker 19: understand that this was a tax bill that was implemented

1166
00:55:32,560 --> 00:55:34,839
Speaker 19: by President Trump. I understand all that.

1167
00:55:35,000 --> 00:55:37,000
Speaker 7: But we are We made it very.

1168
00:55:36,800 --> 00:55:39,360
Speaker 19: Clear during our campaign that restoring the salt production was

1169
00:55:39,360 --> 00:55:42,400
Speaker 19: one of our priorities, if not the biggest one, and

1170
00:55:42,440 --> 00:55:43,880
Speaker 19: we are going to work each and every day to

1171
00:55:43,920 --> 00:55:46,239
Speaker 19: make sure that we restore that production that will work

1172
00:55:46,280 --> 00:55:47,280
Speaker 19: from anyone anywhere.

1173
00:55:47,560 --> 00:55:49,239
Speaker 4: Well, that's a solid note to leave it on.

1174
00:55:49,280 --> 00:55:52,880
Speaker 3: Thank you so much, Congress Congressman Anthony Desposito, Republican from

1175
00:55:52,960 --> 00:55:53,720
Speaker 3: Long Island.

1176
00:55:54,840 --> 00:55:58,239
Speaker 1: You're listening to The Bloomberg Sound on podcast. Catch the

1177
00:55:58,239 --> 00:56:00,200
Speaker 1: program live weekdays at one.

1178
00:56:00,800 --> 00:56:04,200
Speaker 8: On Bloomberg Radio, the tune in APF, Bloomberg dot Com, and.

1179
00:56:04,200 --> 00:56:05,520
Speaker 9: The Bloomberg Business app.

1180
00:56:05,680 --> 00:56:08,520
Speaker 1: You can also listen live on Amazon Alexa from our

1181
00:56:08,560 --> 00:56:14,279
Speaker 1: flagship New York station, Just say Alexa, play Bloomberg eleven thirty.

1182
00:56:14,320 --> 00:56:17,240
Speaker 2: This is indeed sound on Kayle Lions here alongside Emily

1183
00:56:17,280 --> 00:56:20,120
Speaker 2: Wilkins of Bloomberg Government today. Joe has the day off,

1184
00:56:20,120 --> 00:56:22,120
Speaker 2: but Emily, this is usually the point in the show

1185
00:56:22,160 --> 00:56:24,680
Speaker 2: in which we talk about what's going on in the

1186
00:56:24,719 --> 00:56:26,840
Speaker 2: markets and in the markets right now. For me, it

1187
00:56:26,920 --> 00:56:29,400
Speaker 2: is all about these bank stocks. Charlie was just running

1188
00:56:29,440 --> 00:56:32,440
Speaker 2: us through some of this pack West down forty three percent,

1189
00:56:32,520 --> 00:56:35,680
Speaker 2: Western Alliance down thirty five percent just on the day.

1190
00:56:35,719 --> 00:56:37,719
Speaker 2: This is building on losses we already have seen that

1191
00:56:37,719 --> 00:56:40,680
Speaker 2: have been quite severe for these names. Still questions around

1192
00:56:40,719 --> 00:56:44,319
Speaker 2: the stability of the banking sector and frankly, what can

1193
00:56:44,360 --> 00:56:46,800
Speaker 2: be done about it. I was on Capitol Hill earlier

1194
00:56:46,840 --> 00:56:50,920
Speaker 2: today outside of Senate Banking hearing about holding executives accountable

1195
00:56:51,200 --> 00:56:53,400
Speaker 2: of failed banks, but I stopped and had a conversation

1196
00:56:53,520 --> 00:56:57,120
Speaker 2: with Senator Elizabeth Warren, the Democrat from Massachusetts. Here's what

1197
00:56:57,200 --> 00:56:58,400
Speaker 2: she had to say on this matter.

