1 00:00:02,440 --> 00:00:09,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:09,160 --> 00:00:13,280 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:13,360 --> 00:00:17,040 Speaker 1: Eastern on Effocarplay and Android Auto with the Bloomberg Business app. 4 00:00:17,079 --> 00:00:20,279 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:20,360 --> 00:00:22,800 Speaker 1: us live on YouTube. 6 00:00:23,480 --> 00:00:26,400 Speaker 2: It was a bombshelf that happened in the last twenty 7 00:00:26,440 --> 00:00:30,080 Speaker 2: four hours, and that is New York City Mayor Eric 8 00:00:30,120 --> 00:00:35,199 Speaker 2: Adams indicted after federal corruption probe. Are there's video and 9 00:00:35,320 --> 00:00:40,440 Speaker 2: pictures of officers rating Gracie Mansion, where the mayor lives. 10 00:00:40,840 --> 00:00:43,879 Speaker 2: It's something. It is definitely a moment here in New 11 00:00:43,920 --> 00:00:47,280 Speaker 2: York political history. So we wanted to talk to Scott Stringer, 12 00:00:47,360 --> 00:00:49,879 Speaker 2: former New York City Comptroller, on. 13 00:00:49,800 --> 00:00:50,280 Speaker 3: All of this. 14 00:00:50,479 --> 00:00:53,479 Speaker 2: Scott, the latest that we've heard is that Mayor Adams 15 00:00:53,520 --> 00:00:56,040 Speaker 2: is going to fight this. He definitely doesn't look like 16 00:00:56,080 --> 00:00:57,920 Speaker 2: he's resigning. What is your take on that? 17 00:00:59,120 --> 00:01:02,800 Speaker 3: Look, he should and must fight it. This is his 18 00:01:02,880 --> 00:01:06,040 Speaker 3: life and he has to have full focus on a 19 00:01:06,160 --> 00:01:09,920 Speaker 3: very serious federal indictment. But that is what he has 20 00:01:10,000 --> 00:01:14,240 Speaker 3: to do for himself. Unfortunately, you can't govern the city 21 00:01:14,680 --> 00:01:16,840 Speaker 3: and fight the indictment. And that is why he should 22 00:01:16,880 --> 00:01:19,720 Speaker 3: step aside for the good of the city. I presume 23 00:01:19,959 --> 00:01:22,920 Speaker 3: no guilt or no innocence. That's for the courts to decide, 24 00:01:23,160 --> 00:01:25,480 Speaker 3: But I do think we have to be laser focused 25 00:01:25,520 --> 00:01:29,880 Speaker 3: on the city. Look, the business community in particular has 26 00:01:29,959 --> 00:01:33,360 Speaker 3: invested billions of dollars in the financial capital of the 27 00:01:33,360 --> 00:01:37,199 Speaker 3: world called New York City. We have citizens, middle class 28 00:01:37,200 --> 00:01:40,080 Speaker 3: people who are struggling to pay their rent, struggling to 29 00:01:40,160 --> 00:01:43,160 Speaker 3: get their kids through school. The job of mayor is 30 00:01:43,200 --> 00:01:47,160 Speaker 3: to be that person who works every single day laser focused. 31 00:01:47,480 --> 00:01:51,320 Speaker 3: That cannot happen anymore in an administration where not only 32 00:01:51,480 --> 00:01:55,120 Speaker 3: is the mayor indicted, but almost the entire leadership team 33 00:01:55,200 --> 00:01:59,120 Speaker 3: is under some indictment or federal investigation. So, with great 34 00:01:59,160 --> 00:02:03,080 Speaker 3: respect to the man, recognizing innocent until proven guilty, it 35 00:02:03,200 --> 00:02:06,960 Speaker 3: is time to step aside. We've got to govern this 36 00:02:07,080 --> 00:02:09,679 Speaker 3: town in a way that's never been governed before, and 37 00:02:09,720 --> 00:02:11,919 Speaker 3: I think he's got to just step back and Scott. 38 00:02:11,960 --> 00:02:14,600 Speaker 4: If he doesn't do that, how what's your view on 39 00:02:14,639 --> 00:02:16,680 Speaker 4: the timeline of how these events can unfold? Because I 40 00:02:16,680 --> 00:02:20,200 Speaker 4: just think back to last November when the FBI agents 41 00:02:20,280 --> 00:02:22,760 Speaker 4: rated the home of an Adams campaign fundraiser that's really 42 00:02:22,800 --> 00:02:26,000 Speaker 4: what kickstarted that, and that's ten months in the rearview mirror. 43 00:02:27,760 --> 00:02:30,320 Speaker 3: Well, look, at the end of the day, that's what 44 00:02:30,400 --> 00:02:33,840 Speaker 3: investigations are for. I mean, the federal government has obviously 45 00:02:33,960 --> 00:02:37,480 Speaker 3: taken time to look at all of this. They're announcing 46 00:02:37,600 --> 00:02:43,320 Speaker 3: charges probably as we speak. And my concern as a citizen, 47 00:02:43,520 --> 00:02:46,720 Speaker 3: as a public school parent, as somebody who's managed the 48 00:02:46,760 --> 00:02:49,480 Speaker 3: finances of this city for eight years. You know, this 49 00:02:49,560 --> 00:02:53,079 Speaker 3: is a tender moment for New York. We have to 50 00:02:53,120 --> 00:02:56,560 Speaker 3: send a signal internationally that we are open and ready 51 00:02:56,600 --> 00:03:00,840 Speaker 3: for business. We cannot play the you know, the political 52 00:03:00,880 --> 00:03:04,080 Speaker 3: game back and forth. We need strong leadership now. We 53 00:03:04,120 --> 00:03:07,560 Speaker 3: need leadership and finance. We need leadership to actually get 54 00:03:07,600 --> 00:03:10,200 Speaker 3: things done. Look, I love this city. This is a 55 00:03:10,200 --> 00:03:13,600 Speaker 3: sad day for me, but I've seen corruption scandals over 56 00:03:13,639 --> 00:03:17,280 Speaker 3: the years. I fought corruption my entire life, and it's 57 00:03:17,280 --> 00:03:19,400 Speaker 3: a very sad moment at this point that we have 58 00:03:19,480 --> 00:03:20,200 Speaker 3: to be going through this. 59 00:03:21,120 --> 00:03:23,680 Speaker 2: So there's a couple of things to unpack to that 60 00:03:23,720 --> 00:03:25,519 Speaker 2: with me. So as a parent of a child in 61 00:03:25,560 --> 00:03:28,640 Speaker 2: public school, I totally hear you on that. In terms 62 00:03:28,680 --> 00:03:31,760 Speaker 2: of a business or CEO making an investment in New 63 00:03:31,840 --> 00:03:34,840 Speaker 2: York City. I'm struggling to see how this really moves 64 00:03:34,840 --> 00:03:37,040 Speaker 2: the needle in that a lot of us are now 65 00:03:37,080 --> 00:03:41,080 Speaker 2: desensitized to these kind of indictments and scandals, rightly or wrongly. 