Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. After a series
Speaker 1: of damaging scandals on leadership changes, Wells Fargo is trying
Speaker 1: to let the public know it's cleaning up its act,
Speaker 1: going so far as to air television ads touting the
Speaker 1: company's re establishment. We're holding ourselves accountable to find and
Speaker 1: fix issues proactively, because earning back your trust is our
Speaker 1: greatest priority. Joining us from our studios in Washington is
Speaker 1: Jesse Westbrook, Bloomberg News Financial Regulation editor Jesse Wells. Fargo
Speaker 1: has had scandal after scandal and has been trying to
Speaker 1: clean up its act to no avail. Will this time
Speaker 1: be any different? Well, Um, you know, an interesting part
Speaker 1: about that is that maybe there is something accurate they're
Speaker 1: at in the sense of they are find They do
Speaker 1: seem to keep finding things, and they do seem to
Speaker 1: keep finding reporting the the the message of putting the
Speaker 1: scandals behind them. However, um, you know it every every
Speaker 1: day that that we see an ad like that, something
Speaker 1: new seems to come up. I mean, we had this
Speaker 1: interesting situation yesterday where they were holding an event here
Speaker 1: in d C. And just as that event was going on, um,
Speaker 1: this story comes out that some senior people were putting, uh,
Speaker 1: putting false social security numbers in corporate client documents that
Speaker 1: were filed to regulators. And you know, it's supposed to
Speaker 1: be one of these events where they're showing people they've changed,
Speaker 1: and a Republican lawmaker who is actually quite friendly to
Speaker 1: the banking industry, Jeb Hencerling, got up there and trashed
Speaker 1: them standing in front of a Wells Fargo banner. So
Speaker 1: if you can't, uh, if you don't have friends in Washington,
Speaker 1: Inn who are pro bank, anti regulation Republicans, I don't
Speaker 1: know who your friends are. Yeah, but I mean it's
Speaker 1: it's not as though it's that hard for lawmakers on
Speaker 1: either side of the aisle to continue to treat Wells
Speaker 1: Fargo as kind of a political punching bag. But is
Speaker 1: this a matter of the bank is offering greater transparency
Speaker 1: now by getting these bad incidents out of the limelight,
Speaker 1: or or is it still uh committing these bad acts
Speaker 1: has has it just not gone away? Well there, I
Speaker 1: guess my view the Wells Fargo from the perspective of
Speaker 1: you know, we talk a lot about too big to
Speaker 1: fail in relation to banks. I mean, that's obviously an issue.
Speaker 1: You know, there's arguments in Washington about whether Dodd Frank
Speaker 1: fixed too big to fail. Clearly what Dodd Frank did
Speaker 1: not fix is the two big demandage issue. Um. I
Speaker 1: mean I don't I don't have a great insight into
Speaker 1: Wells Fargo. I'm not inside there every day. But to
Speaker 1: the degree that these things keep happening, I mean you
Speaker 1: get the sense that now some of it the people
Speaker 1: at the top or to blame for it, but some
Speaker 1: of it you just get the sense they really just
Speaker 1: have no idea what's going on inside that bank, and
Speaker 1: you know they're they're these big bureaucratic apparatus is where
Speaker 1: the right hand really doesn't know what the left hand
Speaker 1: is doing. Um. And even if you try to do
Speaker 1: things to stem to control that and and tamp it down,
Speaker 1: there are so many people that these institutions are so large,
Speaker 1: their global, global footprints, you know, you just can't seem
Speaker 1: to have everyone rowing in the same direction. So to speak.
Speaker 1: So the change in management has that made any difference? Uh?
Speaker 1: I mean I don't I answer, I don't really want to.