1198
00:56:58,840 --> 00:57:03,560
Speaker 20: I remain so because the fallout from weak regulation and

1199
00:57:03,760 --> 00:57:08,560
Speaker 20: poor oversight is still in the system now there are

1200
00:57:08,680 --> 00:57:11,800
Speaker 20: things we can do about it. The Fed right now

1201
00:57:12,000 --> 00:57:15,320
Speaker 20: has the power to ratchet down on its overside of

1202
00:57:15,360 --> 00:57:18,680
Speaker 20: the banks. It should be doing that this very day.

1203
00:57:19,200 --> 00:57:23,520
Speaker 20: Congress has the power to roll back the weakening of

1204
00:57:23,640 --> 00:57:28,160
Speaker 20: regulations that happened in twenty eighteen. And also it's time

1205
00:57:28,200 --> 00:57:31,919
Speaker 20: to put a new tool in the toolbox, and that's clawbacks.

1206
00:57:33,160 --> 00:57:36,000
Speaker 2: So in theory, the power is there. Using it though

1207
00:57:36,000 --> 00:57:37,800
Speaker 2: emily entirely different.

1208
00:57:37,600 --> 00:57:41,720
Speaker 3: Oh completely, especially when you have Congress really so focused

1209
00:57:41,720 --> 00:57:43,760
Speaker 3: on the dut limit. It is sucking up most of

1210
00:57:43,760 --> 00:57:47,320
Speaker 3: the oxygen I think in the room or rooms on

1211
00:57:47,400 --> 00:57:48,080
Speaker 3: Capitol Hill.

1212
00:57:48,640 --> 00:57:50,800
Speaker 4: But I think there is You know, Warrent has.

1213
00:57:50,680 --> 00:57:54,280
Speaker 3: Continued to push for these regulations, and she's not alone.

1214
00:57:54,320 --> 00:57:56,240
Speaker 3: A number of her Democratic cogs have been with her.

1215
00:57:56,520 --> 00:57:58,120
Speaker 3: The problem is that we are in an era of

1216
00:57:58,120 --> 00:58:01,480
Speaker 3: divided government. Until you start seeing Republicans say hey, we

1217
00:58:01,520 --> 00:58:04,840
Speaker 3: are also on board with regulations, I just don't see

1218
00:58:04,880 --> 00:58:07,400
Speaker 3: how you have anything moved. She didn't mention the clawbacks.

1219
00:58:07,520 --> 00:58:10,280
Speaker 3: There are ours bipartisan legislation on that. I think that's

1220
00:58:10,280 --> 00:58:13,840
Speaker 3: the most interesting bank related bill to be watching.

1221
00:58:13,520 --> 00:58:14,840
Speaker 4: On Capitol Hill right now.

1222
00:58:15,080 --> 00:58:18,160
Speaker 3: But also Congress really responds to a crisis, and I

1223
00:58:18,200 --> 00:58:22,120
Speaker 3: think if we start seeing this continued concern in the market.

1224
00:58:22,160 --> 00:58:25,120
Speaker 3: If we start seeing other banks that are having issues, Yeah,

1225
00:58:25,320 --> 00:58:27,600
Speaker 3: I really do think we could wind up seeing something.

1226
00:58:27,680 --> 00:58:27,840
Speaker 16: Well.

1227
00:58:27,840 --> 00:58:30,320
Speaker 2: We certainly are seeing concern today, a lot of drama

1228
00:58:30,360 --> 00:58:32,120
Speaker 2: in that corner of the market. But I also have

1229
00:58:32,760 --> 00:58:34,520
Speaker 2: my eye on another corner, and that is actually the

1230
00:58:34,600 --> 00:58:36,800
Speaker 2: oil market, because we had seen oil falling out of

1231
00:58:36,800 --> 00:58:39,440
Speaker 2: bed once again. Today the losses aren't as steep. We're

1232
00:58:39,480 --> 00:58:41,720
Speaker 2: only down about two tenths of a percent on WTI,

1233
00:58:41,840 --> 00:58:45,600
Speaker 2: but still we are below seventy dollars a barrel, which

