1 00:00:01,680 --> 00:00:06,200 Speaker 1: Now from our nation's capital. This is Bloomberg's sound on, 2 00:00:07,080 --> 00:00:10,520 Speaker 1: the rest of Sam bankm Freed is welcome news. They 3 00:00:10,600 --> 00:00:15,360 Speaker 1: used QuickBooks. Multibillion dollar company using QuickBooks click books. The 4 00:00:15,400 --> 00:00:20,280 Speaker 1: fact is Crypto is a garden of snakes. Bloomberg sound 5 00:00:20,320 --> 00:00:24,320 Speaker 1: on Politics, Policy and perspective from DC's top name. My 6 00:00:24,440 --> 00:00:28,440 Speaker 1: goal is simple get price increation under control without joking 7 00:00:28,480 --> 00:00:32,080 Speaker 1: off economic growth. Simply put, this is one of the 8 00:00:32,159 --> 00:00:37,080 Speaker 1: most impressive scientific feats of the century. I do think 9 00:00:37,080 --> 00:00:39,479 Speaker 1: he probably did say. This is a B F D. 10 00:00:40,080 --> 00:00:45,640 Speaker 1: Bloomberg Sound On with Joe Matthew on Bloomberg Radio. Sam 11 00:00:45,640 --> 00:00:49,920 Speaker 1: Bankman Freed is arrested and Congress starts asking the hard questions. 12 00:00:49,960 --> 00:00:53,280 Speaker 1: Welcome to the fastest hour in politics. With billions of 13 00:00:53,320 --> 00:00:57,000 Speaker 1: dollars missing from f t X, the company's new CEO 14 00:00:57,200 --> 00:01:00,520 Speaker 1: testifies on Capitol Hill, and we're joined by members of 15 00:01:00,520 --> 00:01:04,040 Speaker 1: the House Financial Services Committee who did the asking. Democrat 16 00:01:04,120 --> 00:01:08,559 Speaker 1: Brad Sherman from California, Republican Andy Barr of Kentucky straight 17 00:01:08,600 --> 00:01:11,800 Speaker 1: ahead on sound On, and as President Biden takes credit 18 00:01:11,840 --> 00:01:15,280 Speaker 1: for lowering inflation. Today, we talked the politics of pricing 19 00:01:15,280 --> 00:01:19,000 Speaker 1: with our signature panel. Bloomberg Politics contributors Rick Davis and 20 00:01:19,080 --> 00:01:22,120 Speaker 1: Genie Chanzano with analysis on all of our top stories. 21 00:01:22,400 --> 00:01:26,000 Speaker 1: Of course thought Sam Bankman Freed would testify today. You 22 00:01:26,000 --> 00:01:28,520 Speaker 1: see how many journalists came to Washington for this one. 23 00:01:29,360 --> 00:01:32,200 Speaker 1: I mean, that was the plan until we learned he 24 00:01:32,280 --> 00:01:35,480 Speaker 1: was being held in prison this morning, into jail in 25 00:01:35,520 --> 00:01:38,080 Speaker 1: the Bahamas after being arrested. As he heard from Charlie 26 00:01:38,080 --> 00:01:41,880 Speaker 1: Pellett and the headline that just went out on the terminal, 27 00:01:42,440 --> 00:01:45,679 Speaker 1: Sam Bankman Freed denied bail by a Bahamas judge, ordered 28 00:01:45,680 --> 00:01:50,800 Speaker 1: to return to jail. But of course the show must 29 00:01:50,800 --> 00:01:53,520 Speaker 1: go on here in Washington, and there was another notable 30 00:01:54,480 --> 00:01:59,040 Speaker 1: UH witness to speak before the House Financial Services Committee, 31 00:01:59,120 --> 00:02:03,240 Speaker 1: chaired by Maxine Waters. Here she is this allowed the 32 00:02:03,280 --> 00:02:09,040 Speaker 1: firm to effectively gamble with customer money without their knowledge 33 00:02:09,080 --> 00:02:13,160 Speaker 1: are consent. If f t X was registered as the 34 00:02:13,240 --> 00:02:18,520 Speaker 1: securities exchange, several laws would have required the segregation of 35 00:02:18,600 --> 00:02:23,639 Speaker 1: customer assets and prevented such clear conflicts of interest. The 36 00:02:23,680 --> 00:02:26,840 Speaker 1: conflicts of interest, the lack of a firewall a big 37 00:02:26,880 --> 00:02:30,320 Speaker 1: part of the conversation today. How did this happen at 38 00:02:30,400 --> 00:02:32,960 Speaker 1: f t X? John Ray is the man who's been 39 00:02:32,960 --> 00:02:36,280 Speaker 1: brought in to figure all of this out. He's he's 40 00:02:36,280 --> 00:02:38,320 Speaker 1: the man who comes in after the storm, right. They 41 00:02:38,360 --> 00:02:41,760 Speaker 1: even brought him into Enron after that debacle, and he 42 00:02:41,880 --> 00:02:45,799 Speaker 1: is now helping to push this company through bankruptcy while 43 00:02:45,840 --> 00:02:50,160 Speaker 1: also conducting an investigation. He can't believe the stuff he's seen, 44 00:02:50,240 --> 00:02:53,840 Speaker 1: and he doesn't even know what he hasn't seen. Speaking 45 00:02:53,960 --> 00:02:57,760 Speaker 1: to that conflict of interest introduced by Maxine Waters, listen 46 00:02:57,800 --> 00:03:01,680 Speaker 1: to John Ray, that's the major down here. Funds from 47 00:03:01,840 --> 00:03:07,160 Speaker 1: FTX dot com, which was the exchange for uh non 48 00:03:07,280 --> 00:03:12,520 Speaker 1: US citizens. Those funds were used at Alameda to make 49 00:03:12,560 --> 00:03:19,520 Speaker 1: investments and other disbursements. Among those questioning Mr Ray, Congressman 50 00:03:19,560 --> 00:03:22,720 Speaker 1: Andy Barr, Republican from Kentucky. Again, this is House Financial 51 00:03:22,760 --> 00:03:25,239 Speaker 1: Services Committee. We're going to speak, as I mentioned, with 52 00:03:25,280 --> 00:03:28,040 Speaker 1: a Republican and a Democrat on the panel, and we 53 00:03:28,080 --> 00:03:31,800 Speaker 1: start now with Congressman barst. Welcome back to Bloomberg. Great 54 00:03:31,840 --> 00:03:34,320 Speaker 1: to be with you. I appreciate that, Joe, you have 55 00:03:34,440 --> 00:03:36,400 Speaker 1: me on the program. Well, thank you for being here. 56 00:03:36,440 --> 00:03:40,560 Speaker 1: Pretty remarkable testimony today from John Ray. Did you learn 57 00:03:40,600 --> 00:03:44,120 Speaker 1: anything new? I think we did. We knew this was 58 00:03:44,160 --> 00:03:47,240 Speaker 1: a huge scandal. We knew that this was one of 59 00:03:47,280 --> 00:03:51,440 Speaker 1: the greatest frauds in American investment history. But what we 60 00:03:51,840 --> 00:03:55,440 Speaker 1: learned was that this was a total and complete failure 61 00:03:56,280 --> 00:04:02,240 Speaker 1: of all internal controls and governance. As uh the new CEO, Mr. 62 00:04:02,360 --> 00:04:08,320 Speaker 1: Ray pointed out, there was absolute concentration of control of 63 00:04:08,480 --> 00:04:11,560 Speaker 1: this business, in these various businesses, in the hands of 64 00:04:11,600 --> 00:04:14,680 Speaker 1: a very small group of in his in his words, 65 00:04:15,080 --> 00:04:21,120 Speaker 1: grossly inexperienced and unsophisticated individuals, who who failed to implement 66 00:04:21,240 --> 00:04:24,599 Speaker 1: virtually any of the systems or control is necessary for 67 00:04:24,720 --> 00:04:29,520 Speaker 1: a company that is entrusted with other people's assets. And um, 68 00:04:29,560 --> 00:04:32,840 Speaker 1: you know, the result is a million creditors. And if 69 00:04:32,839 --> 00:04:35,760 Speaker 1: you think of some of the other scandals in American 70 00:04:36,160 --> 00:04:40,120 Speaker 1: business history and Ron the Accounting scandal or the Bernie 71 00:04:40,200 --> 00:04:43,560 Speaker 1: made Off scandal, you know, you you had a number 72 00:04:43,560 --> 00:04:49,200 Speaker 1: of individuals hurt, but the size and scale of the 73 00:04:49,600 --> 00:04:54,279 Speaker 1: victims of this fraud are enormous and really overshadowed those 74 00:04:54,320 --> 00:04:57,080 Speaker 1: those other scandals. Well, you brought up this lack of 75 00:04:57,120 --> 00:04:59,880 Speaker 1: accounting off if I can even use that term in 76 00:05:00,000 --> 00:05:02,680 Speaker 1: your exchange with John Ray today, Let's listen, there's a 77 00:05:02,720 --> 00:05:07,440 Speaker 1: whole lot of financial statements that are either not audited 78 00:05:07,520 --> 00:05:10,000 Speaker 1: or not available Is that fair to say that's that's fair. 79 00:05:10,520 --> 00:05:12,880 Speaker 1: In your declaration, you stated that you did not believe 80 00:05:12,920 --> 00:05:16,240 Speaker 1: that those audited financial statements were reliable. Can you elaborate 81 00:05:16,279 --> 00:05:18,800 Speaker 1: on why you believe that to be the case. Well, 82 00:05:18,880 --> 00:05:22,200 Speaker 1: we've lost a billion dollars right of customer money, So 83 00:05:22,600 --> 00:05:25,799 Speaker 1: by definition, I don't trust a single piece of paper 84 00:05:25,800 --> 00:05:28,440 Speaker 1: in this organization. Are you surprised, Congressman by how little 85 00:05:28,520 --> 00:05:31,880 Speaker 1: John Ray knows after a couple of weeks of of investigating, 86 00:05:31,920 --> 00:05:34,720 Speaker 1: and how little he trusts still at this point, Well, no, 87 00:05:34,880 --> 00:05:38,839 Speaker 1: because this was an unprecedented case of mismanagement and fraud 88 00:05:38,839 --> 00:05:43,520 Speaker 1: where there was a gross lack of documentation UM. But 89 00:05:43,640 --> 00:05:45,960 Speaker 1: both in terms of, you know, a lack of financial 90 00:05:45,960 --> 00:05:49,479 Speaker 1: statements to begin with, and and then the financial statements 91 00:05:49,480 --> 00:05:53,840 Speaker 1: that are available and that were audited, he doesn't have 92 00:05:54,920 --> 00:05:59,000 Speaker 1: confidence that they are reliable um and. So I think 93 00:05:59,040 --> 00:06:04,119 Speaker 1: the major point that he was making was that there's 94 00:06:04,240 --> 00:06:08,400 Speaker 1: there's simply a lack of documentation, utter lack of record 95 00:06:08,480 --> 00:06:11,960 Speaker 1: keeping was what he said. And and no internal controls 96 00:06:12,680 --> 00:06:14,760 Speaker 1: um and and the fact that there was so much 97 00:06:14,839 --> 00:06:19,640 Speaker 1: commingling of assets UH and use of customer funds for 98 00:06:19,920 --> 00:06:25,360 Speaker 1: um risky trading and also um for you know, diversion 99 00:06:25,440 --> 00:06:29,400 Speaker 1: to things like the f t X Foundation, which was 100 00:06:29,440 --> 00:06:32,599 Speaker 1: not core to the business, the various affiliates of the 101 00:06:32,680 --> 00:06:36,280 Speaker 1: f t X Foundation. There again, this was a man 102 00:06:36,760 --> 00:06:42,200 Speaker 1: Sam Bankman Freed who basically stole money from unwinning investors 103 00:06:42,279 --> 00:06:46,960 Speaker 1: and diverted it into risky trading or other of political 104 00:06:47,000 --> 00:06:51,120 Speaker 1: or charitable causes that resulted in massive losses for those investors. 105 00:06:51,720 --> 00:06:54,679 Speaker 1: Will he ever testify to you? Thinking? Were you concerned 106 00:06:54,680 --> 00:06:56,800 Speaker 1: about the timing of this arrest that was expressed by 107 00:06:56,800 --> 00:07:00,200 Speaker 1: several members. Yeah, I am concerned about the timing. Mean, 108 00:07:00,560 --> 00:07:03,720 Speaker 1: I think there was bipartisan concerned about about the timing. 