WEBVTT - Wells Fargo Struggles to Distance Itself from Crises

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcasts. After a series

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<v Speaker 1>of damaging scandals on leadership changes, Wells Fargo is trying

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<v Speaker 1>to let the public know it's cleaning up its act,

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<v Speaker 1>going so far as to air television ads touting the

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<v Speaker 1>company's re establishment. We're holding ourselves accountable to find and

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<v Speaker 1>fix issues proactively, because earning back your trust is our

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<v Speaker 1>greatest priority. Joining us from our studios in Washington is

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<v Speaker 1>Jesse Westbrook, Bloomberg News Financial Regulation editor Jesse Wells. Fargo

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<v Speaker 1>has had scandal after scandal and has been trying to

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<v Speaker 1>clean up its act to no avail. Will this time

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<v Speaker 1>be any different? Well, Um, you know, an interesting part

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<v Speaker 1>about that is that maybe there is something accurate they're

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<v Speaker 1>at in the sense of they are find They do

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<v Speaker 1>seem to keep finding things, and they do seem to

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<v Speaker 1>keep finding reporting the the the message of putting the

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<v Speaker 1>scandals behind them. However, um, you know it every every

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<v Speaker 1>day that that we see an ad like that, something

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<v Speaker 1>new seems to come up. I mean, we had this

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<v Speaker 1>interesting situation yesterday where they were holding an event here

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<v Speaker 1>in d C. And just as that event was going on, um,

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<v Speaker 1>this story comes out that some senior people were putting, uh,

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<v Speaker 1>putting false social security numbers in corporate client documents that

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<v Speaker 1>were filed to regulators. And you know, it's supposed to

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<v Speaker 1>be one of these events where they're showing people they've changed,

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<v Speaker 1>and a Republican lawmaker who is actually quite friendly to

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<v Speaker 1>the banking industry, Jeb Hencerling, got up there and trashed

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<v Speaker 1>them standing in front of a Wells Fargo banner. So

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<v Speaker 1>if you can't, uh, if you don't have friends in Washington,

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<v Speaker 1>Inn who are pro bank, anti regulation Republicans, I don't

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<v Speaker 1>know who your friends are. Yeah, but I mean it's

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<v Speaker 1>it's not as though it's that hard for lawmakers on

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<v Speaker 1>either side of the aisle to continue to treat Wells

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<v Speaker 1>Fargo as kind of a political punching bag. But is

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<v Speaker 1>this a matter of the bank is offering greater transparency

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<v Speaker 1>now by getting these bad incidents out of the limelight,

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<v Speaker 1>or or is it still uh committing these bad acts

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<v Speaker 1>has has it just not gone away? Well there, I

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<v Speaker 1>guess my view the Wells Fargo from the perspective of

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<v Speaker 1>you know, we talk a lot about too big to

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<v Speaker 1>fail in relation to banks. I mean, that's obviously an issue.

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<v Speaker 1>You know, there's arguments in Washington about whether Dodd Frank

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<v Speaker 1>fixed too big to fail. Clearly what Dodd Frank did

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<v Speaker 1>not fix is the two big demandage issue. Um. I

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<v Speaker 1>mean I don't I don't have a great insight into

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<v Speaker 1>Wells Fargo. I'm not inside there every day. But to

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<v Speaker 1>the degree that these things keep happening, I mean you

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<v Speaker 1>get the sense that now some of it the people

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<v Speaker 1>at the top or to blame for it, but some

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<v Speaker 1>of it you just get the sense they really just

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<v Speaker 1>have no idea what's going on inside that bank, and

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<v Speaker 1>you know they're they're these big bureaucratic apparatus is where

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<v Speaker 1>the right hand really doesn't know what the left hand

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<v Speaker 1>is doing. Um. And even if you try to do

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<v Speaker 1>things to stem to control that and and tamp it down,

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<v Speaker 1>there are so many people that these institutions are so large,

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<v Speaker 1>their global, global footprints, you know, you just can't seem

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<v Speaker 1>to have everyone rowing in the same direction. So to speak.

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<v Speaker 1>So the change in management has that made any difference? Uh?

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<v Speaker 1>I mean I don't I answer, I don't really want to.

