WEBVTT - ConnectOne Bank CEO Remains Bullish Amid Economic Risks 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to Bloomberg

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<v Speaker 1>Business Week with Carol Masser and Tim Stenoveek on Bloomberg Radio.

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<v Speaker 2>One person we go to regularly for his view on

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<v Speaker 2>the economy here in the United States and raids is

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<v Speaker 2>Frank Sorrentino. He's chairman and CEO at the publicly held

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<v Speaker 2>New Jersey based community bank connect One Bank Corp. Which

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<v Speaker 2>is the parent company of Connect One Bank, accounts small

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<v Speaker 2>businesses and construction companies among its customers, and the bank

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<v Speaker 2>has some sixty three locations maybe in counting in New Jersey,

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<v Speaker 2>New York, and Florida. And the bank earlier you will remember,

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<v Speaker 2>this merged with First of Long Island Corporation. Now its

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<v Speaker 2>total assets are about fourteen billion. That's as of the

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<v Speaker 2>end of September. Frank joining us here in our Bloomberg

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<v Speaker 2>Interactive Broker Studio. Did we get anything wrong anything?

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<v Speaker 3>You've got it all right. That's because I wrote it.

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<v Speaker 3>And great and great to be back. Great to see you.

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<v Speaker 2>It's good to have you here. We love talking to

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<v Speaker 2>you because we are at this moment where we're trying

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<v Speaker 2>to figure out I feel like I can say this

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<v Speaker 2>a million times this year, like where we are in

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<v Speaker 2>the US economy, what's ahead? What kind of clarity do

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<v Speaker 2>we have? Tell us about your business.

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<v Speaker 3>And what you're seeing, lef the nice calm part of

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<v Speaker 3>the pool and now we're into the rapids and the

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<v Speaker 3>more turbulent it was, and when you look back before

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<v Speaker 3>Liberation Day. But okay, certainly, you know we're seeing a

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<v Speaker 3>lot of people have a lot of apprehension about where

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<v Speaker 3>we stand right now, right so small businesses have a

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<v Speaker 3>lot of concerns. There's so many things going on, there's

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<v Speaker 3>so many different data points to look at or not

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<v Speaker 3>look at, or not have information in front of them.

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<v Speaker 3>But you know, I know, I know, we've talked about

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<v Speaker 3>this before. I keep saying I believe we're on a

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<v Speaker 3>robust footing here with our economy.

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<v Speaker 2>Because you see it in terms of what loan generation

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<v Speaker 2>or what are clients.

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<v Speaker 3>You know, they discuss the issues of you know, not

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<v Speaker 3>being sure what to do next. Yet when you ask them,

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<v Speaker 3>how are what's going on? You know? Are you are

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<v Speaker 3>you are your revenues up? Are you thinking about expansion?

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<v Speaker 3>Are there opportunities? Are you looking to hire people in

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<v Speaker 3>our market? Anyway? In the New York metro market, which

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<v Speaker 3>is the market we represent. We're finding that people, the businesses,

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<v Speaker 3>business owners here are doing quite well and they're continuing

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<v Speaker 3>to do well. And there's so many inputs that are

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<v Speaker 3>helping that AI is helping in a lot of cases,

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<v Speaker 3>just the amount of capital coming into this region, the

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<v Speaker 3>amount of construction going on, the amount of of of

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<v Speaker 3>heavy and highway work, just you name it. Manufacturing. I

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<v Speaker 3>think today there was a fact that came out about

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<v Speaker 3>New York manufacturings on the rise, something that was actually

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<v Speaker 3>a little bit of surprise to the most, not to me.

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<v Speaker 3>Our our clients are telling us that business is continuing

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<v Speaker 3>to improve, yet they have trepidation about you know, where

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<v Speaker 3>they where they settle right now. However, interestingly, if you

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<v Speaker 3>ask them where they think they'll be in six months

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<v Speaker 3>from now, everyone says they think they'll be in a

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<v Speaker 3>better place. Oh so everyone is counting on the economy

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<v Speaker 3>getting better, or at least their conception of what better

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<v Speaker 3>may be from where they are today. What I say

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<v Speaker 3>is they're in a good economy now and it's going

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<v Speaker 3>to continue to do better now. There's also the tale

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<v Speaker 3>of two different stories here. There are some parts of

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<v Speaker 3>our economy that are not doing as well as others,

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<v Speaker 3>and I think we saw some of the reaction to

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<v Speaker 3>that relatively recently in some of the political events that

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<v Speaker 3>have occurred. So I think we do need to take

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<v Speaker 3>a look at this. This what's the distribution of where

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<v Speaker 3>wealth is being created and not created.

