1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. The US 3 00:00:06,400 --> 00:00:09,880 Speaker 1: economy continues to send mixed signals. The financial stories that 4 00:00:10,039 --> 00:00:13,000 Speaker 1: cheap our world fed action to con concerns over dollar 5 00:00:13,039 --> 00:00:16,520 Speaker 1: liquidity and encouraging China data. The five hundred wealthiest people 6 00:00:16,520 --> 00:00:19,160 Speaker 1: in the world. Through the eyes of the most influential 7 00:00:19,239 --> 00:00:22,520 Speaker 1: voices Larry Summers, the former Treasury Secretary, star Ward CEO 8 00:00:22,640 --> 00:00:26,360 Speaker 1: Kevin Johnson sec Chairman J Clayton. Bloomberg wool Street Week 9 00:00:26,480 --> 00:00:30,200 Speaker 1: with David Weston from Bloomberg Radio. Be careful what you 10 00:00:30,240 --> 00:00:34,120 Speaker 1: wish for. More vaccines and seamulus point toward recovery, but 11 00:00:34,280 --> 00:00:36,440 Speaker 1: it looks like it's going to be a bumpy ride. 12 00:00:36,800 --> 00:00:39,720 Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. Maybe 13 00:00:39,720 --> 00:00:42,760 Speaker 1: the most important development of the week, not just for markets, 14 00:00:42,760 --> 00:00:45,680 Speaker 1: but for all of us was Johnson and Johnson joined 15 00:00:45,720 --> 00:00:49,760 Speaker 1: the elite club of approved vaccine providers, adding its millions 16 00:00:49,760 --> 00:00:52,560 Speaker 1: of doses to the battle against COVID. We talked to 17 00:00:52,680 --> 00:00:55,480 Speaker 1: J and J chairman and CEO Alex Gorski about how 18 00:00:55,520 --> 00:00:58,000 Speaker 1: they did it and how fast they can get that 19 00:00:58,120 --> 00:01:02,080 Speaker 1: vaccine into people's arm. Look. From the very beginning, we 20 00:01:02,120 --> 00:01:06,160 Speaker 1: tried to look at how could we design a the 21 00:01:06,400 --> 00:01:11,160 Speaker 1: very best possible vaccine in terms of safety, efficacy, dosing, 22 00:01:11,640 --> 00:01:15,200 Speaker 1: and and frankly administration and logistics and UH. And we 23 00:01:15,280 --> 00:01:17,080 Speaker 1: had a platform that had been used in more than 24 00:01:17,120 --> 00:01:19,000 Speaker 1: a hundred thousand patients that gave us a lot of 25 00:01:19,040 --> 00:01:22,920 Speaker 1: confidence that the safety profile was very strong. We tested 26 00:01:22,959 --> 00:01:26,440 Speaker 1: it thoroughly. And what's really important about our test, David, 27 00:01:26,480 --> 00:01:30,640 Speaker 1: our clinical trials was we didn't start until September, and 28 00:01:30,720 --> 00:01:32,360 Speaker 1: so just as we had come out of what I 29 00:01:32,400 --> 00:01:34,880 Speaker 1: would say the low point over the summer and we 30 00:01:34,920 --> 00:01:38,160 Speaker 1: started seeing cases increased, certainly across the United States, but 31 00:01:38,240 --> 00:01:41,600 Speaker 1: more importantly around the world, that's when our trial began. 32 00:01:41,720 --> 00:01:45,520 Speaker 1: So we were really into, you know, the the heat 33 00:01:45,880 --> 00:01:50,320 Speaker 1: of the of the virus spread. Number two UH of 34 00:01:50,360 --> 00:01:52,160 Speaker 1: our patients were in the United States, but we had 35 00:01:52,200 --> 00:01:56,080 Speaker 1: about in Latin America, and we had about fifteen percent 36 00:01:56,160 --> 00:01:59,880 Speaker 1: that we're actually in South Africa, so where you know, 37 00:02:00,280 --> 00:02:03,639 Speaker 1: one of the most difficult strains of the South African straint. 38 00:02:03,880 --> 00:02:07,560 Speaker 1: And by the way, of the fifteen thousand patients that 39 00:02:08,080 --> 00:02:10,440 Speaker 1: we were working on, there are those that were infected 40 00:02:10,760 --> 00:02:13,880 Speaker 1: actually had the South African variant UH, and so it 41 00:02:13,880 --> 00:02:15,560 Speaker 1: gave us a lot of data, and what we saw 42 00:02:15,639 --> 00:02:19,240 Speaker 1: were still very strong effectiveness rates in fact in serious 43 00:02:19,280 --> 00:02:21,880 Speaker 1: cases and a hundred percent of the time as far 44 00:02:21,919 --> 00:02:24,560 Speaker 1: as kept patients out of the hospital and kept them 45 00:02:24,600 --> 00:02:27,000 Speaker 1: from dying. UH. So we know that this is going 46 00:02:27,040 --> 00:02:29,800 Speaker 1: to be a really important tool for healthcare providers around 47 00:02:29,840 --> 00:02:33,000 Speaker 1: the world. And so go forward and take give us 48 00:02:33,000 --> 00:02:35,280 Speaker 1: a sense of where you're headed. Do you envision a 49 00:02:35,280 --> 00:02:37,480 Speaker 1: world in which we have different versions of vaccine for 50 00:02:37,480 --> 00:02:39,480 Speaker 1: different variants or do you think we know enough now 51 00:02:39,520 --> 00:02:41,600 Speaker 1: to think we'll be able to have one version that 52 00:02:41,680 --> 00:02:45,519 Speaker 1: will be good enough for all the variants. Well, David, look, 53 00:02:45,560 --> 00:02:48,920 Speaker 1: I think all of these vaccines work extremely well, and 54 00:02:48,919 --> 00:02:51,160 Speaker 1: the fact that we've seen these kind of results from 55 00:02:51,919 --> 00:02:56,520 Speaker 1: three different platforms now is very encouraging. UM. And my 56 00:02:56,600 --> 00:02:59,200 Speaker 1: recommendation is everybody needs to get a shot as soon 57 00:02:59,240 --> 00:03:02,560 Speaker 1: as they possibly can, because every time this virus spreads, 58 00:03:02,960 --> 00:03:06,880 Speaker 1: it's transmitted and UH it could has the potential to 59 00:03:06,960 --> 00:03:10,320 Speaker 1: mutate to cause another variant, and so the faster we 60 00:03:10,360 --> 00:03:13,560 Speaker 1: can get people vaccinated to stop that from happening, the 61 00:03:13,639 --> 00:03:16,720 Speaker 1: likely better outcome we're going to have. But the good 62 00:03:16,720 --> 00:03:19,160 Speaker 1: news is also is because of these new platforms that 63 00:03:19,200 --> 00:03:24,360 Speaker 1: we have that are so much more adaptable, adaptable that 64 00:03:24,560 --> 00:03:27,640 Speaker 1: right now companies and ours included as working on next 65 00:03:27,680 --> 00:03:30,639 Speaker 1: generation should that be necessary. So we're gonna have to 66 00:03:30,680 --> 00:03:33,320 Speaker 1: see how this plays out over the next sixth the 67 00:03:33,480 --> 00:03:36,120 Speaker 1: next nine months. We could be in a situation where 68 00:03:36,120 --> 00:03:39,280 Speaker 1: we see a precipitous decline in the virus. We could 69 00:03:39,280 --> 00:03:41,080 Speaker 1: see some surgeons in the fall that we need to 70 00:03:41,080 --> 00:03:43,920 Speaker 1: stay protective of, or we could see where we could 71 00:03:43,960 --> 00:03:46,640 Speaker 1: need a booster shot or another shot further down the road, 72 00:03:46,640 --> 00:03:48,400 Speaker 1: similar to what you do with the flu shot. But 73 00:03:48,920 --> 00:03:51,280 Speaker 1: that being said, we're in a much better place today 74 00:03:52,080 --> 00:03:55,720 Speaker 1: based upon all the great science, research and engineering that 75 00:03:55,720 --> 00:03:57,480 Speaker 1: that we've been doing. But Alex, when you have the 76 00:03:57,520 --> 00:04:00,640 Speaker 1: four million or who do you call to say worship 77 00:04:00,720 --> 00:04:04,000 Speaker 1: ship them? Well, right now it's directly to the government. 