66 00:03:41,120 --> 00:03:44,800 Speaker 2: When you have a former president also accused and convicted 67 00:03:44,840 --> 00:03:48,080 Speaker 2: of crimes, everyone here is like, yeah, okay, and then 68 00:03:48,120 --> 00:03:50,120 Speaker 2: let's move on. So is it really going to impact 69 00:03:50,160 --> 00:03:52,760 Speaker 2: it in the way that maybe twenty years ago we 70 00:03:52,840 --> 00:03:53,640 Speaker 2: would or should have. 71 00:03:55,120 --> 00:03:57,600 Speaker 3: Well, I'm not going to give up on the sensibilities 72 00:03:57,720 --> 00:04:02,560 Speaker 3: of both the American public and certainly New York City residents. 73 00:04:02,560 --> 00:04:05,240 Speaker 3: First of all, we New Yorkers, we get this stuff. 74 00:04:05,320 --> 00:04:09,400 Speaker 3: We are savvy, We've seen it all. So I don't 75 00:04:09,400 --> 00:04:11,240 Speaker 3: think this is going to sit well with the public. 76 00:04:11,280 --> 00:04:13,240 Speaker 3: I don't think people are going to shrug their shoulders 77 00:04:13,240 --> 00:04:16,400 Speaker 3: walking to work today saying it doesn't matter. I don't 78 00:04:16,400 --> 00:04:19,640 Speaker 3: think Trump's getting re elected in part because he's had 79 00:04:19,760 --> 00:04:24,359 Speaker 3: criminal conduct. I think people want stable leadership. I mean, 80 00:04:24,440 --> 00:04:26,800 Speaker 3: let's talk about the public schools. We have kids who 81 00:04:26,800 --> 00:04:30,760 Speaker 3: are still struggling with COVID. I see, I see the 82 00:04:30,800 --> 00:04:34,040 Speaker 3: difference between parents who have some resources and parents that don't. 83 00:04:34,360 --> 00:04:37,839 Speaker 3: The whole public housing developments are collapsing. We're not building 84 00:04:38,040 --> 00:04:42,480 Speaker 3: affordable housing fast enough. And look, the job mayor is 85 00:04:42,520 --> 00:04:47,039 Speaker 3: to reach out and get to those entrepreneurs, the tech entrepreneurs, 86 00:04:47,440 --> 00:04:52,120 Speaker 3: the communities that we reliant, jumpstart and pump up our economy. 87 00:04:52,800 --> 00:04:55,839 Speaker 3: We want business leaders to say, you know what, we 88 00:04:55,880 --> 00:04:59,080 Speaker 3: want that old New York City Compact back. We will 89 00:04:59,120 --> 00:05:02,200 Speaker 3: attract the best writers to our workforce. But the job 90 00:05:02,240 --> 00:05:05,760 Speaker 3: of mayor is to provide open space, public space, safety 91 00:05:05,800 --> 00:05:08,559 Speaker 3: in the streets, safety in the subways, a real mental 92 00:05:08,560 --> 00:05:11,640 Speaker 3: health initiative to help with homelessness. But also we've got 93 00:05:11,680 --> 00:05:15,240 Speaker 3: to make sure that rather than tout a robot called 94 00:05:15,360 --> 00:05:19,279 Speaker 3: K five to do policing, we actually need a policing 95 00:05:19,360 --> 00:05:23,320 Speaker 3: strategy that's fair but strong, and we have to make 96 00:05:23,360 --> 00:05:27,320 Speaker 3: these challenges. This mayor cannot focus on it because rightfully, 97 00:05:27,800 --> 00:05:30,080 Speaker 3: he's got to focus on a major federal indictment. And 98 00:05:30,160 --> 00:05:31,880 Speaker 3: I don't blame him for doing that at all. 99 00:05:31,960 --> 00:05:33,760 Speaker 2: All right, Scott, we appreciate it. Thank you very much 100 00:05:33,800 --> 00:05:36,960 Speaker 2: for that insight. Satstringer, former New York City Comptroller. 101 00:05:37,080 --> 00:05:42,080 Speaker 1: Joining us there, you're listening to the Bloomberg Intelligence Podcast. 102 00:05:42,320 --> 00:05:45,560 Speaker 1: Catch us live weekdays at ten am Eastern on applecar 103 00:05:45,680 --> 00:05:48,680 Speaker 1: Play and Android Auto with the Bloomberg Business App. You 104 00:05:48,720 --> 00:05:51,960 Speaker 1: can also listen live on Amazon Alexa from our flagship 105 00:05:52,000 --> 00:05:55,760 Speaker 1: New York station. Just say Alexa play Bloomberg eleven. 106 00:05:55,560 --> 00:05:59,719 Speaker 2: Thirty and I want to get more with Doctor Basil Smigel, 107 00:06:00,080 --> 00:06:03,200 Speaker 2: Professor of Practice at Columbia University School at Professional Studies. 108 00:06:03,240 --> 00:06:05,960 Speaker 2: He's also former executive director of the New York State 109 00:06:06,120 --> 00:06:09,440 Speaker 2: Democratic Party. He's been a political strategist and policy advisor 110 00:06:09,520 --> 00:06:14,159 Speaker 2: for almost twenty years with local, international, and national experience. 111 00:06:14,200 --> 00:06:18,039 Speaker 2: This is quite a bombshell here, doctor, What do you 112 00:06:18,240 --> 00:06:22,360 Speaker 2: think this means? How does this unfold? Can Eric Adams 113 00:06:22,800 --> 00:06:23,960 Speaker 2: keep a seat? 114 00:06:24,600 --> 00:06:27,640 Speaker 5: Well, you know, to the point that June just made. 115 00:06:27,640 --> 00:06:30,159 Speaker 5: I mean, this wouldn't have happened had it not gone 116 00:06:30,240 --> 00:06:33,080 Speaker 5: to the highest levels of the Department of Justice. So 117 00:06:33,200 --> 00:06:36,080 Speaker 5: this is serious. It's serious as a lifelong in New Yorker. 118 00:06:36,160 --> 00:06:39,040 Speaker 5: This is serious for me just as a voter and 119 00:06:39,320 --> 00:06:41,359 Speaker 5: you know, with care and concern for my city. But 120 00:06:41,440 --> 00:06:44,120 Speaker 5: if he saw his press conference earlier, he had a 121 00:06:44,160 --> 00:06:47,680 Speaker 5: lot of supporters with him, and I think that's really 122 00:06:47,760 --> 00:06:51,880 Speaker 5: what his future hinges on, not just the charges themselves, 123 00:06:51,880 --> 00:06:56,680 Speaker 5: but politically, you know, will his base stick with him? 124 00:06:57,839 --> 00:07:01,560 Speaker 5: And we saw, you know, some prominent democratic leaders, particularly 125 00:07:01,560 --> 00:07:06,480 Speaker 5: African American leaders, standing behind him. So until we start 126 00:07:06,480 --> 00:07:12,000 Speaker 5: to see more, if we ever see more prominent African Americans, 127 00:07:12,040 --> 00:07:14,720 Speaker 5: particularly from some of the communities that he did did 128 00:07:14,920 --> 00:07:17,640 Speaker 5: very well in in his election, if they sit down 129 00:07:17,720 --> 00:07:20,760 Speaker 5: and saying that he needs to step down he's unable 130 00:07:20,800 --> 00:07:24,120 Speaker 5: to fulfill his duties, then I think you'll see the 131 00:07:24,120 --> 00:07:26,960 Speaker 5: hastening of that decision. But for now, it sounds like 132 00:07:27,000 --> 00:07:30,080 Speaker 5: he's doug its heels it in and to this point, 133 00:07:30,600 --> 00:07:33,480 Speaker 5: I don't really see this sort of watershed moment that 134 00:07:33,640 --> 