WEBVTT - Biden Ups Russia Sanctions, Calls Ukraine Invasion Underway

0:00:01.800 --> 0:00:04.440
<v Speaker 1>This is Bloomberg Business Week. I'm Karl Masser and I'm

0:00:04.480 --> 0:00:07.280
<v Speaker 1>Bloomberg Quick Takes Tim Stanovk. We're here every day bringing

0:00:07.320 --> 0:00:09.840
<v Speaker 1>you the latest news from the world to business and finance,

0:00:09.840 --> 0:00:13.680
<v Speaker 1>plus technology, politics, economics, all partnising the power of Business

0:00:13.680 --> 0:00:17.160
<v Speaker 1>Week reporters and editors, not to mention our journalists and

0:00:17.160 --> 0:00:20.000
<v Speaker 1>analysts in more than one twenty countries. You can download

0:00:20.000 --> 0:00:23.239
<v Speaker 1>Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.

0:00:23.400 --> 0:00:25.200
<v Speaker 1>You can also listen to our radio show at two

0:00:25.200 --> 0:00:27.880
<v Speaker 1>pm Eastern Time on Bloomberg Radio or watch us on

0:00:27.920 --> 0:00:31.600
<v Speaker 1>YouTube search Bloomberg Global News, Glaco and on. When it

0:00:31.720 --> 0:00:35.440
<v Speaker 1>comes to Ukraine, Russia, the US, UH and NATO allies,

0:00:35.960 --> 0:00:38.599
<v Speaker 1>Charlie of course mentioning the u S un failing sanctions

0:00:38.600 --> 0:00:41.159
<v Speaker 1>and North Stream to pipeline. That's the latest round of

0:00:41.200 --> 0:00:43.760
<v Speaker 1>sanctions from President by the EU has called an emergency

0:00:43.760 --> 0:00:45.800
<v Speaker 1>in person some of the blocks leaders that is to

0:00:45.920 --> 0:00:49.960
<v Speaker 1>happen to tomorrow and then we've often seen a lot

0:00:50.120 --> 0:00:52.760
<v Speaker 1>of analysis about what we got from the President of

0:00:52.800 --> 0:00:55.920
<v Speaker 1>the United States yesterday about sanctions, how they didn't seem

0:00:55.960 --> 0:00:58.720
<v Speaker 1>to do much. So let's get the latest on the situation.

0:00:58.800 --> 0:01:01.800
<v Speaker 1>What you need to know. Jody Schneider is political news

0:01:01.800 --> 0:01:04.480
<v Speaker 1>director from Bloomberg TV and Radio. She joins us in

0:01:04.520 --> 0:01:07.400
<v Speaker 1>our Interactor Broker studio in New York City. We keep saying, Jody,

0:01:07.520 --> 0:01:10.840
<v Speaker 1>it's fluid. What do we Uh? The President just in

0:01:10.920 --> 0:01:13.880
<v Speaker 1>veiling right another round of sanctions. Talked to us about

0:01:13.880 --> 0:01:17.479
<v Speaker 1>the significance of that. Yeah, so we're expected to see

0:01:17.520 --> 0:01:20.720
<v Speaker 1>this expanded package, maybe as soon as today. We're hearing

0:01:20.720 --> 0:01:22.800
<v Speaker 1>this from people familiar with the matter. They haven't been

0:01:22.840 --> 0:01:24.960
<v Speaker 1>done yet. They have not yet be done, but but

0:01:25.040 --> 0:01:29.200
<v Speaker 1>we're we expect we're seeing them, and UH Bloomberg News

0:01:29.200 --> 0:01:33.399
<v Speaker 1>colleagues are reporting this, according to people familiar with the matter, UH,

0:01:33.400 --> 0:01:36.800
<v Speaker 1>and the penalties would hit additional Russian elites that are

0:01:36.840 --> 0:01:40.760
<v Speaker 1>close to Vladimir Putin, as well as UH the builder

0:01:40.760 --> 0:01:43.160
<v Speaker 1>of the North Stream to pipeline. This would be on

0:01:43.240 --> 0:01:45.800
<v Speaker 1>top of the sanctions that were announced yesterday that the

0:01:45.840 --> 0:01:49.120
<v Speaker 1>President UH announced in his remarks at the White House,

0:01:49.440 --> 0:01:53.840
<v Speaker 1>which some said we're measured, others said we're a little

0:01:53.880 --> 0:01:58.240
<v Speaker 1>too modest. And he's getting some criticism in Congress, mostly

0:01:58.280 --> 0:02:01.960
<v Speaker 1>from Republicans, UH say, why have we not gone far enough?

0:02:02.040 --> 0:02:05.720
<v Speaker 1>The President yesterday in those remarks said that the beginning

0:02:05.800 --> 0:02:10.079
<v Speaker 1>of the invasion was occurring, and yet he wasn't hitting hard. Uh.

0:02:10.240 --> 0:02:13.839
<v Speaker 1>So there this this is what's uh you know taking place. Now.

