Speaker 1: Hello, and welcome to the Votes and Verdicts podcast, hosted
Speaker 1: by the litigation and policy team at Bloomberg Intelligence, the
Speaker 1: investment research platform of Bloomberg LP. Bloomberg Intelligence has five
Speaker 1: hundred analysts and strategists working across the globe and focused
Speaker 1: on all major markets. Our coverage includes over two thousand
Speaker 1: equities and credits, and we have outlooks on more than
Speaker 1: ninety industries and one hundred market industries, currencies and commodities.
Speaker 1: This podcast series examines the intersection of business policy and law.
Speaker 1: I'm Elliott Stein, an analysts with Bloomberg Intelligence covering financials litigation.
Speaker 1: The Forthcoming Conversation was a post election webinar that our
Speaker 1: Bloomberg Intelligence policy analysts hosted on November sean to discuss
Speaker 1: the industry impacts of the November fifth US elections, which
Speaker 1: saw Donald Trump win the presidency and Republicans take control
Speaker 1: of the Senate. The House of Representatives has yet to
Speaker 1: be called as of this recording, but various new sources
Speaker 1: point to a likely slim Republican majority. I was joined
Speaker 1: by my colleagues Nathan Dean, Jenrie, Matt Schattenhelm, Holly from
Speaker 1: Justin TERESI Rob Barnett, Andrews Silverman, and Ben Elliott. I
Speaker 1: hope you enjoyed the episode.
Speaker 2: Thank you.
Speaker 1: We saw Donald Trump win the presidency and Republicans take
Speaker 1: control of the Senate. The House of Representatives has yet
Speaker 1: to be called as of this recording, but it does
Speaker 1: seem from various news sources at this point that is
Speaker 1: likely to also go to the Republicans. I'm Elliot Stein.
Speaker 1: I'm a litigation analyst with Bloomberg Intelligence. Thank you all
Speaker 1: for joining today. I'm delighted today to also be joined
Speaker 1: by my bi policy analyst colleagues. We have several on
Speaker 1: the line here, so let me just introduce them quickly.
Speaker 1: We have Nathan Dean who covers financials policy, Ben Elliott,
Speaker 1: who covers Fannie May and Freddie Mack and the card lenders.
Speaker 1: Holly from who covers consumer and industrials policy and litigation.
Speaker 1: Justin Teresi and Jen Ree who cover antitrust policy in litigation.
Speaker 1: Andrews Silverman who covers tax policy, Rob Barnett who covers renewables,
Speaker 1: and Matt Chettenhelm who covers TMT litigation and policy. So
Speaker 1: we have a lot of sectors and issues to cover today.
Speaker 1: So I'm going to stop my introductory remarks here and
Speaker 1: we'll start going around the horn to hear from all
Speaker 1: of my colleagues on this call. We're going to start
Speaker 1: with Holly from who, like I said, covers policy and
Speaker 1: litigation in the consumer sector as well as the industrial sector,
Speaker 1: since the imposition of tariffs is likely to be one
Speaker 1: of the first things we see President Trump do when
Speaker 1: he takes office. So, Hollie, what why don't you come
Speaker 1: in tell us what you are thinking and seeing and
Speaker 1: expecting in terms of tarriffs and other issues in the
Speaker 1: consumer and industrial sectors.
Speaker 3: Sure, thanks, Elliott. So, the top thing that we're looking
Speaker 3: at from Trump's administration that could impact consumer and industrial
Speaker 3: space are terroriffs, like you said, changes to electric vehicle policy,
Speaker 3: and potential revision to p pass rules. So I'll start
Speaker 3: with tariffs. Trump has made tariffs an important part of
Speaker 3: his economic plan. He said he would impose terris of
Speaker 3: sixty percent on goods from China, and we think that
Speaker 3: could impact apparel companies like Nike and Adidas, who source
Speaker 3: fourteen to eighteen percent of their footwear from China according
Speaker 3: to BI estimates, and perhaps auto companies too, like Bolo
Speaker 3: and full Stars and some of their evs are meeting China.
Speaker 3: Trump has also pledged tariffs at a rate of ten
Speaker 3: to twenty percent on goods from everywhere else, and we
Speaker 3: think that could impact a peril companies like Lululemon and
Speaker 3: All Birds, given they largely make products in Vietnam. Opponents
Speaker 3: have said Trump's tariffs could drive up per household costs
Speaker 3: by over two thousand dollars a year. So does Trump
Speaker 3: have the power to do that this The short answer
Speaker 3: we think is yes, very such. He'd delegate congressional authority
Speaker 3: to the president to impose tariffs when, for example, they
Speaker 3: are necessary to tech national security, to prevent appreciation of
Speaker 3: the dollar, or when a foreign countries practices deny US
Speaker 3: rights under trade agreements or burning US commerce. This last
Speaker 3: section refers to powers granted to the president under section
Speaker 3: three oh one of the Trade Acts. President Trump used
Speaker 3: this power in twenty eighteen to impose terror some five
Speaker 3: hundred billion dollars worth of goods. Multiple companies challenge these
Speaker 3: actions in the US Court of International Trade, which never
Speaker 3: ruled on the case because the Biden administigation took over
Speaker 3: and the case was rendered moot. But we think that
Speaker 3: those challenges were her, the court would have held them,
Speaker 3: and this is because courts have read terror powers very broadly.
Speaker 3: In fact, we have them openated a single case in
Speaker 3: which a court invalidated the president's imposition terror under this section.
Speaker 3: So that is why we think this judicial challenge will fail.
Speaker 3: With regard to electric vehicle policies, we think there's a
Speaker 3: strong chance that tax credits granted in the Inflation Reduction
Speaker 3: Act to purchasers of eed vehicles in the amount of
Speaker 3: seven thousand, five hundred for new vehicles and four thousand
Speaker 3: dollars for used vehicles use DV vehicles could be scaled
Speaker 3: back now that President Trump has been re elected. We
Speaker 3: also continued to try to scale back Biden administration EPA
Speaker 3: rules that required more stringent emission limits on light and
Speaker 3: medium d vehicles. While on the campaign trail, Trump pledged
Speaker 3: to eliminate a so called eb mandate, and when he
Speaker 3: was president, he attempted to scale back Obama EPA mission rules.
Speaker 3: The elimination these credits and potential revision to EPA rules
Speaker 3: could benefit traditional automakers like Ford and Toyota, who have
Speaker 3: blessed EV penetration, and we think it could hurt ev
Speaker 3: companies and companies that provide charging our grid infrastructure for
Speaker 3: eeds like Sensada to connectivity and Eton. The final thing
Speaker 3: we expect may happen during Trump's administration relate to pe
Speaker 3: p fasts were so called forever chemicals are chemicals that
Speaker 3: have been found in the drinking water and have been
Speaker 3: linked to serious, diverse health effects. The Biden administration ep
Speaker 3: and March promulgated rules that would make two of the
Speaker 3: most widely studied and harmful prefast hazardous hazardous substances under
Speaker 3: super Fund rules and would set maximum contaminant levels or
Speaker 3: MCLs and drinking water, and the EPA is set those
Speaker 3: levels in drinking water at four parts per trillion, which
Speaker 3: is the lowest level that analytical equipment can detect. Industry
Speaker 3: stakeholders have fought back against this level, saying it doesn't
Speaker 3: make economic sense, it's not necessary to protect health, and
Speaker 3: it's absorbitantly expensive. While in office, Trump had a p
Speaker 3: Fast action plan in which he intended to set MCLs
Speaker 3: and designate the substances hazardous, but that never came to
Speaker 3: fruition during his administration, and that Trump administration opposed a
Speaker 3: prior version of the Pfast Action Act, which would have
Speaker 3: done the same thing as the rules that would have
Speaker 3: set limits and designate the substance hazardous. Trump said he'd
Speaker 3: probably detailed that legislation because the costs out the benefits.
