1 00:00:01,360 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,200 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:09,239 Speaker 1: we bring you interviews from CEOs, A, market pros, and 4 00:00:09,400 --> 00:00:12,800 Speaker 1: Bloomberg experts, along with essential market moving news. Find the 5 00:00:12,800 --> 00:00:16,280 Speaker 1: Bloomberg Markets Podcast on Apple podcast or wherever you listen 6 00:00:16,320 --> 00:00:20,520 Speaker 1: to podcasts, and on Bloomberg dot com. Let's bring in 7 00:00:20,600 --> 00:00:23,160 Speaker 1: somebody else into this conversation. Now, legal analysts and a 8 00:00:23,239 --> 00:00:26,880 Speaker 1: course host of Bloomberg Law, which airs weeknights at ten 9 00:00:26,960 --> 00:00:30,960 Speaker 1: pm Eastern. It's a mustless and June gar also joins us. Now, June, 10 00:00:31,000 --> 00:00:33,400 Speaker 1: we have the decision then from the Supreme Court on 11 00:00:33,560 --> 00:00:38,120 Speaker 1: the subpoenas to take us through the May arguments because 12 00:00:38,159 --> 00:00:39,880 Speaker 1: there was a lot of questioning from many of the 13 00:00:39,960 --> 00:00:43,839 Speaker 1: judges on both sides. So some of the Democratic appointees 14 00:00:43,880 --> 00:00:47,519 Speaker 1: were asking questions that didn't make it obvious which way 15 00:00:47,520 --> 00:00:51,920 Speaker 1: they would vote, and equally the Trump appointees, Right, Vonnie, 16 00:00:51,960 --> 00:00:55,200 Speaker 1: it was really difficult to tell from those oral arguments 17 00:00:55,400 --> 00:00:57,640 Speaker 1: where the justices are going to go. You know, sometimes 18 00:00:57,720 --> 00:00:59,600 Speaker 1: you think you know, sometimes you don't. But there it 19 00:00:59,680 --> 00:01:03,080 Speaker 1: was just confusion. But what was clear was that the 20 00:01:03,200 --> 00:01:07,240 Speaker 1: justices were more on the same page, were more amenable 21 00:01:07,319 --> 00:01:12,000 Speaker 1: to the argument by Vance the District Attorney's office in 22 00:01:12,040 --> 00:01:16,759 Speaker 1: Manhattan because of several things. One, because this is grand 23 00:01:16,840 --> 00:01:19,560 Speaker 1: jury secrecy. So remember, I don't know what Kimberly has 24 00:01:19,600 --> 00:01:23,560 Speaker 1: already said, but this is a grand jury. So these documents, 25 00:01:23,680 --> 00:01:27,000 Speaker 1: even when Vance gets them, when the District Attorney gets them, 26 00:01:27,000 --> 00:01:29,160 Speaker 1: are not going to be made public. The only time 27 00:01:29,200 --> 00:01:32,000 Speaker 1: they might be made public if there's an actual criminal 28 00:01:32,040 --> 00:01:36,200 Speaker 1: indictment in that case. So the justices are sure that 29 00:01:36,240 --> 00:01:38,880 Speaker 1: this is going to be kept secret, and they asked 30 00:01:38,880 --> 00:01:42,040 Speaker 1: a lot of questions about grand jury secrecy. I remember 31 00:01:42,120 --> 00:01:46,360 Speaker 1: Justice Alito questioning whether or not you could really count 32 00:01:46,560 --> 00:01:49,720 Speaker 1: on grand jury secrecy or whether the newspapers and the 33 00:01:49,760 --> 00:01:52,680 Speaker 1: media atlets would be able to get hints or be 34 00:01:52,680 --> 00:01:54,600 Speaker 1: able to see the documents. So I think that was 35 00:01:54,680 --> 00:01:57,880 Speaker 1: very important to them. Also, it was very it was limited, 36 00:01:58,280 --> 00:02:03,200 Speaker 1: and the the attorney arguing for the District Attorney's office 37 00:02:03,600 --> 00:02:05,960 Speaker 1: agreed that it was a very limited document. He said, 38 00:02:06,000 --> 00:02:08,400 Speaker 1: they were, you know, there were boundaries to it, whereas 39 00:02:08,400 --> 00:02:11,200 Speaker 1: with the congressional subpoena, which I'm still hitting my refresh 40 00:02:11,280 --> 00:02:15,400 Speaker 1: button to see if it has come out second, perhaps 41 00:02:15,639 --> 00:02:20,440 Speaker 1: maybe we may get with the congressional subpoena. The lawyer 42 00:02:20,480 --> 00:02:23,160 Speaker 1: who argued wouldn't give any kind of limits on what 43 00:02:23,280 --> 00:02:26,560 Speaker 1: the subpoena could be, so I think that made a difference. Also, 44 00:02:26,600 --> 00:02:28,240 Speaker 1: I just want to point out that if you remember, 45 00:02:29,120 --> 00:02:34,000 Speaker 1: Justice Tavanagh, who concurred here, was part of the Whitewater investigation, 46 00:02:34,120 --> 00:02:36,919 Speaker 1: so it would be he'd have to be explaining somehow 47 00:02:37,120 --> 00:02:40,280 Speaker 1: how he could rule against this but still take part 48 00:02:40,320 --> 00:02:44,560 Speaker 1: in that broad investigations the Clintons. So true, and that 49 00:02:44,600 --> 00:02:46,320 Speaker 1: kind of goes to where I wanted to go, which was, 50 00:02:46,880 --> 00:02:50,680 Speaker 1: can will this data really remain uh private as it 51 00:02:50,720 --> 00:02:53,200 Speaker 1: relates to the New York Court? I mean, it just 52 00:02:53,240 --> 00:02:57,880 Speaker 1: seems like it's just you know, rife for potential leaks. 53 00:02:57,919 --> 00:03:00,640 Speaker 1: I think I actually think it will. I have a 54 00:03:00,680 --> 00:03:04,000 Speaker 1: lot of faith in the grand jury system. This is 55 00:03:04,840 --> 00:03:08,240 Speaker 1: this is such an important concept, the fact that when 56 00:03:08,240 --> 00:03:10,600 Speaker 1: you go to a grand jury, it's secret, that everything 57 00:03:10,639 --> 00:03:13,280 Speaker 1: that happens in a grand jury was secret. I can't 58 00:03:13,320 --> 00:03:18,120 Speaker 1: imagine any prosecutor in that office breaking that rule. And 59 00:03:18,160 --> 00:03:21,320 Speaker 1: I think that the grand jurors are you know, very 60 00:03:21,440 --> 00:03:26,320 Speaker 1: very much follow their their secrecy oaths. So I'm just 61 00:03:26,639 --> 00:03:29,359 Speaker 1: just see it would leak as well. June suggests that 62 00:03:29,360 --> 00:03:31,919 Speaker 1: that would actually go to the main problem that the 63 00:03:32,280 --> 00:03:36,480 Speaker 1: justices were having along electoral grounds. And actually we're getting 64 00:03:36,480 --> 00:03:38,920 Speaker 1: another headline, High Court largely back in Trump and House 65 00:03:38,920 --> 00:03:41,760 Speaker 1: financial record a bid. So this would actually back what 66 00:03:41,840 --> 00:03:44,760 Speaker 1: I've just said as well, the idea that you know, 67 00:03:45,360 --> 00:03:47,440 Speaker 1: the House was seeking a lot of information, some of 68 00:03:47,480 --> 00:03:49,760 Speaker 1: that was pretty vague and the Supreme fourd seemed to 69 00:03:49,800 --> 00:03:52,920 Speaker 1: be uncomfortable with that. Another headline, High Court orders tougher 70 00:03:52,960 --> 00:03:56,880 Speaker 1: scrutiny of Houses Trump subpoenas. So maybe this isn't over yet. 71 00:03:57,160 --> 00:03:59,119 Speaker 1: Let me give those two headlines again, the High Court. 