1234
00:58:45,640 --> 00:58:48,720
Speaker 2: is quite low relative to where we've been recently. Let's

1235
00:58:48,720 --> 00:58:50,960
Speaker 2: get more perspective on this now. Ellen Wall, the senior

1236
00:58:50,960 --> 00:58:54,320
Speaker 2: fellow at the Atlantic Council and a contributor for US

1237
00:58:54,320 --> 00:58:58,040
Speaker 2: here at Bloomberg Opinion, is joining us. Ellen. Things do

1238
00:58:58,160 --> 00:59:01,920
Speaker 2: feel more stable today, but still sub seventy. What do

1239
00:59:01,960 --> 00:59:04,080
Speaker 2: you think the primary driver of this move is?

1240
00:59:04,160 --> 00:59:09,680
Speaker 18: First of all, I definitely think it's global economic concerns.

1241
00:59:10,040 --> 00:59:13,040
Speaker 18: The banking issues are certainly not helping. The last time

1242
00:59:13,080 --> 00:59:15,440
Speaker 18: this happened, we saw oil take a dive as well,

1243
00:59:16,240 --> 00:59:18,840
Speaker 18: and I think that really the overriding issues that we're

1244
00:59:18,840 --> 00:59:22,160
Speaker 18: seeing now are just concerns about the global economy and

1245
00:59:22,200 --> 00:59:26,360
Speaker 18: whether we're actually going to see demand for oil and

1246
00:59:26,400 --> 00:59:27,520
Speaker 18: oil products.

1247
00:59:27,920 --> 00:59:33,280
Speaker 2: Well, demand indicates someone buying, obviously someone's selling. And this

1248
00:59:33,400 --> 00:59:36,880
Speaker 2: comes down to me sitting here in Washington to the

1249
00:59:36,960 --> 00:59:40,440
Speaker 2: idea of the Biden administration's management or maybe they wouldn't

1250
00:59:40,440 --> 00:59:43,440
Speaker 2: call it management, but influence on prices. We know they

1251
00:59:43,440 --> 00:59:46,600
Speaker 2: had tapped the Strategic Petroleum Reserve, which is much lower

1252
00:59:46,600 --> 00:59:48,680
Speaker 2: than it had been before that tapping. They had said

1253
00:59:48,720 --> 00:59:51,440
Speaker 2: around these prices is when they would be trying to

1254
00:59:51,480 --> 00:59:52,720
Speaker 2: refill it? Is now the time?

1255
00:59:54,080 --> 00:59:56,960
Speaker 18: Well, it's interesting. Now certainly could be the time to

1256
00:59:57,120 --> 01:00:00,720
Speaker 18: start to refill it. I do think that tend somewhat

1257
01:00:00,840 --> 01:00:03,880
Speaker 18: on whether they've completed I know they had to do

1258
01:00:04,000 --> 01:00:06,640
Speaker 18: some maintenance work in some of the facilities, but you

1259
01:00:06,680 --> 01:00:11,000
Speaker 18: can certainly make purchases now for delivery later. I think

1260
01:00:11,080 --> 01:00:13,960
Speaker 18: one of the issues that we're seeing is that, at

1261
01:00:14,000 --> 01:00:16,520
Speaker 18: least globally, that there was an expectation that the Biden

1262
01:00:16,520 --> 01:00:20,439
Speaker 18: administration would start to refill the SPR and since we're

1263
01:00:20,520 --> 01:00:24,320
Speaker 18: not seeing any movement on that, it seems like, you know,

1264
01:00:24,400 --> 01:00:27,680
Speaker 18: that is one of the things potentially that triggered the

1265
01:00:27,720 --> 01:00:30,959
Speaker 18: OPEC voluntary production cut, where they said, look, we thought

1266
01:00:31,040 --> 01:00:33,720
Speaker 18: there was going to be more demand here and we're

1267
01:00:33,720 --> 01:00:35,800
Speaker 18: not seeing that, so we got to do something on

1268
01:00:35,840 --> 01:00:36,720
Speaker 18: the supply side.