Speaker 3: This is the same argument some industry stakeholders are making
Speaker 3: with respect to the MCL level or four parts per trillion,
Speaker 3: So we think the level will keep us. The four
Speaker 3: parts patrillion may be revisited by Trump's EPA, and if so,
Speaker 3: there may be less us too many factors like random
Speaker 3: which has been subject to lawsuits for alleged contamination, and
Speaker 3: other industries like waste companies who may be required to
Speaker 3: immediate or maybe themed responsible parties under super farm laws.
Speaker 3: And so with that Elliott alternative, back to you.
Speaker 1: Great, thanks Holly. All right, Rob Barnett, let's bring you in.
Speaker 1: Holly touched on IRA a little bit and evs you
Speaker 1: know nice with green energy, you cover renewables. Why don't
Speaker 1: you tell us what you're expecting in Trump two point zero.
Speaker 4: Well, so first let me just start by observing that
Speaker 4: the clean energy space had a very tough day in
Speaker 4: the markets yesterday. We saw solar names really pull back
Speaker 4: the aggregate solar name, So if you look at our
Speaker 4: solar theme basket, the companies in that pulled back about
Speaker 4: ten percent on average yesterday. Some names went down more
Speaker 4: than that. I'm just looking at First Solar right now,
Speaker 4: it had pulled back about twenty percent. Currently it's down
Speaker 4: about nine percent versus where it was pre market, and
Speaker 4: so it's kind of climbed back a little bit from
Speaker 4: that initial reaction following some information about the election results.
Speaker 4: And I think, you know, this sort of vibe, you know,
Speaker 4: why did these companies react the way they did really
Speaker 4: comes down to views one, what could potentially happen, I think,
Speaker 4: to the Inflation Reduction Act under a second Trump administration
Speaker 4: and Republican controlled Senate and possibly the House too, and
Speaker 4: so you know, I think the question is, you know,
Speaker 4: what's what's how is this actually going to play out?
Speaker 4: You know, Holly just mentioned a perspective that that maybe
Speaker 4: some of the ev tax credits go away, and I
Speaker 4: think when you look at the wind in solar space,
Speaker 4: it's it's probably not quite as high of a probability
Speaker 4: of an outright repeal of some of those subsidies. And
Speaker 4: I'll try to tackle a few of the big ones,
Speaker 4: so you know, we we've talked quite a bit in
Speaker 4: the in some of these calls previously, so the idea
Speaker 4: of a full IRA repeal, I think we kind of
Speaker 4: handicap at say ten percent, and other other folks on
Speaker 4: this call can probably more eloquently speak to sort of
Speaker 4: why that is the case. But then you go through
Speaker 4: and sort of say, well, look, maybe individual pieces do
Speaker 4: get dismantled or scaled down or are phased out earlier,
Speaker 4: however you want to think about it. And so in
Speaker 4: the win in solar space, there's I think three buckets
Speaker 4: that I pay the most close attention to. So you've
Speaker 4: got the PTC Production Tax Credit, You've got the ITC,
Speaker 4: the Investment Tax Credit, and I think the way you
Speaker 4: should think about both of those is that they're the
Speaker 4: ones that are kind of driving demand for solar and wind.
Speaker 5: But then you've.
Speaker 4: Got this other provision called a forty five X manufacturing
Speaker 4: tax credit, and that one is the one that's really
Speaker 4: I think quite important to the companies that are producing
Speaker 4: equipment in the US, like a First Solar, and this
Speaker 4: has been a very beneficial provision for the company. You know,
Speaker 4: they're their gross margin is forty five fifty percent right now,
Speaker 4: and roughly half the margin contribution is coming from that
Speaker 4: forty five x tax credit. So if it were to
Speaker 4: go away, it's it's a pretty serious impact on the company.
Speaker 4: And I think that our view is that there's probably
Speaker 4: a fair amount of quiet support for that staying in place.
Speaker 4: And I'll try to articulate why that is true. So
Speaker 4: even though this was the Inflation Reduction Act was a
Speaker 4: Bidenarrow policy, it's sort of magical or interesting that most
Speaker 4: of the companies that appear to be really leveraging it
Speaker 4: and benefiting it built their facilities in fairly red states.
Speaker 4: So you see a lot of construction of solar module
Speaker 4: manufacturing capacity and states like Georgia, UH, Alabama, Louisiana, Texas,
Speaker 4: and and and if you're kind of familiar with how
Speaker 4: these how these projects came to fruition, there's a lot
Speaker 4: of courtship with the governors of those states saying, oh,
Speaker 4: come come to our state, build built your factory here.
Speaker 4: And so I think there's probably a lot of quiet
Speaker 4: support saying hey to from governors and state lawmakers saying hey, look,
Speaker 4: it's okay to be philosophically opposed to win in solar,
Speaker 4: but hey, this. These companies have built factories in my
Speaker 4: state and my district that is employing folks in my state,
Speaker 4: So you know, don't don't get rid of the forty
Speaker 4: five X credit is something I think you're going to
Speaker 4: sort of quietly hear, and I doubt we're ever going
Speaker 4: to see forty five X really discussed much in headlines
Speaker 4: or it's it's this boring wonky name. And my sense
Speaker 4: is that you know, there's there's a decent chance that
Speaker 4: this survives a second term administration. And let me just
Speaker 4: say that even if it doesn't, I would still make
Speaker 4: the argument that wind and solar has a fairly bright
Speaker 4: future in the United States, and that is because federal
Speaker 4: policy is not the only thing driving outcomes in the space.
Speaker 4: California many other states have very ambitious policies aimed at
Speaker 4: reducing emissions transforming the electric generation components within their state,
Speaker 4: and they don't care who the president is or what
Speaker 4: the federal policy is. And so I think you're going
Speaker 4: to see very strong continued support for wind and solar
Speaker 4: at the local level, at the state level, depending on
Speaker 4: the state. And I also think you're going to see
Speaker 4: a continued evolution of the economics for the technology. At
Speaker 4: the end of the day, win and solar have gotten
Speaker 4: fairly cheap. That's why they're being so aggressively installed in
Speaker 4: so many different locations. And so I think at the
Speaker 4: end of the day, we're going to see continued growth
Speaker 4: for wind under President trump second administration. We're going to
Speaker 4: see continued growth for solar on their second administration. Maybe
Speaker 4: some of the subsidies get modified or tweaked, but it's
Speaker 4: probably not a sea change for the industry. So that's
Speaker 4: my broad, high level conclusions. And for anyone listening, if
Speaker 4: you want to talk shop or go into any more
Speaker 4: detail on any of these companies or segments, I'm happy
Speaker 4: to chat with you about it offline. So thanks a lot, Eliott, Great,
Speaker 4: thanks a lot.
Speaker 2: Rob.
Speaker 1: All right, why don't we pivot to financials, Nathan, let's
Speaker 1: bring you in to talk about what you're expecting in
Speaker 1: Trump's second administration. Is it all about the basle three
Speaker 1: endgame or is there more to it than that?
Speaker 6: Yeah, So, you know how Rob mentioned that the solar
Speaker 6: stocks weren't doing so well yesterday. The opposite could be
Speaker 6: said for the bank stock. So I was just looking
Speaker 6: at Bank America, for example, and it's up eight point
Speaker 6: six percent as we speak since prior to the election,
Speaker 6: and that's very indicative of the Bosal three endgames. So
Speaker 6: what I want to do is on one on one
Speaker 6: through the sector talking about the impact.
