WEBVTT - Senator Bill Hagerty Talks Powell Testimony, Biden

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Glad to have Senator

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<v Speaker 1>Bill Haggerty with us right now. Senator, welcome back to

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<v Speaker 1>Bloomberg TV and Radio. You've been calling, I believe, for

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<v Speaker 1>rate cuts over the course of this regime. Are you

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<v Speaker 1>now saying that it's the right move higher for longer

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<v Speaker 1>when it comes to interest rates?

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<v Speaker 2>Joe, actually haven't been calling for rate cuts at all.

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<v Speaker 2>What I've been calling for is for the FED to

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<v Speaker 2>remain data driven. I know Chairman pala is under a

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<v Speaker 2>tremendous amount of political pressure to cut rates. My colleagues, Frankly,

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<v Speaker 2>my colleagues from the other side of the aisle on

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<v Speaker 2>the Democrat side, have put immense pressure on him to

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<v Speaker 2>cut rates ahead of the November election. What I've been

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<v Speaker 2>maintaining is that he needs to remain data driven because

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<v Speaker 2>to the extent the FED gets involved or even gives

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<v Speaker 2>the appearance of acting in a political fashion, it will

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<v Speaker 2>destroy its credibility. Chairman Powell made it clear in his

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<v Speaker 2>testimony with me that he understands that he's going to

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<v Speaker 2>remain data driven. We see inflation moving, you know, direction downward,

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<v Speaker 2>at least the rate of growth, but it's not where

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<v Speaker 2>it's supposed to be, and I think he's going to

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<v Speaker 2>make certain that this isn't a transitory bump before he

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<v Speaker 2>takes any sort of action. I think that's the right

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<v Speaker 2>thing for the FED to do. We need to make

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<v Speaker 2>certain that we get inflation under control, and the most

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<v Speaker 2>important thing right now is that they not allow themselves

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<v Speaker 2>to be perceived as political actors.

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<v Speaker 3>Well, Senator, if it really is about the data, and say,

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<v Speaker 3>the data tomorrow and the data that we get in

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<v Speaker 3>the intervening months do show that inflation is indeed cooling,

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<v Speaker 3>that data could support the idea that the FED would

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<v Speaker 3>cut rates. Are you essentially saying there is no way

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<v Speaker 3>that they can do that before the election without it

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<v Speaker 3>being seen as political, even if the indicators within the

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<v Speaker 3>economy would support it.

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<v Speaker 2>No, Kayley, I think you mentioned the indicators. They just

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<v Speaker 2>have to support it, and I don't care when it

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<v Speaker 2>happens as long as the data do support it. I'm

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<v Speaker 2>just concerned that he's getting a lot of pressure. The

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<v Speaker 2>FED chair is getting a lot of pressure right now

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<v Speaker 2>that is political in nature, and I think he's got

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<v Speaker 2>to stick to his guns. He gave you every indication

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<v Speaker 2>in his testimony that that is precisely what he's going

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<v Speaker 2>to do.

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<v Speaker 1>It brings us to the issue of FED independence, Centator,

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<v Speaker 1>something that you brought up in your remarks yesterday. Here's

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<v Speaker 1>what you had to say during yesterday's testimony, and we'll

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<v Speaker 1>follow up with a question now.

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<v Speaker 2>As you know, the Federal Reserve was structured to shield

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<v Speaker 2>monetary policy from political influence, and that independence has given

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<v Speaker 2>the FED unique credibility in executing its mission. If the

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<v Speaker 2>FOMC were influenced in any way by political calculation rather

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<v Speaker 2>than economic data, it would severely damage the Fed's credibility

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<v Speaker 2>as an independent institution. It would increase uncertainty in our markets,

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<v Speaker 2>and it would jeopardize the dollar status as a global

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<v Speaker 2>reserve currency.

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<v Speaker 1>So FED independence is something we hear about every time

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<v Speaker 1>we talked to White House official. Senator, and I'm glad

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<v Speaker 1>that you went there. You're talking about this through the

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<v Speaker 1>guise of Joe Biden's political interests here, but I wonder

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<v Speaker 1>where you are on FED independence if there's another Trump administration,

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<v Speaker 1>because we all remember the tweeting directly at the FED

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<v Speaker 1>chair and now reading reports that the former president wants

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<v Speaker 1>to be more directly in if he wins this election.

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<v Speaker 1>And actually have a hand in setting interest rates. Does

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<v Speaker 1>FED independence work for both sides of the.

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<v Speaker 2>Aisle, Well, it definitely should, and I think the case

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<v Speaker 2>is very clear that as long as the FED maintains

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<v Speaker 2>data driven approach, that we will see certainty in the marketplace.

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<v Speaker 2>The world looks to what the FED does and the

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<v Speaker 2>approach that Chairman pal has taken, and I think that

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<v Speaker 2>I'll maintain this over time. We need to make certain

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<v Speaker 2>that the FED is perceived not as a political actor,

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<v Speaker 2>but one that is driven by the data.