0:02:14.200 --> 0:02:16.720
<v Speaker 1>The White House says that they're going to continue to

0:02:16.800 --> 0:02:21.440
<v Speaker 1>roll out sanctions. Uh if the uh with what if

0:02:21.480 --> 0:02:25.840
<v Speaker 1>Putin as Putin, I guess uh would escalate uh the

0:02:26.240 --> 0:02:30.880
<v Speaker 1>incursion into Ukraine. So we're watching all that. Uh, we're

0:02:30.880 --> 0:02:34.919
<v Speaker 1>also watching what's happening with the EU and uh their

0:02:35.200 --> 0:02:39.160
<v Speaker 1>uh NATO allies and what they do with sanctions. I'm

0:02:39.200 --> 0:02:41.680
<v Speaker 1>really glad you mentioned the EU allies because we've kind

0:02:41.720 --> 0:02:44.240
<v Speaker 1>of very closely been here before a couple of times

0:02:44.240 --> 0:02:49.760
<v Speaker 1>historically CRIMEA two eight in Georgia, very similar concepts. How

0:02:49.840 --> 0:02:52.960
<v Speaker 1>much further can these sanctions actually hit Russia? Are they

0:02:53.000 --> 0:02:56.480
<v Speaker 1>still effective given we've gone almost ten years where Russia

0:02:56.480 --> 0:02:59.120
<v Speaker 1>has been trying to dedolarize and trying to kind of

0:02:59.280 --> 0:03:02.360
<v Speaker 1>bolster or cushion I should say, the impact, Are they

0:03:02.360 --> 0:03:04.560
<v Speaker 1>still going to be effective? Well, that's right, that's and

0:03:04.639 --> 0:03:06.400
<v Speaker 1>that's a key question. And all this, I mean, I

0:03:06.440 --> 0:03:09.320
<v Speaker 1>think there's two questions there. One is does Vladimir Putin

0:03:09.440 --> 0:03:12.600
<v Speaker 1>care um? You know, is this is this a deterrent effect.

0:03:12.720 --> 0:03:15.040
<v Speaker 1>Has this you know, been a deterrent effect at all?

0:03:15.040 --> 0:03:17.360
<v Speaker 1>That doesn't really seem that it has. Now maybe it

0:03:17.400 --> 0:03:20.840
<v Speaker 1>will deter you know, a dramatic escalation. But the other

0:03:20.880 --> 0:03:23.440
<v Speaker 1>one is a should point out do they work overall?

0:03:23.840 --> 0:03:26.720
<v Speaker 1>And they haven't really seemed to work so far in

0:03:26.800 --> 0:03:29.799
<v Speaker 1>the sphere you're talking about, but uh, you know these

0:03:30.080 --> 0:03:32.360
<v Speaker 1>and and of course they could dramatically escalate if they

0:03:32.360 --> 0:03:35.400
<v Speaker 1>went against big Russian banks, which has been threatened. That's

0:03:35.400 --> 0:03:38.400
<v Speaker 1>a different situation. And if they went to the nuclear option,

0:03:39.240 --> 0:03:41.800
<v Speaker 1>as as they discussed of you know, doing the swift

0:03:42.040 --> 0:03:46.840
<v Speaker 1>um currency um uh sanctions, that would be a whole

0:03:46.840 --> 0:03:49.640
<v Speaker 1>other matter. No one thinks that Joe Biden wants to

0:03:49.680 --> 0:03:52.200
<v Speaker 1>go there. And then there's a chess game involved if

0:03:52.200 --> 0:03:54.560
<v Speaker 1>you give up too much with the sanctions, because you

0:03:54.600 --> 0:03:56.640
<v Speaker 1>don't really have anything else. He's made it clear that

0:03:56.840 --> 0:04:00.000
<v Speaker 1>there will not be American troops on the ground, uh,

0:04:00.080 --> 0:04:02.920
<v Speaker 1>you know in Red Craine. Uh, So you have to

0:04:02.960 --> 0:04:05.160
<v Speaker 1>hold back a little bit because what, you know, what

0:04:05.200 --> 0:04:08.160
<v Speaker 1>currency do you have if you use everything now? So

0:04:08.480 --> 0:04:11.440
<v Speaker 1>it's a waiting game with the White House and everyone's

0:04:11.440 --> 0:04:13.920
<v Speaker 1>watching and you know, waiting to see what Vladimir Putin

0:04:13.960 --> 0:04:17.240
<v Speaker 1>does next? Is there a tipping point do you think

0:04:17.279 --> 0:04:20.360
<v Speaker 1>for President Putin In terms of something that does slow

0:04:20.440 --> 0:04:23.800
<v Speaker 1>him down significantly? Because you look at his speeches and

0:04:23.839 --> 0:04:27.320
<v Speaker 1>what he has said. He feels this territory was it

0:04:27.440 --> 0:04:29.520
<v Speaker 1>was right part of the former Soviet Union, feels like

0:04:29.560 --> 0:04:33.960
<v Speaker 1>this belongs to Russia, and so a lot of nationalism

0:04:34.040 --> 0:04:36.640
<v Speaker 1>right coming from him. So is there something that is

0:04:36.640 --> 0:04:38.559
<v Speaker 1>seen by the experts as there is a tipping point

0:04:38.560 --> 0:04:41.440
<v Speaker 1>that will slow him down? Or does do most expect

0:04:41.440 --> 0:04:43.240
<v Speaker 1>that he's going to go all the way? Yeah? And

0:04:43.279 --> 0:04:46.400
<v Speaker 1>that and that's another set of key questions in this. Uh.

