Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: One of the more talked about topics at Milkin this
Speaker 2: year is, yes, we've been talking about the regional banks,
Speaker 2: but we've talked a lot and maybe even more so
Speaker 2: about what's going on in commercial real estate real estate
Speaker 2: in general. Yesterday I had an all star lineup on
Speaker 2: real estate, including this gentleman next to me. Sean Dobson
Speaker 2: is chairman, CEO and chief investment officer at Amherst. They've
Speaker 2: got seventeen point six billion in assets under manager. I
Speaker 2: think that was at the end of last year. They're
Speaker 2: buying their renovating homes, they're investing in single family rentals,
Speaker 2: mortgage backed securities and commercial real estate. So, man, this
Speaker 2: is the person to talk to real estate.
Speaker 3: I've built you up and it's expectations better than that.
Speaker 4: Please go wherever you want to see you again.
Speaker 3: Very good to see you.
Speaker 2: So I know we're going to rehash some of the
Speaker 2: stuff we talked about it on our panel. But you know,
Speaker 2: coming out of the Great Financial Crisis, you took what
Speaker 2: was a difficult environment, but it was really opportunistic for you.
Speaker 4: Correct, it was bull at your company.
Speaker 2: Talk to us about that time and maybe is it
Speaker 2: you know, how you think about some of the crises
Speaker 2: people are talking about now?
Speaker 3: Is it sure?
Speaker 5: That's always the question, is this another two thousand and eight?
Speaker 5: So for us, it was interesting. The roots of our
Speaker 5: firm are actually in analyzing mortgages, which is pretty boring,
Speaker 5: so we can kind of put everyone to sleep talking
Speaker 5: about the.
Speaker 3: Fixtrate mortgage, but with data is important.
Speaker 5: But data is very important, and we tackled this sort
Speaker 5: of over twenty five years where we'd stopped thinking about
Speaker 5: the mortgage market in general and started thinking.
Speaker 3: About each mortgage in each house.
Speaker 5: And so now with you know, with the data and
Speaker 5: analytics and the scale of operation we can we can
Speaker 5: sort of weave to together the story of what's going
Speaker 5: on with the eighty to one hundred million real estate
Speaker 5: parcels in the world and then look at sort of
Speaker 5: the larger, bigger trends. And so with the financial crisis,
Speaker 5: for us, it was all about understanding the level of
Speaker 5: credit risk that was built up in the market that
Speaker 5: was really heavily dippening on home prices continuing to outperform,
Speaker 5: and so we positioned our clients into sort of really
Speaker 5: asymmetric return trades that benefited from housing underperforming. Now, this
Speaker 5: is not two thousand and eight today, not at all,
Speaker 5: not at all. You've got a very different infrastructure. But
Speaker 5: one of the things that came out of two thousand
Speaker 5: and eight was very difficult for the average American family
Speaker 5: to get a mortgage. So we were sitting around the
Speaker 5: table in two thousand and nine kind of exhausted from
Speaker 5: anticipating it and then you know the mess that it occurred,
Speaker 5: and we thought about what is the next And this
Speaker 5: is what Amherst does. We don't do sort of run
Speaker 5: in and buy something and hope it appreciates. For like,
Speaker 5: what's the next thing that we can do to provide
Speaker 5: a lot of service to a lot of people for
Speaker 5: a trade that's very durable. And we thought about what's
Speaker 5: going to happen to all these homes. Families still need
Speaker 5: to live in the home. They need the type of
Speaker 5: amenities that a home presents the local, the school district,
Speaker 5: and that type of thing the things that multi family
Speaker 5: maybe doesn't do a great job providing. They need this
Speaker 5: type of real estate. But if they can't get a mortgage,
Speaker 5: are how are they going to live in this in
Speaker 5: this real estate? So around post financial crisis is okay,
Speaker 5: let's figure it out. And so we built a national
Speaker 5: platform that does all of the basics that leverage off
Speaker 5: of all of our technology. We already were pricing the
Speaker 5: home and thinking about the home as a as an investment,
Speaker 5: and so we said, okay, how do we activate this
Speaker 5: investment when really it's a lot of grander decisions of
Speaker 5: an acquisition and underwrite repair. So we built a national
Speaker 5: general contracting I never thought that Amherstond end up owning
Speaker 5: trucks with people running around fixing the air conditions.
Speaker 4: Well that's what's interesting, right, I mean, because it's rental.
Speaker 3: It's rental.
Speaker 5: Right, Yeah, So in the US about two thirds of
Speaker 5: people own their home, which is pretty good for a
Speaker 5: global comparison of home ownership versus rentorship. But that means
Speaker 5: about a third of American families are living in a
Speaker 5: home that they're leasing. And I spent the first sort
Speaker 5: of two thirds of my career helping and participating in
Speaker 5: the mortgage market and.
Speaker 3: Helping people own.
Speaker 5: And I spent about the last third of my career,
Speaker 5: the most recent third, hopefully not the last third, but
Speaker 5: the most recent third of my career, focus on that
Speaker 5: rental segment that you know, there's so such a big market.
Speaker 3: You're talking about.
Speaker 5: Fifteen million families live in a separately detached home that
Speaker 5: they're leasing from an owner operator. And of those, there's
Speaker 5: only like half a dozen of us that are big
Speaker 5: owner operators. The rest of them are owned by individual investments.
Speaker 2: Does that continue in terms of the amount of people
Speaker 2: that are in rental? And you know, some of the
Speaker 2: things that came up on the panel show, and I
Speaker 2: thought was really interesting. We talked about demographics. Right, older folks,
Speaker 2: they're not leaving their homes. They don't want to have
Speaker 2: that three percent mortgage or four percent or whatever, you know,
Speaker 2: let low mortgage. But there are some things going on.
Speaker 2: So does that stay? Does that continue where people don't
Speaker 2: buy a home?
Speaker 3: I think it does.
Speaker 5: I think it's here to stay. I think that there's
Speaker 5: a little lot consumer preference at stake here. Owning a
Speaker 5: home means sort of committing to stay in one location
Speaker 5: for a longer period of time. We see less that
Speaker 5: about a quarter of our residents move out every year.
Speaker 6: Wow.
Speaker 3: So some of this is it's not time to buy.
