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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim

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Speaker 1: Fox along with my co host Lisa Bramowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether you're at the grocery

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Speaker 1: store or the trading floor. Find the Bloomberg p m

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Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com.

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Speaker 1: It's really interesting to hear about what the market response

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Speaker 1: has been like too some of these UH malware attacks,

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Speaker 1: and indeed we are going to take a closer look.

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Speaker 1: It does look like governments and companies around the world

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Speaker 1: are getting the upper hand against this wave of an

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Speaker 1: unrivaled global cyber attack, but there still are some pretty

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Speaker 1: important lessons to be learned up from this outbreak. To

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Speaker 1: sort of understand what the implications are, let's bring in

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Speaker 1: Michael Coden. He's head of the cybersecurity practice at BCG

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Speaker 1: Platina that's part of the Boston Consulting Group. He's also

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Speaker 1: associate director of the m I T I see cubed um. Michael,

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Speaker 1: thank you so much for joining us. I want to

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Speaker 1: just start with why this is happening now and are

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Speaker 1: you surprised that an attack like this, which is considered

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Speaker 1: to be the biggest one ever, hasn't happened sooner? Good question, Lisa, Um,

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Speaker 1: it's I think it's happening now only because people were

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Speaker 1: made aware of this latest vulnerability and the attackers see

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Speaker 1: it's done on the opportunity knowing that a lot of

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Speaker 1: systems have not been patched. They were made aware that

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Speaker 1: they were made aware because of the hack into the

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Speaker 1: US right into the release of the information of what

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Speaker 1: what c IA was doing here. Um, it's possible that

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Speaker 1: you could link those two, but not necessary because every

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Speaker 1: time Microsoft issues new patches, those patches are the fact

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Speaker 1: that the patches out there is exposing the vulnerability. So

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Speaker 1: if you you know, the lesson here really for for

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Speaker 1: companies is to install the patches as soon as possible

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Speaker 1: after Microsoft issues them. Once Microsoft issues at patch, both you,

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Speaker 1: the good guys and the bad guys know that there's

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Speaker 1: a vulnerability, and it's it's a race. If you can

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Speaker 1: patch your system before they can exploit it, that would

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Speaker 1: be great. The statistics are not in our favor. Typically,

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Speaker 1: once Microsoft issues a patch within seven days, there are malware.

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Speaker 1: There's malware available to that that exploits that vulnerability. Typically,

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Speaker 1: on the other side, we find that attackers are inside

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Speaker 1: our clients systems for up to two days before they're detective.

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Speaker 1: You know, I was. I'm sort of surprised because when

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Speaker 1: I was looking at the way that this attack unfold

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Speaker 1: it's sort of the classic don't open anything suspicious because

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Speaker 1: that's how it starts, right correct. So, and then you're

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Speaker 1: actually recommending that people do pay the ransom that they

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Speaker 1: are forced to pay in order to get their files back,

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Speaker 1: because that might be the cheapest way to recover some

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Speaker 1: of their data. Correct. Correct. Um, if you don't have backups, um,

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Speaker 1: and then you need your data, Uh, is not a

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Speaker 1: lot of money. I hate to say it, because I

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Speaker 1: don't endorse crime and I hate to reward the criminals.

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Speaker 1: But you're you have you're in the conundrum. The lesson here,

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Speaker 1: and that's front is make frequent backups of your data.

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Speaker 1: Make sure that they're um isolated from your your main

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Speaker 1: system so that you can go and easily retrievable so

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Speaker 1: you can go and get them in in the event

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Speaker 1: of the you know, the next ransomware attack that that

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Speaker 1: you do get hit by. So, Michael, your clients, have

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Speaker 1: they been materially increasing the amount of money that they're

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Speaker 1: putting towards cybersecurity recently. And also do you expect them

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Speaker 1: to only accelerate their expenditures in this front going forward.

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Speaker 1: I can't talk about our clients, but I can talk

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Speaker 1: about general industry trends. UH. The the spending on cybersecurity

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Speaker 1: has been increasing substantially, UH, and we do expect to

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Speaker 1: see that going forward. The key here is that boards

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Speaker 1: of directors are now realizing that cybersecurity is a true

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Speaker 1: business risk, and that's every much of risk is credit

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Speaker 1: risk is to a bank, or the risk of a

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Speaker 1: natural disaster is to a manufacturing facility or an office building,

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Speaker 1: and they're beginning to deal with it as a true

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Speaker 1: business risk. They've elevated it from oh, just something I

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Speaker 1: t should take care of to something that we have

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Speaker 1: to worry about as a as a corporation or an organization.