00:07:35,200 Speaker 5: would get him to step down. 135 00:07:35,320 --> 00:07:38,760 Speaker 6: Doctor. What is the governor's role at Governor Hochel's role 136 00:07:38,880 --> 00:07:42,000 Speaker 6: in all this? Can she essentially fire him? Would she? 137 00:07:42,280 --> 00:07:44,440 Speaker 6: If it comes to that. I mean, you mentioned sort 138 00:07:44,480 --> 00:07:50,000 Speaker 6: of the political delicacy of it all, given his support 139 00:07:50,280 --> 00:07:53,560 Speaker 6: within the African community and elsewhere, and. 140 00:07:53,560 --> 00:07:55,880 Speaker 5: I think it does come down to that she does 141 00:07:55,960 --> 00:07:58,400 Speaker 5: have a role there is that there is a scenario 142 00:07:58,480 --> 00:08:02,920 Speaker 5: where the governor can can take him, take him out 143 00:08:02,960 --> 00:08:06,920 Speaker 5: of his seat. There's another sort of opportunity for that 144 00:08:07,000 --> 00:08:10,240 Speaker 5: to happen by a separate committee should that get formed. 145 00:08:10,600 --> 00:08:14,840 Speaker 5: There's a long explanation about that, but the but yes, 146 00:08:14,920 --> 00:08:17,600 Speaker 5: the governor can step in and take and take him 147 00:08:17,600 --> 00:08:20,360 Speaker 5: out of office at some point. But given the fact 148 00:08:20,480 --> 00:08:24,440 Speaker 5: that you know, the governor has always had you know, 149 00:08:24,520 --> 00:08:27,360 Speaker 5: has had a tricky election just a couple of years 150 00:08:27,360 --> 00:08:30,000 Speaker 5: ago where it was a lot closer than people expected. 151 00:08:30,400 --> 00:08:35,200 Speaker 5: She relies heavily on the same base that Eric Adams 152 00:08:35,200 --> 00:08:38,319 Speaker 5: has in New York City, and I don't know that 153 00:08:38,360 --> 00:08:45,080 Speaker 5: she would make a decision to to a very drastic 154 00:08:45,120 --> 00:08:48,480 Speaker 5: decision like that without really checking with a lot of 155 00:08:48,520 --> 00:08:51,520 Speaker 5: the a lot of the key leaders in those communities 156 00:08:51,920 --> 00:08:54,800 Speaker 5: across the city. Because if she would do that sort 157 00:08:54,800 --> 00:08:58,320 Speaker 5: of unilaterally, I think the blowback would be it would 158 00:08:58,360 --> 00:09:01,160 Speaker 5: be really significant and she would feel it when she's 159 00:09:01,240 --> 00:09:01,880 Speaker 5: up for re election. 160 00:09:02,920 --> 00:09:05,600 Speaker 2: When you take a look at the indictment, what we 161 00:09:05,720 --> 00:09:10,280 Speaker 2: heard from District Attorney Damien Williams, and then excuse me, 162 00:09:10,360 --> 00:09:13,880 Speaker 2: yes you Attorney Damian Williams, when we also heard from 163 00:09:14,000 --> 00:09:16,480 Speaker 2: New York City Mayor Eric Adams as well his defense, 164 00:09:18,880 --> 00:09:21,920 Speaker 2: what stacks up for you? Like if you were with 165 00:09:22,200 --> 00:09:24,400 Speaker 2: Eric Adams, like what would you be saying, like how 166 00:09:24,440 --> 00:09:26,840 Speaker 2: does the defense work? Like We're going to keep fighting. 167 00:09:27,559 --> 00:09:29,080 Speaker 2: I'm going to keep fighting I'm going to keep my 168 00:09:29,160 --> 00:09:31,920 Speaker 2: day job. This isn't true. They're just kind of stalking 169 00:09:31,960 --> 00:09:34,480 Speaker 2: me like all all of that. Does that hold real water? 170 00:09:35,800 --> 00:09:38,559 Speaker 5: You know? This is I So the short answer for 171 00:09:38,720 --> 00:09:42,400 Speaker 5: me is no, because you know him. You know, for 172 00:09:42,520 --> 00:09:48,000 Speaker 5: him to say that this has been he's being targeted 173 00:09:48,080 --> 00:09:51,400 Speaker 5: by the Justice Department, I would remind him that the 174 00:09:51,440 --> 00:09:55,480 Speaker 5: president's own son, Hunter Biden, has been indicted. So I 175 00:09:55,520 --> 00:09:58,560 Speaker 5: don't think he's I don't think that that holds a 176 00:09:58,559 --> 00:10:01,720 Speaker 5: lot of water. Number One one. He's also said that 177 00:10:01,800 --> 00:10:05,280 Speaker 5: this is a retribution for his challenging of the Biden 178 00:10:05,320 --> 00:10:08,720 Speaker 5: administration on his handling of migrants, and I would I 179 00:10:08,720 --> 00:10:12,920 Speaker 5: would also say that I don't think that given everything 180 00:10:12,960 --> 00:10:15,800 Speaker 5: that's happening in our national politics right now, I don't 181 00:10:15,840 --> 00:10:19,960 Speaker 5: think that the Biden administration nor the Democrats nationally have 182 00:10:20,080 --> 00:10:23,840 Speaker 5: the kind of time to specifically be targeting him in 183 00:10:23,880 --> 00:10:26,280 Speaker 5: this way. They've just got a lot of other things 184 00:10:26,280 --> 00:10:29,240 Speaker 5: to do. He's also said that you know this is 185 00:10:30,360 --> 00:10:33,520 Speaker 5: that that cut. The ways in which you've been targeted 186 00:10:33,559 --> 00:10:37,040 Speaker 5: are similar to what David Dinkins, the first African American 187 00:10:37,480 --> 00:10:39,480 Speaker 5: mayor of the City of New York, was similar to 188 00:10:39,520 --> 00:10:42,400 Speaker 5: what he went through, and I actually that bothers me 189 00:10:42,480 --> 00:10:46,200 Speaker 5: a bit too, because number one, David Dinkins is not indicted, 190 00:10:46,559 --> 00:10:50,559 Speaker 5: and number two, you know, he also had an antagonist 191 00:10:50,760 --> 00:10:53,839 Speaker 5: in Rudi Giuliani for the entire four years that he 192 00:10:53,960 --> 00:10:57,200 Speaker 5: was mayor, and there was a tremendous racial undertone and 193 00:10:57,280 --> 00:11:02,200 Speaker 5: overtone to that tension, which is not present here. But 194 00:11:02,320 --> 00:11:05,000 Speaker 5: I will say that it is it is true that 195 00:11:05,200 --> 00:11:07,920 Speaker 5: for a lot of African American voters there is a 196 00:11:08,000 --> 00:11:14,080 Speaker 5: significant amount of apprehension and concern around the ways that 197 00:11:14,120 --> 00:11:17,040 Speaker 5: the community is being treated has been treated by the 198 00:11:17,080 --> 00:11:20,240 Speaker 5: media and by law enforcement. That is that it is 199 00:11:20,280 --> 00:11:23,000 Speaker 5: something that has been well documented over the years. But 200 00:11:23,120 --> 00:11:26,360 Speaker 5: I'm also very mindful as an African American myself, I'm 201 00:11:26,400 --> 00:11:30,400 Speaker 5: also