Speaker 5: Some of this it's very difficult to buy, and we
Speaker 5: have to provide them the type of services that they're
Speaker 5: accustomed to. Coming out of multi family, we have a
Speaker 5: lot more professional management, so I think there will be
Speaker 5: a lot more growth in the rental segment. One of
Speaker 5: the things that to point out, you just point out
Speaker 5: something super important that most people didn't haven't really fully
Speaker 5: adjusted for yet. I don't think so. My dad is
Speaker 5: eighty five years old. He's fantastic. He's still the smartest
Speaker 5: guy in the room. When my father was born in
Speaker 5: nineteen thirty seven, the life expectancy for a male in
Speaker 5: the US and the UK was sixty three years.
Speaker 3: So he's outperformed, which we love. But today Dad go Dad.
Speaker 5: So today a male born in the US or UK
Speaker 5: has a life expectancy of eighty three years.
Speaker 3: So that twenty year.
Speaker 5: Expansion life expectancy is a third and that changes everything.
Speaker 5: And one of the things that changed was how real
Speaker 5: estate gets recycled.
Speaker 3: Back into the market.
Speaker 5: So the US, you have a decade of underinvesting in
Speaker 5: real estate, and then we have the use case extending extending,
Speaker 5: and then on the front side we have more people
Speaker 5: choosing to rent or requiring to rent. What happened to
Speaker 5: the GFC, So you can just kind of see there's
Speaker 5: a lot of tailwinds behind the asset class.
Speaker 2: This is what I find fascinating about housing, Like the
Speaker 2: supply demand.
Speaker 4: It's so basic, but it really it's.
Speaker 5: Not that complicated that you have to have the demand
Speaker 5: the supply where people want to demand.
Speaker 3: This is another issue. Yeah, another big issue is the age.
Speaker 5: Of our housing stock. The average home United States built
Speaker 5: in nineteen seventy seven. It's got less than eight foot
Speaker 5: ceilings and it's got one bathroom for every three bedroom.
Speaker 4: I grew up in a house in the nineteen fifties,
Speaker 4: don't even know.
Speaker 5: Well, that's not the product that people want today. And
Speaker 5: so we have this unbelievable business that takes that home
Speaker 5: and modernizes it and basically recycles it.
Speaker 2: Well, I guess what I'm also curious about is what
Speaker 2: happened to the oversupply of housing coming off the Great
Speaker 2: Financial Crisis where people were talking about blowing up houses,
Speaker 2: you know, increasing immigration, so that immigrants could buy home,
Speaker 2: Like what happened to that oversupply?
Speaker 3: We bought it?
Speaker 5: We did because it wasn't the supply demanding balance that
Speaker 5: they thought about them was geez, we lost a lot
Speaker 5: of our consumers that were going to buy. But we
Speaker 5: realized is that you didn't lose the fact that people
Speaker 5: want to live there. But someone has to institutionalize the equity.
Speaker 3: Supply to that home.
Speaker 5: So how do you get scaled equity into these micro assets?
Speaker 3: And so that's the challenge that we took on. That's
Speaker 3: kind of thing we like to do.
Speaker 2: So what do you do with home? Like, so talk
Speaker 2: about the building side of it. So, all right, if
Speaker 2: we need more supply. I think one of the things
Speaker 2: that also came up on the panels that there's not
Speaker 2: workers there that you need to necessarily build these.
Speaker 5: Yeah, there are so many multiple variables that make housing
Speaker 5: so expensive to manufacture. About two thirds or maybe sixty
Speaker 5: percent of a home that's built on site cost is labor.
Speaker 5: We like to we point out to people that there
Speaker 5: are more barrels of oil in a home than there
Speaker 5: are sticks and timber. So what do you mean just
Speaker 5: transportation cost of all the materials and the people, and
Speaker 5: so you have to form up this construction site every
Speaker 5: day and then take it down.
Speaker 3: When you're building homes on site.
Speaker 5: So we've really gone deep in trying to understand what
Speaker 5: can we do to bring down the cost of housing.
Speaker 5: One of the things we're doing or innovating is a
Speaker 5: new type of factory where we it's the same home
Speaker 5: you would build on site, but it's built modually. Yeah,
Speaker 5: and then we so our labor pool is quite different.
Speaker 5: We have tradesmen that are you know, they are really
Speaker 5: able to perfect what they do to build the home,
Speaker 5: and then we can sort of, if you will, export
Speaker 5: the labor cost of a small town into the real
Speaker 5: estate market of a big town. So it really unlocks
Speaker 5: it brings to American manufacturing jobs. It allows us to
Speaker 5: create really good, high paying jobs right towns of that
Speaker 5: maybe don't have as much opportunity.
Speaker 4: How much of that is going on, that's fascinating.
Speaker 3: It's been around for a long time.
Speaker 5: Moduls's aroun a long time, but we think that we've
Speaker 5: uncovered a little bit of our of what's happened to
Speaker 5: the market. But the industry is to build a home
Speaker 5: and sell it, or preferably sell a home and then
Speaker 5: build it right, so they don't have a long demand
Speaker 5: function for their manufacturing base. So imagine if BMW or
Speaker 5: General Motors waited for you to order a car.
Speaker 3: Before they started the factory every day. That's how the
Speaker 3: US housing market works.
Speaker 5: There's no they don't have an elongated demand cycle, and
Speaker 5: there's a lot of price risk in the asset itself
Speaker 5: as we're seeing today. So what we think we can
Speaker 5: do by having an opportunity to either sell the home
Speaker 5: or provide the home as a rental and have capital
Speaker 5: for that asset available for years in advance, we were
Speaker 5: striking capital relationships with global investors that last five, seven,
Speaker 5: ten years. So now we can create a really reliable
Speaker 5: long term capital base for the asset before it's built.
Speaker 2: Rental the business of being in renting homes versus building
Speaker 2: and selling what's more profitable.
Speaker 3: It depends on where you are on the cycle.
Speaker 5: The big thing that we point out to people is
Speaker 5: that you need to have a monetization.
Speaker 3: Strategy that moves with interest rates.
Speaker 5: Yeah, and if you're just building them to sell and
Speaker 5: like you're in, affordability is really a difficult thing. Right now,
Speaker 5: all of a sudden, the home builder gets concerned about
Speaker 5: their takeout and they have to shrink their capacity. So
Speaker 5: I think that the winning strategy is going to be
Speaker 5: get manufacturing right and then let the capital markets provide
Speaker 5: you a longer term, more stable exit price for your product.
Speaker 4: All right.