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Speaker 1: Are most of them uh, perhaps not your clients, but

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Speaker 1: the people that you talk to who might know something

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Speaker 1: you can talk about. Do you think that people are

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Speaker 1: looking for to to outsource their cybersecurity? Are they looking

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Speaker 1: to beef up their in house protection. It's a mixture

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Speaker 1: of the two. UM Many or Most organizations would like

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Speaker 1: to beef up internally, but that gets expensive and there

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Speaker 1: is a huge shortage in the labor force. There's probably

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Speaker 1: a million vacant cybersecurity jobs right now. UH. So we

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Speaker 1: see a very healthy mixture of UH companies hiring UH

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Speaker 1: and training and UH and and then outsourcing those things

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Speaker 1: for which they need special expertise. The real key that

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Speaker 1: we see is the training. UM. Your your first line

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Speaker 1: of defense and cybersecurity are your employees and the kind

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Speaker 1: of culture they have. The analogy I always give is

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Speaker 1: if you walk into an oil company building, whether it's

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Speaker 1: a refinery or an office building, there's a sign over

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Speaker 1: the where that says two and thirty seven days since

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Speaker 1: the last industrial accident, and nobody wants to be the

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Speaker 1: one who sets that counter back to the hero. We

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Speaker 1: need the same mentality, the safety mentality, the quality mentality

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Speaker 1: that corporations have built into their cultures. They need to

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Speaker 1: build in the same cybersecurity mentality. Don't lend your password

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Speaker 1: to somebody and you can't even though you trust them.

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Speaker 1: Don't click on that email attachment even though you think

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Speaker 1: it might be an order from a new customer. Well,

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Speaker 1: we're gonna have to leave it there. We could talk

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Speaker 1: for a long time. This is fascinating. Michael Coden, head

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Speaker 1: of cyber the cybersecurity practice at BCG platini in which

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Speaker 1: is part of the Boston Consulting Group. Let us find

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Speaker 1: out what is the latest drama brewing in Washington. D C.

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Speaker 1: Tolu l Arunaba is following it all for us, our

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Speaker 1: White House reporter for Bloomberg News, who comes to us

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Speaker 1: from the White House us to lou Gosh, where do

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Speaker 1: we even start? I mean, it's like every day more

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Speaker 1: build on, but I really want to begin with the

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Speaker 1: news of a possible shake up in President Trump's inner circle.

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Speaker 1: Can you talk about how realistic these rumors really are

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Speaker 1: and what it would mean. Yeah, after the last week

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Speaker 1: that the president had, uh, you might not be too

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Speaker 1: too surprised to hear that he wasn't happy with how

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Speaker 1: the week went, how all of his decisions were covered

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Speaker 1: in the news media and on Capitol Hill, with criticism

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Speaker 1: coming from Democrats and Republicans and UH. News analysts looking

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Speaker 1: at how he fired the director of the FBI and

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Speaker 1: all the questions of that race. So the president is

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Speaker 1: looking at a potential shake up. We've heard that he's

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Speaker 1: you know, considered making some changes. He said publicly that

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Speaker 1: he's considered changing the way he the way his his

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Speaker 1: operation briefs the press, maybe getting rid of the press briefing. Uh.

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Speaker 1: Some people are even saying that a couple of his

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Speaker 1: communications staffers could be on their way out the door.

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Speaker 1: And hold on, you're sanitizing this to lou. Basically people

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Speaker 1: are thinking that Sean Spicer is out. Uh, and we

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Speaker 1: have heard we've gotten a tweet from President Trump saying

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Speaker 1: that he might issue uh, you know, comments just to

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Speaker 1: send out send out comments rather than have press conferences.