72 00:03:59,200 --> 00:04:03,840 Speaker 1: That's the Supreme four largely blocking, largely backing Trump in 73 00:04:03,840 --> 00:04:06,920 Speaker 1: the House financial record bid. It's telling the lower courts 74 00:04:06,960 --> 00:04:10,160 Speaker 1: to reconsider the Trump subpoenas. So let me ask both 75 00:04:10,200 --> 00:04:13,360 Speaker 1: of you, Kimberly and June. The Supreme Court is actually 76 00:04:13,400 --> 00:04:15,960 Speaker 1: sending this back down to the lower courts. It wants 77 00:04:15,960 --> 00:04:19,920 Speaker 1: the lower courts to reconsider the Trump subpoenas. What does 78 00:04:19,960 --> 00:04:22,320 Speaker 1: that mean? They were they were, they were very divided 79 00:04:22,440 --> 00:04:26,920 Speaker 1: on the various subpoenas. Who wants to take that? June, well, 80 00:04:26,960 --> 00:04:29,000 Speaker 1: I think what this means is the first thing it 81 00:04:29,040 --> 00:04:31,880 Speaker 1: means is you're not going to see these records before 82 00:04:32,440 --> 00:04:37,240 Speaker 1: the election campaign, before that, not before November, because you 83 00:04:37,320 --> 00:04:39,359 Speaker 1: think about how long it takes that would have to 84 00:04:39,360 --> 00:04:42,560 Speaker 1: be sending it back, they'd have to rebrief everything, and 85 00:04:42,560 --> 00:04:45,000 Speaker 1: then a decision would have to come. So there's no 86 00:04:45,080 --> 00:04:48,520 Speaker 1: way you're going to see these before the November elections. 87 00:04:49,600 --> 00:04:51,919 Speaker 1: Then we'll see what happens as far as the elections, 88 00:04:51,960 --> 00:04:53,880 Speaker 1: but it's going to be a long process. And this 89 00:04:53,920 --> 00:04:56,960 Speaker 1: is what people were predicting that this is a way 90 00:04:57,000 --> 00:04:59,000 Speaker 1: sort of a way out for the court. It's a 91 00:04:59,040 --> 00:05:01,640 Speaker 1: middle ground for the courts send back to the lower courts. 92 00:05:01,640 --> 00:05:03,240 Speaker 1: It's a way to sort of kick the can down 93 00:05:03,240 --> 00:05:06,320 Speaker 1: the road. The Court does this a lot. They issue 94 00:05:06,320 --> 00:05:09,480 Speaker 1: opinions and then they say, okay, take it lower courts, 95 00:05:09,480 --> 00:05:12,800 Speaker 1: you decide. Then sometimes it comes back up, but it's 96 00:05:12,839 --> 00:05:15,599 Speaker 1: going to take quite a long time. So Kim, I 97 00:05:15,600 --> 00:05:17,600 Speaker 1: want to bring you back in here, Kimberly robertson um, 98 00:05:18,279 --> 00:05:20,480 Speaker 1: how do you perceive kind of what the court is 99 00:05:20,480 --> 00:05:22,560 Speaker 1: trying to do here? Is this kind of a win 100 00:05:22,880 --> 00:05:27,520 Speaker 1: for President Trump at this point, well, at least in 101 00:05:27,560 --> 00:05:30,320 Speaker 1: the congressional cases. It seems like a temporary win and 102 00:05:30,400 --> 00:05:33,680 Speaker 1: a win on the objective of not having those financial 103 00:05:33,720 --> 00:05:37,520 Speaker 1: documents week before the election. But this is something that 104 00:05:37,560 --> 00:05:39,920 Speaker 1: the Supreme Court does a lot. It kind of takes 105 00:05:39,920 --> 00:05:42,800 Speaker 1: a middle of the approach, a road road that June 106 00:05:42,880 --> 00:05:45,080 Speaker 1: was talking about, and kind of gives half of a 107 00:05:45,080 --> 00:05:48,080 Speaker 1: win to one side and half of a win to another. So, um, 108 00:05:48,120 --> 00:05:51,680 Speaker 1: this is not surprising from the Court. As you say, 109 00:05:51,760 --> 00:05:55,719 Speaker 1: something that's interesting is that Chief Justice John Roberts wrote 110 00:05:55,839 --> 00:05:58,919 Speaker 1: both majority opinions. And you know, as Kim and I 111 00:05:58,920 --> 00:06:03,159 Speaker 1: have talked about, uh, chief Justice Roberts is in every 112 00:06:03,200 --> 00:06:05,560 Speaker 1: five four decision this Court has come to this term, 113 00:06:05,839 --> 00:06:09,160 Speaker 1: Chief Justice Roberts is the deciding vote, and here he vote. 114 00:06:09,160 --> 00:06:12,880 Speaker 1: He wrote both of these opinions and anxious to read them. Yes, 115 00:06:13,360 --> 00:06:14,880 Speaker 1: we're not gonna let you go read them just yet. 116 00:06:14,880 --> 00:06:18,000 Speaker 1: Though even more questions. So Justice as Karence Thomas and 117 00:06:18,200 --> 00:06:22,240 Speaker 1: Samuel Alito dissented in the Supreme Court grand jury ruling, 118 00:06:22,360 --> 00:06:25,480 Speaker 1: So I guess they didn't want even the grand jury 119 00:06:25,560 --> 00:06:28,159 Speaker 1: to get Tom's tax returns, assuming that that was sort 120 00:06:28,160 --> 00:06:31,240 Speaker 1: of you know, an over right. There was a very 121 00:06:31,400 --> 00:06:34,480 Speaker 1: during the the oral arguments. As I mentioned before, Justice 122 00:06:34,520 --> 00:06:37,800 Speaker 1: Alito expressed, you know, concern that these would be leaked. 123 00:06:38,279 --> 00:06:40,960 Speaker 1: But during the oral arguments, there was also you know, 124 00:06:41,040 --> 00:06:45,760 Speaker 1: a very interesting uh questioning of the President's attorney, because 125 00:06:45,760 --> 00:06:50,240 Speaker 1: the President's attorney, Jay Sekulo, went for this really broad immunity. 