WEBVTT - Twitter Surges After Activists Seek to Replace Dorsey 0:00:00.440 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.480 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.840 --> 0:00:13.480 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.759 not to mention our journalists and analysts more than a 0:00:16.800 --> 0:00:19.520 hundred and twenty countries. You can download Bloomberg Business Week 0:00:19.560 --> 0:00:22.439 on iTunes, SoundCloud, or Bloomberg dot Com. You can also 0:00:22.480 --> 0:00:24.919 listen to our radio show weekdays at two pm Eastern 0:00:25.000 --> 0:00:28.760 only on Bloomberg Radio. Let's turn to Scott to vote. Now, 0:00:28.800 --> 0:00:32.000 he's got a great, great scoop on the terminal, moving 0:00:32.120 --> 0:00:38.760 shares and getting people interested all around this potential or 0:00:38.800 --> 0:00:41.240 I guess it actually is a transaction to the extent 0:00:41.320 --> 0:00:45.519 that we've had Elliott Management, well known investor Paul Singers 0:00:45.680 --> 0:00:50.120 Shop going into Twitter pushing for changes, including saying Jack Dorsey, 0:00:50.360 --> 0:00:52.159 maybe he shouldn't be the CEO. Scott's with us in 0:00:52.159 --> 0:00:55.240 our Bloomberg Interactor brokerst here. First of all, congrats, great 0:00:55.280 --> 0:00:59.160 scoop moving the shares, a green b as we call 0:00:59.240 --> 0:01:01.920 it here. In turn, it's a big deal, so what's 0:01:01.920 --> 0:01:05.720 going on. So I think for the longest time people 0:01:05.760 --> 0:01:08.480 were kind of looking at Jack Dorrisey at Twitter and 0:01:08.520 --> 0:01:12.040 wondering how he could divide his time between the Twitter 0:01:12.160 --> 0:01:15.720 and then his other job, which is the CEO of Square. 0:01:15.760 --> 0:01:19.000 They're both, um, you know, thirty five billion dollar company. 0:01:19.080 --> 0:01:24.039 Twitter is a six billion dollar company, and he's also 0:01:24.440 --> 0:01:26.440 came out and said that he was, you know, looking 0:01:26.440 --> 0:01:30.240 to spend about six months of the year working in Africa. Now, um, so, 0:01:30.280 --> 0:01:32.280 I think the alarm bell started going off for a 0:01:32.319 --> 0:01:35.360 lot of investors. And then when that happens, it doesn't 0:01:35.360 --> 0:01:37.920 take too long for somebody like Elliott to show up. 0:01:38.240 --> 0:01:39.800 So how big a holding do they have and what 0:01:39.840 --> 0:01:42.080 are they pushing for? And tell us about this meeting 0:01:42.080 --> 0:01:45.640 where Twitter executives were there but Jack Dorsey was not. Yeah, 0:01:45.640 --> 0:01:48.240 so they own a more than a billion dollar stake 0:01:48.280 --> 0:01:51.960 in the company. Um and on Friday night they had 0:01:51.960 --> 0:01:55.080 a meeting with the chairman and the lead director. Elliott 0:01:55.160 --> 0:01:57.840 did uh to discuss some of their concerns. And I 0:01:57.840 --> 0:01:59.760 mean it's not uncommon that did not have the ce 0:02:00.000 --> 0:02:01.640 OH in the room. If you're going to be talking 0:02:01.680 --> 0:02:04.480 about the CEO and in the future of the CEO. 0:02:04.640 --> 0:02:07.880 So I wasn't too surprised that Dorsey wasn't there, but 0:02:08.120 --> 0:02:10.200 you know, it makes it a lot easier to facilitate 0:02:10.280 --> 0:02:13.400 a conversation about some of your concerns about Dorsey if 0:02:13.440 --> 0:02:20.040 he's not actually there, And so how likely, how feasible 0:02:20.160 --> 0:02:23.639 is it that they'll get something satisfactory out of all this. 0:02:24.400 --> 0:02:27.040 I don't think that it comes as a surprise to 0:02:27.120 --> 0:02:31.040 the board that there are increasing concerns about the level 0:02:31.080 --> 0:02:36.160 of UM involvement Dorsey has in his divided attention. So 0:02:36.320 --> 0:02:38.040 I think this has got to be something that they 0:02:38.040 --> 0:02:41.400 were thinking of already. UM. And I don't know that 0:02:41.480 --> 0:02:44.480 for a fact, but I do know that the conversations 0:02:44.520 --> 0:02:47.960 between Elliott and uh, the chairman and the lead