Speaker 2: So affordability is tough right now right, and lot of
Speaker 2: people can't afford a home. You've got higher mortgage rates,
Speaker 2: which dampens buying. So give me an idea of what
Speaker 2: you're anticipating, like the dynamics that are sometimes conflicting, the
Speaker 2: strange that are out there, What does it mean for
Speaker 2: the residential housing market in the next six to twelve months. Yeah,
Speaker 2: terms of demand and pricing and sure, and I know
Speaker 2: it's location location.
Speaker 3: We have our view, Yeah, exactly, it's location dependent for sure.
Speaker 5: But the thing I get you can think about is
Speaker 5: incomes grew a lot and that really grew affordability. Now
Speaker 5: interest rates have risen a lot, and that takes away affordability.
Speaker 5: What we think about this is that the marginal home
Speaker 5: sale is what determines the price. You have the stock
Speaker 5: of homes, then you have the flow of homes. The
Speaker 5: flow is down fifty percent because about seventy percent of
Speaker 5: us homeowners went out and were able to refinance into
Speaker 5: a mortgage that was sub four percent, So that means
Speaker 5: that's seventy percent of the sixty percent of homes, so
Speaker 5: maybe forty fifty percent.
Speaker 3: Of all the homes in the country.
Speaker 5: The person living there would literally have to double their
Speaker 5: mortgage payment to replace the same home. So in the
Speaker 5: mortgage world, we call this the lock and effect when
Speaker 5: a group of homeowners are really disincentivized from moving. So
Speaker 5: think about what that does is supply it brings down,
Speaker 5: So we can't really see home prices fall just because
Speaker 5: rates went up, because there's really no homes for sale.
Speaker 5: In the meantime, I think overall we may be underestimating
Speaker 5: how much incomes grew, so houses may not be as
Speaker 5: unaffordable as they were. But there's definitely a case of
Speaker 5: a strange statistic today that even we can't tell you
Speaker 5: what the how this is going to turn out. But ordinarily,
Speaker 5: if you were to lease a home versus buying the home,
Speaker 5: you would your monthly payment would be a little bit higher,
Speaker 5: and that's because the person leasing the home has to
Speaker 5: take on repairs and maintenance.
Speaker 3: So if you buy the home, you take on the responsibilities.
Speaker 5: So your principal interest, tax and assurance will be slightly
Speaker 5: lower than your rental payment. That's inverted now it's inverted significant.
Speaker 5: It's way cheaper to rent than it is to buy
Speaker 5: because you just had this shot to the system. So
Speaker 5: we think that that probably you will correct itself over time.
Speaker 5: It may correct from rents rising. But you mentioned before
Speaker 5: about sort of locations and location and pricing. One of
Speaker 5: the things that we're really really after this is like,
Speaker 5: not exactly ingenious. People need to be able to afford
Speaker 5: the product. No, yeah, so our rents are sort of
Speaker 5: below twenty five percent of law does this school the
Speaker 5: first year exactly, I try try to sell something your
Speaker 5: customers can afford.
Speaker 3: Ding Ding.
Speaker 5: So for us, we're sort of enthused by the fact
Speaker 5: that our rents are about a quarter of the family's
Speaker 5: gross income and that makes them really sustainable and it
Speaker 5: means they can float as income trix.
Speaker 4: It's interesting.
Speaker 2: So let me go back to all right, so then
Speaker 2: what worries you about the outlook?
Speaker 5: Well, look, you have this crazy cross current now to
Speaker 5: where we're in our view, there was too much fiscal
Speaker 5: support to.
Speaker 3: The economy of an overreaction.
Speaker 5: Now you have the Federal Reserve sort of counterblinance that
Speaker 5: with what we would argue was way too fast of
Speaker 5: reaction in monetary policy. So what this does is it
Speaker 5: just slows down the velocity of capital. So we think
Speaker 5: in ten twenty thirty year cycles, we think about affordability,
Speaker 5: we think about rent growth, income growth, national growth, what
Speaker 5: happens to each city.
Speaker 3: And now you just have a point in time where everyone.
Speaker 5: Is a little bit nervous to make it a big
Speaker 5: decision because you only get to capitalize your investment in
Speaker 5: these things once and you're not sure are they going
Speaker 5: to be less expensive tomorrow or more expensive tomorrow. And
Speaker 5: when you just have this much uncertainty in the market,
Speaker 5: you can see it in quoted volatility, you can see
Speaker 5: it in the shape of the e Oeld curve.
Speaker 3: What the real result of all this is people just
Speaker 3: don't do anything.
Speaker 5: So I think the thing that concerns this is just
Speaker 5: if capital becomes there's really no longer a penalty for
Speaker 5: not being invested, and so it just slows down long
Speaker 5: term capital formation.
Speaker 2: We've just got about forty five seconds left here. So
Speaker 2: you're the residential guy that was on the panel, I mean,
Speaker 2: you guys do mortgage backs, securities. Should you do some
Speaker 2: commercial I'm just curious your take on office since you're.
Speaker 3: Yeah, so we're in there. We we have a portfolio loans,
Speaker 3: we have some loans that have.
Speaker 5: Defaulted, and we've taken some properties over, and I sent
Speaker 5: the last year really working closely with our team to
Speaker 5: understand what the alternative use cases are for office. Suburban
Speaker 5: office probably has more flexibility than urban office, okay, and
Speaker 5: so the suburban offices, we're taking some down and putting
Speaker 5: back logistics centers, and so it's.
Speaker 4: Really like logistics center, it's too.
Speaker 3: Much supply and it's real estate. We can take it down.
Speaker 4: Does the data tell you that there's more more pain
Speaker 4: to come, a lot more pain to come, a lot
Speaker 4: more pain to about.
Speaker 5: Well, I mean a lot of the pains already hear.
Speaker 5: The only question is how long before we all reckon?
Speaker 4: But is it again like the lower tier we talked
Speaker 4: about on the panel.
Speaker 5: There's like the top one percent of the office market.
Speaker 5: Everyone dyings about No. One vandor belt and two in
Speaker 5: all rents. That's interesting but not really important.
Speaker 4: Thank you. So see it flew and you kept your voice.
Speaker 3: Thank you, Thank you so much.
Speaker 4: Fun to have you on the panel.
Speaker 2: Fun to have you back here, Shundabs and Chairman, CEO
Speaker 2: and Chief Investment officer at Amherst.
Speaker 1: Right here on Bloomberg, you're listening to the Bloomberg Business
Speaker 1: Week Podcast. Catch us live weekday afternoons from three to
Speaker 1: six Eastern Listen on Bloomberg dot com, the iHeartRadio app
Speaker 1: and the Bloomberg Business App, or watch us live on YouTube.
