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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Cornard made Off, the

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Speaker 1: Manhattan investment advisor who promised stellar returns to his A

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Speaker 1: list clients and instead you frauded them of more than

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Speaker 1: nineteen billion dollars in history's largest Ponzi scheme, has died.

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Speaker 1: He was eighty two. We want to get more color

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Speaker 1: on the man behind the scam, Bernie made Off, and

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Speaker 1: we do that. We're so fortunate to have Jim Campbell.

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Speaker 1: Jim is the author of an upcoming book entitled Made

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Speaker 1: Off Talks. He's also hosted the radio shows Business Talk

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Speaker 1: with Jim Campbell and his crime show Forensic Talk with

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Speaker 1: Jim Campbell. Jim, thanks so much for joining us. I

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Speaker 1: know you have your book coming out on Bernie made Off.

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Speaker 1: Made Off Talks available April. Talk to us about out

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Speaker 1: the access you had to Bernie made Off for this book.

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Speaker 1: I think it's just really interesting. Well, first all, thanks

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Speaker 1: for having me on. Obviously something most have happened today,

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Speaker 1: and it is big news. Actually, Um, it was very

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Speaker 1: It was really fortuitous in the sense that I was

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Speaker 1: doing an interview from my show on a book on

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Speaker 1: made Off and they let me speak off the record

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Speaker 1: with Andrew made Off, and UM, I told him would

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Speaker 1: be very open. I asked him tough questions. He obviously

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Speaker 1: was doing nothing publicly because he was under all kinds

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Speaker 1: of assault from the Southern District of New York and

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Speaker 1: recific made Off trustee. He introduced me then to Ruth Madeoff,

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Speaker 1: who again fortuitously had just moved to Greenwich, where I live,

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Speaker 1: and we developed a relationship. She introduced me to Bernie.

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Speaker 1: Bernie and I communicated. I had got over four hundred

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Speaker 1: pages between handwritten letters emails. Um, he's very Nixtonian. He

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Speaker 1: had this need compulsion to kind of explain everything. Fascinating guy. Um,

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Speaker 1: you'd just be amazed about him. He was not driven

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Speaker 1: by greed, um, ironically driven by control. And let me

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Speaker 1: just tell you then you can ask you whatever you want.

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Speaker 1: The biggest single thing that blows my mind is he

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Speaker 1: built side by side one of the most ethical, innovative,

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Speaker 1: and leading businesses on Wall Street. That was his market

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Speaker 1: maker at the same time, two fours down behind the

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Speaker 1: locked uh door with several unsophisticated folks, he built the

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Speaker 1: biggest criminal enterprise in Wall Street history. It wasn't like

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Speaker 1: he got in trouble had to double down and then

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Speaker 1: do a Ponzi scheme he thought he would get out of.

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Speaker 1: He built them side by side. So I wonder do

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Speaker 1: you feel sorry for Bernie made off? I know he

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Speaker 1: committed I guess you could say heinous crimes, although they

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Speaker 1: were you know, financial and nature. Um he did bankrupt

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Speaker 1: a lot of people who, you know, their lives were

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Speaker 1: made considerably worse afterwards. They were suicide, one of whom

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Speaker 1: was his own son, though um Mark killed himself in

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Speaker 1: two thousand and ten and then Andrew died of lymphoma

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Speaker 1: in two thousand fourteen. I mean, do you feel bad

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Speaker 1: for the guy? I think the way to answer that

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Speaker 1: question is was he a pure social path? Um who

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Speaker 1: sentce you was a financial terrorist? And the answer is no,

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Speaker 1: It's not black and white. He ran the firm like

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Speaker 1: a family. He paid for folks sudden medical expenses their

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Speaker 1: honeymoons traditionally, and so it was not black and white.

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Speaker 1: On the other hand, he has the sociopath aspects of

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Speaker 1: very little empathy. He had resentment for his victims in

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Speaker 1: some sense, he thought they were greedy. They were always

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Speaker 1: asking him for more. He could never say no. So

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Speaker 1: it's kind of a mixed bag. He's obviously can never

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Speaker 1: be forgiven for what he did, and he could never

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Speaker 1: come to grips essentially with honestly admitting it. But he's

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Speaker 1: not at you know, pure sociopath evil God what I found.

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Speaker 1: I'm sorry. Let me just say Ellie was out, you know,

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Speaker 1: the famed Nazi hunter, Holocaust survivor, Nobel Peace Prize winner,

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Speaker 1: was asked if he could forgive made off and he

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Speaker 1: said no. To forgive first of all, and this is

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Speaker 1: a direct quote, would mean that he would come on

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Speaker 1: his knees and asked for ask for forgiveness. He wouldn't

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Speaker 1: do that. Um. Is that right? Did he never do

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Speaker 1: that even to someone like Ellie Wizzell Well, let me

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Speaker 1: tell you this, and this is kind of an irony. Um.

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Speaker 1: He wrote a one satins letter to Andrew, and Andrew's

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Speaker 1: partner fiancee Um that said, I'm so sorry, Dad, essentially

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Speaker 1: apologizing for the scheme not even a look. But it

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Speaker 1: was one set. At the same time, I was getting

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Speaker 1: six seven single spaced letters in beautiful, exquisitive handwriting, explaining

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Speaker 1: and rationalizing everything. So yeah, he had a tough time.