78 00:04:04,040 --> 00:04:07,119 Speaker 1: So in the United States, the government determines it goes 79 00:04:07,160 --> 00:04:11,840 Speaker 1: from basically our our distribution facility and ups trucks to Macksson, 80 00:04:12,160 --> 00:04:14,480 Speaker 1: and then the government works very closely to distribute it 81 00:04:14,480 --> 00:04:17,440 Speaker 1: to the states. They're working closely with the governors as 82 00:04:17,440 --> 00:04:20,560 Speaker 1: well as with some of the large retail chains. And 83 00:04:20,600 --> 00:04:22,640 Speaker 1: you know, the good news is, David, I think now 84 00:04:22,720 --> 00:04:25,760 Speaker 1: that we have a third vaccine out there, and and 85 00:04:25,800 --> 00:04:28,760 Speaker 1: by the way, kudos to Fiser and Maderna for also 86 00:04:28,960 --> 00:04:32,599 Speaker 1: significantly increasing their output. I would predict that in the 87 00:04:32,720 --> 00:04:35,160 Speaker 1: second quarter we're no longer going to be near as 88 00:04:35,200 --> 00:04:38,640 Speaker 1: supply constraint, and as we get more doses out, we're 89 00:04:38,680 --> 00:04:40,760 Speaker 1: going to be able to open up some of the 90 00:04:40,800 --> 00:04:43,680 Speaker 1: requirements and restrictions regarding who can get the vaccine and 91 00:04:43,720 --> 00:04:46,520 Speaker 1: who can't, And as a result, our throughput will go up. 92 00:04:46,560 --> 00:04:48,400 Speaker 1: And I think we're going to see a big difference 93 00:04:48,760 --> 00:04:51,400 Speaker 1: about the number of patients being vaccinated in the second 94 00:04:51,480 --> 00:04:54,719 Speaker 1: quarter around our country, let alone the world. Finally, Alex, 95 00:04:54,800 --> 00:04:57,760 Speaker 1: I know you know you think strategically, and it's become 96 00:04:57,760 --> 00:04:59,760 Speaker 1: a commonplace for all us to say the world's never 97 00:04:59,760 --> 00:05:02,080 Speaker 1: going be the same as it was pre pandemic. But 98 00:05:02,120 --> 00:05:05,000 Speaker 1: what about for Johnson and Johnson for your industry. Can 99 00:05:05,080 --> 00:05:06,960 Speaker 1: you see ways in which you're going to make different 100 00:05:06,960 --> 00:05:10,240 Speaker 1: decisions about deployment of capital employment going forward? Does it 101 00:05:10,320 --> 00:05:13,480 Speaker 1: change the nature Johnson Johnson's business, what we've been through 102 00:05:13,600 --> 00:05:15,479 Speaker 1: here with this pandemic. We look, I said, there's a 103 00:05:15,480 --> 00:05:18,920 Speaker 1: few things that are very important strategic considerations for us 104 00:05:18,960 --> 00:05:21,720 Speaker 1: going forward. And the first is the importance of global 105 00:05:21,760 --> 00:05:24,440 Speaker 1: public health. I mean, one thing that this pandemic has 106 00:05:24,480 --> 00:05:28,360 Speaker 1: demonstrated that if we don't have strong resilient public health 107 00:05:28,400 --> 00:05:33,240 Speaker 1: systems in place, we don't have national security, economics, security, 108 00:05:33,600 --> 00:05:37,080 Speaker 1: or frankly security as a society. And so making that 109 00:05:37,200 --> 00:05:42,160 Speaker 1: investment focusing more on durability, sustainability, and maybe even some 110 00:05:42,200 --> 00:05:46,839 Speaker 1: redundancy versus just maniacally on effectiveness and efficiency is going 111 00:05:46,880 --> 00:05:50,400 Speaker 1: to be critical for us. Whether it's storing ppe, creating 112 00:05:50,480 --> 00:05:53,360 Speaker 1: vaccine capacity, or the way that we even think about 113 00:05:53,400 --> 00:05:57,360 Speaker 1: handling surgeons in hospital is some isn't a very important lesson, 114 00:05:57,440 --> 00:06:00,280 Speaker 1: I believe for our industry. The second one for me, David, 115 00:06:00,360 --> 00:06:03,919 Speaker 1: is just technology, and whether it's the technology of the science, 116 00:06:04,279 --> 00:06:06,440 Speaker 1: the way we were able to collect data quickly, take 117 00:06:06,480 --> 00:06:10,279 Speaker 1: the genomic information, apply it to a platform, have three 118 00:06:10,400 --> 00:06:13,840 Speaker 1: vaccines in a period of months versus what ordinarily would 119 00:06:13,839 --> 00:06:16,719 Speaker 1: require years. The way we've been able to share data 120 00:06:16,760 --> 00:06:20,560 Speaker 1: and information to understand where this virus is and it isn't. 121 00:06:21,040 --> 00:06:24,960 Speaker 1: I think it represents just a significant increase in the 122 00:06:24,960 --> 00:06:27,200 Speaker 1: way we use data and the way that we apply 123 00:06:27,360 --> 00:06:30,840 Speaker 1: that in decision making and healthcare systems throughout the world. 124 00:06:30,960 --> 00:06:33,919 Speaker 1: That was Johnson and Johnson chairman and CEO Alex Gorski 125 00:06:34,160 --> 00:06:38,039 Speaker 1: coming up Walmart as your friendly neighborhood bank. We talked 126 00:06:38,080 --> 00:06:40,800 Speaker 1: with former f d i C head Sheila Bear about 127 00:06:40,800 --> 00:06:44,360 Speaker 1: the risks and the opportunities. That's next on Wall Street 128 00:06:44,400 --> 00:06:54,880 Speaker 1: Week on Bloomberg. This is Bloomberg Wall Street Week with 129 00:06:55,040 --> 00:06:58,520 Speaker 1: David Weston from Bloomberg Radio. We don't care what they 130 00:06:58,520 --> 00:07:01,640 Speaker 1: do as a retailer, but we are concerned about the 131 00:07:01,680 --> 00:07:05,040 Speaker 1: safety and soundness of the financial system. And this doesn't 132 00:07:05,040 --> 00:07:10,000 Speaker 1: just relate to Walmart. It's any commercial industrial company getting 133 00:07:10,040 --> 00:07:13,120 Speaker 1: into banking and the threats that could potentially caused. That 134 00:07:13,320 --> 00:07:17,200 Speaker 1: was former Ohio Congressman Paul Gilmore in two thousand seven, 135 00:07:17,240 --> 00:07:21,600 Speaker 1: after Walmart's failed attempt to get into banking. Fourteen years later, 136 00:07:21,800 --> 00:07:25,560 Speaker 1: Walmart maybe taking another look at taking on Wall Street, 137 00:07:25,600 --> 00:07:29,640 Speaker 1: this time with two veterans from Goldman Sachs Consumer Finance division. 138 00:07:30,080 --> 00:07:33,480 Speaker 1: They left Goldman this week to join a fintech startup 139 00:07:33,760 --> 00:07:38,000 Speaker 1: backed by Walmart and Ribbit Capital. Omar Isma'il was the 140 00:07:38,040 --> 00:07:42,280 Speaker 1: head of Goldman's consumer bank named Marcus launched in two sixteen. 