0:04:46.400 --> 0:04:48.679
<v Speaker 1>He has made it very clear that what he wants,

0:04:48.839 --> 0:04:51.920
<v Speaker 1>that what he kept saying, uh could be something you know,

0:04:52.000 --> 0:04:54.720
<v Speaker 1>the West get out of jail free card here would

0:04:54.760 --> 0:04:58.839
<v Speaker 1>be to promise never to allow Ukraine to become part

0:04:58.839 --> 0:05:01.960
<v Speaker 1>of NATO, which of course is not something that the

0:05:02.080 --> 0:05:06.080
<v Speaker 1>US or its allies in Europe are willing to do. Uh.

0:05:06.200 --> 0:05:09.120
<v Speaker 1>So it's unclear what else might satisfy. I mean, there's

0:05:09.120 --> 0:05:12.400
<v Speaker 1>been some thinking that that's what these these diplomatic efforts

0:05:12.920 --> 0:05:15.240
<v Speaker 1>with Anthony B. Lincoln and and you know the other

0:05:15.320 --> 0:05:18.880
<v Speaker 1>his counterparts among the European nations have been in recent

0:05:18.920 --> 0:05:20.840
<v Speaker 1>weeks and months that to try to come up with

0:05:20.920 --> 0:05:24.080
<v Speaker 1>something that could satisfy Putin, but they haven't been able

0:05:24.120 --> 0:05:26.280
<v Speaker 1>to seem to come up with anything. One good question,

0:05:26.680 --> 0:05:28.800
<v Speaker 1>how political is this becoming in the United States, because

0:05:28.800 --> 0:05:30.880
<v Speaker 1>we've even seen division among the Republicans. But I just

0:05:30.920 --> 0:05:33.960
<v Speaker 1>wonder about this lack of support congressional support for President

0:05:34.000 --> 0:05:36.120
<v Speaker 1>binding in this Yeah, and this of course, you know,

0:05:36.160 --> 0:05:38.359
<v Speaker 1>it's a midterm election year, and the whole thinking is,

0:05:38.880 --> 0:05:41.680
<v Speaker 1>you know, foreign policy doesn't really matter in those elections,

0:05:41.720 --> 0:05:44.760
<v Speaker 1>but there's a big you know, there there's one big

0:05:44.800 --> 0:05:46.800
<v Speaker 1>caveat this year that could make it matter in the

0:05:46.839 --> 0:05:49.800
<v Speaker 1>price of gasoline. And if if this really disrupts oil

0:05:49.839 --> 0:05:52.440
<v Speaker 1>markets and gas prices, which have been going up because

0:05:52.480 --> 0:05:54.919
<v Speaker 1>of you know, the inflationary pressures, they go up further.

0:05:55.279 --> 0:05:58.920
<v Speaker 1>This could be really difficult, as Jimmy Carter saw, as

0:05:58.960 --> 0:06:04.839
<v Speaker 1>others saw when inflation tied to uh international tensions went higher,

0:06:04.880 --> 0:06:08.640
<v Speaker 1>and that could really hurt the Democrats in power. What

0:06:08.680 --> 0:06:11.880
<v Speaker 1>are you watching thirty seconds final thoughts, Well, we're watching

0:06:11.880 --> 0:06:15.000
<v Speaker 1>Putin's moves and and also another thing we're watching is China.

0:06:15.360 --> 0:06:18.640
<v Speaker 1>China's responsor is very interesting because while Putin and she

0:06:19.040 --> 0:06:21.440
<v Speaker 1>spoke at the Olympics and they had those meetings, we

0:06:21.480 --> 0:06:24.000
<v Speaker 1>haven't heard a lot from China in recent days, very

0:06:24.120 --> 0:06:26.800
<v Speaker 1>very modest console comments in state on media. So I'm

0:06:26.839 --> 0:06:30.840
<v Speaker 1>watching them. They've been uping regulatory oversight of their executives

0:06:30.839 --> 0:06:34.240
<v Speaker 1>and businesses. But I agree it's a really important aspect

0:06:34.279 --> 0:06:35.640
<v Speaker 1>of this that we need to keep an eye on. Jodie,

0:06:35.680 --> 0:06:37.640
<v Speaker 1>thank you so much. I know it's busy. Jody Schneider.

0:06:37.839 --> 0:06:40.760
<v Speaker 1>She's political news director for Bloomberg TV and Radio. This

0:06:41.080 --> 0:06:45.120
<v Speaker 1>is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes.