director 0:02:48.000 --> 0:02:51.280 were cordial, uh constructive. They were described to me as 0:02:51.440 --> 0:02:54.080 and that UM, there is some hope that maybe there 0:02:54.080 --> 0:02:56.960 will be some some way, some path forward that they 0:02:56.960 --> 0:03:01.080 can work together. I also want to ask you about 0:03:01.760 --> 0:03:04.639 sort of Elliott right now and policing. I mean, this 0:03:04.720 --> 0:03:06.440 is the second time we've talked to you in in 0:03:06.480 --> 0:03:08.920 as many weeks, I believe, because we were talking to 0:03:08.919 --> 0:03:12.440 you about soft I mean, yeah, this guy's going for it. 0:03:12.440 --> 0:03:14.680 It feels like yeah, I mean, it's a forty billion 0:03:14.680 --> 0:03:18.000 dollar fund now, and it's it's you know, you've got 0:03:18.000 --> 0:03:21.080 to deploy that capital somehow. Um, you've got the clout 0:03:21.400 --> 0:03:23.679 um and there's these targets that are just out there, 0:03:23.880 --> 0:03:27.160 you know, Massa Son's soft Bank. You know, we're all 0:03:27.200 --> 0:03:29.160 talking about all the problems they're having with the Vision 0:03:29.160 --> 0:03:32.079 Fund and not the kingmaker that are the guaranteed kingmaker 0:03:32.080 --> 0:03:34.480 in terms of startups that I think everyone assumed it 0:03:34.560 --> 0:03:36.600 was right. And I think that so as soon as 0:03:37.000 --> 0:03:39.440 that happens in a public realm, there's only a few 0:03:39.440 --> 0:03:42.280 people that have the capital that can go into a 0:03:42.280 --> 0:03:45.560 company like soft Bank or Twitter and say, you know, hey, 0:03:45.600 --> 0:03:48.680 look this isn't right, like this shouldn't be running this way, 0:03:48.800 --> 0:03:51.360 And Eliot's one of those people. I do if I 0:03:51.400 --> 0:03:53.160 can be sorry, I just go back to Twitter for 0:03:53.160 --> 0:03:56.320 a second. Is it is it likely that the Dorsey 0:03:56.400 --> 0:03:59.000 era of Twitter is going to come to an end? Look, 0:03:59.240 --> 0:04:02.920 I'm not good at predicting things. I'm terrible at deciding 0:04:02.960 --> 0:04:06.280 who's going to win an election or a primary or whatever. 0:04:06.640 --> 0:04:09.400 But I would say that the writings on the wall 0:04:09.560 --> 0:04:12.440 if he wants to continue to run both companies and 0:04:12.520 --> 0:04:14.560 moved to Africa for six months of the year. There's 0:04:14.880 --> 0:04:19.320 absolutely no way that somebody running a you know, twenty 0:04:19.320 --> 0:04:22.080 six billion dollar companies should be having those side jobs. 0:04:22.160 --> 0:04:24.320 It's it's a full time job. There's a U S 0:04:24.320 --> 0:04:27.400 election coming up, there's Summer Olympics coming up. There spread 0:04:27.400 --> 0:04:31.159 a coronavirus. That's when all the users start turning to Twitter, 0:04:31.320 --> 0:04:34.479 That's when all the advertisers start turning to Twitter. And 0:04:34.839 --> 0:04:37.760 that requires somebody's full time attention. Well, and there's so 0:04:37.800 --> 0:04:40.560 many big existential questions and we've talked about them on 0:04:40.640 --> 0:04:43.400 this show a lot around you know, Twitter's role in 0:04:43.440 --> 0:04:46.160 the world of politics, in the world of misinformation and 0:04:46.279 --> 0:04:50.920 information and all of those things. And yet, as you 0:04:51.040 --> 0:04:54.719 alluded to Scott, at least so far as it was 0:04:55.120 --> 0:04:58.520 with soft Anchor, as it has been with softing fairly 0:04:58.600 --> 0:05:02.720 friendly at this moment. This isn't sort of storming the gates. Yeah, 0:05:02.800 --> 0:05:05.440 I mean to be clear, Elliott has nominated for directors 0:05:05.560 --> 0:05:08.640 the board. Um, and you know that's just a precaution. 0:05:08.680 --> 0:05:11.159 If things don't go well, then you know they have 0:05:11.360 --> 0:05:13.800 the people there because there was a deadline for nominating. 