109 00:07:03,720 --> 00:07:06,920 Speaker 1: I know, and I spoke to Charwater. She wanted him 110 00:07:06,960 --> 00:07:09,880 Speaker 1: to testify. I don't know of any prosecutor or why 111 00:07:09,920 --> 00:07:14,520 Speaker 1: the Department of Justice would want to thwart the testimony 112 00:07:14,560 --> 00:07:18,280 Speaker 1: of an individual who's prepared to go under oath by 113 00:07:18,400 --> 00:07:21,680 Speaker 1: WebEx There was no real flight risk that I can understand. 114 00:07:21,720 --> 00:07:25,480 Speaker 1: They had, uh the cooperation of the Bahamian authorities. Why 115 00:07:25,480 --> 00:07:28,960 Speaker 1: not go ahead and allow this individuals who continue to 116 00:07:29,040 --> 00:07:33,960 Speaker 1: lie under oath and and build the case. But we 117 00:07:34,040 --> 00:07:37,600 Speaker 1: look forward to exercising the oversight along with the Judiciary 118 00:07:37,640 --> 00:07:41,280 Speaker 1: Committee to find out why the Department of Justice felt 119 00:07:41,280 --> 00:07:44,720 Speaker 1: the time was right just ahead of this hearing to 120 00:07:45,240 --> 00:07:50,720 Speaker 1: thwart that testimony, um and um and and pursue extradition. 121 00:07:50,840 --> 00:07:52,680 Speaker 1: At that time, they certainly let him a lot to 122 00:07:52,720 --> 00:07:56,640 Speaker 1: do a lot of interviews before this hearing. Well they did, 123 00:07:56,760 --> 00:08:01,040 Speaker 1: they did, indeed, and uh we just see again and 124 00:08:01,080 --> 00:08:07,000 Speaker 1: again misrepresentations and concealments and obfuscation of the truth from 125 00:08:07,360 --> 00:08:11,200 Speaker 1: Sam Bankman Freed and uh. As I pointed out in 126 00:08:11,280 --> 00:08:14,240 Speaker 1: my questioning of Mr Ray today, you know, it was 127 00:08:14,320 --> 00:08:15,880 Speaker 1: just a year ago that he was in front of 128 00:08:15,880 --> 00:08:20,640 Speaker 1: our committee testifying that the model, the f t X model, 129 00:08:21,040 --> 00:08:23,520 Speaker 1: was a risk reducing model and that there were bad 130 00:08:23,560 --> 00:08:26,560 Speaker 1: actors in the digital assets assets space, but f t 131 00:08:26,760 --> 00:08:29,320 Speaker 1: X was not one of them. Of course, this was wrong. 132 00:08:29,560 --> 00:08:32,000 Speaker 1: The other the other point that I made was, Uh, 133 00:08:32,040 --> 00:08:34,840 Speaker 1: this the E s G ratings out there, the governance 134 00:08:34,960 --> 00:08:40,280 Speaker 1: ratings were so wildly inaccurate when evaluating this firm for 135 00:08:40,480 --> 00:08:43,560 Speaker 1: investors in this crypto exchange for investors, and I think 136 00:08:43,600 --> 00:08:46,840 Speaker 1: that has to be investigated as well. Why is it 137 00:08:46,880 --> 00:08:51,000 Speaker 1: that we have an E s G ratings company that 138 00:08:51,080 --> 00:08:55,440 Speaker 1: gives f t X a higher governance rating than X 139 00:08:55,520 --> 00:08:57,840 Speaker 1: on mobile when f t X didn't even have an 140 00:08:57,880 --> 00:09:02,520 Speaker 1: independent board of directors. I'm trying to figure out, Congressman, 141 00:09:02,600 --> 00:09:06,240 Speaker 1: how bipartisan this effort is. How much you see eye 142 00:09:06,240 --> 00:09:11,280 Speaker 1: to eye with your Democratic colleagues, knowing that SBF was 143 00:09:11,480 --> 00:09:17,560 Speaker 1: a prolific Democratic fundraiser and donor, and and frequently Democrats 144 00:09:17,600 --> 00:09:21,000 Speaker 1: and Republicans just have a different view of crypto. Is 145 00:09:21,000 --> 00:09:24,080 Speaker 1: there sunlight between the two parties on this. I think 146 00:09:24,080 --> 00:09:27,080 Speaker 1: there's some sunlight, But I also think there's opportunity for 147 00:09:27,160 --> 00:09:32,439 Speaker 1: collaboration and bipartisanship. Ranking Member mckenry and Sherwaters actually collaborated 148 00:09:32,520 --> 00:09:36,080 Speaker 1: quite closely on this hearing. This is the first of 149 00:09:36,120 --> 00:09:38,240 Speaker 1: many hearings, and we really, and I think, in a 150 00:09:38,240 --> 00:09:41,960 Speaker 1: bipartisan way, worked to establish the basic facts here. Of course, 151 00:09:42,000 --> 00:09:45,199 Speaker 1: there was editorializing. After all, its Congress, and you're gonna 152 00:09:45,240 --> 00:09:49,400 Speaker 1: have some editorializing and some difference of opinions. And to 153 00:09:49,480 --> 00:09:55,240 Speaker 1: your point about about donations to Democrats and the changed 154 00:09:55,520 --> 00:10:01,160 Speaker 1: schedule with the regulators with a Chairman Gainstler, we want 155 00:10:01,160 --> 00:10:02,640 Speaker 1: to we want to get to the bottom of that 156 00:10:03,120 --> 00:10:05,640 Speaker 1: um to what extent was Sam Bankman Freed and his 157 00:10:05,840 --> 00:10:08,760 Speaker 1: associates and f t X trying to buy influence both 158 00:10:09,200 --> 00:10:13,120 Speaker 1: in Congress um to get favorable regulatory treatment and also 159 00:10:13,520 --> 00:10:17,319 Speaker 1: from the Securities and Exchange Commission. And I think a 160 00:10:17,400 --> 00:10:20,800 Speaker 1: chair Gainstler has a lot to answer to here. Um. 161 00:10:20,920 --> 00:10:23,439 Speaker 1: He will say that he was sounding the alarm on 162 00:10:23,559 --> 00:10:26,840 Speaker 1: the lack of registration by some of these crypto firms, 163 00:10:26,960 --> 00:10:29,959 Speaker 1: But the truth is existing laws were in place that 164 00:10:30,120 --> 00:10:33,200 Speaker 1: enabled him and authorized him to crack down on some 165 00:10:33,320 --> 00:10:35,560 Speaker 1: of this behavior, and he failed to act. And I 166 00:10:35,600 --> 00:10:38,040 Speaker 1: think he had information available to him. So I think 167 00:10:38,280 --> 00:10:41,840 Speaker 1: we want to definitely hold the Securities and Exchange Commission 168 00:10:41,880 --> 00:10:45,520 Speaker 1: accountable and future hearings. And one final point, when we 169 00:10:45,600 --> 00:10:48,359 Speaker 1: look at the connections between the f t X Foundation 170 00:10:48,520 --> 00:10:53,839 Speaker 1: and the Future Fund and the f t X Climate Organization, Um, 171 00:10:53,920 --> 00:10:57,000 Speaker 1: what we're finding is that Sam Bankman, Freed and f 172 00:10:57,080 --> 00:11:01,079 Speaker 1: t X is the face of environmental social governance investing 173 00:11:01,600 --> 00:11:03,360 Speaker 1: and that this is this is as much of a 174 00:11:03,400 --> 00:11:07,360 Speaker 1: fraud as anything else. When you have a company that's 175 00:11:07,400 --> 00:11:12,520 Speaker 1: trying to attract investors with you know, trendy political causes 176 00:11:12,960 --> 00:11:16,960 Speaker 1: and not focusing on investor protection and investor returns, you 177 00:11:17,080 --> 00:11:19,360 Speaker 1: end up with a scandal like this, Well, there's a 178 00:11:19,360 --> 00:11:22,160 Speaker 1: lot there to talk about. Congressman Andy Barr, thank you 179 00:11:22,200 --> 00:11:24,800 Speaker 1: for the insights following that hearing today and for being 180 00:11:24,800 --> 00:11:27,360 Speaker 1: with us again on Bloomberg. Great to be with you. 181 00:11:28,080 --> 00:11:32,960 Speaker 1: So a fourteen page indictment. This goes back to the 182 00:11:32,960 --> 00:11:37,679 Speaker 1: indictment says bankman Free devised a scheme to defraud f 183 00:11:37,800 --> 00:11:41,040 Speaker 1: t X customers and investors, diverting their money to pay 184 00:11:41,040 --> 00:11:46,800 Speaker 1: expenses and debts at the hedge funds Elevator Research. So well, 185 00:11:46,800 --> 00:11:51,520 Speaker 1: while we're talking digital currencies and coins here, this is 186 00:11:51,640 --> 00:11:57,520 Speaker 1: good old fashion fraud. If it pans out. As the 187 00:11:57,559 --> 00:12:02,040 Speaker 1: Congressman was suggesting, let's assemble the panel for their first 188 00:12:02,080 --> 00:12:04,880 Speaker 1: swing at this. Rick Davis and Jennie Chanzano are here 189 00:12:05,280 --> 00:12:09,040 Speaker 1: happy to report Bloomberg Politics contributors. Rick, is this for 190 00:12:09,160 --> 00:12:13,440 Speaker 1: Washington or or for law enforcement to fix? Oh? I 191 00:12:13,480 --> 00:12:15,920 Speaker 1: think it's all of the above, right. I mean, if 192 00:12:16,000 --> 00:12:19,000 Speaker 1: you look at what's been said both today and even 193 00:12:19,040 --> 00:12:22,800 Speaker 1: coming into today, Um, there is there is a lot 194 00:12:22,880 --> 00:12:25,280 Speaker 1: of work to be done around the regulatory framework, and 195 00:12:25,360 --> 00:12:29,320 Speaker 1: that's both the administration uh and on Congress's heads UH. 196 00:12:29,360 --> 00:12:32,640 Speaker 1: And and in addition to that, it's just UH a 197 00:12:32,720 --> 00:12:34,880 Speaker 1: lot to be done around law enforcement on this in 198 00:12:34,920 --> 00:12:37,920 Speaker 1: other words, jurisdiction and and and and the kinds of 199 00:12:37,960 --> 00:12:40,760 Speaker 1: things that uh, investors look at and say, how safe 200 00:12:40,840 --> 00:12:43,000 Speaker 1: is it to me to put my money to work here? 201 00:12:43,120 --> 00:12:45,120 Speaker 1: And I think there was this false sense of security 202 00:12:45,120 --> 00:12:48,880 Speaker 1: around this one. And uh and I think in this case, 203 00:12:49,200 --> 00:12:52,520 Speaker 1: hopefully it does not become a partisan melee. I think 204 00:12:52,520 --> 00:12:55,640 Speaker 1: it's interesting the congressman started working out the E s 205 00:12:55,679 --> 00:12:58,840 Speaker 1: G attack behinds on this and uh, you know, look, 206 00:12:58,880 --> 00:13:01,480 Speaker 1: I mean everyone's gonna make good use of it. But 207 00:13:01,720 --> 00:13:05,239 Speaker 1: as long as that doesn't seep into the regulatory actions, 208 00:13:05,280 --> 00:13:08,600 Speaker 1: I think, you know, uh fair enough in in in 209 00:13:08,600 --> 00:13:10,920 Speaker 1: in the government work. Congress from Barb did bring up 210 00:13:10,920 --> 00:13:14,199 Speaker 1: the E s G component during his questioning of the 211 00:13:14,200 --> 00:13:17,240 Speaker 1: CEO genie. I mean you heard him articulated probably more 212 00:13:17,280 --> 00:13:20,319 Speaker 1: efficiently here in this interview as he had a chance 213 00:13:20,400 --> 00:13:23,120 Speaker 1: to to kind of talk through this, that that that 214 00:13:23,160 --> 00:13:25,960 Speaker 1: it basically you know, propped up this company to be 215 00:13:26,040 --> 00:13:28,280 Speaker 1: something that it was not. But as E s G 216 00:13:28,440 --> 00:13:30,920 Speaker 1: the problem, you know, I think it's one of the problems. 