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Speaker 1: Is that what you mean? Yeah, it's not clear how

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Speaker 1: realistic that is, but he basically is taking the taking

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Speaker 1: it a bit hard that a lot of the criticism

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Speaker 1: for his press officials has come every time they've made

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Speaker 1: a statement that's been contradicted by the President himself or

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Speaker 1: by the facts. Uh, he's saying that, instead of, you know,

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Speaker 1: expecting them to be perfectly accurate, maybe we'll just put

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Speaker 1: out a paper statement with all of the facts correct

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Speaker 1: and see how the media likes that. I don't know

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Speaker 1: if he'll actually will follow through on that, but he

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Speaker 1: is looking at some some changes in his communication shop,

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Speaker 1: and even higher even his chief of chief of staff

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Speaker 1: and chief strategist. Ranks Previous and Steve Bannon are people

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Speaker 1: who have been reported reportedly on the chopping block and

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Speaker 1: potentially could be UM have their positions changed, or could

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Speaker 1: be on their way out the door in the White House.

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Speaker 1: Why I mean, I guess I'm trying to understand they

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Speaker 1: were not from what I have read, behind the decision

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Speaker 1: to fire James Comey as head of director of the

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Speaker 1: FBI as Director of the FBI um at least not

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Speaker 1: in the past two weeks. So what would be achieved

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Speaker 1: by getting rid of them? Yeah, It's hard to know

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Speaker 1: what's in the President's head as he as he moles

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Speaker 1: over these staffing decisions. But I think one thing that

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Speaker 1: we've seen is that the President has been surprised by

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Speaker 1: the blowback on a number of different things that he's done,

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Speaker 1: everything from the first round of healthcare, which struggled to

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Speaker 1: get through the House to UH this issue with Jim Comey.

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Speaker 1: The president is a newcomer to Washington, and he's hired

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Speaker 1: people like UH, like previous who are supposed to know

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Speaker 1: the ins and outs and know how how things might

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Speaker 1: be received and I think the fact that he was

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Speaker 1: surprised by so many different things. It's one reason that

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Speaker 1: he's questioning his chief of staff and his top officials

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Speaker 1: about how well they're preparing him for, you know, for

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Speaker 1: potential blowback when he makes some of the decisions. And

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Speaker 1: he seems to be blindsided by the fact that, you know,

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Speaker 1: they're not going to go over too well in Washington.

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Speaker 1: So that may be one of the things that he's considering.

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Speaker 1: And you have to remember that he's uh as he

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Speaker 1: has he's focused so much on loyalty. UH. These are

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Speaker 1: people who have come into his orbit in the last

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Speaker 1: year or so, whereas he has his daughter and his

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Speaker 1: son son in law who have been much closer to

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Speaker 1: him for a much longer time since birth. UM. I

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Speaker 1: do want to ask you about a comment that former

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Speaker 1: Director of National Intelligence Jane Clapper said yesterday in a

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Speaker 1: televised interview. He thinks that our quote institutions are under

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Speaker 1: assault and quote by both other nations such as Russia

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Speaker 1: and by the president. Can you explain what that means

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Speaker 1: and if if he is right, what the implications are. Yeah,

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Speaker 1: that was quite a statement coming from the former Director

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Speaker 1: of National Intelligence. I think he was definitely focusing on

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Speaker 1: the fact that President Trump has called into question the

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Speaker 1: intelligence agencies. He's called uh news accounts to be fake

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Speaker 1: news if he doesn't like them. He's even questioned whether

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Speaker 1: RUSSI was a a factor in the election, and that's

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Speaker 1: something that all the intelligence agencies have, um have concluded

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Speaker 1: was the case. So I think the fact that the

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Speaker 1: President is questioning so many of our our institutions, from

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Speaker 1: the intelligence agencies to the media, that's caused a number

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Speaker 1: of people who uh see the value of these institutions

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Speaker 1: to wonder whether or not um some real lasting damages

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Speaker 1: being done to them. When you have the you know,

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Speaker 1: the highest official in the land, uh questioning, you know,

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Speaker 1: whether they have any value and and deciding to sort of, um,

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Speaker 1: you know, go against some of these institutions, even institutions

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Speaker 1: like the FBI by dismissing the director of the FBI

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Speaker 1: in such a sort of embarrassing way that he did,

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Speaker 1: uh and which seemed to happen kind of uh like

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Speaker 1: a spur of the moment decision. Uh. Those types of things,

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Speaker 1: those types of institutions and norms are being thrown out

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Speaker 1: the window by the President, and I think that's what

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Speaker 1: Clapper was talking about, Can I just ask about the

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Speaker 1: tapes that has have been speculated about that President Trump

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Speaker 1: may have tape some of his conversations with former FBI

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Speaker 1: Director James Comy. Do you really think, from the talks

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Speaker 1: that you've had with people who have a better sense

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Speaker 1: of the matter, are there really tapes. I would highly

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Speaker 1: doubt that there are tapes of these conversations that there

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Speaker 1: is a secret taping recording system within the White House.

