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P&L: We're In a Healthy But Maturing Part of Cycle, Shanks Says · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy and useful interviews for
• 0:14
  Speaker 1: you and your money, whether you at the grocery store
• 0:16
  Speaker 1: or the trading floor. Find the Bloomberg P L Podcast
• 0:20
  Speaker 1: on iTunes, SoundCloud and at Bloomberg dot com. Shares a
• 0:31
  Speaker 1: Ford Motor down a little bit more than one per
• 0:33
  Speaker 1: cent today, let's find out more about Ford's results. We've
• 0:36
  Speaker 1: got Bob Shanks. He is the chief financial officer of
• 0:39
  Speaker 1: Ford Motor Company. Bob Shanks, thank you very much for
• 0:41
  Speaker 1: being with us. Thank you. It's great to be with
• 0:44
  Speaker 1: you once again. All right, so where do you want
• 0:45
  Speaker 1: to Where do you want to begin? Because I was
• 0:47
  Speaker 1: going to go to the F one fifty and go
• 0:48
  Speaker 1: into some detail there, but maybe you want to just
• 0:50
  Speaker 1: give us an overview because stocks lower, I mean, you know,
• 0:53
  Speaker 1: the headline speaks for itself, profit down. What's going on? Well,
• 0:57
  Speaker 1: it's uh. For the first thing, I guess I would
• 0:59
  Speaker 1: say keim that everything is in line with our expectations.
• 1:02
  Speaker 1: In fact, we came in at a billion flour in
• 1:05
  Speaker 1: terms of adjusted pretext profit for the company. That was
• 1:07
  Speaker 1: a bit better than what we had guided to, but
• 1:09
  Speaker 1: it's surround things that we expect to just be calndarization
• 1:12
  Speaker 1: or timing things that will offset in the fourth quarter.
• 1:15
  Speaker 1: So very much in line with expectations. I think the
• 1:17
  Speaker 1: markets responding sort of consistent with that. UH One one
• 1:21
  Speaker 1: thing of note for it has been spending big time
• 1:25
  Speaker 1: on its aluminum bodied superduty pick up. This is an
• 1:28
  Speaker 1: effort to compete with Uber and Google um to transform
• 1:33
  Speaker 1: Forward into more of a mobility company. Do you have
• 1:35
  Speaker 1: any insights about whether this big investment is starting to
• 1:39
  Speaker 1: pay off. Well, we're just in the process of launching
• 1:42
  Speaker 1: the Super Duty. We did make a similar investment on
• 1:45
  Speaker 1: the F one fifty a year year and a half
• 1:47
  Speaker 1: ago and that's paid off beautifully. So the super Duty
• 1:51
  Speaker 1: is following, and actually next year are large utilities, the
• 1:55
  Speaker 1: Expedition and the Navigator. UH those will also go aluminum.
• 1:58
  Speaker 1: So it makes a lot of sense because consumers get
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  Speaker 1: the benefit of a lighter vehicle but much better performance.
• 2:05
  Speaker 1: That's certainly been the case with the F one fifty.
• 2:07
  Speaker 1: I'm sure it's going to be what we see with
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  Speaker 1: the Super Duty as it continues to go to market,
• 2:12
  Speaker 1: tell us a little bit about inventory levels, because you know,
• 2:15
  Speaker 1: we've heard that you've really cut back, right, halting one
• 2:20
  Speaker 1: of the two plants that builds the F one fifty. Well,
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  Speaker 1: everything that we're doing is consistent with, you know, our
• 2:26
  Speaker 1: longstanding practice of matching productions to demand. We said throughout
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  Speaker 1: the course of the first half the year that we
• 2:32
  Speaker 1: would be adjusting our stocks as a year progress, and
• 2:34
  Speaker 1: that's exactly what we're doing. PIM. We haven't actually shut
• 2:38
  Speaker 1: any of our FEIF plants, but next week, for example,
• 2:41
  Speaker 1: we have three crews that build in Kansas City, and
• 2:44
  Speaker 1: one of those crews won't be operating so that we
• 2:47
  Speaker 1: can make sure that our production stays in line to demand.
