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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: Well, our headline calls it attack mode on Capitol Hill,

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Speaker 1: Wall Street bank CEOs opposing US regulators proposals for them

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Speaker 1: to raise capital. Rules proposed back in July would require

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Speaker 1: the big banks to increase their capital cushion by almost

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Speaker 1: twenty percent. This would be to ensure that they can

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Speaker 1: survive another financial crisis. Goldman Sachs CEO David Solomon testifies

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Speaker 1: here before the Senate Banking Committee.

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Speaker 3: We can always have debates at the margin as to

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Speaker 3: whether or not there are things that we can do

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Speaker 3: that can strengthen the system. But a wholesale increase of

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Speaker 3: twenty five percent capital and the largest banks with lots

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Speaker 3: of individual provisions that affect different activities, I think is

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Speaker 3: ultimately punitive to economic growth and doesn't strike the right

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Speaker 3: cost benefit analysis.

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Speaker 1: David Solomon. One by one, banking executives confidently told lawmakers

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Speaker 1: their institutions were safe. They say that everyday Americans will

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Speaker 1: ultimately pay the price if these tougher rules are enacted.

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Speaker 2: Well, certainly was a big day for Advanced micro Devices.

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Speaker 2: The company unveiled its new MI I three hundred accelerator chip.

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Speaker 2: AMD CEO Lisa Sue told us the market for these

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Speaker 2: types of semiconductors will climb to more than four hundred

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Speaker 2: billion dollars over the next four years. Has who told

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Speaker 2: us these chips will help develop artificial intelligence models.

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Speaker 4: You know, if you're running these models, you can actually

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Speaker 4: run more models, or you can run larger models. You

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Speaker 4: know with Mi I three hundred and right now, you

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Speaker 4: know the key to AI is GPU compute. I mean,

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Speaker 4: that is absolutely what everybody says, and so we're here

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Speaker 4: to provide lots of GPU compute.

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Speaker 2: That is AMD CEO Lisa Sue. By the way, AMD's

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Speaker 2: chip launch is one of the most important in the

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Speaker 2: company's five decade history, and AMD is hoping these new

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Speaker 2: chips will help it compete better with Nvidia in that

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Speaker 2: red heart market for AI accelerators. Despite the news, today,

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Speaker 2: AMD shares were down about one point three percent in

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Speaker 2: the regular session.

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Speaker 1: Brian Moody's Investors' Service is now going after Chinese financial

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Speaker 1: institutions Bloomberg's and Kate's with the story.

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Speaker 5: Moody's cut us out look for eight Chinese banks to

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Speaker 5: negative a day after unveiling a bearer's stance on the

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Speaker 5: nation's sovereign bonds due to concerns about debt levels. Moody's

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Speaker 5: also lowered its outlook on Hong Kong and Macau and

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Speaker 5: placed twenty six local government financing vehicles on review for

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Speaker 5: down grade. China has been defending its debt status, with

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Speaker 5: state media running articles citing experts who denounced Moody's understanding

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Speaker 5: of the economy. In Washington and Kate's Bloomberg Radio.

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Speaker 2: Well, the European Union is expected to take a tough

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Speaker 2: line with China when talks begin later today in Beijing.

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Speaker 2: We have more from bloombergs ofvon Men in Hong Kong.

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Speaker 6: It's the first in person summit in four years, sources

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Speaker 6: tell Bloomberg. The EU will push hard on issues ranging

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Speaker 6: from industry over capacity, market access, EV subsidies and data flows.

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Speaker 6: The EU wants to level the playing field, which China

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Speaker 6: is expected to push back on. The EU probe into subsidies,

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Speaker 6: and it will show opposition to the EU's drive to

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Speaker 6: d risk with Beijing on over capacity. Europe is concerned

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Speaker 6: that Beijing's flagging economy will push China into exporting even

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Speaker 6: more and that would threaten critical industries in Europe and

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Speaker 6: their workers. Ukraine is also expected to be a critical

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Speaker 6: issue in Hong Kong. I'm Yvon Mann Bloomberg Radio.

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Speaker 1: In the meantime, Italy has officially told China Now that

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Speaker 1: it will exit the Belton Road initiative. Bloomberg's Juan Wong

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Speaker 1: has the story from Hong Kong.

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Speaker 7: Italian Prime Minister Giorgio Maloney has been preparing for months

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Speaker 7: to put an end to her country's involvement. Italy's Foreign

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Speaker 7: minister said the pact has not produced the decired effects

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Speaker 7: and is no longer a priority. Italy was the only

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Speaker 7: G seven country to join the pact as it looked

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Speaker 7: to boost economic ties with China, but it has been

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Speaker 7: caught in the middle of escalating tensions among Washington, Brussels

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Speaker 7: and Beijing.

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Speaker 2: Italy had until.

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Speaker 7: The end of the year to decide whether it would

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Speaker 7: renew as involvement after its participation expires in March. The

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Speaker 7: exit now may risk angering Beijing. In Hong Kong, Join

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Speaker 7: Wong Bloomberg Radio and.

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Speaker 2: From the Bloomberg terminal elon Musk SpaceX has initiated discussions

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Speaker 2: about selling insiders shares at a price that we are

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Speaker 2: told would value the closely held company at around one

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Speaker 2: hundred and seventy five billion dollars or.

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Speaker 1: More time now for Global News. As an in, Biden's

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Speaker 1: request for Ukraine and Israeli funding has been blocked in

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Speaker 1: the Senate at back to with that story and more

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Speaker 1: from the San Francisco nine sixty News remt.

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Speaker 8: Yeah, that's right, Brian did not make it very far.

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Speaker 8: Block kept the aid package from even advancing to the floor.

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Speaker 8: Republicans have insisted, of course, that four and eight must

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Speaker 8: be paired with major border security policy changes. They've not

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Speaker 8: reached consensus, but the White House says it is not

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Speaker 8: time to cut aid for Ukraine and something will be

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Speaker 8: done and go out now. National Security Council Coordinator John Kirby.

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Speaker 9: This package includes more artillery munition to help Ukraine defend

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Speaker 9: their territory, and it includes more air defense capabilities to

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Speaker 9: protect Ukrainian cities in infrastructure from Russian missiles. I said

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Speaker 9: the other day, we fully expect the Russians to go

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Speaker 9: after the energy infrastructure, so this air defense capability is

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Speaker 9: meant to help them defend against those attacks.

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Speaker 8: But Kirby says this could be the last package and

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Speaker 8: less Congress acts now. Earlier in the day, President Biden

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Speaker 8: said the world is watching and that this is a

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Speaker 8: battle for freedom globally. Meantime, and the Senate Republican have

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Speaker 8: the votes to block it. And meanwhile, Kirby says the

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Speaker 8: AID is managing to get to Gaza as well.

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Speaker 9: Conducted yet another US military airlift of three thirty six

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Speaker 9: thousand pounds of food, assistance and medical supplies. I think

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Speaker 9: in the coming days you'll see yet another US military

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Speaker 9: airlift of aid and assistants going into Egypt then to

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Speaker 9: get trucked into.

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Speaker 8: Gaza, and says it's up to AMAS as to whether

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Speaker 8: more can get in this. Israeli Prime Minister Benjamin Netanyaho

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Speaker 8: says Israeli forces have so rounded the home of the

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Speaker 8: leader of Amas, Yaya Sinmoar, and five Democratic Senators are

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Speaker 8: urging the Biden administration to impose more oversight over Israel's

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Speaker 8: use of US supplied weaponry to make sure they don't

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Speaker 8: cause more civilian casualties. Mass shooting at the University of Nevada,

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Speaker 8: Las Vegas, head of University Police Adam Garcia says the

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Speaker 8: situation is contained.

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Speaker 2: Officers immediately responded engates the suspect.

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Speaker 9: The suspect suspect.

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Speaker 6: At this point is deceased.

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Speaker 8: There are multiple victims, though the shooter was at Abeam Hall,

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Speaker 8: home of UNLV's Lee Business School, near the student union.

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Speaker 8: Leaders of the nation's biggest banks on Capitol Hill today

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Speaker 8: and an interesting alliance has formed now. Senator Elizabeth Warren

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Speaker 8: says Congress as well as a backing industry, very concerned

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Speaker 8: about Crypto funding every kind of criminal activity, including funds

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Speaker 8: in Iran and funding terrorism.

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Speaker 10: When it comes to banking policy, I am not usually

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Speaker 10: holding hands with the CEO those of multi billion dollar banks,

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Speaker 10: but this is a matter of national security.

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Speaker 8: And as we're reporting, JP Morgan Chase CEO Jamie Diamond

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Speaker 8: says if he was in position to do so, he

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Speaker 8: would shut Crypto down. Former House Speaker Kevin McCarthy as

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Speaker 8: an ounceday he is going to resign from Congress. We'll

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Speaker 8: have more on that later. At this half hour, the

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Speaker 8: last GOP debate before the Iowa Caucus tonight, and Trump

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Speaker 8: critics are focusing on his appearance on Fox last night

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Speaker 8: at a town hall with Sean Hannity, where he said

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Speaker 8: he would only be a dictator for one day. Day one.

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Speaker 8: He says, you're not going to be a dictator, are you?

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Speaker 3: I said no, no, noe, other than day one.

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Speaker 8: Yeah, and referenced al Capone.

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Speaker 1: I often say al Capone.

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Speaker 3: He was one of the greatest of all time if

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Speaker 3: you like criminals. He was a mob.

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Speaker 8: Boss, the likes of which Scarface they call him.

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Speaker 3: And he got indicted once.

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Speaker 8: I got indicted four times. So back to dictator. No,

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Speaker 8: except for day one.

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Speaker 9: He's going to except the day one meaning I want

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Speaker 9: to close.

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Speaker 1: The border and I want a drill.

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Speaker 8: That's not all. That's right. Global News twenty four hours

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Speaker 8: a day and whenever you want with Bloomberg News Now

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Speaker 8: in San Francisco. I'm at Baxter and this is.

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Speaker 2: Bloomberg Daybreak Asia And a closer look now at our

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Speaker 2: top story, the heads of the big banks on Wall

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Speaker 2: Street taking aim their most direct swing yet at plans

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Speaker 2: in Washington to force the big banks to set aside

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Speaker 2: more cash as a buffer against losses. Let's bring in

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Speaker 2: Bloomberg Sally Bakewell, Bloomberg US finance team leader, on what

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Speaker 2: was happening today regarding this Wall Street testimony, Sally, pleasure

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Speaker 2: to have you on the program. So much of this

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Speaker 2: feels like it's left over, it's yet to be resolved

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Speaker 2: from what happened as a result of the global financial crisis.

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Speaker 11: Yeah, that's definitely true. I mean, well, for months, even years,

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Speaker 11: banks have lamented that more regulation, lamented more regulation is

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Speaker 11: you know, problematic for them and can curb their lending

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Speaker 11: to underrepresentative communities or hinder them lending to low income borrowers.

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Speaker 11: And when regulators unveiled these new capital rule proposals in July,

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Speaker 11: which would require them to set aside yet even more capital,

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Speaker 11: as much as twenty percent more as a capital cushion

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Speaker 11: to guard against losses, well that just intensified their arguments

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Speaker 11: and it also unleashed lobbying blits on behalf of the banks.

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Speaker 11: Now they have argued over and over again that this

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Speaker 11: will curb their ability to lend, and they've taken their

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Speaker 11: fight to the mainstream recently. Even they've commanded advertisements on TV,

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Speaker 11: They've peppered the financial press with ads against these capital rules.

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Speaker 11: And we heard these arguments all again today. Jamie Diamond,

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Speaker 11: the city CEO of JP Morgan, he said it could

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Speaker 11: hurt Americans. He mentioned Montana pension plans. We heard from

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Speaker 11: the City CEO Jane Fraser, who invoked farmers and said

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Speaker 11: it could genuinely impact their ability to do business in

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Speaker 11: a stable fashion. And these are pretty emotional arguments that

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Speaker 11: they're using with lawmakers who can represent voting constituents.

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Speaker 1: You could see this as you know, negotiating going on

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Speaker 1: behind the scenes, but instead the bankers here in this

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Speaker 1: particular environment going on the offensive. And that's a big change.

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Speaker 1: I mean, they've been on the defense really for the

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Speaker 1: last fifteen years, so we're curious about the effect that

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Speaker 1: it's having. It seems like Republicans are buying into it,

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Speaker 1: but what about Congress as.

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Speaker 11: A whole, right, They have been on the defense for

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Speaker 11: a number of years, and this is the time where

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Speaker 11: they're really taking this to lawmakers, I think, underscoring quite

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Speaker 11: how strongly they feel about these proposals and their arguments.

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Speaker 11: By the way, perhaps you know, they could be criticized

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Speaker 11: for not being entirely sort of genuine. They say that

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Speaker 11: this will cause them to have to pull back on mortgages. Well, actually,

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Speaker 11: the biggest mortgage providers in the country are no longer

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Speaker 11: the biggest banks. And indeed, that sort of the Democrat

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Speaker 11: argument that we hear from Shared Brown is that actually

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Speaker 11: banks will well be able to make the loans that

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Speaker 11: they're saying they won't be able to make to small businesses,

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Speaker 11: to mortgage, to lower income borrowers, to underserve communities. So yeah,

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Speaker 11: but that they're invoking these more emotional arguments because the

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Speaker 11: court of public opinion isn't going to perhaps want to

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Speaker 11: hear or be so sympthetic to perhaps what they really

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Speaker 11: worry about, which is the impact of the capital rules

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Speaker 11: on their markets business like trading.

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Speaker 2: What about non bank players and I'm thinking of not

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Speaker 2: to use a pejorative term here, the shadow banking industry.

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Speaker 2: When you talk about firms like Apollo or even Blackstone,

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Speaker 2: could they be the beneficiaries.

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Speaker 11: Absolutely, And this is another part of the bank CEO's arguments.

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Speaker 11: They say that these rules, because they will restrain again

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Speaker 11: their lending, that will push a lot of the lending

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Speaker 11: activity to the non banks, to the shadow banks, who

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Speaker 11: are of course outside of the regulator purview. And they

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Speaker 11: use pretty strong language about this. See the CEO of

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Speaker 11: Goldman Sax, David Solomon, said that this could lead to

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Speaker 11: financial shocks and Jamie Diamond he said that this will

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Speaker 11: cause a lot of risks to be unseen, and of

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Speaker 11: course that's the sort of thing that happened just a

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Speaker 11: few months back in March, where we had this huge

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Speaker 11: unseen excessive interest rate risk.

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Speaker 1: Even though we say in our story that the bankers

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Speaker 1: weren't on the offensive, we also say that the tone

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Speaker 1: was generally less combative than what we've seen in the past.

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Speaker 1: But is it fair to say that there's still a

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Speaker 1: lot of politics involved.

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Speaker 11: Definitely a lot of politics involved, and you know, how

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Speaker 11: the election plays out next year will directly impact what

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Speaker 11: these rules look like. And these rules have a huge

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Speaker 11: impact on the economy. But yeah, you're absolutely right that

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Speaker 11: it was a less combative tone. We had Senator Elizabeth Warren,

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Speaker 11: who is usually the harshest of the bank critics and

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Speaker 11: really goes out guns blazing. Well, she focused a lot

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Speaker 11: of her questions on the crypto industry, which doesn't have

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Speaker 11: that much to do with banks, and whether the industry

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Speaker 11: should abide by the same anti money laundering rules that

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Speaker 11: banks do, and she won you know, wholehearted agreement from

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Speaker 11: the bank's CEOs, which is an unusual and rare moment

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Speaker 11: of unity. But also, you know, important to note the

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Speaker 11: banking industry, it's cleaned up a lot of the problems

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Speaker 11: that emerged in previous hearings, so such as overdraft fees

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Speaker 11: or other sort of junk fees as they're called, lots

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Speaker 11: of those have been scrapped and those used to incur

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Speaker 11: the wrath of lawmakers. And of course banks have also

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Speaker 11: raised minimum wages, like Bank of America did recently. And

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Speaker 11: I think you know that some of those issues that

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Speaker 11: used to create a lot of the sparks have fallen

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Speaker 11: away a little bit.

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Speaker 2: So as I understand that these higher standards are known

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Speaker 2: as the basal three end game, I'm wondering how this

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Speaker 2: would position US banks, the big banks, with their global competitors.

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Speaker 11: That's a really great question. These rules, the bank CEOs

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Speaker 11: say they go far beyond what their European competitors are doing.

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Speaker 11: They say that they are more stringent, that they penalize

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Speaker 11: the banks more, that banks have to set up American

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Speaker 11: banks will have to set aside more capital. And again

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Speaker 11: David Solomon, he said that this could really damage the

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Speaker 11: the competitiveness of capital markets. There's also a timeline issue.

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Speaker 11: They're supposed to be doing these things to some degree

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Speaker 11: in a sort of contemporaneous fashion, but If the US

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Speaker 11: slips behind because these proposals are getting so much pushback

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Speaker 11: and we've already had to extend the comment period to

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Speaker 11: the end of January, well this might impact how European

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Speaker 11: regulators are trying to enforce their own versions of buzzletree.

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Speaker 2: All right, Sally, good stuff. Thank you so much for

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Speaker 2: being with us, Sally Bakewell, as a Bloomberg US Finance

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Speaker 2: team leader.

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