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Speaker 1: I think this is more sort of the President blowing

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Speaker 1: off steam and trying to change the news cycle and

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Speaker 1: make a veiled threat at the FBI director after some

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Speaker 1: stories had come out about what the FBI director was

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Speaker 1: that the President has installed a taping system within the

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Speaker 1: White House. If he has, that would be a major

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Speaker 1: scandal and we'll definitely hear more about it. So, Lou,

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Speaker 1: thank you so much as always for bringing us this

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Speaker 1: news to lose. Alorna but is our White House reporter

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Speaker 1: at Bloomberg News and comes to us from the White House.

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Speaker 1: We want to take a moment to let you know

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Speaker 1: We hear a lot about political turmoil in Washington, whether

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Speaker 1: it's the firing of James Comee as a head of

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Speaker 1: FBI or potential turnover in President Trump's inner circle. At

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Speaker 1: what point will some of these developments bleed into the

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Speaker 1: market complacency that has led to a kind of melt

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Speaker 1: up of stocks and risk your bonds. David Dietz perhaps

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Speaker 1: has some answer. David Eats, founder and president and chief

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Speaker 1: investment strategist at Point View Wealth Management, which oversees two

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Speaker 1: two million dollars in Summit, New Jersey. David, thank you

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Speaker 1: so much for joining us. So let's start there. At

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Speaker 1: what point does the political issues that are painted with

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Speaker 1: such inflamed rhetoric uh in newspapers across the world, At

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Speaker 1: what point will that bleed into the market. Yeah, that's

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Speaker 1: a great question, Lisa, Thank you so much for having

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Speaker 1: me on. Certainly we see that as a critical risk,

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Speaker 1: which leads into our fundamental caution on the stocks right now.

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Speaker 1: We saw tremendous ramp up in stocks post election as

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Speaker 1: investors priced in the pro growth Trump agenda. UM, then,

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Speaker 1: of course we saw was the first failure to repeal

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Speaker 1: the a C a UM doubt starting to creep into

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Speaker 1: Trump's ability to push that agenda forward. Now, of course,

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Speaker 1: with the firing of James call Me and other issues,

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Speaker 1: you will start to wonder whether there will be so

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Speaker 1: much distraction on an Siller issues that the Washington would

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Speaker 1: not be able to focus on any of the pro

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Speaker 1: growth items that have caused such enthusiasm on the part

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Speaker 1: of investors. Having said that, you know clearly it's not

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Speaker 1: just enthusiasm over the Trump agenda which is forcing stocks higher,

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Speaker 1: ironically enough or not ironically enough. Overseas stocks that actually

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Speaker 1: outperformed the United States this year. Hopefully they don't think

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Speaker 1: it's all about the Trump agenda. If anything, the Trump

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Speaker 1: agenda would have curtailed some UM cross border trade. So

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Speaker 1: obviously there are other cross currents. I think we're seeing

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Speaker 1: them today. I think the fact that China is taking

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Speaker 1: some leadership here in terms of global trade also is

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Speaker 1: providing a boost to this market. Well, so let's talk

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Speaker 1: about China and the fact that they have come out

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Speaker 1: and tried to present themselves as the new global leader,

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Speaker 1: replacing the United States. UH in the wake of some

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Speaker 1: turmoil and protectionist hype rhetoric in the U. Asked you

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Speaker 1: from your fund managing expertise, do you plan on investing

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Speaker 1: more in China as a result of this move? UM

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Speaker 1: China per se, we think it's actually fully valued UM where,

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Speaker 1: but we liked ancillary place based on in effect growth

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Speaker 1: initiatives that are put forth by China. UM, the so

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Speaker 1: called One Road one Belt would increase trade trade dramatically

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Speaker 1: with Europe. UM. So we are investing in Europe and

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Speaker 1: tilting in that direction. Why would that be? First of all,

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Speaker 1: earnings projections going forward are actually stronger than the United States. UH.

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Speaker 1: They are a major trader with Asia, including China. UM

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Speaker 1: and also the valuations significantly less. One of the challenges

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Speaker 1: to the US market is the near nineteen times forward earnings,

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Speaker 1: but in Europe that's closer to fifteen times forward earnings,

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Speaker 1: and the davidend yields are better. Um. So the Europe

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Speaker 1: is I think, in a way to take advantage of

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Speaker 1: a uh, the leadership that China is showing on global trade.