Speaker 5: And the regulators and so forth like that. So let's
Speaker 5: start with the.
Speaker 6: Banks and this is the FED, the OCC, the Office
Speaker 6: of the Control of the Currency, and the FDIC. Now
Speaker 6: there are two rules that are really looking at here.
Speaker 6: The first one is the Bosal three end game. Now,
Speaker 6: this rule has proposed would increase capital requirements as outlined
Speaker 6: by the FED around nine percent. Our view is that
Speaker 6: the bos of three endgame is going to be indefinitely
Speaker 6: delayed for now. Reason being is is that while the
Speaker 6: FED will keep their leadership individuals through twenty twenty six,
Speaker 6: this is the chairman Drome Poll and advice chair Michael Barr,
Speaker 6: the OCC acting chair Michael Sue most likely le on
Speaker 6: day one, and the FDIC will most likely flip to
Speaker 6: a republican control.
Speaker 5: And if you don't have all three, then you don't
Speaker 5: have a rule.
Speaker 6: And so we think the bosle three endgame will be delayed.
Speaker 6: It's feasible that they can come around in twenty twenty
Speaker 6: six or twenty twenty seven and repropose it and try
Speaker 6: and implement something that's much more watered down. But for
Speaker 6: the next year, those capital requirements are most likely not
Speaker 6: going to happen. A similar story could be set in
Speaker 6: the regional bank side, you know the big buzzle three
Speaker 6: end games set three to four percent increase in capital.
Speaker 5: Again, we don't think that's going to happen.
Speaker 6: But secondly, there's a rule out there from the FED
Speaker 6: on long term debt issuances. We don't think the FED
Speaker 6: is going to finalize that even before the new administration
Speaker 6: takes office. Reason being is is that if they do,
Speaker 6: Congress has the authority overturn.
Speaker 5: It via the Congressional Review Act.
Speaker 6: And if Congress does overturn it, and this would be
Speaker 6: the next Congress the Republican controlled the House, Senate, and Presidency,
Speaker 6: assuming the Republicans do take the House, if they do
Speaker 6: overtake it, then the FED has to go back to
Speaker 6: the drawing board and essentially can't even use that rule
Speaker 6: as the baseline. Has to substantially change that rule. So
Speaker 6: we don't think they're going to finalize that. Over on
Speaker 6: the asset management space, a lot of status quo happening here.
Speaker 6: The Financial Stability Oversight Council had been talking about systemic
Speaker 6: risk of asset managers. We don't think that's really much
Speaker 6: of a risk anymore. We don't think that the future
Speaker 6: f SoC is going to take any steps there. I
Speaker 6: would say, though, is that this idea of private credit
Speaker 6: is still something that I think a Republican administration via
Speaker 6: their regulators will certainly look at. If you have bank
Speaker 6: lobbyists whispering into the regulatory ears, hey don't look at us,
Speaker 6: look at our friends up in Connecticut, I at least
Speaker 6: think the question is going to be asked, and so
Speaker 6: you know, we'll see scrutiny of hedge funds and private
Speaker 6: equity funds in private credit, but more questions than actual
Speaker 6: tangible proposals or regulations at this point. So you know,
Speaker 6: over at the SEC this is where cryptocurrency comes in. Now,
Speaker 6: we do think a cryptocurrency framework is going to happen
Speaker 6: next year. Via Congress, President Trump vowed to be the
Speaker 6: crypto capital, or vow of the United States to be
Speaker 6: the crypto capital of the world. But just remember this
Speaker 6: does come from Congress. So we do think a crypto
Speaker 6: framework can pass next year. I don't think the stable
Speaker 6: coin bill that people are taught talking about and Lane
Speaker 6: Duck is going to happen. I think this is just
Speaker 6: my own personal belief that I think the Lame Duck
Speaker 6: is not going to be as active due to the
Speaker 6: victory of the Republicans. I think they may just say, hey,
Speaker 6: let's pick up our toys and play next year.
Speaker 5: When we actually have control.
Speaker 6: But you know, Gary Gensler, the Chairman of the SEC,
Speaker 6: will most likely step down probably about a.
Speaker 5: Week before inauguration. Then at this point you're gonna have
Speaker 5: a two to two.
Speaker 6: I do believe that the Trump White House may take
Speaker 6: some time to figure out who the next chairman is,
Speaker 6: So don't be surprised if commission Er hester Purse is
Speaker 6: the acting chair for a few months before potentially she
Speaker 6: or somebody else gets the nomination for the full chair,
Speaker 6: which essentially means the SEC is just going to be in.
Speaker 5: A quiet period.
Speaker 6: Same can be said for exchanges, and this is coming
Speaker 6: from the Commodity Futures Training Commission CFTC is not doing
Speaker 6: a lot in the exchange place at this moment, and
Speaker 6: I'm talking about derivative exchanges. Remember, equity is controlled by
Speaker 6: the SEC but in the derivative side. So CMME group
Speaker 6: in Ice mostly going to be status quo probably for
Speaker 6: the next few years, just because there's really not much
Speaker 6: over at the CFTC. That's really like the Republicans will
Speaker 6: come in and dramatically change and so forth like that.
Speaker 6: And then the last thing I want to talk about
Speaker 6: is consumer finance, and this is the Consumer Financial Protection Bureau.
Speaker 6: So these are essentially non bank consumer firms, ranging from
Speaker 6: mortgage lenders to credit unions, to you know, to payday lenders,
Speaker 6: debt collectors, and so forth, even some of Matt Schttenhelm's
Speaker 6: technology companies that he talks about. So what you should
Speaker 6: know about the CFPB is that there's a lot of
Speaker 6: rumors and a lot of thoughts. And if you read
Speaker 6: Project twenty twenty five, you may have seen language that
Speaker 6: President Trump needs to essentially gut the agency and abolish
Speaker 6: the agency. We don't think that's going to happen. What
Speaker 6: we think is going to happen is you're going to
Speaker 6: see a very similar playbook to what you did in
Speaker 6: the first Trump administration when former cd CFPB director Kathy
Speaker 6: Cranager came in and essentially scaled up a deregulatory effort,
Speaker 6: but at the same time still keeping up examination authority
Speaker 6: and examination interests. So I think that's what the CFPB
Speaker 6: is most likely going to be going forward. Rohee Chopra,
Speaker 6: if he doesn't leave, will be most like fired. But
Speaker 6: then I think if you're on the examination side, or
Speaker 6: the compliance side, or the risk side, CFPB still is
Speaker 6: going to be something that you got to deal with.
Speaker 6: You're probably just not going to see a dramatic number
Speaker 6: of regulations coming out.
Speaker 5: Certainly you're not.
Speaker 6: Going to see any of the current initiatives being finalized,
Speaker 6: and we'll have to wait and see what those deregulatory
Speaker 6: efforts look like when we have personnel, because remember personnel's
Speaker 6: policy for a lot of these regulatory agencies.
Speaker 5: So with that, I'm going to pass it back to you.
Speaker 1: Thanks, Nathan, excuse me, and I just I happened to
Speaker 1: be looking at Project twenty five briefly before this call,
Speaker 1: in particular with respect to the CFPB, and I think
Speaker 1: a lot of the you know, the concern that Project
Speaker 1: twenty twenty five had or has with the CFPP is
Speaker 1: that it was unconstitutionally funded. But that argument was really
Speaker 1: struck down by the Supreme Court last term. So I
Speaker 1: agree with you that you know, any attacks on the
Speaker 1: agency are going to be a little more target and
Speaker 1: not sort of wholesale trying to eliminate the agency completely.