0:06:45.240 --> 0:06:49.240
<v Speaker 1>Tim Stinovic on Bloomberg Radio. Listening to Bloomberg Business Week,

0:06:49.240 --> 0:06:51.520
<v Speaker 1>Carol Master along with Creedy gooptin now as we watch

0:06:51.600 --> 0:06:54.280
<v Speaker 1>the situation over in Ukraine, there's one other fund to

0:06:54.320 --> 0:06:56.359
<v Speaker 1>keep an eye on, and that is the cyber attacks

0:06:56.440 --> 0:06:59.840
<v Speaker 1>intended to create chaos and undermine the Ukrainian government. That

0:07:00.080 --> 0:07:03.200
<v Speaker 1>story from Jeff Stone, cybersecurity editor Bloomberg News. He joins,

0:07:03.400 --> 0:07:06.320
<v Speaker 1>creating myself here in our Bloomberg Interactive Broker studio. How

0:07:06.360 --> 0:07:10.800
<v Speaker 1>are you well, It's good to have you here. You

0:07:10.840 --> 0:07:13.800
<v Speaker 1>are busy anything in all things Ukraine right now, Um,

0:07:13.880 --> 0:07:17.040
<v Speaker 1>what's going on here? Uh? It changes by the day,

0:07:17.200 --> 0:07:20.200
<v Speaker 1>right you alluded to this, But we have seen a

0:07:20.280 --> 0:07:24.400
<v Speaker 1>number of attacks, um, that are intended to create chaos,

0:07:24.560 --> 0:07:28.680
<v Speaker 1>create confusion, create difficulty for Ukrainian government websites trying to

0:07:28.680 --> 0:07:31.960
<v Speaker 1>stand online. Um, and it's really tough for banks to

0:07:32.000 --> 0:07:35.840
<v Speaker 1>stay online. What does difficulty mean? They're overwhelmed with inauthentic

0:07:35.880 --> 0:07:39.120
<v Speaker 1>traffic that appears to be coming from within Russian borders,

0:07:39.840 --> 0:07:42.800
<v Speaker 1>and that traffic does what knocks the websites offline. So

0:07:42.840 --> 0:07:46.400
<v Speaker 1>if you're trying to access your bank, you can't gather

0:07:46.640 --> 0:07:49.760
<v Speaker 1>your transaction details, for instance, you can't access information from

0:07:49.800 --> 0:07:51.800
<v Speaker 1>the Ministry of Foreign Affairs for instance. That would freak

0:07:51.840 --> 0:07:54.720
<v Speaker 1>me out. Yeah, that sounds scary. How much further can

0:07:54.760 --> 0:07:57.360
<v Speaker 1>it really go? It's hard to say. Um, we haven't

0:07:57.360 --> 0:08:02.520
<v Speaker 1>been in a situation before where, um, a traditional warfare situation,

0:08:02.680 --> 0:08:05.240
<v Speaker 1>troops on the ground, if you will, is combined with

0:08:05.280 --> 0:08:07.440
<v Speaker 1>this kind of stuff that we've seen evolve in cyberspace

0:08:07.440 --> 0:08:10.200
<v Speaker 1>over the past five or ten years. Um, it can

0:08:10.200 --> 0:08:12.640
<v Speaker 1>get worse, Jeff. It does feel like Russia is just

0:08:13.000 --> 0:08:16.320
<v Speaker 1>chipping away at Ukraine on so many different fronts to

0:08:16.360 --> 0:08:19.800
<v Speaker 1>really kind of undermine the citizens there. That's true. I

0:08:19.800 --> 0:08:21.800
<v Speaker 1>think that's part of the strategy. We're speaking with folks

0:08:21.840 --> 0:08:25.200
<v Speaker 1>in Ukraine who who say essentially that the goal here

0:08:25.360 --> 0:08:27.800
<v Speaker 1>is to exhaust us, it is to intimidate us, it

0:08:27.880 --> 0:08:32.000
<v Speaker 1>is to wear us down. Well, I guess my question

0:08:32.040 --> 0:08:34.160
<v Speaker 1>here now is if you do have that kind of

0:08:34.200 --> 0:08:38.720
<v Speaker 1>exhausting wearing it down idea, Um, can't they go the

0:08:38.800 --> 0:08:41.640
<v Speaker 1>other way as well? Can't cyber attacks happen on Russia

0:08:41.679 --> 0:08:44.320
<v Speaker 1>as well? As this a a means of warfare if

0:08:44.320 --> 0:08:46.480
<v Speaker 1>you're not seeing those physical troops on the ground, it

0:08:46.520 --> 0:08:49.000
<v Speaker 1>absolutely is. Um. We know that the Russian government is

0:08:49.000 --> 0:08:52.079
<v Speaker 1>particularly advanced and sophisticated with this kind of stuff, but

0:08:52.200 --> 0:08:55.520
<v Speaker 1>we have seen attacks against them, not from Ukraine as

0:08:55.520 --> 0:08:58.520
<v Speaker 1>of yet that we know of, but we've seen cases

0:08:58.520 --> 0:09:01.040
<v Speaker 1>in the past, certainly from the U S. U S

0:09:01.040 --> 0:09:05.520
<v Speaker 1>intelligence has affected UM Russian government activity in in cyberspace

0:09:05.600 --> 0:09:07.240
<v Speaker 1>prior to the last election. Well, this is kind of

0:09:07.280 --> 0:09:09.600
<v Speaker 1>interesting right as we are watching what some would say

0:09:09.840 --> 0:09:13.640
<v Speaker 1>are two week sanctions opposed by the U S. That

0:09:13.720 --> 0:09:16.000
<v Speaker 1>you do wonder write what's going on behind the scenes

0:09:16.040 --> 0:09:18.400
<v Speaker 1>in terms of cyber warfare, right which is something that

0:09:18.400 --> 0:09:22.040
<v Speaker 1>doesn't always get talked about, at least initially. But you

0:09:22.080 --> 0:09:24.280
<v Speaker 1>do wonder what are you hearing stuff on that front.