126 00:06:50,240 --> 00:06:54,960 Speaker 1: He said, the president is absolutely immune from criminal investigation 127 00:06:55,120 --> 00:06:58,560 Speaker 1: even while in office. So that was this broad broad 128 00:06:58,640 --> 00:07:02,160 Speaker 1: stance he took. So I'm I'm anxious to see exactly 129 00:07:02,200 --> 00:07:06,040 Speaker 1: where uh Thomas and Alito thinks the line should be 130 00:07:06,120 --> 00:07:09,680 Speaker 1: if they say, but it just it shows you. And 131 00:07:09,760 --> 00:07:12,920 Speaker 1: also the seven to two um A lot depends on 132 00:07:13,000 --> 00:07:16,840 Speaker 1: what Justice Roberts actually wrote in his opinion to see, 133 00:07:17,080 --> 00:07:19,680 Speaker 1: you know, you don't have the history I don't see 134 00:07:19,720 --> 00:07:22,640 Speaker 1: at the beginning that you do in the heat during 135 00:07:22,680 --> 00:07:26,760 Speaker 1: the In the other case, the the Manhattan District Attorney's case, 136 00:07:27,040 --> 00:07:29,440 Speaker 1: there was this long history he gave that presidents from 137 00:07:29,440 --> 00:07:32,600 Speaker 1: Monroe to Clinton have accepted this ruling that the chief 138 00:07:32,600 --> 00:07:36,280 Speaker 1: executive is subject to subpoena and have uniformly agreed to 139 00:07:36,280 --> 00:07:41,080 Speaker 1: testify when called in criminal proceedings. So maybe that's the difference, 140 00:07:41,160 --> 00:07:42,640 Speaker 1: but this is going to be this is a huge 141 00:07:42,640 --> 00:07:45,360 Speaker 1: separation of powers issue here is as I'm sure Kim 142 00:07:45,960 --> 00:07:50,040 Speaker 1: Kimberly said before, because the question now is how much 143 00:07:50,080 --> 00:07:56,360 Speaker 1: has congress is oversight authority been stripped away? So, Kimberly, 144 00:07:56,400 --> 00:07:59,000 Speaker 1: what do you think the response is going to be from? 145 00:07:59,640 --> 00:08:01,640 Speaker 1: I guess guess what? What do you think that are 146 00:08:01,680 --> 00:08:04,640 Speaker 1: the next steps here? Well, the next steps is that 147 00:08:04,720 --> 00:08:07,480 Speaker 1: these cases will go back down to the courts from 148 00:08:07,480 --> 00:08:11,600 Speaker 1: which they came, Um, and they'll be some closer look 149 00:08:11,960 --> 00:08:16,440 Speaker 1: at them at the House's reasoning for why it needed 150 00:08:16,800 --> 00:08:18,920 Speaker 1: these cases. Again, think they're just coming out, but it 151 00:08:18,920 --> 00:08:21,920 Speaker 1: looks like the Supreme Court wants the lower courts to 152 00:08:22,040 --> 00:08:25,840 Speaker 1: take a better account of the separation of powers problems 153 00:08:26,480 --> 00:08:29,680 Speaker 1: that the Trump that Trump is asserting here and kind 154 00:08:29,680 --> 00:08:32,840 Speaker 1: of do more work on that issue. It's a win 155 00:08:33,160 --> 00:08:36,199 Speaker 1: for cs IR response for the New York District Attorney 156 00:08:36,559 --> 00:08:40,880 Speaker 1: June on precedent, What can the District attorney do beyond 157 00:08:41,280 --> 00:08:44,960 Speaker 1: just serving these subpoenas and serving these documents to the 158 00:08:44,960 --> 00:08:48,240 Speaker 1: grand jury? Is there anything that he can use this 159 00:08:48,320 --> 00:08:52,640 Speaker 1: as a precedent for Well, um would have to see 160 00:08:52,720 --> 00:08:54,880 Speaker 1: what happens. I think what was going to happen. He's 161 00:08:54,920 --> 00:08:58,800 Speaker 1: already served the subpoenas, and these subpoenas as you mentioned, 162 00:08:58,800 --> 00:09:02,880 Speaker 1: after third parties there to his subpoena actually is is 163 00:09:03,000 --> 00:09:08,319 Speaker 1: just to the accounting firm um and so he's so 164 00:09:08,480 --> 00:09:11,160 Speaker 1: the question is, you know, they'll turn it over right away. 165 00:09:11,200 --> 00:09:13,440 Speaker 1: They've said before that they're going to turn it over, 166 00:09:13,480 --> 00:09:16,800 Speaker 1: so there'll be that turnover. They'll look at the information 167 00:09:16,840 --> 00:09:19,600 Speaker 1: there and then they'll start investigating, and they have investigators. 168 00:09:19,760 --> 00:09:24,080 Speaker 1: They'll start investigating what's behind if they find anything that 169 00:09:24,360 --> 00:09:26,480 Speaker 1: and as you've mentioned, this is a huge amount of 170 00:09:26,520 --> 00:09:28,400 Speaker 1: material that's going to come in. So they'll look at 171 00:09:28,440 --> 00:09:30,959 Speaker 1: it and they'll see if there are any other questions 172 00:09:31,400 --> 00:09:34,480 Speaker 1: what they might decide to do. I mean, grand jury 173 00:09:34,520 --> 00:09:38,959 Speaker 1: has broad powers to look in directions that a normal 174 00:09:39,040 --> 00:09:42,880 Speaker 1: jury wouldn't be doing. And so as you probably heard 175 00:09:42,880 --> 00:09:45,439 Speaker 1: the expression that you know a prosecutor, you can get 176 00:09:45,520 --> 00:09:48,720 Speaker 1: a grand jury to indict a ham sandwich. And so 177 00:09:48,760 --> 00:09:51,199 Speaker 1: the a lot depends on how much you know and 178 00:09:51,200 --> 00:09:53,960 Speaker 1: advance is politically motivated, So a lot depends on how 179 00:09:54,040 --> 00:09:56,800 Speaker 1: much he wants to push this grand jury what they're 180 00:09:56,840 --> 00:10:00,000 Speaker 1: going to do with those with that information. But you've 181 00:10:00,040 --> 00:10:03,200 Speaker 1: gotta know it's it's going there's gonna be a lot 182 00:10:03,240 --> 00:10:05,920 Speaker 1: of pressure on his office now since he is the 183 00:10:05,960 --> 00:10:09,439 Speaker 1: only office in the country that's going to have those. 184 00:10:09,559 --> 00:10:17,800 Speaker 1: Um uh, there's that information. A very interesting conversation coming 185 00:10:17,880 --> 00:10:20,480 Speaker 1: up next now because it is time for Bloomberg opinion 186 00:10:20,520 --> 00:10:23,040 Speaker 1: and a great opinion piece by the former chair of 187 00:10:23,080 --> 00:10:25,840 Speaker 1: the f d i C during the Great Financial Crisis 188 00:10:25,840 --> 00:10:28,160 Speaker 1: that should be noted. She La Bet. She is on 189 00:10:28,200 --> 00:10:31,960 Speaker 1: everybody's lips. She's a household name. Really. She's also founding 190 00:10:31,960 --> 00:10:34,720 Speaker 1: director of the Local Alliance, which aims to build trust 191 00:10:34,800 --> 00:10:37,520 Speaker 1: in government, and she is the founding chair of the 192 00:10:37,559 --> 00:10:40,599 Speaker 1: Systemic Risk Council now after her at the f d 193 00:10:40,679 --> 00:10:42,640 Speaker 1: i C, the vice chairman was Tom Hunig, who is 194 00:10:42,679 --> 00:10:45,280 Speaker 1: also of course of Kansas City Fed President. And they 195 00:10:45,360 --> 00:10:48,360 Speaker 1: have a great opinion piece out on the Bloomberg today 196 00:10:49,240 --> 00:10:52,960 Speaker 1: or in recent days. Banks risks during the pandemic aren't clear. 