141 00:07:42,720 --> 00:07:45,280 Speaker 1: It was meant to get Goldman into the consumer business, 142 00:07:45,360 --> 00:07:49,040 Speaker 1: but it's been slow to gain traction. Here's Stephanie Cohen 143 00:07:49,120 --> 00:07:52,720 Speaker 1: of Goldman. Sachs. We want to be the leading digital 144 00:07:52,880 --> 00:07:55,800 Speaker 1: banking platform, and the idea behind this is that we 145 00:07:55,840 --> 00:07:59,119 Speaker 1: can be someone's holistic bank. Later this year, we planned 146 00:07:59,120 --> 00:08:01,840 Speaker 1: to launch checking. We really think that's the final staff 147 00:08:01,880 --> 00:08:06,040 Speaker 1: efforts by retailers and startups to begin offering core banking products. 148 00:08:06,040 --> 00:08:11,200 Speaker 1: Pits fintech against Wall Street. You have fintech, big tech. 149 00:08:11,360 --> 00:08:13,720 Speaker 1: You saw Walmart recently, so we just have to be 150 00:08:13,720 --> 00:08:17,360 Speaker 1: prepared for intensified competition. We're ready for it. We're very 151 00:08:17,360 --> 00:08:20,080 Speaker 1: competitive and we expect to win. That's Jamie Diamond of 152 00:08:20,160 --> 00:08:22,840 Speaker 1: JP Morgan Chase. Walmart has been trying to get into 153 00:08:22,880 --> 00:08:25,560 Speaker 1: the banking business since the late nineteen nineties. It first 154 00:08:25,600 --> 00:08:28,840 Speaker 1: tried unsuccessfully to buy a bank in California. Then it 155 00:08:28,920 --> 00:08:31,080 Speaker 1: tried again in two thousand and five, applying for an 156 00:08:31,080 --> 00:08:34,480 Speaker 1: industrial bank charter in Utah, which had hoped to use 157 00:08:34,600 --> 00:08:38,480 Speaker 1: to process credit and debit card transactions internally. But the 158 00:08:38,600 --> 00:08:42,720 Speaker 1: retailer faced a firestorm of opposition from lawmakers and banking 159 00:08:42,760 --> 00:08:47,400 Speaker 1: industry groups. After two years and several delays, Walmart ultimately 160 00:08:47,520 --> 00:08:51,800 Speaker 1: withdrew its application. Here's Walmart CEO Doug McMillan. You can 161 00:08:51,840 --> 00:08:55,120 Speaker 1: go away quickly if you're not moving to where the 162 00:08:55,160 --> 00:08:59,000 Speaker 1: customer wants to be served in the future. So what 163 00:08:59,040 --> 00:09:00,959 Speaker 1: we're trying to do here is to get people to 164 00:09:01,040 --> 00:09:04,520 Speaker 1: be really open to embracing what's next. Sheilabart was the 165 00:09:04,559 --> 00:09:06,440 Speaker 1: head of the f d i C when the agency 166 00:09:06,559 --> 00:09:10,719 Speaker 1: temporarily suspended Walmart's banking ambitions and encouraged the retailed to 167 00:09:10,840 --> 00:09:14,360 Speaker 1: partner with banks instead. I asked her, what is different 168 00:09:14,480 --> 00:09:18,439 Speaker 1: this time around. I'm not sure much is different. There's 169 00:09:18,480 --> 00:09:23,880 Speaker 1: a financial technology has uh created new opportunities to provide 170 00:09:23,920 --> 00:09:27,679 Speaker 1: financial services, especially in the payments space, with with with 171 00:09:27,800 --> 00:09:31,560 Speaker 1: larger returns. So it may be that Walmart used this 172 00:09:32,000 --> 00:09:35,280 Speaker 1: as attractive um as you say that they tried to 173 00:09:35,280 --> 00:09:37,319 Speaker 1: get an i LC charter in two thousand five and 174 00:09:37,360 --> 00:09:39,280 Speaker 1: two thousand and six. I was actually chair of the 175 00:09:39,360 --> 00:09:42,000 Speaker 1: f d i C when that was attempted. It was 176 00:09:42,040 --> 00:09:44,280 Speaker 1: already an ongoing issue when I came to the f 177 00:09:44,440 --> 00:09:47,320 Speaker 1: d i C and I placed a moratorium on their 178 00:09:47,360 --> 00:09:50,080 Speaker 1: application because there was so much controversy about it and 179 00:09:50,160 --> 00:09:53,160 Speaker 1: asked Congress to resolve this whether they really want a 180 00:09:53,160 --> 00:09:56,480 Speaker 1: commercial entity like Walmart to own at an I l 181 00:09:56,520 --> 00:09:59,880 Speaker 1: C which is essentially a bank, and Congress never really 182 00:10:00,000 --> 00:10:02,520 Speaker 1: out with it. It's still permitted. Walmart at that point 183 00:10:02,559 --> 00:10:05,360 Speaker 1: decided to withdraw the application, which I think was wise. 184 00:10:05,760 --> 00:10:08,360 Speaker 1: The Great Financial Crisis was, you know, coming, and we 185 00:10:08,400 --> 00:10:10,319 Speaker 1: had other things to worry about at the fdi C. 186 00:10:10,640 --> 00:10:13,720 Speaker 1: So a lot of the policy arguments are the same. 187 00:10:13,760 --> 00:10:16,840 Speaker 1: I think financial technology perhaps makes this more attractive now 188 00:10:16,880 --> 00:10:19,880 Speaker 1: to Walmart. I can only speculate they haven't really provided 189 00:10:19,920 --> 00:10:22,240 Speaker 1: much public information about what their plans are. As you say, 190 00:10:22,280 --> 00:10:25,600 Speaker 1: most of the regulatory agencies disfavor a commercial entity owning 191 00:10:25,600 --> 00:10:28,000 Speaker 1: a bank. There is an exception in this industrial bank 192 00:10:28,080 --> 00:10:32,480 Speaker 1: sort of an interesting phenomenon. What are the risks from 193 00:10:32,480 --> 00:10:35,800 Speaker 1: not having the full regulatory force applied to something like 194 00:10:35,840 --> 00:10:39,880 Speaker 1: a Walmart? So yeah, so I think so their concentration 195 00:10:39,920 --> 00:10:42,760 Speaker 1: of power. I think the traditional prohibition we've had on 196 00:10:42,800 --> 00:10:46,679 Speaker 1: this is the concentration of power of commercial, very large 197 00:10:46,720 --> 00:10:50,679 Speaker 1: commercial entities, you know, being able to build banking empires 198 00:10:50,679 --> 00:10:53,000 Speaker 1: to That's that's a lot of concentrated power. So I 199 00:10:53,000 --> 00:10:57,640 Speaker 1: think that's an issue. Also the impact on community banks, 200 00:10:57,800 --> 00:11:00,600 Speaker 1: you know, given Walmart you know, could provide a lot 201 00:11:00,600 --> 00:11:03,760 Speaker 1: of competition. Uh. I think there's a fear there that 202 00:11:03,800 --> 00:11:08,520 Speaker 1: they could really hurt community banks. So that's really uh 203 00:11:08,640 --> 00:11:12,360 Speaker 1: the policy arguments against it, um but it's you know, 204 00:11:12,400 --> 00:11:16,920 Speaker 1: in terms of safety and soundness. The other difference with 205 00:11:16,960 --> 00:11:20,080 Speaker 1: the regular bank charter is that there's no holding company supervision. 