Speaker 1: I mean, I don't really want to take any shots
Speaker 1: at at at the CEO Tim Sloan, I don't. I
Speaker 1: don't know him. I've never met him, I've never talked
Speaker 1: to him. Um. I mean I will say that, you know,
Speaker 1: sort of observing this less as a journalist and more
Speaker 1: just as you know, a member of the public. I'm
Speaker 1: not sure the contrition has been strong enough with Wells Fargo,
Speaker 1: and even under Sloan. I'm not sure that sort of
Speaker 1: message of being contrite has been powerful enough. I mean
Speaker 1: you sort of look at these ads and you know,
Speaker 1: the last person I really have sincerely believed that Wells
Speaker 1: Fargo has fixed things is Wells Fargo. I mean, I'm
Speaker 1: not I I that message would resonate more if I
Speaker 1: had someone who was sort of an objective analyst who
Speaker 1: spent six months in there, digging under every rock and
Speaker 1: told me it's fixed. But sort of, the the taint
Speaker 1: of that bank is so strong. I mean, we're supposed
Speaker 1: to believe them that they fixed their problems, and meanwhile,
Speaker 1: we keep getting this evidence every day. That they haven't
Speaker 1: fixed their problems. And back to Sloan, I mean, you know,
Speaker 1: there's been a couple of instances where being contrite probably
Speaker 1: would have gone further than being sort of the combative
Speaker 1: way that he has been. In some instances, he's been
Speaker 1: a little combative with the press. You know, he he's
Speaker 1: made some statements at time times where you know, oh,
Speaker 1: it's the press's fault, this stuff keeps popping up. Well, no,
Speaker 1: it's your fault that you're not fixing the problems. I mean,
Speaker 1: you know that's what journalists do. We dig, We look
Speaker 1: for problems. We're not We're rarely reporting that the sun
Speaker 1: is out today. We're looking for bad So so you
Speaker 1: know we're looking for bad stuff. So give us less
Speaker 1: bad stuff to find. I guess would be with you've
Speaker 1: you've rolled out the carpet nicely for us to uh
Speaker 1: let our listeners know that we will in fact be
Speaker 1: speaking with Wells Fargo CEO Tim Sloan. We'll see if
Speaker 1: he continues his combative stance with the media when he
Speaker 1: speaks with Bloomberg Television's Eric Shatzker. You can hear that conversation. Uh,
Speaker 1: this coming Monday afternoon, four pm Wall Street Time. Yeah, comments,
Speaker 1: I'm not going to hold them to it, and we'll
Speaker 1: see what happens at any rate. That's coming up at
Speaker 1: four pm Wall Street. Trying to be nice this coming
Speaker 1: Monday on Bloomberg Radio and TV. Want to switch to
Speaker 1: another topic that you and your team have been covering
Speaker 1: at the finn reg team, Jesse, Fannie May and Freddie Mack.
Speaker 1: They're not supposed to be lobbying about whether they should
Speaker 1: continue to operate, but apparently, uh, that admonition isn't stopping
Speaker 1: Fanny's general council. Okay, tell us a little bit more
Speaker 1: about that. Yeah, so, uh, good reporter works for me
Speaker 1: knows more about Fannie and Freddie than anyone I know.
Speaker 1: Joe light Um had this story about their general counsel
Speaker 1: going out and meeting with stakeholders people associated with the
Speaker 1: Trump administration and expressing the view that he thinks that
Speaker 1: that the Trump administration should find a solution for these
Speaker 1: companies on their own, on its own, cut Congress out
Speaker 1: of the picture. Congress has not been able to do
Speaker 1: anything about these companies for a decade. They continue to
Speaker 1: sit under the government's thumb. They're they're sort of in
Speaker 1: this you know, purgatory of not really independent companies, but
Speaker 1: they've got such a huge footprint in the mortgage market,
Speaker 1: so he he wants them to take the bull by
Speaker 1: the horns and and fix this. Now, on the surface,
Speaker 1: that doesn't sound like a bad thing. I mean, we
Speaker 1: do need a solution to Fannie and Freddy. It's just
Speaker 1: sort of one of these things that has enormous implications
Speaker 1: UM in Washington and beyond, and no one really has
Speaker 1: a good idea to what to do about it. And
Speaker 1: just like everything in Washington, there's no immediate crisis. And
Speaker 1: unless we have an immediate crisis, no one in Washington
Speaker 1: is going to do anything. So these massive companies that
Speaker 1: are basically, you know, cutting to the chase of the
Speaker 1: argument propping up the housing and mortgage market have been
Speaker 1: in this state of purgatory for a decade. Um what
Speaker 1: might be inappropriate about what what Mr Brooks is doing,
Speaker 1: um inappropriates a strong word. There is um awkwardly or
Speaker 1: you know, unfortunately, a ban on lobbying at these companies.