0:05:14.000 --> 0:05:16.600 They have those directors there. So if things don't go well, 0:05:16.680 --> 0:05:19.159 then they can push for changes in a in a 0:05:19.200 --> 0:05:21.240 proxy fighter. I do feel like the Twitter story, how 0:05:21.240 --> 0:05:23.680 many conversations have we had, you know, I think their 0:05:23.920 --> 0:05:25.479 numbers may have been I have to go back and 0:05:25.480 --> 0:05:27.360 look at the most recent earnings, but I do think 0:05:27.400 --> 0:05:29.800 people wonder about, like kind of what is this business 0:05:29.800 --> 0:05:32.159 going forward? Right? It's well, if you look at the 0:05:32.200 --> 0:05:35.600 numbers since Doris came back in July, the shares are 0:05:35.640 --> 0:05:38.599 down six percent over that same period of time. Facebooks 0:05:38.600 --> 0:05:43.760 are up one um. So you do the math, right, Yeah. Well, 0:05:43.800 --> 0:05:46.400 and just to point out, Twitter shares you know, really 0:05:46.440 --> 0:05:51.160 based on your reporting, up about seven percent today. So 0:05:51.560 --> 0:05:55.440 clearly investors excited about the idea that Mr Singer and 0:05:55.480 --> 0:05:58.120 his cohorts getting in there, and a kind of timeline 0:05:58.120 --> 0:05:59.719 that we can expect that we might start to see 0:05:59.760 --> 0:06:02.760 something happening here. I'm hearing that things are moving fast. 0:06:03.120 --> 0:06:07.120 All right, Well, stay tuned and you might lose another weekend. 0:06:07.760 --> 0:06:11.680 Sorry for just a week, all right, Scott Devote, thank 0:06:11.680 --> 0:06:13.920 you so much. Feel's report of fantastic scoop one of 0:06:13.920 --> 0:06:17.440 the most read on the Blottolberg. People certainly talking about 0:06:17.440 --> 0:06:21.280 this amid a very very busy week in politics and 0:06:21.480 --> 0:06:25.440 global economics and central banks and coronavirus. This is capturing 0:06:25.600 --> 0:06:35.480 a lot of attention. A lot of pet shop boys 0:06:35.839 --> 0:06:42.000 these days. Pet shop boys takes me back. Oh yeah, 0:06:41.080 --> 0:06:46.240 the hund pig. Uh. Nick Parrish is here with us, 0:06:46.240 --> 0:06:49.440 managing director of Crescent Partners based out in Chicago, here 0:06:49.440 --> 0:06:52.359 with us in New York City today talking opportunity zones. 0:06:52.480 --> 0:06:57.960 That's the subject of the story. So tell us what's 0:06:58.000 --> 0:07:01.440 going on out there, because we've heard a lot about 0:07:01.560 --> 0:07:03.480 them sort of in theory, but I feel like less 0:07:03.600 --> 0:07:06.400 in practice. What are you seeing? Yep, So I think 0:07:06.520 --> 0:07:08.880 you know, it's it's a good point, right, this is 0:07:08.920 --> 0:07:12.200 a relatively new piece of legislation. It's fifteen months old 0:07:12.200 --> 0:07:15.240 in practice, a little bit older in legislation, and it 0:07:15.440 --> 0:07:17.800 caught a lot of excitement early on. Right, It's you know, 0:07:17.840 --> 0:07:20.040 if you look at the magnitude of these tax breaks, 0:07:20.080 --> 0:07:23.880 there's a huge opportunity for investors. But it's new, and 0:07:23.960 --> 0:07:26.760 it's been largely untested, and so you know, initially you 0:07:26.760 --> 0:07:28.720 sell a lot of people talking about it, but not 0:07:28.840 --> 0:07:31.800 a lot of activity. And I think now you know, 0:07:31.840 --> 0:07:34.480 you're fifteen months in and you know, while that's only 0:07:34.520 --> 0:07:37.400 the early innings of the program, you know, you're starting 0:07:37.400 --> 0:07:39.600 to see some of that activity, whether it be in 0:07:39.680 --> 0:07:43.000 the fundraising side or actual deployment of capital. Um And 0:07:43.080 --> 0:07:45.040 so now I think there's a you know, there's a 0:07:45.240 --> 0:07:47.760 there's a subset of folks in the market. They're actually 0:07:47.920 --> 0:07:50.400 getting things done, and I think we're you know, we're 0:07:50.400 --> 0:07:53.360 starting to see that that percolate. All right, so you've 0:07:53.360 --> 0:07:55.679 got money, I know. So so give me an idea 0:07:56.560 --> 0:07:59.400 of the types of projects were costing. You know that 0:07:59.440 --> 0:08:01.000 we're talking at Nike that where the money is going 0:08:01.040 --> 0:08:02.920 to go. Because