• 2:50
  Speaker 1: Our our stock levels are are fine and where we
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  Speaker 1: want them. But these plants run three crews constantly, so
• 2:55
  Speaker 1: sometimes we just have to make tweaks or adjustments to
• 2:58
  Speaker 1: make sure o'mventry stay where we want them to be.
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  Speaker 1: Got it. But But having said having said that, and
• 3:03
  Speaker 1: I'm sure you're scratching your head just as much as
• 3:04
  Speaker 1: everybody else is. But you know the Mustang factory right
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  Speaker 1: that was idle because of a decline in sales. You
• 3:10
  Speaker 1: have the Louisville plant also, you know, I mean you're
• 3:14
  Speaker 1: doing what you need to do obviously, but what how
• 3:16
  Speaker 1: do you read into the industry or into the environment
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  Speaker 1: that's making these kinds of things happen. Well, that's a
• 3:22
  Speaker 1: good question. I Mean, what we've been saying since at
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  Speaker 1: least the second quarter earnest called so three months ago,
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  Speaker 1: is that we're starting to see a bit of a
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  Speaker 1: softening in the industry here in the US, and that's
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  Speaker 1: on the retail side as well as uh. We saw
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  Speaker 1: in the third quarter a bit on the fleet side
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  Speaker 1: as well. So still very strong levels, but slightly less
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  Speaker 1: than what we had seen in our case. The other
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  Speaker 1: thing that we talked about the very beginning of the
• 3:45
  Speaker 1: years that we were going to have a an upfront
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  Speaker 1: counterization of our rental vehicles that we sell to the
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  Speaker 1: rental fleets, and that was based on their request and
• 3:54
  Speaker 1: that would be sort of, if you will, paid back
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  Speaker 1: in terms of uh the second half the year. So
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  Speaker 1: that's that's a factor. Is that What does that mean?
• 4:00
  Speaker 1: Maybe just define that for people. Sure, So we sell
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  Speaker 1: we sell to individual customers, we also sell to fleets,
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  Speaker 1: commercial governments both federal and state, but also the rental
• 4:10
  Speaker 1: car companies. UH. We sold about two hundred and eighty
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  Speaker 1: thousand units to fleet or to to rental last year.
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  Speaker 1: We'll do the same this year. Normally that calendarization is
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  Speaker 1: UH is timed more towards the second half in the
• 4:24
  Speaker 1: first half, But in this particular year, UH, the rental
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  Speaker 1: companies asked us to provide them with our units earlier
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  Speaker 1: in the year, which we did. So Therefore, in the
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  Speaker 1: year of a year basis, you know, we don't have
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  Speaker 1: those units that we're providing in the second half, and
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  Speaker 1: so that's one of the factors that's affecting some of
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  Speaker 1: the adjustments that we're making, particularly on the car side
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  Speaker 1: of the business. One concern that I've heard from a
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  Speaker 1: lot of people who speak to is that you have
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  Speaker 1: auto loans which are poised to top one trillion dollars
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  Speaker 1: are already have topped one trillion dollars the first time
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  Speaker 1: ever UH this year, and you're starting to see some firms,
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  Speaker 1: including JP Morgan UH pull back raise the borrowing US
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  Speaker 1: enters as the values of the underlying cars deteriorate. How
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  Speaker 1: concerned are you that a tightening of credit conditions in
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  Speaker 1: the auto lending sector could further weaken profitability afford Well,
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  Speaker 1: a lot of that's a good question, and I saw
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  Speaker 1: that article this morning as well. But you have to
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  Speaker 1: remember we have our own captive finance company, Ford Credit,
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  Speaker 1: which finances both our wholesales and a very high percentage
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  Speaker 1: of our sales to individual customers. And we have you know,
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  Speaker 1: we follow consistent policies in terms of loan standards, origination
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  Speaker 1: and so forth. The risk profile of our business is
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  Speaker 1: very constant. We do that whether we're in a down
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  Speaker 1: cycle or an up cycle. So I think what you're
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  Speaker 1: talking about more as a phenomenon that probably is going
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  Speaker 1: to affect banks and credit unions. Uh, you know, we're
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  Speaker 1: continuing to follow the same policies that we have been.