217 00:13:30,960 --> 00:13:32,680 Speaker 1: I don't think it's the only problem. And you know, 218 00:13:32,760 --> 00:13:35,160 Speaker 1: I looked at this from the perspective of Congress. You know, 219 00:13:35,160 --> 00:13:37,880 Speaker 1: you had John Tester out over the weekend saying, look, folks, 220 00:13:37,880 --> 00:13:40,640 Speaker 1: if we regulate this, we've legitimize it. So one question 221 00:13:40,760 --> 00:13:42,839 Speaker 1: is going to be do you regulate it? Most people 222 00:13:42,840 --> 00:13:44,440 Speaker 1: say the horses out of the barn, You've got to 223 00:13:44,480 --> 00:13:47,840 Speaker 1: regulate it. But then, you know, a thousand questions emerged 224 00:13:47,840 --> 00:13:51,200 Speaker 1: from that. Is Congress equipped to regulate it? They have 225 00:13:51,320 --> 00:13:55,559 Speaker 1: shown zero ability to regulate in high tech areas and 226 00:13:55,600 --> 00:13:58,720 Speaker 1: this is the you know, the absolute highest tech area. 227 00:13:59,000 --> 00:14:01,640 Speaker 1: That's number one number to who do they turn to 228 00:14:01,640 --> 00:14:03,760 Speaker 1: to help them regulate it? Let's see, they turned to 229 00:14:03,800 --> 00:14:06,440 Speaker 1: the likes of Sam Bateman Freed. He was spending more 230 00:14:06,480 --> 00:14:09,600 Speaker 1: times in Washington, and with not Sam BigMan Fried, who 231 00:14:09,679 --> 00:14:11,560 Speaker 1: is going to be the next Sam Bankman Freed? We 232 00:14:11,640 --> 00:14:15,000 Speaker 1: don't know about publicly, but who's donating millions of dollars 233 00:14:15,040 --> 00:14:18,400 Speaker 1: behind the scenes. So so many questions about that, And 234 00:14:18,559 --> 00:14:21,360 Speaker 1: you know that's why I think they cannot escape the 235 00:14:21,400 --> 00:14:25,000 Speaker 1: donations that he made. And the question of timing of 236 00:14:25,000 --> 00:14:27,840 Speaker 1: this arrest is critical, and I think Congress on both 237 00:14:27,880 --> 00:14:30,560 Speaker 1: sides was a thousand percent right to press on that 238 00:14:30,840 --> 00:14:34,440 Speaker 1: why do this last night? After all? Two hours before 239 00:14:34,480 --> 00:14:36,400 Speaker 1: he was arrested, Sam Bagman Freed said he wasn't going 240 00:14:36,440 --> 00:14:38,920 Speaker 1: to be arrested. He's then arrested, and we're robbed of 241 00:14:39,000 --> 00:14:41,400 Speaker 1: hearing him publicly as we should have been able to 242 00:14:41,520 --> 00:14:44,760 Speaker 1: outside the scope of his bizarre media circus that he's been. 243 00:14:44,840 --> 00:14:47,000 Speaker 1: You know, what do you make of that? Did he 244 00:14:47,000 --> 00:14:49,480 Speaker 1: do himself? I mean, did did did law enforcement do 245 00:14:49,840 --> 00:14:53,560 Speaker 1: SPF a favor by arresting him last night? Well? I 246 00:14:53,800 --> 00:14:55,800 Speaker 1: think it's a kind of a silly argument to say, oh, well, 247 00:14:55,880 --> 00:14:58,080 Speaker 1: we should have heard him tell us more lies. I mean, 248 00:14:58,160 --> 00:15:00,760 Speaker 1: I just you know, I well, I didn't we care 249 00:15:00,760 --> 00:15:04,240 Speaker 1: about that. You know, he's been lying all along, and 250 00:15:04,280 --> 00:15:07,480 Speaker 1: we wanted one more hour of you know, SPFS lying. 251 00:15:07,800 --> 00:15:09,520 Speaker 1: I don't get it. I mean, the guy, you know, 252 00:15:09,720 --> 00:15:12,560 Speaker 1: frankly sounds like he deserves to be in jail, and 253 00:15:12,600 --> 00:15:14,640 Speaker 1: I think he's right in the right place. It does 254 00:15:14,680 --> 00:15:17,840 Speaker 1: not serve a public interest to have a man either 255 00:15:17,920 --> 00:15:21,120 Speaker 1: incriminated himself in front of Congress more than he already has, 256 00:15:21,320 --> 00:15:24,480 Speaker 1: or lie to the American people, uh, with the far 257 00:15:24,600 --> 00:15:27,760 Speaker 1: chance that maybe someone believes him. And so I think 258 00:15:27,800 --> 00:15:29,920 Speaker 1: if law enforcement had a case to be made against him, 259 00:15:29,920 --> 00:15:32,520 Speaker 1: and obviously the indictments spell it out. Then he deserves 260 00:15:32,560 --> 00:15:34,560 Speaker 1: to be in jail, and we should we should quit 261 00:15:34,600 --> 00:15:36,760 Speaker 1: carping about who was able to get the most lies 262 00:15:36,800 --> 00:15:40,280 Speaker 1: out of him before he was incarcerating. Well, you'll pick 263 00:15:40,320 --> 00:15:42,680 Speaker 1: your podcast because you know, as I alluded, he certainly 264 00:15:42,720 --> 00:15:45,480 Speaker 1: did his share of of interviews. Genie, we only have 265 00:15:45,520 --> 00:15:48,240 Speaker 1: thirty seconds. We're gonna have a Democrat on next, Congressman 266 00:15:48,240 --> 00:15:51,840 Speaker 1: Brad Sherman, who is not a crypto guy. How much 267 00:15:52,000 --> 00:15:56,720 Speaker 1: are the donations gonna hamper Democrats from having credibility on them? 268 00:15:57,640 --> 00:15:59,760 Speaker 1: It's it's going to hamper them. And he asked, you know, 269 00:16:00,160 --> 00:16:02,200 Speaker 1: made one of the most I think important statements of 270 00:16:02,240 --> 00:16:04,840 Speaker 1: the whole session. And I'm going to disagree with with 271 00:16:04,920 --> 00:16:07,320 Speaker 1: my friend Rick on that. I think you should testify. 272 00:16:07,520 --> 00:16:09,200 Speaker 1: I'll tell you about that later. I know you gotta 273 00:16:09,240 --> 00:16:11,600 Speaker 1: go right. No, I want to hear more from Genie 274 00:16:11,600 --> 00:16:14,000 Speaker 1: and Rick on this. We're gonna hear as well from 275 00:16:14,040 --> 00:16:17,800 Speaker 1: some of the other lawmakers who had some great singers 276 00:16:17,880 --> 00:16:23,840 Speaker 1: in that hearing. Today. This is Bloomberg. The committee will 277 00:16:23,840 --> 00:16:28,880 Speaker 1: come to order. I'm so deeply troubled to learn how 278 00:16:28,920 --> 00:16:32,920 Speaker 1: common it was for Banque and Freed and FTX employees 279 00:16:33,360 --> 00:16:36,520 Speaker 1: distilled from the cook a jar of customer bones to 280 00:16:36,640 --> 00:16:43,720 Speaker 1: finance their lattish lifestyles. And literally, you know, there's no 281 00:16:43,840 --> 00:16:47,640 Speaker 1: record keeping whatsoever. It's the absence of record keeping. I 282 00:16:47,640 --> 00:16:52,560 Speaker 1: don't get the point of um cryptocurrency to begin with um, 283 00:16:52,560 --> 00:16:55,440 Speaker 1: other than you know, if you're a terrorist or someone 284 00:16:55,440 --> 00:16:57,480 Speaker 1: who wants to hide money. My fear is that we 285 00:16:57,480 --> 00:17:01,960 Speaker 1: will view Sam Bankman freed as Joe one big snake 286 00:17:02,400 --> 00:17:07,960 Speaker 1: in a crypto garden of Eden. The fact is crypto 287 00:17:08,080 --> 00:17:11,199 Speaker 1: is a garden of snakes. So let's say I have 288 00:17:11,400 --> 00:17:13,480 Speaker 1: DOGI coiner, I don't even know how you say it, 289 00:17:13,840 --> 00:17:17,639 Speaker 1: but I have ten dogi coin, which year ago is 290 00:17:17,680 --> 00:17:21,919 Speaker 1: a doggy coin or doggy doge doge coin? All right, 291 00:17:21,960 --> 00:17:25,400 Speaker 1: don't I have ten doge coins? All right? They used 292 00:17:25,440 --> 00:17:29,760 Speaker 1: quick books, multi billion dollar company using quick books, quick books, 293 00:17:30,080 --> 00:17:36,760 Speaker 1: quick books. What about the dogi coin? It's the dog coin, 294 00:17:37,080 --> 00:17:40,639 Speaker 1: whatever the coin. The fact the matter is s b 295 00:17:41,000 --> 00:17:44,520 Speaker 1: F could get a hundred and fifteen years. That's what 296 00:17:44,560 --> 00:17:49,040 Speaker 1: we're looking at here, huh not, according to US prosecutors. 297 00:17:49,920 --> 00:17:52,160 Speaker 1: And then I started asking myself, how about John Ray? 298 00:17:52,240 --> 00:17:55,159 Speaker 1: This has got to be the most thankless job you 299 00:17:55,200 --> 00:17:58,000 Speaker 1: could find what's he getting paid. It's in the court 300 00:17:58,080 --> 00:18:02,440 Speaker 1: filings thirty hundred dollars an hour. He's building one thousand, 301 00:18:02,520 --> 00:18:08,840 Speaker 1: three hundred dollars an hour for his work. So I 302 00:18:08,880 --> 00:18:10,480 Speaker 1: don't know. If this takes a minute, he could do 303 00:18:10,520 --> 00:18:13,000 Speaker 1: pretty well then. I guess now we're expecting to talk 304 00:18:13,040 --> 00:18:14,680 Speaker 1: to Brad Sherman in a minute. We wanted to bring 305 00:18:14,680 --> 00:18:17,680 Speaker 1: you a Democrat after the Republican. We spoke with Andy 306 00:18:17,720 --> 00:18:20,000 Speaker 1: Barr at the top of the hour. They are both 307 00:18:20,040 --> 00:18:22,840 Speaker 1: members of the House Financial Services Committee. I know Congressman 308 00:18:22,840 --> 00:18:25,760 Speaker 1: Sherman is running a little late here, and we'll talk 309 00:18:25,760 --> 00:18:27,560 Speaker 1: to him as soon as he gets a moment. These 310 00:18:27,560 --> 00:18:30,679 Speaker 1: guys are pretty busy today, as you might suspect. He 311 00:18:30,720 --> 00:18:32,760 Speaker 1: did leave a mark on that hearing though, and you 312 00:18:32,920 --> 00:18:37,200 Speaker 1: just heard a brief part of it. The Garden of Snakes, 313 00:18:37,240 --> 00:18:39,639 Speaker 1: I mean, there was poetry in the air in the 314 00:18:39,640 --> 00:18:42,560 Speaker 1: hearing room. Here's Brad Sherman again. My fear is that 315 00:18:42,600 --> 00:18:46,719 Speaker 1: we will view Sam Bankman freed as just one big 316 00:18:46,760 --> 00:18:51,719 Speaker 1: snake in a crypto garden of eating. The fact is 317 00:18:53,160 --> 00:18:56,800 Speaker 1: crypto is a garden of snakes. I'm a big fan 318 00:18:56,880 --> 00:19:00,800 Speaker 1: of the crypt though, and he did up, by the way, 319 00:19:00,880 --> 00:19:05,040 Speaker 1: the lack of firewall and the donations all in one breath. 