1269
01:00:36,800 --> 01:00:39,240
Speaker 2: Well, I'm glad you brought up OPEK that cut production

1270
01:00:39,360 --> 01:00:41,400
Speaker 2: with prices this low. What do you think the likelihood

1271
01:00:41,440 --> 01:00:42,520
Speaker 2: is that they're going to do that again?

1272
01:00:43,720 --> 01:00:46,640
Speaker 18: You know, I don't think it's all that likely that

1273
01:00:46,640 --> 01:00:50,920
Speaker 18: OPEC will act again, because, for one thing, those production

1274
01:00:51,000 --> 01:00:53,880
Speaker 18: cuts are just going into effect now. They didn't start

1275
01:00:53,920 --> 01:00:56,760
Speaker 18: till the beginning of May, so I think that they

1276
01:00:56,920 --> 01:00:59,440
Speaker 18: would probably like to wait and see how those play

1277
01:00:59,480 --> 01:01:02,600
Speaker 18: out market, especially over the summer when demand tends to

1278
01:01:02,600 --> 01:01:05,960
Speaker 18: be higher. And also, remember they're voluntary, so we've got

1279
01:01:05,960 --> 01:01:08,640
Speaker 18: to see who's even going to follow through on their commitments.

1280
01:01:08,680 --> 01:01:12,640
Speaker 18: There's really no any kind of mechanism even to compel

1281
01:01:12,680 --> 01:01:16,240
Speaker 18: anyone to participate here, other than the idea that they

1282
01:01:16,360 --> 01:01:20,160
Speaker 18: might actually list prices. So there's that, but you know,

1283
01:01:20,280 --> 01:01:23,080
Speaker 18: never say never. OPEK definitely came through with a big

1284
01:01:23,080 --> 01:01:26,840
Speaker 18: surprise that time, and there's always the potential for them

1285
01:01:26,920 --> 01:01:27,720
Speaker 18: to take more action.

1286
01:01:28,840 --> 01:01:30,720
Speaker 3: We've got a story up right now in the terminal

1287
01:01:31,000 --> 01:01:34,640
Speaker 3: by our own and ray Or Dern about two members

1288
01:01:34,680 --> 01:01:38,000
Speaker 3: of Biden's team planning to make separate trips to Saudi Arabia.

1289
01:01:38,040 --> 01:01:40,880
Speaker 3: We're going to see National Security Advisor Jake Sullivan meet

1290
01:01:40,920 --> 01:01:45,320
Speaker 3: with his counterparts from Saudi Arabia and India next week,

1291
01:01:45,480 --> 01:01:47,360
Speaker 3: and then we're going to see Secretary of State Anthony

1292
01:01:47,360 --> 01:01:50,800
Speaker 3: Blincoln also planned to visit Saudi Arabia in June and

1293
01:01:51,200 --> 01:01:51,920
Speaker 3: read the tea.

1294
01:01:51,800 --> 01:01:52,720
Speaker 4: Leaves for us here.

1295
01:01:52,840 --> 01:01:56,200
Speaker 3: What is your takeaway from these high level diplomats making

1296
01:01:56,280 --> 01:01:58,360
Speaker 3: these trips and meeting with these officials.

1297
01:01:59,200 --> 01:02:02,000
Speaker 18: I mean, there's is the possibility that it could be

1298
01:02:02,040 --> 01:02:04,840
Speaker 18: about oil. So my guess probably it has more to

1299
01:02:04,880 --> 01:02:12,440
Speaker 18: do with the new Saudi relationships that they're ron than

1300
01:02:12,520 --> 01:02:16,000
Speaker 18: it does with oil, but you know, it could always

1301
01:02:16,160 --> 01:02:17,680
Speaker 18: have an oil component.