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  Speaker 1: What we have seen is a decline in auction values
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  Speaker 1: for vehicles coming off lease, and that's something that we
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  Speaker 1: talked about today in our earnings call. Right well, so
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  Speaker 1: that that was sort of what I was going to
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  Speaker 1: pick up on. You have the resale values going down
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  Speaker 1: as people are buying more new cars and are not
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  Speaker 1: looking to sort of buy the older ones. This creates
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  Speaker 1: a problem for loans that are like sixty eight months long, etcetera.
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  Speaker 1: Because you have very little value left. Does this affect
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  Speaker 1: your business at all? And if so, how well, it's
• 6:16
  Speaker 1: actually not Normally I'll call it vehicles that are financed
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  Speaker 1: through a pr that type of thing. What it really is,
• 6:23
  Speaker 1: it's around the lease vehicles. So the industry has been
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  Speaker 1: leasing more and more vehicles over the last number of
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  Speaker 1: years and an increasing or or rising industry. Those vehicles
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  Speaker 1: are usually leased for two years or three years, and
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  Speaker 1: so you have more and more of those vehicles coming back.
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  Speaker 1: So it's it's really a supply and demand factor that's
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  Speaker 1: taking place, So it's more of those units come back.
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  Speaker 1: It just suppresses the value of auction values for those
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  Speaker 1: off lease vehicles, and that's the phenomenon that we're seeing.
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  Speaker 1: It can have an impact in terms of UH the
• 6:52
  Speaker 1: ability to get the prices that you want for for
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  Speaker 1: new vehicles. It can also affect the volume of new
• 6:59
  Speaker 1: vehicles because US people have more choices if you will
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  Speaker 1: have nearly new vehicles as those vehicles come back. So
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  Speaker 1: that's something that we're watching, and certainly in our Ford
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  Speaker 1: credit business, it was an effect that that we've seen
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  Speaker 1: throughout the course of this year as residual values have fallen.
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  Speaker 1: But it's against something we have forecasting and built into
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  Speaker 1: our outlook going forward. Bob Shanks, just quickly, I know
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  Speaker 1: that you joined Ford Motor in nineteen seventy seven. That's amazing. Well,
• 7:25
  Speaker 1: I thought I was gonna tell people I was only
• 7:26
  Speaker 1: thirty five years old. Now I can't do that. Well,
• 7:28
  Speaker 1: you know, you were a child prodigy. The reason the
• 7:32
  Speaker 1: reason I bring that up is because I'm just wanting
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  Speaker 1: to maybe in ten fifteen seconds, tell us what is
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  Speaker 1: the market feel like to you today? It feels like
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  Speaker 1: we're in a maturing part of the of the cycle,
• 7:43
  Speaker 1: particularly in our industry. We can see that with softening
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  Speaker 1: industry sales. We see that with the credit cycle. You
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  Speaker 1: know the discussion we were just having around auction values.
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  Speaker 1: So still a healthy part of the cycle, but it's
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  Speaker 1: a maturing part of the cycle. Thank you so much,
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  Speaker 1: Bob Shanks, chief financial Officer, Afford Motor Company, on what's
• 8:02
  Speaker 1: ahead for that company. They had largely expected to see
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  Speaker 1: UH profits decline as they invest heavily in their new
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  Speaker 1: fleet of super aluminum super duper trucks. Thank you so
• 8:13
  Speaker 1: much for being with us. And right now, what what
• 8:15
  Speaker 1: are the shares doing right now? Down about one and
• 8:19
  Speaker 1: this is Bloomberg. I want to bring in Laura Keller
• 8:37
  Speaker 1: of Bloomberg News, who covers the banking industry, as well
• 8:41
  Speaker 1: as Barrington pitt Miller equity analyst and your market expert
• 8:45
  Speaker 1: at Janice Capital. Laura, I want to kick it off
• 8:48
  Speaker 1: with you. Uh, Deutsche Bank released earnings today better than expected.