197 00:10:53,080 --> 00:10:55,400 Speaker 1: There is a lot to unpack here. So she Labert, welcome, 198 00:10:56,400 --> 00:10:59,959 Speaker 1: thank you for having me talk to us about how 199 00:11:00,080 --> 00:11:02,600 Speaker 1: risky banks are these days, because right now we're seeing 200 00:11:02,640 --> 00:11:05,480 Speaker 1: headlines about you know, employees being laid off and so on, 201 00:11:05,520 --> 00:11:09,400 Speaker 1: and we're not actually thinking too much. I think about how, 202 00:11:10,160 --> 00:11:14,160 Speaker 1: you know, how strong fundamentally banks are didn't we fix 203 00:11:14,280 --> 00:11:18,320 Speaker 1: that post Financial park crisis? Well, we did. I mean, 204 00:11:18,320 --> 00:11:21,160 Speaker 1: there was certainly much better capitalized going into this crisis 205 00:11:21,200 --> 00:11:24,040 Speaker 1: than they were during the Great Financial Crisis back in 206 00:11:24,080 --> 00:11:27,080 Speaker 1: two two nine, But that's not saying much because they 207 00:11:27,120 --> 00:11:31,120 Speaker 1: were really very highly leveraged back then. So we started 208 00:11:31,120 --> 00:11:34,640 Speaker 1: from the low baseline. Yes, lots more capital, which was 209 00:11:34,679 --> 00:11:36,920 Speaker 1: good because they were in a much better position going 210 00:11:36,960 --> 00:11:40,439 Speaker 1: into this and and that's that's in in in large 211 00:11:40,480 --> 00:11:43,560 Speaker 1: part due to the reforms we put in place after 212 00:11:43,600 --> 00:11:47,280 Speaker 1: the Great Financial Crisis. So we shouldn't be overly confident, 213 00:11:47,320 --> 00:11:50,680 Speaker 1: though this is a very severe crisis and h capital 214 00:11:50,760 --> 00:11:53,760 Speaker 1: levels have been declining actually leading into this crisis. The 215 00:11:53,840 --> 00:11:55,960 Speaker 1: FED over the last few years have been letting banks 216 00:11:56,720 --> 00:11:59,760 Speaker 1: on average distribute more in capital than they were earning, 217 00:11:59,800 --> 00:12:03,720 Speaker 1: a which depletes their capital levels and so on an 218 00:12:03,720 --> 00:12:07,000 Speaker 1: anonymous weighted basis, we actually saw capital ratio's declining for 219 00:12:07,040 --> 00:12:10,520 Speaker 1: the last two years, So we shouldn't We shouldn't be overconfident. 220 00:12:10,600 --> 00:12:13,000 Speaker 1: There was a bad friend going into this, which is 221 00:12:13,080 --> 00:12:16,960 Speaker 1: unfortunate because usually when you're in a good economic times 222 00:12:17,000 --> 00:12:19,160 Speaker 1: for discycle, the smart thing to do is to raise 223 00:12:19,240 --> 00:12:22,360 Speaker 1: capital not not to lower it. So she'll give us 224 00:12:22,400 --> 00:12:24,600 Speaker 1: a sense of kind of what your your takeaways were 225 00:12:24,760 --> 00:12:30,600 Speaker 1: from the recently released stress tests, right. So I think 226 00:12:30,600 --> 00:12:32,840 Speaker 1: the problem is they just were So we had as 227 00:12:32,880 --> 00:12:35,360 Speaker 1: sensitivity analysis this testament and then we had this to 228 00:12:35,440 --> 00:12:37,560 Speaker 1: stress test, but the stress test really didn't tell us 229 00:12:37,640 --> 00:12:41,200 Speaker 1: much of anything because they were based on economic stress 230 00:12:41,200 --> 00:12:45,040 Speaker 1: scenarios pre pandemic and what we're what we're experiencing now 231 00:12:45,120 --> 00:12:48,880 Speaker 1: is more severe than what even the most severe assumptions 232 00:12:48,920 --> 00:12:53,640 Speaker 1: of the stress tests that we're announced very pre pandemic were. 233 00:12:53,679 --> 00:12:55,800 Speaker 1: And also you were looking at bank balance sheets as 234 00:12:55,840 --> 00:12:58,480 Speaker 1: at the end of the year last year, those have 235 00:12:58,559 --> 00:13:02,880 Speaker 1: grown significantly because of the crisis. And ironically, the FED, 236 00:13:03,480 --> 00:13:05,600 Speaker 1: this is something I supported back when I was chair 237 00:13:05,600 --> 00:13:07,120 Speaker 1: of the f c I s T and later as 238 00:13:07,160 --> 00:13:10,839 Speaker 1: an advocate at the s RC Systemic Risk Council, to 239 00:13:10,960 --> 00:13:12,880 Speaker 1: require as part of the stress tests to show that 240 00:13:13,000 --> 00:13:15,600 Speaker 1: banks can't expand their balance sheets and still have adequate 241 00:13:15,720 --> 00:13:18,600 Speaker 1: levels of capital. Ironically, they fed a down away from 242 00:13:18,640 --> 00:13:20,520 Speaker 1: that they'd weakened to stress test. That was one of 243 00:13:20,559 --> 00:13:23,280 Speaker 1: the many ways they'd weaken going into this. So I 244 00:13:23,360 --> 00:13:25,920 Speaker 1: don't the stress test results, which were firms specific. I 245 00:13:25,960 --> 00:13:28,520 Speaker 1: don't have a lot of confidence in them. There were 246 00:13:28,640 --> 00:13:31,480 Speaker 1: there were some numbers that were frightening, even though they 247 00:13:31,520 --> 00:13:34,880 Speaker 1: were you know, uh were stressed under much more benign 248 00:13:34,920 --> 00:13:39,160 Speaker 1: economic circumstances. As I said in my piece of Tom Hanig, 249 00:13:39,600 --> 00:13:43,120 Speaker 1: the leverage ratios were still quite low, which is a 250 00:13:43,240 --> 00:13:47,040 Speaker 1: non risquaited measure of financial strength of the bank. That 251 00:13:47,240 --> 00:13:49,640 Speaker 1: one went down of Goldman Sacks actually dipped down a 252 00:13:49,679 --> 00:13:53,640 Speaker 1: three point five perc. That was under pre pandemic conditions. 253 00:13:54,120 --> 00:13:57,880 Speaker 1: And we had the sensitivity analysis that tried to incorporate 254 00:13:58,520 --> 00:14:02,000 Speaker 1: pandemic conditions, but they didn't give us the leverage ratios. 255 00:14:02,000 --> 00:14:05,160 Speaker 1: They didn't give this firm specific results. So that's a 256 00:14:05,240 --> 00:14:07,439 Speaker 1: long way of answering your question. We really don't know 257 00:14:08,000 --> 00:14:10,800 Speaker 1: how safe these banks are, and if anything, I think 258 00:14:10,840 --> 00:14:13,839 Speaker 1: they Fed well intentioned but just created more confusion and 259 00:14:14,160 --> 00:14:17,640 Speaker 1: angst about this and it was not reassuring exercise. Has 260 00:14:17,679 --> 00:14:20,360 Speaker 1: the President been set now, Sheila that the FED will 261 00:14:20,400 --> 00:14:23,280 Speaker 1: sort of back stop everything? I mean, the financial crisis 262 00:14:23,360 --> 00:14:25,680 Speaker 1: back stops were supposed to be a one off thing, 263 00:14:25,880 --> 00:14:28,120 Speaker 1: but it does seem like if the FED will back 264 00:14:28,160 --> 00:14:32,040 Speaker 1: stop anything these days, well they are they kind of 265 00:14:32,560 --> 00:14:36,160 Speaker 1: you know, I I supported intervention in the corporate debt markets. 266 00:14:36,240 --> 00:14:39,360 Speaker 1: We had so many companies that were just barely investment grade. 