1302
01:02:18,800 --> 01:02:21,520
Speaker 2: How can you just characterize quickly, we only have about

1303
01:02:21,520 --> 01:02:24,600
Speaker 2: a minute left the relationship between US and these oil

1304
01:02:24,640 --> 01:02:27,120
Speaker 2: producing countries in the Middle East. How tense is it

1305
01:02:27,200 --> 01:02:27,560
Speaker 2: right now?

1306
01:02:28,560 --> 01:02:31,000
Speaker 18: I think that it's not as good as it has been,

1307
01:02:31,040 --> 01:02:33,960
Speaker 18: and part of that is because the relationship is really shifted.

1308
01:02:34,040 --> 01:02:37,880
Speaker 18: The US is no longer Saudi Arabia's most important customer.

1309
01:02:38,040 --> 01:02:41,160
Speaker 18: That's now China and probably soon to the India as well,

1310
01:02:41,560 --> 01:02:44,520
Speaker 18: And the US is really is the largest producer in

1311
01:02:44,560 --> 01:02:47,240
Speaker 18: the world. So that relationship is I would say, in

1312
01:02:47,280 --> 01:02:48,480
Speaker 18: a state of flocks.

1313
01:02:49,360 --> 01:02:51,680
Speaker 2: Okay, Ellen, thank you so much for joining us as

1314
01:02:51,680 --> 01:02:53,680
Speaker 2: always with your insight. Wish we had more time, but

1315
01:02:53,880 --> 01:02:56,160
Speaker 2: really appreciate you joining us. That is Ellen Wald. She

1316
01:02:56,240 --> 01:02:58,960
Speaker 2: is a senior fellow at the Atlantic Council as well

1317
01:02:59,000 --> 01:03:01,520
Speaker 2: as a contributor to Bloomberg Opinion, and she makes a

1318
01:03:01,520 --> 01:03:04,240
Speaker 2: good point about the US as an energy producer as well.

1319
01:03:04,640 --> 01:03:07,600
Speaker 2: You know the domestic production, what's happening in the shale patch.

1320
01:03:07,640 --> 01:03:10,080
Speaker 2: But what we have seen with producers here in the

1321
01:03:10,160 --> 01:03:13,000
Speaker 2: US is that they've been all about capital discipline, not

1322
01:03:13,160 --> 01:03:16,400
Speaker 2: drilling more, returning capital to shareholders. And we know Emily

1323
01:03:16,400 --> 01:03:19,040
Speaker 2: that hasn't always been popular with the Biden administration.

1324
01:03:19,200 --> 01:03:21,000
Speaker 3: No, and I think we should also keep a very

1325
01:03:21,040 --> 01:03:23,320
Speaker 3: close eye on these debt limit talks. Republicans want some

1326
01:03:23,360 --> 01:03:26,560
Speaker 3: of their big energy package included. That could be something

1327
01:03:26,600 --> 01:03:27,960
Speaker 3: that impacts the markets as well.

1328
01:03:28,200 --> 01:03:30,520
Speaker 2: That is a really good flag something we will continue

1329
01:03:30,560 --> 01:03:32,400
Speaker 2: to keep an eye on, and you know we'll be

1330
01:03:32,400 --> 01:03:36,680
Speaker 2: doing that here on sound On. As always, this is Bloomberg.

1331
01:03:41,240 --> 01:03:43,120
Speaker 1: Thanks for listening to the sound On podcast.

1332
01:03:43,200 --> 01:03:46,440
Speaker 11: Make sure to subscribe if you haven't already at Apple, Spotify, and.

1333
01:03:46,480 --> 01:03:49,040
Speaker 8: Anywhere else you get your podcasts, and you can find

1334
01:03:49,080 --> 01:03:52,160
Speaker 8: us live every weekday from Washington, DC at one pm

1335
01:03:52,200 --> 01:03:52,600
Speaker 8: Eastern

1336
01:03:52,640 --> 01:03:55,760
Speaker 1: Time at Bloomberg dot com