320 00:19:05,080 --> 00:19:10,000 Speaker 1: As Congressman Sherman did the Q and A with again 321 00:19:10,119 --> 00:19:13,200 Speaker 1: John Ray. He is the new head of ft X. Listen, 322 00:19:13,520 --> 00:19:16,040 Speaker 1: I hope that what you will turn over is a 323 00:19:16,080 --> 00:19:22,040 Speaker 1: list of the major bonuses and or loans. It's reported 324 00:19:22,040 --> 00:19:24,600 Speaker 1: that d Ryan Slomy got a fifty five million dollar loan, 325 00:19:25,240 --> 00:19:28,800 Speaker 1: So that a law enforcement can piece together when those 326 00:19:29,080 --> 00:19:32,639 Speaker 1: loans and bonuses were made and whether they immediately preceded 327 00:19:32,720 --> 00:19:36,760 Speaker 1: uh illegal campaign disguise campaign contributions. Can we count you 328 00:19:36,760 --> 00:19:41,520 Speaker 1: to do that? Yes, I can confirm them disguise campaign contributions, 329 00:19:42,440 --> 00:19:44,560 Speaker 1: and so you wonder, Uh, we have some things that 330 00:19:44,560 --> 00:19:46,800 Speaker 1: we want to ask Congressman Sherman, just like we did 331 00:19:46,880 --> 00:19:50,000 Speaker 1: Congressman bar And we have the panel standing by as well. 332 00:19:50,080 --> 00:19:54,680 Speaker 1: Genie Schanzano and Rick Davis are with us. Uh. That's uh, 333 00:19:54,720 --> 00:19:58,280 Speaker 1: it's being telegraphed in advance, almost Genie, from both sides, 334 00:19:58,320 --> 00:20:02,000 Speaker 1: the concerns that both sides have in the questions they're asking. Yeah, yeah, 335 00:20:02,040 --> 00:20:04,320 Speaker 1: that's right. And I thought, in addition to those clips 336 00:20:04,359 --> 00:20:07,720 Speaker 1: you just played, I thought Representative Sherman made a really 337 00:20:07,760 --> 00:20:12,040 Speaker 1: important additional statement in which he warned his his colleagues 338 00:20:12,080 --> 00:20:14,960 Speaker 1: in Congress. You know, he said, don't trash Sam Bankman 339 00:20:15,040 --> 00:20:18,480 Speaker 1: Freed and then pass his bill, because again, this is 340 00:20:18,520 --> 00:20:23,120 Speaker 1: the guy who was lobbying Congress, pushing for this legislation, 341 00:20:23,160 --> 00:20:26,520 Speaker 1: which many people described as you know, crypto lite legislation. 342 00:20:26,880 --> 00:20:30,080 Speaker 1: And this is the problem we have with Congress is 343 00:20:30,119 --> 00:20:33,240 Speaker 1: they turned to insiders. There is a revolving door when 344 00:20:33,240 --> 00:20:36,000 Speaker 1: it comes to these regulations, and this is who they 345 00:20:36,040 --> 00:20:39,040 Speaker 1: turn to because they simply don't have the expertise to 346 00:20:39,119 --> 00:20:42,800 Speaker 1: do it themselves. I'm not suggesting they should, but this 347 00:20:42,880 --> 00:20:45,560 Speaker 1: is why I would have wanted to hear from Sam 348 00:20:45,560 --> 00:20:48,240 Speaker 1: Bankman Freed today if possible. I don't need any more 349 00:20:48,240 --> 00:20:50,720 Speaker 1: of him in interviews. I've heard enough. What I want 350 00:20:50,760 --> 00:20:54,000 Speaker 1: as I want our representatives in Congress to face him, 351 00:20:54,040 --> 00:20:57,600 Speaker 1: and I want to see how these two entities Congress 352 00:20:57,600 --> 00:21:00,280 Speaker 1: and same Bankman Freed, who have been you know, he's 353 00:21:00,280 --> 00:21:02,639 Speaker 1: been funding them, he's been donating a lot of money, 354 00:21:02,880 --> 00:21:05,720 Speaker 1: how do they interact. And I think as the American public, 355 00:21:05,920 --> 00:21:08,560 Speaker 1: we are owed that to see that interaction between some 356 00:21:08,600 --> 00:21:10,920 Speaker 1: people who took money from him and how they deal 357 00:21:11,000 --> 00:21:14,040 Speaker 1: with him. Now, well, what should be done with these donations? Rick? 358 00:21:14,119 --> 00:21:16,400 Speaker 1: I mean, is it enough to return them or what? 359 00:21:16,400 --> 00:21:19,000 Speaker 1: What do they do? Well, at a minimum, they need 360 00:21:19,040 --> 00:21:22,760 Speaker 1: to be returned either to the source that they got 361 00:21:22,800 --> 00:21:29,760 Speaker 1: them or a a charitable contribution to a worthy group. Obviously, Uh, 362 00:21:29,800 --> 00:21:33,040 Speaker 1: if you don't know the actual genesis of the contribution, 363 00:21:33,119 --> 00:21:36,159 Speaker 1: and by the way, pox on your house for not knowing, Uh, 364 00:21:36,200 --> 00:21:38,280 Speaker 1: then certainly don't give it back to the criminals who 365 00:21:38,359 --> 00:21:40,040 Speaker 1: gave it to you. You know, give it to a 366 00:21:40,160 --> 00:21:43,520 Speaker 1: veterans group or something you think is a appropriate charity. 367 00:21:43,600 --> 00:21:46,720 Speaker 1: But anybody who's holding onto this money by the year end, 368 00:21:47,359 --> 00:21:50,679 Speaker 1: um is a scandal. Uh. You know you if you 369 00:21:50,760 --> 00:21:53,239 Speaker 1: got it, and you've got to get rid of it 370 00:21:53,280 --> 00:21:56,479 Speaker 1: because it's not an honorable way to to raise funds 371 00:21:56,560 --> 00:22:00,320 Speaker 1: in the public trust. And I would say to um, uh, 372 00:22:00,359 --> 00:22:03,879 Speaker 1: you know, where's the investigation by the Federal Election Commission? Right? 373 00:22:03,920 --> 00:22:05,959 Speaker 1: The first thing these guys ought to do is immediately 374 00:22:06,040 --> 00:22:10,840 Speaker 1: launched investigation into this because this is a funding scandal. Right. 375 00:22:10,960 --> 00:22:14,520 Speaker 1: And and if you're ever going to have an opportunity 376 00:22:14,560 --> 00:22:18,840 Speaker 1: to reform the process, which is completely bankrupt, Uh, this 377 00:22:18,920 --> 00:22:22,080 Speaker 1: is the opportunity to say, let's see how this happened, 378 00:22:22,119 --> 00:22:24,840 Speaker 1: why it happened, and and how do we tighten our 379 00:22:24,880 --> 00:22:27,320 Speaker 1: seals to make sure that things like this don't happen again, 380 00:22:27,359 --> 00:22:30,880 Speaker 1: because we can't have tens of billions of dollars every 381 00:22:30,880 --> 00:22:34,200 Speaker 1: election cycle floating around and not know where it came from. 382 00:22:34,240 --> 00:22:36,840 Speaker 1: It just really reinforces how many layers there are here. Right, 383 00:22:36,880 --> 00:22:39,760 Speaker 1: it's a funding scandal, uh. To your point, Rick, it 384 00:22:39,880 --> 00:22:44,600 Speaker 1: is a corporate scandal. It's an investing scandal. Uh. And 385 00:22:44,600 --> 00:22:47,960 Speaker 1: and they each threatened to snuff each other out in 386 00:22:48,000 --> 00:22:50,840 Speaker 1: the way people see this, Genie, You wonder how deep 387 00:22:50,880 --> 00:22:53,280 Speaker 1: people are reading into this outside of the investment community, 388 00:22:53,280 --> 00:22:55,880 Speaker 1: because it could be a huge political story. It could 389 00:22:55,920 --> 00:22:58,000 Speaker 1: be a huge political story. And let'sen I forget it. Also, 390 00:22:58,160 --> 00:23:00,040 Speaker 1: you know, is why didn't the scope We had a 391 00:23:00,040 --> 00:23:04,000 Speaker 1: lot of celebrities over the Super Bowl and beyond endorsing 392 00:23:04,240 --> 00:23:07,720 Speaker 1: this industry, making it palatable for people like quite frankly, 393 00:23:07,840 --> 00:23:10,920 Speaker 1: my own kids to invest in something that they don't 394 00:23:11,000 --> 00:23:14,840 Speaker 1: know anything about. And so you know, the scope is 395 00:23:14,880 --> 00:23:18,040 Speaker 1: wide to Rick's point, thirty seven million dollars to Democrats 396 00:23:18,080 --> 00:23:21,520 Speaker 1: to the GOP that we know about. In addition, we're 397 00:23:21,560 --> 00:23:24,800 Speaker 1: hearing some dark money went out from him to Republicans. 398 00:23:24,960 --> 00:23:28,520 Speaker 1: And it's not just about Sam bankmun Freed. Congress needs no, 399 00:23:28,640 --> 00:23:30,720 Speaker 1: we need to know how far this extends into the 400 00:23:30,800 --> 00:23:34,440 Speaker 1: industry itself, because it is again a wild, wild rest 401 00:23:34,520 --> 00:23:37,640 Speaker 1: of the financial industry. Well, so what's next year, ric 402 00:23:37,680 --> 00:23:40,280 Speaker 1: or we're gonna be uh sending subpoenas to Tom Brady 403 00:23:40,359 --> 00:23:44,120 Speaker 1: or what? Well, look, I think of the pot right, Uh, 404 00:23:44,160 --> 00:23:47,520 Speaker 1: if the pot's right. I think these guys like Jennie's mentioned, 405 00:23:47,520 --> 00:23:50,480 Speaker 1: who are out there endorsing this without having the diligence 406 00:23:50,680 --> 00:23:53,359 Speaker 1: of knowing whether or not they are working with a 407 00:23:53,400 --> 00:23:56,879 Speaker 1: bona fide legal entity that is within the laws and 408 00:23:56,960 --> 00:24:00,840 Speaker 1: regulations of our country. Uh, they're at risk and and 409 00:24:01,000 --> 00:24:03,560 Speaker 1: so certainly it's going to take some shine off of 410 00:24:03,600 --> 00:24:07,160 Speaker 1: their stars on Hollywood. But at the end of the day, 411 00:24:07,880 --> 00:24:10,720 Speaker 1: I think everybody today is subject to some form of 412 00:24:10,800 --> 00:24:13,879 Speaker 1: investigation who were doing business with f t X and 413 00:24:13,960 --> 00:24:17,280 Speaker 1: for whatever reason, might have helped add legitimacy to what 414 00:24:17,440 --> 00:24:20,879 Speaker 1: was otherwise a massive criminal enterprise. Incredible stuff here with 415 00:24:20,960 --> 00:24:24,680 Speaker 1: Rick and Genie and now Congressman Brad Sherman, as promised, 416 00:24:24,720 --> 00:24:29,000 Speaker 1: we had an interesting dive with a Republican from the committee, 417 00:24:29,040 --> 00:24:32,200 Speaker 1: of course in Andy Barr and Brad Sherman, the Democrat 418 00:24:32,240 --> 00:24:34,439 Speaker 1: from California is with us now also a member of 419 00:24:34,440 --> 00:24:37,640 Speaker 1: the House Financial Services Committee. Congressman, thank you for being 420 00:24:37,640 --> 00:24:40,639 Speaker 1: here on a busy day. We were we were regaling 421 00:24:40,640 --> 00:24:44,959 Speaker 1: our listeners with the Garden of Snakes before you joined us. 422 00:24:45,359 --> 00:24:48,720 Speaker 1: Your remarks were really something in front of the committee today. 423 00:24:48,760 --> 00:24:52,960 Speaker 1: What do you think of John Ray? I think he's 424 00:24:53,000 --> 00:24:56,679 Speaker 1: doing a good job, but the the barn door was open, 425 00:24:56,880 --> 00:25:01,119 Speaker 1: the horses left, and the we'll see what he what 426 00:25:01,280 --> 00:25:03,840 Speaker 1: he can do. Do you have an allergy to crypto? 427 00:25:04,400 --> 00:25:06,639 Speaker 1: Just in general? And there's no wrong answers here. This 428 00:25:06,680 --> 00:25:08,879 Speaker 1: isn't like a crypto show on Bloomberg or anything. But 429 00:25:08,920 --> 00:25:12,720 Speaker 1: I can see you're not a fan. No the I've 430 00:25:12,720 --> 00:25:16,920 Speaker 1: been trying for five years to either banned American investment 431 00:25:16,920 --> 00:25:22,480 Speaker 1: in crypto or to force the entire crypto ecosystem to 432 00:25:22,600 --> 00:25:26,040 Speaker 1: follow them know your Customer rules. They won't do that 433 00:25:26,920 --> 00:25:31,320 Speaker 1: because the whole purpose of crypto, the business plan, is 434 00:25:31,359 --> 00:25:37,159 Speaker 1: to be a secret currency, hence the term cryptocurrency, and 435 00:25:37,359 --> 00:25:41,040 Speaker 1: to compete with the US dollar by having one advantage 436 00:25:41,040 --> 00:25:43,840 Speaker 1: over the US dollar, and that is that it's a 437 00:25:43,960 --> 00:25:48,720 Speaker 1: currency that can be better used by those who engage 438 00:25:48,720 --> 00:25:54,760 Speaker 1: in sanctions, evasion, tax evasion. UM based in bankman Freed 439 00:25:54,760 --> 00:25:59,040 Speaker 1: will tell you about bankruptcy, court evasion, drug dealing, etcetera. 