1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? The deficit is a real issue. To use 3 00:00:06,400 --> 00:00:09,800 Speaker 1: economy continues to send mixed signals to the financial stories 4 00:00:09,800 --> 00:00:12,680 Speaker 1: that cheap our world fed action to con concerns over 5 00:00:12,760 --> 00:00:16,240 Speaker 1: dollar liquidity and encouraging China data the five hundred wealthiest 6 00:00:16,239 --> 00:00:18,360 Speaker 1: people in the world. Through the eyes of the most 7 00:00:18,480 --> 00:00:22,520 Speaker 1: influential voices Larry Summers, the former Treasury Secretary, star Ward CEO, 8 00:00:22,640 --> 00:00:26,360 Speaker 1: Kevin Johnson sec Chairman J Clayton. Bloomberg Wall Street Week 9 00:00:26,480 --> 00:00:30,440 Speaker 1: with David Weston from Bloomberg Radio. Another week of waiting 10 00:00:30,720 --> 00:00:34,920 Speaker 1: for stimulus, for Brexit, and for COVID to peak. Welcome 11 00:00:34,960 --> 00:00:38,320 Speaker 1: to Bloomberg Wall Street Week. I'm David Weston. Getting a 12 00:00:38,400 --> 00:00:41,120 Speaker 1: vaccine that works in so short a time maybe nothing 13 00:00:41,159 --> 00:00:43,559 Speaker 1: short of a miracle, but now that we're on the 14 00:00:43,600 --> 00:00:46,479 Speaker 1: cusp of getting it, Katherine Baker, dean of the Harris 15 00:00:46,520 --> 00:00:49,200 Speaker 1: School of Public Policy at the University of Chicago, says, 16 00:00:49,240 --> 00:00:51,879 Speaker 1: we made in another miracle to get it distributed to 17 00:00:51,920 --> 00:00:55,040 Speaker 1: those who need it. It would be a herculean task 18 00:00:55,280 --> 00:00:58,080 Speaker 1: under any circumstances, but I think it's made all the 19 00:00:58,120 --> 00:01:00,520 Speaker 1: more challenging by the fact that this is the same 20 00:01:00,560 --> 00:01:02,880 Speaker 1: health care system that's going to have to be caring 21 00:01:02,960 --> 00:01:06,360 Speaker 1: for lots and lots of people who still get COVID. 22 00:01:06,720 --> 00:01:08,560 Speaker 1: We're gonna need to do all that we can to 23 00:01:08,600 --> 00:01:12,800 Speaker 1: suppress transmission of the disease during this period and also 24 00:01:12,959 --> 00:01:16,520 Speaker 1: to introduce new therapeutics. It's going to be months and 25 00:01:16,560 --> 00:01:21,240 Speaker 1: months and months before everyone is vaccinated, and in that time, unfortunately, 26 00:01:21,440 --> 00:01:24,119 Speaker 1: hundreds of thousands of people are going to be getting 27 00:01:24,160 --> 00:01:27,280 Speaker 1: COVID at this point, two hundred thousand a day. What 28 00:01:27,480 --> 00:01:30,440 Speaker 1: is that require of the system? I mean, is that money. 29 00:01:30,560 --> 00:01:33,720 Speaker 1: There's talk about further money coming from Congress. Is it people? 30 00:01:34,000 --> 00:01:37,040 Speaker 1: Do we have enough trained personnel to actually be administering 31 00:01:37,280 --> 00:01:39,360 Speaker 1: this kind of system, As you say, it's vaccines plus 32 00:01:39,440 --> 00:01:42,520 Speaker 1: your therapeutics plus dealing with people who have the disease. Yeah, 33 00:01:42,560 --> 00:01:44,560 Speaker 1: I think it takes money, but I think you're right 34 00:01:44,640 --> 00:01:47,160 Speaker 1: that people are probably going to be in the shortest 35 00:01:47,160 --> 00:01:51,280 Speaker 1: supply right now. Our healthcare system is incredibly strained just 36 00:01:51,520 --> 00:01:55,120 Speaker 1: caring for the people who have COVID, So adding on 37 00:01:55,400 --> 00:01:58,040 Speaker 1: the layer of distribution of vaccine is going to be 38 00:01:58,040 --> 00:02:01,600 Speaker 1: an added complication by unfortunately, the kind of trainting that's 39 00:02:01,640 --> 00:02:06,160 Speaker 1: required to administer a vaccine is not nearly as intensive 40 00:02:06,200 --> 00:02:08,560 Speaker 1: as the kind of training that's required to be qualified 41 00:02:08,560 --> 00:02:10,840 Speaker 1: to care for somebody in the I see you. So 42 00:02:10,880 --> 00:02:13,280 Speaker 1: the hope is that we're going to be reducing the 43 00:02:13,360 --> 00:02:15,800 Speaker 1: number of people in the hospital at the same time 44 00:02:15,800 --> 00:02:19,280 Speaker 1: that we're ramping up vaccine distribution. But we can't take 45 00:02:19,320 --> 00:02:24,639 Speaker 1: our eyes off of suppressing transmission, the masking, the washing hands, 46 00:02:24,639 --> 00:02:27,799 Speaker 1: and keeping distance. If we forget about those while we 47 00:02:27,919 --> 00:02:30,840 Speaker 1: focus on vaccine administration, we're going to be in big problem. 48 00:02:31,200 --> 00:02:34,840 Speaker 1: I also wonder whether, as happened last spring, frankly, some 49 00:02:35,000 --> 00:02:37,200 Speaker 1: of the people who are most vulnerable, most hit, are 50 00:02:37,200 --> 00:02:39,080 Speaker 1: the people with the least resources to deal with it. 51 00:02:39,360 --> 00:02:42,400 Speaker 1: We're talking about low income people, we're talking about noority groups, 52 00:02:42,400 --> 00:02:45,760 Speaker 1: particularly in urban centers, but also for that matter, Native Americans. 53 00:02:45,919 --> 00:02:48,440 Speaker 1: We've had disproportionate problems. These people didn't have that great 54 00:02:48,520 --> 00:02:51,320 Speaker 1: healthcare system supporting them to begin with, didn'y. This is 55 00:02:51,440 --> 00:02:55,120 Speaker 1: compounding all sorts of disparities in our system. Of course, 56 00:02:55,160 --> 00:02:58,800 Speaker 1: in healthcare, where the people with the most health vulnerabilities 57 00:02:59,040 --> 00:03:03,239 Speaker 1: such as diet, abetes, high blood pressure, they're the most 58 00:03:03,320 --> 00:03:06,840 Speaker 1: likely to get COVID and the least likely to have 59 00:03:07,000 --> 00:03:10,480 Speaker 1: access to the healthcare resources. But that's only part of it. 60 00:03:10,520 --> 00:03:13,640 Speaker 1: There are also the economic disparities that line up as well. 61 00:03:14,040 --> 00:03:16,720 Speaker 1: People who are least likely to be able to do 62 00:03:16,760 --> 00:03:20,240 Speaker 1: their jobs from their homes are also and that's more 63 00:03:20,280 --> 00:03:22,360 Speaker 1: likely to be exposed to the disease. Are also the 64 00:03:22,400 --> 00:03:25,080 Speaker 1: ones with the biggest disease burden and then the fewest 65 00:03:25,120 --> 00:03:29,840 Speaker 1: economic resources to weather a recession that's been generated by 66 00:03:29,919 --> 00:03:32,639 Speaker 1: the pandemics. So people who are losing their jobs, maybe 67 00:03:32,720 --> 00:03:37,320 Speaker 1: losing their health insurance. This is all exacerbating disparities that 68 00:03:37,400 --> 