Speaker 1: And that's because people who have been in this town
Speaker 1: a long time. Remember, before the crisis, there were no
Speaker 1: bigger lobbying powerhouses in Washington, d C. Than Fannie May
Speaker 1: and Freddie mac Every lawmaker was on their payroll, so
Speaker 1: to speak. Um, and they had huge gallas and breakfasts,
Speaker 1: and you know, many attempts to regulate the companies and
Speaker 1: prevent them from growing bigger and bigger were halted. And
Speaker 1: that was you know a lot of people smart, people
Speaker 1: smarter than me. I think that was largely because of
Speaker 1: their lobbying prowess. We'll have to stop you there and
Speaker 1: we'll pick up with this another time. Thanks. That's Jesse Westbrook,
Speaker 1: Bloomberg News Financial Regulation editor. Can a phone interview with
Speaker 1: Bloomberg yesterday, Rudy Giuliani, President Trump's lawyer, said that Special
Speaker 1: Counsel Robert Mueller has indicated he'd be willing to narrow
Speaker 1: the scope of an interview with Trump. Speaking on CNN
Speaker 1: this morning, Giuliani repeated that assertion. They sent us a response.
Speaker 1: I can't go into detail, but narrowing the subjects for
Speaker 1: questioning down to about two. Joining me is Jimmy Grule,
Speaker 1: a professor at Notre Dame Law School. Jimmy, Sometimes I
Speaker 1: wonder if Giuliani's real intent is to wear us down
Speaker 1: with this bouncing ball explanation of what's happening in the
Speaker 1: case and contradictions about the facts. He's gotten the facts
Speaker 1: wrong before. How likely is it that Mueller would narrow
Speaker 1: the interview down to two questions. I think it's highly unlikely.
Speaker 1: Excuse me, And I think it's another example indication of
Speaker 1: Juliani either not knowing what the president's intentions and desires
Speaker 1: are or he's just speculating as to what he thinks
Speaker 1: the President will go along with, and then from day
Speaker 1: to day he seems to flip and flop back and
Speaker 1: forth on on these issues. So I think what he
Speaker 1: says on any given day should be taken with a
Speaker 1: grain of salt. Does it seem that the problem is
Speaker 1: not so much the scope of the interview as the
Speaker 1: likelihood that Trump, no matter how much prep there is,
Speaker 1: and it doesn't seem like they're leaving room for much,
Speaker 1: will contradict himself where the facts and Mueller may owe
Speaker 1: them as well as Trump. I think that's the real danger.
Speaker 1: You hit it right on the head. First of all,
Speaker 1: Trump has a long history of flip flopping, exaggerating, misstating,
Speaker 1: misleading on a number of different issues. Uh, and here
Speaker 1: he's going to go in to an interview with an
Speaker 1: adversary who's going to be fully informed on very specific details,
Speaker 1: very specific facts, in which he can rebut and challenge
Speaker 1: Trump's claims, and and I think it's a it's a
Speaker 1: great danger, a risk that the Trump is is running
Speaker 1: if he agrees to this type of interview. According to Politico,
Speaker 1: Giuliani also said he got a verbal assurance from a
Speaker 1: top Mueller deputy that the Special Council intends to follow
Speaker 1: a pair of Justice Department legal opinions that say a
Speaker 1: sitting president can't be indicted. Legal opinions change. There are
Speaker 1: no specific cases on point, but that change if, for example,
Speaker 1: let's say Trump purjursed himself in an interview. It's it's possible,
Speaker 1: but but I think it's highly unlikely. I think it's
Speaker 1: clear from the Constitution that the Framers envisioned UH with
Speaker 1: respect to bringing criminal charges against a sitting president, that
Speaker 1: that be a political process, not a legal process, and
Speaker 1: that political process would be the process of impeachment. Again,
Speaker 1: the caveat there as well, the president is sitting in
Speaker 1: office now. Once he he is removed from office, or
Speaker 1: he doesn't run for reelection, or he's defeated. He's like
Speaker 1: any other citizen, and he could be criminally charged for
Speaker 1: for any crime that he allegedly committed. Mueller's team apparently
Speaker 1: offered no assurances, according to Giuliani, that the investigation would
Speaker 1: end shortly after a presidential interview, which is one of
Speaker 1: Giuliani's demands. What do you make of that, because they've
Speaker 1: they've been there, The rumors have been and the talk
Speaker 1: has been that Mueller wants to close the obstruction of
Speaker 1: investigation at first, he wants to hear about intent from Trump. Well,
Speaker 1: that's true. I mean, the the investigation is on two
Speaker 1: parallel tracks. The first track is, of course, the issue
Speaker 1: of whether there was Russian interference in the two thousand
Speaker 1: and sixteen eleven and more specifically, whether there was a
Speaker 1: conspiracy between Russian government officials and members of the Trump campaign.