440 00:25:59,119 --> 00:26:02,879 Speaker 1: There's a huge market for hidden money. Hundred dollar bills 441 00:26:03,000 --> 00:26:10,840 Speaker 1: are very inconvenient and um. Ultimately, crypto aspires to be 442 00:26:10,880 --> 00:26:13,760 Speaker 1: a currency. Right now, it's kind of a pet rock, 443 00:26:14,600 --> 00:26:17,160 Speaker 1: but it aspires to be a currency. When you get 444 00:26:17,160 --> 00:26:19,960 Speaker 1: all kinds of tweets, you must get great tweets. So look, 445 00:26:20,080 --> 00:26:22,840 Speaker 1: with all of that said, is this the moment here? 446 00:26:23,200 --> 00:26:25,399 Speaker 1: Is f t X a crypto story that is this 447 00:26:25,440 --> 00:26:28,639 Speaker 1: sort of the the hook that leads to the regulation 448 00:26:28,800 --> 00:26:32,399 Speaker 1: or is this just an old fashioned offshore robbery story. 449 00:26:34,200 --> 00:26:37,560 Speaker 1: UM My fear is that it will be regarded as 450 00:26:37,600 --> 00:26:42,840 Speaker 1: the latter. And the fact is, though, when you're dealing 451 00:26:42,880 --> 00:26:46,560 Speaker 1: with an enterprise the whole purpose of which is to 452 00:26:46,640 --> 00:26:50,919 Speaker 1: come up with a currency system that allows you to 453 00:26:51,000 --> 00:26:55,760 Speaker 1: evade American financial law, then you're going to be dealing 454 00:26:55,800 --> 00:27:00,000 Speaker 1: with people who are going to evade American financial law. Uh. 455 00:27:00,119 --> 00:27:03,480 Speaker 1: If you go into the business of making burglary tools, 456 00:27:03,760 --> 00:27:08,119 Speaker 1: you shouldn't be surprised if your factory is burglarized by burglars. 457 00:27:10,960 --> 00:27:13,760 Speaker 1: Talk to us about the donation's Congressman, are you concerned 458 00:27:13,760 --> 00:27:17,640 Speaker 1: the Democrats who took money from Sam Bankman freed Uh 459 00:27:18,119 --> 00:27:21,760 Speaker 1: could have could bring credibility issues to this story. Are 460 00:27:21,800 --> 00:27:26,960 Speaker 1: the two parties prepared to tackle this together? Well? Uh? 461 00:27:27,040 --> 00:27:30,600 Speaker 1: The fact is Sam Bankman freed Uh did interview last 462 00:27:30,640 --> 00:27:32,879 Speaker 1: month in which he said he gave as much money 463 00:27:32,920 --> 00:27:37,360 Speaker 1: to Republicans as Democrats, but the Republican money he gave 464 00:27:37,480 --> 00:27:41,080 Speaker 1: to dark money organizations. And he explained why, and it 465 00:27:41,160 --> 00:27:44,399 Speaker 1: made perfect sense. He says, the press is liberal, probably is, 466 00:27:45,160 --> 00:27:49,080 Speaker 1: and they would have beaten him up for giving money 467 00:27:49,160 --> 00:27:52,480 Speaker 1: two Republicans. So he gives the Republican money under the table, 468 00:27:52,520 --> 00:27:57,200 Speaker 1: gives the Democratic money over the table. He's an equal 469 00:27:57,320 --> 00:28:03,560 Speaker 1: opportunity influence purchasers. And then uh uh, Ryan Stalom, the 470 00:28:03,600 --> 00:28:06,800 Speaker 1: co CEO of one of the ft X enterprises, did 471 00:28:06,840 --> 00:28:15,520 Speaker 1: another million dollars exclusively to Republicans. So uh, they they 472 00:28:15,520 --> 00:28:20,399 Speaker 1: had one thing, keep the sec out of the crypto world. 473 00:28:21,480 --> 00:28:24,280 Speaker 1: And the point, the point I made to my colleagues 474 00:28:24,320 --> 00:28:27,920 Speaker 1: today is don't come here and trash Sam bank and 475 00:28:28,040 --> 00:28:32,120 Speaker 1: freed and then pass his bill. His bill is designed 476 00:28:32,160 --> 00:28:36,439 Speaker 1: to provide a little patina of regulation to crypto uh, 477 00:28:36,600 --> 00:28:40,960 Speaker 1: to give authority to the CFTC, a much weaker regulatory organization, 478 00:28:41,640 --> 00:28:44,360 Speaker 1: and then make people feel safe. Uh. Not that they're 479 00:28:44,360 --> 00:28:46,280 Speaker 1: going to feel safe anytime in the next few months. 480 00:28:46,920 --> 00:28:50,880 Speaker 1: You know that the memories fade, but they don't fade immediately. Uh. 481 00:28:50,920 --> 00:28:53,840 Speaker 1: So that's his bill. He's got two versions of it. 482 00:28:54,120 --> 00:28:58,120 Speaker 1: We've got to block it. Whether we could pass positive 483 00:28:58,200 --> 00:29:05,960 Speaker 1: legislation to g of the sec UH jurisdiction over all crypto, Um, 484 00:29:06,000 --> 00:29:08,840 Speaker 1: that's gonna be harder because all the money and power 485 00:29:09,080 --> 00:29:11,720 Speaker 1: is in the hands of the crypto billionaire bros. There's 486 00:29:11,760 --> 00:29:16,360 Speaker 1: no lobbyist or pack here um focused on fair tax 487 00:29:16,640 --> 00:29:20,960 Speaker 1: enforcement or sanctions enforcement. Well, it sounds to me, then, 488 00:29:21,080 --> 00:29:24,840 Speaker 1: the Congressman, that you would support an investigation and a 489 00:29:24,880 --> 00:29:28,760 Speaker 1: public reveal on all the donations, who accepted them and 490 00:29:28,800 --> 00:29:33,080 Speaker 1: how much. Well, at least on the democratic side, that's 491 00:29:33,080 --> 00:29:36,959 Speaker 1: all the matter that would have to be. And in 492 00:29:37,000 --> 00:29:40,600 Speaker 1: the dark money world, I look not just from crypto, 493 00:29:40,640 --> 00:29:44,360 Speaker 1: They're not the only folks using dark money to have 494 00:29:44,760 --> 00:29:48,000 Speaker 1: a hidden effect on politics. We ought to get rid 495 00:29:48,040 --> 00:29:51,520 Speaker 1: of dark money and or lighted up which of course 496 00:29:51,960 --> 00:29:58,600 Speaker 1: it's not dark money anymore in this case, Well, we're certain, 497 00:29:58,680 --> 00:30:02,520 Speaker 1: I mean certain a committee find that. I think Mr 498 00:30:02,600 --> 00:30:04,440 Speaker 1: Ray is more likely to tell us about it. And 499 00:30:04,480 --> 00:30:07,760 Speaker 1: you know, one of the indictments UH from the Southern 500 00:30:07,840 --> 00:30:11,200 Speaker 1: District of New York is violations of campaign finance laws. 501 00:30:11,960 --> 00:30:15,160 Speaker 1: And my question to Mr Rays whether he'll co operate 502 00:30:16,480 --> 00:30:20,160 Speaker 1: UH by identifying because one thing that happens sometimes is 503 00:30:20,200 --> 00:30:22,840 Speaker 1: the corporation gives money to the executive with the understanding 504 00:30:22,880 --> 00:30:25,640 Speaker 1: they're going to use it for politics. Is to identify 505 00:30:26,280 --> 00:30:31,200 Speaker 1: the when uh, Mr Salomon got the fifty five million 506 00:30:31,200 --> 00:30:33,560 Speaker 1: dollars in loans and other payments and see if there's 507 00:30:33,600 --> 00:30:38,840 Speaker 1: a coincidence in time to a political spending. Boy, this 508 00:30:38,920 --> 00:30:40,440 Speaker 1: is wild. Does it end up in the hands of 509 00:30:40,440 --> 00:30:43,440 Speaker 1: the SEC if if you don't succeed in banning US 510 00:30:43,520 --> 00:30:48,400 Speaker 1: investment in crypto, do you trust Gary Gainsler with handling this? Well, 511 00:30:48,400 --> 00:30:50,320 Speaker 1: I want him to do more. We had hearings in 512 00:30:50,400 --> 00:30:53,680 Speaker 1: July before my subcommittee in which I had the head 513 00:30:53,680 --> 00:30:56,400 Speaker 1: of enforcement there, and I beat him pretty hard over 514 00:30:56,440 --> 00:30:59,800 Speaker 1: the idea that you say that crypto or most of 515 00:30:59,800 --> 00:31:03,240 Speaker 1: it is a security and so you go after it 516 00:31:03,280 --> 00:31:06,640 Speaker 1: on that basis, But then you don't go after the 517 00:31:06,680 --> 00:31:11,719 Speaker 1: securities exchanges. And if if crypto is a security then 518 00:31:11,720 --> 00:31:14,720 Speaker 1: a crypto exchange is a security exchange, and they have 519 00:31:14,880 --> 00:31:20,600 Speaker 1: not gone after that. Um In the sec often their 520 00:31:20,640 --> 00:31:23,400 Speaker 1: time frame tends to be in decades or half decades, 521 00:31:23,600 --> 00:31:25,920 Speaker 1: and you can't you can't live in that world in 522 00:31:25,960 --> 00:31:30,520 Speaker 1: the crypto world. So what comes next from the committee here? 523 00:31:30,520 --> 00:31:33,480 Speaker 1: Then as you seek the paperwork here you've got obviously 524 00:31:33,560 --> 00:31:35,560 Speaker 1: John Ray needs a lot of time. He's he's digging 525 00:31:35,560 --> 00:31:38,840 Speaker 1: out of this massive hole, and it doesn't appear he's 526 00:31:38,880 --> 00:31:40,760 Speaker 1: even made a dent yet, with what he referred to 527 00:31:40,800 --> 00:31:46,160 Speaker 1: as dozens of tero bytes of material left to go through. Uh, 528 00:31:46,200 --> 00:31:50,080 Speaker 1: what is the purpose of the committee here? Short of 529 00:31:50,200 --> 00:31:53,280 Speaker 1: referring criminal charges, which obviously he's already been arrested. Do 530 00:31:53,320 --> 00:31:56,320 Speaker 1: you need to bring him to the committee in person 531 00:31:56,440 --> 00:32:00,480 Speaker 1: or virtually to testify before this is done? There isn't 532 00:32:00,520 --> 00:32:03,560 Speaker 1: a criminal defense lawyer in the world who wouldn't be 533 00:32:03,760 --> 00:32:06,800 Speaker 1: disbarred for incompetence if he allowed his client to come 534 00:32:06,840 --> 00:32:11,400 Speaker 1: before our committee. So that's not gonna happen. Do you 535 00:32:11,480 --> 00:32:15,680 Speaker 1: question the timing of the arrest? Uh? No, I think 536 00:32:15,720 --> 00:32:18,600 Speaker 1: the prosecutors did what they I don't think they were 537 00:32:18,640 --> 00:32:21,800 Speaker 1: focused on No, let's let's not let Maxine Waters get 538 00:32:21,800 --> 00:32:24,360 Speaker 1: a crack at him. Uh No, they they acted as 539 00:32:24,400 --> 00:32:29,520 Speaker 1: soon as they could, and uh it uh obviated the 540 00:32:29,560 --> 00:32:31,960 Speaker 1: one question I had for bank ben Freed. I was 541 00:32:31,960 --> 00:32:34,160 Speaker 1: going to act to ask him whether he had consulted 542 00:32:34,240 --> 00:32:38,520 Speaker 1: with with attorneys to find jurisdictions that wouldn't extradite him. 543 00:32:38,560 --> 00:32:42,880 Speaker 1: And the obvious answers, no, he didn't, wow or at 544 00:32:42,960 --> 00:32:47,480 Speaker 1: least he didn't take their advice. Yeah right, this is 545 00:32:47,520 --> 00:32:50,840 Speaker 1: pretty incredible stuff. Congressman, how do