you know that there's a fair amount 0:08:02.920 --> 0:08:06.600 of controversy surrounding opportunity zones. Are they really an opportunity 0:08:06.680 --> 0:08:08.760 zone or is it a zone that's already turning and 0:08:08.800 --> 0:08:12.520 it's just a great opportunity for wealthy investors to kind 0:08:12.520 --> 0:08:15.840 of tap into. Yeah, So so you know, the government 0:08:15.880 --> 0:08:20.200 designated where we could invest. Right, So there's finger point 0:08:20.200 --> 0:08:22.400 I should point at the government. And I don't mean 0:08:22.440 --> 0:08:24.440 to point fingers, but you know it it is, you 0:08:24.440 --> 0:08:26.880 know they and and by the way, you know it's 0:08:26.880 --> 0:08:30.160 not all um necessarily you know, political in terms of 0:08:30.160 --> 0:08:33.319 how those got selected. So one of the biggest disconnects 0:08:33.320 --> 0:08:36.800 in the program. They used UM. They used employment statistics 0:08:36.800 --> 0:08:39.640 and these income levels from the last census. Do you 0:08:39.640 --> 0:08:42.080 remember from your high school Civics class, WEDE a census 0:08:42.080 --> 0:08:46.000 every ten years, and so you had opportunity zones that 0:08:46.040 --> 0:08:48.760 were selected based on income and poverty levels in two 0:08:48.800 --> 0:08:52.079 thousand ten. If you think of really high growth markets 0:08:52.080 --> 0:08:55.000 and especially just coming off the crisis, so those numbers 0:08:55.000 --> 0:08:57.800 are in particular particularly kind of skewed correct. And so 0:08:57.920 --> 0:08:59.520 if you look at where a lot of the capital 0:08:59.600 --> 0:09:01.319 is flowing today, a lot of these are high growth 0:09:01.360 --> 0:09:05.280 markets in places where nine years, ten years makes a 0:09:05.280 --> 0:09:08.560 world of difference. You think about markets like Portland, like Nashville, 0:09:08.600 --> 0:09:11.360 like Denver. You know, there are areas that ten years 0:09:11.360 --> 0:09:13.800 ago might have been very much on the periphery of 0:09:13.840 --> 0:09:17.280 these of these cities that now today are very much 0:09:17.280 --> 0:09:20.600 in the center of that economic development curve UM. And 0:09:20.640 --> 0:09:22.680 so that's where you're seeing a lot of the capital today. 0:09:22.720 --> 0:09:25.080 But you know, I like to remind people we're fifteen 0:09:25.120 --> 0:09:28.080 months into a ten year program. You know, you're only 0:09:28.120 --> 0:09:31.320 starting to see that capital get deployed. What our hope 0:09:31.400 --> 0:09:33.400 is is that it will create a path to progress 0:09:33.400 --> 0:09:36.120 where if you build on the periphery of these areas, 0:09:36.559 --> 0:09:38.600 that will give the next developer a little more license 0:09:38.640 --> 0:09:40.360 to go a little bit further out, and that will 0:09:40.360 --> 0:09:43.400 give capital kind of a natural path to follow. And 0:09:43.520 --> 0:09:45.679 what could get in the way of this? I mean, 0:09:45.800 --> 0:09:50.520 is it macro economic concerned? Is it further legislation? Is 0:09:50.559 --> 0:09:53.280 at local? Like, what do you worry about? I think, 0:09:53.320 --> 0:09:56.800 you know, the further legislation piece that that ebbs and flows. 0:09:56.920 --> 0:10:00.120 And you know, we're in an election cycle, so we're 0:10:00.120 --> 0:10:03.200 is there a presidential election, so we get you know, 0:10:03.240 --> 0:10:04.640 we might fall. I don't want to say fall a 0:10:04.720 --> 0:10:06.800 victim to that. I think that the likelihood that any 0:10:06.800 --> 0:10:09.920 of that changes before the next election is pretty slim 0:10:09.960 --> 0:10:12.760 to knell. You will see some local elections that we 0:10:12.800 --> 0:10:15.600 need to be mindful of, you know, around housing and 0:10:15.679 --> 0:10:19.280 zoning that that I think, uh, you know, by and large, 0:10:19.280 --> 0:10:21.840 a lot of the local municipalities have actually been supportive 0:10:21.840 --> 0:10:24.679 of this because they see this as an opportunity to 0:10:24.800 --> 0:10:27.640 attract capital to the