mindful of how that is be how that is used, 202 00:11:30,400 --> 00:11:33,280 Speaker 5: and how that's leveraged in situations like this. So I 203 00:11:33,320 --> 00:11:36,880 Speaker 5: would suggest that he stay away from those kinds of 204 00:11:36,920 --> 00:11:40,280 Speaker 5: those defensive tactics in that narrative and kind of just 205 00:11:40,480 --> 00:11:43,760 Speaker 5: focus on saying that he still can run the city, 206 00:11:43,800 --> 00:11:47,640 Speaker 5: and he's still in charge, and this is the future 207 00:11:47,640 --> 00:11:50,559 Speaker 5: and envision he has for the upcoming weeks. So I 208 00:11:50,600 --> 00:11:51,480 Speaker 5: would stick to that. 209 00:11:51,800 --> 00:11:55,440 Speaker 6: Can a city as complex as New York City continue 210 00:11:55,480 --> 00:11:59,160 Speaker 6: to operate with a mayor who's distracted by this, and 211 00:11:59,240 --> 00:12:03,280 Speaker 6: with any of other department leaders in New York City 212 00:12:03,280 --> 00:12:04,360 Speaker 6: who just aren't there. 213 00:12:05,760 --> 00:12:08,760 Speaker 5: Well, I mean, that's one of the key concerns because 214 00:12:08,800 --> 00:12:12,160 Speaker 5: if you think about the biggest agencies, the most prominent 215 00:12:12,200 --> 00:12:16,120 Speaker 5: agencies in New York Fire, Police, Department of Health, and Education, 216 00:12:16,440 --> 00:12:19,920 Speaker 5: and you know, for full disclosure, the former school's chancellor. 217 00:12:19,920 --> 00:12:22,360 Speaker 5: The school chancellor who said he's resigning the end of 218 00:12:22,400 --> 00:12:26,000 Speaker 5: the year, I've known for twenty five years and he's 219 00:12:26,000 --> 00:12:28,520 Speaker 5: wanted that job but pretty much his entire career, So 220 00:12:28,600 --> 00:12:32,720 Speaker 5: for him to take that step fairly significant. You know, 221 00:12:32,800 --> 00:12:38,880 Speaker 5: the rating of the current Police Commissioner's House, who himself 222 00:12:38,920 --> 00:12:41,640 Speaker 5: is acting because the previous one stepped down because of 223 00:12:41,679 --> 00:12:45,440 Speaker 5: the investigation. All of these challenges to running the city 224 00:12:45,920 --> 00:12:48,480 Speaker 5: will be on the minds of voters in the next 225 00:12:48,520 --> 00:12:51,360 Speaker 5: couple of weeks. My guess, however, is that there's to 226 00:12:51,480 --> 00:12:53,640 Speaker 5: go out and be so much focused on the presidential 227 00:12:53,720 --> 00:12:58,600 Speaker 5: that it'll be mitigated by that. But just after and unless, 228 00:12:59,040 --> 00:13:01,480 Speaker 5: of course, if something happens tragically, and I hope that 229 00:13:01,480 --> 00:13:04,640 Speaker 5: doesn't happen, there will be more attention on his leadership. 230 00:13:04,679 --> 00:13:07,360 Speaker 5: But what he has to wonder right now and hope 231 00:13:07,400 --> 00:13:09,680 Speaker 5: for is that a lot of voters are going to 232 00:13:09,679 --> 00:13:12,400 Speaker 5: be focused on more on the presidential than on him. 233 00:13:12,400 --> 00:13:15,240 Speaker 5: But once that happened, all eyes quickly turned back to 234 00:13:15,320 --> 00:13:19,559 Speaker 5: him because the male primaries in June, it's really right 235 00:13:20,280 --> 00:13:23,880 Speaker 5: upon us and just very quickly. There is a succession plan, 236 00:13:23,960 --> 00:13:27,760 Speaker 5: and I think everybody should understand that that the state 237 00:13:27,880 --> 00:13:32,160 Speaker 5: and the state constitution, city charter have a succession plan 238 00:13:32,240 --> 00:13:34,720 Speaker 5: built in. If you work stut Down, the New York 239 00:13:34,760 --> 00:13:37,160 Speaker 5: City Public Advocate becomes the acting mayor. 240 00:13:37,840 --> 00:13:40,680 Speaker 2: All right, doctor, we really appreciate it. That was extraordinarily helpful, 241 00:13:40,720 --> 00:13:44,160 Speaker 2: Doctor basilsmikel Professor of Practice and Columbia University School of 242 00:13:44,240 --> 00:13:47,280 Speaker 2: Professional Studies, also former executive director of the New York 243 00:13:47,360 --> 00:13:49,800 Speaker 2: State Democratic Party. 244 00:13:50,200 --> 00:13:54,080 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 245 00:13:54,160 --> 00:13:57,480 Speaker 1: weekdays at ten am Eastern on FOCAR playing Android outo 246 00:13:57,600 --> 00:14:00,480 Speaker 1: with the Bloomberg Business app. Listen on demand wherever you 247 00:14:00,600 --> 00:14:03,560 Speaker 1: get your podcasts, or watch us live on YouTube. 248 00:14:05,600 --> 00:14:08,000 Speaker 2: So let's continue the story. Tom or Lake as Bloomberg 249 00:14:08,040 --> 00:14:10,920 Speaker 2: Economics Chief Economists, and he joins us now now Tom 250 00:14:11,040 --> 00:14:13,079 Speaker 2: had lived in Beision for a very long time. He 251 00:14:13,320 --> 00:14:16,120 Speaker 2: was the chief China economics correspondent over the Wall Street Journal. 252 00:14:16,320 --> 00:14:20,120 Speaker 2: He also headed Bloomberg economics coverage in China, Japan, and Korea, 253 00:14:20,680 --> 00:14:23,040 Speaker 2: and now he joins US from DC. But he has 254 00:14:23,080 --> 00:14:25,240 Speaker 2: a long history of looking at these kind of interventions 255 00:14:25,760 --> 00:14:28,880 Speaker 2: from the government as well as monetary authority. I hate Tom, 256 00:14:29,360 --> 00:14:30,080 Speaker 2: Is this the end? 257 00:14:32,080 --> 00:14:33,920 Speaker 7: So I think we need to break it down into 258 00:14:34,240 --> 00:14:38,320 Speaker 7: two different problems. So the first problem is the cycle. 