Speaker 1: This is a good pivot. Talking about consumer finance to
Speaker 1: Ben Elliott, who, in addition to covering card lenders, covers
Speaker 1: Fannie May and Freddie Mac, two companies who's preferred stock
Speaker 1: at least yesterday also went up somewhere to the increases
Speaker 1: we saw in bank stock prices. Ben, why don't you
Speaker 1: come in talk to us about Fanny and Freddie. Lotta
Speaker 1: chatter on Twitter and elsewhere about you know, whether those
Speaker 1: companies are finally going to get out of conservatorship or not.
Speaker 7: Yeah, thanks Elliott. So this is really one of the
Speaker 7: most binary of the Trump trades, I think clearly from
Speaker 7: the price action yesterday, people were discounting Trump's reelection. I
Speaker 7: was looking at the common stock this morning. It's up
Speaker 7: sixty something percent in two days, which, for reasons I
Speaker 7: can discuss in more detail, is maybe.
Speaker 5: Not the smartest move there.
Speaker 7: And some of the preferred issuances are up two hundred
Speaker 7: percent year to date, about sixteen percent, seventeen percent again
Speaker 7: today and in theory those could trade up to their.
Speaker 5: Par value.
Speaker 7: As as a potential additional upside to this trade. So
Speaker 7: this is kind of like a big, sort of unfinished
Speaker 7: piece of business from the first Trump administration. They kind
Speaker 7: of got things all the way to the starting line,
Speaker 7: I want to call it, and then ran out of time.
Speaker 7: But as The Wall Street Journal reported last September, some
Speaker 7: of the former Trump administration officials that were intimately involved
Speaker 7: in the prior administration have really been sort of stewing
Speaker 7: on this ever since they left office, So it's possible
Speaker 7: this time around they can get a much quicker start
Speaker 7: off the line and actually move the process much further along.
Speaker 7: The problem is that this remains of a market's driven story.
Speaker 7: Recap and release is the name of sort of the concept,
Speaker 7: and really the recap portion is the challenging part. So
Speaker 7: the companies are going to need to raise probably at
Speaker 7: least one hundred billion dollars in new capital. That sort
Speaker 7: of goalpost can be moved by the Trump administration in
Speaker 7: order to sort of speed the process along.
Speaker 5: But in the past.
Speaker 7: Lots of sort of conservative thinkers view this as sort
Speaker 7: of a two part process. One is reduce the exposure
Speaker 7: of taxpayers to Fanny and Freddy, but to bring in
Speaker 7: substantially more private capital so that their failure doesn't have
Speaker 7: to be sort of distributed amongst taxpayers again in the
Speaker 7: future of it were to reoccur. So you know that
Speaker 7: said that, this is probably going to be a multi
Speaker 7: phase process where they raise capital and several tranches. There might,
Speaker 7: for instance, be a conversion of the junior preferreds into
Speaker 7: common equity as sort of a first stage, because those
Speaker 7: investors already have skin in the game. Then there might
Speaker 7: be a rights offering for existing shareholders or sort of
Speaker 7: an early IPO, and that could increase the capitalization level
Speaker 7: of the companies in a way that allows them to
Speaker 7: pursue a much larger, broader IPO. Ultimately, it's going to
Speaker 7: rely on market conditions and the housing market which the
Speaker 7: Trump administration is now going to preside over in many
Speaker 7: different ways, which will affect Fanning Fordy's cash flows and
Speaker 7: therefore their valuation and return on equity metrics, which will
Speaker 7: be key to raising additional private capital. So if mortgage
Speaker 7: volumes were to slow down, right, if tariffs were to
Speaker 7: drive up inflation which required interest rates to rise again,
Speaker 7: that could be a substantial delay to the process if
Speaker 7: credit were to worsen, charge offs, modifications, foreclosures, or to
Speaker 7: come back. It's also could be a major drag on
Speaker 7: Fanny Freddy earnings, which could slow the process. So basically,
Speaker 7: if they were to start, you know, day one, the
Speaker 7: market remains benign, they attract a bunch of private capital.
Speaker 7: It's probably a twenty twenty six or twenty twenty seven
Speaker 7: prospect of the best and between now and then, there's
Speaker 7: a lot of room for these different securities to trade
Speaker 7: up and down with sort of wins and delays and whatnot.
Speaker 7: But it's really not done until the private capital starts
Speaker 7: to come in. So a couple of things we'll be
Speaker 7: watching here in the short term. First, Trump has got
Speaker 7: to pick a Treasury secretary. That person needs to be
Speaker 7: amenable to releasing the enterprises and confirmable by the Senate.
Speaker 7: So one of the big sort of sticking points here
Speaker 7: is that Treasury owns something called the senior Preferred stock,
Speaker 7: which has what's called a liquidation preference in government parlance,
Speaker 7: which basically says the Treasury still owed three hundred and
Speaker 7: forty one billion dollars, that money has to sort of
Speaker 7: come out of nowhere. If you do any sort of
Speaker 7: basic deal math, you come to the conclusion that that
Speaker 7: has to be crammed down. That's been a long time
Speaker 7: sticking point for Treasury officials. There are a lot of
Speaker 7: career Treasury officials and lawyers who view that as problematic
Speaker 7: for ourcane reasons. So they needed a Treasury secretary who's
Speaker 7: really deal oriented, willing to get creative. Probably Trump's last
Speaker 7: Treasury secretary was actually a little bit more moderate and
Speaker 7: didn't really take any sort of the drastic steps that
Speaker 7: we had anticipated they might attempt to take, and some
Speaker 7: of that might be necessary this time around. And then secondly,
Speaker 7: Trump is going to pick an FHFA director who's the
Speaker 7: regulator of Fanny and Freddie and sort of the other
Speaker 7: signatory to the agreements that govern their conservatorship. That person
Speaker 7: it's a bit of a challenge because Republicans are picking
Speaker 7: from a pool of conservative housing academics and policymakers who
Speaker 7: historically are not pro Fanny and Freddy, And to get
Speaker 7: the transaction across the finish line, you kind of need
Speaker 7: to be pro Fanny and Freddy because you're asking people
Speaker 7: to put in tens or hundreds of billions of dollars
Speaker 7: of additional private capital, so the companies need to have
Speaker 7: a sustained return. And then the sort of a final
Speaker 7: issue is you can't just release the enterprises with no
Speaker 7: government backstop, because that would likely lead to a credit
Speaker 7: downgrade from the credit ratings agencies, which would be catastrophic
Speaker 7: essentially for agency nbs markets because people who buy agency
Speaker 7: nbs are buying them because of their credit rating and
Speaker 7: they're implicit backing from the US government. So there's going
Speaker 7: to need to be a pay for for that, which
Speaker 7: could also be a complicating factor. So once those two
Speaker 7: agencies are staffed up and then get started on this,
Speaker 7: there's plenty of of sort of procedural hurdles to surpass.
Speaker 7: You know, Trump administration wants to get this done, and
Speaker 7: so we're going to be following it closely and and
Speaker 7: we welcome any any questions or feedback from anyone who's
Speaker 7: more interested in some of the MINUTII that I'll hand
Speaker 7: it back to you, Elliott.
Speaker 1: Thanks Ben, and actually Benny and Freddie and releasing them
Speaker 1: from conservativeship and government ownership. There's also an issue that's
Speaker 1: in the Project twenty twenty five plan and you know,
Speaker 1: it occurred to me as you were talking, Ben, that
Speaker 1: one advantage the Trumpet administration has this time around versus
Speaker 1: last time is that they can replace the current FHFA
Speaker 1: director on day one and nominate whoever they want. The
Speaker 1: last time around, there was a removal restriction on removing
Speaker 1: the FHFA directors, so they had to wait for mel
Speaker 1: Watt to leave. Essentially, so it took a couple of
Speaker 1: years before they could actually get going on all their
Speaker 1: plans to privatize the companies. All right, let's pivot to
Speaker 1: some cross sector issues. Let's talk tax and bring in
Speaker 1: our taxman, Andrew Silverman. Andrew, the House hasn't been called yet,
Speaker 1: looks like it's going to go Republican. You know how
Speaker 1: important is that to the things you're looking at.