Speaker 2: Carol Masser along with Jess Mettin, She's back at our
Speaker 2: Bloomberg Interactive Broker's studio. I'm here live in Beverly Hills
Speaker 2: at the Milkin Institute Global Conference. I'm reading from a book,
Speaker 2: and here's what it says. Those first weeks that United
Speaker 2: were a frenzy of NonStop activity, from the moment I
Speaker 2: walked into the office on my first day to the
Speaker 2: moment my heart stopped thirty seven days later. This book
Speaker 2: is called Turnaround Time, Uniting an Airline and its employees
Speaker 2: in the Friendly Skies, and it's written by Oscar Munios.
Speaker 2: He's the former CEO of United Airlines, which then became
Speaker 2: United Continental and then back to United. He was also
Speaker 2: executive chairman at United. Oscar, it is so wonderful I
Speaker 2: wish I was back in our studio with you, and
Speaker 2: I know you're there with Jess. Congratulations on the book.
Speaker 2: It's very personal, and you talk about your time at United.
Speaker 2: Tell us a little bit about when you landed No
Speaker 2: pun intended as CEO in twenty fifteen. It was five
Speaker 2: years after their merger. What was top of mind? What
Speaker 2: were you seeing?
Speaker 7: Oh, well, thanks, thanks for having me, both of you.
Speaker 8: It's great to see you. And I listened to you
Speaker 8: guys quite a bit, so it's good to see you personally.
Speaker 8: You know, I think we you know, I had a
Speaker 8: lot of insight into the business only because I was
Speaker 8: on the board, but as we all know, being on
Speaker 8: the board and needing something is a very different situation.
Speaker 8: So even in a short few days as I met
Speaker 8: Tonight traveled, I could I could sense, you know, there
Speaker 8: were smiles and nagulation and people wanting him to say hello,
Speaker 8: but there was always this kind of this lingering, holding
Speaker 8: on to a sleeve sort of thing and look at like,
Speaker 8: almost without being dramatic, you know, help me, help us
Speaker 8: sort of thing. So I could send something and I
Speaker 8: think my first my first interview, I use the terms
Speaker 8: I'm finding our team disillusion disenfranchised, and disengaged, you know,
Speaker 8: the three d's, just because they had And I also said,
Speaker 8: I'm a little embarrassed as a board member that we
Speaker 8: didn't see this before. And so that's what I found
Speaker 8: to your question. And then, of course, lots of things happened.
Speaker 8: Everybody wants to know what you're gonna do first, and
Speaker 8: I thought I would ask my team rather than myself.
Speaker 2: All right, there's a lot, I'm sure of conversations and
Speaker 2: talking to your team one month in though you did
Speaker 2: suffer in your fatal heart attack, I can't even imagine
Speaker 2: some of the things that you were dealing with personally, professionally.
Speaker 4: Give us a little bit of what that was like.
Speaker 2: I read a little bit of a passage from your book,
Speaker 2: but I just can't even imagine.
Speaker 4: Take us again back there.
Speaker 7: You know.
Speaker 8: It's it's every time I begin to talk about it,
Speaker 8: or someally, when I write about all of that comes
Speaker 8: back to you. Because heart disease is the biggest killer
Speaker 8: in America by far. The symptoms are varied and wide
Speaker 8: difference between men and women, and unfortunately, what a lot
Speaker 8: of people do is they just ignore those signs. And
Speaker 8: you know, we take a shower, we lay down, and
Speaker 8: of course never to be done. So I was fortunate
Speaker 8: to have a good friend who was a cardiologist, who
Speaker 8: I did a lot of Again, I trained for you know,
Speaker 8: we we ran marathons, we did long bike rides.
Speaker 7: I mean, so I was fit. I was a vegan.
Speaker 8: But he'd always kind of warned us that heart diseases
Speaker 8: is not optics, it's internal plumbing.
Speaker 7: And one day in particular, he said something to the
Speaker 7: degree that listen, if.
Speaker 8: You ever feel anything weird, call nine one one. The
Speaker 8: worst you can be is embarrassed. And then he added
Speaker 8: something that I've remembered those a couple of years later
Speaker 8: when I had my event, when he said, when when
Speaker 8: you call nine one one, immediately tell him where you are,
Speaker 8: which like, duh, of course that makes sense. But then
Speaker 8: he added, because you may not make it past the
Speaker 8: phone call. And I remember exact where I was, and
Speaker 8: I'm like, okay, that's a little dramatic. But two years later,
Speaker 8: I'm sitting there having my vegan protein shake after a run,
Speaker 8: and my phone buzzes and I got to move it
Speaker 8: and my legs sort of give out. I feel clammy,
Speaker 8: and his words came rushing back I crawled over to
Speaker 8: the landline some of you may know what that is
Speaker 8: and called nine on one and told him immediately where
Speaker 8: I was. So thirty seven days into the job, and
Speaker 8: again in the story you really can't make up, thirty
Speaker 8: seven minutes later, Wow, as in the hospital and I
Speaker 8: was on life support on a heart artificial heart lung
Speaker 8: machine because I had my heart had gotten pretty blown up.
Speaker 9: And how did this end up basically transforming your career
Speaker 9: as well as how you ended up managing United through
Speaker 9: what Carol was just talking about, this huge transformation between
Speaker 9: twenty fifteen up until early in the pandemic when you
Speaker 9: were still CEO.
Speaker 8: So you know, the few days, the thirty seven days
Speaker 8: before the events the heart of it. And I got
Speaker 8: a chance to meet a lot of the people that
Speaker 8: united what became pretty immediately my family. And so to
Speaker 8: your question, there's two things that happened, not quite transformational,
Speaker 8: but certainly ratifying. The outpouring of love, support, kindness, food, flowers,
Speaker 8: cards from all over the world from the United Family
Speaker 8: was amazing. My kids would read those notes every day,
Speaker 8: So you know, I confirmed what I had seen out there.
Speaker 8: These these are wonderful people, but they're sort of wandering
Speaker 8: nomad's in the desert and there's no North star for that.
Speaker 8: By the way, North starts Plaris, And if you fly us,
Speaker 8: you know there's a history and a tie into everything.
Speaker 8: So the people were amazing. The second thing for all
Speaker 8: of us out here, you know, this concept of mind
Speaker 8: over body and all that sort of stuff. I never
Speaker 8: once thought I was never coming back. I never once
Speaker 8: thought I was in any kind.