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Speaker 1: He had an ego that could never admit any kind

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Speaker 1: of loss, which is not something to be a tribute

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Speaker 1: and the trait you want to have if you're in

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Speaker 1: the investment business, where losses are are part of the game,

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Speaker 1: similar to President Trump in that way. And so there's

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Speaker 1: a huge denial mechanism. And though he did not ask

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Speaker 1: for forgiveness, he told me Um he felt he felt

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Speaker 1: really bad for his his uh you know, his victims

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Speaker 1: and everything he knew he'd done wrong. He was devastated

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Speaker 1: by what he did to his sons. He essentially killed

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Speaker 1: both because Andrew died slowly of cancer. But I spent

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Speaker 1: a lot of time with victims, and Um, it's it's

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Speaker 1: very very hard to forgive a guy, um, knowing what

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Speaker 1: he what he the damage that he calls Jim and

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Speaker 1: your communications with made off. You know, did you talk

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Speaker 1: to Hi about the angle? Only angles that fascinates me

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Speaker 1: was you know, it seems like he took advantage of

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Speaker 1: his friends, um and maybe praying upon their Jewish religion. Hey,

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Speaker 1: you know, you know that's where a lot of his

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Speaker 1: relationships came from, whether it's a synagogue or just you know,

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Speaker 1: uh circle of friends and pomp Beach or Adam Hampton's.

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Speaker 1: And it seemed to really prey upon you know, his friends,

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Speaker 1: that his Jewish friends. Did that come up at all?

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Speaker 1: Oh yeah, he's um in a sense, it was almost

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Speaker 1: a financial holocaust, and in the Jewish community, UM to

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Speaker 1: betray financially um, you know, fellow brotherren is almost beyond conception,

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Speaker 1: which is one of the reasons he was so successful.

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Speaker 1: Here's example of the two sides of him. His his

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Speaker 1: he had big four investors who he basically took his

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Speaker 1: lower net worth investors and passed the money onto them

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Speaker 1: and what I call a reverse Robin hood and um

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Speaker 1: one of the uh, one of the four Norm Levy

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Speaker 1: he was very close to and and and worked hand

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Speaker 1: in hand and when he died even sort of took

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Speaker 1: care of him to keep control over him. At the

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Speaker 1: same time, he was the executor of his non real estate.

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Speaker 1: Asked that he was a big real estate investor. He

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Speaker 1: stole twitter in fifty million to pump into his headge fund. So, um,

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Speaker 1: you know, how do you fathom this guy? It is

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Speaker 1: it's it's an it's an amazing, um, you know thing

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Speaker 1: that I have been sort of blessed with to try

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Speaker 1: to diagnose this and get under the hood. Did he

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Speaker 1: have any friends at the end, Jim, you mentioned that

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Speaker 1: you have that you have a relationship with Ruth, And

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Speaker 1: I know at one point, I think after mark suicide,

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Speaker 1: she said she was never going to talk to Bernie again.

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Speaker 1: But surely she must have remained in contact if she

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Speaker 1: hiked you up. Yeah. She Um. The first thing is

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Speaker 1: that that she's really was almost cult like controlled by him,

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Speaker 1: and she had a very hard time decoupling from him.

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Speaker 1: She was thirteen years old when they started dating. She

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Speaker 1: believed his rationalizations and minimizations at first. By the time

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Speaker 1: I met her, she was presenting to me at least that, um,

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Speaker 1: you know that he was going to that she was

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Speaker 1: cutting off relations to the degree she could. He emailed her,

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Speaker 1: he phoned her, They were in communication. Still they were.

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Speaker 1: She was also obviously through me funnel uh stuff to him.

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Speaker 1: But um, it was very hard for her to get through.

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Speaker 1: To be honest, she was also very hurt, as I

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Speaker 1: say in the book, by um some sexual affairs that

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Speaker 1: he had that actually related more to control of his

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Speaker 1: investors than it did to the pure sex. But that's

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Speaker 1: all in the book. You'll find Also in the book,

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Speaker 1: I will just uh, I'm the first meteor media source

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Speaker 1: I believe to determine if Ruth, Mark and Andrew were

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Speaker 1: complicit in any way. The FBI and the SIF the

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Speaker 1: trust stee believe that they had to have known, and

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Speaker 1: I have I've got a it's in chapter eight, folks, right,

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Speaker 1: that's interesting real quick? How is his time in prison,

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Speaker 1: the ten years? How hard was it? Did he have

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Speaker 1: any friends or any supporters or is he really alone?

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Speaker 1: My understanding was that actually, you know, he's charismatic, and

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Speaker 1: uh he is. He is a non con con man

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Speaker 1: because he's so low Keith and I think he gained

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Speaker 1: a lot of respect that a lot of the prisoners

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Speaker 1: thought he was kind of cool. We'll pull off what

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Speaker 1: he pulled off, and he's kind of a survivor that way. Um.

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Speaker 1: He's been sick for a while, though pretty badly and isolated.