• 8:53
  Speaker 1: Its shares go nowhere? What's going on? Yeah? I saw
• 8:56
  Speaker 1: that too. UM. I mean when you look though into
• 8:59
  Speaker 1: the results and you don't just look at that you know,
• 9:02
  Speaker 1: surprise profit. When you dig into some of the things,
• 9:05
  Speaker 1: I mean, I don't know that you can see a
• 9:06
  Speaker 1: sustainability UM and some of those numbers, like, for example,
• 9:10
  Speaker 1: if you look at the the fixed income results, great good,
• 9:13
  Speaker 1: but still the bottom of the pack for peers, bottom
• 9:16
  Speaker 1: of the pack for advisory. So that's all the investment
• 9:18
  Speaker 1: banking side of things. And then I think to a
• 9:20
  Speaker 1: lot of UM analysts were not so happy with not
• 9:22
  Speaker 1: any more information on where we stand with the litigation
• 9:26
  Speaker 1: and the R and B S settlement negotiations. I mean,
• 9:28
  Speaker 1: Deutsche Bank get self the saying, look, we can't really
• 9:30
  Speaker 1: provide you those kinds of things because it actually undermines
• 9:33
  Speaker 1: our strategy and negotiation Barrington. So after you saw these results,
• 9:37
  Speaker 1: did you go to your PMS and say, all right,
• 9:40
  Speaker 1: go ahead, you can buy. Unfortunately, not okay. The reality
• 9:46
  Speaker 1: is that the outstanding d o J settlement is the
• 9:50
  Speaker 1: big question mark on Deutsche Bank today, And until we
• 9:55
  Speaker 1: know therefore what the settlement is, we don't know what
• 9:58
  Speaker 1: the share account is, and we don know whether indeed
• 10:01
  Speaker 1: this is a bank that's going to face a serious
• 10:03
  Speaker 1: capital challenge at a time when it's potentially market cap
• 10:08
  Speaker 1: is falling to levels which will make it potentially very
• 10:11
  Speaker 1: difficult to refill the whole. It will then lead to
• 10:13
  Speaker 1: serious question marks about therefore, okay, then what does the
• 10:17
  Speaker 1: shape of the business look like? You can't maybe raise
• 10:20
  Speaker 1: enough in the market, so you'll be forced into and
• 10:22
  Speaker 1: indeed John grinds that he doesn't want to raise. You
• 10:24
  Speaker 1: may be forced into strategic decisions such as selling the
• 10:27
  Speaker 1: asset management business, which absolutely would address a capital hole,
• 10:30
  Speaker 1: but it brings with it aps dilution um. The options
• 10:34
  Speaker 1: that Deutsche Bank faces here without knowing the d o
• 10:38
  Speaker 1: J settlement are too far too broad for John cry
• 10:41
  Speaker 1: and the CEO and the management team to really give
• 10:43
  Speaker 1: the market additional strategic ideas initiatives, because, as I say,
• 10:49
  Speaker 1: until you know that number, you don't know whether your
• 10:52
  Speaker 1: option is to simply cut the bonus ball or is
• 10:56
  Speaker 1: it to sell asset management, is it to try and
• 10:58
  Speaker 1: raise a bit of capital, is it trying to cap
• 11:00
  Speaker 1: the nation of all of the above. So I think
• 11:02
  Speaker 1: for that reason, hey, we didn't get anything new. I'm
• 11:05
  Speaker 1: not surprised we didn't get anything new. The only way
• 11:07
  Speaker 1: we would have got a material change and update would
• 11:10
  Speaker 1: have been if we had the settlement number. Is there
• 11:12
  Speaker 1: any bad news that you can't think of about Deutsche
• 11:15
  Speaker 1: Bank right now? I mean, is there anything else out
• 11:17
  Speaker 1: there that is bad that might come to the four
• 11:20
  Speaker 1: I mean, let's say they do get that. Let's say
• 11:21
  Speaker 1: they do they are tagged with the fourteen billions from
• 11:23
  Speaker 1: the Department of Justice. Let's say they do sell assets,
• 11:27
  Speaker 1: they do cut bonuses, they cut staff. Is Deutsche Bank
• 11:29