00:03:40,840 Speaker 1: line up for the most vulnerable populations. They may also 69 00:03:40,880 --> 00:03:44,520 Speaker 1: be the people least likely to take a vaccine. There 70 00:03:44,640 --> 00:03:48,360 Speaker 1: is some longstanding distrust of the health care system that 71 00:03:48,480 --> 00:03:53,160 Speaker 1: has been well justified by past inequities that I think 72 00:03:53,160 --> 00:03:56,000 Speaker 1: will make people differentially likely to take up a vaccine 73 00:03:56,000 --> 00:03:58,440 Speaker 1: that's offered. What do you make of the team that 74 00:03:58,880 --> 00:04:02,800 Speaker 1: president elected is now announced? So for the people, even 75 00:04:02,800 --> 00:04:06,080 Speaker 1: now he's announced, have clearly demonstrated that they take the 76 00:04:06,080 --> 00:04:09,760 Speaker 1: pandemic very seriously and that they're very concerned with addressing 77 00:04:09,840 --> 00:04:13,880 Speaker 1: the inequities in the system. I think the concerted attention 78 00:04:14,320 --> 00:04:18,880 Speaker 1: to the message that people receive about how to prevent transmission, 79 00:04:19,400 --> 00:04:22,799 Speaker 1: the efficacy of a vaccine, as well as the focus 80 00:04:22,839 --> 00:04:26,359 Speaker 1: on the economic disparities that have been exacerbated by the disease, 81 00:04:26,560 --> 00:04:30,560 Speaker 1: is bound to be helpful for addressing some of the 82 00:04:30,680 --> 00:04:34,000 Speaker 1: challenges that vulnerable populations have based over the last months. 83 00:04:34,240 --> 00:04:37,120 Speaker 1: How big a difference can they make at this point, Well, 84 00:04:37,160 --> 00:04:40,120 Speaker 1: I wish that somebody had a magic wand to make 85 00:04:40,160 --> 00:04:42,440 Speaker 1: all of this go away, but that is clearly just 86 00:04:42,600 --> 00:04:46,080 Speaker 1: not possible, and so I think we're in under the 87 00:04:46,120 --> 00:04:51,039 Speaker 1: best of circumstances for many months more of wrestling with 88 00:04:51,120 --> 00:04:56,279 Speaker 1: the pandemic. My hope is that by spring things will 89 00:04:56,360 --> 00:04:59,080 Speaker 1: start to look better on the disease front, and that 90 00:04:59,080 --> 00:05:02,839 Speaker 1: that will enable war economic activity. I also think all 91 00:05:02,880 --> 00:05:07,799 Speaker 1: along the way to maximize economic activity, to keep businesses open, 92 00:05:07,839 --> 00:05:11,599 Speaker 1: to keep people at work, paying attention to the disease 93 00:05:12,200 --> 00:05:15,600 Speaker 1: helps with that. And so if we had been more 94 00:05:15,760 --> 00:05:21,400 Speaker 1: consistently reducing transmission by having people keep social distance and 95 00:05:21,480 --> 00:05:24,480 Speaker 1: wearing masks, we could have had a lot more economic 96 00:05:24,520 --> 00:05:27,880 Speaker 1: activity without the surge that we're wrestling with right now. 97 00:05:28,040 --> 00:05:30,800 Speaker 1: As an expert in this area, what worries you the 98 00:05:30,880 --> 00:05:33,039 Speaker 1: most over the next two to three months. You said 99 00:05:33,080 --> 00:05:34,640 Speaker 1: until we get to the spring. People are talking to 100 00:05:34,680 --> 00:05:36,760 Speaker 1: two or three months. It's going to get worse before 101 00:05:36,760 --> 00:05:38,760 Speaker 1: it gets better. What is the thing that worries you 102 00:05:38,800 --> 00:05:42,440 Speaker 1: the very most. I think it is the fatigue with 103 00:05:42,560 --> 00:05:45,240 Speaker 1: the pandemic and with the restrictions that we've all been 104 00:05:45,279 --> 00:05:48,120 Speaker 1: talking about so much. I think it's real, and I 105 00:05:48,160 --> 00:05:51,840 Speaker 1: think that people are letting their guard down, especially around 106 00:05:51,839 --> 00:05:56,520 Speaker 1: the holidays as people focus on the coming vaccine. I 107 00:05:56,640 --> 00:05:59,040 Speaker 1: worry that the spike that we're seeing is going to 108 00:05:59,160 --> 00:06:01,479 Speaker 1: overwhelm the healthcare system and we're gonna end up with 109 00:06:01,640 --> 00:06:04,359 Speaker 1: much more loss of life and well being that we 110 00:06:04,400 --> 00:06:06,800 Speaker 1: otherwise would have had. We also don't know what the 111 00:06:06,880 --> 00:06:10,680 Speaker 1: long term consequences of COVID are there. We're learning more 112 00:06:10,760 --> 00:06:15,440 Speaker 1: about the long haulers, people who wrestle with u symptoms 113 00:06:15,480 --> 00:06:20,320 Speaker 1: of the disease, or downstream consequences for months afterwards. It's 114 00:06:20,360 --> 00:06:22,960 Speaker 1: been around for less than a year, so we don't 115 00:06:23,040 --> 00:06:26,680 Speaker 1: know what two, three, four years out looks like. So 116 00:06:27,040 --> 00:06:30,280 Speaker 1: the more we can reduce the spread of the disease now, 117 00:06:30,720 --> 00:06:34,200 Speaker 1: not only the more economic activity and well being can 118 00:06:34,200 --> 00:06:37,440 Speaker 1: we have now, but perhaps health consequences in the future 119 00:06:37,480 --> 00:06:39,960 Speaker 1: can be a birth thanks to Dean Katherine Baker of 120 00:06:40,000 --> 00:06:43,279 Speaker 1: the Harris School of Public Policy at the University of Chicago. 121 00:06:44,040 --> 00:06:47,560 Speaker 1: Coming up, SEC Chairman j Clayton on what he's accomplished 122 00:06:47,600 --> 00:06:50,480 Speaker 1: during his tenure and what is left to be done 123 00:06:51,080 --> 00:06:59,440 Speaker 1: That's next on Wall Street Weight on Bloomberg. This is 124 00:06:59,440 --> 00:07:03,839 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 125 00:07:04,120 --> 00:07:06,760 Speaker 1: Jay Clayton is nearing the end of his four years 126 00:07:06,800 --> 00:07:09,840 Speaker 1: as Chairman of the SEC, leaving behind a record number 127 00:07:09,840 --> 00:07:14,200 Speaker 1: of new regulations and over fourteen billion dollars in monetary remedies. 