206 00:11:20,200 --> 00:11:22,400 Speaker 1: So with an i l C, for a regular bank 207 00:11:22,720 --> 00:11:27,000 Speaker 1: that's owned by another entity, the FED exercises authority regulatory 208 00:11:27,040 --> 00:11:30,920 Speaker 1: supervisory authority over that holding company. With an i l C, 209 00:11:31,120 --> 00:11:34,240 Speaker 1: you don't have that. However, in the case of Walmart, 210 00:11:34,360 --> 00:11:37,199 Speaker 1: I'm not really sure that's an issue. First, the f 211 00:11:37,320 --> 00:11:39,240 Speaker 1: D i C always when they prove these I l 212 00:11:39,280 --> 00:11:44,160 Speaker 1: C charters contractually require the parent to provide financial support 213 00:11:44,240 --> 00:11:48,280 Speaker 1: to to the i l C. And also, obviously Walmart 214 00:11:48,320 --> 00:11:50,480 Speaker 1: has very deep pockets, so it's hard to imagine the 215 00:11:50,520 --> 00:11:52,840 Speaker 1: situation where a bag of theirs would would get in 216 00:11:52,840 --> 00:11:55,080 Speaker 1: trouble for one of the ability of the parent to 217 00:11:55,160 --> 00:11:58,360 Speaker 1: support it. So I think safety and sands is less 218 00:11:58,360 --> 00:12:01,360 Speaker 1: of an issue in this content X, but certainly consumer 219 00:12:01,400 --> 00:12:04,240 Speaker 1: protection and the impact of the competition are very, very 220 00:12:04,360 --> 00:12:07,479 Speaker 1: very real issues you mentioned shield of the possible squeeze 221 00:12:07,600 --> 00:12:10,120 Speaker 1: on local and community banks. If the Walmarts of this 222 00:12:10,120 --> 00:12:12,040 Speaker 1: world get into that business, could there also be a 223 00:12:12,080 --> 00:12:14,520 Speaker 1: squeeze on the bigger banks as a practical matter, as 224 00:12:14,559 --> 00:12:17,400 Speaker 1: more and more big commercial energies come into their neighborhood 225 00:12:17,440 --> 00:12:19,760 Speaker 1: and compete with them, for example, for a deposit taking, Well, 226 00:12:19,760 --> 00:12:22,760 Speaker 1: they could very well be And you know again it's 227 00:12:22,760 --> 00:12:26,480 Speaker 1: that may be a benefit. It's uh one you know 228 00:12:26,520 --> 00:12:29,600 Speaker 1: we've had with this terrible pandemic. We've had an accelerating 229 00:12:29,600 --> 00:12:33,319 Speaker 1: trend towards you know, a lot of branches closing remote 230 00:12:33,320 --> 00:12:37,440 Speaker 1: provision of financial services. It's less cost, it doesn't involve 231 00:12:37,520 --> 00:12:40,000 Speaker 1: people personally interacting with each other, which has become an 232 00:12:40,040 --> 00:12:43,719 Speaker 1: issue with this pandemic. But there are still a lot 233 00:12:43,720 --> 00:12:46,080 Speaker 1: of people who want a physical location to go to 234 00:12:46,200 --> 00:12:49,520 Speaker 1: for their banking services. And Walmart can provide that with 235 00:12:49,559 --> 00:12:53,120 Speaker 1: all its stores of elderly people, you know, people lowering 236 00:12:53,160 --> 00:12:56,040 Speaker 1: some people who don't have access to the internet. The 237 00:12:56,040 --> 00:13:00,480 Speaker 1: the ability of also provide not just technology to allogically 238 00:13:00,480 --> 00:13:04,079 Speaker 1: remote services, but also a physical location, I think is 239 00:13:04,080 --> 00:13:07,280 Speaker 1: an advantage that that Walmart could provide in a benefit 240 00:13:07,320 --> 00:13:10,040 Speaker 1: to that segment of the population that still wants wants 241 00:13:10,080 --> 00:13:13,840 Speaker 1: an actual banking physical space to go to. So yes, 242 00:13:13,960 --> 00:13:16,959 Speaker 1: and in that context, their their vast array of stores 243 00:13:17,040 --> 00:13:21,320 Speaker 1: could be highly competitive with these larger banks branch operations. 244 00:13:21,360 --> 00:13:23,080 Speaker 1: So as you're right, it's not clear that it would 245 00:13:23,120 --> 00:13:25,920 Speaker 1: just be an impact to community banks. Well, you raise 246 00:13:26,000 --> 00:13:28,640 Speaker 1: a very interesting possibility. I think we have talked for 247 00:13:28,679 --> 00:13:31,480 Speaker 1: some time about the unbanked and the underbanked in the 248 00:13:31,559 --> 00:13:36,000 Speaker 1: United States, typically in poor communities, suggest and how we 249 00:13:36,040 --> 00:13:39,319 Speaker 1: address that. We haven't been successful terribly in doing that. 250 00:13:39,640 --> 00:13:42,959 Speaker 1: Could a Walmart moving in actually help address that problem 251 00:13:42,960 --> 00:13:44,959 Speaker 1: in the country. Well, I think they could. I mean, 252 00:13:45,000 --> 00:13:48,600 Speaker 1: I think lower income and lower middle income Americans are 253 00:13:48,640 --> 00:13:53,439 Speaker 1: are are very big part of Walmart's UH customer base, 254 00:13:53,600 --> 00:13:56,280 Speaker 1: and so they're coming to those stores already. So yeah, 255 00:13:56,280 --> 00:13:58,920 Speaker 1: I mean, I think we need to know what Walmart plans. 256 00:13:59,640 --> 00:14:02,600 Speaker 1: They just plan to, you know, fatten their profit margins. Well, 257 00:14:03,000 --> 00:14:04,480 Speaker 1: good for them, but you know, that's not really a 258 00:14:04,520 --> 00:14:07,640 Speaker 1: public policy reason to provide the charter a group the charter. 259 00:14:08,280 --> 00:14:11,040 Speaker 1: But if yeah, if they can leverage that reach that 260 00:14:11,080 --> 00:14:14,079 Speaker 1: they have with the unbank and undermank populations to provide 261 00:14:14,520 --> 00:14:17,600 Speaker 1: a fuller panic ply of financial services at low cost, 262 00:14:17,679 --> 00:14:20,400 Speaker 1: at mainstream cost. Right, So people can go to payday 263 00:14:20,480 --> 00:14:23,680 Speaker 1: lenders and pawn shops now and get financial services that 264 00:14:23,720 --> 00:14:28,480 Speaker 1: are very high cost. But if Walmart can democratize for 265 00:14:28,600 --> 00:14:31,680 Speaker 1: the democratized credit and banking services and provided the same 266 00:14:31,680 --> 00:14:33,160 Speaker 1: cost that you and I get, and I think that 267 00:14:33,200 --> 00:14:35,840 Speaker 1: would be hugely beneficial. So, you know, we need to 268 00:14:35,840 --> 00:14:38,280 Speaker 1: stay tuned in terms of what Walmart is, what the 269 00:14:38,320 --> 00:14:41,280 Speaker 1: value proposition is that they're contemplating, But there's certainly a 270 00:14:41,280 --> 00:14:43,960 Speaker 1: lot of potential there. That was Sheila Bear, former head 271 00:14:44,000 --> 00:14:47,240 Speaker 1: of the f d i C, coming up what broke 272 00:14:47,360 --> 00:14:50,720 Speaker 1: the supply chain on chips just when we needed it most. 273 00:14:51,120 --> 00:14:54,920 Speaker 1: We talked with supply chain expert Ndia Vakil of Wrestling. 274 00:14:55,440 --> 00:15:01,720 Speaker 1: That's next on Wall Street Week on Bloomberth. This is 275 00:15:01,760 --> 00:15:06,120 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 276 00:15:06,320 --> 00:15:09,480 Speaker 1: The world's manufacturing supply chains are showing signs of strain, 277 00:15:10,000 --> 00:15:13,720 Speaker 1: and semiconductors or chips, are among the hardest hit. The 278 00:15:13,800 --> 00:15:17,440 Speaker 1: combination of the pandemic, policy decisions and the growing demand 279 00:15:17,480 --> 00:15:20,960 Speaker 1: for electric vehicles created a perfect storm for the industry. 280 00:15:21,200 --> 00:15:25,200 Speaker 1: Here's GM CEO Mary Bara, this is an industry issue. 