267 00:14:39,400 --> 00:14:41,640 Speaker 1: I was worried if they dropped in a junk territory, 268 00:14:41,760 --> 00:14:45,120 Speaker 1: they wouldn't be able to access credit markets anymore, debt 269 00:14:45,160 --> 00:14:47,880 Speaker 1: markets anymore, and so you would have that would exacerbate 270 00:14:47,960 --> 00:14:51,680 Speaker 1: the layoffs. So I thought, you know, there's a lot 271 00:14:51,760 --> 00:14:53,840 Speaker 1: of problems with how we got to all those overlabored 272 00:14:53,920 --> 00:14:57,160 Speaker 1: corporations to begin with, and some of them were took 273 00:14:57,200 --> 00:14:59,880 Speaker 1: on far too much debt. But be dead as it may, 274 00:15:00,040 --> 00:15:02,440 Speaker 1: I think it was the wise thing to do to intervene, 275 00:15:02,560 --> 00:15:04,360 Speaker 1: but I was guess I was thinking more that they 276 00:15:04,360 --> 00:15:09,520 Speaker 1: would do primary market interventions to help the companies as employers. 277 00:15:10,440 --> 00:15:13,840 Speaker 1: The line's share of the intervention has been in the 278 00:15:13,880 --> 00:15:16,840 Speaker 1: secondary market, which which also helps them issue new debt, 279 00:15:16,920 --> 00:15:20,800 Speaker 1: but it really is more beneficial to investors. So it 280 00:15:21,000 --> 00:15:23,240 Speaker 1: is concerning. And then they're not. I guess they just 281 00:15:23,400 --> 00:15:26,080 Speaker 1: recently said maybe they're gonna taper off a bit now. 282 00:15:26,200 --> 00:15:28,600 Speaker 1: But yeah, I just the last thing we wanted for 283 00:15:28,640 --> 00:15:31,240 Speaker 1: everybody in the country to make too big to fail 284 00:15:31,720 --> 00:15:35,120 Speaker 1: because Jpal pretty much said we're going to backstop these markets, 285 00:15:35,800 --> 00:15:39,920 Speaker 1: and that had a tremendously a beneficial impact for opening 286 00:15:40,000 --> 00:15:43,480 Speaker 1: up corporate debt markets. But again, some of these some 287 00:15:43,600 --> 00:15:46,480 Speaker 1: of these companies probably do need to be restructured. They 288 00:15:46,520 --> 00:15:48,720 Speaker 1: should be having a higher cost of capital, and to 289 00:15:49,120 --> 00:15:51,200 Speaker 1: let this be, we should be trying to figure out 290 00:15:51,200 --> 00:15:53,080 Speaker 1: a way to access this. Now, that was a temporary 291 00:15:53,920 --> 00:15:56,360 Speaker 1: um jolt that we needed to provide to the corporate 292 00:15:56,400 --> 00:15:58,320 Speaker 1: debt markets, but really they should be thinking about the 293 00:15:58,360 --> 00:16:01,800 Speaker 1: excess strategy now case. She also bottom line, how concerned 294 00:16:01,880 --> 00:16:04,840 Speaker 1: are you or how concerned should we be about our 295 00:16:04,920 --> 00:16:09,880 Speaker 1: nation's banks right here? Well, I think we should be 296 00:16:10,040 --> 00:16:14,200 Speaker 1: very worry. I think I think the leadership in Congress, 297 00:16:14,280 --> 00:16:18,080 Speaker 1: instead of trying to you know, have election your deregulatory 298 00:16:18,160 --> 00:16:20,200 Speaker 1: giveaways and pressure the FED to do that, I think 299 00:16:20,240 --> 00:16:23,280 Speaker 1: the pressure should be on the regulators to hold firm 300 00:16:23,840 --> 00:16:27,080 Speaker 1: suspend dividends. That's one good way to bolster bank balance sheets. 301 00:16:27,160 --> 00:16:30,320 Speaker 1: Thirty billion dollars left after I insured banks in the 302 00:16:30,400 --> 00:16:33,160 Speaker 1: first quarter that thirty billion dollars to take on their 303 00:16:33,200 --> 00:16:35,160 Speaker 1: balance sheets. That would have supported about a half a 304 00:16:35,240 --> 00:16:39,440 Speaker 1: three in dollars of expanding capacity and resiliency. So we 305 00:16:39,440 --> 00:16:42,480 Speaker 1: should suspend dividends. We should be bolstering bank balance sheets, 306 00:16:43,240 --> 00:16:46,640 Speaker 1: requiring new equity issue and if necessary, I mean, why 307 00:16:46,800 --> 00:16:49,760 Speaker 1: take a chance. Nobody's going to criticize you for having 308 00:16:49,840 --> 00:16:52,800 Speaker 1: ho much capital in the banking system, but there's going 309 00:16:52,840 --> 00:16:56,360 Speaker 1: to be a lot of adverse fallout for politically and 310 00:16:56,440 --> 00:16:59,280 Speaker 1: more importantly for the real economy if this pandemic crisis 311 00:16:59,360 --> 00:17:02,720 Speaker 1: turned into a financial crisis because banks start failing. So 312 00:17:03,560 --> 00:17:06,280 Speaker 1: suspend those dividends, look at maybe requiring that the issue 313 00:17:06,320 --> 00:17:10,439 Speaker 1: equity um the weaker ones. And that's that's the direction 314 00:17:10,560 --> 00:17:12,760 Speaker 1: I think that the FED should be going. And hopefully 315 00:17:13,040 --> 00:17:16,359 Speaker 1: Congress and the Trump administration will stand down and let 316 00:17:16,400 --> 00:17:19,720 Speaker 1: them do those hard decisions, or or even better, support 317 00:17:19,800 --> 00:17:22,359 Speaker 1: them and encourage them to do so. Sheila, thanks so 318 00:17:22,440 --> 00:17:25,320 Speaker 1: much for joining us. We really appreciate your perspective. Sheilla Bear, 319 00:17:25,720 --> 00:17:29,800 Speaker 1: former chairman of the Federal Deposit Insurance Corporation, giving us 320 00:17:30,000 --> 00:17:34,560 Speaker 1: her thoughts on the banks. All right, So COVID nineteen 321 00:17:34,600 --> 00:17:38,480 Speaker 1: bankrupting American companies at a relentless pace. On boy is 322 00:17:38,560 --> 00:17:41,040 Speaker 1: a hundred and eleven companies right now and expect to 323 00:17:41,080 --> 00:17:44,119 Speaker 1: see more on and I b c Y today a 324 00:17:44,240 --> 00:17:47,040 Speaker 1: great story with fantastic graphics. Let's bring in the author 325 00:17:47,200 --> 00:17:52,879 Speaker 1: David Chilioso, who joins us now to talk about these retailers, airlines, restaurants, 326 00:17:53,040 --> 00:17:57,000 Speaker 1: but also sports leagues and even an arch diocese or more. 327 00:17:57,400 --> 00:17:59,760 Speaker 1: David just first of all gives rundown of the sort 328 00:17:59,800 --> 00:18:04,880 Speaker 1: of variety of companies and entities that are declaring good morning, 329 00:18:05,040 --> 00:18:08,560 Speaker 1: UM funny. It's it's really a cross section of corporate America. 