  Speaker 1: is still going to be around let's say in twelve months,
• 11:31
  Speaker 1: twenty four months. I think it's highly likely that the
• 11:36
  Speaker 1: German state would be forced in a serious crisis to
• 11:40
  Speaker 1: step in and provide assurance. Okay, so that's like worst
• 11:43
  Speaker 1: case scenario. That is worse. I think that is worst
• 11:45
  Speaker 1: case scenario. So curiously, there maybe a number of Europeans
• 11:48
  Speaker 1: out there who would be quite excited about that because
• 11:50
  Speaker 1: it might take the pressure off them. They might finally
• 11:52
  Speaker 1: able to do the same for themselves in Italy. But
• 11:54
  Speaker 1: the reason I was going there is because at fourteen
• 11:55
  Speaker 1: and a half dollars a share, is Deutsche Bank, you know,
• 11:59
  Speaker 1: a buy right now? I mean, is this a start
• 12:01
  Speaker 1: that you know, there's a lot of bad news out there,
• 12:03
  Speaker 1: and you go back, you say, I want to buy
• 12:05
  Speaker 1: when there's a lot of bad news if the thing
• 12:06
  Speaker 1: is gonna survive, or maybe even someone going to buy
• 12:08
  Speaker 1: part of the franchise, right, is it a bottom? Is
• 12:11
  Speaker 1: it aboutom here? Or doesn't have to be a bottom,
• 12:13
  Speaker 1: It just has to be, you know, decent, not if
• 12:15
  Speaker 1: it's a fourteen billion dollar fine, okay, and if you
• 12:18
  Speaker 1: then layer on Russian sanctions on top. The market is
• 12:21
  Speaker 1: pragmatically saying that is an unrealistic number because it's the
• 12:23
  Speaker 1: fourth largest global city bank, it's one of the largest
• 12:27
  Speaker 1: capital market counterparties in the world, and particularly US financial institutions.
• 12:31
  Speaker 1: Surely the d o J isn't going to undermine all
• 12:34
  Speaker 1: the recovery and the financial institutions and potentially threatened the counterparties.
• 12:38
  Speaker 1: I think that is um. I think that's the market's
• 12:41
  Speaker 1: pragmatic position, and therefore the consensus number is something in
• 12:44
  Speaker 1: the ballpark of five to seven billion, So that would
• 12:46
  Speaker 1: make the start attractive at fourteen and a half and
• 12:50
  Speaker 1: that kind of settlement, I think that takes a lot
• 12:52
  Speaker 1: of the risk away. And it doesn't. It doesn't mean
• 12:54
  Speaker 1: to say that this is, you know, a compelling business mix,
• 12:58
  Speaker 1: but absolutely it takes away the tail risk, and it's
• 13:01
  Speaker 1: that tail risk that I think holds back a lot
• 13:03
  Speaker 1: of investors today. Did we get a sense from their
• 13:05
  Speaker 1: earnings about how much of their business, their investment banking
• 13:09
  Speaker 1: business in particular, has disappeared amid the cloud of uncertainty
• 13:14
  Speaker 1: UM They reported debt treating debton currency trading revenue there
• 13:18
  Speaker 1: was up the third quarter, but that's versus of an
• 13:22
  Speaker 1: increase in debt treading from the five biggest US banks.
• 13:25
  Speaker 1: I think it's certainly. On the call, we got the
• 13:27
  Speaker 1: impression that they're clearly was business that was taken away
• 13:29
  Speaker 1: from them and some of that is returning. It is undeniable. Yes,
• 13:33
  Speaker 1: there were stories out there that a number of hedge
• 13:35
  Speaker 1: funds and remove prime brokerage business, prime brokeradge and equity
• 13:38
  Speaker 1: in fact, weren't. We're actually weak, weak spots versus the
• 13:40
  Speaker 1: thick business. So I think it's fair to say, yes,
• 13:42
  Speaker 1: we can absolutely identify that trend. But you know, overall,
• 13:46
  Speaker 1: the market obviously took a big sigh of relief and said, well,
• 13:49
  Speaker 1: the worst fears of franchise erosion haven't come to pass.