Speaker 8: It's very important, And I'm going to assume that the
Speaker 8: House goes Republican in my comments because if the Republicans
Speaker 8: have the House and the Senate and the Presidency, they're
Speaker 8: definitely going to try and make the Tax Cuts and
Speaker 8: Jobs Act, Trump's signature Tax Reformact from twenty seventeen to
Speaker 8: twenty eighteen permanent. But making it permanent is extremely expensive
Speaker 8: on the low end, it costs about four point five
Speaker 8: trillion dollars. On the high end it could cost six
Speaker 8: trillion dollars. And then, of course, on the other hand,
Speaker 8: Donald Trump on the campaign trail was talking about a
Speaker 8: whole slew of tax cuts, tax exemptions for Social Security,
Speaker 8: overtime pay and tips, intratroductions for auto loan payments, fifteen
Speaker 8: percent corporate tax rate for domestic manufacturing, getting rid of
Speaker 8: the state local tax deduction cap of ten thousand dollars,
Speaker 8: and a slew of other proposals. In fact, I was
Speaker 8: just thinking about this morning. He even went on Joe
Speaker 8: Rogan and said he was going to get rid of
Speaker 8: the income tax completely. But the Committee for a Responsible
Speaker 8: Thorough Budget says that, as I said, you know, making
Speaker 8: the TCGA permanent would cost six trillion dollars, but if
Speaker 8: you add everything else that he wants to do into
Speaker 8: that equation, it could cost as much as sixteen trillion dollars.
Speaker 8: And to put that into perspective, the government spent six
Speaker 8: point seventy five trillion dollars in all of fiscal twenty
Speaker 8: twenty four, which ended at the end of September. So
Speaker 8: could Congress to everything that Trump has promised tax wise.
Speaker 8: I think the simple answer to that question is no,
Speaker 8: why not because Republicans don't have sixty seats in the Senate,
Speaker 8: And as Nathan and I like to talk about, without
Speaker 8: sixty seats in the Senate, that means they have to
Speaker 8: use budget reconciliation in order to make the Tax Cuts
Speaker 8: and Jobs Act permanent or to do any of the
Speaker 8: other things that Trump has promised to do. And let
Speaker 8: me put in a bid here for a future webinar
Speaker 8: focusing just on reconciliation because it is such a pleasure
Speaker 8: to discuss. But if Republicans have to use reconciliation, then
Speaker 8: Congress has to adopt its tax proposals on a budget
Speaker 8: neutral basis. And the amount of revenue that the government
Speaker 8: collected in fiscal twenty twenty four was four point five
Speaker 8: trillion dollars. But keep in mind that budget neutrality is
Speaker 8: generally speaking, subjective, and what I mean by that is
Speaker 8: that economic growth can be taken into account when we
Speaker 8: talk about budget neutrality. So the Congradual Budget Office can say, sure,
Speaker 8: we're going to collect fifty trillion dollars in tax revenue
Speaker 8: over a decade, But gosh, these tax policies they're going
Speaker 8: to stimulate the heck out of the economy so much
Speaker 8: that GDP is going to increase and fifty trillion dollars,
Speaker 8: it's actually going to be fifty five trillion dollars. And
Speaker 8: that's all and good. But even if we squint with
Speaker 8: our rose colored glasses on, I just don't believe that
Speaker 8: the CBO can find a way for everything that Trump
Speaker 8: has promised to come to pass. And so that means
Speaker 8: one of three things, or three of three things. Trump
Speaker 8: doesn't get everything he's campaigned on. Cutbacks have to be made,
Speaker 8: or the Republicans will have to introduce new taxes, or
Speaker 8: like I said, all three of them. But I want
Speaker 8: to be completely straight with you here. Trump is not
Speaker 8: going to get everything that he campaigned on. Politicians campaign
Speaker 8: and poetry that governed in pros or put another way,
Speaker 8: they can sometimes stretch the truth on a campaign trail.
Speaker 8: I know that's shocking and disturbing to hear, but that's
Speaker 8: how it is. So tax exemptions on Social Security tipping
Speaker 8: it over to I'm not going to happen. In my view.
Speaker 8: Maybe Congress does some of these things to a small extent,
Speaker 8: but certainly not as Trump has described them, and in
Speaker 8: terms of cutbacks, obviously, the Inflation Duction Act is going
Speaker 8: to be the Republican's main target because it was adopted
Speaker 8: without Republican support. Yet, as we've pointed out in the
Speaker 8: past and even in our discussion today, Rob eloquently putting
Speaker 8: out all of the ways that Republicans like clean energy,
Speaker 8: the IRA is almost certainly not going to go away entirely,
Speaker 8: and we can probably do an entire webinar on that
Speaker 8: as well, But it'll be tough for Republicans, I think,
Speaker 8: to repeal the IRA and the buyback tax and the
Speaker 8: corporate minimum tax and the state and local tax cap.
Speaker 8: To be honest, not super optimistic about it, and I'm
Speaker 8: sorry to say. And lastly, the you know, the third
Speaker 8: leg of the stool here, would Republicans adopt you taxes? Well,
Speaker 8: we have to see how big Republicans appetite for the
Speaker 8: TCJA and Trump's other promises. Is a chairman of the
Speaker 8: Ways Means Committee, Jason Smith, who's almost certainly going to
Speaker 8: stay in place next term if the Republicans keep the House,
Speaker 8: has said that everything is on the table, including corporate
Speaker 8: tax increases. But at the same time, Ronald Reagan's great
Speaker 8: tax reform in nineteen eighty six was accomplished in large
Speaker 8: part by closing loopholes. But sixteen trillion dollars of loopholes,
Speaker 8: I'm not convinced that they exist. So, Elliott, exciting days
Speaker 8: are ahead. Can you feel it? Big tax changes, they're
Speaker 8: on the way, They're big, They're gonna be big, huge, huge.
Speaker 1: Thanks Andrew. You mentioned a webinar on reconciliation that you're doing.
Speaker 1: Do you want to just plug the details about that?
Speaker 1: Do you have a date for that?
Speaker 8: I have simply pitching it. Okay, I think it would
Speaker 8: be a really good idea if people are up for it.
Speaker 1: Yep, stay tuned, folks. All right, let's pivot to another
Speaker 1: cross sector topic, anti trust. Obviously, the last four years
Speaker 1: has seen a lot of anti trust enforcement activity. So
Speaker 1: we have two anti trust analysts with us. We're fortunate
Speaker 1: to have Justin Teresi and jenre Justin, why don't we
Speaker 1: start with you? Nathan mentioned personnel's policy. What are we
Speaker 1: thinking in terms of Lena Kahn? And I guess to
Speaker 1: a lesser extent, maybe Jonathan Canter.
Speaker 2: Thanks Elliott.