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Speaker 1: I think the hospital wins all right. Jim, Hey Jim,

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Speaker 1: we really appreciate you taking time here on this really

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Speaker 1: important day. Jim Campbell, he's the author of the upcoming

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Speaker 1: book it's due uh out in stores and on online

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Speaker 1: on April seven, entitled Made Off Talks, so that should

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Speaker 1: be very interest giving the timing that we have here. Jim,

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Speaker 1: thanks so much for joining us here. Point based public

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Speaker 1: offering today via directed listening. We're still waiting for that

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Speaker 1: to open, but it is certainly has the attention of

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Speaker 1: a global Wall Street. Meltem Demror's cheap strategy officer from

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Speaker 1: coin Shares Group, joins us here today. Give us your

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Speaker 1: thoughts of what's the feeling inside coin Shares today. Quick delineation.

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Speaker 1: Coin Base is listening today. Coin Shares, which is my firm,

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Speaker 1: listed about a month ago, so look really great day

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Speaker 1: for the industry. Coin Base is not only going to

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Speaker 1: be a great validation, not just for crypto assets, which

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Speaker 1: are two trillion dollar market now, but for the companies

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Speaker 1: building in the crypto ecosystem slated to be und billion

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Speaker 1: dollar I p O. I think we're going to tap

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Speaker 1: a hundred fifty billion by the end of the week.

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Speaker 1: Coin Base will be bigger than Golden and Stacks, which

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Speaker 1: is amazing. But really the monumental moment here is we're

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Speaker 1: firmly planting the flag in the ground. Crypto is an

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Speaker 1: asset class. Crypto is an industry, and for investors, this

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Speaker 1: is a place where you can no longer afford to ignore.

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Speaker 1: You have to be allocating to this sector. You can

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Speaker 1: do it be the assets themselves. That's what we do

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Speaker 1: at coin Shares. We have five billion in assets under

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Speaker 1: management in our change trade of products. Or now with

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Speaker 1: coin base, you can buy equity in high growth sintech companies.

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Speaker 1: So we're super excited. So let's talk about the well,

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Speaker 1: to some extent, the differences right. Coin Base is an exchange,

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Speaker 1: the largest US cryptocurrency exchange. What you offer with your

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Speaker 1: exchange traded product is the ability to and correct me

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Speaker 1: if if I'm wrong to buy bitcoin, but I don't

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Speaker 1: have to. I can buy bitcoin with your E t P,

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Speaker 1: but I don't have to figure out how to hold it.

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Speaker 1: Do I put it in? I don't know what it's

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Speaker 1: called cold storage or whatever. Um you guarantee my security,

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Speaker 1: you know, you know, I know what I'm talking about, Meltham. No,

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Speaker 1: But the point is you. Um, you basically take the

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Speaker 1: busy work out of it for an old gen Z

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Speaker 1: guy like me, and I don't have to worry about

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Speaker 1: someone stealing it. I I still own it though, Yep,

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Speaker 1: exactly right. So coin Shares we've been around for the

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Speaker 1: last seven years and basically what we do. We're an

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Speaker 1: investment firm that does a lot of different things. Were

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Speaker 1: best known for products, which again you can go onto

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Speaker 1: any old brokerage platform type in a ticker and hold

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Speaker 1: crypto exposure in your account. Coin based lifts you buy

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Speaker 1: the underlying assets directly, which is different right there. They're

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Speaker 1: more of an exchange and a bank effectively. But again,

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Speaker 1: there's tons of innovation in this space. We're seeing a

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Speaker 1: lot of different companies going public over the coming months

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Speaker 1: and years, and we're really excited. You know, I manage

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Speaker 1: our venture portfolio. We're also interesting in a lot of

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Speaker 1: these companies with our balance sheet capital and we're just

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Speaker 1: so excited to see huge validation. I just want to

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Speaker 1: say one more thing on the coin based on listing.

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Speaker 1: What's really cool. Here's Colin Based didn't do an I

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Speaker 1: p O. They're going to market through a direct listing,

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Speaker 1: which I think is great, um. But more importantly, this

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Speaker 1: listing is going to be the biggest direct listing and

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Speaker 1: one of the biggest capital markets events we've seen in

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Speaker 1: the venture space in the last ten years. So I

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Speaker 1: think again, the fact that this is a crypto native

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Speaker 1: comp ane that's able to achieve this type of outcome

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Speaker 1: just validates why it's so important for investors to allocate

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Speaker 1: to this space. And then I think again, just a

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Speaker 1: huge moment for this industry. After seven years of being

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Speaker 1: called crazy and the traditional financial world shutting us, we

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Speaker 1: are now being accepted because we speak in the language

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Speaker 1: that investors understand, which is money. Well, you know, my

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Speaker 1: my heartache is UM. When I started researching and reporting

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Speaker 1: on bitcoin in two thousand twelve, I bought some, put

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Speaker 1: it in my blockchain wallet and promptly forgot the password.

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Speaker 1: I'm not I'm not feeling the pain as much as

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Speaker 1: some of the bigger whales that did the same. But Um.

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Speaker 1: The benefit I guess of an et P which you

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Speaker 1: offer is that I would be able to what call

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Speaker 1: somebody and say, hey, help me out here exactly. And

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Speaker 1: it's also the other element that's really important is you

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Speaker 1: can hold exchange trigger products in your retirement account. Right,

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Speaker 1: so tax advantage savings really important. Through me, Are you

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Speaker 1: going through a tunnel? Are you in an elevator right now?

