Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to Bloomberg
Speaker 1: Business Week with Carol Masser and Tim Stenoveek on Bloomberg Radio.
Speaker 2: One person we go to regularly for his view on
Speaker 2: the economy here in the United States and raids is
Speaker 2: Frank Sorrentino. He's chairman and CEO at the publicly held
Speaker 2: New Jersey based community bank connect One Bank Corp. Which
Speaker 2: is the parent company of Connect One Bank, accounts small
Speaker 2: businesses and construction companies among its customers, and the bank
Speaker 2: has some sixty three locations maybe in counting in New Jersey,
Speaker 2: New York, and Florida. And the bank earlier you will remember,
Speaker 2: this merged with First of Long Island Corporation. Now its
Speaker 2: total assets are about fourteen billion. That's as of the
Speaker 2: end of September. Frank joining us here in our Bloomberg
Speaker 2: Interactive Broker Studio. Did we get anything wrong anything?
Speaker 3: You've got it all right. That's because I wrote it.
Speaker 3: And great and great to be back. Great to see you.
Speaker 2: It's good to have you here. We love talking to
Speaker 2: you because we are at this moment where we're trying
Speaker 2: to figure out I feel like I can say this
Speaker 2: a million times this year, like where we are in
Speaker 2: the US economy, what's ahead? What kind of clarity do
Speaker 2: we have? Tell us about your business.
Speaker 3: And what you're seeing, lef the nice calm part of
Speaker 3: the pool and now we're into the rapids and the
Speaker 3: more turbulent it was, and when you look back before
Speaker 3: Liberation Day. But okay, certainly, you know we're seeing a
Speaker 3: lot of people have a lot of apprehension about where
Speaker 3: we stand right now, right so small businesses have a
Speaker 3: lot of concerns. There's so many things going on, there's
Speaker 3: so many different data points to look at or not
Speaker 3: look at, or not have information in front of them.
Speaker 3: But you know, I know, I know, we've talked about
Speaker 3: this before. I keep saying I believe we're on a
Speaker 3: robust footing here with our economy.
Speaker 2: Because you see it in terms of what loan generation
Speaker 2: or what are clients.
Speaker 3: You know, they discuss the issues of you know, not
Speaker 3: being sure what to do next. Yet when you ask them,
Speaker 3: how are what's going on? You know? Are you are
Speaker 3: you are your revenues up? Are you thinking about expansion?
Speaker 3: Are there opportunities? Are you looking to hire people in
Speaker 3: our market? Anyway? In the New York metro market, which
Speaker 3: is the market we represent. We're finding that people, the businesses,
Speaker 3: business owners here are doing quite well and they're continuing
Speaker 3: to do well. And there's so many inputs that are
Speaker 3: helping that AI is helping in a lot of cases,
Speaker 3: just the amount of capital coming into this region, the
Speaker 3: amount of construction going on, the amount of of of
Speaker 3: heavy and highway work, just you name it. Manufacturing. I
Speaker 3: think today there was a fact that came out about
Speaker 3: New York manufacturings on the rise, something that was actually
Speaker 3: a little bit of surprise to the most, not to me.
Speaker 3: Our our clients are telling us that business is continuing
Speaker 3: to improve, yet they have trepidation about you know, where
Speaker 3: they where they settle right now. However, interestingly, if you
Speaker 3: ask them where they think they'll be in six months
Speaker 3: from now, everyone says they think they'll be in a
Speaker 3: better place. Oh so everyone is counting on the economy
Speaker 3: getting better, or at least their conception of what better
Speaker 3: may be from where they are today. What I say
Speaker 3: is they're in a good economy now and it's going
Speaker 3: to continue to do better now. There's also the tale
Speaker 3: of two different stories here. There are some parts of
Speaker 3: our economy that are not doing as well as others,
Speaker 3: and I think we saw some of the reaction to
Speaker 3: that relatively recently in some of the political events that
Speaker 3: have occurred. So I think we do need to take
Speaker 3: a look at this. This what's the distribution of where
Speaker 3: wealth is being created and not created.