128 00:07:14,680 --> 00:07:17,640 Speaker 1: One of his goals was to reinforce the attractiveness of 129 00:07:17,640 --> 00:07:20,560 Speaker 1: the public markets in raising capital. So it's only fitting 130 00:07:20,600 --> 00:07:23,520 Speaker 1: that even as he counts down the days until his departure, 131 00:07:23,800 --> 00:07:26,440 Speaker 1: he saw this week the remarkable I d os of 132 00:07:26,520 --> 00:07:30,600 Speaker 1: door Dash and then Airbnb, something we asked about even 133 00:07:30,640 --> 00:07:34,120 Speaker 1: as they were happening. Well, David, in this in this job, 134 00:07:34,280 --> 00:07:37,160 Speaker 1: you always have to be active, because our markets are 135 00:07:37,200 --> 00:07:42,200 Speaker 1: ever active. If we're not modifying, updating, modernizing, as I 136 00:07:42,280 --> 00:07:46,400 Speaker 1: like to say, our regulations, we're falling behind. And so 137 00:07:46,840 --> 00:07:49,440 Speaker 1: you have to be activists. And what we've what we've 138 00:07:49,480 --> 00:07:52,280 Speaker 1: tried to do is be activists for the benefit of 139 00:07:52,280 --> 00:07:57,480 Speaker 1: our main street investors, really getting main street investors better products, cheaper, 140 00:07:58,160 --> 00:08:01,480 Speaker 1: making sure they have better protections, and in the event 141 00:08:01,600 --> 00:08:06,360 Speaker 1: that our main street investors unfortunately fall victim UH to fosters, 142 00:08:06,440 --> 00:08:09,760 Speaker 1: getting them their money back as quickly as we can UM. 143 00:08:09,840 --> 00:08:13,520 Speaker 1: And in addition, trying to modernize our our framework around 144 00:08:13,520 --> 00:08:17,400 Speaker 1: the functioning of markets so that markets function efficiently UM 145 00:08:17,400 --> 00:08:19,720 Speaker 1: in a modern age. And you know, yeah, you have 146 00:08:19,800 --> 00:08:21,800 Speaker 1: to be you have to be engaged to do those 147 00:08:21,840 --> 00:08:25,440 Speaker 1: things you've put down as one of your principles. That 148 00:08:25,600 --> 00:08:27,960 Speaker 1: really a protection of the main street investor as you 149 00:08:28,000 --> 00:08:31,640 Speaker 1: call them. You also sometimes say long term main street investor. 150 00:08:31,680 --> 00:08:34,480 Speaker 1: You add that in there. What can the SEC do 151 00:08:34,840 --> 00:08:38,640 Speaker 1: to address the issue of long term versus short term? 152 00:08:38,880 --> 00:08:41,240 Speaker 1: It's a terrific question. It's a it's a question not 153 00:08:41,320 --> 00:08:45,600 Speaker 1: just for the SEC, but but across our economy. UM. Look, 154 00:08:45,800 --> 00:08:49,080 Speaker 1: markets thirst for information, the thirst for information by the 155 00:08:49,160 --> 00:08:52,120 Speaker 1: micro second. So markets are always going to be focusing 156 00:08:52,160 --> 00:08:56,280 Speaker 1: on short term changes. The culture of investing for the 157 00:08:56,320 --> 00:09:00,160 Speaker 1: long term is something that we need to foster across 158 00:09:00,200 --> 00:09:04,480 Speaker 1: are regulatory infrastructure. The SEC is is here to help 159 00:09:04,520 --> 00:09:07,720 Speaker 1: with the way that we try to talk about trends 160 00:09:07,760 --> 00:09:11,720 Speaker 1: on certainties, opportunities, getting companies to disclose that kind of 161 00:09:11,760 --> 00:09:14,720 Speaker 1: forward looking information. I think disclosure of that type of 162 00:09:14,760 --> 00:09:19,600 Speaker 1: forward looking information helps foster a long term attitude. But David, 163 00:09:19,640 --> 00:09:21,600 Speaker 1: one thing I've learned in Washington is that is that 164 00:09:21,679 --> 00:09:23,720 Speaker 1: this needs to be sort of a whole of government 165 00:09:23,720 --> 00:09:27,880 Speaker 1: approach to more long term ism. Uh. For for investment, 166 00:09:28,400 --> 00:09:30,760 Speaker 1: are you concerned at all about the growth of private 167 00:09:31,240 --> 00:09:34,079 Speaker 1: h private capital as opposed to public capital, because there's 168 00:09:34,080 --> 00:09:35,880 Speaker 1: an awful lot that's being done on the private side 169 00:09:35,880 --> 00:09:38,400 Speaker 1: now that used to be done in publicly. Well, let 170 00:09:38,400 --> 00:09:41,199 Speaker 1: me say this. People talk about that as a dichotomy. 171 00:09:41,360 --> 00:09:44,600 Speaker 1: It's not a dichotomy. If you're a company that say, 172 00:09:44,679 --> 00:09:47,640 Speaker 1: under pick a number, David, a hundred million, two hundred million, 173 00:09:48,240 --> 00:09:52,280 Speaker 1: the private markets are really your only viable source of 174 00:09:52,720 --> 00:09:56,440 Speaker 1: growth capity. So we need to preserve that private market 175 00:09:56,520 --> 00:09:59,480 Speaker 1: and foster that private market. It is part of the 176 00:09:59,559 --> 00:10:02,800 Speaker 1: dynam ism of America. It's part of innovation. Then you 177 00:10:02,840 --> 00:10:05,800 Speaker 1: get above that two hundred million dollar valuation level, you 178 00:10:05,800 --> 00:10:08,040 Speaker 1: get up into the types of companies that you were 179 00:10:08,120 --> 00:10:12,640 Speaker 1: just talking about there, you do want to encourage those 180 00:10:12,640 --> 00:10:15,760 Speaker 1: companies to become public companies for the reasons we talked 181 00:10:15,800 --> 00:10:20,079 Speaker 1: about greater participation UM from the American retail investor, and 182 00:10:20,280 --> 00:10:22,480 Speaker 1: and that's how I look at it. You, but we 183 00:10:22,679 --> 00:10:27,280 Speaker 1: need vibrant private markets up through and well above that 184 00:10:27,360 --> 00:10:30,520 Speaker 1: two hundred million dollar level. It's so contributes to the 185 00:10:30,640 --> 00:10:34,800 Speaker 1: nimble nature of American capitalism as you pursued your goal 186 00:10:34,960 --> 00:10:38,160 Speaker 1: of really protecting the long term mainstream investor. One thing 187 00:10:38,200 --> 00:10:39,720 Speaker 1: you talked about was I think you referred to as 188 00:10:39,760 --> 00:10:43,320 Speaker 1: corporate hygiene, one aspect of which is insider trading. And 189 00:10:43,320 --> 00:10:44,839 Speaker 1: I have a very specific question because you had to 190 00:10:44,880 --> 00:10:48,120 Speaker 1: deal with a COVID uh pandemic which none of us 191 00:10:48,240 --> 00:10:50,680 Speaker 1: ever thought we'd anticipate, and affects your business as well. 192 00:10:50,840 --> 00:10:53,520 Speaker 1: Have you seen instances of questions at least being raised 193 00:10:53,559 --> 00:10:56,960 Speaker 1: about insiders perhaps selling securities and some of the companies 194 00:10:57,040 --> 00:11:01,120 Speaker 1: that could benefit from vaccine or treatment. Sure, David, Look, 195 00:11:01,200 --> 00:11:04,199 Speaker 1: when you have any time you have UM a new 196 00:11:04,280 --> 00:11:08,199 Speaker 1: information environment, and COVID has certainly created a new information 197 00:11:08,360 --> 00:11:13,080 Speaker 1: environment across many companies, including UM, most notably pharmaceutical companies. 