zones located in their cities and 0:10:28.240 --> 0:10:30.760 UH and states. And so we've seen a number of 0:10:30.760 --> 0:10:33.920 of UM political entities get very involved in kind of 0:10:33.960 --> 0:10:38.280 advertising that UM you know, I think macroeconomic fundamentals are 0:10:38.320 --> 0:10:41.040 certainly of note though. That's one of the benefits of 0:10:41.040 --> 0:10:44.880 this program. It's a ten year old so it's very 0:10:44.960 --> 0:10:48.360 much designed for a long term investment horizon, and so 0:10:48.720 --> 0:10:51.080 you don't have to be as mindful of the you know, 0:10:51.160 --> 0:10:53.520 daily and weekly dips in the market. It's much more 0:10:53.559 --> 0:10:56.439 long term. Is it safe to say, um that even 0:10:56.480 --> 0:10:58.360 without the tax breaks, these are areas you would have 0:10:58.360 --> 0:11:00.920 been investing in any way. Yeah, I mean, I think 0:11:00.960 --> 0:11:03.800 that's the real magic or the real challenge in this program, 0:11:03.880 --> 0:11:06.880 right that the way the whole legislation is designed is 0:11:07.240 --> 0:11:10.000 it allows you to own assets for a long period 0:11:10.040 --> 0:11:12.680 of time and then to sell them without capital gains tax. 0:11:13.559 --> 0:11:16.959 That only does you good if you have generated gain. Right, 0:11:17.000 --> 0:11:18.600 So this is not a program where you can go 0:11:18.640 --> 0:11:21.360 out and you get a participant medal for trying. Right, 0:11:21.760 --> 0:11:24.040 you have to make a good investment. But if you 0:11:24.120 --> 0:11:26.520 make a good investment and then layer the benefits on 0:11:26.559 --> 0:11:29.960 top of it, that's when this becomes interesting. So that's 0:11:29.960 --> 0:11:33.360 the real challenges. You have to find opportunities to invest 0:11:33.440 --> 0:11:35.760 that makes sense, that kind of pencil to a normal 0:11:36.040 --> 0:11:40.079 you know, investment return that exists within these defined zones. 0:11:40.160 --> 0:11:42.480 All right, Nick Parish, thank you so much, Managing director 0:11:42.520 --> 0:11:46.160 for Crested Partners based out in Chicago, working on opportunity zones. 0:11:46.240 --> 0:11:49.040 We're forgiving the fact that he is a Marquette guy 0:11:49.480 --> 0:11:51.320 and his basketball team is better than mine. We're just 0:11:51.360 --> 0:11:55.600 going to leave that to the exactly. We're all neutral here, 0:11:56.120 --> 0:11:57.560 especially because we're gonna be the host of the Big 0:11:57.600 --> 0:11:59.719 East Tournament and you know, we'll see what happens then, 0:12:00.040 --> 0:12:02.320 just saying I'm just saying, I'm just saying, all right, Nick, 0:12:02.360 --> 0:12:10.439 thank you so much. All right. So, certainly the big 0:12:10.480 --> 0:12:13.080 players when it comes to the housing mortgage market, we're 0:12:13.080 --> 0:12:17.600 talking about Fannie May and Freddie mac um. These two 0:12:18.200 --> 0:12:20.200 um companies. I don't even know what you call them 0:12:20.240 --> 0:12:26.400 because their government sponsored enterprises. Uh, yes, companies. Well, they're 0:12:26.440 --> 0:12:30.320 publicly traded, you know what I'm saying. They're publicly traded. No, no, no, 0:12:30.320 --> 0:12:32.240 no, no no, come on, you guys aren't being fair. They've 0:12:32.280 --> 0:12:34.880 trade publicly, although they've been taken over by the government, 0:12:34.960 --> 0:12:38.800 but they have a lot of government oversight. Uh and 0:12:38.840 --> 0:12:41.160 their keeper is still the US government. So let's get 0:12:41.160 --> 0:12:43.080 into this story. It's going to be the upcoming issue 0:12:43.200 --> 0:12:47.160 of the magazine. Elizabeth Dexheimer is financial regulation and congressional 0:12:47.200 --> 0:12:49.280 reporter at Bloomberg News. She's on the phone in Washington. 