Speaker 7: Of serious situation. My doctors didn't agree with me.
Speaker 4: I mean, I'm surprised to hear you were a vegan
Speaker 4: and this happened.
Speaker 9: Typically to think that would be allbviously more healthy lifestyle.
Speaker 8: Again, you know, heart disease is a genetic aspect. I
Speaker 8: didn't know my biological father, so I didn't have any
Speaker 8: of that history. So it's what's important for all of
Speaker 8: us get You know, an EKG doesn't do anything stress
Speaker 8: tests do. There's more invasive process and there's a lot
Speaker 8: of great new technology that's coming out that's going to
Speaker 8: be if you think about breast cancer and the old
Speaker 8: way we used to you know, women used to do it.
Speaker 8: Now mimography comes in. There's new as a company called
Speaker 8: Clearly that I'm involved with that does.
Speaker 7: In essence, mimmography for the heart. So there's a lot
Speaker 7: of waste to do that.
Speaker 8: But you know, the transformation was partly that and partly
Speaker 8: the fact of I was, you know, I just I
Speaker 8: love this United team, and we knew we had to
Speaker 8: do something about it, and.
Speaker 7: Didn't change who I was, didn't change how I led.
Speaker 8: But of course there's a level of gratitude that comes
Speaker 8: with surviving something.
Speaker 4: Link Now, so how.
Speaker 2: Did you create a culture that was better for employees,
Speaker 2: better for the company overall, and better for those who
Speaker 2: flew United.
Speaker 8: This will be a shocking revelation. I did nothing but
Speaker 8: actually listen and learn from the tens of thousands of
Speaker 8: people that we have out in the field that take
Speaker 8: care of you, the people you see and the people
Speaker 8: that you don't see below the wing and in the
Speaker 8: maintenance facilities. The thirty seven days before I was on
Speaker 8: a massive listening tour and nothing, nothing structured, nothing deeply
Speaker 8: you know, academic or intellectual. It was just a human conversation.
Speaker 8: It's like, just tell me how it's going, tell me
Speaker 8: what you can think. And I heard lots of different things,
Speaker 8: and in a very pivotal moment for the turnaround, in
Speaker 8: United It was on a flight with a flight attendant
Speaker 8: and I was on a flight and I went and
Speaker 8: met and talked with the flights at high oscure, and
Speaker 8: she clearly did not want to talk to me.
Speaker 7: Oh that's how far we had disengaged our folks. It's like,
Speaker 7: I don't want to listen. You know, why am I
Speaker 7: going to waste my breath?
Speaker 2: Right?
Speaker 7: Over time, we had.
Speaker 8: Had I don't know, five six CEOs in the last
Speaker 8: few years. What she said to me when I finally
Speaker 8: got her to open up, she just said, Oscar, I'm
Speaker 8: just tired of always having to say I'm sorry, I'm
Speaker 8: sorry the coffee section, I'm sorry, we're late. And if
Speaker 8: you think about an individual that works with such a
Speaker 8: large global company, who we embodied this concept of friendly skies,
Speaker 8: but everything was broken and they are the ones that
Speaker 8: had to, in essence, you know, apologize. That's how you
Speaker 8: lose human engagement. And so to your question, how we
Speaker 8: built the culture is just from that perspective, is just
Speaker 8: telling them like, okay, employees, you don't have to do anything.
Speaker 8: I and this team have to regain your trust and
Speaker 8: from that we're going to build what you.
Speaker 7: See now in United.
Speaker 4: So I am curious.
Speaker 2: You know, we're all flying around. People want to go
Speaker 2: out and experience things.
Speaker 4: The industry today it can be stressful.
Speaker 2: Again, what is it that you think we could do
Speaker 2: better in the airline industry? And I think, I know
Speaker 2: there's things you've talked about in terms of the type
Speaker 2: of fuel that's being used, because it certainly has a
Speaker 2: carbon imprint. We just have about a minute left. How
Speaker 2: do you think it can go to the next level.
Speaker 4: If you will.
Speaker 7: I think two things.
Speaker 8: I think from a broader perspective, air traffic control in
Speaker 8: America is outdated and obsolete. If we don't start getting
Speaker 8: it fixed soon, like a lot of the other infrastructure,
Speaker 8: we're going to pay the price. I know it's easy
Speaker 8: to blame the airlines for a lot of the delays.
Speaker 8: We are often hampered by the fact that we can't
Speaker 8: put a lot of airplanes in the air because we
Speaker 8: can effectively and safety monitor them without slowing everything down
Speaker 8: A and B. You know, a little caring goes a
Speaker 8: long way. You're not the only one that has something
Speaker 8: important to go to. And if you just kind of
Speaker 8: lay back a little bit, you know, have a little care.
Speaker 8: If somebody is in a wheelchair. You know they're in
Speaker 8: a worse state than you, and I know they're holding
Speaker 8: you up, but it wouldn't be.
Speaker 7: A bad thing if you just show it to a
Speaker 7: little love and care.
Speaker 4: Well, we're going to leave it on that note.
Speaker 2: Just great words in a world where I think it's
Speaker 2: very trying on a lot of people. We certainly see
Speaker 2: it from the financial perspective, but just in general, there's
Speaker 2: a lot coming at people and great to hear your
Speaker 2: story and to see you know what you personally and
Speaker 2: professionally have achieved. So Oscar, thank you so much for
Speaker 2: for spending some time with us. Oscar Munnos He is
Speaker 2: of course the former CEO of United Airlines executive chairman
Speaker 2: as well, and his new book is Turnaround Time Uniting
Speaker 2: an Airline and it's employees in the Friendly Sky. So
Speaker 2: some really, you know, just logical about how we can.
Speaker 4: Make things better.
Speaker 2: And it's amazing when you start listening to people what
Speaker 2: you can find out. All right, Oscar, thank you so much.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,
Speaker 1: the Bloomberg Business app and YouTube. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: The world's largest companies poise to face a fifteen percent
Speaker 2: minimum tax under a twenty twenty one deal to overhaul
Speaker 2: global tax rules as more countries begin to implement the measures.
Speaker 2: We're talking about more than around one hundred and forty countries,
Speaker 2: So we wanted to get to some of the implications
Speaker 2: of it, and we're delighted to have with us Marna Ricker.
Speaker 2: She's Global vice chair of Tax at the Consulting and
Speaker 2: Advisory from EY here at MILK, and I.
Speaker 4: Do want to talk about that.