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Speaker 1: You know I'm right hear me? Okay, yeah, okay, you're

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Speaker 1: breaking up a little bit. We got you, okay. So, look,

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Speaker 1: that big opportunity with E T t s is the

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Speaker 1: retirement accounts. Americans hold the majority of their wealth in

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Speaker 1: their homes and in their retirement accounts. So we want

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Speaker 1: to get crypto into every retirement account so that people

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Speaker 1: can grow their their wealth through this asthet class and

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Speaker 1: through these businesses in their tax advantaged savings, especially as

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Speaker 1: the U. S. Government looks to tax earners and savers

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Speaker 1: alike at a much higher basis than the years going

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Speaker 1: forward given all of the deficit that we're seeing in

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Speaker 1: this country and in the world more broadly. Meltime, you

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Speaker 1: talked about maybe some of the uptake of some of

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Speaker 1: this cryptocurrencies at there give us a sense for the

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Speaker 1: institutional appetite for all things crypto. There's concerns that maybe

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Speaker 1: we're not seeing the uptake from some of the big

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Speaker 1: institutional investors. What's your experience, Yeah, absolutely, so, look from

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Speaker 1: an asset allocation perspective. We produced the weekly fund Flows

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Speaker 1: reports that tracks all of the inflows and outflows into

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Speaker 1: crypto products that are publicly traded right now, those products

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Speaker 1: have over sixty billion in assets under management between them.

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Speaker 1: The last two quarters have seen record inflows. And I'll

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Speaker 1: just share one more fact. Gold has typically been the

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Speaker 1: preferred portfolio diversifier for institutions. What we are seeing right

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Speaker 1: now is over the last two quarters, gold products and

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Speaker 1: gold ETF have seen twenty billion dollars in outflows. Crypto

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Speaker 1: products have seen seven billion dollars in inflows. And so

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Speaker 1: what we have here is a sector rotation. Investors and

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Speaker 1: allocators need diversifiers in the current macro climates. Our research

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Speaker 1: has found a four percent allocation to bitcoins is the

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Speaker 1: optimal portfolio diversitycation to balance risk and reward. JP Morgan

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Speaker 1: says one percent that we think our research is better

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Speaker 1: at four per cents um. But look, investors are looking

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Speaker 1: to diversify. They're looking for places to generate return. With

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Speaker 1: real inflation at two point five to three percent and

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Speaker 1: fixed in comic close to zero and real rate it

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Speaker 1: close to zero. We think crypto and bitcoin will play

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Speaker 1: an increasingly important role in investor portfolios and allocators are

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Speaker 1: starting to come out of the woodwork. They're starting to

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Speaker 1: allocate in size, and nowhere is that more apparent than

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Speaker 1: the inflows we're being into these products. All right, Melton,

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Speaker 1: great to get some time with you. I hope we

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Speaker 1: can talk to you a little bit more after this.

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Speaker 1: Melton um Demers has been really a huge driving force

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Speaker 1: in this industry. She's on the she founded the World

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Speaker 1: Economic Forum Blockchain Council, and you've probably seen her if

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Speaker 1: you watch c SPAN testifying in front of Congress on

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Speaker 1: digital currencies. She also teaches at m I T as

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Speaker 1: well as ox Ford and UM. Right now, you know,

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Speaker 1: we're focused on the coin based direct listing. It's indicated

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Speaker 1: to open at three five and no now indicated to

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Speaker 1: open at three six five dollars in the NASDAC debut.

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Speaker 1: But there's so much more to talk about around crypto,

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Speaker 1: especially as here in Europe they're talking about digital currency

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Speaker 1: and they're focused on privacy. I wonder how much of

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Speaker 1: that she believes. We'll get her back on again soon.

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Speaker 1: This is Bloomberg, John Tucker. They're talking about some of

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Speaker 1: the big banks that have come out today. JP Morgan

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Speaker 1: Goldman Sachs Wells Fargo. We have one of the top

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Speaker 1: bank analysts on Wall Street Quick Chris Whalen joins, us

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Speaker 1: chairman of Whalen Global Advisors, And Chris, let me get

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Speaker 1: your reaction first to JP Morgan. I mean, everyone is

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Speaker 1: saying it was such a great quarter, and yet the

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Speaker 1: shares are down for the third day in a row. Well,

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Speaker 1: it's because we're counting last year's earnings. Very simply, if

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Speaker 1: you back out the release of loan loss reserves, which

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Speaker 1: they had put aside when COVID first exploded on the scene, Um,

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Speaker 1: we're now taking them back into income. So if you

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Speaker 1: really look at the numbers, their expenses were up, revenues

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Speaker 1: were flat, and as you mentioned in your intro, loan

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Speaker 1: demand is soft. Um. You know, it's funny in the

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Speaker 1: classical economics texts, when rates rise, you're supposed to see

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Speaker 1: an expansion of margins on lending. We're not seeing that. Uh,

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Speaker 1: net interest margin is being squeezed. So I think, honestly, uh,

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Speaker 1: it may be record gap earnings because the accountants and

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Speaker 1: the Fed let them take four and a half billion

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Speaker 1: dollars back into income from loan loss reserves. But if

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Speaker 1: you back that out, the numbers don't look so good.