• 13:53
  Speaker 1: So so that certainly is a positive. But there's no
• 13:57
  Speaker 1: question that given the experiences of Lehman, given the kind
• 14:00
  Speaker 1: of whole recency bus of European wobbles and worries and
• 14:04
  Speaker 1: back in eleven around the sovereign crisis, there's not a
• 14:06
  Speaker 1: single risk manager out there or counterparty risk committee out
• 14:10
  Speaker 1: there that is going to sit by and say and say, well,
• 14:13
  Speaker 1: is there a risk? Yes, there might be, Well we'll
• 14:16
  Speaker 1: just sit on our hands and do nothing. I think
• 14:19
  Speaker 1: it's quite likely we are seeing gradually that risk committees
• 14:23
  Speaker 1: are de risking, and logically you don't. You don't lose
• 14:27
  Speaker 1: your job for d risking and then putting it back.
• 14:29
  Speaker 1: You will lose your job if you have a problem.
• 14:31
  Speaker 1: But moving away from prime brokerage, I mean, if you
• 14:33
  Speaker 1: talk a little bit more indolved into the investment bank itself.
• 14:36
  Speaker 1: So many people have left Deutsche Bank. I mean big
• 14:39
  Speaker 1: bankers who are all these deals have gone And if
• 14:41
  Speaker 1: you look at their investment advisory business, I mean they
• 14:44
  Speaker 1: were the worst of the pack. So if you look
• 14:46
  Speaker 1: at that and extrapolate and say, okay, well those are
• 14:49
  Speaker 1: the dealmakers help me bring in underwriting equity for example,
• 14:53
  Speaker 1: I mean they were in the middle of the pack
• 14:54
  Speaker 1: this quarter for that. So will you see in the
• 14:56
  Speaker 1: future that if some of these key people have gone,
• 14:59
  Speaker 1: that that will be I don't see how you avoid that.
• 15:02
  Speaker 1: I think that's fair the franchise. You know, this is
• 15:06
  Speaker 1: a people business, and you're setting the people up to
• 15:09
  Speaker 1: recognize that. You know, they may not get a cash bonus.
• 15:12
  Speaker 1: They may not get a bonus into any sixteen you
• 15:16
  Speaker 1: may you may get stocked, you may get some other
• 15:18
  Speaker 1: form of interesting asset mix coming out of your non
• 15:21
  Speaker 1: core bank. We've seen that done in the past. You're
• 15:24
  Speaker 1: also going to potentially risk you know, is there a clawback?
• 15:27
  Speaker 1: Is there a clawback on unvested? Is can you convert
• 15:30
  Speaker 1: some of the unvested? These are questions that obviously employees
• 15:33
  Speaker 1: will be asking themselves. Um, but I think one point
• 15:37
  Speaker 1: to remember is we've been through this. UBS has been
• 15:41
  Speaker 1: through this. John Crime was a UBS and UBS went
• 15:44
  Speaker 1: through it. UM many of the U S banks have
• 15:46
  Speaker 1: been through it. Many employees there were whether the storm
• 15:49
  Speaker 1: at these U S banks, UM have experienced it. So
• 15:52
  Speaker 1: I think short term, yes, there can be erosion, but
• 15:55
  Speaker 1: if you can sady the ship. I want to thank
• 15:59
  Speaker 1: you very much for joining us, Barrington Pitt Miller equity
• 16:02
  Speaker 1: analyst from Janice Capital, and Laura Keller of Bloomberg Finance.
• 16:21
  Speaker 1: I want to bring in Ben Brody, a reporter for
• 16:23
  Speaker 1: Bloomberg Politics. It joins us from Washington, d C, home
• 16:27
  Speaker 1: the Bloomberg and the one of five point seven h
• 16:30
  Speaker 1: D two and he can be followed on Twitter at
• 16:33
  Speaker 1: Ben Brody d C. All right, Ben Brody, tell us
• 16:36
  Speaker 1: about these new leaks, these emails that are in a
• 16:41
  Speaker 1: sense compromising the business relationship that former President Bill Clinton
• 16:46
  Speaker 1: has with the same organizations that are also donors to
• 16:50
  Speaker 1: the Clinton Foundation. Am I getting that right? Yes? You
• 16:54
  Speaker 1: basically are. The key here is that these things just
• 16:58
  Speaker 1: always overlap. The Clintons have always had a relatively small
• 17:02
  Speaker 1: group of very loyal staffers who often play a lot
• 17:05
  Speaker 1: of roles. And what this most recent alleged hacked email
• 17:10
  Speaker 1: shows is it was a memo detailing one of these aids,
• 17:13
  Speaker 1: all the many things that he did for Clinton, helping
• 17:16
  Speaker 1: to raise money for the foundation, getting Bill Clinton uh
• 17:20
  Speaker 1: speeches and private events, and then uh seemingly pressuring this
• 17:26
  Speaker 1: this particular aid ran a consultancy and seemingly pressuring something.