198 00:11:13,440 --> 00:11:17,920 Speaker 1: You have the much greater risk that there's an asymmetry 199 00:11:17,960 --> 00:11:21,920 Speaker 1: of information between the company's insiders and the market more generally, 200 00:11:22,280 --> 00:11:25,559 Speaker 1: and in those circumstances, you know, companies need to up 201 00:11:25,559 --> 00:11:28,240 Speaker 1: their game. They need to up up their controls to 202 00:11:28,480 --> 00:11:32,000 Speaker 1: ensure that no one is taking advantage of or I 203 00:11:32,000 --> 00:11:35,559 Speaker 1: would say, even be perceived to be taking advantage of 204 00:11:35,760 --> 00:11:39,000 Speaker 1: that kind of information asymmetry. And now we've been very 205 00:11:39,080 --> 00:11:43,240 Speaker 1: vocal about this. Follow your internal procedures, you know, have 206 00:11:43,440 --> 00:11:45,800 Speaker 1: your have your checks with your general counsel's office on 207 00:11:45,840 --> 00:11:47,960 Speaker 1: whether it's appropriate to be selling stock. And then just 208 00:11:48,000 --> 00:11:51,240 Speaker 1: ask yourself, does this look right or not? I mean, look, 209 00:11:51,520 --> 00:11:54,240 Speaker 1: we're going to get through this, I believe, um, you know, 210 00:11:54,440 --> 00:11:57,400 Speaker 1: and if you're in it for the long term. Um. 211 00:11:57,440 --> 00:11:59,439 Speaker 1: Now I'm not telling people you have to, but think 212 00:11:59,440 --> 00:12:02,080 Speaker 1: about stay for the long term. M John. I want 213 00:12:02,120 --> 00:12:03,720 Speaker 1: to look forward here just a little bit and some 214 00:12:03,800 --> 00:12:06,480 Speaker 1: things that will actually come up after you've left office, 215 00:12:06,720 --> 00:12:08,200 Speaker 1: and one of them is in the area of E. 216 00:12:08,360 --> 00:12:11,040 Speaker 1: S G. You've spoken out about that quite a few times, environmental, social, 217 00:12:11,040 --> 00:12:13,000 Speaker 1: and government, saying they're not all the same sort of thing. 218 00:12:13,040 --> 00:12:15,840 Speaker 1: You refer to Kevin Kenneth Arrow, your favorite economist in 219 00:12:15,840 --> 00:12:18,120 Speaker 1: that connection. But I want to talk actually about governance, 220 00:12:18,200 --> 00:12:21,240 Speaker 1: not the environmental part. There's a proposal now from Nasdaq 221 00:12:21,320 --> 00:12:24,920 Speaker 1: basically to impose some diversity requirements on board. That's not 222 00:12:24,960 --> 00:12:26,720 Speaker 1: gonna come up in your tenure. But if you were 223 00:12:26,720 --> 00:12:29,120 Speaker 1: giving some private advice to your successor, would you be 224 00:12:29,160 --> 00:12:31,160 Speaker 1: inclined to say that's a good idea. It would be 225 00:12:31,200 --> 00:12:34,079 Speaker 1: inappropriate for me to comment on it order to bind 226 00:12:34,080 --> 00:12:37,120 Speaker 1: in any way, UM, about my successor. But what I 227 00:12:37,200 --> 00:12:39,959 Speaker 1: do want to say is, UM, this is this is 228 00:12:40,000 --> 00:12:42,640 Speaker 1: an area that we we have decided at the Commission. 229 00:12:42,679 --> 00:12:44,880 Speaker 1: We are focused on this, and we've actually focused on 230 00:12:45,000 --> 00:12:48,920 Speaker 1: here at the Commission diversity, inclusion and opportunity and making 231 00:12:48,920 --> 00:12:51,120 Speaker 1: sure that we're cognizant of it through all of our 232 00:12:51,200 --> 00:12:55,400 Speaker 1: hiring decisions, UM, and the way we approached the marketplace. UM. 233 00:12:55,480 --> 00:12:58,040 Speaker 1: And I believe that we've done a good job of 234 00:12:58,120 --> 00:13:00,640 Speaker 1: shining a spotlight on the fact that in the asset 235 00:13:00,720 --> 00:13:04,960 Speaker 1: management industry, UM. You know, uh, it's not as inclusive 236 00:13:04,960 --> 00:13:07,760 Speaker 1: as it should be. Actually, the numbers are stock and 237 00:13:07,880 --> 00:13:10,880 Speaker 1: we need to do a better job of having our 238 00:13:10,920 --> 00:13:16,920 Speaker 1: asset management industry reflect UM. Uh, the diversity in our society. 239 00:13:17,360 --> 00:13:20,080 Speaker 1: You sort of mentioned this obliquely just the moment, is 240 00:13:20,080 --> 00:13:23,160 Speaker 1: it equally important for the leadership of the SEC, whoever 241 00:13:23,200 --> 00:13:26,880 Speaker 1: it is, to also reflect America more broadly. Look, I 242 00:13:26,920 --> 00:13:30,079 Speaker 1: think I think these types of things, uh, you you 243 00:13:30,440 --> 00:13:32,640 Speaker 1: have to have them in your mind as you're making 244 00:13:32,679 --> 00:13:36,200 Speaker 1: decisions that no one who's been in a in a 245 00:13:36,240 --> 00:13:39,640 Speaker 1: diverse board room or a diverse decision making body um 246 00:13:39,640 --> 00:13:43,520 Speaker 1: comes away with it without understanding that it adds um, 247 00:13:43,559 --> 00:13:47,240 Speaker 1: it enhances decision making, it makes for better decisions, and 248 00:13:47,280 --> 00:13:49,800 Speaker 1: so of course anybody who's forming that kind of body 249 00:13:50,200 --> 00:13:54,560 Speaker 1: wants a diversity of experience and perspective. Mr Sherman, I'm 250 00:13:54,559 --> 00:13:57,520 Speaker 1: gonna save the toughest one for last, I suspect, and 251 00:13:57,559 --> 00:14:01,319 Speaker 1: that's money market underformed. Because we've heard a lot about 252 00:14:01,320 --> 00:14:04,520 Speaker 1: short term funding. There's been various attempts to try to 253 00:14:04,520 --> 00:14:06,400 Speaker 1: address it. We had it as a crisis. Really, I 254 00:14:06,400 --> 00:14:07,959 Speaker 1: think it's fair to say this spring again with a 255 00:14:08,000 --> 00:14:09,920 Speaker 1: FETE had to step in. We don't seem to have 256 00:14:10,040 --> 00:14:11,640 Speaker 1: arms arms right. I talked with Dan to Roll, a 257 00:14:11,720 --> 00:14:14,800 Speaker 1: former fit UH member, recently, and he said he thinks 258 00:14:14,800 --> 00:14:16,400 Speaker 1: it's up to the SEC in the next round to 259 00:14:16,400 --> 00:14:19,120 Speaker 1: do that. What could be done on the short term 260 00:14:19,120 --> 00:14:24,040 Speaker 1: funding front, Well, you know, you as usual you you 261 00:14:24,120 --> 00:14:26,480 Speaker 1: frame this in the right way, which is, you know, 262 00:14:26,600 --> 00:14:29,120 Speaker 1: the short term funding markets and the money markets are 263 00:14:29,160 --> 00:14:33,480 Speaker 1: inexplicably length. The short term funding markets um are different 264 00:14:33,760 --> 00:14:38,600 Speaker 1: depending on the underlying instrument. So our our treasury market 265 00:14:38,920 --> 00:14:42,080 Speaker 1: and there are money market treasury funds, is far different 266 00:14:42,480 --> 00:14:47,040 Speaker 1: from the short term municipal paper market, which also has 267 00:14:47,320 --> 00:14:50,360 Speaker 1: money money market funds. That was Jake Layton, Chairman of 268 00:14:50,400 --> 00:14:54,360 Speaker 1: the SEC. Coming up, former House Majority Leader Eric Canter 269 00:14:54,760 --> 00:14:57,680 Speaker 1: on how prospects