281 00:15:25,280 --> 00:15:27,920 Speaker 1: Of course, we're working every single day with a cross 282 00:15:27,960 --> 00:15:30,400 Speaker 1: functional team to look for opportunities of how do we 283 00:15:30,480 --> 00:15:33,720 Speaker 1: minimize the impact. In January, Honda said it will cut 284 00:15:33,760 --> 00:15:37,000 Speaker 1: domestic output at one of its Japanese factories, while Nissan 285 00:15:37,200 --> 00:15:41,760 Speaker 1: is adjusting production of its note hatchback model. GM announced 286 00:15:41,760 --> 00:15:44,560 Speaker 1: this week that it's extending temporary shutdowns that's three of 287 00:15:44,560 --> 00:15:49,120 Speaker 1: its North American plants because of the ongoing semiconductor shortage. Well, 288 00:15:49,200 --> 00:15:53,760 Speaker 1: the first quarter we have had some disruptions and idled 289 00:15:53,840 --> 00:15:56,800 Speaker 1: some of our plants, but it is still a volatile situation. 290 00:15:56,920 --> 00:16:01,080 Speaker 1: That's diner CEO Ola COLLINEUS. It's not just harmmakers. A 291 00:16:01,120 --> 00:16:04,120 Speaker 1: shortage of chips affects everything from five G phones to 292 00:16:04,280 --> 00:16:08,880 Speaker 1: medical devices. Here's Whahwei's Andy Perdy combination of a coronavirus 293 00:16:09,000 --> 00:16:12,920 Speaker 1: and the the impact on not to be two technical 294 00:16:12,960 --> 00:16:15,440 Speaker 1: the entity list, but the ability of American companies to 295 00:16:15,480 --> 00:16:18,120 Speaker 1: sell the lesson others. It's really had a very negative 296 00:16:18,120 --> 00:16:20,840 Speaker 1: effect on us. The shortage has gotten so bad that 297 00:16:20,920 --> 00:16:23,800 Speaker 1: President Biden stepped in this week with an executive order 298 00:16:24,080 --> 00:16:27,960 Speaker 1: directing a government wide supply chain review for critical goods. 299 00:16:28,240 --> 00:16:31,160 Speaker 1: We need to make sure these supply chains are secure 300 00:16:31,160 --> 00:16:35,280 Speaker 1: and reliable. I'm directing senior officials and my administration to 301 00:16:35,320 --> 00:16:39,880 Speaker 1: work with industrial leaders to identify solutions to this semiconductor shortfall. 302 00:16:40,080 --> 00:16:43,320 Speaker 1: The problem has been brewing since two thousand nine, and 303 00:16:43,400 --> 00:16:46,400 Speaker 1: President Donald Trump's trade war with China also played a 304 00:16:46,440 --> 00:16:49,480 Speaker 1: part in the supply crunch. Roughly ten percent of the 305 00:16:49,480 --> 00:16:52,120 Speaker 1: world's chip production comes from s m i C, a 306 00:16:52,160 --> 00:16:55,800 Speaker 1: semiconductor company that's partially owned by the Chinese government. In 307 00:16:55,920 --> 00:16:59,440 Speaker 1: two thousand and twenty, the US restricted American companies from 308 00:16:59,480 --> 00:17:04,320 Speaker 1: selling to sm i C. So by dealing with the 309 00:17:04,400 --> 00:17:10,240 Speaker 1: availability of high tech, particularly semi conductors, to AWE and 310 00:17:10,359 --> 00:17:15,000 Speaker 1: to ZE, we've slowed that down. That was former Commerce 311 00:17:15,040 --> 00:17:18,399 Speaker 1: Secretary Wilburt Ross. To get a better sense of just 312 00:17:18,520 --> 00:17:21,040 Speaker 1: how bad the problem is and what can be done 313 00:17:21,080 --> 00:17:24,480 Speaker 1: about it. We talked with Benda Vakil, CEO of Resiling, 314 00:17:24,840 --> 00:17:28,480 Speaker 1: the leading provider of supply chain mapping services, and she 315 00:17:28,600 --> 00:17:31,679 Speaker 1: said that the problem has been a long time coming. 316 00:17:32,359 --> 00:17:35,919 Speaker 1: This has been building since last year, and now we 317 00:17:35,960 --> 00:17:39,560 Speaker 1: are looking at an extremely constrained environment. It started with 318 00:17:39,720 --> 00:17:44,320 Speaker 1: two big battery fires at Japanese semiconductor plants, one in July, 319 00:17:44,560 --> 00:17:47,720 Speaker 1: one in October. Then there were some labor strikes that 320 00:17:47,800 --> 00:17:51,320 Speaker 1: ship making facilities in Europe, and then you combine that 321 00:17:51,520 --> 00:17:55,840 Speaker 1: with the upheaval from COVID. We had fired in California 322 00:17:56,119 --> 00:18:01,399 Speaker 1: record hurricane season winter storm to continue issues that we 323 00:18:01,480 --> 00:18:05,480 Speaker 1: have experienced container shortages. And then we saw Boeing seven 324 00:18:05,560 --> 00:18:10,679 Speaker 1: seven seven grounding, which grounds, which affects airshipment capacity. And 325 00:18:10,760 --> 00:18:14,199 Speaker 1: just last week we heard that in Taiwan there is 326 00:18:14,240 --> 00:18:18,560 Speaker 1: a water shortage that is creating constrained water supplies which 327 00:18:18,560 --> 00:18:23,360 Speaker 1: are very essential for way for fabrication assembly operations. So 328 00:18:23,400 --> 00:18:26,000 Speaker 1: it's a very interesting situation. Well and is it just 329 00:18:26,080 --> 00:18:29,240 Speaker 1: a fluke I mean? Or were there fundamental underlying weaknesses 330 00:18:29,240 --> 00:18:31,480 Speaker 1: and the supply chain because what you just described sounds 331 00:18:31,480 --> 00:18:33,439 Speaker 1: like who could have predicted all those things would come 332 00:18:33,480 --> 00:18:37,680 Speaker 1: together at one time. Um, the world of supply chain risks, 333 00:18:37,760 --> 00:18:40,400 Speaker 1: I have to say, is it is a constant thing. 334 00:18:40,880 --> 00:18:45,120 Speaker 1: There are in a given year resuling monitors over three 335 00:18:45,200 --> 00:18:50,360 Speaker 1: hundred factory buyers alone. Add to that supply chain risks 336 00:18:50,440 --> 00:18:55,359 Speaker 1: due to hurricanes, arthquakes, labor strike, transportation issues, and what 337 00:18:55,560 --> 00:18:59,240 Speaker 1: you have is a situation and supply chain where normal 338 00:18:59,560 --> 00:19:03,360 Speaker 1: is is disrupted. Now we have the bud imustration saying 339 00:19:03,359 --> 00:19:05,480 Speaker 1: we're gonna get our arms around this. We're gonna start 340 00:19:05,480 --> 00:19:08,639 Speaker 1: with information, making sure we know what's going on something 341 00:19:08,680 --> 00:19:11,080 Speaker 1: I think you may have some insight into and resoling. 