0:09:24.280 --> 0:09:27.160
<v Speaker 1>In terms of the U S specifically in NATO allies.

0:09:27.760 --> 0:09:29.680
<v Speaker 1>We haven't heard anything about that yet. I would be

0:09:29.679 --> 0:09:31.960
<v Speaker 1>surprised if it's If it's not happening. They certainly have

0:09:32.160 --> 0:09:37.640
<v Speaker 1>the capability to uh take Russian banks offline for instances

0:09:37.720 --> 0:09:40.920
<v Speaker 1>we've seen in Ukraine and affect uh you know, they

0:09:40.920 --> 0:09:43.240
<v Speaker 1>can they can certainly get any emails and things like that.

0:09:43.280 --> 0:09:45.840
<v Speaker 1>We haven't seen anything indicating that that's happening yet. But

0:09:46.640 --> 0:09:49.960
<v Speaker 1>as a harder story, so how do you protect yourself

0:09:50.080 --> 0:09:54.360
<v Speaker 1>against the sabama Ukrainian citizen hypothetically, what what do you

0:09:54.400 --> 0:09:59.320
<v Speaker 1>do to to to prevent yourself? I think that that candidly,

0:09:59.360 --> 0:10:02.120
<v Speaker 1>you're your concerns if you're Ukrainian citizen right now, are

0:10:02.200 --> 0:10:04.920
<v Speaker 1>not in the cyberspace. I think that you want to

0:10:05.000 --> 0:10:07.240
<v Speaker 1>probably take out cash and make sure that you can

0:10:07.280 --> 0:10:10.920
<v Speaker 1>access your information, have it handy. UM. But a lot

0:10:10.960 --> 0:10:12.920
<v Speaker 1>of this stuff is UM kind of a tip for

0:10:12.960 --> 0:10:15.760
<v Speaker 1>tat in in terms of the geopolitics, we know that

0:10:15.800 --> 0:10:19.200
<v Speaker 1>the Ukrainian government, for instance, is trying to UM ease

0:10:19.440 --> 0:10:21.600
<v Speaker 1>some of this burden so that it's not a thought

0:10:21.760 --> 0:10:25.640
<v Speaker 1>for people yet. It's just I would say, it's fascinating

0:10:25.679 --> 0:10:27.319
<v Speaker 1>that you've mentioned that you kind of have to look

0:10:27.320 --> 0:10:29.160
<v Speaker 1>at your cash right now, because anecdotally, I mean I

0:10:29.200 --> 0:10:31.480
<v Speaker 1>have friends who are German or live in Europe and

0:10:31.480 --> 0:10:34.440
<v Speaker 1>have families in Ukraine, and anecdotally they said, well, everyone's

0:10:34.480 --> 0:10:36.440
<v Speaker 1>pulling their money out of their bank accounts. They're spending

0:10:36.480 --> 0:10:38.960
<v Speaker 1>it on real estate in Western Europe. And this is

0:10:39.000 --> 0:10:41.360
<v Speaker 1>what the President of Ukraine was talking about, right He

0:10:41.440 --> 0:10:44.840
<v Speaker 1>was saying to President Biden, actually say tamp down the rhetoric,

0:10:44.880 --> 0:10:48.280
<v Speaker 1>because you're seeing capital flows exit Ukraine at a pace

0:10:48.320 --> 0:10:50.400
<v Speaker 1>that you just haven't seen. And I thought, my little

0:10:50.440 --> 0:10:52.440
<v Speaker 1>market mind market hat on, I was like, oh, they're

0:10:52.440 --> 0:10:54.480
<v Speaker 1>talking about financial markets. That's not what they're talking about

0:10:54.480 --> 0:10:56.920
<v Speaker 1>the time, about people's savings. It's wild. If you can say,

0:10:56.920 --> 0:11:00.000
<v Speaker 1>if I can say one more thing, they also, um,

0:11:00.080 --> 0:11:02.840
<v Speaker 1>we also are trying to keep this as grounded as

0:11:02.960 --> 0:11:07.280
<v Speaker 1>possible as you alluded to the President saying, because fears

0:11:07.400 --> 0:11:10.959
<v Speaker 1>or over emphasizing this kind of rushing capability in cyberspace

0:11:11.080 --> 0:11:14.440
<v Speaker 1>plays into the Kremlin's hands. Um, you don't want to

0:11:14.440 --> 0:11:17.360
<v Speaker 1>create that panic that you that you kind of alluded to. No,

0:11:17.480 --> 0:11:19.599
<v Speaker 1>it's really smart right to be levelheaded about this. But

0:11:19.640 --> 0:11:22.240
<v Speaker 1>at the same time, this is our current world in

0:11:22.360 --> 0:11:24.480
<v Speaker 1>terms of warfare. We've talked about this right over the

0:11:24.520 --> 0:11:27.680
<v Speaker 1>last really decade or so, if not more, that this

0:11:27.800 --> 0:11:30.240
<v Speaker 1>is this is how how it is often played or

0:11:30.240 --> 0:11:35.440
<v Speaker 1>will be increasingly played. Right, Well, you're gonna be busy, Jeff,

0:11:35.440 --> 0:11:37.000
<v Speaker 1>Thanks for getting up to speak, because this is another

0:11:37.000 --> 0:11:38.439
<v Speaker 1>side of the story that we just wanted to bring

0:11:38.480 --> 0:11:41.680
<v Speaker 1>to our audience. Jeff Stone, the cybersecurity editor Bloomberg News.