of our recovery are affecting his business 270 00:14:57,840 --> 00:15:01,120 Speaker 1: at Molis and Company. That's next on Wall Street Week 271 00:15:01,280 --> 00:15:09,880 Speaker 1: on Bloomberg. This is Bloomberg Wall Street Week with David 272 00:15:09,920 --> 00:15:13,440 Speaker 1: Weston from Bloomberg Radio. Those who thought that if anything 273 00:15:13,560 --> 00:15:16,320 Speaker 1: so horrible as the election of a Democrat should occur, 274 00:15:17,040 --> 00:15:20,840 Speaker 1: the bond market would panic and gold would soar turned 275 00:15:20,880 --> 00:15:24,920 Speaker 1: out to be suffering from just another superstition. That was 276 00:15:25,000 --> 00:15:28,840 Speaker 1: Lewis Ruckheiser on Wall Street Week back in just after 277 00:15:28,960 --> 00:15:32,440 Speaker 1: Bill Clinton was elected president. Now we have a different 278 00:15:32,480 --> 00:15:35,640 Speaker 1: Democrat elected to the presidency in a very different time. 279 00:15:36,040 --> 00:15:39,280 Speaker 1: But once again reports of possible adverse effects on business 280 00:15:39,440 --> 00:15:43,080 Speaker 1: or the markets appear to have been greatly exaggerated, as 281 00:15:43,120 --> 00:15:46,680 Speaker 1: reported by a Republican former House Majority Leader Eric Canter, 282 00:15:46,800 --> 00:15:50,040 Speaker 1: now vice chairman of Molus and Company. We had seen 283 00:15:50,040 --> 00:15:54,840 Speaker 1: a dramatic resurgence of M ANDEG globally and has been 284 00:15:54,880 --> 00:15:59,200 Speaker 1: across sectors. Uh, it is in our view and which 285 00:15:59,200 --> 00:16:01,840 Speaker 1: has been dominant about what we're calling the power middle. 286 00:16:02,160 --> 00:16:04,880 Speaker 1: You know, these are the mid marketing companies, the seven 287 00:16:04,960 --> 00:16:07,840 Speaker 1: eight hundred million dollars to four or five billion dollar companies. 288 00:16:08,400 --> 00:16:11,320 Speaker 1: Things are just very active. Obviously, there's a lot of 289 00:16:11,360 --> 00:16:15,840 Speaker 1: activity amongst the sponsors, product equity community, and really the 290 00:16:15,920 --> 00:16:19,640 Speaker 1: breadth of participation has been, as you suggest, beyond just 291 00:16:19,840 --> 00:16:23,600 Speaker 1: the COVID winners, beyond just the digital and the tech arena. 292 00:16:23,720 --> 00:16:26,120 Speaker 1: We're seeing it in the chemical arena. We're seeing in 293 00:16:26,200 --> 00:16:30,560 Speaker 1: the energy utility arena, we're seeing in TMT. So it 294 00:16:30,720 --> 00:16:34,160 Speaker 1: is broad participation. And I think the striking thing about 295 00:16:34,240 --> 00:16:37,440 Speaker 1: what we're seeing is the timing um has been a 296 00:16:37,520 --> 00:16:41,040 Speaker 1: huge factor in terms of the process, and what we're 297 00:16:41,040 --> 00:16:45,240 Speaker 1: seeing is deals get to exclusivity a lot faster than 298 00:16:45,280 --> 00:16:47,200 Speaker 1: what was otherwise the case. A lot of it is 299 00:16:47,280 --> 00:16:50,960 Speaker 1: sort of brought about by the digital infusion of communications 300 00:16:51,000 --> 00:16:53,960 Speaker 1: and the way people are interacting right now and I 301 00:16:54,000 --> 00:16:56,760 Speaker 1: also think you can attribute some of the resurgence back 302 00:16:56,800 --> 00:16:59,200 Speaker 1: to the cost of cattle and the cost of capital 303 00:16:59,400 --> 00:17:02,280 Speaker 1: is extremely low. We saw the federal reserves step in 304 00:17:02,400 --> 00:17:06,359 Speaker 1: immediately after the pandemic really hit UM. That's can that 305 00:17:06,480 --> 00:17:09,879 Speaker 1: effect has continued to benefit. I think some of this activity. 306 00:17:10,200 --> 00:17:13,840 Speaker 1: We are seeing a shift to U from stock back 307 00:17:13,840 --> 00:17:16,320 Speaker 1: to cash because of this and many of the deals 308 00:17:16,320 --> 00:17:18,960 Speaker 1: that we're involved with, and and on the upside for 309 00:17:19,040 --> 00:17:22,640 Speaker 1: investors and certainly for our clients UM, what we're seeing 310 00:17:22,680 --> 00:17:26,200 Speaker 1: is evaluations continue to go up, and evaluations that we're 311 00:17:26,200 --> 00:17:30,000 Speaker 1: seeing are even exceeding those from pre COVID level. So 312 00:17:30,160 --> 00:17:32,760 Speaker 1: all of this is sort of it's it's very interesting 313 00:17:32,800 --> 00:17:35,440 Speaker 1: given the fact that we are in this unpressed and 314 00:17:35,600 --> 00:17:39,480 Speaker 1: in one under year pandemic. And I don't I don't 315 00:17:39,520 --> 00:17:41,880 Speaker 1: say this likely, but I do think that for many 316 00:17:42,240 --> 00:17:45,120 Speaker 1: UM times seem to be very promising as people are 317 00:17:45,119 --> 00:17:48,280 Speaker 1: looking beyond the pandemic, but there is a reality here. 318 00:17:48,440 --> 00:17:51,199 Speaker 1: There are many small businesses that are really suffering. And 319 00:17:51,240 --> 00:17:54,560 Speaker 1: I do think that the sort of aftermath of all 320 00:17:54,640 --> 00:17:58,479 Speaker 1: this and maybe UM continued sort of collapse in certain 321 00:17:58,520 --> 00:18:01,840 Speaker 1: sectors UH and the ability to go and restructure to 322 00:18:01,920 --> 00:18:04,159 Speaker 1: try and allow folks to get back on their feet. 323 00:18:04,600 --> 00:18:06,840 Speaker 1: Do you see any frothiness? I mean, as you say, 324 00:18:06,880 --> 00:18:09,880 Speaker 1: the cost of capital is approaching zero's breaco matter, that's 325 00:18:09,920 --> 00:18:11,680 Speaker 1: really great if you own an asset, if you want 326 00:18:11,680 --> 00:18:14,720 Speaker 1: to buy an asset. Is there any sticker shock? There's 327 00:18:14,760 --> 00:18:18,000 Speaker 1: no question valuations. And when I speak to my partners 328 00:18:18,040 --> 00:18:21,000 Speaker 1: at Molis and Company who have been in the market's 329 00:18:21,040 --> 00:18:24,160 Speaker 1: a lot longer than I have, and in these sectors 330 00:18:24,200 --> 00:18:27,280 Speaker 1: that are surgeon um, you know, they do say, look, 331 00:18:27,359 --> 00:18:30,840 Speaker 1: things are definitely very competitive in these deals out there. 