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<v Speaker 1>I mean, I don't really want to take any shots

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<v Speaker 1>at at at the CEO Tim Sloan, I don't. I

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<v Speaker 1>don't know him. I've never met him, I've never talked

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<v Speaker 1>to him. Um. I mean I will say that, you know,

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<v Speaker 1>sort of observing this less as a journalist and more

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<v Speaker 1>just as you know, a member of the public. I'm

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<v Speaker 1>not sure the contrition has been strong enough with Wells Fargo,

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<v Speaker 1>and even under Sloan. I'm not sure that sort of

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<v Speaker 1>message of being contrite has been powerful enough. I mean

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<v Speaker 1>you sort of look at these ads and you know,

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<v Speaker 1>the last person I really have sincerely believed that Wells

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<v Speaker 1>Fargo has fixed things is Wells Fargo. I mean, I'm

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<v Speaker 1>not I I that message would resonate more if I

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<v Speaker 1>had someone who was sort of an objective analyst who

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<v Speaker 1>spent six months in there, digging under every rock and

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<v Speaker 1>told me it's fixed. But sort of, the the taint

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<v Speaker 1>of that bank is so strong. I mean, we're supposed

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<v Speaker 1>to believe them that they fixed their problems, and meanwhile,

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<v Speaker 1>we keep getting this evidence every day. That they haven't

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<v Speaker 1>fixed their problems. And back to Sloan, I mean, you know,

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<v Speaker 1>there's been a couple of instances where being contrite probably

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<v Speaker 1>would have gone further than being sort of the combative

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<v Speaker 1>way that he has been. In some instances, he's been

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<v Speaker 1>a little combative with the press. You know, he he's

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<v Speaker 1>made some statements at time times where you know, oh,

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<v Speaker 1>it's the press's fault, this stuff keeps popping up. Well, no,

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<v Speaker 1>it's your fault that you're not fixing the problems. I mean,

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<v Speaker 1>you know that's what journalists do. We dig, We look

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<v Speaker 1>for problems. We're not We're rarely reporting that the sun

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<v Speaker 1>is out today. We're looking for bad So so you

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<v Speaker 1>know we're looking for bad stuff. So give us less

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<v Speaker 1>bad stuff to find. I guess would be with you've

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<v Speaker 1>you've rolled out the carpet nicely for us to uh

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<v Speaker 1>let our listeners know that we will in fact be

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<v Speaker 1>speaking with Wells Fargo CEO Tim Sloan. We'll see if

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<v Speaker 1>he continues his combative stance with the media when he

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<v Speaker 1>speaks with Bloomberg Television's Eric Shatzker. You can hear that conversation. Uh,

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<v Speaker 1>this coming Monday afternoon, four pm Wall Street Time. Yeah, comments,

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<v Speaker 1>I'm not going to hold them to it, and we'll

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<v Speaker 1>see what happens at any rate. That's coming up at

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<v Speaker 1>four pm Wall Street. Trying to be nice this coming

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<v Speaker 1>Monday on Bloomberg Radio and TV. Want to switch to

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<v Speaker 1>another topic that you and your team have been covering

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<v Speaker 1>at the finn reg team, Jesse, Fannie May and Freddie Mack.

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<v Speaker 1>They're not supposed to be lobbying about whether they should

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<v Speaker 1>continue to operate, but apparently, uh, that admonition isn't stopping

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<v Speaker 1>Fanny's general council. Okay, tell us a little bit more

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<v Speaker 1>about that. Yeah, so, uh, good reporter works for me

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<v Speaker 1>knows more about Fannie and Freddie than anyone I know.