0:11:41.800 --> 0:11:45.360
<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

0:11:45.440 --> 0:11:49.800
<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, this

0:11:49.880 --> 0:11:51.720
<v Speaker 1>is our most read story on the Bloomberg today and

0:11:51.760 --> 0:11:54.920
<v Speaker 1>it has sat there all day. Uh, it's another one

0:11:54.920 --> 0:11:57.080
<v Speaker 1>by our street, not urajon, and I guess I don't know.

0:11:57.160 --> 0:11:58.680
<v Speaker 1>Can we call it a clawback? We'll see what he

0:11:58.679 --> 0:12:01.400
<v Speaker 1>has to say. Goldman is actually wants your bonus back.

0:12:01.480 --> 0:12:04.280
<v Speaker 1>So here with who the firm is targeting Istory. He

0:12:04.360 --> 0:12:07.840
<v Speaker 1>is financial port rep Blomberg News in Bloomberg Interactive Brokers Studio.

0:12:08.320 --> 0:12:10.520
<v Speaker 1>Is it a clawback. Is it the ultimate clos back?

0:12:11.840 --> 0:12:14.040
<v Speaker 1>It definitely is the threat of a claw back. What

0:12:14.120 --> 0:12:17.040
<v Speaker 1>they're really doing right now is taking steps to confiscate

0:12:17.120 --> 0:12:19.960
<v Speaker 1>pay for from a couple of their departed executives who

0:12:20.000 --> 0:12:24.439
<v Speaker 1>when who left to start this banking started backed by Walmart.

0:12:25.120 --> 0:12:27.440
<v Speaker 1>It's a small startup. It would be somewhat similar to

0:12:27.640 --> 0:12:30.719
<v Speaker 1>Goldman Zone consumer banking aspirations, which took group five or

0:12:30.760 --> 0:12:32.959
<v Speaker 1>six years ago, and these two executives were key to that.

0:12:33.600 --> 0:12:36.400
<v Speaker 1>But what Goodman is doing here, which is what is

0:12:36.520 --> 0:12:40.760
<v Speaker 1>rare and unprecedented about that, is they're going after paid

0:12:40.880 --> 0:12:45.040
<v Speaker 1>that has already vested and been text. We've heard a

0:12:45.120 --> 0:12:48.080
<v Speaker 1>lot of instances where deferred pay gets taken away. You

0:12:48.120 --> 0:12:50.960
<v Speaker 1>go from Goldman to JP Morgan, Goldman to Morgan standing

0:12:51.360 --> 0:12:54.480
<v Speaker 1>you don't have a chance of keeping your deferred faith.

0:12:54.520 --> 0:12:56.880
<v Speaker 1>That's always you don't have it yet, right, you don't

0:12:56.920 --> 0:12:58.920
<v Speaker 1>have it yet. In this case they have it. I

0:12:58.920 --> 0:13:01.120
<v Speaker 1>mean we also cite example in the story where even

0:13:01.160 --> 0:13:02.960
<v Speaker 1>the deferred pay is getting pulled from people who are

0:13:02.960 --> 0:13:06.199
<v Speaker 1>moving to clients and by side films that would typically

0:13:06.240 --> 0:13:08.800
<v Speaker 1>not be treated that way. But even if you're willing

0:13:08.840 --> 0:13:10.800
<v Speaker 1>to set that aside, for a second and just count

0:13:10.840 --> 0:13:14.160
<v Speaker 1>that as as an aggressive tone of the dial. What

0:13:14.280 --> 0:13:19.440
<v Speaker 1>they're doing with the vested compensation, compensation that's already been

0:13:19.480 --> 0:13:23.320
<v Speaker 1>delivered to them, that really stands out, and that to

0:13:23.400 --> 0:13:25.160
<v Speaker 1>me and a lot of the people have spoken with,

0:13:25.880 --> 0:13:29.000
<v Speaker 1>is really the prime example perhaps of Goldman and its

0:13:29.000 --> 0:13:33.240
<v Speaker 1>CEO sending a message, making it loud and clear to stuff.

0:13:33.280 --> 0:13:35.720
<v Speaker 1>We're still at the bank and thinking about jumping ship.

0:13:36.280 --> 0:13:39.320
<v Speaker 1>It might be very costly to do so. Well, what's

0:13:39.360 --> 0:13:41.040
<v Speaker 1>interesting to me, And you say this in your story,

0:13:41.559 --> 0:13:45.040
<v Speaker 1>you say that this is something that normally happens when

0:13:45.080 --> 0:13:47.600
<v Speaker 1>it's kind of it's used for punishments, reserved for cases

0:13:47.640 --> 0:13:51.320
<v Speaker 1>of misconduct, not necessarily new jobs. And we saw this before,

0:13:51.480 --> 0:13:54.040
<v Speaker 1>not necessarily at JP or at Goldman. Excuse me, but

0:13:54.120 --> 0:13:56.280
<v Speaker 1>we saw this. You also quote this in your story

0:13:56.280 --> 0:13:59.640
<v Speaker 1>an infamous incident with Andrea or cell I remember that story.