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Speaker 1: And I think that's what the more astute observers on

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Speaker 1: the street are going to trade based on how concerned

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Speaker 1: are you about the commentary from JP Morgan about the

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Speaker 1: corporate loan growth or the lack thereof in terms of demand.

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Speaker 1: Is that something you view as temporary that event Actually,

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Speaker 1: as this economy reopens, we will, in fact see lenders

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Speaker 1: come back into the market, our barbarers come back into

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Speaker 1: the market. We've had soft loan demand for a while.

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Speaker 1: And you know, the street typically hasn't focused on this.

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Speaker 1: They just focus on the press release, maybe the first

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Speaker 1: paragraph of the press release when it comes to earnings.

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Speaker 1: But banks are in a very difficult environment now because

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Speaker 1: the FED has created scarcity and just about any asset

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Speaker 1: class you look at, and the competition for big commercial

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Speaker 1: loans is intense. So in order for banks to win

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Speaker 1: that business, they have to be willing to drop their rate,

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Speaker 1: and in some cases the banks just fold their arms

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Speaker 1: and say, no, I'm going to just leave the reserves

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Speaker 1: at the FED. I don't need to work for nothing,

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Speaker 1: which is what quantitative easing really means. It means financial

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Speaker 1: assets have no value and so I think the FED

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Speaker 1: needs to rethink what they're doing because if we leave

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Speaker 1: current policy in place, I think banks are going to

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Speaker 1: be in trouble by the end of the year. There's

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Speaker 1: a certain level of interest earnings that they have to

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Speaker 1: have to survive, and we are going to test those

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Speaker 1: limits because of people like Janet Yellen and j Powell.

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Speaker 1: They just don't get it. You know, they're they're working

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Speaker 1: with a playbook that's twenty five years old. Yeah, but Chris,

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Speaker 1: I mean, you know, we're coming out of this pandemic.

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Speaker 1: It's all about getting the economy open. And these banks

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Speaker 1: are printing record profits. Nobody's going to cry for these guys. Well,

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Speaker 1: they're printing record gap profits. But if you back out

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Speaker 1: the low loss reserves, they're not doing that. Well, um,

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Speaker 1: look at again, look at the results if you take

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Speaker 1: that out, because remember that's last year's profits were counting.

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Speaker 1: Now that's not this year. Market stuff. I mean, you know,

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Speaker 1: the consolidation in the banking industry has resulted in five

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Speaker 1: six of these players just racking up numbers that and

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Speaker 1: I used to work on the street, we'd never even

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Speaker 1: think of these levels of profitability. Well, no, and and

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Speaker 1: thank God, because it is the transactional side of people

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Speaker 1: like Goldman and JP Morgan that's gonna save them temporarily

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Speaker 1: from quantitative easing, the the ill effects on net interest

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Speaker 1: margin and on the return on earning assets, which is

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Speaker 1: really all that matters with banks. You know, banks a

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Speaker 1: big portfolio. If they're not making money on their assets,

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Speaker 1: you can survive for a while when the FED pushes

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Speaker 1: the cost of funds down. The cost of funds for

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Speaker 1: the whole industry today is about eleven billion dollars for

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Speaker 1: twenty trillion dollars worth of assets. Think about that, and

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Speaker 1: that's just helping them look okay. So over the next

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Speaker 1: several quarters, the benefit of that cheap funding is gonna

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Speaker 1: eventually EBB and the the earnings on assets are falling

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Speaker 1: just as fast. So it's kind of a race to

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Speaker 1: the bottom right now on banks, the mid sized banks,

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Speaker 1: I mean, it could be an example the bank I

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Speaker 1: love Western Alliance that just bought a big mortgage company,

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Speaker 1: a Mara home from Apollo. They're gonna do okay because

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Speaker 1: the smaller banks have more pricing power. They're they're chasing

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Speaker 1: smaller loans. But the big banks, you know, they are

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Speaker 1: in a world a hurt right now because the competition

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Speaker 1: for large assets is global. Every private equity fund, every

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Speaker 1: sovereign fund, they're all chasing the same customers and so

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Speaker 1: JP Thank god they have capital markets. Is any of

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Speaker 1: the big banks positioned well to deal with this situation then,

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Speaker 1: Chris or do you look down? Um? The latter two,

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Speaker 1: the smaller, midsize and smaller banks look the best bank

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Speaker 1: in the top five as US bankrupt consistently, they have

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Speaker 1: actually been taking more losses in the other banks half,

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Speaker 1: which I see as a sign of strength. They're cleaning house.

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Speaker 1: There's a lot of forbearance on the street. So as

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Speaker 1: an analyst, when my clients asked me about these banks,

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Speaker 1: I tell them off. And I don't know because the

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Speaker 1: FED has countenanced forbearance on commercial credits, especially commercial real estate,

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Speaker 1: that I think we're going to regret. Because their hope

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Speaker 1: is that the economy bounces is yere. You know, people

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Speaker 1: go back to New York City, we start to see

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Speaker 1: utilization of commercial assets return. I'm not sure that's going

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Speaker 1: to happen. I think the ravage is right. I think

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Speaker 1: New York City is in trouble, and all the lenders

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Speaker 1: who have exposure to commercial real estate and cities like

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Speaker 1: New York, Chicago, Los Angeles. I think they've got a long,

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Speaker 1: long road ahead of them. Hey, Chris, thanks so much

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Speaker 1: for joining us to really appreciate your take on some

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Speaker 1: of these big bank earnings uh that we are dealing

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Speaker 1: with this morning, and also more to come later this week.

