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Speaker 1: That's a Bloomberg business flash. Tom and Mike Karen, thank
Speaker 1: you so much. Long ago in far away where I
Speaker 1: would remember, and I'm sure that Arthur Levitt, the former
Speaker 1: chairman of the SEC remember, was a field goal. No,
Speaker 1: not Pete or Charlie Gogelac kicking field goals, three point
Speaker 1: field goals a long time ago. But if you really
Speaker 1: wanted to get paid and damage your client, you could
Speaker 1: make three big figures or a field goal. I'm moving
Speaker 1: a piece of paper over to one of your clients.
Speaker 1: Arthur Levitt considers the final death of this where maybe Arthur,
Speaker 1: we would actually know the mark up at least some
Speaker 1: of the markup on some of our bonds. Are we
Speaker 1: really actually too a visible market on bonds. I think
Speaker 1: we're getting closer, whether we'll get there. We've thought this
Speaker 1: for the past twenty years, the game of taking bonds
Speaker 1: into inventory, and that afternoon, marking them up by one
Speaker 1: or two points as much as that and handing them
Speaker 1: to innocent retail investors as a game that was known
Speaker 1: throughout the street. But I think that the Municipal Securities
Speaker 1: Rulemaking Board and FINRA are now going to require brokers
Speaker 1: to disclose exactly how much they pocket when they buy
Speaker 1: corporate or municipal bonds and then sell those same securities
Speaker 1: later in the same day. And I would point out, folks,
Speaker 1: as you know, the field goal was a joke on
Speaker 1: the street, but I want to point out, as Mr
Speaker 1: Lovitt mentions one or two points, many many people would
Speaker 1: mark up bonds constructively and ethically to their customers for
Speaker 1: a quarter, three aids, half a point whatever. So you know,
Speaker 1: it wasn't Mike. It wasn't so reprehensible that everybody did it.
Speaker 1: It's just you didn't even know who was doing it.
Speaker 1: It didn't because those markets have not had the liquidity
Speaker 1: of our equity markets, and when you get mom and
Speaker 1: pop buyers of odd lots, they're gonna pay a lot
Speaker 1: of money for it. I don't know that that's going
Speaker 1: to change totally. I think it probably won't, but we're
Speaker 1: still in a better place than we were ten years ago.
Speaker 1: We were talking earlier today with Brad Hints about the
Speaker 1: outlook for banks and how regulator has increased their costs significantly. Uh.
Speaker 1: One of the items of regulatory requirement banks having to
Speaker 1: put up with these days, and the living wills, which
Speaker 1: Jenny ellens Hays haven't worked out so well so far
Speaker 1: as they've send them back to the banks to do
Speaker 1: them again. Who should be the most worried the banks
Speaker 1: that they have to keep doing this or regulators because
Speaker 1: we can't get right. Well, I think regulators should be
Speaker 1: nervous because their credibility is online, and I think the
Speaker 1: American public should be most nervous. It's their money on
Speaker 1: the line if they end up bailing out the banks again.
Speaker 1: The regulators should have required more of the living wills
Speaker 1: to be made public so that outside experts could have
Speaker 1: evaluated them. They should have also publicly disclosed how much
Speaker 1: funding they think it would take for those institutions to
Speaker 1: be resolved in bankruptcy and exactly where is the money
Speaker 1: coming from. Well, so I think there's a lot of
Speaker 1: worry to go around. One of the points cash carry
Speaker 1: makes is that the money doesn't have to come from anywhere.
Speaker 1: If one bank is failing in isolation, they can let
Speaker 1: it go. But the bank is unlikely to fail. A
Speaker 1: big bank like that is unlikely to fail unless there's
Speaker 1: some sort of overall crisis that means that the federal
Speaker 1: government has to bail about. So his view is it's
Speaker 1: by default a bailout. Yes, I think that's absolutely right.
Speaker 1: I look, Arthur, at the state of banking, I mean,
Speaker 1: and to go away from the reading of the weekend,
Speaker 1: are we at a point we were where we are
Speaker 1: utility banking? Are we in the cycle? No? I don't
Speaker 1: think so, not quite. I don't think banking has changed
Speaker 1: all that much. I think our regulation has changed in
Speaker 1: some ways. It's become more punitive. I think the public's
Speaker 1: awareness of the consequences of too big to fail is
Speaker 1: much keener than it's ever been for so I think
Speaker 1: the lessons of the market haven't gone unheeded. And I
Speaker 1: think the political pressure on the banks is greater today
Speaker 1: than ever before in recent history. So the banks are
Speaker 1: not getting a free ride, but the regulators aren't doing
Speaker 1: all they can, and the public obviously is bearing down
Speaker 1: on the banks as the villain of this economic environment.
Speaker 1: Arthur thank you so much. Arthur Lovely quickly this morning.
Speaker 1: He's a former chairman of the STEC board member with
Speaker 1: Bloomberg LP. Mike. The bond markup idea would be revolutionary
Speaker 1: if it happened. I think so much of the reason
Speaker 1: individual bond performance went away, in individual bond interest went away,
Speaker 1: I should say, is because people have no clue what
Speaker 1: they're buying. If I mean not that mistakes aren't made
Speaker 1: every every day in the equity market, but there's even
Speaker 1: there's a semblance of actually doing where you are. People
Speaker 1: have no clue what they're getting in the bottom market none.
Speaker 1: That's why they're they gravitate towards things like ETFs. Yeah,
Speaker 1: and well that that and and also the unit trust
Speaker 1: and the mutual funds as well. But individual bonds, I
Speaker 1: remember a million years ago it was a huge part
Speaker 1: of the business. And that is just evaporated. Futures very
Speaker 1: stable up twenty as we get the markets open here
Speaker 1: in five minutes, death futures up one seventy five. Yields
Speaker 1: are higher by two and one basis points or so.
Speaker 1: But early my headline today is curved flattening really significant.
Speaker 1: Bears close watching as he goes through the week with
Speaker 1: important economic data Bloomberg Surveillance. We're kind of down to
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