0:14:00.080 --> 0:14:03.200
<v Speaker 1>Moving over to I want to say Banco santand their right, Yeah,

0:14:03.200 --> 0:14:06.679
<v Speaker 1>the Spanish bank over from UBS. So this has happened before.

0:14:06.720 --> 0:14:09.640
<v Speaker 1>It's almost like it's been in the making, except that's

0:14:09.679 --> 0:14:13.440
<v Speaker 1>a little different. That's one level less aggressive because under

0:14:13.440 --> 0:14:16.320
<v Speaker 1>your child, who was running investment banking at ubs at

0:14:16.320 --> 0:14:20.400
<v Speaker 1>the time moving to Banco Santander Spanish retail lender. What

0:14:20.640 --> 0:14:24.280
<v Speaker 1>blew up that contract was the fact that is deferred

0:14:24.320 --> 0:14:27.000
<v Speaker 1>pay was taken away. In this case, they're not only

0:14:27.040 --> 0:14:28.720
<v Speaker 1>to go with a deferred pay, but they're also going

0:14:28.720 --> 0:14:31.080
<v Speaker 1>off to pay that has been delivered. That is what

0:14:31.280 --> 0:14:33.320
<v Speaker 1>makes it a little mind boggling. Well, this is interesting

0:14:33.360 --> 0:14:35.360
<v Speaker 1>because it also speaks to you when it's vested, right,

0:14:35.400 --> 0:14:38.360
<v Speaker 1>these are executives who put in their time right and

0:14:38.400 --> 0:14:41.760
<v Speaker 1>delivered uncertain things. Right. Can we assume that and then

0:14:41.800 --> 0:14:46.400
<v Speaker 1>we're awarded absolutely? I mean the performance bonuses what all

0:14:46.440 --> 0:14:50.040
<v Speaker 1>these large Wall Street films thrive on, and it's awarded

0:14:50.040 --> 0:14:51.560
<v Speaker 1>at the end of the year. It is supposed to

0:14:51.600 --> 0:14:55.560
<v Speaker 1>be a pay for performance culture invests over three years

0:14:55.600 --> 0:14:57.720
<v Speaker 1>and you're restricted from selling it for five years. But

0:14:57.720 --> 0:15:00.480
<v Speaker 1>those are all steps put in place to make sure

0:15:00.560 --> 0:15:02.800
<v Speaker 1>no one's making a quick buck so that the stocks

0:15:02.800 --> 0:15:04.480
<v Speaker 1>going up in the short term and then you cash

0:15:04.480 --> 0:15:06.720
<v Speaker 1>out in the stock banks, which is why these measures

0:15:06.840 --> 0:15:11.200
<v Speaker 1>in place. But you're using some of those restrictions to

0:15:11.360 --> 0:15:14.800
<v Speaker 1>now find a back door into clowing back that pay. Sure,

0:15:14.960 --> 0:15:17.480
<v Speaker 1>it sounds like comments getting incredibly aggressive with a lot

0:15:17.520 --> 0:15:20.520
<v Speaker 1>of stuff. What's going on here? It's the broader backdrop.

0:15:20.600 --> 0:15:23.080
<v Speaker 1>We have been speaking about the lost for the last

0:15:23.120 --> 0:15:26.280
<v Speaker 1>two years, through the pandemic, really about this intense battle

0:15:26.320 --> 0:15:29.120
<v Speaker 1>for talent. What have all the major firms done in

0:15:29.200 --> 0:15:32.600
<v Speaker 1>a period of record revenues and profits we saw for

0:15:32.720 --> 0:15:35.840
<v Speaker 1>when it came to the one pay cycle, all of them,

0:15:36.040 --> 0:15:40.280
<v Speaker 1>all of them increased their compensation, They boosted pay bonuses

0:15:40.320 --> 0:15:43.520
<v Speaker 1>were raining down in and the bonuses were going up

0:15:43.560 --> 0:15:45.880
<v Speaker 1>to a level that you hadn't scenes in the financial

0:15:45.920 --> 0:15:48.560
<v Speaker 1>crisis in some places, to a new record. That is

0:15:48.720 --> 0:15:51.320
<v Speaker 1>one side of how you deal with the talent war.

0:15:51.760 --> 0:15:55.400
<v Speaker 1>The other, uglier side, I guess, is also trying to

0:15:55.440 --> 0:15:57.840
<v Speaker 1>send a message to those who are leaving that there

0:15:57.920 --> 0:16:00.000
<v Speaker 1>is only one top dog in town and you don't

0:16:00.040 --> 0:16:02.520
<v Speaker 1>to get on the wrong side. Well, what's interesting to

0:16:02.600 --> 0:16:05.360
<v Speaker 1>me is that this also follows, like you said, this,

0:16:05.560 --> 0:16:07.560
<v Speaker 1>this conversation has been increasing for a while, right, and

0:16:07.560 --> 0:16:09.680
<v Speaker 1>it's also eating into their bottom line. So you kind

0:16:09.680 --> 0:16:13.040
<v Speaker 1>of understand in a way why they're making this decision.