330 00:18:08,720 --> 00:18:12,160 Speaker 1: That's was the interesting part of this exercises their names 331 00:18:12,280 --> 00:18:15,840 Speaker 1: like Hurts and J. C. Penney, even Brooks Brothers recently 332 00:18:16,000 --> 00:18:19,200 Speaker 1: that you know, nearly everyone is familiar with. But in 333 00:18:19,480 --> 00:18:21,600 Speaker 1: the research that we did for this story, we also 334 00:18:21,680 --> 00:18:25,440 Speaker 1: found a lot of smaller companies whose stories have gone 335 00:18:25,560 --> 00:18:28,160 Speaker 1: largely unnoticed. And as you said, there is a lot 336 00:18:28,240 --> 00:18:32,800 Speaker 1: of retail restaurants um in there a lot of energy 337 00:18:33,320 --> 00:18:36,600 Speaker 1: companies with the fall in order prices and entertainment spectors 338 00:18:36,640 --> 00:18:39,800 Speaker 1: that are directly impacted by COVID. But then you find 339 00:18:39,840 --> 00:18:43,440 Speaker 1: also a lot of companies that had financial issues from 340 00:18:43,520 --> 00:18:46,920 Speaker 1: before UM and for for whom COVID was just like 341 00:18:47,040 --> 00:18:50,359 Speaker 1: you know, the last the last drop UM. The archdiocese 342 00:18:50,440 --> 00:18:53,400 Speaker 1: case that you that you brought about, you know, it's 343 00:18:53,440 --> 00:18:56,240 Speaker 1: the New Orleans archdioceses. It's one of over twenty that 344 00:18:56,760 --> 00:18:59,280 Speaker 1: you know, over the past several years of used bankruptcy 345 00:18:59,400 --> 00:19:02,639 Speaker 1: as a way to settle sexual abuse allegations. UM. So 346 00:19:02,760 --> 00:19:06,280 Speaker 1: they obviously had issues before, but COVID is just one 347 00:19:06,400 --> 00:19:10,080 Speaker 1: more challenge that they faced. And in their core papers 348 00:19:10,160 --> 00:19:13,000 Speaker 1: they said, you know, a drop in collections and offerings 349 00:19:13,520 --> 00:19:17,760 Speaker 1: added to an already strained budget. So, David, you know, 350 00:19:17,920 --> 00:19:20,520 Speaker 1: it's interesting. I think what we've heard just anecdotally about 351 00:19:20,520 --> 00:19:23,000 Speaker 1: some of these bankruptcies in certain industries is that the 352 00:19:23,040 --> 00:19:25,639 Speaker 1: ones that went in to this pandemic, the companies that 353 00:19:25,680 --> 00:19:29,639 Speaker 1: went into this pandemic with a over LEVELALERGYT obviously the 354 00:19:29,720 --> 00:19:32,240 Speaker 1: most at risk here. Are you finding that's still the 355 00:19:32,320 --> 00:19:36,000 Speaker 1: case or are we finding companies that are relatively healthy 356 00:19:36,160 --> 00:19:39,320 Speaker 1: in terms of capitalization they're also being pushed to the brink. 357 00:19:40,760 --> 00:19:44,240 Speaker 1: I think we've found both. UM. There are definitely companies 358 00:19:44,320 --> 00:19:48,760 Speaker 1: that were struggling with like heavy debt loads from before UM, 359 00:19:49,119 --> 00:19:52,280 Speaker 1: and in some cases those were the results of leverage 360 00:19:52,320 --> 00:19:56,000 Speaker 1: buyout UM. But in other cases, and especially with some 361 00:19:56,119 --> 00:19:59,760 Speaker 1: of the smaller companies UM, the companies were doing fine. 362 00:20:00,000 --> 00:20:02,520 Speaker 1: They weren't over levered. Uh and they just happened to 363 00:20:02,600 --> 00:20:07,080 Speaker 1: be inspectors that are directly impacted by COVID. So, for example, 364 00:20:07,480 --> 00:20:10,680 Speaker 1: UM and interviewed the owner of Bounce for Fund, which 365 00:20:10,720 --> 00:20:14,120 Speaker 1: is a small company outside of Dallas that rents out 366 00:20:14,280 --> 00:20:18,240 Speaker 1: water slides and and bounce houses. UM the company was 367 00:20:18,400 --> 00:20:22,119 Speaker 1: on track for the record year um and business was 368 00:20:22,400 --> 00:20:27,960 Speaker 1: was going exceptionally well. The problem is they had cancelations 369 00:20:28,160 --> 00:20:31,879 Speaker 1: as soon as shutdown orders came in. UH and the owner, 370 00:20:32,440 --> 00:20:34,200 Speaker 1: you know, he said he got a p P P 371 00:20:34,400 --> 00:20:36,119 Speaker 1: loan that lasted for a couple of months, but he 372 00:20:36,280 --> 00:20:40,400 Speaker 1: just didn't see a way for the business to continue. Uh, 373 00:20:40,600 --> 00:20:43,040 Speaker 1: not over the next few months, but probably not even 374 00:20:43,119 --> 00:20:46,359 Speaker 1: the next season. So the one I found particularly sad 375 00:20:46,880 --> 00:20:49,359 Speaker 1: is the XFL. I mean, whether or not you're a 376 00:20:49,359 --> 00:20:52,040 Speaker 1: fan of Vince Mygmahan and all that he's done, this 377 00:20:52,320 --> 00:20:55,600 Speaker 1: was a way for football players who maybe weren't fully 378 00:20:55,640 --> 00:20:58,479 Speaker 1: able to continue at the highest levels or didn't make 379 00:20:58,520 --> 00:21:00,639 Speaker 1: it the highest levels to play right. It was a 380 00:21:00,760 --> 00:21:05,280 Speaker 1: pro football league. It declared bankruptcy and fired about five 381 00:21:05,720 --> 00:21:10,159 Speaker 1: football players. Alpha Entertainment was the company. There is there 382 00:21:10,200 --> 00:21:12,159 Speaker 1: any chance that companies like this will come out of 383 00:21:12,200 --> 00:21:17,159 Speaker 1: this maybe small or more streamlined, but still an entity absolutely. 384 00:21:17,240 --> 00:21:19,399 Speaker 1: I mean, I guess it depends on the sector and 385 00:21:19,520 --> 00:21:23,240 Speaker 1: whether there are you know, willing buyers for the company 386 00:21:23,480 --> 00:21:27,400 Speaker 1: or it slim down version of the company or its assets. UM. 387 00:21:27,600 --> 00:21:30,720 Speaker 1: But you know, filing for bankruptcy doesn't necessarily mean you're 388 00:21:30,800 --> 00:21:33,360 Speaker 1: going out of business for good, So some of these 389 00:21:33,400 --> 00:21:36,879 Speaker 1: companies may re emerge in a different forms. They may 390 00:21:36,960 --> 00:21:40,960 Speaker 1: be bought by a competitor or an organization UM that 391 00:21:41,160 --> 00:21:44,280 Speaker 1: is active in that in that space. UM. We have 392 00:21:44,520 --> 00:21:48,840 Speaker 1: come across a few cases where the company is actually liquidating, 393 00:21:48,920 --> 00:21:52,359 Speaker 1: so they're selling off all of their assets and shutting 394 00:21:52,400 --> 00:21:54,879 Speaker 1: down for good. But I would say that's not the 395 00:21:55,000 --> 00:21:57,320 Speaker 1: majority of cases that we have come across the farm. 396 00:21:57,680 --> 00:21:59,680 Speaker 1: So that how bad is this going to get? Or 397 00:21:59,760 --> 00:22:02,640 Speaker 1: how it could this get? Uh? Do you expect to see, 398 00:22:03,000 --> 00:22:05,679 Speaker 1: you know, an acceleration of these bankruptcies over the next 399 00:22:05,720 --> 00:22:09,679 