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<v Speaker 1>Joe light Um had this story about their general counsel

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<v Speaker 1>going out and meeting with stakeholders people associated with the

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<v Speaker 1>Trump administration and expressing the view that he thinks that

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<v Speaker 1>that the Trump administration should find a solution for these

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<v Speaker 1>companies on their own, on its own, cut Congress out

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<v Speaker 1>of the picture. Congress has not been able to do

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<v Speaker 1>anything about these companies for a decade. They continue to

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<v Speaker 1>sit under the government's thumb. They're they're sort of in

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<v Speaker 1>this you know, purgatory of not really independent companies, but

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<v Speaker 1>they've got such a huge footprint in the mortgage market,

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<v Speaker 1>so he he wants them to take the bull by

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<v Speaker 1>the horns and and fix this. Now, on the surface,

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<v Speaker 1>that doesn't sound like a bad thing. I mean, we

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<v Speaker 1>do need a solution to Fannie and Freddy. It's just

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<v Speaker 1>sort of one of these things that has enormous implications

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<v Speaker 1>UM in Washington and beyond, and no one really has

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<v Speaker 1>a good idea to what to do about it. And

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<v Speaker 1>just like everything in Washington, there's no immediate crisis. And

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<v Speaker 1>unless we have an immediate crisis, no one in Washington

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<v Speaker 1>is going to do anything. So these massive companies that

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<v Speaker 1>are basically, you know, cutting to the chase of the

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<v Speaker 1>argument propping up the housing and mortgage market have been

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<v Speaker 1>in this state of purgatory for a decade. Um what

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<v Speaker 1>might be inappropriate about what what Mr Brooks is doing,

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<v Speaker 1>um inappropriates a strong word. There is um awkwardly or

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<v Speaker 1>you know, unfortunately, a ban on lobbying at these companies.

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<v Speaker 1>And that's because people who have been in this town

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<v Speaker 1>a long time. Remember, before the crisis, there were no

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<v Speaker 1>bigger lobbying powerhouses in Washington, d C. Than Fannie May

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<v Speaker 1>and Freddie mac Every lawmaker was on their payroll, so

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<v Speaker 1>to speak. Um, and they had huge gallas and breakfasts,

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<v Speaker 1>and you know, many attempts to regulate the companies and

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<v Speaker 1>prevent them from growing bigger and bigger were halted. And

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<v Speaker 1>that was you know a lot of people smart, people

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<v Speaker 1>smarter than me. I think that was largely because of

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<v Speaker 1>their lobbying prowess. We'll have to stop you there and

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<v Speaker 1>we'll pick up with this another time. Thanks. That's Jesse Westbrook,

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<v Speaker 1>Bloomberg News Financial Regulation editor. Can a phone interview with

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<v Speaker 1>Bloomberg yesterday, Rudy Giuliani, President Trump's lawyer, said that Special

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<v Speaker 1>Counsel Robert Mueller has indicated he'd be willing to narrow

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<v Speaker 1>the scope of an interview with Trump. Speaking on CNN

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<v Speaker 1>this morning, Giuliani repeated that assertion. They sent us a response.

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<v Speaker 1>I can't go into detail, but narrowing the subjects for

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<v Speaker 1>questioning down to about two. Joining me is Jimmy Grule,

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<v Speaker 1>a professor at Notre Dame Law School. Jimmy, Sometimes I

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<v Speaker 1>wonder if Giuliani's real intent is to wear us down

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<v Speaker 1>with this bouncing ball explanation of what's happening in the

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<v Speaker 1>case and contradictions about the facts. He's gotten the facts

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<v Speaker 1>wrong before. How likely is it that Mueller would narrow

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<v Speaker 1>the interview down to two questions. I think it's highly unlikely.

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<v Speaker 1>Excuse me, And I think it's another example indication of

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<v Speaker 1>Juliani either not knowing what the president's intentions and desires

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<v Speaker 1>are or he's just speculating as to what he thinks

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<v Speaker 1>the President will go along with, and then from day

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<v Speaker 1>to day he seems to flip and flop back and

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<v Speaker 1>forth on on these issues. So I think what he

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<v Speaker 1>says on any given day should be taken with a

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<v Speaker 1>grain of salt. Does it seem that the problem is

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<v Speaker 1>not so much the scope of the interview as the

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<v Speaker 1>likelihood that Trump, no matter how much prep there is,

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<v Speaker 1>and it doesn't seem like they're leaving room for much,

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<v Speaker 1>will contradict himself where the facts and Mueller may owe

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<v Speaker 1>them as well as Trump. I think that's the real danger.