259 00:14:39,520 --> 00:14:43,200 Speaker 7: And if we think about the cycle, well, growth was 260 00:14:43,320 --> 00:14:48,440 Speaker 7: very weak, deflation was coming, markets were slumping, and this 261 00:14:48,680 --> 00:14:52,320 Speaker 7: intervention by China's Central Bank and now the Pollit Bureau, 262 00:14:52,800 --> 00:14:57,440 Speaker 7: well it looks pretty decisive. The equity market has broad 263 00:14:57,600 --> 00:15:02,920 Speaker 7: back higher, the Chinese yuan has strengthened, bond yields have 264 00:15:03,040 --> 00:15:06,680 Speaker 7: ticked up, and expectations for growth out to the end 265 00:15:06,720 --> 00:15:09,600 Speaker 7: of twenty twenty four and into twenty twenty five, well 266 00:15:09,800 --> 00:15:12,520 Speaker 7: they're a little bit stronger. So on the cycle, this 267 00:15:12,680 --> 00:15:16,360 Speaker 7: is certainly a positive moment, maybe a decisive moment. The 268 00:15:16,480 --> 00:15:20,040 Speaker 7: second set of issues, though, is around structure, right, and 269 00:15:20,160 --> 00:15:23,560 Speaker 7: that's where we have to worry about the massive overhang 270 00:15:23,920 --> 00:15:32,120 Speaker 7: of property supply. The shrinking workforce, the increasingly fractious relations 271 00:15:32,200 --> 00:15:35,120 Speaker 7: with the United States. These are the factors which are 272 00:15:35,160 --> 00:15:37,840 Speaker 7: going to be weighing on China's growth, not just in 273 00:15:37,920 --> 00:15:40,560 Speaker 7: twenty twenty four, twenty twenty five, but out into the 274 00:15:40,600 --> 00:15:44,680 Speaker 7: next decade. And on those well, nothing we've seen in 275 00:15:44,720 --> 00:15:47,040 Speaker 7: the last few days really changes the picture. 276 00:15:47,720 --> 00:15:50,359 Speaker 4: Yeah, Tom, With that in mind, we're seeing a tremendous 277 00:15:50,520 --> 00:15:53,560 Speaker 4: rally across assets, especially in China. Just looking at the 278 00:15:53,560 --> 00:15:57,000 Speaker 4: Shanghai composite up more than nine percent in the last 279 00:15:57,040 --> 00:16:00,560 Speaker 4: three days. Does this have sticking power? It feels like 280 00:16:00,680 --> 00:16:03,040 Speaker 4: in the past we've seen these moments were stimulus is 281 00:16:03,120 --> 00:16:06,160 Speaker 4: kind of drummed up in China, talks about injecting money 282 00:16:06,200 --> 00:16:08,720 Speaker 4: into the economy, and then those moments are relatively fleeting. 283 00:16:10,520 --> 00:16:14,480 Speaker 7: So the last couple of years has seen what you 284 00:16:14,600 --> 00:16:17,320 Speaker 7: might call a kind of steady drip drip of micro 285 00:16:17,520 --> 00:16:22,520 Speaker 7: policy moves. The PBOC cuts interest rates by ten basis 286 00:16:22,600 --> 00:16:26,600 Speaker 7: points or twenty basis points. The PBOC frees up a 287 00:16:26,680 --> 00:16:30,680 Speaker 7: bit more funds for China's banks to lend. The Ministry 288 00:16:30,720 --> 00:16:33,200 Speaker 7: of Finance puts a bit more money in the pockets 289 00:16:33,280 --> 00:16:36,560 Speaker 7: of local governments. What we've seen in the last few 290 00:16:36,640 --> 00:16:40,880 Speaker 7: days is a kind of a package of more powerful 291 00:16:40,960 --> 00:16:46,080 Speaker 7: measures rolled out at the same moment, and the Pollit Bureau, 292 00:16:47,360 --> 00:16:50,480 Speaker 7: the twenty four men who kind of call the shots 293 00:16:50,560 --> 00:16:54,760 Speaker 7: on China's economy, coming out with some pretty sort of 294 00:16:54,880 --> 00:16:58,480 Speaker 7: firm statements about how they want to turn the cycle round. 295 00:16:58,960 --> 00:17:03,720 Speaker 7: Hold the decline in property, give equities a boost. Right, So, 296 00:17:04,280 --> 00:17:08,600 Speaker 7: if we think about markets, if we think about growth 297 00:17:08,720 --> 00:17:11,440 Speaker 7: for the next few months, maybe even into early twenty 298 00:17:11,520 --> 00:17:16,720 Speaker 7: twenty five, this is a pretty important move. If we 299 00:17:16,800 --> 00:17:20,480 Speaker 7: think about those bigger structural problems, if we think about 300 00:17:20,880 --> 00:17:23,840 Speaker 7: the millions and millions of empty homes in China, we 301 00:17:23,960 --> 00:17:28,240 Speaker 7: think about the shrinking working age population. No, nothing which 302 00:17:28,240 --> 00:17:30,480 Speaker 7: has happened so far is going to move the dial 303 00:17:30,560 --> 00:17:31,920 Speaker 7: on those big structural problems. 304 00:17:32,400 --> 00:17:34,560 Speaker 2: And here's the question we've all been waiting for, right 305 00:17:34,720 --> 00:17:37,200 Speaker 2: when when is China going to cut checks to people? 306 00:17:37,359 --> 00:17:38,960 Speaker 2: I mean, they already mentioned that they're going to do 307 00:17:39,000 --> 00:17:41,240 Speaker 2: it for their low incomes, just to one off, but 308 00:17:41,359 --> 00:17:43,640 Speaker 2: that's literally what needs to happen. No, So like, when 309 00:17:43,640 --> 00:17:44,280 Speaker 2: are they going to do that? 310 00:17:45,520 --> 00:17:49,600 Speaker 7: So it's a great question, Alex so that I'm sure 311 00:17:49,640 --> 00:17:51,920 Speaker 7: we're all familiar with the term pushing on a piece 312 00:17:51,960 --> 00:17:55,360 Speaker 7: of string. Right, At some point, there's just too much 313 00:17:55,520 --> 00:17:59,440 Speaker 7: debt in the economy. And when you cut interest rates, well, 314 00:17:59,680 --> 00:18:03,119 Speaker 7: because debt is already so high, no one rushes to 315 00:18:03,200 --> 00:18:06,520 Speaker 7: borrow more, no one rushes to invest more, right, And 316 00:18:06,640 --> 00:18:10,800 Speaker 7: I think that's almost where China is, right. Debt's really high, 317 00:18:11,520 --> 00:18:14,840 Speaker 7: so rate cuts they help a little bit, But there's 318 00:18:14,920 --> 00:18:18,440 Speaker 7: certainly that pushing on a piece of string aspect to it. 319 00:18:19,160 --> 00:18:22,280 Speaker 7: So if you really want to accelerate China's growth, what 320 00:18:22,400 --> 00:18:24,399 Speaker 7: do you have to do? Well, the government has to 321 00:18:24,480 --> 00:18:29,600 Speaker 7: open its checkbook and put money in household's pockets. Now 322 00:18:30,040 --> 00:18:33,920 Speaker 7: we've seen the Polyt Bureau say they're going to amp 323 00:18:34,040 --> 00:18:38,159 Speaker 7: up fiscal stimulus, so it seems like the checkbook, the 324 00:18:38,400 --> 00:18:43,200 Speaker 7: government wallet is starting to creak open. The question is, well, 325 00:18:43,440 --> 00:18:45,240 Speaker 7: how much money are they going to put to work 326 00:18:46,040 --> 00:18:47,600 Speaker 7: and where are they going to put it to work. 327 00:18:47,920 --> 00:18:50,360 Speaker 7: Is it going to be a kind of traditional infrastructure 328 00:18:50,400 --> 00:18:54,600 Speaker 7: style stimulus, let's build some more bridges, or is it 329 00:18:54,680 --> 00:18:57,440 Speaker 7: going to be the consumer stimulus, let's put money in 330 00:18:57,520 --> 00:19:01,840 Speaker 7: household's pockets so they can upgrade their Electroney baby switch 331 00:19:01,880 --> 00:19:02,879 Speaker 7: to electric vehicle? 