Speaker 6: First of all, welcome, thank you, thanks for having me. Carol.
Speaker 4: Great to have you here.
Speaker 2: But you know, before we started getting going, we were
Speaker 2: talking a little bit about what's being talked about at
Speaker 2: MILK and you said, there's been some really interesting panels.
Speaker 2: What's jumped out at you?
Speaker 10: Yeah, I have to tell you there's you know, I
Speaker 10: sort of feel like at the end of the day,
Speaker 10: things are going to get greener, right, we're looking for
Speaker 10: economic inefficient or efficiency, not inefficiency efficiency, right, you know,
Speaker 10: I think that trade is going to be really interesting
Speaker 10: to see who emerges ultimately, what countries emerge, India, Mina, Africa, Right.
Speaker 4: It's moving around.
Speaker 2: The least conversation I just had was the same thing
Speaker 2: that globalization isn't going away.
Speaker 10: Now it's going to be different. That's exactly right. I
Speaker 10: really love that of you know, China. You know, you
Speaker 10: were hearing people say to coupling from China. Now you're
Speaker 10: hearing them say de risking, you know, or or navigating
Speaker 10: with China. You know, you can't cut off trade right
Speaker 10: through with some of the largest economies in the world.
Speaker 10: And so I just I feel I think I said
Speaker 10: to you, I feel a lot of optimism, frankly, more
Speaker 10: optimism maybe.
Speaker 2: That I expected you go to any Paris on real
Speaker 2: estate or on banking.
Speaker 6: I stayed. I went to banking, I stayed out of
Speaker 6: real estate. I want predict there.
Speaker 2: Well, talk to us about the implications, because another thing is,
Speaker 2: you know, I don't know that we've talked tons about
Speaker 2: corporate tax stuff, structure and strategy, but it's a it's
Speaker 2: a big deal.
Speaker 4: It is, So talk to us a little bit about
Speaker 4: this rule.
Speaker 2: And my companies that have joined on, or the countries
Speaker 2: that have joined on, and the implications of it.
Speaker 10: Yep, for sure, I am so. I love good tax policy,
Speaker 10: and so you know, I do. Look at it's called bad.
Speaker 4: Love a person who loves good tex I do.
Speaker 10: It's an I look, I think it's a force for
Speaker 10: good and I think it has the ability to drive
Speaker 10: you know, behavioral change. And so what's interesting I think about.
Speaker 4: This is good leveling the playing fit globally.
Speaker 6: Yes, it is. That's exactly right.
Speaker 10: And so when you look at Pep's pillar two, that's
Speaker 10: what we're talking about here, ultimately starting in financial statements
Speaker 10: in one one twenty four. So for calendar your companies
Speaker 10: are going to get it under their rate. It is
Speaker 10: it really literally is about what does the minimum tax
Speaker 10: around the world look like? And so what are those
Speaker 10: tax collections going to look like?
Speaker 6: You know?
Speaker 10: And I also look at it with pillar one, which
Speaker 10: is much more about digital you know, digital customer based
Speaker 10: market rates to taxation.
Speaker 6: I look at that.
Speaker 10: This is all about modernizing the tax code. Right, we
Speaker 10: have a century old tax code. It is a you know,
Speaker 10: it is a bricks and industrial type tax code. And
Speaker 10: we'ren't a really modern society that's extraordinarily digital.
Speaker 4: When you say that are you just talking about the
Speaker 4: corporate or are you also talking about.
Speaker 6: Just overall corporate really about corporate.
Speaker 4: As an individual. Yeah, we got to do something.
Speaker 6: Yeah we got to do that too.
Speaker 4: But we'll talk about on bebs first. So what are
Speaker 4: the implications.
Speaker 2: Then for companies for multinationals right who operate the around
Speaker 2: the world, and they have to be fair, have gone
Speaker 2: to countries that have had lower corporate tax rates to
Speaker 2: their benefits. So as that changes, what's the impact on
Speaker 2: their balance you what's the impact on the taxes they
Speaker 2: are paying?
Speaker 10: So it's a great common I you know, the the
Speaker 10: obviously taxes are a big line item ultimately the P
Speaker 10: and L and your and your balance sheet to your
Speaker 10: point into ferds and so you know, I do look
Speaker 10: at this when you look overall what you hear from
Speaker 10: most companies, it's more of a shifting of where they're
Speaker 10: playing taxes, right, But I would contrast that to what
Speaker 10: the OECD is saying. So their estimates on pillar two
Speaker 10: roughly we're one hundred and fifty billion dollars of new
Speaker 10: tax collection ultimately. Okay, that has been revised now up
Speaker 10: another seventy billion dollars to two hundred and twenty billion. Okay,
Speaker 10: So again there's a little bit of I think reconciliation
Speaker 10: that's going to happen in between the companies and obviously
Speaker 10: what the OECD is expected at.
Speaker 2: So you know, morena net net companies multinationals are going
Speaker 2: to be paying more at that.
Speaker 4: That's where it's going. It's going to be different exactly.
Speaker 10: You've got it, and so I think that's what'll be
Speaker 10: interesting to see shift. I think one of the big
Speaker 10: items too, I want to make sure I'm flagging for
Speaker 10: companies and for our listeners ultimately is credits and incentives.
Speaker 10: So subsidies and credits and incentives that you were just
Speaker 10: talking about whether those are green you know, green climate things.
Speaker 4: That were seeing me about that because I was looking
Speaker 4: at a little bit of it.
Speaker 2: You know, when it comes to sustainability goal, when it
Speaker 2: comes to your supply chains, like we know that that
Speaker 2: is certainly coming in the United States.
Speaker 4: You know, you want to build something great, but you know.
Speaker 2: You've got to make sure that the goods are here
Speaker 2: in the US, like you know, alternative energy, green energy,
Speaker 2: that's not always so easy to do.
Speaker 6: So that is an unanswered question.
Speaker 10: So that I look, I think that's probably the biggest
Speaker 10: issue on companies' minds, and I think the OECD is
Speaker 10: going to have to get that settled. So how you
Speaker 10: will treat credits and incentives and subsidies. Europe tends to
Speaker 10: use more subsidies, right, you know, I'd say the US
Speaker 10: and more developed countries are using more credit type systems,
Speaker 10: and so that's not reconciled yet on whether that's in
Speaker 10: the base for your calculation of this corporate alternative Mentoye, can.
Speaker 2: I ask you the higher taxes that essentially corporations will
Speaker 2: have to pay, And I would say that there are
Speaker 2: a fair amount of people out there saying, well, it's finally.