332 00:18:31,080 --> 00:18:32,600 Speaker 1: I think a lot of that has to do with 333 00:18:32,680 --> 00:18:36,720 Speaker 1: the supply of capital. That they reduced costs of capital um. 334 00:18:36,800 --> 00:18:39,960 Speaker 1: That's fueling the fact that money has got to go somewhere, 335 00:18:40,400 --> 00:18:43,240 Speaker 1: and there's plenty of potential. I think that people see 336 00:18:43,520 --> 00:18:48,800 Speaker 1: beyond just this pandemic you indicated earlier in the economy, 337 00:18:48,840 --> 00:18:52,840 Speaker 1: the fact that vaccines, you know, are here, and I 338 00:18:52,920 --> 00:18:54,520 Speaker 1: do think that light is going to be at the 339 00:18:54,600 --> 00:18:57,040 Speaker 1: end of the tunnel. Let's hope that we can minimize 340 00:18:57,080 --> 00:19:00,240 Speaker 1: the actual human casualty and focus on the act that 341 00:19:00,320 --> 00:19:03,159 Speaker 1: we can see an economy going again, and hopefully the 342 00:19:03,200 --> 00:19:06,040 Speaker 1: policymakers in Washington will be able to wrestle with this 343 00:19:06,119 --> 00:19:09,200 Speaker 1: notion of getting some of those who have been laid 344 00:19:09,240 --> 00:19:12,280 Speaker 1: off from work back into the workforce. I do think 345 00:19:12,320 --> 00:19:15,040 Speaker 1: that that's gonna be a big challenge given the transformation 346 00:19:15,840 --> 00:19:19,520 Speaker 1: that this pandemic has brought about economically. And finally, Eric, 347 00:19:19,520 --> 00:19:21,280 Speaker 1: are you picking up in any concern in the c 348 00:19:21,440 --> 00:19:24,480 Speaker 1: suite about what might happen with regulation or with taxation 349 00:19:24,760 --> 00:19:27,920 Speaker 1: in a Biden administration with David, I think that's thought 350 00:19:28,000 --> 00:19:30,160 Speaker 1: on and a lot of our conversations with our client 351 00:19:30,240 --> 00:19:32,120 Speaker 1: have to do with the fact and what to expect 352 00:19:32,160 --> 00:19:35,320 Speaker 1: in this next congress. Uh. Clearly there's been a side 353 00:19:35,359 --> 00:19:39,159 Speaker 1: of relief on the taxation issue. Again, assuming the Republicans 354 00:19:39,200 --> 00:19:42,240 Speaker 1: maintain control of the Senate, we'll see, I think, for 355 00:19:42,280 --> 00:19:44,560 Speaker 1: the rest of the two years, no significant changes in 356 00:19:44,640 --> 00:19:47,760 Speaker 1: taxes when most people expect them to go up. But 357 00:19:47,880 --> 00:19:51,200 Speaker 1: there will be some regulatory actions undertaken by the Biden 358 00:19:51,200 --> 00:19:55,919 Speaker 1: administration immediately, very analogous to those moves made by the 359 00:19:55,920 --> 00:20:01,280 Speaker 1: Trump administration in seventeen the Obio administration nine, which basically 360 00:20:01,320 --> 00:20:04,919 Speaker 1: will undo the prior administration's regulations. And we'll see a 361 00:20:05,000 --> 00:20:08,000 Speaker 1: real shift left word in terms of things like the environment, 362 00:20:08,080 --> 00:20:13,440 Speaker 1: the labor laws, financial institution oversight, and the rest. Very briefly, 363 00:20:13,600 --> 00:20:16,960 Speaker 1: and do you have hopes for that that unicorn we've 364 00:20:16,960 --> 00:20:20,760 Speaker 1: been searching for, which is of course infrastructure. Well, you know, 365 00:20:21,040 --> 00:20:25,280 Speaker 1: I would hope that we could probably have some some 366 00:20:25,440 --> 00:20:29,040 Speaker 1: effort to try and promote more public private partnerships because 367 00:20:29,040 --> 00:20:32,440 Speaker 1: there's so much capital and sidelines waiting to invest in 368 00:20:32,440 --> 00:20:35,800 Speaker 1: in some of the infrastructure that's needed just so desperately 369 00:20:35,840 --> 00:20:39,240 Speaker 1: across our country. Again, I'll have to see whether there's 370 00:20:39,280 --> 00:20:42,040 Speaker 1: going to be some agreement. Real questionnaire is whether the 371 00:20:42,080 --> 00:20:46,480 Speaker 1: Congress will reinstate earmarks. If the Congress reinstates earmarks, I 372 00:20:46,520 --> 00:20:49,159 Speaker 1: think that the potential for an infrastructure bill will go 373 00:20:49,240 --> 00:20:52,439 Speaker 1: up pretty dramatically. That was Eric Cantor, vice chairman of 374 00:20:52,560 --> 00:20:55,080 Speaker 1: Mullus in Company. Coming up, we wrap up the week 375 00:20:55,200 --> 00:20:58,200 Speaker 1: as we always do, with our special contributor Larry Summers 376 00:20:58,200 --> 00:21:06,640 Speaker 1: of Harvard. This is wal Free Week on Bloomberg. This 377 00:21:07,000 --> 00:21:11,480 Speaker 1: is Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 378 00:21:11,640 --> 00:21:13,760 Speaker 1: We're gonna wrap up the week as we do every week, 379 00:21:13,800 --> 00:21:16,840 Speaker 1: with our special contributor Larry Summers of Harvard. So, Larry, 380 00:21:16,960 --> 00:21:19,840 Speaker 1: maybe the biggest story on Wall Street this week were 381 00:21:19,880 --> 00:21:22,080 Speaker 1: these I p o S. We had door Dash first, 382 00:21:22,280 --> 00:21:24,879 Speaker 1: then we have Airbnb come out. Airbnb ends up with 383 00:21:24,920 --> 00:21:28,520 Speaker 1: a market kevil like a hundred billion dollars, just astronomical numbers. 384 00:21:28,680 --> 00:21:31,119 Speaker 1: What is that telling us about our economy as well 385 00:21:31,160 --> 00:21:35,200 Speaker 1: as our financial system. Look, the fact that we're creating 386 00:21:35,280 --> 00:21:40,160 Speaker 1: these very valuable, terrific companies says something very special about 387 00:21:40,200 --> 00:21:46,480 Speaker 1: American capitalism, and that's a strength. The process coveted shares 388 00:21:46,600 --> 00:21:50,479 Speaker 1: of I p o S popping by seventy dollars to share, 389 00:21:51,000 --> 00:21:56,600 Speaker 1: people getting rich very quick, flipping the stock. That's a travesty. 390 00:21:57,040 --> 00:21:59,960 Speaker 1: That's why people don't like the morality of our financial 391 00:22:00,080 --> 00:22:05,119 Speaker 1: services industry, and this kind of gilded age stuff in 392 00:22:05,160 --> 00:22:08,440 Speaker 1: the midst of COVID. When children in our country are 393 00:22:08,480 --> 00:22:12,560 Speaker 1: going hungry, when mothers aren't able to take care of 394 00:22:12,600 --> 00:22:17,720 Speaker 1: their kids and support uh their families, this is a 395 00:22:17,760 --> 00:22:24,280 Speaker 1: symptom of terrible excess. And I hope that those who 396 00:22:24,760 --> 00:22:29,600 Speaker 1: support entrepreneurship will want to have a much better process 397 00:22:29,680 --> 00:22:35,199 Speaker 1: than the process we have today. It's a very unseemly 398 00:22:35,240 --> 00:22:39,760 Speaker 1: and ugly spectacle what we're watching, even if it is 399 00:22:39,880 --> 00:22:45,399 Speaker 1: surrounding really impressive achievements in the form of companies like 400 00:22:45,480 --> 00:22:48,960 Speaker 1: Airbnb and DoorDash. So so you make a really powerful point. 