you follow up on it? Then? 546 00:32:50,880 --> 00:32:57,320 Speaker 1: With this committee? I think that as far as FTX, 547 00:32:57,560 --> 00:33:00,680 Speaker 1: that's in the hands of the sec. But as Ashley 548 00:33:00,720 --> 00:33:03,760 Speaker 1: of the Southern District of New York and the bankruptcy courts, 549 00:33:04,960 --> 00:33:08,680 Speaker 1: my fear is that this will be regarded as one 550 00:33:08,800 --> 00:33:12,600 Speaker 1: snake in the garden of Eden, and my job is 551 00:33:12,640 --> 00:33:16,920 Speaker 1: to convince my colleagues that crypto is a garden of 552 00:33:16,960 --> 00:33:22,440 Speaker 1: snakes and that, uh, my guess is that we can 553 00:33:23,320 --> 00:33:25,240 Speaker 1: that we're not going to be able to pass good regulation, 554 00:33:25,440 --> 00:33:29,920 Speaker 1: good legislation because the other crypto bros are here and 555 00:33:29,960 --> 00:33:33,080 Speaker 1: they got their lobbyists their backs. But I think we 556 00:33:33,160 --> 00:33:37,560 Speaker 1: can stop bad legislation, and that means the SEC will 557 00:33:37,640 --> 00:33:40,680 Speaker 1: have not all the authority they ought to have, but 558 00:33:40,720 --> 00:33:44,640 Speaker 1: a whole lot of authority, and hopefully we'll push them 559 00:33:44,640 --> 00:33:49,360 Speaker 1: into to using it more than they have been. Can 560 00:33:49,360 --> 00:33:52,720 Speaker 1: you get regulation through the U. S. House of the 561 00:33:52,720 --> 00:33:58,680 Speaker 1: Republican majority? Uh? Legislation no regulation is in the hands 562 00:33:58,720 --> 00:34:03,880 Speaker 1: of the SEC and will go forward unless uh the 563 00:34:04,040 --> 00:34:08,719 Speaker 1: SEC is bo browbeaten into stopping and I don't think 564 00:34:08,760 --> 00:34:10,600 Speaker 1: that will happen. You want to help them write it, though, 565 00:34:10,640 --> 00:34:16,279 Speaker 1: don't you. Um? I they hear from me, awesome, thank 566 00:34:16,280 --> 00:34:18,200 Speaker 1: you for talking about all they hope they want. And 567 00:34:18,239 --> 00:34:20,319 Speaker 1: maybe a little beyond that. I'm just trying to get 568 00:34:20,360 --> 00:34:22,600 Speaker 1: a sense of how much sunlight there is between Democrats 569 00:34:22,600 --> 00:34:25,000 Speaker 1: and Republicans on this issue. Everyone seems to have a 570 00:34:25,000 --> 00:34:28,040 Speaker 1: different angle, and you've got the complexities of the donations. 571 00:34:29,440 --> 00:34:34,920 Speaker 1: There are huge differences, but they're not necessarily Democrat versus Republican. 572 00:34:36,280 --> 00:34:38,840 Speaker 1: I do think that there is more support on the 573 00:34:38,880 --> 00:34:43,879 Speaker 1: Republican side for what I call UH patriotic anarchism. Where 574 00:34:43,880 --> 00:34:45,840 Speaker 1: you found the table and you say America should be 575 00:34:45,880 --> 00:34:49,120 Speaker 1: the most powerful country in the world, and we should 576 00:34:49,160 --> 00:34:51,760 Speaker 1: do everything possible to make sure that the federal government 577 00:34:51,760 --> 00:34:55,600 Speaker 1: can't collect taxes. Um. If you look at history, the 578 00:34:55,719 --> 00:34:58,680 Speaker 1: kind of the countries that are successful in international affairs 579 00:34:58,640 --> 00:35:03,040 Speaker 1: of the countries that can collect act and uh, I 580 00:35:03,719 --> 00:35:06,640 Speaker 1: will put it this way, UM, I fear that every 581 00:35:06,680 --> 00:35:10,400 Speaker 1: time a billionaire keats on his taxes, member of the 582 00:35:10,440 --> 00:35:15,239 Speaker 1: Freedom Caucus wind gets his wings. Thanks for talking with 583 00:35:15,320 --> 00:35:18,759 Speaker 1: us today, Congress and brass Sherman. A pleasure here on 584 00:35:18,920 --> 00:35:21,760 Speaker 1: the hearing day to have both the Democrat and a Republican. 585 00:35:21,800 --> 00:35:23,800 Speaker 1: This is the type of conversation we strive for on 586 00:35:23,920 --> 00:35:26,279 Speaker 1: sound On and it's one that you're not going to 587 00:35:26,360 --> 00:35:31,040 Speaker 1: hear anywhere else. We're gonna turn just a bit to 588 00:35:31,080 --> 00:35:34,800 Speaker 1: the matter of inflation, the big CPI report out today 589 00:35:34,840 --> 00:35:36,600 Speaker 1: and what it meant for the White House. By the way, 590 00:35:36,600 --> 00:35:39,960 Speaker 1: did you hear Joe Biden now acting as an economist 591 00:35:40,120 --> 00:35:42,759 Speaker 1: and making a prediction on prices for next year even 592 00:35:42,760 --> 00:35:46,279 Speaker 1: though he didn't want to. It's all ahead. This is 593 00:35:46,280 --> 00:35:53,680 Speaker 1: Bloomberg son On with Joe Matthew on Bloomberg Radio. Great 594 00:35:53,680 --> 00:35:57,480 Speaker 1: headline on the terminal Powel's most important US inflation indicator 595 00:35:57,560 --> 00:36:01,000 Speaker 1: cools again. You, of course know what that is with 596 00:36:01,160 --> 00:36:04,040 Speaker 1: a slice of the consumer price index that Charlie just 597 00:36:04,160 --> 00:36:07,200 Speaker 1: referred to, that J. Powell flag recently is potentially most 598 00:36:07,239 --> 00:36:12,319 Speaker 1: important for determining the outlook. Moderated again in November. Could 599 00:36:12,320 --> 00:36:17,440 Speaker 1: it be Real services prices excluding energy services and rents 600 00:36:18,120 --> 00:36:21,880 Speaker 1: up one tenth of one percent last month after logging 601 00:36:21,920 --> 00:36:25,160 Speaker 1: increases in October and in September got SHA up eight 602 00:36:25,160 --> 00:36:30,120 Speaker 1: tenths and September according to Bloombergy calculations, I couldn't do 603 00:36:30,160 --> 00:36:34,719 Speaker 1: this without the terminal. So good news, right, CP I 604 00:36:35,120 --> 00:36:37,040 Speaker 1: something good to think about after you woke up and 605 00:36:37,120 --> 00:36:39,360 Speaker 1: heard about Sam Bankman Freed being arrested and all this 606 00:36:39,400 --> 00:36:43,760 Speaker 1: other stuff. Eight thirty blam. Markets go into rally mode, 607 00:36:43,760 --> 00:36:46,400 Speaker 1: and of course at the White House they say, well, 608 00:36:46,440 --> 00:36:48,160 Speaker 1: we gotta get the boss out. We've got to get 609 00:36:48,239 --> 00:36:50,040 Speaker 1: him out in front of the cameras. This is these 610 00:36:50,120 --> 00:36:53,399 Speaker 1: police at the moments. Don't waste it. And he did 611 00:36:53,760 --> 00:36:59,480 Speaker 1: address the nation from the Roosevelt Room, economic advisors flanking 612 00:36:59,560 --> 00:37:02,880 Speaker 1: him the good things to say, here's the president in 613 00:37:02,880 --> 00:37:05,719 Speaker 1: the world where inflation is rising a double digits in 614 00:37:05,800 --> 00:37:09,319 Speaker 1: many major economies around the world. Inflation is coming down 615 00:37:09,360 --> 00:37:12,319 Speaker 1: in America, In fact, this new report is the fifth 616 00:37:12,400 --> 00:37:15,200 Speaker 1: month in a row where and inflation has fallen in 617 00:37:15,239 --> 00:37:18,960 Speaker 1: the United States, and so we wanted to talk about 618 00:37:19,000 --> 00:37:21,240 Speaker 1: this the political side of it. Of course, we've already 619 00:37:21,239 --> 00:37:24,320 Speaker 1: heard the market side. Courtney Rosenberger is with us, managing 620 00:37:24,320 --> 00:37:28,120 Speaker 1: director at Strategous. Courtney, thank you for for your patients, 621 00:37:28,400 --> 00:37:30,799 Speaker 1: and it's great to have you at the moment here. 622 00:37:31,080 --> 00:37:34,520 Speaker 1: People are very reluctant to start ringing the bell on inflation. 623 00:37:34,600 --> 00:37:37,799 Speaker 1: We've got a FED meeting resuming tomorrow. We're gonna give 624 00:37:37,840 --> 00:37:40,960 Speaker 1: back all these good feelings as soon as j Powell 625 00:37:41,000 --> 00:37:42,879 Speaker 1: does the Q and AY tomorrow or are you are 626 00:37:42,880 --> 00:37:46,400 Speaker 1: you taking heart in this data? Yeah, thank you for 627 00:37:46,440 --> 00:37:49,440 Speaker 1: having me. Certainly we feel like the inflation data. It's 628 00:37:49,520 --> 00:37:52,200 Speaker 1: good news for the Band administration. Any time that you 629 00:37:52,280 --> 00:37:55,799 Speaker 1: have inflation data point and this period where it comes 630 00:37:55,800 --> 00:37:59,080 Speaker 1: in below estimates, that's good news for them. But in reality, 631 00:37:59,280 --> 00:38:01,719 Speaker 1: we still find flation and that means that it's going 632 00:38:01,760 --> 00:38:04,440 Speaker 1: to be the focus for monetary and fiscal policy over 633 00:38:04,520 --> 00:38:07,520 Speaker 1: the next year. So our chief economist Frateiguous is still 634 00:38:07,520 --> 00:38:11,279 Speaker 1: expecting a fifty basis point hike. Software data gives the 635 00:38:11,280 --> 00:38:13,279 Speaker 1: FED some room to be less aggressive here, but we 636 00:38:13,320 --> 00:38:15,759 Speaker 1: still have a FED funds a terminal target rate at 637 00:38:15,800 --> 00:38:18,200 Speaker 1: five to five and a quarter percent for early next year. 638 00:38:18,920 --> 00:38:20,560 Speaker 1: UM and we're also going to see it as a 639 00:38:20,560 --> 00:38:22,920 Speaker 1: focal point for Congress. We're seeing that right now with 640 00:38:23,000 --> 00:38:27,320 Speaker 1: the omnibus negotiations where Republicans, citing the massive fiscal spending 641 00:38:27,320 --> 00:38:30,000 Speaker 1: we've had, tying it to inflation, they're trying to limit 642 00:38:30,000 --> 00:38:34,000 Speaker 1: the non defense discretionary spending increases. And then next year, 643 00:38:34,320 --> 00:38:37,880 Speaker 1: particularly with the debt ceiling and other issues, inflation is 644 00:38:37,920 --> 00:38:40,239 Speaker 1: going to be a focal point. Well, boy, and I 645 00:38:40,320 --> 00:38:43,320 Speaker 1: was feeling so good about things. Courtney. Of course, I 646 00:38:43,360 --> 00:38:44,959 Speaker 1: knew you were going to say that though we can't 647 00:38:45,000 --> 00:38:47,520 Speaker 1: read into these data. I hate doing that with the 648 00:38:47,560 --> 00:38:51,920 Speaker 1: singular plural. It's these data. But when you see, you know, 649 00:38:52,000 --> 00:38:55,080 Speaker 1: Wall Street takeoff like that, you almost start to get nervous, like, well, 650 00:38:55,120 --> 00:38:59,640 Speaker 1: here we go again, especially the day before the Fed 651 00:38:59,800 --> 00:39:03,080 Speaker 1: and anouncement and news conference. What's j Powell going to 652 00:39:03,160 --> 00:39:06,719 Speaker 1: tell us tomorrow? I mean, I think it's pretty consensus 653 00:39:06,800 --> 00:39:09,280 Speaker 1: the fifty basis points, but I'm sure that he's probably 654 00:39:09,320 --> 00:39:12,480 Speaker 1: going to try to temper expectations. Yeah, because they had 655 00:39:12,520 --> 00:39:15,240 Speaker 1: a party today he's got to play angry Dad tomorrow 656 00:39:15,239 --> 00:39:16,960 Speaker 1: and tell us that, you know, things aren't as good 657 00:39:16,960 --> 00:39:19,440 Speaker 1: as we think again. I mean, we're at five to 658 00:39:19,480 --> 00:39:21,759 Speaker 1: five and a quarter for the terminal fund jury. I 659 00:39:21,800 --> 00:39:24,040 Speaker 1: think some estimates have come out today being a little 660 00:39:24,040 --> 00:39:26,720 Speaker 1: bit um saying that we're going to be below five percent. 