Speaker 4: That the corporation should be doing it. But that's a
Speaker 4: whole different argument.
Speaker 6: That is.
Speaker 2: But what I do wonder is it manageable in an
Speaker 2: environment where there's lots of questions about the outlook, about growth,
Speaker 2: about you know, pressure on balance sheets.
Speaker 10: I do think it's manageable, you know, I think it's
Speaker 10: a journey worth taking. I do like good tax policy,
Speaker 10: like consistency. Certainly are you know, clients and taxpayers are
Speaker 10: looking for they're really looking for certainty, right, you know?
Speaker 10: How do they how do they plan.
Speaker 6: Their operations there.
Speaker 4: What do I have to do?
Speaker 10: These are huge capital investments companies are making, and they
Speaker 10: need to know that when they make those, right, they're
Speaker 10: going to have the outcome that they expected ultimately from
Speaker 10: a tax person.
Speaker 4: What are you hearing from your clients?
Speaker 6: Though?
Speaker 11: Then?
Speaker 2: Ultimately will they be shifting around where they have operations
Speaker 2: because of this?
Speaker 6: Yeah?
Speaker 10: So they'll always not because of this, they will always
Speaker 10: you know, look, I've been in this business for thirty
Speaker 10: years and companies, you know, tax does and drive business.
Speaker 10: Business drives business, right, They're always going to make good,
Speaker 10: good business decisions. But again they're going to want to
Speaker 10: be tax efficient about how they make those investments.
Speaker 2: But that is so interesting because there's often the argument
Speaker 2: of no, no, no, the people you know, tax policies
Speaker 2: does determine business decisions.
Speaker 4: Yeah, that's not necessarily.
Speaker 6: I'd say it differently.
Speaker 10: I don't think you're ever going to make a just
Speaker 10: reframe it, right, I don't think you're ever going to
Speaker 10: make a business decision solely on tax. Right, But there
Speaker 10: is no doubt right that if governments are trying to
Speaker 10: incent you know, onshoing or near shoring right now as
Speaker 10: an example, and you know sustainable, really self sufficient, secure
Speaker 10: supply chains.
Speaker 4: Right, they're going to.
Speaker 6: Encourage behavior around that, right.
Speaker 10: So we see that with the chips act on semiconductors
Speaker 10: as an example, and obviously we're seeing it with IRA
Speaker 10: right now on climate.
Speaker 4: One thing I wanted to ask you just got about
Speaker 4: thirty seconds.
Speaker 2: Left aiest for some reason, I've got to believe that
Speaker 2: that's going to simplify to some extent, big extent your world.
Speaker 6: Absolutely, I'm so excited about it.
Speaker 4: Are you?
Speaker 6: Oh, we're doubling and down on it.
Speaker 10: It's you know, when you think about it, we want
Speaker 10: to be data enable, tech enabled, right, and we want
Speaker 10: to be playing to our highest level degrees, at our
Speaker 10: highest level thinking. And so the ability of chat GPT
Speaker 10: four in particular to come in in a rules based
Speaker 10: database system and really push our thinking upwards and let
Speaker 10: us do judgment and you know, and the nuances around.
Speaker 6: It, I think is extraordinary.
Speaker 4: I love it super actively, like we are on it.
Speaker 6: We are on it.
Speaker 4: Have you been at it before the Microsoft news? We
Speaker 4: absolutely were see like the Microsoft I got this, No.
Speaker 6: We're with them.
Speaker 4: I'm totally oh yeah, this was really fun me too.
Speaker 6: I enjoyed talking to you.
Speaker 4: We did too safe travels home. Thank you, Werner Rickers.
Speaker 2: He's global vice chair of tax at EUI, of course,
Speaker 2: the global consulting and advisory firm. Here at Milkin, you
Speaker 2: are listening and watching Bloomberg BusinessWeek, and this is Bloomberg Radio.
Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Kay con seals with US President CEO of Churchill Asset
Speaker 2: Management with a sixteen dollars private Cabalihild of new being
Speaker 2: here at Milkin, And I'm just gonna put it out
Speaker 2: because he was just talking about his own personal story
Speaker 2: and he sat down and talked about it with Barry Ridtholt.
Speaker 2: So I highly recommend everybody get the podcast because unfortunately
Speaker 2: so you can just have to come back and maybe
Speaker 2: tell my audience about it. It is interesting. All I
Speaker 2: want to do is talk about your personal story. Okay,
Speaker 2: we won't do that.
Speaker 3: It's a pretty funny story.
Speaker 4: Talk does.
Speaker 2: It's a great story. It's like gives me hope it
Speaker 2: gives me hope about life well inspired.
Speaker 11: You know, if your story inspires people, if you can
Speaker 11: inspire even one person, then it's great to tell it.
Speaker 11: And I never used to tell it. And I had
Speaker 11: one of our folks, actually, Jen Prosek, who works with
Speaker 11: you know his ones our firm, founded our PR firm,
Speaker 11: and she said, you know, I heard your story from
Speaker 11: someone else and she's like, you got to tell it,
Speaker 11: You got to tell your story. And I'm like, really,
Speaker 11: do I really want to go to tell this? And
Speaker 11: she said, you absolutely should tell it, And so I
Speaker 11: have not all the time, but I do tell it,
Speaker 11: and I think that it does inspire people, you know,
Speaker 11: when they hear that you maybe have come from adversity
Speaker 11: or a background that is not kind of not traditional,
Speaker 11: you know. I think there is an element to you know,
Speaker 11: inspiring people. And so now you know, I tell it
Speaker 11: more off on HG.
Speaker 2: Well and like I said, go to Barrier Hills's podcast. No,
Speaker 2: but I do think there is somebody there about people
Speaker 2: who I've interviewed a lot of successful people who've done
Speaker 2: very well in life, and often their beginnings they were
Speaker 2: living in a car at one point or just never
Speaker 2: lived in a car Okay are large families, lots of poverty,
Speaker 2: and it's amazing what you can do.
Speaker 4: And I do I do believe it gives hope. But
Speaker 4: I'm gonna yelled at if I don't ask you about
Speaker 4: You do have an interesting background, you have an interesting career.
Speaker 2: You've been in the financial world for a long time,
Speaker 2: going back to I feel like some of the iconic.