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Speaker 1: So uh. One thing that I am thinking about as

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Speaker 1: you speak is that last week I believe that mutual

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Speaker 1: funds in Europe focused on equities in that region received

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Speaker 1: their biggest weekly inflow ever. So it's not as though

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Speaker 1: people are ignoring European stocks, and yet you're saying they're

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Speaker 1: still not fully valued. Are there particular areas in European

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Speaker 1: stocks that you think have greater values than others? Well, Lisa,

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Speaker 1: first of all, I would profis my words marked by saying,

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Speaker 1: we think industrial sectors, what you're doing is probably more

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Speaker 1: important than where you're doing it from. So, for example, um,

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Speaker 1: whether you're in the energy business versus the tech business

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Speaker 1: is probably more important than whether you're based in Dallas

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Speaker 1: or Paris. So what we like to do is overlay

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Speaker 1: those sectors that we find most attractive with those geographic reasons.

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Speaker 1: For US, it would be three key areas financial, uh, energy,

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Speaker 1: in healthcare. So we're actually beating the bushes looking for

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Speaker 1: the best opportunities in those areas that are European based.

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Speaker 1: So one question that keeps coming up is are we

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Speaker 1: just seeing a continuation of the there is no alternative trade?

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Speaker 1: In other words, because interest rates are so low and

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Speaker 1: continue to be uh and and as central banks continue

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Speaker 1: to buy vans around the world, our stocks simply as

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Speaker 1: high as they are because of this, And could a

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Speaker 1: material increase in benchmark rates in the US disrupt this

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Speaker 1: and cause a pretty big sell off in stocks? Do

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Speaker 1: you think that's realistic? Well? Is yes, and yes, really, Lisa,

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Speaker 1: I mean the reason they continue to be bullish, notwithstanding

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Speaker 1: higher the normal valuation is not notwithstanding you know some

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Speaker 1: distressing news on the political front is you still got

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Speaker 1: that ten year treasury below two point four percent. So

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Speaker 1: in Donwin's pensions, individuals trying to finance kids education retirements

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Speaker 1: still think that's just not enough. So every time there's

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Speaker 1: a perceived opportunity pull back, I think people are going

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Speaker 1: to continue to push into stocks. So that's the bullish case,

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Speaker 1: and that's why Frankly, it's even more bullish in Europe.

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Speaker 1: Is interesstrated that much lower, even though stock valuations have

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Speaker 1: higher yields. Um? So could that upset the apple cart

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Speaker 1: if interest ratement went significantly higher. Absolutely? Um. There's nothing

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Speaker 1: that makes the present value of any type of investment

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Speaker 1: more more valuable if there's a trace higher. Uh. The

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Speaker 1: one silver lining might be if they're going higher because

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Speaker 1: of stronger economic growth, that's probably better than a stagflation

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Speaker 1: inflation situation. We're just driving interest rates higher. So I'm

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Speaker 1: looking at a ten year treasury yield of two point

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Speaker 1: three or four right now. How high does that yield

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Speaker 1: have to go before people start taking the money out

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Speaker 1: of stocks and going back into government bonds? You know,

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Speaker 1: I don't think there's any one tipping point, And of course,

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Speaker 1: even to back that up is I challenge anyone to

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Speaker 1: figure out exactly we're in strates are going to be

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Speaker 1: one year for now, that's a very complicated topic. Assuming

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Speaker 1: they go higher, I think at the margin that will

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Speaker 1: reduce enthusiasm for the so called Tina trade. But to

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Speaker 1: the extent that people are saying, well, that's because everyone's

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Speaker 1: going out to buy a new house um. New projects

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Speaker 1: are getting off the drawing boards and being built, so

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Speaker 1: they're borrowing money that can help offset that gradual drift

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Speaker 1: up and interest rates. David Diets, thank you so much

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Speaker 1: for joining us. David Diets is a founder, president, and

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Speaker 1: chief investment strategist at Point View Wealth Management, which is

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Speaker 1: based in Summit, New Jersey. Talking about industrials as well

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Speaker 1: as gas companies, some of his stock picks are Chevron,

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Speaker 1: Blacks and Smith Klein and a I G. We hear

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Speaker 1: a lot about small businesses in the U S. Since