661 00:39:26,840 --> 00:39:29,319 Speaker 1: Could be you know, for four and a half. That's 662 00:39:29,400 --> 00:39:31,600 Speaker 1: that's not where we are. We're more pessthimistic, I think 663 00:39:31,600 --> 00:39:35,280 Speaker 1: than maybe some of the street gots today. You probably 664 00:39:35,360 --> 00:39:38,040 Speaker 1: heard he's on his way out of the room today 665 00:39:38,160 --> 00:39:39,960 Speaker 1: and my gosh, you know, what a way to make 666 00:39:39,960 --> 00:39:43,120 Speaker 1: a living in front of cameras and microphones. Uh, you know, 667 00:39:43,160 --> 00:39:45,000 Speaker 1: it's all a big ad lib. All the reporters are 668 00:39:45,040 --> 00:39:47,080 Speaker 1: trying to get you, says, I'm not answering any questions 669 00:39:47,120 --> 00:39:50,759 Speaker 1: until later. Then of course somebody yells the question and 670 00:39:50,800 --> 00:39:53,160 Speaker 1: he answers it. And it had to do with you know, 671 00:39:53,160 --> 00:39:55,360 Speaker 1: where do you see well, listen to the question is 672 00:39:55,440 --> 00:40:04,799 Speaker 1: right here. Listen. I hope by the end of next year, 673 00:40:05,200 --> 00:40:13,799 Speaker 1: which closer confication. I'm not going to go out convinced 674 00:40:13,800 --> 00:40:17,080 Speaker 1: they're going to continue to go down. When asked his 675 00:40:17,080 --> 00:40:20,560 Speaker 1: his expectation for prices, whether they'd be under control of 676 00:40:20,560 --> 00:40:23,719 Speaker 1: a year from now. Courtney, risky politically to say that, 677 00:40:24,520 --> 00:40:27,360 Speaker 1: but that is kind of the consensus, right, is that 678 00:40:27,400 --> 00:40:29,799 Speaker 1: your expectation? Was he correct the end of next year? 679 00:40:31,160 --> 00:40:33,319 Speaker 1: I mean, our viewpoint is that if the Fed can 680 00:40:33,360 --> 00:40:37,399 Speaker 1: manage to get inflation below three percent, that's a significant 681 00:40:37,480 --> 00:40:40,200 Speaker 1: accomplishment at the end of next year. I wouldn't say, though, 682 00:40:40,200 --> 00:40:43,080 Speaker 1: that that's normal. That's not what Americans have expected the 683 00:40:43,120 --> 00:40:46,040 Speaker 1: inflation rate to be for in the past couple of decades. 684 00:40:46,120 --> 00:40:48,319 Speaker 1: So um not ourgue that we're going to be back 685 00:40:48,320 --> 00:40:51,680 Speaker 1: to normal under three percent significant accomplishment. We don't think 686 00:40:51,680 --> 00:40:53,239 Speaker 1: they're going to be able to get that to that 687 00:40:53,280 --> 00:40:57,520 Speaker 1: two percent target. Right. Well, there it is. Thanks for 688 00:40:57,600 --> 00:41:00,640 Speaker 1: being with us, Courtney. Great to have your perspective. Court Rosenberger, 689 00:41:00,640 --> 00:41:05,000 Speaker 1: Managing Director Strategious. As we reassemble the panel, Genie Chanzana, 690 00:41:05,040 --> 00:41:08,640 Speaker 1: when Rick Davis with another tough not here two Untie, Genie, 691 00:41:08,640 --> 00:41:12,200 Speaker 1: the president, I'm sure his communication staff free not be 692 00:41:12,239 --> 00:41:15,239 Speaker 1: taking questions like that, particularly when he's asked, but he's 693 00:41:15,239 --> 00:41:17,799 Speaker 1: put it out there now, so he just dropped the 694 00:41:17,840 --> 00:41:19,360 Speaker 1: marker on the end of next year. Is that what 695 00:41:19,440 --> 00:41:22,000 Speaker 1: he'll be judged by Yeah, you know, he likes to 696 00:41:22,040 --> 00:41:24,799 Speaker 1: set these red lines. That makes it's got to make 697 00:41:24,840 --> 00:41:28,839 Speaker 1: everybody very very nervous because he's done it many times before. Um, 698 00:41:28,920 --> 00:41:32,480 Speaker 1: you know, you know, he's right into the extent that 699 00:41:32,520 --> 00:41:34,520 Speaker 1: the numbers are going in the right direction. But to 700 00:41:34,560 --> 00:41:36,799 Speaker 1: make a prediction like that is tough because we have 701 00:41:36,920 --> 00:41:39,480 Speaker 1: to keep in mind, if the target is two percent 702 00:41:39,800 --> 00:41:43,120 Speaker 1: at seven point one, we still have high inflation and 703 00:41:43,160 --> 00:41:45,520 Speaker 1: there's no guarantee it goes down. So we're sort of 704 00:41:45,520 --> 00:41:48,239 Speaker 1: in this strange position of, you know, celebrating all the 705 00:41:48,320 --> 00:41:51,320 Speaker 1: time a seven point one, Well it's the right direction, 706 00:41:51,520 --> 00:41:54,080 Speaker 1: but it's still high inflation, and I think a note 707 00:41:54,080 --> 00:41:56,279 Speaker 1: of caution is better. You know. It's almost like when 708 00:41:56,280 --> 00:41:58,200 Speaker 1: you get on a flight and they say we're gonna 709 00:41:58,280 --> 00:42:00,279 Speaker 1: land at four and you land at free four five, 710 00:42:00,280 --> 00:42:03,600 Speaker 1: and everybody celebrates it better that way than the opposite. 711 00:42:03,600 --> 00:42:05,400 Speaker 1: You land at five and you're all annoyed. So the 712 00:42:05,400 --> 00:42:08,400 Speaker 1: president's got to be careful. Well, that's the that's the deal. 713 00:42:08,560 --> 00:42:12,759 Speaker 1: It's a big game of expectations, particularly when it involves markets. Rick, 714 00:42:12,880 --> 00:42:16,560 Speaker 1: was that an unwise thing to say? Well, it's certainly, 715 00:42:16,800 --> 00:42:20,200 Speaker 1: you know, Uh, I think reflected the enthusiasm the markets 716 00:42:20,200 --> 00:42:25,080 Speaker 1: had with this news today. So uh, rational exuberance, maybe 717 00:42:25,080 --> 00:42:28,080 Speaker 1: a little bit today, as the FED chair used to say, 718 00:42:28,200 --> 00:42:31,480 Speaker 1: But um, look, you know, this is the one thing 719 00:42:31,560 --> 00:42:34,799 Speaker 1: I really don't understand about this administration. They continuously put 720 00:42:34,840 --> 00:42:38,200 Speaker 1: their hands into the inflation cookie jar, right, you know, 721 00:42:38,320 --> 00:42:40,120 Speaker 1: they denied that it was going to be a problem, 722 00:42:40,160 --> 00:42:41,600 Speaker 1: then when it was a problem, they blamed it on 723 00:42:41,640 --> 00:42:43,719 Speaker 1: the FED, said the Fed had to fix it in 724 00:42:43,760 --> 00:42:46,279 Speaker 1: a minute. There's any kind of you know, softening of 725 00:42:46,320 --> 00:42:48,359 Speaker 1: the news around it. They take credit and want to 726 00:42:48,480 --> 00:42:51,879 Speaker 1: run a victory parade. So uh, if if if we're 727 00:42:51,960 --> 00:42:55,280 Speaker 1: advising the White House, I'd say, don't talk about this stuff, 728 00:42:55,640 --> 00:42:58,760 Speaker 1: not just lay off and that let the market decide 729 00:42:58,760 --> 00:43:00,480 Speaker 1: for you whether or not it's good or bad. But 730 00:43:01,320 --> 00:43:04,880 Speaker 1: it's been a real up and down kind of feature 731 00:43:04,920 --> 00:43:07,719 Speaker 1: within this administration, and even today they continue to to 732 00:43:08,160 --> 00:43:11,000 Speaker 1: prime that pump. Should we assume and I'm I'm guessing 733 00:43:11,040 --> 00:43:13,239 Speaker 1: this is a yes, Jennie, that we're going to live 734 00:43:13,280 --> 00:43:15,840 Speaker 1: the next calendar year once again, as we we just 735 00:43:15,920 --> 00:43:20,400 Speaker 1: live with a month to month check that cp I 736 00:43:20,480 --> 00:43:23,680 Speaker 1: will be the most important stop in the road economically 737 00:43:23,760 --> 00:43:27,640 Speaker 1: and politically for this administration, for this next year ahead. Yeah, 738 00:43:27,680 --> 00:43:29,439 Speaker 1: for the next year ahead at least, and I think 739 00:43:29,440 --> 00:43:31,520 Speaker 1: it could go, you know, at least I think it 740 00:43:31,560 --> 00:43:33,600 Speaker 1: can go two years, because of course we're bumping right 741 00:43:33,600 --> 00:43:37,120 Speaker 1: into another election cycle, and a presidential one at that. Um. 742 00:43:37,160 --> 00:43:39,120 Speaker 1: You know, on the plus side for the president, gas 743 00:43:39,120 --> 00:43:42,919 Speaker 1: prices have fallen, but again you're seeing housing up, you're 744 00:43:42,920 --> 00:43:46,000 Speaker 1: seeing food up, and these have a real impact on 745 00:43:46,120 --> 00:43:49,399 Speaker 1: people's lives. And so as opposed to making predictions about 746 00:43:49,480 --> 00:43:52,040 Speaker 1: when things are going to stabilize and come down and 747 00:43:52,080 --> 00:43:54,200 Speaker 1: be where he wants him to be, he he needs 748 00:43:54,239 --> 00:43:56,120 Speaker 1: to be a little more circumspect, and he needs to 749 00:43:56,160 --> 00:43:58,799 Speaker 1: talk about the fact that people are still feeling pain 750 00:43:59,239 --> 00:44:02,120 Speaker 1: because we can't remember, we can't forget this is just 751 00:44:02,200 --> 00:44:05,160 Speaker 1: about a rate of increase. It doesn't mean prices are down. 752 00:44:05,480 --> 00:44:08,200 Speaker 1: And that's a big difference. Well, it's not lost on us. 753 00:44:08,200 --> 00:44:10,520 Speaker 1: Of course, he'd been the throes of a presidential re 754 00:44:10,680 --> 00:44:12,799 Speaker 1: election campaign. If you follow through with this right at 755 00:44:12,800 --> 00:44:16,520 Speaker 1: the time, he's saying that inflation, uh will will be 756 00:44:16,640 --> 00:44:21,080 Speaker 1: essentially beaten. Here Rick, for Donald Trump, it was COVID numbers, right, 757 00:44:21,120 --> 00:44:24,200 Speaker 1: We're always checking COVID numbers to get a sense of 758 00:44:24,200 --> 00:44:26,720 Speaker 1: of of his place in the universe. For Barack Obama, 759 00:44:26,760 --> 00:44:29,399 Speaker 1: it was the job's report every month. You could say 760 00:44:29,440 --> 00:44:33,680 Speaker 1: the same, uh, to a large extent. For for George W. Bush, 761 00:44:33,840 --> 00:44:36,960 Speaker 1: is this going to be an inflation data check every 762 00:44:36,960 --> 00:44:40,839 Speaker 1: month for another year? For Joe Biden, sure, consumer price 763 00:44:40,880 --> 00:44:43,719 Speaker 1: index is something that the public has gotten used to 764 00:44:43,760 --> 00:44:46,160 Speaker 1: hearing about, right, We talked about it constantly. Is not 765 00:44:46,640 --> 00:44:49,319 Speaker 1: a shock to anybody to uh to hear, you know, 766 00:44:49,360 --> 00:44:52,400 Speaker 1: when it's reported, and and it does reflect to a 767 00:44:52,480 --> 00:44:55,759 Speaker 1: large degree the impact that's happening on the consumer and 768 00:44:56,000 --> 00:44:58,919 Speaker 1: other things like consumer sentiment indexes have always been good 769 00:44:58,920 --> 00:45:03,560 Speaker 1: political barometer of the success or failure of an existing administration. 