Speaker 11: Firms and most folks here, you know, I mean Drexel
Speaker 11: Tracksil started my career here and going to dinner tonight,
Speaker 11: Mike Milkin does a reunion dinner every of that. So
Speaker 11: we all get together and we're all frozen, like you know,
Speaker 11: you're right back, yeah, oh yeah, totally. Everybody. Everybody resumes
Speaker 11: the position they were in when like nineteen eighty nine,
Speaker 11: you know. So it's it's kind of interesting.
Speaker 2: It is like from a large family where you never
Speaker 2: get like the pecking order. You're always either the youngest
Speaker 2: or the.
Speaker 11: Oldest, and we all know what each other is doing, right,
Speaker 11: and we're all, you know, I would say, largely cheerleaders
Speaker 11: for each other. You know, we kind of like, wow,
Speaker 11: that's fantastic, look what he did. That's interesting. Maybe there's
Speaker 11: an element here of I should that I should be
Speaker 11: looking at so you try to learn, right, And so
Speaker 11: we were an incredibly interesting time, right Mike was obviously
Speaker 11: leading all of that, and look what he's done here
Speaker 11: at the conference, and it's absolutely amazing. It's a great
Speaker 11: American story.
Speaker 2: Well, how do you look at the financial markets where
Speaker 2: I think about I often say this, you know, when Mike,
Speaker 2: you know, the high yield market, junk bonds, like it
Speaker 2: was considered you know, creative and something different, and now
Speaker 2: it's just part of the normal financial way, if you will.
Speaker 2: And now we look at some other different things direct running, Yeah,
Speaker 2: exactly exactly.
Speaker 11: You know, it's it's you know, every I would say,
Speaker 11: you know, each one of those has had their time. Right. First,
Speaker 11: it was really the high yield bond market because the
Speaker 11: banks really dominated, you know, the actual lending business. Then
Speaker 11: it became more of a syndicated loan market, right, So
Speaker 11: institutional investors ultimately got involved in in buying and investing
Speaker 11: in in leverage loans, and that marketer grew up out
Speaker 11: of the basically the banks offloading a lot of their risk.
Speaker 6: Right.
Speaker 11: So they were syndicating and I like to call that
Speaker 11: the moving business. Right, So they were in the moving business.
Speaker 11: First they were in the storage business. Right, It's like, oh,
Speaker 11: we make a loan, we own the loan. Then it
Speaker 11: became over, you know, we're gonna get we're too big.
Speaker 11: Now we're in investment banks. We're going to get big business, right,
Speaker 11: so they sell the mutual funds and colos and everything,
Speaker 11: and and it's kind of funny. We've come full circles
Speaker 11: so that the latest iteration, which is obviously our business,
Speaker 11: is direct lending, and so we've kind of taken over
Speaker 11: from the banks, right. I mean, if you think about
Speaker 11: that business today, it now we as the largest asset
Speaker 11: managers are basically you know, the banks are really not
Speaker 11: in our business today in any any material way, and
Speaker 11: we are, you know, the ones that are actually doing
Speaker 11: the direct loans to regular way fantastic, we hope middle
Speaker 11: market companies, and that's what we do. So you know,
Speaker 11: we annually as a firm invest about twelve billion dollars
Speaker 11: in US mid size companies. Yeah. I like to say
Speaker 11: that we actually do what the banks used to do.
Speaker 4: The middle market that so often has gotten.
Speaker 11: Which is a huge economy by the way, it's the
Speaker 11: third largest economy in the world, and ironically, you know,
Speaker 11: the regular way banks today are really not lending to it.
Speaker 11: You know, it's interesting. I mean, the regional lenders now
Speaker 11: are really focusing more on mortgages and you know, car
Speaker 11: loans and all that stuff. Credit cards, and the large
Speaker 11: scale banks are really in the moving business, right They're
Speaker 11: in the business of originating to distribute, and asset management
Speaker 11: and other business doesn't make sense for them, So it's
Speaker 11: left us.
Speaker 4: In this huge market like, okay, thank you.
Speaker 3: Right.
Speaker 11: So, direct lending today is a one point four one
Speaker 11: point five trillion dollar market. It is dominated by a
Speaker 11: dozen or so of the largest asset man direct lenders,
Speaker 11: many of them affiliated with or part of larger public
Speaker 11: publicly traded companies. And you know, we're you know, very
Speaker 11: much in the mix, and we all kind of have
Speaker 11: our unique strategies. I mean everybody's. I mean, we compete,
Speaker 11: but in some cases we actually don't compete. I mean,
Speaker 11: there are very large direct lenders that we never really
Speaker 11: compete with at all. People ask us, all, would you
Speaker 11: know those guys, and I'm like, actually no, So how
Speaker 11: do you ranimize risk? Though?
Speaker 2: Then if you are kind of all specializing in a
Speaker 2: certain area, does that make you a little bit vulnerable.
Speaker 6: I don't think so.
Speaker 11: I mean, I think if you think about the model, okay,
Speaker 11: and you know, I think this is one way where
Speaker 11: regulation actually accomplished. I think something very very very good.
Speaker 11: If you think about the GFC that the banks were
Speaker 11: certainly prior to that and even during that, the bank's
Speaker 11: were actually holding a lot of loans on their balance sheet,
Speaker 11: right and so they might do it, do a four
Speaker 11: hundred million dollars five hundred million dollars deal and hold
Speaker 11: five hundred million dollars on their own balance sheet right now.
Speaker 11: They're in the moving business now and everything is being sold.
Speaker 11: But what did is it really pushed the banks away
Speaker 11: from you know, holding such large amounts of capital on
Speaker 11: their balance sheet. And what's happened is, if you look
Speaker 11: at our business, you.
Speaker 4: Only have about twenty five seconds. Yeah, sorry, go ahead.
Speaker 11: We managed four We managed capital for six hundred plus
Speaker 11: institutional investors, and we distribute it to those investors. So
Speaker 11: in that sense we mitigate rest Well, we can.
Speaker 4: Come back, come back, and then maybe we'll share it.
Speaker 2: I can't now, yeah, but come back on air, because
Speaker 2: I'd love to continue this conversation, because I do think
Speaker 2: this is a very important advantage point.
Speaker 4: In terms of what's going on. Great, fantastic, We're leaving
Speaker 4: them wanting more.
Speaker 2: Absolutely kick it's out presidence of Churchill Asset Management right
Speaker 2: here on.
Speaker 1: This is the Bloomberg Business Week podcast of a Little Apple,
Speaker 1: Spotify and anywhere else you get your podcast. Listen live
Speaker 1: weekday afternoons from three to six Eastern on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal