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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: Joining us now Meredith Whitney here for too short a

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Speaker 2: conversation this morning. Meredith, I want to go with all

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Speaker 2: of the acclaim of what you and I did years ago.

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Speaker 2: The golden goose keeps delivering for finance companies. All my

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Speaker 2: radars up on private equity, private credit. I'm hearing the

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Speaker 2: same phrases you and I heard in two thousand and six.

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Speaker 2: Am I off the mark?

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Speaker 1: It reminds me more of nineteen ninety four, nineteen ninety six,

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Speaker 1: to the extent that you see so much specialized demand

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Speaker 1: for consumer loan products duration consumer loan products. So when

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Speaker 1: the securitization market expanded from mortgage to this is in

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Speaker 1: the nineties and democratization of credit, they called it into

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Speaker 1: auto loans to home equity. Home equity is a very

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Speaker 1: new product in terms of it had been around a

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Speaker 1: lot with household and beneficial but in terms of the expansion,

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Speaker 1: it went from zero to sixty really quickly. And you're seeing,

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Speaker 1: I mean, home equity has exploded over the.

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Speaker 3: Path past year.

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Speaker 1: And that is after seventeen year contraction. Private credit cannot

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Speaker 1: get enough supply to meet its demand.

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Speaker 2: Let's come back with Meredith threatening thrilled she's with us

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Speaker 2: for this good conversation this morning to get the markets open. Here,

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Speaker 2: huge upmoves in the markets two hours ago. It was

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Speaker 2: still up right now, but it's not going to be

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Speaker 2: the enthusiasm of seven am as well. Right now. The

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Speaker 2: dough up thirty eight points on first print. We'll look

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Speaker 2: to the NASDAK to settle out here. In the last

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Speaker 2: couple minutes, SI helped me here with Intel. What's the

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Speaker 2: symbol right now?

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Speaker 1: It she?

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Speaker 2: You know, I did I nail that? Okay, all of it.

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Speaker 2: I'm just nervous meritis here and you know up twenty

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Speaker 2: five thirty one is Meredith whitning with us this morning.

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Speaker 2: You have a paragraph in here which you know, I

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Speaker 2: think a lot of people aren't aware of seniors owned

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Speaker 2: nearly sick. This is classic Meredith. Seniors owned sixty percent

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Speaker 2: of all homes. They have seventy nine percent of on

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Speaker 2: their homes. Seventy six percent of those home owners have

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Speaker 2: no three quarters of the seniors have no mortgages. They're

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Speaker 2: the golden goose for consumers. How do you play it?

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Speaker 3: They're the golden goose for consumer lenders? Excuse me?

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Speaker 1: Sorry, how you play it is their so SOFI has

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Speaker 1: been a rocket ship. Rocket mortgage has been a rocket ship.

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Speaker 1: Sorry for the for the pun. But here's what's interesting.

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Speaker 1: Ice Mortgage Monitor came out and said that seventy percent

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Speaker 1: of cash out refinances were at higher rates than people

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Speaker 1: had on their first mortgages so they could access cash.

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Speaker 1: So seniors are taking out first mortgages. That seventy six

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Speaker 1: percent of seniors with no mortgage, I expect to go down.

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Speaker 1: And they're taking out there all these products that are

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Speaker 1: catering to seniors interest.

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Speaker 3: It's it's a real estate.

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Speaker 1: Interest only product for seniors that exists in the UK,

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Speaker 1: retirement interest only.

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Speaker 3: Excuse me, that exists only in the UK. That's coming

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Speaker 3: to the US.

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Speaker 1: All of these lenders, and I think a lot of

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Speaker 1: these companies are private that it will soon be going

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Speaker 1: public because a lot of these companies are funded by

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Speaker 1: private equity and their loans are funded by private credit.

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Speaker 4: Meredith, you talked to and investors all over the world.

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Speaker 4: What are they asking you most about these days?

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Speaker 1: I think they're asking what the next shoe to drop

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Speaker 1: in terms of credit is and yeah, how well, okay?

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Speaker 3: The two things.

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Speaker 1: There's an incredible interest over the government getting out of

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Speaker 1: Fanny Freddy, when that will happen, how what that will

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Speaker 1: look like, and you know what structure will happen, and

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Speaker 1: and then what's going on with student debt? And then

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Speaker 1: also what's going on with with.

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Speaker 3: Home equity and private credit?

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Speaker 1: Because one thing, I mean, you know, one of the

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Speaker 1: biggest thesis that we've had has been on names like

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Speaker 1: Rocket and so far because of this originate and cell

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Speaker 1: model to a certain extent, Upstart and others.

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Speaker 3: What else are they asking.

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Speaker 4: Is Fanny and Freddy talk to us about that, because

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Speaker 4: that could be a monster deal for a Wall Street,

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Speaker 4: for b the US government, see I guess homeowners.

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Speaker 1: It will be a monster deal for the US government.

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Speaker 1: So in the vein of how the US government was

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Speaker 1: great after this Intel deal, how the US government looked

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Speaker 1: great after the Mountain Pass MP materials deal, how the

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Speaker 1: administration will look great after Fanny Freddy, I mean, it

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Speaker 1: is a no brainer for Fanny Freday.

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Speaker 2: I got to get this in and you did a

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Speaker 2: PG at Lawrence phil You show up in Brown to

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Speaker 2: get a history degree, and then you said to me

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Speaker 2: you must have been like twenty four years old. Hey,

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Speaker 2: stupid by Visa. Who's the new Meredith Whitney Visa up

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Speaker 2: to twenty three per year?

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Speaker 3: I mean this year it's been rocket and so far.

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Speaker 2: Yeah, but for the next five years, ten years, who's

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Speaker 2: the new Visa? Just buy more Visa.

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Speaker 1: That's a tough one because Visa was effectively a demutualization,

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Speaker 1: so there are very few number crudentials. Like all those

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Speaker 1: insurance companies were demusualization. It's hard to have an exact fit.

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Speaker 1: That's a moment in time. Visa MasterCard, this is the

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Speaker 1: same extent. But it's hard for me to go out.

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Speaker 1: I look at names, like, you know, there was a

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Speaker 1: name that is not in my sector, Axon, which is

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Speaker 1: the original taser company that has been just an unbelievable name,

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Speaker 1: and you think about police enforcement, I think that's just

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Speaker 1: maybe an Axon.

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Speaker 2: Yeah, Meredith, with this, let me squeeze this in and

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Speaker 2: I want you to stay over for one more section

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Speaker 2: with this as well. Meredith, you're on Park Avenue, the

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Speaker 2: new rebuilt Park Avenue, James Diamond's Fortress Diamond Citadels above

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Speaker 2: a fancy restaurant at the Waldorf's reopen. What's a symbolism

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Speaker 2: for New York of Park Avenue as redo.

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Speaker 1: I think it's incredible, but those are long term projects.

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Speaker 1: Those are long, long live projects. The symbol to me,

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Speaker 1: I'm mixed. Look, I've loved New York. New York has

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Speaker 1: given me an incredible opportunity. It's really exciting to look

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Speaker 1: at at those it seems like a vestige from their PASTOK.

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Speaker 2: We continue with Meredith Whitney, just iconic on Wall Street

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Speaker 2: forever for me with OpCo, but with many others. And

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Speaker 2: she retired for a cup of coffee or something like that.

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Speaker 2: She's in Washington now we say good morning ninety nine

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Speaker 2: one FM Nathan Hager Radio in Washington. What is it

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Speaker 2: like being financial person in Washington? Is there any legit

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Speaker 2: financial literacy down there? Or are they just worried about

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Speaker 2: what the cook political reports said this morning?

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Speaker 1: I think they're certainly at the Treasury, they're very smart

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Speaker 1: people at the Commerce Department. There's some very smart people

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Speaker 1: at the different You know, everybody has a vested interest

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Speaker 1: outside of politics to be inside of politics. So it's

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Speaker 1: almost like everybody's on, you know, getting something out of somewhere.

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Speaker 1: So there's you know, their their pundits all over the place.

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Speaker 1: It's it's nerdy to be sure, but it's not like

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Speaker 1: there's only one New York and there's nothing, nothing that

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Speaker 1: compares to being.

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Speaker 2: Okay within the deregulation milieu that mister Trump is invented.

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Speaker 2: Do you look at it as continuing or is it

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Speaker 2: just simply a one off to whatever the outcome of

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Speaker 2: the next time.

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Speaker 1: Here's what I hear inside the Beltway, which is the

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Speaker 1: the departments that have been incredibly successful. So the Treasury

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Speaker 1: has gotten a tremendous amount done so far.

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Speaker 3: Trump is throwing.

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Speaker 1: More their way, so whatever they they've accomplished, they're doing more.

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Speaker 1: So the Genius Act was effectively written before Ump came

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Speaker 1: into office, so a lot of the stuff they're putting

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Speaker 1: out was already was already done.

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Speaker 3: So now they're working on new things.

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Speaker 1: So people are not sleeping and are trying to get

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Speaker 1: this agenda passed as quickly as there's a lot to

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Speaker 1: do in terms of deregulation. Michelle Bouman has still not

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Speaker 1: come out with her new guideline guideline, so that's something

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Speaker 1: in terms of supervision, so that's something we're waiting on

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Speaker 1: and that's going to be a big deal for the banks.

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Speaker 4: That's where I wanted to go one of the when

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Speaker 4: President Trump was elected the second time. You know, one

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Speaker 4: of the calls on Wall Street was by the banks

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Speaker 4: because this administration is really going to be pulled back

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Speaker 4: as much as they can some of the regulatory yoke

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Speaker 4: from a great financial crisis. So my question to you

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Speaker 4: is is that happening? Do you think it's going to happen?

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Speaker 4: Is that a real thing?

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Speaker 1: Well, I can just tell you P and C that

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Speaker 1: made an acquisition a couple of weeks ago, said that

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Speaker 1: they don't dem TEK spoke last week, I believe, and

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Speaker 1: said that he doesn't expect any big bank mergers to happen,

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Speaker 1: but they will have capital relief and buying the banks.

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Speaker 1: It has all been a financial engineering play. So they

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Speaker 1: bought backstock, they've increased their dividend. It's not really sexy stuff.

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Speaker 1: What is happening that is very sexy is the IPO

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Speaker 1: pipeline is wide open and I don't think that's going

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Speaker 1: to change. So I don't know how long it takes

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Speaker 1: for Bowman to come out with new supervisory guidelines set.

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Speaker 1: She's already told the market what she's planning on doing.

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Speaker 1: You know, the three quarters of the banks or two

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Speaker 1: thirds of the banks had unsatisfactory ratings on the banks

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Speaker 1: so they couldn't do anything. So lifting those and those

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Speaker 1: a lot of those writings were subjective management governments governments.

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Speaker 1: Lifting those will should put a lot in terms of

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Speaker 1: consolidation in the banks. The outside of the bank systems.

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Speaker 1: The system like the traditional banks have done better. So

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Speaker 1: my pure play model lines have done better than the banks,

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Speaker 1: even City that's up a bunch this year. But the

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Speaker 1: underwriting pip pipeline should be underrestivated the.

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Speaker 2: Heart of the matter. Good morning, Jillian Ted, writing at

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Speaker 2: the ft is zillion years ago, gave me the phrase

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Speaker 2: cdo squared. I'm hearing the same language now. I got

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Speaker 2: so angry at something the other day. I started doing

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Speaker 2: a trunch analysis on air, which is like major folks pot.

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Speaker 2: It's like sort of complicated. But are we reliving five

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Speaker 2: oh six where we're we're living securitized jargon that's going

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Speaker 2: to lead us to upset down the road.

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Speaker 3: I don't see it. I don't I don't see it.

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Speaker 1: Certainly not in the mortgage and the mortgage space has

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Speaker 1: been dead for two years, so there's no market debt

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Speaker 1: market big art.

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Speaker 2: Sorry, come on, asset back AI is.

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Speaker 1: Coming right right right, I don't see it because also

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Speaker 1: I don't expect the housard market to improve anytime time soon.

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Speaker 1: So outside of whatever they're going to do with government,

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Speaker 1: I mean, I don't think you're going to have a

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Speaker 1: yeah ten years.

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Speaker 2: Lisa, can we blow up the interview?

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Speaker 3: Okay?

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Speaker 2: Here, I saw a bar chart yesterday. I'm upset. Two

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Speaker 2: thirds of the nation is flat under back. Then there's

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Speaker 2: like New York and Milwaukee's doing well. And right at

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Speaker 2: the bottom of the chart, you too, is Summit New Jersey.

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Speaker 2: I mean, Summit Jersey is killing it. Right now. You're

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Speaker 2: telling me housing prices in Summit, New Jersey are at risk.

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Speaker 3: Oh, I don't know that.

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Speaker 1: I'm saying deal activity is the lowest it's been in

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Speaker 1: over twenty five years. Housing prices are staying high because

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Speaker 1: there's so little activity and the high end that can

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Speaker 1: get it qualified for mortgages or pay cash.

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Speaker 3: That's where the transactions.

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Speaker 4: Summit never goes down.

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Speaker 2: Bro for the beach.

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Speaker 4: The beach and spring Lake never goes down.

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Speaker 2: Forget it.

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Speaker 4: I picked two of the most expensive places in the

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Speaker 4: world to live, right.

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Speaker 1: But it's yeah, it's worth that the big box on

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Speaker 1: Wall Street, Right, Yeah, it used to be Big Bucks.

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Speaker 4: So you mentioned City, one of the many banks I

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Speaker 4: used to work at. Arguably the greatest trade of my

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Speaker 4: life is the day I left City. I sold everything

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Speaker 4: literally before I got out the door, which was a

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Speaker 4: great trade. Stocks of forty five percent this year. Has

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Speaker 4: Jane Fraser found the secret sauce to finally turn SUP around?

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Speaker 2: Do you think?

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Speaker 1: Okay, let's take that into contact. So what banks have

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Speaker 1: done incredibly well, The European banks have done unbelievably well.

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Speaker 1: A lot of that is because of the infrastructure and

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Speaker 1: investment plans, and there's going to be a huge revival

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Speaker 1: in those stocks. But they were all trading below book,

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Speaker 1: and they were all trading a blow tangible book, and

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Speaker 1: so it's a reversion to the mean, and things weren't

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Speaker 1: getting worse, and so the reason why the stock is

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Speaker 1: up is because it was the cheapest.

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Speaker 3: Going into the year.

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Speaker 1: I'm not taking anything away from the execution, but there's

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Speaker 1: a lot to do.

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Speaker 3: And is it still.

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Speaker 4: Too big of a bank, too sprawling of the bank.

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Speaker 4: They kind of do everything for everybody everywhere. That's kind

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Speaker 4: of been in one of the critiques, and I think

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Speaker 4: Jane Fraser is trying to get some focus there, but it.

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Speaker 3: Just takes a long time to move a ship.

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Speaker 1: But the fact of what she had in her, you know,

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Speaker 1: she looks like she looks very good because of the

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Speaker 1: stock performance is a novalidate whether it's deserved or not.

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Speaker 1: Her performance it was just cheap going into the year.

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Speaker 2: You're at the Hey Adams Hotel. You have lunch four

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Speaker 2: times a week. The Secretary of treasure walks in. You're

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Speaker 2: sitting with mister Bessett. What's your number one advice to him?

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Speaker 2: Right now?

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Speaker 1: Ooh, I think I think deal with Fanny Fridday. It's

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Speaker 1: you know, the fisticuffs fight between Poulty and Bassett. I

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Speaker 1: think is all over Fanny Freddy. So I think that's

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Speaker 1: what the market's waiting for.

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Speaker 2: I can't give you my opinion. I can't give you

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Speaker 2: my opinion right now. Let's go there then. I mean,

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Speaker 2: this is really sensitive stuff and we don't do rumor

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Speaker 2: and speculation. Your whole career has been fact based as well.

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Speaker 2: He's going to prosecute what the privatization of these two

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Speaker 2: great mortgage companies and push aside the pretenders. Is that

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Speaker 2: what you're saying push aside the pretenders.

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Speaker 1: I don't know that anyone gets pushed in political types.

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Speaker 1: Oh oh, oh oh, I see what you mean. It's look,

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Speaker 1: it's a knife fight down John and DC. And so

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Speaker 1: it's like, you know, I don't believe like it's a

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Speaker 1: zero S game in politics. So whoever comes out ahead,

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Speaker 1: it's I think it's yes.

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Speaker 4: With the Federal Reserve, we had the you know, their

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Speaker 4: decision cutting twenty five basis points. How do you think

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Speaker 4: that the Federal Reserve is kind of how do you

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Speaker 4: think they're performing these days? Are they behind the curve

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Speaker 4: do you think? Or are they kind of dealing with

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Speaker 4: the data as those come up.

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Speaker 1: Well, they're not saying the S word, right, which is stagflation,

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Speaker 1: which it seems we're you know, very very close to

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Speaker 1: from a from a growth standpoint. It's I hope I'm wrong,

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Speaker 1: but it's hard to see from an inflation standpoint. You

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Speaker 1: don't see it in the hard numbers, but you see

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Speaker 1: it in anecdotal And I think what you do see

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Speaker 1: is homeowners insurance. I think insurance costs are going to

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Speaker 1: go up. So they're two. They're a couple of factors.

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Speaker 1: Number one, you know, auto insurance and homeowners insurance AUTO,

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Speaker 1: and so our homeowners insurance has gone up close to

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Speaker 1: seventy percent in the last five years, and that's been

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Speaker 1: a real sticking point in terms of affordability for seniors,

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Speaker 1: and that's why they're tapping into home equity. Auto insurance

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Speaker 1: has also gone up tremendously, tell me so, yeah, So

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Speaker 1: I think you're seeing sticky points. There's all this also

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Speaker 1: things that happen in terms of the American Rescue Act,

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Speaker 1: which subsidized healthcare premiums for everyone who's self insured. Fifty

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Speaker 1: plus percent of Americans who are self insured. The ends

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Speaker 1: at the end of the year, so healthcare premiums will

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Speaker 1: spike at the end of the year. So I think

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Speaker 1: the Fed's got to be really, really careful. I mean,

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Speaker 1: they probably did cut yesterday to save face and risk management,

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Speaker 1: because they'd get in trouble if they didn't.

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Speaker 3: They'd be blamed if they didn't.

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Speaker 4: But TVD, Meredith and your coverage. What's most interesting to

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Speaker 4: you these days? Is it the new fintech just broadly defined,

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Speaker 4: or is something else specifically you're looking at.

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Speaker 1: There are a lot of things that I think are interesting.

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Speaker 1: I think that I always think that the consumer's incredibly interesting.

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Speaker 1: The consumer had been bifurcated. I think the consumer gets

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Speaker 1: even more segmented in terms of the strength I think

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Speaker 1: student debt. So the Department of Education is now going

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Speaker 1: to start garnish as August is going to start garnishing

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Speaker 1: wages to fifteen percent of salaries. That's going to put

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Speaker 1: a sting serious delinquencies or over almost eleven percent, and

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Speaker 1: that's rising quickly. So I think you're going to see

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Speaker 1: I've always the most interested in the consumers of the data,

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Speaker 1: so granular, I think you're going to see different strains

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Speaker 1: on the consumer. The very high end will continue just

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Speaker 1: you're you know, you're some in New Jersey, where I

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Speaker 1: was born, is going to still spend robustly and carry

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Speaker 1: the economy.

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Speaker 2: So Meredith, we're going to have to leave it there.

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Speaker 2: We've got news in England as well. Thank you so much, generous,

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Speaker 2: so much.

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Speaker 3: I'm such a man.

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Speaker 2: If we come down to Washington, we got a first guest.

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Speaker 2: I mean, you know, Secretary Treasurer here, Meredith Whitney, who

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Speaker 2: do you take first? I mean, it's all there was

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Speaker 2: to it. Meredith Whitney, thank you so much for being

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Speaker 2: with some important perspective here on the ebbs and flows

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Speaker 2: of our finance