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Speaker 1: Chris Whalen. He is chairman of Whalen Global Advisors, based

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Speaker 1: in New York and getting some guy to here. Coin

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Speaker 1: Voice a coin base indicated to open at three and

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Speaker 1: at forty. We'll have more coming up now. I want

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Speaker 1: to get over to Bloomberg. Business Week reporter William Turton

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Speaker 1: has written a story with Joshua Bruce dun about a

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Speaker 1: kid really twenty three year old coder who kept q

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Speaker 1: and On online when no one else would. That's the

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Speaker 1: headline from your Business Week story. Um who is this kid?

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Speaker 1: He's not. He doesn't appear to be a white supremacist

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Speaker 1: or um a q and on follower? Um where did

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Speaker 1: you find him? Hi? Thanks for having me. Nick Limb

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Speaker 1: is the CEO and founder of a company called Bonmo Tech,

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Speaker 1: which is based in his hometown of Vancouver, Washington, and

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Speaker 1: they provide various web services. But most importantly they provide

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Speaker 1: a what's called the cd N service, which prevents websites

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00:24:30,480 --> 00:24:34,000
Speaker 1: from being knocked offline by kind of malicious attacks. And

430
00:24:34,040 --> 00:24:37,679
Speaker 1: so you know, websites like eight coun and the Daily Stormer,

431
00:24:37,720 --> 00:24:39,960
Speaker 1: which is like white nationalist website, have been kind of

432
00:24:40,080 --> 00:24:43,880
Speaker 1: dropped by mainstream providers of that service, like cloud Player

433
00:24:43,920 --> 00:24:47,520
Speaker 1: for example. So Limb's company von Tech kind of steps

434
00:24:47,560 --> 00:24:50,840
Speaker 1: in to fill that void, and his clients, um, you know,

435
00:24:50,880 --> 00:24:52,879
Speaker 1: as far as we can tell, is a very small

436
00:24:52,920 --> 00:24:54,879
Speaker 1: amount of people who kind of run some of the

437
00:24:54,920 --> 00:24:58,640
Speaker 1: most extremist websites on the Internet, alright, So it kind

438
00:24:58,640 --> 00:25:00,520
Speaker 1: of goes to I think a lot of folks when

439
00:25:00,520 --> 00:25:04,320
Speaker 1: I think about uh technology and social media and the

440
00:25:04,400 --> 00:25:07,359
Speaker 1: spread of extremist views. I think obviously of the brand

441
00:25:07,440 --> 00:25:10,160
Speaker 1: names the facebooks of the world, but there's also, as

442
00:25:10,200 --> 00:25:12,919
Speaker 1: you point out in this Business Week story, there's a

443
00:25:12,920 --> 00:25:15,760
Speaker 1: lot of smaller players involved as well. This is is

444
00:25:15,760 --> 00:25:20,280
Speaker 1: more than just Facebook, right, and you know, there's this

445
00:25:20,400 --> 00:25:23,399
Speaker 1: kind of interesting debate going on right right now about

446
00:25:23,400 --> 00:25:26,919
Speaker 1: the platforming and social media censorship, right, But so what

447
00:25:27,040 --> 00:25:29,240
Speaker 1: if you take it a little further and think about,

448
00:25:29,400 --> 00:25:31,679
Speaker 1: you know, does someone have a right to have a

449
00:25:31,720 --> 00:25:33,960
Speaker 1: website even you know, even if it has kind of

450
00:25:33,960 --> 00:25:38,600
Speaker 1: the most abhorrent views um and limb is is kind

451
00:25:38,600 --> 00:25:41,000
Speaker 1: of you know, and what he explains as the maximum

452
00:25:41,119 --> 00:25:44,280
Speaker 1: for free speech. Um. And you know, he kind of

453
00:25:44,320 --> 00:25:47,479
Speaker 1: summed up his his ideology when it comes to this

454
00:25:47,520 --> 00:25:49,560
Speaker 1: issue to us, you know, very simply by just saying,

455
00:25:49,600 --> 00:25:51,720
Speaker 1: I don't care as long as it's not illegal in

456
00:25:51,760 --> 00:25:55,240
Speaker 1: the US. You know, he's happort it. But he believes

457
00:25:55,240 --> 00:25:59,000
Speaker 1: in free speech. Then you're saying, well, right, that's what

458
00:25:59,119 --> 00:26:00,879
Speaker 1: that's what he says that that I think how he

459
00:26:00,960 --> 00:26:04,480
Speaker 1: justifies you know, kind of exclusively offering his services to

460
00:26:05,080 --> 00:26:08,760
Speaker 1: you know, extremely far right uh websites, He exclusively offers

461
00:26:08,800 --> 00:26:11,640
Speaker 1: them to them or is he just the only one

462
00:26:11,680 --> 00:26:15,680
Speaker 1: that will accept them? Are you saying he actively white