• 17:30
  Speaker 1: This is I mean, you can name him, right, I
• 17:31
  Speaker 1: mean Doug. This is Doug band Band and he is
• 17:34
  Speaker 1: the co founder of ten Ao Consulting, a l Clinton aide,
• 17:38
  Speaker 1: and this came all out from wicked. He calls it
• 17:40
  Speaker 1: Bill Clinton, Inc. I believe. And he has pressuring his
• 17:43
  Speaker 1: clients like Coca Cola and al Chemicals to give to
• 17:46
  Speaker 1: the foundation. And so all three of those things are
• 17:48
  Speaker 1: really lining up well. And Chelsea Clinton raised issues, right,
• 17:52
  Speaker 1: I mean, she around this time was questioning whether Doug
• 17:56
  Speaker 1: band Uh sort of had a conflict of interest as
• 18:00
  Speaker 1: an advisor both to her father and the family foundation
• 18:04
  Speaker 1: as he courted clients for the company exactly. She was
• 18:07
  Speaker 1: concerned that he was using the Bill Clinton name to
• 18:10
  Speaker 1: build his client list, and this memo in some ways
• 18:13
  Speaker 1: seems to be a rejection of that. He is saying
• 18:15
  Speaker 1: I'm not using Bill Clinton to build my list. I'm
• 18:18
  Speaker 1: using my list to build the Clinton Foundation because it's
• 18:21
  Speaker 1: not meeting its fundraising requirements. Do you think this is
• 18:24
  Speaker 1: going to hurt Hillary Clinton? Uh? Certainly. It doubles down
• 18:29
  Speaker 1: on the kinds of things that have hurt her, the
• 18:31
  Speaker 1: pay to play, Uh, the appearance of friendliness between Wall Street,
• 18:37
  Speaker 1: the appearance of influence. But of course, we are in
• 18:40
  Speaker 1: the closing days of the election and a lot of
• 18:43
  Speaker 1: opinions have already been formed, and it doesn't necessarily touch
• 18:46
  Speaker 1: directly on our campaign. It's, you know, rather her husband
• 18:48
  Speaker 1: than an aid of his and several of his efforts.
• 18:50
  Speaker 1: And how big of an ethical breach is it? Sure,
• 18:54
  Speaker 1: it's a big question. You know, lots of us do networking.
• 18:57
  Speaker 1: You know, we might be involved with the charity and
• 18:59
  Speaker 1: we might say to someone the office, hey, could you give.
• 19:01
  Speaker 1: On the other hand, it really seems like Doug Band
• 19:03
  Speaker 1: has two masters, and one are his paying clients and
• 19:06
  Speaker 1: the other is his old boss, and he's trying to
• 19:08
  Speaker 1: serve both, and it's not clear to me that he
• 19:11
  Speaker 1: was doing it in a way that was not conflicted.
• 19:14
  Speaker 1: There's also the issue of signing a document that would
• 19:19
  Speaker 1: preclude a conflict of interest, and according to the email,
• 19:24
  Speaker 1: it says that the former president Clinton doesn't have to
• 19:28
  Speaker 1: sign such a document, even though according to the email,
• 19:31
  Speaker 1: it says he's been paid by three Clinton Global Initiative sponsors,
• 19:36
  Speaker 1: gets many expensive gifts from them and some that are
• 19:39
  Speaker 1: at home. Right also mentions travel, vacation, stays, those kinds
• 19:44
  Speaker 1: of things, And he's on the payroll of of many
• 19:46
  Speaker 1: of these companies, like I think there was a three
• 19:47
  Speaker 1: point fund, boards and things like that. Makes speeches absolutely um.