Speaker 9: Yeah, personnel is absolutely policy, and I think we're probably
Speaker 9: seeing that in the realm of anti trust perhaps more
Speaker 9: than many other places right now as the new administration
Speaker 9: prepares to come in. So let me just start off
Speaker 9: by saying, you know, it's certainly is customary for DJ
Speaker 9: and FTC officials to resign when there's a party change
Speaker 9: in the White House. Job offers start rolling in new
Speaker 9: presidential agentas start to take form, and we certainly think
Speaker 9: that's going to be the case with what we have
Speaker 9: at DOJ. There will be a new Attorney General, and
Speaker 9: I think Jonathan Canter, who's been the chief of the
Speaker 9: Anti Trust division there, probably resigns sometime before the new
Speaker 9: administration comes in. And Jonathan Cant, as you might remember,
Speaker 9: really was influential in bringing cases against Google's ad tech
Speaker 9: stack over the last few years, recently against Visa related
Speaker 9: to its debit card practices. So certainly big cases brought
Speaker 9: by DJ under Canter. What we've really seen in the
Speaker 9: last couple of days and the time leading up to
Speaker 9: the election is an enormous amount of interest and what
Speaker 9: will ultimately be the fate of FTUC.
Speaker 2: Cher Lena Khan.
Speaker 9: So our view on this right now, we think chair
Speaker 9: con is almost certain to be replaced, and I'll give
Speaker 9: you our view as to why, and certainly this is
Speaker 9: a much more certain, I think you know prediction if
Speaker 9: you will under President Trump than it would have been
Speaker 9: under President Harris.
Speaker 2: But just a level set.
Speaker 9: Chair CON's term has expired as of September, and right
Speaker 9: now her post is the only of the five seats
Speaker 9: at the FTUC that's up for renomination. The next one
Speaker 9: up is Republican Melissa Hoyoku's term expires next fall. But
Speaker 9: really important to point out here under the FTC Act,
Speaker 9: the organic Statute for the FTUC, unless Cohn leaves on
Speaker 9: her own, she can stay indefinitely until the time that
Speaker 9: a replacement is confirmed by the Senate. So we're looking
Speaker 9: at it several months here, possibly of Chair Con staying
Speaker 9: on before we have someone else that's appointed to that slot.
Speaker 9: So first Trump can very quickly elevate republished Republican Commissioners
Speaker 9: Holyoke or Ferguson to the chair spot once he takes office,
Speaker 9: and we think, you know, very likely to do that.
Speaker 9: And while they might result in some rather expedient and
Speaker 9: change the FDC's agenda, it's still the case that there
Speaker 9: has to be a majority vote at the Commission to
Speaker 9: take any new actions like bringing lawsuits. The commission itself,
Speaker 9: it has kind of this three two structure where there's
Speaker 9: three members of one party, two from another by log
Speaker 9: inner under the statute, so there can't be more than
Speaker 9: three members of any one political party. And right now
Speaker 9: the Commission has three two democratic control while Lena Khan
Speaker 9: is there. So we don't think that's a situation with
Speaker 9: three two democratic control that a President Trump would be
Speaker 9: likely to uphold. And we think that's the case no
Speaker 9: matter how much support shir Khan might be receiving from
Speaker 9: folks like Vice President elect jd Vance or more conservative
Speaker 9: folks in the Senate who have a voice support for Khan,
Speaker 9: like Senator Josh Holly from Missouri. So we think, really,
Speaker 9: when's the day here is that partisan split that we're
Speaker 9: going to want to go back to Republican control and
Speaker 9: questions of loyalty not you know, it certainly is the
Speaker 9: case that I think President Trump has expressed that views
Speaker 9: of folks that were appointed in the first term, loyalty
Speaker 9: questions arose. And I think especially in the case of
Speaker 9: independent commission like the FTC, where actions can be taken
Speaker 9: without that handholding from the White House, many times all
Speaker 9: the more reason we think President.
Speaker 2: Trump is likely to appoint a new.
Speaker 9: FTC commissioner that's seen as much more loyal to his views.
Speaker 9: And don't forget the removal of the filibuster for the
Speaker 9: approval of nominations in the Senate means that with that
Speaker 9: fifty two to fifty three seed control by Republicans that
Speaker 9: we're expected to see at the end of the day,
Speaker 9: we don't anticipate a real problem here and moving forward
Speaker 9: with whoever Trump decides to dominate to the FTC. And
Speaker 9: we think that also the timing on this. In a
Speaker 9: world where there might have been divided control between the
Speaker 9: White House and a Senate, we might see nominations taking
Speaker 9: a bit of a delay until a time when both
Speaker 9: the Republican and Democratic seat was up to be filled.
Speaker 9: But here where there really is that that situation where
Speaker 9: there's going to be very little pushback, if any, we
Speaker 9: think we could see a replacement for shar Con put
Speaker 9: forward as soon as you know, January or February. The
Speaker 9: Senate will take the time it does for that approvals process,
Speaker 9: but we think that happens before and probably separate apart
Speaker 9: from waiting until Commissioner Holyoaks term ends later on next year.
Speaker 9: And just speaking of the Senate itself, one more point
Speaker 9: to make with Republican control, you know, of the Senate,
Speaker 9: we think broad and sweeping kind of anti trust legislation.
Speaker 9: We'll see what happens, but unlikely to move right now
Speaker 9: to the next Congress. We'll see how the House ultimately
Speaker 9: shakes up, but probably not a big factor in anything moving.
Speaker 9: And you know that there really could be some industry
Speaker 9: specific actions that are taken if there's bipartisan support from them,
Speaker 9: but separate apart from that, nothing too broader and coming
Speaker 9: down the pike here, But that'll head it over to
Speaker 9: Jen to talk a little bit more about some specific
Speaker 9: impaction might see on antitrust.
Speaker 10: Thanks, Justin, I mean absolutely following on on your expectation
Speaker 10: and my expectation that the chief decision makers at the
Speaker 10: FTC and DJ will be replaced eventually, let's talk about
Speaker 10: how that actually impacts enforcement. So there are two areas
Speaker 10: I'm going to focus on. One, we have a lot
Speaker 10: of ongoing anti trust lawsuits from monopolistic conduct against the
Speaker 10: big tech platforms as well as Live Nation if you
Speaker 10: don't think of Live Nation as a big tech platform.
Speaker 10: And then We also have a lot of merger enforcement
Speaker 10: at the moment, and we've had it ever since, you know,
Speaker 10: Biden became the president. So first time we talk about
Speaker 10: the impact here on M and A, you know, Andrew
Speaker 10: talked about big tax changes. Well, we're going to have
Speaker 10: big merger changes. And I think it's definitely going to
Speaker 10: become easier for companies to merge. So, but I do
Speaker 10: want to say, I feel like there's been, you know,
Speaker 10: kind of an attitude that we're just going to go
Speaker 10: back to the way things were five ten years ago,
Speaker 10: any anti trust with respect to mergers, and I don't
Speaker 10: really think that's going to happen. You know, we had
Speaker 10: a movement that started about ten years ago but really
Speaker 10: took hold about four or five years ago in which
Speaker 10: there was just a very different philosophy about consolidation in
Speaker 10: markets and in particular and this kind of started during Trump.
Speaker 10: Trump's at first administration, but in particular Biden's enforcers are
Speaker 10: very anti consolidation. They've worked really hard to try to
Speaker 10: block deals, and they've made it much more difficult to settle.
Speaker 10: It used to be most mergers that actually raised dainty
Speaker 10: trust problems would settle with remedies behavioral or some sort
Speaker 10: of structural remedy, and these regulators just refused to do that. Essentially,
Speaker 10: they've settled a few, but for the most part, they don't.
Speaker 10: And the other thing that they did is they revised
Speaker 10: merger guidelines at the end of twenty twenty three that
Speaker 10: they used to assess a merger. And what those guidelines
Speaker 10: do is essentially lay out what makes a merger presumed harmful.