401 00:22:49,000 --> 00:22:51,320 Speaker 1: I mean, there's a moral point, to be sure, but 402 00:22:51,520 --> 00:22:54,040 Speaker 1: is there also an economic point? Because even as we're 403 00:22:54,080 --> 00:22:56,760 Speaker 1: watching Congress take us up to something about fiscal cliff, 404 00:22:56,800 --> 00:23:00,159 Speaker 1: here with millions of Americans potentially losing on one and 405 00:23:00,320 --> 00:23:03,000 Speaker 1: other benefits, you have those people were worried about putting 406 00:23:03,000 --> 00:23:05,160 Speaker 1: food in the table, brook on their heads, and then 407 00:23:05,200 --> 00:23:07,520 Speaker 1: you have this enormous wealth being created. You reported the 408 00:23:07,560 --> 00:23:12,080 Speaker 1: guilded age. What is that? To the sure there is David. 409 00:23:12,200 --> 00:23:18,320 Speaker 1: I have enormous respect for uh Hank Paulson, and I 410 00:23:18,359 --> 00:23:24,040 Speaker 1: think he served the country in really great ways. But 411 00:23:24,400 --> 00:23:29,280 Speaker 1: when on the very day this was happening, he called 412 00:23:29,359 --> 00:23:34,679 Speaker 1: for making strengthening America's financial services sector some kind of 413 00:23:34,760 --> 00:23:40,480 Speaker 1: major priority, and he implicitly advocated cutting back people's social 414 00:23:40,520 --> 00:23:45,160 Speaker 1: security benefits in the name of fiscal discipline and calling 415 00:23:45,400 --> 00:23:52,000 Speaker 1: for entitlement UH controls and the rhetoric of long term 416 00:23:52,080 --> 00:23:57,520 Speaker 1: fiscal discipline. I thought to myself, there, I cannot uh 417 00:23:57,880 --> 00:24:02,000 Speaker 1: go that what we are witnessing is a kind of 418 00:24:02,080 --> 00:24:07,920 Speaker 1: financial sector hyper trophy that I think is very dangerous 419 00:24:08,040 --> 00:24:13,720 Speaker 1: and that really demands a lot of soul searching. Um Again, 420 00:24:14,119 --> 00:24:17,240 Speaker 1: I have all four venture capital I have all four 421 00:24:17,280 --> 00:24:23,160 Speaker 1: of the entrepreneurial companies. But selling something for seventy dollars 422 00:24:23,240 --> 00:24:26,560 Speaker 1: and enabling people to flip it at a hundred and 423 00:24:26,640 --> 00:24:32,359 Speaker 1: forty dollars, that I think is appalling. How much of 424 00:24:32,400 --> 00:24:34,640 Speaker 1: this is a result of the federal reserves practic matter, 425 00:24:34,680 --> 00:24:36,920 Speaker 1: because there's so much liquidity in the marketplace. I mean, 426 00:24:37,160 --> 00:24:40,159 Speaker 1: certainly that's sustaining an awful lot of these evaluations. I 427 00:24:40,200 --> 00:24:43,600 Speaker 1: think the questions you can ask about the long term valuations. 428 00:24:43,720 --> 00:24:47,119 Speaker 1: But the fact that the stock was sold at sixty 429 00:24:47,200 --> 00:24:50,439 Speaker 1: eight dollars and then immediately jumped to a hundred and 430 00:24:50,480 --> 00:24:53,720 Speaker 1: forty dollars, making those who were lucky enough to get 431 00:24:53,760 --> 00:24:59,159 Speaker 1: access billions of dollars. That error has nothing to do 432 00:24:59,240 --> 00:25:02,080 Speaker 1: with liquidit. That has to do with the way our 433 00:25:02,080 --> 00:25:05,679 Speaker 1: Wall Street is organized, and that ought to be a 434 00:25:05,760 --> 00:25:09,520 Speaker 1: priority for somebody to clean up. Larry referred to the 435 00:25:09,520 --> 00:25:12,200 Speaker 1: guilded age. One of the phenomenon guilded ages I recalled 436 00:25:12,320 --> 00:25:14,399 Speaker 1: there was no income tax effect. They had to have 437 00:25:14,440 --> 00:25:16,600 Speaker 1: been the constitution. I think, in order to have an 438 00:25:16,640 --> 00:25:19,280 Speaker 1: income tax, we have an income tax now, but you 439 00:25:19,359 --> 00:25:22,639 Speaker 1: actually have written about and now you've tweeted about the 440 00:25:22,680 --> 00:25:25,439 Speaker 1: fact that we don't collect the taxes that were owed. 441 00:25:27,040 --> 00:25:31,840 Speaker 1: Seven three dollars that is owed won't be collected over 442 00:25:31,880 --> 00:25:36,560 Speaker 1: the next decade. It will be disproportionately among people at 443 00:25:36,600 --> 00:25:41,240 Speaker 1: the high end. And I have to say it's a 444 00:25:41,400 --> 00:25:46,719 Speaker 1: warped set of social values that lead us to wander 445 00:25:46,880 --> 00:25:52,120 Speaker 1: at higher rates in African American areas of Mississippi where 446 00:25:52,119 --> 00:25:55,320 Speaker 1: people get the e I T C, then in the 447 00:25:55,440 --> 00:26:00,960 Speaker 1: richest zip codes on Park Avenue. The idea that you're 448 00:26:01,040 --> 00:26:05,359 Speaker 1: more likely to get audited if you're collecting the earned 449 00:26:05,359 --> 00:26:11,760 Speaker 1: income tax Credit then if you're collecting carried interest has 450 00:26:11,840 --> 00:26:16,399 Speaker 1: something very badly wrong with it. My hope would be 451 00:26:16,480 --> 00:26:21,719 Speaker 1: that the new administration will immediately reallocate resources within the 452 00:26:21,760 --> 00:26:26,440 Speaker 1: i r S, which is its prerogative, that over time 453 00:26:26,880 --> 00:26:29,280 Speaker 1: we will get the i r S back to some 454 00:26:29,440 --> 00:26:33,320 Speaker 1: level of effort like the one it had a generation ago, 455 00:26:34,119 --> 00:26:39,680 Speaker 1: so that we can keep up with these inequities. Look, 456 00:26:39,920 --> 00:26:46,000 Speaker 1: this is not some kind of partisan progressive to uh. 457 00:26:46,240 --> 00:26:51,879 Speaker 1: Charlie Rosatti, who was the commissioner of the i r S, 458 00:26:51,920 --> 00:26:57,720 Speaker 1: who's a lifelong Republican. Uh. He is right there that 459 00:26:57,880 --> 00:27:01,840 Speaker 1: it is scandalous the things we are not doing that 460 00:27:01,960 --> 00:27:06,480 Speaker 1: could collect substantial uh taxes. I really hope this is 461 00:27:06,840 --> 00:27:10,240 Speaker 1: something that Secretary yell At and her colleagues will move 462 00:27:10,920 --> 00:27:16,240 Speaker 1: uh very aggressively on because it's a real injustice and 463 00:27:16,400 --> 00:27:19,919 Speaker 1: it's a symbol of deeper and more profound injustices in 464 00:27:19,960 --> 00:27:22,639 Speaker 1: our society. Well, and the piece that you wrote with 465 00:27:22,640 --> 00:27:25,399 Speaker 1: in Society actually pointed out that it would be a 466 00:27:25,440 --> 00:27:29,280 Speaker 1: smart investment. For a relatively modest increase in the U 467 00:27:29,480 --> 00:27:31,480 Speaker 1: in the resources AVAILB of the I R S, we 468 00:27:31,520 --> 00:27:35,680 Speaker 1: would get something like tenfolds. This is this is this 469 00:27:35,840 --> 00:27:41,760 Speaker 1: is easy. If you have one more auditing hour directed 470 00:27:41,760 --> 00:27:46,040 Speaker 1: at high income people, that