Speaker 1: As a New Yorker, it's nice to hear that things
Speaker 1: in the New York City area are looking good, but
Speaker 1: it also makes me think of the changing politics of
Speaker 1: the city and Mayor elect Zoron Mamdani. And you know,
Speaker 1: this is not a political question, It's simply a question
Speaker 1: about how people should plan for the future. We reported
Speaker 1: last week the Bloomberg News team that is that aids
Speaker 1: to President Trump have spent the days following mom da
Speaker 1: victory in New York reviewing federal funds that benefit the
Speaker 1: city to potentially suspend or cancel. A White House official said,
Speaker 1: highlighting the threat of retribution over the Democratic Socialists win.
Speaker 1: If we were to see in New York City or
Speaker 1: New York State funding cut off for some of these projects,
Speaker 1: would that have a big effect on the economy?
Speaker 3: Look, I would believe the answer would be yes, it
Speaker 3: will have some effect on the economy.
Speaker 1: Because you mentioned some infrastructure projects.
Speaker 3: Sure, I don't know how big that would be, and
Speaker 3: I don't know what the you know, it seems to
Speaker 3: me in this economy, at least over the last twelve
Speaker 3: months or so, there seemed to be so many inputs
Speaker 3: that have been maybe going in one direction, maybe a
Speaker 3: negative way, and something else turns around and comes back
Speaker 3: to the other the other direction. So, look, New York
Speaker 3: has always been New York, and we've been through all
Speaker 3: different types of political environments, and there have been ups
Speaker 3: and downs. But if you chart the growth of New
Speaker 3: York from sixteen oh nine or whenever, when the first
Speaker 3: settlement started here through to today, it has been an uphill, NonStop,
Speaker 3: you know, economy, and so I have every confidence that
Speaker 3: New York is going to continue to be the place
Speaker 3: to be. Are there challenges here today about affordability and
Speaker 3: who can live here, and you know, some of the
Speaker 3: changes that need to be made, Absolutely, I think we'll
Speaker 3: get those things right. What one thing I have learned
Speaker 3: from this administration, There are a lot of threats that
Speaker 3: are made and a lot of you know, there's a
Speaker 3: lot of saber rattling. At the end of the day, though,
Speaker 3: I think our president loves the city of New York.
Speaker 3: I can't see him doing anything that's generally going to
Speaker 3: be harmful to the city.
Speaker 2: And correct as if we're wrong. Though, we were talking
Speaker 2: with some of our folks who also cover like the
Speaker 2: banking area and are interesting is you do have some
Speaker 2: exposure to rent regulated We do properties or apartments I
Speaker 2: think via your cre lending. So with the mom Donnie
Speaker 2: when here in New York City, how do you feel
Speaker 2: about that exposure and what he has said about, you know,
Speaker 2: his pledge to freeze rents.
Speaker 3: So look for those you know, for those properties that
Speaker 3: we're trying to convert from rent regulated or rent stabilized
Speaker 3: rather to market rent, those properties are going to have
Speaker 3: some challenges going forward because that's not going to happen.
Speaker 3: And part of that was the two thousand night Let's
Speaker 3: not forget the twenty nineteen law made that change. And
Speaker 3: it was interesting, right the candidate everybody wanted to win,
Speaker 3: which was Andrew Cromwell, he's the one who signed that law.
Speaker 3: So everybody's afraid of coming in. But yet you know,
Speaker 3: it was the one who ran against him that brought
Speaker 3: that law to pass. For the balance of the rent
Speaker 3: stabilized properties that are out there that are already cash
Speaker 3: flowing and have been underwritten under those terms, I think
Speaker 3: they're going to be fine. As a matter of fact,
Speaker 3: the current mayor elect has spoken many times about programs
Speaker 3: possibly to lower property taxes for some of those property
Speaker 3: owners and come up with insurance programs to sort of
Speaker 3: help out to keep the rents at a lower rate.
Speaker 3: So if that's true, and you know, if there's going
Speaker 3: to be some level of negotiation around what to do
Speaker 3: or how to do it to keep the rent increases lower,
Speaker 3: I'm all for it. That's great. What we have found
Speaker 3: over the years is that there have been rent increases.