332 00:19:03,359 --> 00:19:05,320 Speaker 2: All right, Tom, we appreciate that. Thank you very much, 333 00:19:05,359 --> 00:19:08,280 Speaker 2: Tom or like Bloomberg Economics chief economists joining us on 334 00:19:08,600 --> 00:19:09,600 Speaker 2: the China Latest. 335 00:19:11,160 --> 00:19:15,000 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 336 00:19:15,119 --> 00:19:18,640 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 337 00:19:18,680 --> 00:19:21,440 Speaker 1: Auto with the Bloomberg Business App. You can also listen 338 00:19:21,560 --> 00:19:24,640 Speaker 1: live on Amazon Alexa from our flagship New York station, 339 00:19:25,040 --> 00:19:27,760 Speaker 1: Just say Alexa Play Bloomberg eleven thirty. 340 00:19:29,480 --> 00:19:31,520 Speaker 2: We bring you all the tough news and business economics 341 00:19:31,560 --> 00:19:33,800 Speaker 2: and finance through a lens of our Bloomberg Intelligence folks. 342 00:19:33,840 --> 00:19:35,800 Speaker 2: They cover two thousand companies and one hundred and thirty 343 00:19:35,840 --> 00:19:40,000 Speaker 2: industries worldwide. The news that broke yesterday is that open 344 00:19:40,160 --> 00:19:43,520 Speaker 2: ai is going to transition from being a nonprofit organization 345 00:19:43,640 --> 00:19:46,159 Speaker 2: to a for profit company. I have no idea what 346 00:19:46,280 --> 00:19:48,280 Speaker 2: that means, but the goal of the company was supposed 347 00:19:48,320 --> 00:19:51,240 Speaker 2: to quote benefit humanity as a whole, unconstrained by a 348 00:19:51,320 --> 00:19:53,879 Speaker 2: need to generate financial return. If that changes, what does 349 00:19:53,920 --> 00:19:56,040 Speaker 2: that due to the actual company? Joining us now, as 350 00:19:56,080 --> 00:20:01,000 Speaker 2: Man Deep Sing, Bloomberg Intelligence senior tech industry analyst joins, now, Okay, 351 00:20:01,200 --> 00:20:02,439 Speaker 2: I don't get it. What does it mean? 352 00:20:03,000 --> 00:20:05,960 Speaker 8: Well, I mean they've been looking to do that for 353 00:20:06,119 --> 00:20:12,359 Speaker 8: a while in terms of becoming a profitable company similar 354 00:20:12,480 --> 00:20:16,480 Speaker 8: to other tech companies that are out there. And I 355 00:20:16,560 --> 00:20:20,480 Speaker 8: guess we had hints all along because they never open 356 00:20:20,560 --> 00:20:23,200 Speaker 8: source their model. You know, they are the leaders when 357 00:20:23,240 --> 00:20:26,720 Speaker 8: it comes to generative AI, and there are two approaches 358 00:20:26,840 --> 00:20:31,040 Speaker 8: right now with companies keeping their model proprietary versus open source, 359 00:20:31,119 --> 00:20:34,320 Speaker 8: and they are one of those who have kept it proprietary. 360 00:20:34,440 --> 00:20:37,040 Speaker 8: So it's not a surprise that they wanted to convert 361 00:20:37,080 --> 00:20:41,680 Speaker 8: to a profit structure. Given all this has happened, I 362 00:20:41,760 --> 00:20:45,480 Speaker 8: think the bigger thing here is the CTO Mira Murrati 363 00:20:45,600 --> 00:20:48,080 Speaker 8: leaving and pretty much all the co founders of the 364 00:20:48,160 --> 00:20:52,360 Speaker 8: company leaving at this point, with Altmann being the only 365 00:20:52,440 --> 00:20:54,920 Speaker 8: one there. So that's to me the bigger news. 366 00:20:55,440 --> 00:21:00,359 Speaker 4: Capitalism strikes again. But real question though, if it's valued 367 00:21:00,359 --> 00:21:03,040 Speaker 4: around one hundred and fifty billion dollars and you mentioned 368 00:21:03,520 --> 00:21:07,200 Speaker 4: CTO Mira Muradi resigning, does she keep her stock like 369 00:21:07,320 --> 00:21:10,520 Speaker 4: is she leaving the company with a nest egg worth 370 00:21:10,560 --> 00:21:11,520 Speaker 4: a few billion dollars? 371 00:21:12,280 --> 00:21:16,480 Speaker 8: Well, again, I think once the entity changes, there are 372 00:21:16,600 --> 00:21:20,480 Speaker 8: a lot more things that will happen subsequently in terms 373 00:21:20,560 --> 00:21:23,480 Speaker 8: of you know, the new profitable structure, what sort of 374 00:21:23,800 --> 00:21:27,200 Speaker 8: equity sam Altman would have. So in terms of the 375 00:21:27,359 --> 00:21:32,119 Speaker 8: prior structure, they already had a subsidiary which was profitable. 376 00:21:32,240 --> 00:21:36,080 Speaker 8: So it's a pretty convoluted structure. So when the November 377 00:21:36,240 --> 00:21:39,600 Speaker 8: thing happened, number twenty twenty three, when sam Altman was 378 00:21:40,440 --> 00:21:42,880 Speaker 8: asked to leave and then he came back, at that time, 379 00:21:43,000 --> 00:21:47,399 Speaker 8: they changed the board composition and they created a profitable subsidiary. 380 00:21:47,960 --> 00:21:51,760 Speaker 8: Now this is like converting the full company to a 381 00:21:51,840 --> 00:21:55,760 Speaker 8: profitable entity, and there will be changes that will come along. 382 00:21:55,880 --> 00:21:59,560 Speaker 8: So hard to say exactly who keeps what at this 383 00:21:59,640 --> 00:22:02,720 Speaker 8: point of time, but suffice to say that you know, 384 00:22:03,240 --> 00:22:06,520 Speaker 8: the Microsoft relationship would come into play as well. I mean, 385 00:22:06,600 --> 00:22:09,679 Speaker 8: they are one of the biggest stakeholders in the company, 386 00:22:09,760 --> 00:22:14,600 Speaker 8: and all the signs are they want more investors in 387 00:22:14,680 --> 00:22:17,680 Speaker 8: the company. So sam Altman is trying to raise more 388 00:22:17,760 --> 00:22:21,720 Speaker 8: money and it will be at a higher valuation one 389 00:22:21,800 --> 00:22:25,280 Speaker 8: hundred and fifty billion dollars. That's expected, and at some 390 00:22:25,400 --> 00:22:27,240 Speaker 8: point I think they will go public as well. 391 00:22:27,760 --> 00:22:31,480 Speaker 2: When you brought up the CTO leaving, wasn't that also expected? 392 00:22:31,520 --> 00:22:35,240 Speaker 2: Hasn't she stayed on longer than everyone had anticipated because 393 00:22:35,280 --> 00:22:37,320 Speaker 2: she covered for Sam Welt when he was out, so 394 00:22:37,520 --> 00:22:40,040 Speaker 2: it was understood that she was leaving once he came back. 395 00:22:40,760 --> 00:22:42,800 Speaker 8: Well, I mean, I look at it this week again, 396 00:22:43,119 --> 00:22:45,960 Speaker 8: it's from the outside. I obviously I am not privy 397 00:22:46,040 --> 00:22:48,680 Speaker 8: to anything that's going on inside the company, but there 398 00:22:48,840 --> 00:22:52,240 Speaker 8: is clearly some tension. Whether it's tied to the you know, 399 00:22:52,440 --> 00:22:56,920 Speaker 8: the profitable or non profitable aspect, or any other risks 400 00:22:57,000 --> 00:23:01,000 Speaker 8: related to large language models, whether it's come down to 401 00:23:01,119 --> 00:23:05,200 Speaker 8: safety issues or copyright issues. We don't know that level 402 00:23:05,280 --> 00:23:08,280 Speaker 8: of transparency, and I think the fact that all the 403 00:23:08,400 --> 00:23:12,199 Speaker 8: co founders have left clearly there is disagreement and tension. 