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<v Speaker 1>As a New Yorker, it's nice to hear that things

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<v Speaker 1>in the New York City area are looking good, but

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<v Speaker 1>it also makes me think of the changing politics of

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<v Speaker 1>the city and Mayor elect Zoron Mamdani. And you know,

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<v Speaker 1>this is not a political question, It's simply a question

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<v Speaker 1>about how people should plan for the future. We reported

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<v Speaker 1>last week the Bloomberg News team that is that aids

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<v Speaker 1>to President Trump have spent the days following mom da

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<v Speaker 1>victory in New York reviewing federal funds that benefit the

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<v Speaker 1>city to potentially suspend or cancel. A White House official said,

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<v Speaker 1>highlighting the threat of retribution over the Democratic Socialists win.

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<v Speaker 1>If we were to see in New York City or

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<v Speaker 1>New York State funding cut off for some of these projects,

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<v Speaker 1>would that have a big effect on the economy?

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<v Speaker 3>Look, I would believe the answer would be yes, it

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<v Speaker 3>will have some effect on the economy.

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<v Speaker 1>Because you mentioned some infrastructure projects.

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<v Speaker 3>Sure, I don't know how big that would be, and

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<v Speaker 3>I don't know what the you know, it seems to

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<v Speaker 3>me in this economy, at least over the last twelve

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<v Speaker 3>months or so, there seemed to be so many inputs

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<v Speaker 3>that have been maybe going in one direction, maybe a

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<v Speaker 3>negative way, and something else turns around and comes back

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<v Speaker 3>to the other the other direction. So, look, New York

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<v Speaker 3>has always been New York, and we've been through all

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<v Speaker 3>different types of political environments, and there have been ups

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<v Speaker 3>and downs. But if you chart the growth of New

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<v Speaker 3>York from sixteen oh nine or whenever, when the first

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<v Speaker 3>settlement started here through to today, it has been an uphill, NonStop,

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<v Speaker 3>you know, economy, and so I have every confidence that

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<v Speaker 3>New York is going to continue to be the place

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<v Speaker 3>to be. Are there challenges here today about affordability and

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<v Speaker 3>who can live here, and you know, some of the

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<v Speaker 3>changes that need to be made, Absolutely, I think we'll

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<v Speaker 3>get those things right. What one thing I have learned

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<v Speaker 3>from this administration, There are a lot of threats that

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<v Speaker 3>are made and a lot of you know, there's a

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<v Speaker 3>lot of saber rattling. At the end of the day, though,

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<v Speaker 3>I think our president loves the city of New York.

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<v Speaker 3>I can't see him doing anything that's generally going to

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<v Speaker 3>be harmful to the city.

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<v Speaker 2>And correct as if we're wrong. Though, we were talking

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<v Speaker 2>with some of our folks who also cover like the

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<v Speaker 2>banking area and are interesting is you do have some

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<v Speaker 2>exposure to rent regulated We do properties or apartments I

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<v Speaker 2>think via your cre lending. So with the mom Donnie

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<v Speaker 2>when here in New York City, how do you feel

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<v Speaker 2>about that exposure and what he has said about, you know,

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<v Speaker 2>his pledge to freeze rents.

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<v Speaker 3>So look for those you know, for those properties that

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<v Speaker 3>we're trying to convert from rent regulated or rent stabilized

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<v Speaker 3>rather to market rent, those properties are going to have

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<v Speaker 3>some challenges going forward because that's not going to happen.

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<v Speaker 3>And part of that was the two thousand night Let's

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<v Speaker 3>not forget the twenty nineteen law made that change. And

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<v Speaker 3>it was interesting, right the candidate everybody wanted to win,

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<v Speaker 3>which was Andrew Cromwell, he's the one who signed that law.

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<v Speaker 3>So everybody's afraid of coming in. But yet you know,

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<v Speaker 3>it was the one who ran against him that brought

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<v Speaker 3>that law to pass. For the balance of the rent

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<v Speaker 3>stabilized properties that are out there that are already cash

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<v Speaker 3>flowing and have been underwritten under those terms, I think

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<v Speaker 3>they're going to be fine. As a matter of fact,

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<v Speaker 3>the current mayor elect has spoken many times about programs

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<v Speaker 3>possibly to lower property taxes for some of those property

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<v Speaker 3>owners and come up with insurance programs to sort of

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<v Speaker 3>help out to keep the rents at a lower rate.

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<v Speaker 3>So if that's true, and you know, if there's going

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<v Speaker 3>to be some level of negotiation around what to do

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<v Speaker 3>or how to do it to keep the rent increases lower,

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<v Speaker 3>I'm all for it. That's great. What we have found

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<v Speaker 3>over the years is that there have been rent increases.