Speaker 10: And that helps them in court because they walk in
Speaker 10: based on those guidelines with the presumption. And in those
Speaker 10: guidelines they lowered the thresholds for illegality. Means more deals
Speaker 10: that are proposed to them get ensnared and are considered
Speaker 10: potentially harmful. So, first of all, the reason I think
Speaker 10: there will be a change here is because those two
Speaker 10: things I just mentioned I think are going to change. First,
Speaker 10: I think we're going to see new enforcers that are
Speaker 10: willing to settle deals. They're not just going to go
Speaker 10: after every single problematic deal in court. I think they're
Speaker 10: going to be more willing to listen to these companies
Speaker 10: offers in terms of their remedies, and also more open
Speaker 10: to claims that some of these deals may have pro
Speaker 10: competitive efficiencies and should be allowed to go forward on
Speaker 10: the basis of those efficiencies. And the second thing is
Speaker 10: we really know already that they're going to revise those
Speaker 10: guidelines I just talked about, because the two Republican FTC
Speaker 10: commissioners today have both said recently in speeches that they
Speaker 10: will either revise and one actually said riscind the guidelines.
Speaker 10: And to me, you know, they didn't go elaborate on that,
Speaker 10: but to me, that means that they're going to go
Speaker 10: back up to higher thresholds so that those guidelines catch
Speaker 10: fewer mergers, call at the outset fewer mergers as actually problematic. Now,
Speaker 10: the one thing I do want to say, though, that
Speaker 10: I think can be a little bit difficult for merging
Speaker 10: parties and for businesses is that I do think despite
Speaker 10: certain areas getting easier, that we are going to have
Speaker 10: some uncertainty. And that is always difficult, you know, to
Speaker 10: not really know how your deal is going to be
Speaker 10: approached by the regulators when you sign up for it,
Speaker 10: sign it is difficult. And I'd say that because I
Speaker 10: think anti trust enforcement of mergers in the first Trump
Speaker 10: administration was really idiosyncratic, meaning rather than really thinking about
Speaker 10: does this deal violate the intertrust laws or not. There
Speaker 10: was maybe a little bit more focus on do I
Speaker 10: like the deal, do I like the companies doing the deal?
Speaker 10: Or do I not like the companies that are doing
Speaker 10: the deal and want to try to punish them. That
Speaker 10: is idiosyncratic. It's a radic It creates on predictability. I
Speaker 10: think we saw that in his first term. I think
Speaker 10: we're going to see that again. So really quickly, let
Speaker 10: me move over to the big tech lawsuits. So what
Speaker 10: we have right now are two Department of Justice lawsuits
Speaker 10: against Google, one over search and one targeted to its
Speaker 10: ad tech products. We have a Department of Justice laws
Speaker 10: suit against Apple, one against Live Nation, a Federal Trade
Speaker 10: Commission suit against Meta, and one against Amazon, all of
Speaker 10: them for a lleged monopolistic conduct and the way these
Speaker 10: companies do their business. I have seen a lot of
Speaker 10: news saying, oh, now that Trump won the presidency, there's
Speaker 10: a lot less likelihood that Google will be broken up.
Speaker 10: The reason that's an issue is because in the search suit,
Speaker 10: a judge already decided that Google had engaged in a
Speaker 10: legal conduct. And now what they're trying to figure out
Speaker 10: are what the proper remedy should be, and the Department
Speaker 10: of Justice has asked about has talked about asking for
Speaker 10: a breakup. We think the concept because Trump was elected
Speaker 10: makes a breakup less likely is kind of neither here
Speaker 10: nor there. We have never thought that a breakup was
Speaker 10: likely to begin with. It is a judge that would
Speaker 10: order that as the remedy, and we don't think it
Speaker 10: lines up at all with the Search case, and we
Speaker 10: felt it was very unlikely that that would have been
Speaker 10: ordered by a judge. This will be next year that
Speaker 10: the order comes out in the Search case. And likewise,
Speaker 10: we also think even though there's no liability ruling yet
Speaker 10: in the ad Tech case, which has had its trial,
Speaker 10: we don't think a breakup is likely there either. None
Speaker 10: of the other suits are advanced enough to really understand
Speaker 10: whether the dj will even seek something like that, so
Speaker 10: will probably not broken up no matter who would won
Speaker 10: the presidency. On the other suits, I do see a
Speaker 10: higher chance of some settlement down the road, not in
Speaker 10: the near term. You know, a couple of these are
Speaker 10: really new US versus Apple Amazon very much beginning stages.
Speaker 10: They have a lot of litigation ahead of them, and
Speaker 10: I do think those two cases, I just mentioned USB
Speaker 10: Apple FTCV Amazon are probably the weakest of all of
Speaker 10: these cases, and so I could see the possibility that
Speaker 10: Trump's enforcers down the road might be willing to accept
Speaker 10: a settlement. I believe Amazon has tried hard to settle
Speaker 10: with the current FTC in the lawsuit that's against them,
Speaker 10: and they haven't been able to So that's one possibility.
Speaker 10: But again I think down the road. And with that
Speaker 10: back to you, Elliott.
Speaker 1: Thanks Jaran. You know, it's funny when you say there's
Speaker 1: still a lot of litigation ahead of them. For these parties,
Speaker 1: feel like there's a lot of litigation behind behind them
Speaker 1: just in these cases. So it gives you a sense
Speaker 1: of just how long a lot of these cases take.
Speaker 1: All right, So let's bring in Matt sent in Helm last,
Speaker 1: but certainly not least. Matt Jed mentioned a bunch of
Speaker 1: the companies that you also cover from policy and litigation angle,
Speaker 1: obviously not the antitrust stuff. Why don't you come in
Speaker 1: and tell us what you're looking for the next few years.
Speaker 11: Yeah, thanks Elliott. So so let me break it into
Speaker 11: three categories. We'll talk about Internet regulation, talk about broadband
Speaker 11: and telecom regulation, and then talk about broadcasters and broadcast
Speaker 11: regulation and what a Trump presidency means taking Internet regulation first.
Speaker 11: I think there's good and bad here. We saw under
Speaker 11: President Biden the Federal Trade Commission under Lena Khan start
Speaker 11: potential rulemaking to regulate the digital ad business in in
Speaker 11: a novel way, in a way that Congress has has
Speaker 11: not been able to achieve. Uh She was pushing ahead
Speaker 11: with a surveillance advertising you know rules that I think
Speaker 11: they had.
Speaker 2: We're going to have trouble in court.
Speaker 11: I think that that's that's dead now, that's not going
Speaker 11: to be pursued by by this uh FTC. So that's
Speaker 11: that's a positive for the companies that there aren't going
Speaker 11: to be novel rules going after there the way they
Speaker 11: make most of their money where there is risk, though,
Speaker 11: there is concern from the Trump administration and Republicans about
Speaker 11: about bias against conservatives from the big tech companies, and
Speaker 11: that translates most directly into threats to Section two thirty.
Speaker 11: And that's the liability shield that that that keeps people
Speaker 11: from suing these companies over all the stuff that's put
Speaker 11: on the Internet, and and there's a strong push to
Speaker 11: limit that liability shield. And with Republicans in control. I
Speaker 11: think that's going to become a more vocal force. And
Speaker 11: I think we saw a Trump executive order. The first
Speaker 11: time around, we saw an FCC rulemaking that didn't quite
Speaker 11: get off the ground on it. I think things advanced
Speaker 11: further this time in that direction. And so both an
Speaker 11: FCC rule making potential Supreme Court case and the Court
Speaker 11: being pushed to narrow the liability shield itself, and so
Speaker 11: that could lead to significant new liability for the company,
Speaker 11: much larger settlements of lawsuits. One last thing on Internet
Speaker 11: Company's TikTok. President Trumps has since come out in you know,
Speaker 11: against a ban of TikTok, and that kind of makes
Speaker 11: maybe gives the company a little hope in what's looking
Speaker 11: like a pretty dark situation. Congress passed an effective ban
Speaker 11: of the company last year. It's set to take effect
Speaker 11: in seventy three days or something. And so the question
Speaker 11: is does President Trump have the power to reverse that.