Speaker 1: several months. It remains to be seen. And you if 400 00:22:09,720 --> 00:22:12,360 Speaker 1: you look at the timeline, we definitely see a few 401 00:22:12,440 --> 00:22:15,120 Speaker 1: cases in May. Then we had a big increase during 402 00:22:15,240 --> 00:22:19,719 Speaker 1: April May, uh, in June, and you know, we started 403 00:22:19,720 --> 00:22:23,280 Speaker 1: seeing quite a few cases in July as well. UM, 404 00:22:23,359 --> 00:22:27,879 Speaker 1: I think much will depend on how much access to financing. Uh, 405 00:22:28,119 --> 00:22:31,840 Speaker 1: these companies have both in terms of you know, capital 406 00:22:31,920 --> 00:22:35,480 Speaker 1: markets if they're large enough, or you know, loan from 407 00:22:35,560 --> 00:22:39,200 Speaker 1: banks or government programs if they are smaller. Obviously, some 408 00:22:39,359 --> 00:22:42,280 Speaker 1: of the stimulus that was put in place as running out, 409 00:22:42,320 --> 00:22:44,920 Speaker 1: like in the case of p P p UM, so 410 00:22:45,080 --> 00:22:48,320 Speaker 1: you can rule out the possibility that as the effects 411 00:22:48,359 --> 00:22:52,240 Speaker 1: of that simulus kind of fade away, you may see 412 00:22:52,280 --> 00:22:56,399 Speaker 1: more cases for sure. Thanks so much for joining us. 413 00:22:56,480 --> 00:23:00,359 Speaker 1: David Uzo certainly the name of the day, corporate financier 414 00:23:00,400 --> 00:23:04,359 Speaker 1: reporter for Bloomberg News, bring us a fascinating story about 415 00:23:04,640 --> 00:23:09,000 Speaker 1: unfortunately this relentless path of bankruptcies that we're starting to 416 00:23:09,040 --> 00:23:14,120 Speaker 1: see as a result of the pandemic. March sixth low 417 00:23:14,320 --> 00:23:17,240 Speaker 1: up almost nine still down or year today, but up 418 00:23:17,960 --> 00:23:22,080 Speaker 1: from that March low. Just extraordinary continued volatility. But crypto 419 00:23:22,280 --> 00:23:24,840 Speaker 1: is here to stay. To get some latest, we welcome 420 00:23:24,920 --> 00:23:27,560 Speaker 1: Rich Rosen bloom He's co founder and co had of 421 00:23:27,560 --> 00:23:30,239 Speaker 1: trading at g S are based in New York City. Rich, 422 00:23:30,320 --> 00:23:32,440 Speaker 1: thanks so much for joining us here. Give us a 423 00:23:32,520 --> 00:23:37,040 Speaker 1: sense of kind of maybe just how crypto and blockchain 424 00:23:37,280 --> 00:23:40,560 Speaker 1: and bitcoin and all those things have kind of performed 425 00:23:41,200 --> 00:23:43,760 Speaker 1: over the last several months of this new world that 426 00:23:43,840 --> 00:23:48,040 Speaker 1: we find ourselves in. That's a great question. If you 427 00:23:48,080 --> 00:23:50,879 Speaker 1: look at bitcoin it's itself over the last two months, 428 00:23:50,960 --> 00:23:53,560 Speaker 1: it's been mired in a rather thin range between the 429 00:23:53,840 --> 00:23:56,800 Speaker 1: eight thousands to ten thousands. But I think what's what's 430 00:23:56,840 --> 00:24:00,560 Speaker 1: more interesting is that you have a whole parallel ecosystem that, 431 00:24:00,920 --> 00:24:05,160 Speaker 1: even though it was fueled by bitcoin, it's rather independent. 432 00:24:05,880 --> 00:24:09,000 Speaker 1: And I'd say that and since the traditional financial market 433 00:24:09,080 --> 00:24:13,080 Speaker 1: is focused on bitcoin as proverbial digital gold, but there's 434 00:24:13,119 --> 00:24:16,480 Speaker 1: this entire ecosystem that serves a variety of other functions 435 00:24:16,560 --> 00:24:19,640 Speaker 1: and um even though on a broad scale the market 436 00:24:19,680 --> 00:24:21,919 Speaker 1: gets said I believe more in bitcoin, I'm not as 437 00:24:21,960 --> 00:24:25,200 Speaker 1: focused on alf coins. If you take a smaller snapshop 438 00:24:25,320 --> 00:24:28,320 Speaker 1: such as as this week, bitcoin's rally a few percent 439 00:24:28,400 --> 00:24:33,680 Speaker 1: from nine thousands to adding roughly ten billion of market value. 440 00:24:33,920 --> 00:24:36,280 Speaker 1: But if you take two other cryptos that are in 441 00:24:36,320 --> 00:24:39,480 Speaker 1: the top fifteen, they've added over twenty billion of market 442 00:24:39,600 --> 00:24:43,800 Speaker 1: value and rallied in these three days alone between fifteen 443 00:24:43,840 --> 00:24:46,800 Speaker 1: and so I think there's there's a lot of action 444 00:24:46,800 --> 00:24:49,520 Speaker 1: in the space that doesn't get it quite enough focus 445 00:24:49,600 --> 00:24:52,560 Speaker 1: as it should, because I think that the broad market 446 00:24:52,640 --> 00:24:55,200 Speaker 1: is just focused on the big belt bell leather, which 447 00:24:55,280 --> 00:24:58,320 Speaker 1: is Bitcoin. But in terms of the activity in the 448 00:24:58,440 --> 00:25:02,600 Speaker 1: space for groups are are more looking for the activity 449 00:25:02,640 --> 00:25:05,560 Speaker 1: in the crypto natives G s R. We we trade 450 00:25:05,640 --> 00:25:08,879 Speaker 1: with exchanges, we still take business with the miners, with 451 00:25:09,000 --> 00:25:12,080 Speaker 1: the issuers. Uh. We're doing more business in the alt 452 00:25:12,119 --> 00:25:15,440 Speaker 1: coin space uh than in bitcoin. And I think that's 453 00:25:15,480 --> 00:25:18,200 Speaker 1: really the story of this week, since we're seeing a 454 00:25:18,240 --> 00:25:20,800 Speaker 1: bit of a mini all coin boom. So if you're 455 00:25:20,800 --> 00:25:23,639 Speaker 1: looking at bitcoin prices and seeing them up down a 456 00:25:23,760 --> 00:25:27,000 Speaker 1: percent per day, uh, you're missing that there's some other 457 00:25:27,080 --> 00:25:31,280 Speaker 1: assets that are up in a single day. And I 458 00:25:31,440 --> 00:25:34,480 Speaker 1: think that some of these groups, it might be that 459 00:25:34,640 --> 00:25:39,280 Speaker 1: appears more speculation and it's based on Chinese economy operating 460 00:25:39,320 --> 00:25:42,000 Speaker 1: back at full cylinders and there's some trading elements that 461 00:25:42,280 --> 00:25:45,720 Speaker 1: there's a momentum trade people want to buy um the 462 00:25:45,800 --> 00:25:48,120 Speaker 1: groups that are are meeting new highs. But I think 463 00:25:48,160 --> 00:25:51,040 Speaker 1: from speaking to these projects directly, there's a lot of 464 00:25:51,119 --> 00:25:54,600 Speaker 1: building um onto these ecosystems, and we're going to see 465 00:25:54,640 --> 00:25:57,520 Speaker 1: the benefits of these products being built as we move 466 00:25:57,600 --> 00:26:00,800 Speaker 1: out of that prototype phase and more of the stage 467 00:26:00,840 --> 00:26:04,720 Speaker 1: where you see the emerging crypto economy as one where 468 00:26:04,760 --> 00:26:09,320 Speaker 1: it's more of its own tech ecosphere of its own. Yeah. 469 00:26:09,400 --> 00:26:12,240 Speaker 1: Whatever happened to all of the companies that were trying 470 00:26:12,320 --> 00:26:15,560 Speaker 1: to build out the blockchain and the ecosphere and then 471 00:26:15,640 --> 00:26:17,479 Speaker 1: sort of run into a little bit of difficulty right 472 00:26:17,520 --> 00:26:22,440 Speaker 1: when everyone thought that they were taking over the world. Yeah. 473 00:26:22,640 --> 00:26:25,960 Speaker 1: I think that there's always cycles of hype and bust 474 00:26:26,040 --> 00:26:29,800 Speaker 1: for for any new products, especially if it's tech focus 475 00:26:30,320 --> 00:26:33,960 Speaker 1: UM and might have gotten too much attention to certain projects. 