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<v Speaker 3>Of course, it's not just the Fed's job to set

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<v Speaker 3>monetary policy. They also act as a regulator of the

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<v Speaker 3>banking system. And Chairman Powell did make a little news

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<v Speaker 3>in your hearing yesterday in regard to Basel three and

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<v Speaker 3>what the game will be. He suggested they're going to

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<v Speaker 3>have to repropose it. What do you need to see

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<v Speaker 3>in that reproposal?

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<v Speaker 2>Well, frankly, I don't think we even require a submission.

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<v Speaker 2>We've been through a massive stress test if you think

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<v Speaker 2>about what happened through the pandemic, and for three consecutive

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<v Speaker 2>years we were told that the system was adequately capitalized.

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<v Speaker 2>We get a new Vice chair who comes in and

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<v Speaker 2>makes a dramatic proposal that everyone in the industry told

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<v Speaker 2>me would have been devastating in terms of our competitiveness

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<v Speaker 2>as a nation. Our banking system is one of our

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<v Speaker 2>true sources of competitive advantage here in America, and this

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<v Speaker 2>would have placed us at a huge disadvantage relative to

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<v Speaker 2>Europe and relative to other banking systems across the world.

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<v Speaker 2>I'm delighted to see that the FED Board has realized

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<v Speaker 2>that they've withdrawn it, or he's talking about withdrawing it

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<v Speaker 2>and reproposing. At least he's indicated that the Chair has

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<v Speaker 2>indicated that they're going to follow the Administrative Procedures Act,

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<v Speaker 2>and that means they will have a reasonable amount of

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<v Speaker 2>input from the industry, and I hope that they they'll

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<v Speaker 2>take that fully into account.

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<v Speaker 1>Donald Trump has said Senator that he wants to be

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<v Speaker 1>the most crypto friendly president in American history. I guess

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<v Speaker 1>that history doesn't go back too far if we want

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<v Speaker 1>to draw a comparison. But what would that look like.

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<v Speaker 2>Well, I've spent a good deal of time with the

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<v Speaker 2>President talking about this industry and what we see, and

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<v Speaker 2>I think a shared vision came through in our Republican

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<v Speaker 2>platform just this week. We see crypto as a defining

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<v Speaker 2>issue in the election this November, and I think as

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<v Speaker 2>voters go to the polls, they're going to realize that

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<v Speaker 2>as they cast their vote will determine the outcome of

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<v Speaker 2>the crypto industry here in America, because on the Democrat

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<v Speaker 2>side you have a group that are I think, very

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<v Speaker 2>radically trying to centralize everything. They want central control. They

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<v Speaker 2>don't like the decentralized nature of cryptocurrency. They don't like

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<v Speaker 2>the decentralized nature of cryptotechnology. The innovation is going to happen.

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<v Speaker 2>Cryptotechnology possesses tremendous potential for America. We have innovative DNA

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<v Speaker 2>here that goes beyond any of the nation. We should

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<v Speaker 2>capitalize on that. We'll create the ecosystem that would allow

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<v Speaker 2>for that. And our platform basically says we're going to

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<v Speaker 2>end the crackdown on the crypto industry. We're going to

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<v Speaker 2>allow mining, we're going to create an ecosystem for innovation,

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<v Speaker 2>we're going to allow decentralized control of these assets, and

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<v Speaker 2>we're not going to allow the type of surveillance that

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<v Speaker 2>the Democrat solution would support.

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<v Speaker 3>Well, it's interesting, Senator to hear a little bit about

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<v Speaker 3>the conversations you've had with the former president on that subject,

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<v Speaker 3>and knowing that you've served as his ambassador to Japan,

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<v Speaker 3>I wonder what conversations you've had with him about the

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<v Speaker 3>US's relationship with allies As we have the NATO summit

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<v Speaker 3>underway here in Washington, do you expect that the nature

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<v Speaker 3>of US participation in that alliance will be changed in

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<v Speaker 3>any way if he does indeed win in November. Our

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<v Speaker 3>allies right to be concerned about that as they meet

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<v Speaker 3>this week.

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<v Speaker 2>Kaylee, I've met with a number of our allies during

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<v Speaker 2>the course of this week because they realize I'm the

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<v Speaker 2>only former member of the Trump administration that serves in

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<v Speaker 2>the United States Senate, and I've been very clear with them,

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<v Speaker 2>America First does not mean America alone. But what we

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<v Speaker 2>want to see is our allies standing strong with us.

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<v Speaker 2>And what we've seen in NATO is that they've responded

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<v Speaker 2>to President Trump's pressure. They've stepped up their investment. They

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<v Speaker 2>need to do more. I think President Trump is going

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<v Speaker 2>to be very clear about that. We don't hesitate to

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<v Speaker 2>criticize our allies when it's time for them to step up.

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<v Speaker 2>We stand shoulder to shoulder with them at the same

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<v Speaker 2>time when the need arises. That's what I've conveyed. That's

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<v Speaker 2>what I think we'll see is the Natos Nateto group

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<v Speaker 2>continues to visit me here this week. That's a message

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<v Speaker 2>I'm going to be very consistent in delivering, all right.

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<v Speaker 3>Republican Senator Bill Haggerty of Tennessee, member of the Senate

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<v Speaker 3>Form Relations Committee and the Banking Committee as well, thank

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<v Speaker 3>you so much for joining us.