will raise four thousand, five 471 00:27:46,119 --> 00:27:49,160 Speaker 1: hundred dollars according to the I R S as estimates 472 00:27:49,640 --> 00:27:56,280 Speaker 1: without taking account of deterrenth effects. And I can assure 473 00:27:56,320 --> 00:27:59,959 Speaker 1: you that no I R S agent is paid anything 474 00:28:00,040 --> 00:28:03,920 Speaker 1: and like four thousand, five hundred dollars an hour. Frankly, 475 00:28:03,920 --> 00:28:07,119 Speaker 1: they're not paid anything like four hundred and fifty dollars 476 00:28:07,280 --> 00:28:13,800 Speaker 1: um an hour. So this is a terrific investment. It 477 00:28:14,160 --> 00:28:18,719 Speaker 1: is standing up for the law, the rule of law, 478 00:28:19,520 --> 00:28:21,840 Speaker 1: and I hope some of the voices in our country 479 00:28:21,880 --> 00:28:25,560 Speaker 1: that are concerned with getting tough on crime could think 480 00:28:25,600 --> 00:28:30,520 Speaker 1: about these crimes among the others. Why haven't we done 481 00:28:30,560 --> 00:28:32,879 Speaker 1: it already? Is this is this political? I mean, you 482 00:28:32,880 --> 00:28:35,240 Speaker 1: were Secretary Treasury and then you were in the Obama 483 00:28:35,280 --> 00:28:37,040 Speaker 1: White House. Was this a problem, Bann or is this 484 00:28:37,160 --> 00:28:41,280 Speaker 1: a reasonably recent phenomenon? This is a longstanding This is 485 00:28:41,320 --> 00:28:45,120 Speaker 1: a longstanding problem, and one that in my Treasury we 486 00:28:45,200 --> 00:28:49,200 Speaker 1: worked very hard on our a whole variety of things, 487 00:28:49,280 --> 00:28:54,880 Speaker 1: strengthening the I R S UH computer systems UH in particular, 488 00:28:55,280 --> 00:28:58,760 Speaker 1: and that President Obama and his team pushed while I 489 00:28:58,840 --> 00:29:01,640 Speaker 1: was in the White House. Part of it is a 490 00:29:01,800 --> 00:29:05,640 Speaker 1: myopia on the part of the way we calculate budgets, 491 00:29:05,720 --> 00:29:09,520 Speaker 1: where you don't get any credit for the revenue benefit 492 00:29:09,640 --> 00:29:13,719 Speaker 1: from the investment, and so it looks just like a cost, 493 00:29:14,200 --> 00:29:18,120 Speaker 1: even though it's a major revenue item. It's like trying 494 00:29:18,120 --> 00:29:21,920 Speaker 1: to run McDonald's and not giving yourself any credit for 495 00:29:22,040 --> 00:29:25,680 Speaker 1: revenue from selling UH milkshakes. Well, it'll cause you to 496 00:29:25,720 --> 00:29:30,120 Speaker 1: stop selling milkshakes, but it doesn't really make any sense. 497 00:29:30,360 --> 00:29:35,920 Speaker 1: It's that kind of score keeping error, And let's be honest, Uh, 498 00:29:35,960 --> 00:29:39,800 Speaker 1: there's some people who don't want the tax law enforced 499 00:29:40,480 --> 00:29:43,480 Speaker 1: because they don't want to pay what they owe and 500 00:29:43,520 --> 00:29:46,600 Speaker 1: they don't want to face the possibility of being audited. 501 00:29:47,400 --> 00:29:51,280 Speaker 1: And we've got too many congress people who see their 502 00:29:51,360 --> 00:29:56,200 Speaker 1: job as working for those scoff laws. So it's wrap 503 00:29:56,200 --> 00:29:58,120 Speaker 1: it up with a rapid fire around a summer, says, 504 00:29:58,200 --> 00:30:01,080 Speaker 1: Let's start where it's beginning to see the economic team 505 00:30:01,240 --> 00:30:05,160 Speaker 1: around president like Biden. You know, these people pick one 506 00:30:05,200 --> 00:30:07,600 Speaker 1: that will turn out to be a real star. It's 507 00:30:07,600 --> 00:30:10,320 Speaker 1: a great team. It's a great team across the board. 508 00:30:10,400 --> 00:30:15,640 Speaker 1: I think my old colleague Briandese is gonna be much 509 00:30:15,680 --> 00:30:18,440 Speaker 1: better known the year from now than he is today, 510 00:30:18,480 --> 00:30:21,920 Speaker 1: and that he's going to be a driving force behind 511 00:30:22,520 --> 00:30:26,440 Speaker 1: much more effective and much more green economic policies in 512 00:30:26,520 --> 00:30:30,920 Speaker 1: our country. Okay, Brian Days will keep her eyes on him. Okay, 513 00:30:30,960 --> 00:30:35,040 Speaker 1: give us a number now for us GDP growth. What 514 00:30:35,120 --> 00:30:37,720 Speaker 1: do you think what the percentage growth will have, because 515 00:30:37,840 --> 00:30:39,280 Speaker 1: right now it kind of things it's gonna be a 516 00:30:39,360 --> 00:30:41,240 Speaker 1: rough first half of the year, then we'll come back, 517 00:30:41,280 --> 00:30:44,280 Speaker 1: and all likely because of the vaccine. I think between 518 00:30:44,360 --> 00:30:47,520 Speaker 1: the vaccine and between the fact that there's a lot 519 00:30:47,520 --> 00:30:50,720 Speaker 1: of pent up savings from the money people couldn't spend. 520 00:30:51,360 --> 00:30:53,160 Speaker 1: I'm an optimist. I think we're gonna have a good 521 00:30:53,280 --> 00:30:56,720 Speaker 1: year in the five percent range. Oh good, that's that 522 00:30:56,840 --> 00:30:58,600 Speaker 1: is good news. Okay, And bring it back to New 523 00:30:58,680 --> 00:31:02,400 Speaker 1: York City right here or we are right now. When 524 00:31:02,520 --> 00:31:05,400 Speaker 1: will be the date that the New York City economy 525 00:31:05,440 --> 00:31:09,040 Speaker 1: returns to where it was before the pandemic. I'm not 526 00:31:09,080 --> 00:31:11,840 Speaker 1: sure it's ever going to be quite the same, Between 527 00:31:11,880 --> 00:31:16,280 Speaker 1: the blow to theater and restaurants, between the far larger 528 00:31:16,760 --> 00:31:19,560 Speaker 1: number of employers who are going to have people working 529 00:31:19,760 --> 00:31:23,400 Speaker 1: at home, between the risks people are going to attach 530 00:31:23,560 --> 00:31:27,400 Speaker 1: to the subway system. I didn't the arcle be a 531 00:31:27,520 --> 00:31:31,360 Speaker 1: great city, but maybe not with quite the same sense 532 00:31:31,400 --> 00:31:35,200 Speaker 1: of dense energy that it had before. So I'm not 533 00:31:35,240 --> 00:31:40,080 Speaker 1: sure we're gonna see anytime in the foreseeable future a 534 00:31:40,160 --> 00:31:42,520 Speaker 1: return to life as it was, not as happy enough. 535 00:31:42,600 --> 00:31:44,720 Speaker 1: But thank you so much that, as Summer says from 536 00:31:44,760 --> 00:31:47,959 Speaker 1: the man himself, are especially when trimity Larry Summers, oh Harvard, 537 00:31:47,960 --> 00:31:50,640 Speaker 1: thank you so much. Thanks David. That does it for 538 00:31:50,680 --> 00:31:53,239 Speaker 1: this episode of Wall Street Week. I'm David Weston. This 539 00:31:53,320 --> 00:31:55,040 Speaker 1: is Bloomberg. See you next week.