0:12:49.320 --> 0:12:52.319 You have to help me out here, Elizabeth. Also without you, 0:12:52.320 --> 0:12:54.800 you've hit it on the head of these companies are 0:12:55.320 --> 0:12:59.959 two of the weirdest sagas in modern finance. And Freddy 0:13:00.040 --> 0:13:02.920 Mac two very important companies at the heart of the 0:13:02.920 --> 0:13:06.920 mortgage market. They buy mortgages from lenders, they package them 0:13:06.920 --> 0:13:09.960 into securities and sell them to investors. And this whole 0:13:10.000 --> 0:13:13.480 process really makes it possible for the thirty year mortgage 0:13:13.520 --> 0:13:16.680 to exist. It has bearing on everything from mortgage rates 0:13:16.679 --> 0:13:20.160 to home prices. And during the financial crisis, um these 0:13:20.200 --> 0:13:23.280 companies were about to fail, US taxpayers had to step 0:13:23.280 --> 0:13:26.800 in bail them out, and since then they've operated in 0:13:26.840 --> 0:13:30.040 this really weird place where yes, they have shareholders and 0:13:30.640 --> 0:13:34.080 have earnings, they've returned to profitability and otherwise look like 0:13:34.160 --> 0:13:37.280 normal publicly traded companies, But on the other hand, they 0:13:37.280 --> 0:13:40.520 are completely controlled by the government. And where we're at 0:13:40.559 --> 0:13:44.480 now is the Trump administration has promised to fix all 0:13:44.520 --> 0:13:48.240 of this, and uh in more than sort of at 0:13:48.240 --> 0:13:50.800 the core of this, to free them from government control 0:13:51.200 --> 0:13:54.079 and they've promised to do it without help of Congress, 0:13:54.240 --> 0:13:56.440 and so that's really put a lot of eyeballs in 0:13:56.480 --> 0:14:00.439 certain places on Wall Street focused on markla Riot. He 0:14:00.520 --> 0:14:03.120 is the director of the Federal Housing Finance Agency, which 0:14:03.160 --> 0:14:06.880 is their chief regulator. And that's and that's the story. Say, 0:14:06.880 --> 0:14:08.679 the fate of it all largely hines that one man, 0:14:08.720 --> 0:14:10.560 I know, Bloomberg Business we get it or Jil Webber 0:14:10.679 --> 0:14:14.400 also here. So um uh deck Nimer has done a 0:14:14.400 --> 0:14:16.240 great job on this. And I guess the thing that 0:14:16.280 --> 0:14:19.680 I'm really interested in, like the people that come up 0:14:19.680 --> 0:14:21.760 in the article, it's really the hedge fund world, right, 0:14:21.800 --> 0:14:25.240 So how do they factor into all of this? Right? 0:14:25.280 --> 0:14:28.320 So that is one really in a big group on 0:14:28.320 --> 0:14:31.840 on Wall Street right now. The shareholders in these companies themselves, 0:14:31.880 --> 0:14:35.000 which do include some pretty prominent hedge funds UH and 0:14:35.040 --> 0:14:39.480 investors like John Paulson and Bill Ackman. They made a 0:14:39.480 --> 0:14:41.640 big bet on these companies a long time ago and 0:14:41.680 --> 0:14:44.640 they've yet to really see it payoff. And so depending 0:14:44.680 --> 0:14:47.640 on what happens and sort of the details on how 0:14:47.680 --> 0:14:50.680 these companies are freed from US control, there's a lot 0:14:50.760 --> 0:14:54.560 of money riding among shareholders, whether or not they're going 0:14:54.600 --> 0:14:56.840 to be able to see that and sort of how much. 0:14:57.240 --> 0:14:59.000 And quite frankly, I can tell you after spending a 0:14:59.000 --> 0:15:03.240 lot of time with Mark Collabora and it really is unclear. Um. 0:15:03.320 --> 0:15:05.240 He does play a big role in this, as does 0:15:05.280 --> 0:15:07.880 the Treasury Department, but it's really unclear where they're where 0:15:07.880 --> 0:15:10.640 they're going to go on this shareholder question. You can 0:15:10.680 --> 0:15:12.880 just look at the shares of these companies the past 0:15:12.920 --> 0:15:15.680 few months that have been surging on sort of optimism 0:15:15.760 --> 0:15:18.120 that this is going to go their way. But I 0:15:18.120 --> 0:15:20.680 can tell you that it's it's really unclear whether or 0:15:20.720 --> 0:15:22.560 not they are going to see the pay day that 0:15:22.600 --> 0:15:25.600 they're hoping for. And tell us about this guy, I mean, 0:15:25.640 --> 0:15:28.280 because as you point out, I mean, it's all it's 0:15:28.280 --> 0:15:32.040 all to him, like what do we know? Well, right, 0:15:32.160 --> 