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<v Speaker 3>There was just one past recently for I think about

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<v Speaker 3>three percent that went into effect in October. And let's

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<v Speaker 3>not forget that the current mayor has six picks still

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<v Speaker 3>on the rent guidelines board and they're not you know,

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<v Speaker 3>they are supposed to look at the economy on the

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<v Speaker 3>ground today. Where are expenses. You know, the city does

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<v Speaker 3>raise your taxes and your sewer fees and the cost

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<v Speaker 3>of everything else goes up, so rents should go up

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<v Speaker 3>appropriately as well, you know, based on inflation. So I

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<v Speaker 3>do think there'll be a give and take there and

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<v Speaker 3>you know, at the end of the day, look, I

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<v Speaker 3>think having affordable apartments is a very very great thing

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<v Speaker 3>for our city. I'd like to see us be able

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<v Speaker 3>to do more in that regard here in New York City.

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<v Speaker 2>Why don't we do more? And I guess I asked

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<v Speaker 2>that we.

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<v Speaker 3>Would need a very long program to get into what.

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<v Speaker 3>You know, there are any cities and towns. New Rochelle

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<v Speaker 3>is an example of that where they've taken the opposite approach,

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<v Speaker 3>which is, let's build as many apartments as we can

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<v Speaker 3>possibly build. Let's let the developers go build. And they

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<v Speaker 3>did that, and you know, the laws of supply and demand,

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<v Speaker 3>they're sort of like gravity, right, they can't you can't

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<v Speaker 3>undo them. And so they built a lot of supply.

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<v Speaker 3>Guess what happened to the rents? They came down, they

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<v Speaker 3>didn't go up.

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<v Speaker 1>The Yeah, we had the Mayor Yadira Ramos Herbert on

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<v Speaker 1>a few months ago talking about this and the zoning changes.

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<v Speaker 1>You a background as a builder, You actually went to

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<v Speaker 1>college for this before you were a banker. And I

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<v Speaker 1>think it's fair to say that I'm not going to

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<v Speaker 1>say all economists. Most economists would agree the way to

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<v Speaker 1>decrease housing prices is to build more housing? How do

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<v Speaker 1>you do that in New York City? And our developer

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<v Speaker 1>is going to do that in New York's Like, what

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<v Speaker 1>would developers need in the next administration order to do

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<v Speaker 1>that apart from zoning changes? Like, what would they need

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<v Speaker 1>to hear from city Hall that says you guys can

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<v Speaker 1>go ahead and build and build more houses.

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<v Speaker 3>Well, we would need zoning changes, We would need the

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<v Speaker 3>ability to build housing that is affordable to build. You

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<v Speaker 3>can't add on all of these issues. Yeah, listen, you know,

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<v Speaker 3>I come from a union family, so I love, you know,

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<v Speaker 3>unionized workforces. But if you're going to force every small

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<v Speaker 3>apartment builder to build using union labor, you're going to

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<v Speaker 3>drive up the cost. If we're going to force buildings

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<v Speaker 3>to not be able to use certain types of natural

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<v Speaker 3>gas appliances, or they got to meet certain environmentals that

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<v Speaker 3>New York City has faced here, and so they keep

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<v Speaker 3>adding all of these things on and it makes the

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<v Speaker 3>projects unaffordable and if they're unaffordable, they don't get built.

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<v Speaker 2>I have like five more questions we have.

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<v Speaker 3>It's not that hard.

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<v Speaker 1>We have seventy seconds.

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<v Speaker 2>No, I know, we don't have a long time. Just

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<v Speaker 2>one last question, because I've got it. We're bloomberg. We

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<v Speaker 2>do have a last FED meeting December. What are you expecting?

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<v Speaker 2>What do you think we do need? Based on you

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<v Speaker 2>said pretty upbeat? Just got about forty seconds, Okay, FED.

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<v Speaker 3>The Fed's got a tough job ahead of them. On

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<v Speaker 3>the one hand, you know, unemployment and the employment structure

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<v Speaker 3>in the economy is giving some mixed signals. Yeah, you know,

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<v Speaker 3>larger businesses maybe hiring, smaller businesses maybe laying off. That

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<v Speaker 3>could be temporary in that camp. I do believe that

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<v Speaker 3>the smaller businesses are going to catch up soon. I

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<v Speaker 3>do think there is I don't think there's a lot

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<v Speaker 3>of inflation built into the economy. I think the terriffs

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<v Speaker 3>are sort of skewing some of those numbers. I think

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<v Speaker 3>they're going to have a tough call. My hope would

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<v Speaker 3>be that they continue on the path and they cut

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<v Speaker 3>rates another twenty five basis points in December.

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<v Speaker 1>Well, just another excuse for Frank to come and hang

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<v Speaker 1>out with us again and get to the round December tenth.

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<v Speaker 3>That day when we.

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<v Speaker 1>Get that decision from j.

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<v Speaker 2>Powell and the Federal Reserve, you're just up the street

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<v Speaker 2>so come back soon.

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<v Speaker 3>We'll do.

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<v Speaker 2>Frank Sorrentino, Chairman and Chief Executive Officer of connect One Bank,

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<v Speaker 2>joining us right here in our Bloomberg Interactive Broker Studio