342 00:19:11,440 --> 00:19:14,240 Speaker 1: Is that the right first step? Absolutely? In fact, I 343 00:19:14,240 --> 00:19:17,159 Speaker 1: would say the direction that the government is going with 344 00:19:17,200 --> 00:19:21,520 Speaker 1: supply chain right now. They first most critical. They have 345 00:19:21,680 --> 00:19:26,120 Speaker 1: caused supply chain resilience a matter of national security. This 346 00:19:26,200 --> 00:19:28,600 Speaker 1: is the first thing that they needed to do and 347 00:19:28,640 --> 00:19:33,440 Speaker 1: they have finally done it. Um Understanding the supply chain landscape, 348 00:19:34,080 --> 00:19:37,639 Speaker 1: who the critical players are, what are the global sites 349 00:19:37,760 --> 00:19:41,320 Speaker 1: and regions that are critical to the supply chain. This 350 00:19:41,400 --> 00:19:44,800 Speaker 1: is the first step in helping us make informed decisions 351 00:19:45,080 --> 00:19:48,239 Speaker 1: about what are those sources of constraint supply that we 352 00:19:48,320 --> 00:19:51,760 Speaker 1: need to address, where we need to hold back up supplies, 353 00:19:51,840 --> 00:19:55,000 Speaker 1: where we need to hold extra inventory, and what it 354 00:19:55,080 --> 00:19:57,560 Speaker 1: is that we need to do to avoid the similar 355 00:19:57,600 --> 00:20:01,639 Speaker 1: problems that we experienced in ppech shortages last year that 356 00:20:01,760 --> 00:20:05,280 Speaker 1: brought the healthcare industry to their needs. So it's really 357 00:20:05,320 --> 00:20:09,600 Speaker 1: criticals and and mapping supply chains and understanding those global 358 00:20:09,640 --> 00:20:13,480 Speaker 1: dependencies is the first step have we been spending too 359 00:20:13,560 --> 00:20:15,719 Speaker 1: little on our supply chain, because as I listened to 360 00:20:15,760 --> 00:20:19,359 Speaker 1: you and as you talk about increased inventories, increased capacity, 361 00:20:19,600 --> 00:20:21,399 Speaker 1: that sounds like money that we in fact, we've been 362 00:20:21,440 --> 00:20:25,119 Speaker 1: running a two tight a tolerance. Absolutely. But the FoST 363 00:20:25,119 --> 00:20:27,679 Speaker 1: thing we did in the last twenty years is we 364 00:20:27,720 --> 00:20:32,680 Speaker 1: went overseas and globalized. Not the wrong thing to do. 365 00:20:33,160 --> 00:20:36,159 Speaker 1: You not only globalize your supply chain to take advantage 366 00:20:36,160 --> 00:20:41,000 Speaker 1: of lower cost supplies, you take advantage of emerging markets 367 00:20:41,040 --> 00:20:43,720 Speaker 1: and the demand there as well. That has been vacill 368 00:20:44,080 --> 00:20:46,880 Speaker 1: CEO of residents. Coming up, we wrap up the week 369 00:20:47,040 --> 00:20:50,080 Speaker 1: as always with our special contributor Larry Summers of Harvard. 370 00:20:50,560 --> 00:20:59,119 Speaker 1: This is Wall Street Week on Bloomberg. This is Bloomberg 371 00:20:59,200 --> 00:21:03,200 Speaker 1: Wall Street with David Weston from Bloomberg Radio, and we're 372 00:21:03,200 --> 00:21:05,400 Speaker 1: gonna conclude our week as we do every single week, 373 00:21:05,400 --> 00:21:08,200 Speaker 1: with our special contrainion Larry Summers of Harvard. So Larry, 374 00:21:08,200 --> 00:21:09,600 Speaker 1: thanks so much for being back. One of the big 375 00:21:09,640 --> 00:21:12,480 Speaker 1: events of the week was Fitchair J. Pale, speaking in 376 00:21:12,560 --> 00:21:15,200 Speaker 1: a Wall Street Journal event. Talked about a lot of things, 377 00:21:15,240 --> 00:21:17,080 Speaker 1: including the body yield things like that, but one of 378 00:21:17,119 --> 00:21:19,800 Speaker 1: the things he addressed was inflation, and he admitted is 379 00:21:19,840 --> 00:21:21,720 Speaker 1: how they're keeping a close eye on it maybe because 380 00:21:21,720 --> 00:21:24,080 Speaker 1: of some of the things you've said, frankly, uh, and 381 00:21:24,200 --> 00:21:26,320 Speaker 1: that they are not going to repeat the mistakes of 382 00:21:26,400 --> 00:21:28,439 Speaker 1: the sixties and seventies as here before I do it. 383 00:21:28,840 --> 00:21:30,439 Speaker 1: What does he need to do to avoid that. I 384 00:21:30,440 --> 00:21:32,880 Speaker 1: sure hope they don't repeat the mistakes to the sixties 385 00:21:32,880 --> 00:21:38,040 Speaker 1: and seventies, because they were hugely important, not just for inflation, 386 00:21:38,200 --> 00:21:42,800 Speaker 1: not just for macroeconomics stability, but for the whole politics 387 00:21:42,840 --> 00:21:48,200 Speaker 1: and attitude of the country. They're gonna need to look 388 00:21:48,440 --> 00:21:53,040 Speaker 1: in hardheaded ways and to be prepared to not make 389 00:21:53,160 --> 00:21:59,040 Speaker 1: excuses each month pointing to a different factor when inflation 390 00:21:59,240 --> 00:22:02,960 Speaker 1: ficks up, and they're gonna need to remember that their 391 00:22:03,119 --> 00:22:08,840 Speaker 1: priority is the macro economy. When I see them say 392 00:22:08,880 --> 00:22:14,800 Speaker 1: they won't raise rates until UM diversity groups unemployment rates 393 00:22:14,920 --> 00:22:19,320 Speaker 1: are appropriate, I get nervous because the FED can't really 394 00:22:19,359 --> 00:22:23,400 Speaker 1: control those issues. Those are issues for antidiscrimination law, those 395 00:22:23,400 --> 00:22:26,840 Speaker 1: are issues for fiscal policy, UH, those are issues for 396 00:22:27,000 --> 00:22:31,760 Speaker 1: labor market UH programs. And so if the FED sets 397 00:22:31,760 --> 00:22:36,560 Speaker 1: out to target the unemployment rate of particular groups without 398 00:22:36,680 --> 00:22:39,320 Speaker 1: regard to inflation, that would be a good way to 399 00:22:39,400 --> 00:22:44,800 Speaker 1: make really serious uh inflation. If they take inflation seriously, 400 00:22:45,359 --> 00:22:50,239 Speaker 1: they monitor closely, and they're prepared to cause pain, they 401 00:22:50,280 --> 00:22:55,399 Speaker 1: will be able to control inflation. But if instead they say, oh, 402 00:22:55,480 --> 00:23:01,000 Speaker 1: we've got credibility inflation, expectations are anchored and inflation is 403 00:23:01,040 --> 00:23:05,520 Speaker 1: not something we have to worry about. Ironically, the more 404 00:23:05,600 --> 00:23:10,520 Speaker 1: optimistic they are about inflation being under control, the less 405 00:23:10,560 --> 00:23:13,520 Speaker 1: likely it is to actually be under control. So fed 406 00:23:13,640 --> 00:23:15,280 Speaker 1: Cherrich Powell gave us a little bit of a hint 407 00:23:15,320 --> 00:23:17,200 Speaker 1: about how he's going to approach this because he addressed 408 00:23:17,240 --> 00:23:19,640 Speaker 1: a couple of things. He said, some of the upticking 409 00:23:19,680 --> 00:23:21,960 Speaker 1: prices that we're expecting is going to be base effects, 410 00:23:22,000 --> 00:23:24,199 Speaker 1: as there's a reopening effect as people come back. And 411 00:23:24,240 --> 00:23:26,480 Speaker 1: also there may be some particular choke points in the 412 00:23:26,480 --> 00:23:28,639 Speaker 1: supply chain. We're not going to pay much attention to 413 00:23:28,680 --> 00:23:31,840 Speaker 1: those because that's transient. How do you tell the difference 414 00:23:31,880 --> 00:23:35,160 Speaker 1: between transient inflation something more troubling. That's why they've got 415 00:23:35,160 --> 00:23:39,560 Speaker 1: a staff of a few hundred economists and precisely to 416 00:23:39,640 --> 00:23:42,280 Speaker 1: make those distinctions, and they got to look at all 417 00:23:42,320 --> 00:23:47,199 Speaker 1: the data they can. What I'm worried about when I 418 00:23:47,280 --> 00:23:50,760 Speaker 1: hear that kind of talk is not that it isn't right. 