Speaker 2: Well, he can't.
Speaker 11: Undo an Act of Congress himself, and I doubt he's
Speaker 11: going to convince Congress to adopt the new law to
Speaker 11: reverse itself on something that had such clear bipartisan support.
Speaker 11: And so I think TikTok's best chance with Trump Trump
Speaker 11: in the White House is still winning its legal case.
Speaker 11: If it can somehow win that and we're waiting for
Speaker 11: a decision, then Trump isn't going to sign off on
Speaker 11: any sort of fix from Congress, and so then a
Speaker 11: band would fade. I don't think TikTok's going to win
Speaker 11: that legal case though, so I think that that means
Speaker 11: that Trump's only option may be saying, look, okay, Congress,
Speaker 11: you passed this law, I'm not going to enforce it. Well,
Speaker 11: I'm going to tell my Department of Justice to ignore it.
Speaker 11: That's kind of strange, you know, that's not typically the
Speaker 11: way things work, But you can't rule it out entirely
Speaker 11: with President Trump, I guess.
Speaker 2: So it's worth watching.
Speaker 11: But I think it's you know, TikTok's not looking great
Speaker 11: in the DC. It could make a last ditch plea
Speaker 11: to the Supreme Court, but I'm not sure that's going
Speaker 11: to work either. So it's it's it's a tough road
Speaker 11: for TikTok, which is great news for TikTok's competitors. I
Speaker 11: think going forward, let's shift to broadband and telecom regulation.
Speaker 11: FCC regulation of broadband is is basically dead under a
Speaker 11: President Trump. FCC that it was probably going to die
Speaker 11: in the courts anyway. This makes it certain that it's
Speaker 11: going to die. I'm not really sure if they're going
Speaker 11: to keep continuing to pursue it in court. It might
Speaker 11: actually be better for Trump to win in court and
Speaker 11: have the court say, look, agencies don't have the FCC
Speaker 11: doesn't have this power at all, and so then you
Speaker 11: end this flip and flip flop, if you know, in
Speaker 11: future administrations, if you have a final word from the courts.
Speaker 11: Either way, it's great news for Comcast, AT and T, Verizon.
Speaker 11: They don't have to worry about about these digital discrimination rules,
Speaker 11: net neutrality rules, all that.
Speaker 2: Yeah, we're good. We're good for a couple of years.
Speaker 11: On that Universal Service program, the FCC has a nine
Speaker 11: billion dollar universal service program that the Fifth Circuit struck
Speaker 11: down and it's headed to the Supreme Court now, and
Speaker 11: I think there's a real chance the Supreme Court agrees
Speaker 11: with the Fifth Circuit and says the whole thing is unconstitutional.
Speaker 11: That's going to give the Republicans in Congress and President
Speaker 11: Trump a lot of say on how to fix these
Speaker 11: subsidy programs. Going forward, and so I and Brendan Carr,
Speaker 11: the potential FCC chief, has been pushing, let's make big
Speaker 11: tech pay for those programs. So that's going to be
Speaker 11: potentially on the table after the Supreme Court case next year.
Speaker 11: You also have to note that Elon Musk operates Starlink,
Speaker 11: which has sought subsidies for serving rural broadband companies, and
Speaker 11: you start to wonder how that might play into revising
Speaker 11: any of these programs, as he has a satellite company
Speaker 11: that's that's looking to get a piece of the pie. Lastly,
Speaker 11: broadcasters for decades, TV and radio stations have been shackled
Speaker 11: by these FCC media limits. You can only own so
Speaker 11: many TV stations in certain markets, so many radio stations.
Speaker 11: Republicans have long said, look, this doesn't make any sense anymore.
Speaker 11: There's all this new competition to broadcasters. Why does one
Speaker 11: industry have all these limits? And I think a Trump
Speaker 11: FCC is going to agree with that and really cut
Speaker 11: back on regulation. You saw the Biden FCC block the
Speaker 11: ability to acquire Tegna a broadcaster. You're not going to
Speaker 11: see that from from a Trump led FCC. Those sorts
Speaker 11: of acquisitions aren't going to be blocked by the FCC.
Speaker 11: The other one last note on the broadcasting angle. You've
Speaker 11: seen recently probably tweets from Elon Musk saying, let's take
Speaker 11: away all the broadcasters spectrum, all their licenses, and let's
Speaker 11: give that to wireless and let let broadcasters just cable companies,
Speaker 11: and you know, and and Congress has sort of done
Speaker 11: things like this in the past where it's had you know, look,
Speaker 11: I give us back some spectrum, uh, and we'll pay
Speaker 11: you broadcasters. So the bottom line on this is, I
Speaker 11: think it's a lot of noise and politics until you
Speaker 11: see serious legislation moving in Congress, and it's probably going
Speaker 11: to need on a need to move on a bipartisan basis,
Speaker 11: because to get as we talked about earlier, to get
Speaker 11: through the Senate, you're going to need that. So I
Speaker 11: kind of keep that on the side of political noise
Speaker 11: until we see more concrete proposals and some hope of
Speaker 11: it moving on a bipartisan basis. I don't I don't see,
Speaker 11: like you know, broadcasters being stripped of their spectrum and
Speaker 11: their licensing rights in any sort of comprehensive way, because
Speaker 11: it would require Congress on a bipartisan basis to do it.
Speaker 2: So with that, let me toss it back to you Elliott.
Speaker 1: Great, thanks Matt. And yeah, I mean you mentioned Elon
Speaker 1: Musk on a couple of different issues there. You didn't
Speaker 1: mention him in connection with TikTok, but I think it's
Speaker 1: probably relevant there too. And it also goes to this
Speaker 1: personnel's policy idea that we've been talking about because it's
Speaker 1: sort of unclear. I mean, it seems like he's going
Speaker 1: to have you know, Trump's ear in some capacity. It's
Speaker 1: just sort of the extent of that and how official
Speaker 1: or unofficial that influence is. And you also mentioned I
Speaker 1: thought it was interesting when you mentioned the broadband rules
Speaker 1: and whether you know it's better for them to get
Speaker 1: a court ruin to sort of undo them. I'm seeing
Speaker 1: the same thing, you know. I'm tracking dozens of lawsuits
Speaker 1: challenging SEC and CFPB rules. You know, I expect the
Speaker 1: new leadership in both those agencies to try to undo
Speaker 1: a lot of the rules that were promulgated in the
Speaker 1: Biden administration. But we'll see whether the lawsuits also get stayed,
Speaker 1: or whether some of them continue and the rules get
Speaker 1: struck down via the courts.
Speaker 11: Yeah, I mean I think the typical course has been okay,
Speaker 11: just let the agent see undo it itself.
Speaker 2: But there's an argument to be made.
Speaker 11: Let you know, if the court strikes it down, then
Speaker 11: the policy stays dead. You know, a future democratic administration
Speaker 11: can't revive it. We can't keep going around in circles.
Speaker 11: So there's at least a case to be made that
Speaker 11: why not just let the courts do it and maybe
Speaker 11: you get more finality that way.
Speaker 1: You just have to be certain that the court's going
Speaker 1: to ruin the way you want it to. But with
Speaker 1: some courts you sometimes have that confidence. And with that,
Speaker 1: I think we'll wrap up this episode of votes and verdicts.
Speaker 1: As a reminder, you can read all of our Bloomberg
Speaker 1: intelligence research on the Bloomberg terminal at BI go, and
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Speaker 1: on our dashboard BI space laws Go. Thank you again
Speaker 1: for listening, and have a great day.
Speaker 8: The