770 00:45:03,680 --> 00:45:06,440 Speaker 1: So uh, Look, I ran a presidential campaign in the 771 00:45:06,440 --> 00:45:08,399 Speaker 1: middle of one of the greatest downturns in the history 772 00:45:08,400 --> 00:45:10,880 Speaker 1: of the world and didn't have any fun watching my 773 00:45:10,960 --> 00:45:14,000 Speaker 1: candidate give a speech while the market declined on the 774 00:45:14,040 --> 00:45:18,719 Speaker 1: same screen. So I think the more this Biden administration 775 00:45:18,840 --> 00:45:22,759 Speaker 1: can let those regulators do their job and not get 776 00:45:22,800 --> 00:45:25,000 Speaker 1: in their way and make predictions, the better off. They'll 777 00:45:25,040 --> 00:45:27,480 Speaker 1: be well fed days tomorrow. And we've got a lot 778 00:45:27,520 --> 00:45:31,200 Speaker 1: to learn still, Although everyone's obviously fixed on a fifty 779 00:45:31,239 --> 00:45:33,160 Speaker 1: basis point. We will see what that Q and A 780 00:45:33,239 --> 00:45:35,279 Speaker 1: is like. You know, I always stop and listen, as 781 00:45:35,280 --> 00:45:38,160 Speaker 1: I know you both do. To Michael McKee, there are 782 00:45:38,280 --> 00:45:41,840 Speaker 1: great economics editor here at Bloomberg. No matter what order 783 00:45:41,920 --> 00:45:44,920 Speaker 1: he comes in the questioning, he always seems to be 784 00:45:44,960 --> 00:45:48,439 Speaker 1: the guy who stops j. Powell and makes him say 785 00:45:48,440 --> 00:45:51,760 Speaker 1: something newsworthy. So we'll be doing this at this time tomorrow, 786 00:45:51,760 --> 00:45:58,319 Speaker 1: of course. Meanwhile, something remarkable announced today by the Energy Secretary, 787 00:45:58,440 --> 00:46:02,160 Speaker 1: and it was a low gas price. Is the creation 788 00:46:02,280 --> 00:46:04,280 Speaker 1: of what amounts to be And I'm going to steal 789 00:46:04,320 --> 00:46:09,720 Speaker 1: the words of the Washington Post a miniature star. Here's 790 00:46:09,760 --> 00:46:15,280 Speaker 1: Jennifer Granhell. We're here to talk about fusion, combining two 791 00:46:15,320 --> 00:46:20,600 Speaker 1: particles into one. Last week at the Lawrence Livermore National 792 00:46:20,680 --> 00:46:27,440 Speaker 1: Laboratory in California, scientists at the National Ignition Facility achieved 793 00:46:27,640 --> 00:46:32,960 Speaker 1: fusion ignition, and that is, creating more energy from fusion 794 00:46:33,040 --> 00:46:38,040 Speaker 1: reactions than the energy used to start the process. It's 795 00:46:38,080 --> 00:46:40,759 Speaker 1: the first time it has ever been done in a 796 00:46:40,840 --> 00:46:47,520 Speaker 1: laboratory anywhere in the world. Simply put, this is one 797 00:46:47,560 --> 00:46:54,160 Speaker 1: of the most impressive scientific feats of the century. Or, 798 00:46:54,200 --> 00:46:57,919 Speaker 1: as the President might say, wait for it, wait, wait 799 00:46:57,960 --> 00:47:05,160 Speaker 1: for it. We've got a let the across goo before 800 00:47:05,200 --> 00:47:11,680 Speaker 1: to be a feedual. Okay, I do think he probably 801 00:47:11,719 --> 00:47:14,560 Speaker 1: did say this is a b f D. Yes, there 802 00:47:14,600 --> 00:47:17,319 Speaker 1: you go, a b f D. In a truly incredible 803 00:47:17,400 --> 00:47:20,200 Speaker 1: sort of mind blowing moment here when you consider what 804 00:47:20,320 --> 00:47:26,319 Speaker 1: was just done, this will someday, maybe not as quick 805 00:47:26,360 --> 00:47:31,160 Speaker 1: as you want. They say, lead to truly clean energy, 806 00:47:31,440 --> 00:47:35,960 Speaker 1: carbon free and abundant energy. And when you think about 807 00:47:35,960 --> 00:47:40,040 Speaker 1: what they did, they created a miniature star. All I 808 00:47:40,080 --> 00:47:42,200 Speaker 1: could think of was hanging out with the professor in 809 00:47:42,280 --> 00:47:47,840 Speaker 1: animal house. Remember this. That means that our whole solar 810 00:47:47,880 --> 00:47:53,600 Speaker 1: system could be one tiny atom in the fingernail of 811 00:47:53,680 --> 00:48:01,840 Speaker 1: some other giant being. Right, it's too much that the 812 00:48:04,560 --> 00:48:09,879 Speaker 1: one tiny atom in my fingernail could be one turn 813 00:48:10,960 --> 00:48:16,440 Speaker 1: you interest. With apologies to Genie Chanzano, an actual professor, Genie, 814 00:48:16,480 --> 00:48:20,200 Speaker 1: Come on, this is incredible stuff. It is. Oh that 815 00:48:20,360 --> 00:48:23,200 Speaker 1: just brought me back. I love it so so Joe 816 00:48:23,280 --> 00:48:26,080 Speaker 1: I was somebody reminded me of another movie of Back 817 00:48:26,120 --> 00:48:28,520 Speaker 1: to the Future when he returns with the car and 818 00:48:28,600 --> 00:48:32,040 Speaker 1: it's powered by nuclear fusion. And that's literally when you 819 00:48:32,080 --> 00:48:34,840 Speaker 1: talk about it, you know, BF D. And you know, 820 00:48:35,080 --> 00:48:37,839 Speaker 1: this is a game change would change humanity, would change 821 00:48:37,920 --> 00:48:40,160 Speaker 1: human has change his civilization. I mean, think about the 822 00:48:40,239 --> 00:48:43,280 Speaker 1: number of wars are geopolitics that are fought over energy, 823 00:48:43,280 --> 00:48:45,600 Speaker 1: Think about the impact on climate. I mean, it is 824 00:48:45,640 --> 00:48:47,520 Speaker 1: just so wide ranging. Of course we are a long 825 00:48:47,560 --> 00:48:50,800 Speaker 1: way away from you know, from that, but the impact, 826 00:48:50,840 --> 00:48:53,480 Speaker 1: I mean, I think the Secretary is absolutely right the impact. 827 00:48:53,520 --> 00:48:56,520 Speaker 1: It is a b F D. And I love the 828 00:48:56,560 --> 00:49:00,160 Speaker 1: fact that you highlighted this because what and animal else, 829 00:49:00,239 --> 00:49:04,200 Speaker 1: because what an important moment. This is potentially for you know, 830 00:49:04,480 --> 00:49:07,560 Speaker 1: for everything from climate to the economy to you know, 831 00:49:07,600 --> 00:49:09,520 Speaker 1: the way we live our lives. My brain is a 832 00:49:09,520 --> 00:49:12,640 Speaker 1: little bit small to really understand what we're talking about here. 833 00:49:12,680 --> 00:49:14,600 Speaker 1: I can, I can kind of describe it as you 834 00:49:14,719 --> 00:49:19,200 Speaker 1: just heard, Rick, But this happened in a federal government building, 835 00:49:19,600 --> 00:49:24,239 Speaker 1: a high security federal government building, reminding us that our 836 00:49:24,280 --> 00:49:26,840 Speaker 1: government is actually up to some pretty incredible things. We 837 00:49:26,920 --> 00:49:29,799 Speaker 1: just don't usually talk about it. Yeah, kudos to the 838 00:49:29,800 --> 00:49:32,319 Speaker 1: boys at Lawrence Livermore. I mean, you know, isn't this 839 00:49:32,400 --> 00:49:35,319 Speaker 1: the greatest thing for a bunch of science nerds like 840 00:49:35,440 --> 00:49:37,960 Speaker 1: we are. I mean, over the weekend we got the 841 00:49:38,080 --> 00:49:43,520 Speaker 1: armatis uh, orion splashing down and today we've got nuclear fusion. 842 00:49:43,560 --> 00:49:47,640 Speaker 1: I mean, what's next? Wait to see what this weekend brings. Well, 843 00:49:47,719 --> 00:49:49,799 Speaker 1: you know, and it's an answer to Elon Musk as well. 844 00:49:49,840 --> 00:49:52,560 Speaker 1: He's not the only one helping us reconsider the future 845 00:49:52,560 --> 00:49:55,040 Speaker 1: of civilization as he Yeah, these geniuses are on a 846 00:49:55,080 --> 00:49:58,560 Speaker 1: government payroll. You know, they're not listed on the wealthiest 847 00:49:58,600 --> 00:50:00,319 Speaker 1: people in the face of the earth, but it could 848 00:50:00,320 --> 00:50:04,000 Speaker 1: be the most transformation organization on the face of the earth. 849 00:50:04,040 --> 00:50:06,880 Speaker 1: And and how much fun did you know, Secretary Graholme 850 00:50:06,960 --> 00:50:09,399 Speaker 1: have today to be able to make this announcement. It's 851 00:50:09,440 --> 00:50:11,520 Speaker 1: like true, you know, I'll take the job, but only 852 00:50:11,520 --> 00:50:14,239 Speaker 1: if I can announce a breakthrough in nucfusion when we 853 00:50:14,320 --> 00:50:19,240 Speaker 1: got fantastic first time anyone managed to create net energy 854 00:50:19,400 --> 00:50:22,719 Speaker 1: that alone, that that is an incredible statement, Genie Shenzano, 855 00:50:22,840 --> 00:50:26,160 Speaker 1: So hats off to the government. That's right, and it 856 00:50:26,320 --> 00:50:28,359 Speaker 1: is that those kinds of investment is what it takes. 857 00:50:28,360 --> 00:50:30,920 Speaker 1: And of course a big question going forward is do 858 00:50:30,960 --> 00:50:33,400 Speaker 1: we have the resources to move this in from the 859 00:50:33,400 --> 00:50:36,640 Speaker 1: government into the private sector where these breakthroughs will you know, 860 00:50:36,719 --> 00:50:39,080 Speaker 1: come to fruition. And that's going to be a big 861 00:50:39,200 --> 00:50:41,600 Speaker 1: question for you know, governments around the world as we 862 00:50:41,640 --> 00:50:43,640 Speaker 1: move forward, But what a day to day was for 863 00:50:43,680 --> 00:50:45,880 Speaker 1: her to be able to announce this. That's right, we 864 00:50:45,960 --> 00:50:49,799 Speaker 1: don't need roads. How true, we'll be throwing garbage and 865 00:50:49,800 --> 00:50:53,919 Speaker 1: stuff in there. The power, the flux capacitor. Right now, 866 00:50:53,920 --> 00:50:57,319 Speaker 1: we're mixing metaphors, we're mixing movies. Rick and Genie, thank you. 867 00:50:57,360 --> 00:50:59,359 Speaker 1: It's great to be back with you. I forget how 868 00:50:59,400 --> 00:51:02,520 Speaker 1: important talk is for me every day. You don't forget, though. 869 00:51:02,560 --> 00:51:04,600 Speaker 1: That's why I always come here and why you should 870 00:51:04,600 --> 00:51:09,600 Speaker 1: subscribe to the podcast. Sound on the fastest hour in politics. 871 00:51:10,239 --> 00:51:12,600 Speaker 1: Bring it up justin. I'll meet you back here tomorrow. 872 00:51:12,640 --> 00:51:13,840 Speaker 1: This is Bloomberg