0:15:36.840 him and the Treasury Secretary and Nuan play a big um. 0:15:36.880 --> 0:15:38.880 But not only is the power in his hands, but 0:15:38.920 --> 0:15:41.640 he's also been making a lot of really ambitious promises 0:15:41.800 --> 0:15:44.560 about how it's not a question of if it's when 0:15:44.600 --> 0:15:47.760 this you know these companies are free, and how quickly 0:15:47.800 --> 0:15:49.720 that's going to happen. I mean, he's saying in my 0:15:49.760 --> 0:15:52.160 interview with him, may Or June of next year, we 0:15:52.200 --> 0:15:54.560 could be seeing a huge I p O of of 0:15:54.680 --> 0:15:58.520 Fannie and Freddie and UM. Yeah, so collabora is is 0:15:58.520 --> 0:16:00.920 is a well known sort of entity here in Washington. Um. 0:16:01.080 --> 0:16:05.560 He was uh Republican staff around the Hill for many years. 0:16:05.600 --> 0:16:08.920 He was at the conservative thing tank Cato Institute, and 0:16:09.000 --> 0:16:13.000 he most recently served as Mike Pence's Jesus economist. UM. 0:16:13.120 --> 0:16:15.280 So he's definitely in a lot of sort of what 0:16:15.400 --> 0:16:18.080 he's done. Um. He has had some controversial views on 0:16:18.080 --> 0:16:20.480 on housing reform in the past, and as he even 0:16:20.520 --> 0:16:22.400 puts it, a lot of what he's done the past 0:16:22.440 --> 0:16:25.000 few months since taking this job is sort of reassuring 0:16:25.440 --> 0:16:27.280 a lot of the different people, um, that have a 0:16:27.280 --> 0:16:29.880 lot of stake in the decisions he makes. That Um, 0:16:29.920 --> 0:16:31.880 you know, his role as a regulator is different from 0:16:31.880 --> 0:16:39.000 that as a conservative writer. What what what was the controversy? Uh, Well, 0:16:39.040 --> 0:16:41.080 he's he's made some comments in the past, including about 0:16:41.120 --> 0:16:44.400 around shareholders, this issue around the hedge funds. Um. He 0:16:44.480 --> 0:16:46.640 believes that the hedge funds should have been wiped out 0:16:47.320 --> 0:16:49.800 or any of the shareholders in Fannie and Freddie when 0:16:49.840 --> 0:16:53.040 they were when the government bailed them out. Um. He 0:16:53.080 --> 0:16:55.920 has said that no circumstances right now would indicate that 0:16:56.040 --> 0:17:00.960 they shareholders should be wiped out again. Um, if they 0:17:00.960 --> 0:17:03.520 were facing another on the brink of failure again, he 0:17:03.560 --> 0:17:06.160 believes the shareholder should be wiped out. So it seems 0:17:06.240 --> 0:17:09.280 like that that um, you know, is part of this 0:17:09.359 --> 0:17:11.439 narrative and trying to understand where he's really going with 0:17:11.480 --> 0:17:15.040 all of this, which, if you're an investor or anybody 0:17:15.040 --> 0:17:16.720 else watching this stuff, it's just like you get this 0:17:16.800 --> 0:17:19.520 kind of cloudy picture that you know, markets don't always 0:17:19.520 --> 0:17:22.760 like um and so what what does all this mean 0:17:22.840 --> 0:17:28.040 for me and my mortgage? Well, that's remains to be seen. 0:17:28.200 --> 0:17:30.679 I think part of the reason why it has taken 0:17:30.760 --> 0:17:32.919 so long to sort of fix this and the and 0:17:32.920 --> 0:17:35.280 the company sort of remain in this weird state that 0:17:35.320 --> 0:17:39.720 they're at is because politically, no politician, Republican or Democrat, 0:17:39.800 --> 0:17:42.000 wants to do anything that would really mess with the 0:17:42.000 --> 0:17:45.480 mortgage market or mess with your ability or anyone's ability 0:17:45.520 --> 0:17:48.960 to buy a home. And uh and quite frankly, there's 0:17:48.960 --> 0:17:50.800 a lot of the housing market is booming right now. 0:17:51.040 --> 0:17:53.640 There's a lot that's working in this system right now, 0:17:54.160 --> 0:17:56.679 and uh so I think that that is sort of 0:17:56.680 --> 0:17:58.680 the biggest question that how do you do all these 0:17:58.720 --> 0:18:02.679 things and not sort of mess with anything that is 0:18:02.800 --> 0:18:06.280 currently going well. And that's where I think urgency there's 