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<v Speaker 1>You hit it right on the head. First of all,

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<v Speaker 1>Trump has a long history of flip flopping, exaggerating, misstating,

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<v Speaker 1>misleading on a number of different issues. Uh, and here

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<v Speaker 1>he's going to go in to an interview with an

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<v Speaker 1>adversary who's going to be fully informed on very specific details,

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<v Speaker 1>very specific facts, in which he can rebut and challenge

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<v Speaker 1>Trump's claims, and and I think it's a it's a

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<v Speaker 1>great danger, a risk that the Trump is is running

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<v Speaker 1>if he agrees to this type of interview. According to Politico,

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<v Speaker 1>Giuliani also said he got a verbal assurance from a

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<v Speaker 1>top Mueller deputy that the Special Council intends to follow

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<v Speaker 1>a pair of Justice Department legal opinions that say a

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<v Speaker 1>sitting president can't be indicted. Legal opinions change. There are

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<v Speaker 1>no specific cases on point, but that change if, for example,

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<v Speaker 1>let's say Trump purjursed himself in an interview. It's it's possible,

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<v Speaker 1>but but I think it's highly unlikely. I think it's

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<v Speaker 1>clear from the Constitution that the Framers envisioned UH with

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<v Speaker 1>respect to bringing criminal charges against a sitting president, that

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<v Speaker 1>that be a political process, not a legal process, and

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<v Speaker 1>that political process would be the process of impeachment. Again,

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<v Speaker 1>the caveat there as well, the president is sitting in

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<v Speaker 1>office now. Once he he is removed from office, or

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<v Speaker 1>he doesn't run for reelection, or he's defeated. He's like

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<v Speaker 1>any other citizen, and he could be criminally charged for

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<v Speaker 1>for any crime that he allegedly committed. Mueller's team apparently

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<v Speaker 1>offered no assurances, according to Giuliani, that the investigation would

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<v Speaker 1>end shortly after a presidential interview, which is one of

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<v Speaker 1>Giuliani's demands. What do you make of that, because they've

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<v Speaker 1>they've been there, The rumors have been and the talk

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<v Speaker 1>has been that Mueller wants to close the obstruction of

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<v Speaker 1>investigation at first, he wants to hear about intent from Trump. Well,

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<v Speaker 1>that's true. I mean, the the investigation is on two

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<v Speaker 1>parallel tracks. The first track is, of course, the issue

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<v Speaker 1>of whether there was Russian interference in the two thousand

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<v Speaker 1>and sixteen eleven and more specifically, whether there was a

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<v Speaker 1>conspiracy between Russian government officials and members of the Trump campaign.

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<v Speaker 1>And then the second attract is the obstruction of justice track,

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<v Speaker 1>whether the president has taken actions, including the firing of

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<v Speaker 1>FBI director former FBI director Comey, to obstruct justice to

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<v Speaker 1>fort fort the investigation. But but again we have to

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<v Speaker 1>put this in perspective. Yes, it's one year, this investigation

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<v Speaker 1>has been going on one year. But let's look at

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<v Speaker 1>past investigations of presidents, including white the white Water scandal

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<v Speaker 1>involving President Clinton that went on for for I think

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<v Speaker 1>close to six years before it was finally concluded. I

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<v Speaker 1>think sevent of Clinton's ten are in office involved this investigation.

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<v Speaker 1>This investigation was going on during that period of time.

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<v Speaker 1>So one year, I think, when you put in perspective,

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<v Speaker 1>is a relatively short time for this type of very

0:13:11.800 --> 0:13:15.160
<v Speaker 1>complex criminal investigation. Now he seems to be moving rather

0:13:15.240 --> 0:13:17.200
<v Speaker 1>quickly if you if you ask me when you when

0:13:17.240 --> 0:13:19.560
<v Speaker 1>you look at the indictments and things. Let's turn so

0:13:19.640 --> 0:13:21.040
<v Speaker 1>that's true. I mean, if you look at the number,

0:13:21.040 --> 0:13:24.040
<v Speaker 1>we're looking at nineteen people that have been indicted or

0:13:24.200 --> 0:13:28.160
<v Speaker 1>pleaded guilty, and then as well as three Russian companies

0:13:28.320 --> 0:13:32.800
<v Speaker 1>that have been indicted. So that's a very robust, substantial

0:13:32.840 --> 0:13:37.160
<v Speaker 1>track record of investigations prosecutions in that one year period