404 00:23:12,520 --> 00:23:15,760 Speaker 8: And we can only speculate from the outside, but it's 405 00:23:15,920 --> 00:23:18,600 Speaker 8: never a good sign when you know the core team 406 00:23:18,760 --> 00:23:22,720 Speaker 8: that started the company and these are the technical guys 407 00:23:22,760 --> 00:23:24,920 Speaker 8: who have left. So Sam Altman is the face of 408 00:23:25,000 --> 00:23:27,240 Speaker 8: the company, is the CEO, but these are the real 409 00:23:27,359 --> 00:23:30,960 Speaker 8: technical guys who built the product. So I mean, look, 410 00:23:31,000 --> 00:23:33,920 Speaker 8: they have a big bench and the company is much 411 00:23:33,960 --> 00:23:36,879 Speaker 8: bigger now. The fact that we haven't heard a lot 412 00:23:36,920 --> 00:23:41,000 Speaker 8: about GPT five that worries me a little bit because 413 00:23:41,040 --> 00:23:44,560 Speaker 8: when you are a company like open ai, who is 414 00:23:44,640 --> 00:23:48,320 Speaker 8: leading the charge, you want that product roadmap to be 415 00:23:48,400 --> 00:23:50,840 Speaker 8: out there. You want to set expectations when is the 416 00:23:50,920 --> 00:23:53,159 Speaker 8: next version of the large anglid model coming out? And 417 00:23:53,920 --> 00:23:55,760 Speaker 8: I think that's where they could be delayed. 418 00:23:56,080 --> 00:23:58,120 Speaker 2: All right, Mandy, really appreciate it. Thank you so much, 419 00:23:58,200 --> 00:24:02,240 Speaker 2: many saying, joining us Boomberg Technology senior analysts for Bloomberg Intelligence. 420 00:24:03,800 --> 00:24:07,640 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 421 00:24:07,760 --> 00:24:11,280 Speaker 1: weekdays at ten am Eastern on Applecar Play and Android 422 00:24:11,320 --> 00:24:14,040 Speaker 1: Auto with the Bloomberg Business app. You can also listen 423 00:24:14,200 --> 00:24:17,280 Speaker 1: live on Amazon Alexa from our flagship New York station. 424 00:24:17,680 --> 00:24:20,400 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 425 00:24:22,080 --> 00:24:25,000 Speaker 2: In other news, Wells Fargo is said to send some 426 00:24:25,200 --> 00:24:29,359 Speaker 2: fed crucial review for lifting cap. Shares rise by about 427 00:24:29,359 --> 00:24:30,720 Speaker 2: two percent to a session high. 428 00:24:30,800 --> 00:24:31,880 Speaker 5: This is like the deal. 429 00:24:32,040 --> 00:24:35,560 Speaker 2: This is the It's like consistent things that Wells Fargo 430 00:24:35,680 --> 00:24:39,359 Speaker 2: has to do, Bailey in order to get that asset 431 00:24:39,440 --> 00:24:42,479 Speaker 2: cap lifted so they can really start to grow again exactly. 432 00:24:42,600 --> 00:24:44,840 Speaker 4: And when you look at kind of some of these updates, 433 00:24:44,880 --> 00:24:46,920 Speaker 4: so it's a big step in trying to kind of 434 00:24:47,000 --> 00:24:48,760 Speaker 4: write the ship, if you will, for Wells Fargo. As 435 00:24:48,800 --> 00:24:50,840 Speaker 4: you mentioned, stock right now at more than four percent 436 00:24:50,960 --> 00:24:53,800 Speaker 4: so when you see these sharp immediate reactions, it's Wall 437 00:24:53,840 --> 00:24:57,520 Speaker 4: Street obviously applauding those deals. And the big thing going 438 00:24:57,600 --> 00:25:02,320 Speaker 4: forward is how can Walls Fargo kind of again re 439 00:25:02,440 --> 00:25:04,760 Speaker 4: emerge from some of those issues that they had a 440 00:25:05,000 --> 00:25:08,000 Speaker 4: number of years ago and the kind of reworking of 441 00:25:08,040 --> 00:25:10,359 Speaker 4: the company that's been taking I believe it's just over 442 00:25:10,440 --> 00:25:13,159 Speaker 4: five years, six years at this point, and trying to 443 00:25:13,200 --> 00:25:16,800 Speaker 4: get over some of these regulatory sanctions. And obviously the 444 00:25:16,880 --> 00:25:19,080 Speaker 4: stock again of four percent. I want to say it's 445 00:25:19,080 --> 00:25:21,879 Speaker 4: been underperforming relative to some comps, but I'm waiting on 446 00:25:21,960 --> 00:25:23,040 Speaker 4: a terminal to load right now. 447 00:25:23,440 --> 00:25:25,760 Speaker 2: And also the idea is that you know, you'd like 448 00:25:25,920 --> 00:25:27,720 Speaker 2: to say that they do this one thing and the 449 00:25:27,800 --> 00:25:31,040 Speaker 2: asset cap is lifted, but in actuality it's going to 450 00:25:31,119 --> 00:25:37,280 Speaker 2: be chipping away at compliance, transparency, getting all their ducks 451 00:25:37,320 --> 00:25:39,639 Speaker 2: in a row, and that it takes a lot of 452 00:25:39,800 --> 00:25:42,840 Speaker 2: time not to be bested. There is other breaking news here. 453 00:25:42,920 --> 00:25:45,320 Speaker 2: FED Vice Chare for Supervision Michael Barr delivers in a 454 00:25:45,400 --> 00:25:49,240 Speaker 2: speech that he says the FED is exploring liquidity rule 455 00:25:50,040 --> 00:25:53,600 Speaker 2: tied to uninsured deposit Now that rule would address those 456 00:25:53,640 --> 00:25:57,560 Speaker 2: constraints on hold to maturity assets Part of the issue 457 00:25:57,640 --> 00:25:59,760 Speaker 2: that brought down SVB. At the end of the day, 458 00:26:00,080 --> 00:26:02,119 Speaker 2: have an asset on your books, you're holding for safety, 459 00:26:02,160 --> 00:26:03,680 Speaker 2: You're going to hold them till the end of the term. 460 00:26:04,520 --> 00:26:06,880 Speaker 2: Yet when rates move violently up or down, it really 461 00:26:06,920 --> 00:26:10,920 Speaker 2: creates a disparity. Then in that asset price. You also 462 00:26:11,080 --> 00:26:14,280 Speaker 2: have potential requirements that could complement some of the existing rules, 463 00:26:14,320 --> 00:26:18,440 Speaker 2: exploring some large bank requirement on minimum liquidity. So many things, 464 00:26:18,640 --> 00:26:20,240 Speaker 2: so many things happening. It's so exciting. 465 00:26:20,280 --> 00:26:20,520 Speaker 3: Good thing. 