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Speaker 1: they do provide such a big part of the growth

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Speaker 1: in this country. But just how dire is a situation

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Speaker 1: for small businesses? We hear a lot of rudder. I

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Speaker 1: can here to put some reality to it. Uh to

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Speaker 1: it all is Karen mel Senior Fellow at Harvard Business

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Speaker 1: School in Boston. She also was the former Small Business

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Speaker 1: Administrator for President Obama from two thousand nineteen. Karen, it's

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Speaker 1: terrific to have you in the studio here in Bloomberg

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Speaker 1: Bloomberg eleven three oh studios. Let's just start with the

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Speaker 1: state of US small businesses today. We hear so much

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Speaker 1: about them struggling to gain the same kind of traction

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Speaker 1: as larger businesses, and yet it seems like credit is

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Speaker 1: fairly free flowing. What's the disconnect here? What is what

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Speaker 1: is sort of the health here? Well, it's always important

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Speaker 1: to talk about the health of small business because half

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Speaker 1: the people who work in this country own a work

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Speaker 1: for a small business. So I used to say I

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Speaker 1: went to sleep at night worrying about half the jobs.

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Speaker 1: So even in a robust economy, which is what we've

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Speaker 1: been having, you have to keep your eye on the ball.

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Speaker 1: You can't um take your foot off the gas for

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Speaker 1: small businesses or you will have a slowdown, and it

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Speaker 1: can happen quite quickly. Right now, we're a little worried

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Speaker 1: about that slowdown because the recent optimism indexes all showed

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Speaker 1: a few sort of glitchy moments, and they don't believe

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Speaker 1: small businesses now don't believe that pumped up economy that

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Speaker 1: came from the early Trump bump in the fall is

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Speaker 1: really going to be maintained and maybe their business will

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Speaker 1: go down. Well, and when you talk about the optimism readings,

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Speaker 1: what's the practical implication of a decline in optimism among

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Speaker 1: small business operators? Well, when small business operators are concerned

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Speaker 1: about the future. They don't hire more people, they don't

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Speaker 1: invest in their business, they don't expand, and the kinds

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Speaker 1: of job creation that you might otherwise see from them

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Speaker 1: slows down. And that can actually have a pretty big

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Speaker 1: effect because the main street businesses, uh, you know, we

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Speaker 1: don't think about them as the innovation drivers of the

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Speaker 1: next Google, but they actually create a huge amount of

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Speaker 1: the jobs. So what does the current administration need to

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Speaker 1: do to bolster optimism among these business owners as well

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Speaker 1: as provide a more supportive backdrop for them. Well, if

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Speaker 1: I were in Washington day and I saw this, and

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Speaker 1: the President was going off on a foreign trip, I

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Speaker 1: would get all of the domestic folks in the White

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Speaker 1: House or in Congress, and I would hatch a small

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Speaker 1: business piece of legislation, you know, the Small Business Growth

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Speaker 1: Act of twenty seventeen. She's even naming it, absolutely and

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Speaker 1: everything has a name in Washington, and you know, you

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Speaker 1: could fill it with some tax credits. Small businesses love

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Speaker 1: tax credits, and you doesn't have to wait until some

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Speaker 1: big piece of legislation goes through. You can do some

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Speaker 1: things to reduce regulation and signal to the small business

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Speaker 1: owner that Washington has their back. So how bipartisan with

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Speaker 1: something like that be what would be very bipartisan. Small

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Speaker 1: business is the holy grail if you look at UM,

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Speaker 1: what people can agree on the first is the military.

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Speaker 1: Right behind it is small businesses. And I found in

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Speaker 1: Washington we were able to pass a lot of small

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Speaker 1: business legislation because people congressmen go home to their districts

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Speaker 1: and they see the small business owner and they hear

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Speaker 1: from them. So whether they're Republican or Democrat, they feel

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Speaker 1: this sensibility and they want to do something for their

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Speaker 1: small business owners. So why isn't there more of a

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Speaker 1: push to do something like what you just said as

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Speaker 1: President Trump to uh disembarks for for the rest of

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Speaker 1: the world, He's gonna be away. Why aren't they doing

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Speaker 1: something like this? You know, the notion that small businesses

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Speaker 1: are so critical to the economy is actually kind of

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Speaker 1: new in Washington because small businesses don't have great big

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Speaker 1: lobby a lobbyists and people watching out for them. They're busy,

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Speaker 1: they're just home doing their business. So this time I

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Speaker 1: spent in Washington, one of the things I'm the most

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Speaker 1: proud of is that UM the position was made a

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Speaker 1: cabinet level position, and small business really had a voice

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Speaker 1: at the table. But sometimes, um, the macro economists and

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Speaker 1: others don't get around to putting small business at the

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Speaker 1: top of the action items, and I think that's a mistake.