476 00:26:34,240 --> 00:26:37,400 Speaker 1: But if you look at early stage investing, angel investing, 477 00:26:38,280 --> 00:26:40,480 Speaker 1: most of the projects are are not going to succeed 478 00:26:40,560 --> 00:26:43,600 Speaker 1: in the end, and as long as there's gonna be 479 00:26:43,800 --> 00:26:47,040 Speaker 1: still a handful of very successful projects, then they can 480 00:26:47,160 --> 00:26:50,600 Speaker 1: remain leaders in this in this space and be a 481 00:26:50,680 --> 00:26:53,240 Speaker 1: good place to invest for the future. So I think 482 00:26:53,400 --> 00:26:56,320 Speaker 1: that the hype in two thousand seventeen, um, you know, 483 00:26:56,320 --> 00:26:58,720 Speaker 1: it was early for bitcoin itself, and at that point, 484 00:26:58,800 --> 00:27:01,080 Speaker 1: I think he needs more a structure to be in place, 485 00:27:01,560 --> 00:27:03,639 Speaker 1: and we're we're in a world different place as far 486 00:27:03,680 --> 00:27:08,959 Speaker 1: as custody, UM, clearing, execution, UM. But I think there 487 00:27:09,000 --> 00:27:12,560 Speaker 1: are some other parts of the ecosystem that they just 488 00:27:12,680 --> 00:27:15,399 Speaker 1: need some more time to play out. And if you 489 00:27:15,480 --> 00:27:18,800 Speaker 1: look at the three thousand different I C O s UM, 490 00:27:19,040 --> 00:27:23,919 Speaker 1: I'm sure that the bulk of them uh aren't going 491 00:27:23,960 --> 00:27:27,040 Speaker 1: to succeed, just like any three thousand groups of tech 492 00:27:27,119 --> 00:27:29,560 Speaker 1: companies that are are brand new. But you know, if 493 00:27:29,600 --> 00:27:33,959 Speaker 1: there's a hundreds that end up powerhouses and changing um, 494 00:27:34,160 --> 00:27:36,760 Speaker 1: you know, the global ecosystem, then you know, I think 495 00:27:36,760 --> 00:27:38,920 Speaker 1: it's still gonna be a good sign for things to 496 00:27:39,000 --> 00:27:41,920 Speaker 1: come in uh decades UH that we are to see 497 00:27:42,280 --> 00:27:45,439 Speaker 1: since UM, you know, looking at the baseball framework, were 498 00:27:45,480 --> 00:27:49,000 Speaker 1: certainly very much in the second, if not the first inning. 499 00:27:50,040 --> 00:27:52,359 Speaker 1: So rich kind of where are we in terms of 500 00:27:52,560 --> 00:27:57,480 Speaker 1: adoption of crypto as an investment asset class by institutional investors? 501 00:27:57,520 --> 00:27:59,160 Speaker 1: I know you trade with a lot of folks out there, 502 00:27:59,480 --> 00:28:00,880 Speaker 1: and where do you do you think we are there? 503 00:28:03,920 --> 00:28:06,320 Speaker 1: So in terms of the saturation, the all the data 504 00:28:06,359 --> 00:28:09,840 Speaker 1: would point to UM decently high saturation as much as 505 00:28:11,080 --> 00:28:13,600 Speaker 1: but I think that that might be reaching that UM 506 00:28:13,720 --> 00:28:18,639 Speaker 1: an institution tangentally has some type of access to some 507 00:28:18,800 --> 00:28:22,440 Speaker 1: investment related to crypto. But I think there's some demographic 508 00:28:22,520 --> 00:28:26,520 Speaker 1: issues in which UM age wise, you know, people that 509 00:28:26,600 --> 00:28:29,520 Speaker 1: are part of the older generation, they still feel that 510 00:28:29,800 --> 00:28:31,800 Speaker 1: even if the point goes up, they don't know if 511 00:28:31,880 --> 00:28:34,920 Speaker 1: that's a real gain. It seems like it's some type 512 00:28:34,960 --> 00:28:39,200 Speaker 1: of you know, interestring currency that can't be translated into 513 00:28:39,360 --> 00:28:44,160 Speaker 1: real dollars versus UH. Millennials or younger generations below thirty 514 00:28:44,200 --> 00:28:47,440 Speaker 1: years old, they tend to believe more in crypto than 515 00:28:47,480 --> 00:28:51,200 Speaker 1: they do in the normal stock market. UM, and so 516 00:28:51,360 --> 00:28:54,280 Speaker 1: I think that, you know, give it five ten years, 517 00:28:54,400 --> 00:28:57,160 Speaker 1: these demographics are certainly going to be in favor of 518 00:28:57,400 --> 00:29:01,280 Speaker 1: crypto investing. But as far as today, UM, while bitcoin 519 00:29:01,880 --> 00:29:04,560 Speaker 1: is a powerhouse and gets a lot of attention from 520 00:29:05,120 --> 00:29:08,360 Speaker 1: both the media and investors, it's still wouldn't be one 521 00:29:08,400 --> 00:29:11,520 Speaker 1: of the top twenty stocks in SMP. So I think 522 00:29:11,640 --> 00:29:15,680 Speaker 1: that if that saturation in terms of people going buying 523 00:29:15,720 --> 00:29:19,600 Speaker 1: and putting in their portfolio is more at I think 524 00:29:19,640 --> 00:29:23,440 Speaker 1: that's pretty pretty good and there's room to build. Rich. 525 00:29:23,520 --> 00:29:26,440 Speaker 1: Thank you the fascinating discussion. Rich Rosen was co founder 526 00:29:26,480 --> 00:29:28,840 Speaker 1: and cohead of trading at g s R, which trades 527 00:29:28,960 --> 00:29:33,160 Speaker 1: in digital assets and provides derivatives and volatility hitting products 528 00:29:33,240 --> 00:29:37,400 Speaker 1: as well. Thanks for listening to Bloomberg Markets podcast. You 529 00:29:37,480 --> 00:29:40,920 Speaker 1: can subscribe and listen to interviews at Apple Podcasts or 530 00:29:41,080 --> 00:29:44,400 Speaker 1: whatever a podcast platform you prefer. I'm Bonnie Quinn. I'm 531 00:29:44,440 --> 00:29:47,120 Speaker 1: on Twitter at Bonnie Quinn. And Paul Sweeney I'm on 532 00:29:47,160 --> 00:29:50,080 Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always 533 00:29:50,120 --> 00:29:51,960 Speaker 1: catch us worldwide at Bloomberg Radio