Speaker 3: There was just one past recently for I think about
Speaker 3: three percent that went into effect in October. And let's
Speaker 3: not forget that the current mayor has six picks still
Speaker 3: on the rent guidelines board and they're not you know,
Speaker 3: they are supposed to look at the economy on the
Speaker 3: ground today. Where are expenses. You know, the city does
Speaker 3: raise your taxes and your sewer fees and the cost
Speaker 3: of everything else goes up, so rents should go up
Speaker 3: appropriately as well, you know, based on inflation. So I
Speaker 3: do think there'll be a give and take there and
Speaker 3: you know, at the end of the day, look, I
Speaker 3: think having affordable apartments is a very very great thing
Speaker 3: for our city. I'd like to see us be able
Speaker 3: to do more in that regard here in New York City.
Speaker 2: Why don't we do more? And I guess I asked
Speaker 2: that we.
Speaker 3: Would need a very long program to get into what.
Speaker 3: You know, there are any cities and towns. New Rochelle
Speaker 3: is an example of that where they've taken the opposite approach,
Speaker 3: which is, let's build as many apartments as we can
Speaker 3: possibly build. Let's let the developers go build. And they
Speaker 3: did that, and you know, the laws of supply and demand,
Speaker 3: they're sort of like gravity, right, they can't you can't
Speaker 3: undo them. And so they built a lot of supply.
Speaker 3: Guess what happened to the rents? They came down, they
Speaker 3: didn't go up.
Speaker 1: The Yeah, we had the Mayor Yadira Ramos Herbert on
Speaker 1: a few months ago talking about this and the zoning changes.
Speaker 1: You a background as a builder, You actually went to
Speaker 1: college for this before you were a banker. And I
Speaker 1: think it's fair to say that I'm not going to
Speaker 1: say all economists. Most economists would agree the way to
Speaker 1: decrease housing prices is to build more housing? How do
Speaker 1: you do that in New York City? And our developer
Speaker 1: is going to do that in New York's Like, what
Speaker 1: would developers need in the next administration order to do
Speaker 1: that apart from zoning changes? Like, what would they need
Speaker 1: to hear from city Hall that says you guys can
Speaker 1: go ahead and build and build more houses.
Speaker 3: Well, we would need zoning changes, We would need the
Speaker 3: ability to build housing that is affordable to build. You
Speaker 3: can't add on all of these issues. Yeah, listen, you know,
Speaker 3: I come from a union family, so I love, you know,
Speaker 3: unionized workforces. But if you're going to force every small
Speaker 3: apartment builder to build using union labor, you're going to
Speaker 3: drive up the cost. If we're going to force buildings
Speaker 3: to not be able to use certain types of natural
Speaker 3: gas appliances, or they got to meet certain environmentals that
Speaker 3: New York City has faced here, and so they keep
Speaker 3: adding all of these things on and it makes the
Speaker 3: projects unaffordable and if they're unaffordable, they don't get built.
Speaker 2: I have like five more questions we have.
Speaker 3: It's not that hard.
Speaker 1: We have seventy seconds.
Speaker 2: No, I know, we don't have a long time. Just
Speaker 2: one last question, because I've got it. We're bloomberg. We
Speaker 2: do have a last FED meeting December. What are you expecting?
Speaker 2: What do you think we do need? Based on you
Speaker 2: said pretty upbeat? Just got about forty seconds, Okay, FED.
Speaker 3: The Fed's got a tough job ahead of them. On
Speaker 3: the one hand, you know, unemployment and the employment structure
Speaker 3: in the economy is giving some mixed signals. Yeah, you know,
Speaker 3: larger businesses maybe hiring, smaller businesses maybe laying off. That
Speaker 3: could be temporary in that camp. I do believe that
Speaker 3: the smaller businesses are going to catch up soon. I
Speaker 3: do think there is I don't think there's a lot
Speaker 3: of inflation built into the economy. I think the terriffs
Speaker 3: are sort of skewing some of those numbers. I think
Speaker 3: they're going to have a tough call. My hope would
Speaker 3: be that they continue on the path and they cut
Speaker 3: rates another twenty five basis points in December.
Speaker 1: Well, just another excuse for Frank to come and hang
Speaker 1: out with us again and get to the round December tenth.
Speaker 3: That day when we.
Speaker 1: Get that decision from j.
Speaker 2: Powell and the Federal Reserve, you're just up the street
Speaker 2: so come back soon.
Speaker 3: We'll do.
Speaker 2: Frank Sorrentino, Chairman and Chief Executive Officer of connect One Bank,
Speaker 2: joining us right here in our Bloomberg Interactive Broker Studio