463
00:26:15,720 --> 00:26:19,480
Speaker 1: supremacists that's true, Yes, he does. You know, we found

464
00:26:19,480 --> 00:26:23,439
Speaker 1: an instance where he you know, actively courted Andrew England,

465
00:26:23,480 --> 00:26:26,760
Speaker 1: who runs the white supremacy of website Daily Stormer, and

466
00:26:26,960 --> 00:26:33,359
Speaker 1: offered him free services. Um. But you know he claimed that,

467
00:26:33,920 --> 00:26:36,280
Speaker 1: you know, he offers his services to everyone, but the

468
00:26:36,320 --> 00:26:39,000
Speaker 1: only ones that we could find really were sites like

469
00:26:39,119 --> 00:26:42,960
Speaker 1: a coon in the Daily Stormer who else does this, um,

470
00:26:43,359 --> 00:26:45,359
Speaker 1: you know, I mean it's it's hard to believe that

471
00:26:45,400 --> 00:26:48,840
Speaker 1: this twenty three old with this small company is the

472
00:26:48,880 --> 00:26:52,639
Speaker 1: only one providing I guess technical support for some of

473
00:26:52,640 --> 00:26:56,600
Speaker 1: these extremist groups. Is is this a collection a lot

474
00:26:56,720 --> 00:27:01,200
Speaker 1: of small players out there, William? Well, you know, as

475
00:27:01,240 --> 00:27:04,399
Speaker 1: we know in the story cloud Flare it's still offer

476
00:27:04,440 --> 00:27:07,639
Speaker 1: services to sites that kind of have these extreme mists used, right.

477
00:27:07,680 --> 00:27:12,240
Speaker 1: They they've only really dropped support of certain sites um. Um,

478
00:27:12,280 --> 00:27:14,480
Speaker 1: you know, under a lot of kind of public scrutiny

479
00:27:14,480 --> 00:27:16,720
Speaker 1: and pressure, right and this is an extremely nuance and

480
00:27:16,760 --> 00:27:20,720
Speaker 1: complicated issue, which cloud Flaire has itself talked about. UM.

481
00:27:20,840 --> 00:27:23,240
Speaker 1: But you know, there's as far as I know, there's

482
00:27:23,320 --> 00:27:26,960
Speaker 1: there's no one really like Nick um, you know, considering

483
00:27:27,000 --> 00:27:31,400
Speaker 1: most people don't actually have problems using using mainstream providers

484
00:27:31,480 --> 00:27:35,480
Speaker 1: unless there's kind of a massive backlash that comes from it.

485
00:27:35,480 --> 00:27:37,639
Speaker 1: It's funny I would have thought you'd see in in

486
00:27:37,960 --> 00:27:42,919
Speaker 1: UM maybe Eastern Europe or Asia, the hosts of these

487
00:27:43,240 --> 00:27:48,160
Speaker 1: Q and on UM supportive websites. Now I say that, um,

488
00:27:48,280 --> 00:27:51,960
Speaker 1: William without thinking about Facebook and Twitter, which Paul mentioned

489
00:27:51,960 --> 00:27:56,600
Speaker 1: the top I don't obviously UM surf the web and

490
00:27:56,680 --> 00:27:59,040
Speaker 1: go to these little niche places. But I do see

491
00:27:59,080 --> 00:28:02,359
Speaker 1: these kind of weird views, I guess if I can.

492
00:28:02,560 --> 00:28:04,199
Speaker 1: I don't want to make a value judgment of it,

493
00:28:04,240 --> 00:28:05,679
Speaker 1: but I do see these kind of Q and on

494
00:28:05,800 --> 00:28:11,439
Speaker 1: views spreading across everyday Facebook pages, right, I mean, you

495
00:28:11,480 --> 00:28:17,159
Speaker 1: know the Facebook difficulty and moderating content has been well documented,

496
00:28:17,200 --> 00:28:20,919
Speaker 1: of course. I mean, I think it's just sort of interesting. Um,

497
00:28:20,960 --> 00:28:25,720
Speaker 1: you know how even if you try to d platform someone, right,

498
00:28:25,760 --> 00:28:28,480
Speaker 1: like if if cloud player stops offering its services, state Coon,

499
00:28:28,760 --> 00:28:31,560
Speaker 1: there's someone like Nick who can kind of build the gaps.

500
00:28:31,600 --> 00:28:33,600
Speaker 1: So it's really just a question of how hard these

501
00:28:33,640 --> 00:28:36,720
Speaker 1: sites want to try to keep themselves online. And then

502
00:28:36,800 --> 00:28:38,800
Speaker 1: you know, you're you're at a point where you're kind

503
00:28:38,800 --> 00:28:40,680
Speaker 1: of playing this cat and mouse game, right, and so

504
00:28:41,920 --> 00:28:43,880
Speaker 1: what effectively what are you doing? Right? You're kind of

505
00:28:43,960 --> 00:28:47,960
Speaker 1: chasing different sites to different service writers, but maybe you're

506
00:28:47,960 --> 00:28:50,520
Speaker 1: not actually kind of confronting the real question of the

507
00:28:50,560 --> 00:28:54,560
Speaker 1: content and how to how to address it, you know, societally.