419 00:23:50,920 --> 00:23:54,040 Speaker 1: He's right about the base here, effects he's right about 420 00:23:54,160 --> 00:24:00,560 Speaker 1: specific sectors. But every great inflation is made by central 421 00:24:00,600 --> 00:24:06,160 Speaker 1: bank that dismisses it as due to transient factors. And 422 00:24:06,200 --> 00:24:08,439 Speaker 1: so at a certain point, when you start having a 423 00:24:08,440 --> 00:24:12,400 Speaker 1: transient factor every month, then you maybe got a permanent 424 00:24:12,440 --> 00:24:19,880 Speaker 1: factor going over going overall. So it takes a lot 425 00:24:19,920 --> 00:24:25,520 Speaker 1: of worry about inflation to make their not be uh inflation. 426 00:24:26,040 --> 00:24:29,960 Speaker 1: This is a classic example of self denying prophecy. The 427 00:24:30,119 --> 00:24:33,560 Speaker 1: more the fat is fearful of inflation, the more likely 428 00:24:33,640 --> 00:24:36,359 Speaker 1: they are to avoid it. The more the fat is 429 00:24:36,400 --> 00:24:40,439 Speaker 1: complacent about inflation, the more likely they are to have 430 00:24:41,480 --> 00:24:43,560 Speaker 1: So Larry, one of the things that's a big item 431 00:24:43,600 --> 00:24:46,000 Speaker 1: in the agenda now as we are working our way 432 00:24:46,040 --> 00:24:49,600 Speaker 1: through the stimulus package is infrastructure. President Biden has said 433 00:24:49,640 --> 00:24:51,800 Speaker 1: that he wants to go onto that. He had meetings 434 00:24:51,800 --> 00:24:53,600 Speaker 1: at the White House this week to talk about it. 435 00:24:54,240 --> 00:24:56,399 Speaker 1: So we've talked in the past about the stimulus package, 436 00:24:56,400 --> 00:24:57,959 Speaker 1: maybe what should have been done, what could have been 437 00:24:57,960 --> 00:25:00,919 Speaker 1: done before we get started. I FRA structure. Give us 438 00:25:00,920 --> 00:25:02,960 Speaker 1: some advice. How do you do it the right way 439 00:25:02,960 --> 00:25:04,920 Speaker 1: and how do you do it the wrong way. Here 440 00:25:04,960 --> 00:25:09,760 Speaker 1: to broad principles, UH, David. One is Democrats are right 441 00:25:09,880 --> 00:25:14,040 Speaker 1: that we need much more money on infrastructure, and Republicans 442 00:25:14,040 --> 00:25:17,720 Speaker 1: are right that we need much more efficient regulation, much 443 00:25:17,760 --> 00:25:24,560 Speaker 1: more rapid environmental approvals, and much more efficient procurement. And 444 00:25:24,680 --> 00:25:28,520 Speaker 1: we need to do the politics of both add rather 445 00:25:28,600 --> 00:25:32,359 Speaker 1: than either or when it comes to infrastructure. The other 446 00:25:32,400 --> 00:25:35,119 Speaker 1: thing is this is an area where the public sector 447 00:25:35,160 --> 00:25:40,640 Speaker 1: and the private sector have to UH collaborate. Some infrastructure 448 00:25:40,800 --> 00:25:44,959 Speaker 1: is public repairing the potholes and the roads in New 449 00:25:45,040 --> 00:25:50,119 Speaker 1: York City. Some is private building out a five G 450 00:25:50,359 --> 00:25:58,320 Speaker 1: wireless UH system. Some is UH joint UH toll roads, bridges, 451 00:25:58,840 --> 00:26:02,800 Speaker 1: electric utility, these UH and the like. We've got to 452 00:26:02,840 --> 00:26:06,280 Speaker 1: find creative ways to bringing the public and private sectors 453 00:26:06,280 --> 00:26:11,160 Speaker 1: together around the infrastructure UH issues. And we need to 454 00:26:11,280 --> 00:26:14,960 Speaker 1: understand that infrastructure is much more than bricks and mortar. 455 00:26:15,200 --> 00:26:17,040 Speaker 1: So infrastructure is good for all of us because it 456 00:26:17,080 --> 00:26:19,880 Speaker 1: makes our lives better presumently, but there's another purpose as well, 457 00:26:19,960 --> 00:26:24,080 Speaker 1: which is increased productivity as we go forward. It's future growth. Essentially, 458 00:26:24,200 --> 00:26:26,199 Speaker 1: we're investing in a lot of us haven't had the 459 00:26:26,200 --> 00:26:29,960 Speaker 1: experience you've had being a macro economist in the US government, 460 00:26:30,200 --> 00:26:32,639 Speaker 1: we've run companies or parts of companies. When we make 461 00:26:32,680 --> 00:26:34,760 Speaker 1: a decision about capital investment, we take a look at 462 00:26:34,800 --> 00:26:37,040 Speaker 1: the payback. When do we get the payback, what's the 463 00:26:37,080 --> 00:26:39,560 Speaker 1: long what's the prospects of payback? Do you look at 464 00:26:39,560 --> 00:26:41,240 Speaker 1: it that way? I mean, how do you decide which 465 00:26:41,280 --> 00:26:44,600 Speaker 1: projects are the most likely to really increase productivity and 466 00:26:44,680 --> 00:26:46,800 Speaker 1: increase growth in the outyears. And if you've got to 467 00:26:46,840 --> 00:26:50,000 Speaker 1: look at the overall social return. Some of that is 468 00:26:50,040 --> 00:26:54,119 Speaker 1: the extra money that's going to get produced. Some of 469 00:26:54,119 --> 00:26:57,320 Speaker 1: that is the carbon that's going to get mitigated that 470 00:26:57,480 --> 00:27:02,520 Speaker 1: otherwise would have a substantial uh social costs. Some of 471 00:27:02,520 --> 00:27:08,840 Speaker 1: that is the incremental business activity that's going to be enabled. 472 00:27:09,280 --> 00:27:12,240 Speaker 1: Some of that is and it's not always easy putting 473 00:27:12,280 --> 00:27:18,680 Speaker 1: a valuation on amenities that people are going to enjoy. 474 00:27:19,240 --> 00:27:22,440 Speaker 1: Central Park is a kind of infrastructure. Very hard to 475 00:27:22,440 --> 00:27:26,119 Speaker 1: put a price on Central Park, but even harder to 476 00:27:26,160 --> 00:27:29,760 Speaker 1: imagine New York City than out Central Park. And so 477 00:27:30,119 --> 00:27:33,040 Speaker 1: we need to think very broadly as we think about 478 00:27:33,080 --> 00:27:36,200 Speaker 1: the benefits of infrastructure. There's a spack frenzy some people 479 00:27:36,240 --> 00:27:38,760 Speaker 1: think of the country right now, and so we treat 480 00:27:38,760 --> 00:27:40,920 Speaker 1: you as an expert, which you certainly are. But let's 481 00:27:40,960 --> 00:27:42,760 Speaker 1: treat you as a fact witness the way I used 482 00:27:42,800 --> 00:27:45,239 Speaker 1: to when I put witnesses on in the courtroom. You 483 00:27:45,280 --> 00:27:47,800 Speaker 1: actually have gotten involved in this. Back here, as I understanding, 484 00:27:47,800 --> 00:27:49,920 Speaker 1: you're an investor in a company that now is being 485 00:27:49,920 --> 00:27:52,359 Speaker 1: acquired by us. Back tell us about It's called the 486 00:27:52,520 --> 00:27:55,879 Speaker 1: States Title Right, I'm on the I'm on the board 487 00:27:55,960 --> 00:27:59,679 Speaker 1: and have been uh an investor for a number of years. 