0:18:06.280 --> 0:18:09.160 a lot of time. Like the whatever they do UM, 0:18:09.359 --> 0:18:12.399 there's not only an election coming up where the people 0:18:12.560 --> 0:18:15.399 that UM are going to decide this may change with 0:18:15.440 --> 0:18:18.679 a new administration, but it's also if the markets, you know, 0:18:18.720 --> 0:18:21.879 if the public markets UM take a change, at the 0:18:21.920 --> 0:18:24.440 housing market takes a turn for the worst, it's gonna 0:18:24.440 --> 0:18:26.240 be a lot harder to make changes. So I have 0:18:26.280 --> 0:18:31.040 a question, billion dollar question, Elizabeth UM. Has the government 0:18:31.080 --> 0:18:33.720 that was the bail out UM that the government did 0:18:33.720 --> 0:18:36.560 for Fannie and Freddie? Has that been paid back? Yes, 0:18:36.720 --> 0:18:39.000 it's been paid And since then, the terms of the 0:18:39.000 --> 0:18:42.040 bailout agreement were changed a few years ago, and Fanny 0:18:42.040 --> 0:18:44.080 and Freddie have been sending all of their profits to 0:18:44.640 --> 0:18:49.119 the government. Collabora and Secretary Minution made a slight tweak 0:18:49.200 --> 0:18:53.040 to that UM in September, So now Fanny and Freddie 0:18:53.040 --> 0:18:55.679 are retaining more of their profits. Once they reached a 0:18:55.720 --> 0:18:58.120 certain amount, they send the rest to Treasury. So yes, 0:18:58.160 --> 0:19:02.160 treasury has been repaid. Alright, final thought to you, Mr 0:19:02.160 --> 0:19:04.840 Webber well, I think to me, it speaks to like 0:19:04.960 --> 0:19:08.119 how these things get messy? Right? Are they companies? Are 0:19:08.160 --> 0:19:11.440 they not companies? To Carol's exact question at the top, 0:19:11.480 --> 0:19:13.720 that we gave a hard time and who's the person 0:19:13.760 --> 0:19:17.280 behind this? Because ultimately it's he's going to be uniquely 0:19:17.359 --> 0:19:19.760 put in into a position that's going to test him. 0:19:19.800 --> 0:19:22.159 So TBD what comes out of that? But you know, 0:19:22.200 --> 0:19:24.600 I feel like I'm a little better off, thinks Elizabeth. 0:19:26.400 --> 0:19:29.240 It really mapped it out really well. Elizabeth Dexheimer joining 0:19:29.320 --> 0:19:33.399 us from Washington on the phone, financial regulation and congressional reporter. 0:19:33.480 --> 0:19:37.200 Her story on the Bloomberg and on Bloomberg dot com 0:19:37.280 --> 0:19:40.480 right now will be the upcoming issue of Bloomberg this week. 0:19:40.520 --> 0:19:42.720 Our thanks to to the editor of the magazine, Joe Webber. 0:19:42.840 --> 0:19:44.639 Just a reminder that we're not all done with the 0:19:44.680 --> 0:19:47.080 financial crisis, right We keep talking about everything or so 0:19:47.119 --> 0:19:49.360 many things that have made their way back, but we're 0:19:49.359 --> 0:19:51.680 still figuring out Fanny and Freddy, which is why this 0:19:51.760 --> 0:19:55.160 is a really smart story. This is Bloomberg Business Week 0:19:55.320 --> 0:19:59.400 with Carol Messer and Jason Kelly on Bloomberg Radio. First 0:19:59.440 --> 0:20:00.919 of all, we have the U. S HINNA trade war, 0:20:01.000 --> 0:20:03.720 now we've got the coronavirus. Global supply chains, they have 0:20:04.080 --> 0:20:06.080 no doubt about it been attacked and in many ways 0:20:06.160 --> 0:20:09.760 for some stopped, causing many to rethink and reverse the 0:20:09.760 --> 0:20:14.040 great globalization trend from west to east. Andy Brown writes 0:20:14.040 --> 0:20:16.760 about it. He is Bloomberg New Economy Editorial director. He 0:20:16.840 --> 0:20:20.359 joins us you, Bloomberg Interactive Broker Studio. You know, I 0:20:20.400 --> 0:20:22.399 do feel like, right, all of this started with the 0:20:22.440 --> 0:20:24.399 trade war, but it's really picked up some momentum as 0:20:24.400 --> 0:20:26.960 a result of the virus. Andy, can I just bring 0:20:27.000 --> 0:20:30.920 one headline that just across the Bloomberg Pete Blotch, former 0:20:30.960 --> 0:20:34.200 mayor of South Bend, Indiana, to endorse former Vice President 0:20:34.240 --> 0:20:36.520