Speaker 1: And then the second attract is the obstruction of justice track,
Speaker 1: whether the president has taken actions, including the firing of
Speaker 1: FBI director former FBI director Comey, to obstruct justice to
Speaker 1: fort fort the investigation. But but again we have to
Speaker 1: put this in perspective. Yes, it's one year, this investigation
Speaker 1: has been going on one year. But let's look at
Speaker 1: past investigations of presidents, including white the white Water scandal
Speaker 1: involving President Clinton that went on for for I think
Speaker 1: close to six years before it was finally concluded. I
Speaker 1: think sevent of Clinton's ten are in office involved this investigation.
Speaker 1: This investigation was going on during that period of time.
Speaker 1: So one year, I think, when you put in perspective,
Speaker 1: is a relatively short time for this type of very
Speaker 1: complex criminal investigation. Now he seems to be moving rather
Speaker 1: quickly if you if you ask me when you when
Speaker 1: you look at the indictments and things. Let's turn so
Speaker 1: that's true. I mean, if you look at the number,
Speaker 1: we're looking at nineteen people that have been indicted or
Speaker 1: pleaded guilty, and then as well as three Russian companies
Speaker 1: that have been indicted. So that's a very robust, substantial
Speaker 1: track record of investigations prosecutions in that one year period
Speaker 1: of time. Let's turn to some of the civil lawsuits
Speaker 1: that Trump is facing. A New York appeals court rejected
Speaker 1: his request to put a defamation lawsuit by a former
Speaker 1: Apprentice candidate, Summer zevos Zevo's on hold, and the judge
Speaker 1: in that case had said in March when she rejected
Speaker 1: Trump's request to throughout the lawsuit. No one is above
Speaker 1: the law. What does that ruling tell you, Well, exactly
Speaker 1: that it's very important. It's very fundamental to the to
Speaker 1: American democracy. American democracy is founded on the rule of law,
Speaker 1: and central to that tenant is that no one is
Speaker 1: above the rule of law, including the president. And so
Speaker 1: like any other citizen, the president can be sued, like
Speaker 1: any of the citizens, he can be the target of
Speaker 1: a criminal investigation. Now, at the same time, in fairness,
Speaker 1: you know, it's important that these these civil and criminal
Speaker 1: investigations do not uh significantly disrupt the president's ability to govern.
Speaker 1: But if these investigations can be conducted, especially the civil investigations,
Speaker 1: in a way that doesn't substantially interfere with governance, then
Speaker 1: they should be permitted to go forward, and someone who
Speaker 1: has been harmed should be afforded his or her day
Speaker 1: in court. Jimmy, we have about forty five seconds here.
Speaker 1: But does it seem to you as if the civil
Speaker 1: investigations are almost causing more trouble for Trump than than
Speaker 1: the criminal Well, certainly, the Stormy Daniels investigation has been
Speaker 1: and that's a huge headache for the president has been
Speaker 1: very embarrassing. The President has been caught in a lie.
Speaker 1: On one occasion he said he knew nothing about the payment,
Speaker 1: and then we love to Stormy Daniels just one dollar payment,
Speaker 1: only to learn later than in fact, he didn't know
Speaker 1: about it and in fact reimbursed his attorney, David Cohen Hunter.
Speaker 1: Thank you, Jimmy. As always, that's Jimmy Garoule, a professor
Speaker 1: at Notre Dame Law School. Thanks for listening to the
Speaker 1: Bloomberg Law Podcast. You can subscribe and listen to the
Speaker 1: show on Apple Podcasts, SoundCloud, and on Bloomberg dot com
Speaker 1: slash podcast. I'm June Brolso this is Bloomberg