488 00:28:00,240 --> 00:28:05,159 Speaker 1: Our company has the potential to transform title insurance, the 489 00:28:05,200 --> 00:28:08,320 Speaker 1: type of insurance where most of the time there's the 490 00:28:08,359 --> 00:28:13,200 Speaker 1: highest ratio of premiums paid two benefits paid out. And 491 00:28:13,440 --> 00:28:17,399 Speaker 1: this company is going to transform its sufficiency by using 492 00:28:18,320 --> 00:28:25,200 Speaker 1: artificial intelligence. It's a huge business opportunity ultimately to transform 493 00:28:25,280 --> 00:28:28,720 Speaker 1: the process of buying a house and make it pleasant 494 00:28:28,960 --> 00:28:35,399 Speaker 1: and fast rather than excruciating and slow. This is the 495 00:28:35,440 --> 00:28:39,800 Speaker 1: most exciting thing that I've been part of in the 496 00:28:39,800 --> 00:28:43,120 Speaker 1: fintech area, in the business area since I was on 497 00:28:43,160 --> 00:28:47,880 Speaker 1: the board of Square before it became a unicorn. And 498 00:28:48,080 --> 00:28:53,200 Speaker 1: I think there's a similar possibility for financial innovation, not 499 00:28:53,320 --> 00:28:56,280 Speaker 1: for the benefit of money, but for the benefit of 500 00:28:56,320 --> 00:29:01,640 Speaker 1: making people's lives better and at at all important juncture 501 00:29:01,720 --> 00:29:05,480 Speaker 1: for all of us when uh we're buying a home. 502 00:29:06,120 --> 00:29:09,040 Speaker 1: And I think the spack is going to enable this 503 00:29:09,120 --> 00:29:14,200 Speaker 1: company to raise more capital, more quickly, for more growth 504 00:29:14,720 --> 00:29:18,480 Speaker 1: and more transformation than ever would have been possible even 505 00:29:18,560 --> 00:29:20,480 Speaker 1: several years ago. So let's wrap this up with a 506 00:29:20,600 --> 00:29:23,000 Speaker 1: rapid fire. Summer says Number. When we talked about j. 507 00:29:23,120 --> 00:29:25,920 Speaker 1: Powe the Federal Research here earlier, do you expect him 508 00:29:25,960 --> 00:29:29,040 Speaker 1: to be reappointed? He should be. He certainly should be. 509 00:29:29,120 --> 00:29:32,200 Speaker 1: He's done a great job and continuity in that role 510 00:29:32,720 --> 00:29:35,640 Speaker 1: is a very important thing. On the other side, we 511 00:29:35,840 --> 00:29:38,920 Speaker 1: learned this week that Near Attendon's nomination to be the 512 00:29:38,920 --> 00:29:41,680 Speaker 1: Director of Office Manage a Budget has been withdrawn. You 513 00:29:41,720 --> 00:29:44,800 Speaker 1: know her, Who do you expect to succeed her? Nobody 514 00:29:44,840 --> 00:29:47,120 Speaker 1: who will be able to do that job as well 515 00:29:47,840 --> 00:29:54,160 Speaker 1: as uh she could have. She is a formidable uh talent, 516 00:29:54,840 --> 00:30:02,680 Speaker 1: a person of great intellectual capacity, great editor, energy and spirit, 517 00:30:03,000 --> 00:30:07,360 Speaker 1: and I am just really disappointed that the nation's not 518 00:30:07,520 --> 00:30:10,680 Speaker 1: going to have her in that role. But knowing how 519 00:30:10,720 --> 00:30:14,560 Speaker 1: resilient she is, I know she will go on to 520 00:30:14,680 --> 00:30:20,360 Speaker 1: serve and to serve with great distinction UM in President 521 00:30:20,440 --> 00:30:23,680 Speaker 1: Biden's administration. And finally, A Larry what's the future of 522 00:30:23,680 --> 00:30:25,240 Speaker 1: the minimum wage. It looks like it's not gonna be 523 00:30:25,320 --> 00:30:28,160 Speaker 1: part of this stimulus package. What's the future? My guesses 524 00:30:28,200 --> 00:30:30,640 Speaker 1: will have a minimum wage that will be way above 525 00:30:30,760 --> 00:30:35,600 Speaker 1: seven but won't reach fifteen dollars, and I think that's 526 00:30:35,600 --> 00:30:38,760 Speaker 1: probably the right kind of prudent compromise. Okay, thank you 527 00:30:38,800 --> 00:30:41,400 Speaker 1: so much, Larry. That's Larry Summers, our special contributor, and 528 00:30:41,400 --> 00:30:45,200 Speaker 1: of course he's from Harvard. Finally, one more thought. We 529 00:30:45,320 --> 00:30:48,240 Speaker 1: lost a giant this week, and by we, I mean 530 00:30:48,320 --> 00:30:51,320 Speaker 1: those who walk the corridors of power in Washington, those 531 00:30:51,320 --> 00:30:53,640 Speaker 1: who sit in the boardrooms of our corporations, those who 532 00:30:53,720 --> 00:30:56,760 Speaker 1: care about racial justice, those of us who care about 533 00:30:56,760 --> 00:31:00,080 Speaker 1: our country. Vernon Jordan did it all or all it 534 00:31:00,160 --> 00:31:02,920 Speaker 1: that truly matters, and he changed it all. First as 535 00:31:02,960 --> 00:31:05,160 Speaker 1: a civil rights lawyer and leader at the nub A 536 00:31:05,240 --> 00:31:08,040 Speaker 1: c P, the United Negro College Fund, and the National 537 00:31:08,280 --> 00:31:11,680 Speaker 1: Urban League, and then when he saw we needed changing 538 00:31:11,720 --> 00:31:15,600 Speaker 1: from the inside, he became an influential lawyer and lobbyist 539 00:31:15,720 --> 00:31:18,720 Speaker 1: in Washington, an investment banker in New York, a corporate 540 00:31:18,760 --> 00:31:22,400 Speaker 1: board director, and a close advisor to presidents. He was 541 00:31:22,520 --> 00:31:26,320 Speaker 1: larger than life in every way. In his stature, in 542 00:31:26,400 --> 00:31:30,280 Speaker 1: his deep baritone voice, and measured tones in that twinkle 543 00:31:30,360 --> 00:31:33,240 Speaker 1: in his eye, but most of all in his quiet 544 00:31:33,440 --> 00:31:37,600 Speaker 1: moral authority he brought to every gathering and to every decision, 545 00:31:38,080 --> 00:31:40,880 Speaker 1: And for those of us blessed to witness it firsthand, 546 00:31:41,040 --> 00:31:43,760 Speaker 1: it was sometimes as much how he did it as 547 00:31:43,800 --> 00:31:47,440 Speaker 1: what he did, A loyal and true friend, always there 548 00:31:47,480 --> 00:31:50,520 Speaker 1: to listen, to remind us of our true north. At 549 00:31:50,520 --> 00:31:53,800 Speaker 1: a time of so much division, so much bickering, we 550 00:31:53,880 --> 00:31:58,560 Speaker 1: need a Vernon Jordan more than ever the grace, the wisdom, 551 00:31:58,600 --> 00:32:01,360 Speaker 1: and most of all the respect act he showed everyone, 552 00:32:01,920 --> 00:32:04,760 Speaker 1: respect for those he agreed with, and every bit as 553 00:32:04,840 --> 00:32:08,080 Speaker 1: much for those with whom he could not agree. Yes, 554 00:32:08,240 --> 00:32:11,680 Speaker 1: we lost a giant this week. I fear we will 555 00:32:11,720 --> 00:32:14,560 Speaker 1: not see his like again, but I so hope that 556 00:32:14,600 --> 00:32:18,040 Speaker 1: I'm wrong, for all of our sakes. That does it 557 00:32:18,120 --> 00:32:20,680 Speaker 1: for this episode of Wall Street Week. I'm David Weston. 558 00:32:20,800 --> 00:32:24,080 Speaker 1: This is Bloomberg. See you next week.