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Speaker 1: I think we're really missing the boat here, particularly at

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Speaker 1: a time where it could bring people together and kind

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Speaker 1: of keep our whole democracy and our whole economy on

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Speaker 1: a more positive footing. So last week we had a

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Speaker 1: former business administrator for UH, former President Bush, George W.

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Speaker 1: Bush UH, and he was Hector Barretto, and UH he

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Speaker 1: blamed some of the distraction that we've been seeing from

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Speaker 1: the firing of James Comey, the former FBI director, as

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Speaker 1: well as other things that have gotten a lot of

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Speaker 1: attention in the prosidy, so that this distraction is what's

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Speaker 1: sort of keeping legislators from getting things done. I mean,

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Speaker 1: do you see that as the reality that basically as

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Speaker 1: long as we continue to discuss the FBI dust up

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Speaker 1: as well as the Russia investigation, there's going to be

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Speaker 1: just absolute lack of action from Washington. Well, I think

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Speaker 1: that's letting politics get in the way of facts. You know,

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Speaker 1: the reality is that there are lots of people in

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Speaker 1: Congress who want to do something good. We need leadership

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Speaker 1: both in the White House and in the Republican and

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Speaker 1: the Democratic Party to decide that they do want to

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Speaker 1: work together on something, and small business would be a

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Speaker 1: likely candidate for that. If they decide they want to

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Speaker 1: work together, this is a place where they know they

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Speaker 1: can find common ground. So, um, you're talking about rolling

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Speaker 1: back certain parts of Dodd Frank or at least allowing

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Speaker 1: it to be a little bit easier. How would that

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Speaker 1: help small businesses? Well, one of the first things there

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Speaker 1: where there's bipartist agreement on Dodd Frank is to do

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Speaker 1: something about small community banks. And here we see, with

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Speaker 1: the advent of fintech, community banks have figured out that

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Speaker 1: they really need to serve the small dollar loans to

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Speaker 1: the smaller customers. And you know, surprisingly enough, these very

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Speaker 1: small rural banks are getting innovative and they're competing with

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Speaker 1: the fin techs. So making it easier for UH for

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Speaker 1: them to do that and taking away some of the gobbledegook.

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Speaker 1: They have seven federal regulators who are all telling them, um,

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Speaker 1: how to categorize their loans and what to do about

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Speaker 1: their third party arrangements, and sometimes the guidance is conflicting

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Speaker 1: and they don't know what to do. So these people

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Speaker 1: want to comply. I do think we can make it

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Speaker 1: easier for them to do it real quick. Is there

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Speaker 1: one other provision that you think could be changed or

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Speaker 1: tweaked to make things easier for small businesses? Well, I

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Speaker 1: do think we need small business borrowerk disclosures. We have

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Speaker 1: a very vibrant, innovative new fintech community. They've put out

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Speaker 1: loans to some businesses who couldn't get loans before. But

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Speaker 1: sometimes they charge a lot of money, and sometimes small

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Speaker 1: businesses can't see exactly what they're paying. So I think

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Speaker 1: protecting a small business owner with some disclosure that would

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Speaker 1: be appropriate. Thank you so much for joining us. Karen

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Speaker 1: Mills is a senior Fellow at Harvard Business School. She

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Speaker 1: also was the former Small Business Administrator under former President

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Speaker 1: Obama from two thousand and nine to two thousand and thirteen,

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Speaker 1: talking about how perhaps Congressman should get together while President

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Speaker 1: Trump is on his global trip and try to pass

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Speaker 1: some real material changes for small businesses to drive forward

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Speaker 1: uh this growth. Thanks for listening to the Bloomberg P

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Speaker 1: and L podcast. You can subscribe and listen to interviews

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00:28:54,880 --> 00:28:58,920
Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.

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00:28:59,320 --> 00:29:02,400
Speaker 1: I'm Pim fall Box, I'm on Twitter at pim Fox.

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Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.

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Speaker 1: You can always catch us worldwide on Bloomberg Radio