0:16:13.120 --> 0:16:17.560
<v Speaker 1>It's it's getting very costly. Yes, and no, I would say,

0:16:17.640 --> 0:16:20.840
<v Speaker 1>because remember the film that coined the phrase, or at

0:16:20.880 --> 0:16:23.400
<v Speaker 1>least made the phrase popular long term greedy. That is

0:16:23.440 --> 0:16:26.800
<v Speaker 1>Goldman Sax It's former leader, Gus Levy in the nineties

0:16:27.200 --> 0:16:29.960
<v Speaker 1>when he was leading of the film, you know, till

0:16:30.080 --> 0:16:32.520
<v Speaker 1>his dying day, he was the CEO of Goldman Sex.

0:16:32.600 --> 0:16:36.520
<v Speaker 1>He ran that place, and that is when this whole

0:16:36.600 --> 0:16:39.960
<v Speaker 1>idea of you have to be long term greedy to crout.

0:16:40.040 --> 0:16:42.120
<v Speaker 1>And over the last fifty sixty years that has been

0:16:42.120 --> 0:16:45.240
<v Speaker 1>a film that's been closely associated with Goldman Sex. So

0:16:45.280 --> 0:16:48.960
<v Speaker 1>the question is some of these measures which are likely

0:16:49.040 --> 0:16:51.880
<v Speaker 1>to irk clients, and we point out a couple of

0:16:51.920 --> 0:16:54.800
<v Speaker 1>instances in the story where it has irked clients or

0:16:54.920 --> 0:16:59.360
<v Speaker 1>has led to some awkward conversations. Does that eat into

0:16:59.400 --> 0:17:04.800
<v Speaker 1>this long term greedy ethos. Any time of record capital markets,

0:17:05.359 --> 0:17:08.960
<v Speaker 1>record do making activity, massive trading activity, you may not

0:17:09.080 --> 0:17:11.640
<v Speaker 1>necessarily see it in the numbers. And the Goldman Sax

0:17:11.760 --> 0:17:14.560
<v Speaker 1>brand has been built over a hundred and fifty years.

0:17:15.160 --> 0:17:17.360
<v Speaker 1>Nothing's going to shake the foundation of two or three

0:17:17.400 --> 0:17:20.159
<v Speaker 1>five clients are upset, but you have to wonder what

0:17:20.280 --> 0:17:23.679
<v Speaker 1>long term impact it does have if the trend continues,

0:17:24.119 --> 0:17:28.040
<v Speaker 1>and really is that the best way to boost loyalty

0:17:28.240 --> 0:17:30.280
<v Speaker 1>and association with the film. Well, and I do think

0:17:30.280 --> 0:17:33.159
<v Speaker 1>bottom line. It is about the bottom line, right, Goldman

0:17:33.200 --> 0:17:37.479
<v Speaker 1>concerned about, you know, preserving the revenues, the relationships, right,

0:17:37.520 --> 0:17:40.120
<v Speaker 1>because when some of these big topper runers and deal

0:17:40.160 --> 0:17:43.880
<v Speaker 1>makers go, that certainly impacts them. Yes, but they've also

0:17:43.920 --> 0:17:46.840
<v Speaker 1>done a fabulous job over several decades of cultivating what

0:17:47.040 --> 0:17:51.000
<v Speaker 1>is the corporate world's most powerful alumni network. When these

0:17:51.040 --> 0:17:55.639
<v Speaker 1>successful rainmakers leave two hundred West Street Goldman's headquarters in

0:17:55.680 --> 0:17:59.560
<v Speaker 1>New York and take up a lucrative second career, they

0:17:59.560 --> 0:18:03.040
<v Speaker 1>will come back to Goldman for advice, deals, trades, that

0:18:03.200 --> 0:18:06.080
<v Speaker 1>connective ishsh that is really a connective issue for a

0:18:06.200 --> 0:18:08.520
<v Speaker 1>lifetime of shared riches. Yeah, and you always feel like

0:18:08.520 --> 0:18:11.360
<v Speaker 1>almost really really good at that. Um, We're gonna watch

0:18:11.400 --> 0:18:14.000
<v Speaker 1>and see if other Wall Street firms follow Street Fantastic

0:18:14.000 --> 0:18:16.760
<v Speaker 1>story Street a financial report at Bloomberg News. It is

0:18:16.760 --> 0:18:21.080
<v Speaker 1>our most read story on the Bloomberg Today. Thanks for

0:18:21.119 --> 0:18:24.879
<v Speaker 1>listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,

0:18:25.000 --> 0:18:27.119
<v Speaker 1>or Bloomberg dot com, and you can also listen to

0:18:27.160 --> 0:18:29.760
<v Speaker 1>our radio show at two pm Eastern on Bloomberg Radio

0:18:29.880 --> 0:18:32.639
<v Speaker 1>or watch us on YouTube search Bloomberg Global News