0:13:37.160 --> 0:13:39.840
<v Speaker 1>of time. Let's turn to some of the civil lawsuits

0:13:39.840 --> 0:13:43.240
<v Speaker 1>that Trump is facing. A New York appeals court rejected

0:13:43.320 --> 0:13:46.000
<v Speaker 1>his request to put a defamation lawsuit by a former

0:13:46.040 --> 0:13:50.400
<v Speaker 1>Apprentice candidate, Summer zevos Zevo's on hold, and the judge

0:13:50.400 --> 0:13:53.440
<v Speaker 1>in that case had said in March when she rejected

0:13:53.440 --> 0:13:56.120
<v Speaker 1>Trump's request to throughout the lawsuit. No one is above

0:13:56.200 --> 0:14:01.839
<v Speaker 1>the law. What does that ruling tell you, Well, exactly

0:14:01.920 --> 0:14:04.719
<v Speaker 1>that it's very important. It's very fundamental to the to

0:14:05.000 --> 0:14:09.520
<v Speaker 1>American democracy. American democracy is founded on the rule of law,

0:14:09.679 --> 0:14:13.080
<v Speaker 1>and central to that tenant is that no one is

0:14:13.120 --> 0:14:16.160
<v Speaker 1>above the rule of law, including the president. And so

0:14:16.600 --> 0:14:20.320
<v Speaker 1>like any other citizen, the president can be sued, like

0:14:20.400 --> 0:14:22.720
<v Speaker 1>any of the citizens, he can be the target of

0:14:22.720 --> 0:14:25.880
<v Speaker 1>a criminal investigation. Now, at the same time, in fairness,

0:14:25.920 --> 0:14:29.160
<v Speaker 1>you know, it's important that these these civil and criminal

0:14:29.200 --> 0:14:35.360
<v Speaker 1>investigations do not uh significantly disrupt the president's ability to govern.

0:14:35.760 --> 0:14:39.880
<v Speaker 1>But if these investigations can be conducted, especially the civil investigations,

0:14:39.920 --> 0:14:43.720
<v Speaker 1>in a way that doesn't substantially interfere with governance, then

0:14:43.720 --> 0:14:46.400
<v Speaker 1>they should be permitted to go forward, and someone who

0:14:46.440 --> 0:14:49.640
<v Speaker 1>has been harmed should be afforded his or her day

0:14:49.640 --> 0:14:53.240
<v Speaker 1>in court. Jimmy, we have about forty five seconds here.

0:14:53.240 --> 0:14:56.040
<v Speaker 1>But does it seem to you as if the civil

0:14:56.080 --> 0:15:00.280
<v Speaker 1>investigations are almost causing more trouble for Trump than than

0:15:00.320 --> 0:15:04.360
<v Speaker 1>the criminal Well, certainly, the Stormy Daniels investigation has been

0:15:04.480 --> 0:15:07.200
<v Speaker 1>and that's a huge headache for the president has been

0:15:07.280 --> 0:15:10.800
<v Speaker 1>very embarrassing. The President has been caught in a lie.

0:15:11.760 --> 0:15:15.080
<v Speaker 1>On one occasion he said he knew nothing about the payment,

0:15:15.440 --> 0:15:19.000
<v Speaker 1>and then we love to Stormy Daniels just one dollar payment,

0:15:19.080 --> 0:15:21.200
<v Speaker 1>only to learn later than in fact, he didn't know

0:15:21.240 --> 0:15:25.360
<v Speaker 1>about it and in fact reimbursed his attorney, David Cohen Hunter.

0:15:25.880 --> 0:15:28.840
<v Speaker 1>Thank you, Jimmy. As always, that's Jimmy Garoule, a professor

0:15:28.840 --> 0:15:31.160
<v Speaker 1>at Notre Dame Law School. Thanks for listening to the

0:15:31.200 --> 0:15:34.560
<v Speaker 1>Bloomberg Law Podcast. You can subscribe and listen to the

0:15:34.600 --> 0:15:38.480
<v Speaker 1>show on Apple Podcasts, SoundCloud, and on Bloomberg dot com

0:15:38.560 --> 0:15:42.720
<v Speaker 1>slash podcast. I'm June Brolso this is Bloomberg