• 19:51
  Speaker 1: It's unclear exactly what happened at the time. This was
• 19:53
  Speaker 1: all happening in the midst of an internal audit, and
• 19:57
  Speaker 1: whether those kinds of ethical obligations are now in place
• 20:00
  Speaker 1: at the foundation we don't know, but it is clear
• 20:03
  Speaker 1: from the emails at the time that that does not
• 20:05
  Speaker 1: seem to be the case. How is Chelsea and Clinton
• 20:09
  Speaker 1: involved here, because I believe she's had a difficult past
• 20:13
  Speaker 1: with this particular Sure, they seem to have a difficult relationship.
• 20:20
  Speaker 1: From the email, there's a lot of insults, a lot
• 20:22
  Speaker 1: of accusations, hacking, influence, peddling, all kinds of things. It
• 20:27
  Speaker 1: basically seems that Chelsea Clinton was coming in to try
• 20:30
  Speaker 1: and clean up some of these overlaps, and that she
• 20:33
  Speaker 1: had basically brought the audit in um and the band
• 20:36
  Speaker 1: was very unhappy with it. He felt that she was
• 20:38
  Speaker 1: trying to walk into something that he had built just
• 20:41
  Speaker 1: because she was the natural air. He sort of felt,
• 20:44
  Speaker 1: seems to feel in these emails that he was really
• 20:47
  Speaker 1: the the architect and she she was butting in where
• 20:50
  Speaker 1: she didn't belong. Yeah. Well, and he referred to her
• 20:53
  Speaker 1: as a spoiled brat kid. It really is like it
• 20:57
  Speaker 1: really is like airing your dirty linen in public. And indeed,
• 21:00
  Speaker 1: there is a public summary that was prepared by the
• 21:04
  Speaker 1: law firm Simpson Thatcher, right, and they talked about strengthening
• 21:07
  Speaker 1: policies on conflict of interest, absolutely, and that's something that
• 21:11
  Speaker 1: it was very clear that a lot of people around
• 21:14
  Speaker 1: the foundation wanted to do at that point. But as
• 21:17
  Speaker 1: we've seen from a lot of reporting and a lot
• 21:20
  Speaker 1: of different conflicts, you know, they clearly didn't eliminate the
• 21:23
  Speaker 1: appearance of these sorts of things. In twenty seconds, are
• 21:26
  Speaker 1: the people who you're speaking to political consultants Bracing for
• 21:29
  Speaker 1: another round of releases from Wiki Lakes as we finished
• 21:32
  Speaker 1: up the cycle. We see these daily. Sometimes they make
• 21:36
  Speaker 1: big news, sometimes they don't, but we are always on
• 21:38
  Speaker 1: the lookout for a lot more news that could change
• 21:41
  Speaker 1: the momentum of the election or not. Ben Brody, thank
• 21:45
  Speaker 1: you so much for joining us. Ben Body, reporter of
• 21:47
  Speaker 1: Bloomberg Boock Politics in Washington, d c UH. The latest
• 21:52
  Speaker 1: breaking down the latest email scandal to emerge from really
• 21:56
  Speaker 1: getting you're really getting a look at at what goes
• 21:59
  Speaker 1: on behind find the scenes. I think that is the
• 22:01
  Speaker 1: most fascinating, and the detail of all of the companies
• 22:04
  Speaker 1: and the amount of money that they gave me only
• 22:06
  Speaker 1: to Bill Clinton, but also to the foundation. Well, and
• 22:08
  Speaker 1: we would be remiss to mention that this is the
• 22:10
  Speaker 1: Wiki leaks, uh, the emails that were their leaked to
• 22:13
  Speaker 1: Wiki leagues and are widely believed to have been done
• 22:16
  Speaker 1: brought about by Russia. So it's a lot of controversy here,
• 22:20
  Speaker 1: but a lot more I'm sure to come in the
• 22:22
  Speaker 1: next twelve days. This is Bloomberg. Thanks for listening to
• 22:32
  Speaker 1: the Bloomberg P and L podcast. You can subscribe and
• 22:35
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• 22:40
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• 22:43
  Speaker 1: at pim Fox. I'm out there on Twitter at Lisa Abramo.
• 22:47
  Speaker 1: It's one before the podcast. You can always catch us
• 22:50
  Speaker 1: worldwide on Bloomberg Radio. It