508
00:28:55,560 --> 00:28:59,840
Speaker 1: So well, has there been any pushback on Nick Limmon

509
00:29:00,000 --> 00:29:03,720
Speaker 1: and his company van wall Tech? Has been any regulatory pushback,

510
00:29:03,840 --> 00:29:08,200
Speaker 1: legal pushback, um? Anything that might people try to stifle

511
00:29:08,440 --> 00:29:12,680
Speaker 1: his operation. Yeah, you know, we feature a researcher in

512
00:29:12,720 --> 00:29:15,840
Speaker 1: the story who kind of had made it a personal

513
00:29:15,880 --> 00:29:20,600
Speaker 1: mission of his too to disrupt Limb's operations. And so

514
00:29:20,920 --> 00:29:24,000
Speaker 1: he you know, found one of the providers that helped

515
00:29:24,080 --> 00:29:27,560
Speaker 1: provide Limbs his services and wrote them and they took

516
00:29:27,640 --> 00:29:29,800
Speaker 1: them offline. But you know, as I was just saying,

517
00:29:30,120 --> 00:29:33,160
Speaker 1: Nick quickly found someone else to to keep the services going.

518
00:29:33,320 --> 00:29:38,960
Speaker 1: So um, you know, there's always I think gonna be

519
00:29:39,080 --> 00:29:41,120
Speaker 1: someone that that will be able to offer this kind

520
00:29:41,120 --> 00:29:43,440
Speaker 1: of thing. I guess. I guess the question is is

521
00:29:43,480 --> 00:29:48,720
Speaker 1: he um is he helping to keep any illegal content

522
00:29:49,360 --> 00:29:52,440
Speaker 1: out there? I mean you mentioned, for example, not just

523
00:29:52,840 --> 00:29:56,000
Speaker 1: white supremacist websites, but there are also you know these

524
00:29:56,080 --> 00:29:58,520
Speaker 1: kind of four chan eight chan. I guess it's more

525
00:29:58,640 --> 00:30:01,280
Speaker 1: into eight coon now I can and keep up um.

526
00:30:01,320 --> 00:30:05,479
Speaker 1: They also that's intense at all. They also branch they

527
00:30:05,520 --> 00:30:11,240
Speaker 1: also branch into really uh illegal things like child pornography.

528
00:30:11,360 --> 00:30:16,080
Speaker 1: Right well a coon, you know fans shown pornography, or

529
00:30:16,320 --> 00:30:18,440
Speaker 1: at least it says it does, and and Limb is

530
00:30:18,520 --> 00:30:20,560
Speaker 1: very clear that you know, if if you know something

531
00:30:20,640 --> 00:30:24,040
Speaker 1: was illegal, he wouldn't support it. Right now, in practice,

532
00:30:24,080 --> 00:30:27,200
Speaker 1: what does that actually look like it's It's hard to tell, um,

533
00:30:27,240 --> 00:30:30,960
Speaker 1: But you know, I think these people aren't actually really

534
00:30:30,960 --> 00:30:33,920
Speaker 1: that interested in having much legal liability. They're they're more

535
00:30:33,920 --> 00:30:36,120
Speaker 1: interested in seeing how far they can push the First Amendment.

536
00:30:36,840 --> 00:30:39,960
Speaker 1: UM and uh, you know, as far as kind of

537
00:30:39,960 --> 00:30:43,239
Speaker 1: any regulatory illegal pushback, I mean, not much has been

538
00:30:43,280 --> 00:30:46,600
Speaker 1: written about Limb or his company, UM, and he actually

539
00:30:46,640 --> 00:30:48,640
Speaker 1: avoided a lot of scrutiny during the kind of peak

540
00:30:48,720 --> 00:30:50,560
Speaker 1: of Q and on. But you know, I am curious

541
00:30:50,600 --> 00:30:53,840
Speaker 1: to see what happens next. I don't anticipate any legal

542
00:30:54,280 --> 00:30:56,560
Speaker 1: regulatory perspect because Limb, you know, as far as I

543
00:30:56,560 --> 00:31:00,200
Speaker 1: can tell, isn't doing anything illegal. Interesting. William, thanks much

544
00:31:00,240 --> 00:31:03,360
Speaker 1: for bringing this this story. William Turton, cybersecurity reporter for

545
00:31:03,440 --> 00:31:08,440
Speaker 1: Bloomberg News. His story on a small part of the

546
00:31:08,480 --> 00:31:11,200
Speaker 1: Internet as but certainly a big part for some of

547
00:31:11,240 --> 00:31:15,040
Speaker 1: these extremist websites. You can find his story in this

548
00:31:15,080 --> 00:31:19,160
Speaker 1: week's edition of Bloomberg Business. Sweet Thanks for listening to

549
00:31:19,200 --> 00:31:22,720
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to

550
00:31:22,760 --> 00:31:26,920
Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer.

551
00:31:27,320 --> 00:31:31,280
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three

552
00:31:31,720 --> 00:31:34,200
Speaker 1: put on fall Sweeney. I'm on Twitter at pt Sweeney

553
00:31:34,240 --> 00:31:36,920
Speaker 1: before the podcast. You can always catch us worldwide at

554
00:31:36,920 --> 00:31:37,680
Speaker 1: Bloomberg Radio