466 00:26:20,560 --> 00:26:25,399 Speaker 2: Alison Williams is here Bloomberg Intelligence, chief US Bank's asset 467 00:26:25,480 --> 00:26:29,080 Speaker 2: manager person. She covers all of these things just in 468 00:26:29,200 --> 00:26:32,640 Speaker 2: terms of Wells Fargo moving forward to lifting the cap 469 00:26:33,320 --> 00:26:35,600 Speaker 2: in your estimate, like how close is Wells Fargo to 470 00:26:35,680 --> 00:26:37,800 Speaker 2: actually be able to lift their cap their asset cap. 471 00:26:38,720 --> 00:26:43,159 Speaker 9: You know, it's tough to say, you know, certainly this 472 00:26:43,280 --> 00:26:47,320 Speaker 9: has been unprecedented, right, I mean, this began with a 473 00:26:47,480 --> 00:26:51,360 Speaker 9: fine in twenty sixteen. I think Wells Fargo initially thought 474 00:26:51,359 --> 00:26:55,080 Speaker 9: it would be a few months. It's been several years, 475 00:26:57,680 --> 00:27:02,320 Speaker 9: but you know, they one of the biggest things I think, 476 00:27:02,600 --> 00:27:04,560 Speaker 9: you know, one of the biggest changes I thought was, 477 00:27:05,000 --> 00:27:06,760 Speaker 9: you know, they changed over the boar they brought in 478 00:27:06,840 --> 00:27:10,639 Speaker 9: all new management, Charlie Sharf as the CEO. He was 479 00:27:10,720 --> 00:27:13,639 Speaker 9: the sort of the third CEO in a short time period, 480 00:27:13,760 --> 00:27:16,840 Speaker 9: but almost fully turned over the board, brought in a 481 00:27:16,920 --> 00:27:20,080 Speaker 9: lot of x JP Morgan people, and then it's just 482 00:27:20,160 --> 00:27:23,240 Speaker 9: been sort of locking and tackling since. And we've seen 483 00:27:23,960 --> 00:27:27,159 Speaker 9: a number of the consent orders get resolved, but there 484 00:27:27,240 --> 00:27:29,040 Speaker 9: still are a few more out there that they need 485 00:27:29,119 --> 00:27:29,800 Speaker 9: to take care of. 486 00:27:30,359 --> 00:27:32,760 Speaker 4: Yeah, just looking at the Bloomberg News story stands out 487 00:27:33,119 --> 00:27:37,040 Speaker 4: the caps lifespan so far, JP Morgan has swelled sixty 488 00:27:37,160 --> 00:27:39,720 Speaker 4: four percent to more than four trillion dollars of assets, 489 00:27:39,800 --> 00:27:43,119 Speaker 4: meaning they've added almost an entire Wells Fargo to the 490 00:27:43,160 --> 00:27:47,119 Speaker 4: balance sheet. What's the timeline for Wells Fargo to potentially 491 00:27:47,440 --> 00:27:47,879 Speaker 4: catch up? 492 00:27:48,000 --> 00:27:48,680 Speaker 6: Is that possible? 493 00:27:48,720 --> 00:27:49,560 Speaker 4: How would that work out? 494 00:27:49,680 --> 00:27:49,880 Speaker 5: Yeah? 495 00:27:49,920 --> 00:27:53,800 Speaker 9: I mean to some extent, there was, you know, a 496 00:27:53,920 --> 00:27:58,560 Speaker 9: lost opportunity, right, So, I think the biggest, you know, 497 00:27:59,520 --> 00:28:03,280 Speaker 9: the biggest hurt from the asset cap was during COVID 498 00:28:03,960 --> 00:28:07,280 Speaker 9: when JP Morgan and Bank America were able to add 499 00:28:07,400 --> 00:28:10,840 Speaker 9: all these retail deposits, right and Wills far Ago really 500 00:28:10,880 --> 00:28:14,040 Speaker 9: could not participate because they they did, but it was 501 00:28:14,080 --> 00:28:17,640 Speaker 9: a lot more work right, because it wasn't the loan 502 00:28:17,720 --> 00:28:19,920 Speaker 9: side of the balance sheet. It was really the deposit 503 00:28:20,040 --> 00:28:22,960 Speaker 9: side of the balance sheet that was a constraint because 504 00:28:22,960 --> 00:28:26,719 Speaker 9: they were growing so rapidly, and they did do things 505 00:28:26,920 --> 00:28:29,760 Speaker 9: to try to manage their balance sheet in the most 506 00:28:29,800 --> 00:28:32,560 Speaker 9: profitable way, you know, getting rid of things like non 507 00:28:32,640 --> 00:28:36,320 Speaker 9: operational deposits that are you know, less profitable and less 508 00:28:36,800 --> 00:28:40,360 Speaker 9: valuable long term than core deposits. They have sold off 509 00:28:40,440 --> 00:28:45,600 Speaker 9: businesses over time, so I mean, but for banks such 510 00:28:45,640 --> 00:28:48,680 Speaker 9: as Bank American and JP Morgan, granted, some of those 511 00:28:48,760 --> 00:28:53,040 Speaker 9: balances did go away over time, but they were able 512 00:28:53,120 --> 00:28:55,960 Speaker 9: to retain at least, you know, some of those customers, 513 00:28:56,040 --> 00:28:58,160 Speaker 9: and so I would say that's where sort of the 514 00:28:58,760 --> 00:29:00,760 Speaker 9: big harm from the assa cap has come from. You know, 515 00:29:00,800 --> 00:29:06,200 Speaker 9: if you fast forward to today, the balance sheet constraint 516 00:29:06,520 --> 00:29:10,720 Speaker 9: is not as significant. They have started investing in banks 517 00:29:10,840 --> 00:29:13,720 Speaker 9: like businesses like card and trading where they're under index, 518 00:29:13,760 --> 00:29:18,040 Speaker 9: so they are growing their businesses. So one, you know, 519 00:29:18,320 --> 00:29:21,360 Speaker 9: if the cap was removed, that would certainly give them 520 00:29:21,400 --> 00:29:25,720 Speaker 9: more flexibility in those businesses. But on the deposit, But 521 00:29:25,880 --> 00:29:28,600 Speaker 9: on the deposit point, that's that's really sort of a 522 00:29:28,680 --> 00:29:29,480 Speaker 9: lost opportunity. 523 00:29:29,880 --> 00:29:30,960 Speaker 2: Yeah, Allison. 524 00:29:31,000 --> 00:29:31,240 Speaker 4: Thank you. 525 00:29:31,320 --> 00:29:33,200 Speaker 2: You weren' booked on this, but you came in exactly 526 00:29:33,280 --> 00:29:35,480 Speaker 2: the right time, so thanks so much. We really appreciate you. 527 00:29:35,560 --> 00:29:38,880 Speaker 2: Alson Williams of Bloomberg Intelligence senior analysts for global banks 528 00:29:39,520 --> 00:29:41,200 Speaker 2: and asset managers. 529 00:29:41,640 --> 00:29:46,120 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, 530 00:29:46,320 --> 00:29:49,200 Speaker 1: and anywhere else you will get your podcasts. Listen live 531 00:29:49,320 --> 00:29:52,720 Speaker 1: each weekday, ten am to noon Eastern on Bloomberg dot com, 532 00:29:53,040 --> 00:29:56,400 Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app. 533 00:29:56,560 --> 00:29:59,520 Speaker 1: You can also watch us live every weekday on YouTube 534 00:29:59,760 --> 00:30:05,200 Speaker 1: and always on the Bloomberg trunnem