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Trump Rejects New AI Safety Rules · Balance of Power

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Speaker 1: Bloomberg Audio Studios.
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Speaker 2: Podcasts.
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Speaker 3: Radio.
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Speaker 4: News.
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Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
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Speaker 5: us live on YouTube.
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Speaker 6: I'm Kayleigh Lyons alongside Joe Matthew in Washington, which is
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Speaker 6: a very busy town today. As Joe mentioned, it's a
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Speaker 6: who's who of leaders in the tech and AI space
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Speaker 6: who have descended upon the White House for a summit
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Speaker 6: with President Trump and not just the president, but the
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Speaker 6: Speaker of the House, Mike Johnson as well. Mark Zuckerberg,
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Speaker 6: Sundar Pichai, Satya Nadella. Dario Amadei, Elon Musk, Jensen Wong,
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Speaker 6: you could continue to go around the table with the
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Speaker 6: names who are going to be present. But as Joe
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Speaker 6: asked earlier, and I will ask it again, Joe, the
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Speaker 6: question is whether anything comes out of this or it's
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Speaker 6: just a chance to talk.
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Speaker 1: And promote American AI. It's a good question.
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Speaker 3: That's why Tyler Kendall has been standing by ahead of
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Speaker 3: our conversation today.
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Speaker 1: With Chair Comer.
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Speaker 3: Our Washington correspondent is just outside, well, I guess just
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Speaker 3: inside the White House complex. Imagine 17th and New York,
1:13
Speaker 3: if you know the city very well, as you walk
1:15
Speaker 3: into what we used.
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Speaker 1: To call the old executive office building.
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Speaker 3: This is where Tyler's standing because as they came back
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Speaker 3: from Mellon Auditorium, they all have to file through there
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Speaker 3: with the exception of Dario. Tyler, give us the latest.
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Speaker 3: You've been talking to a number of these folks, including
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Speaker 3: Alex Karp.
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Speaker 1: What's the mood?
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Speaker 7: Well, Joe, to answer the question that Kayleigh posed, it
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Speaker 7: doesn't really feel like we're going to get any sort
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Speaker 7: of tangible way forward here when it comes to the
1:39
Speaker 7: future of regulation in the industry. Instead, today has really
1:43
Speaker 7: been about the White House touting the technology, starting today
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Speaker 7: with that event. in downtown Washington regarding this new AI-enabled
1:51
Speaker 7: tool that the White House says is going to make
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Speaker 7: it easier for the American public to interface with the government,
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Speaker 7: and now leading up to this meeting. And as you mentioned,
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Speaker 7: there are a lot of big tech leaders here, and
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Speaker 7: as I'm talking to them, all of them are touting
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Speaker 7: working with the administration, walking that line, even though we
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Speaker 7: know some in the industry, including when it comes to Anthropic,
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Speaker 7: have been urging some caution and a slowdown, a pacing,
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Speaker 7: if you will, as it's been called when it comes
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Speaker 7: to AI development. One of those people that I spoke
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Speaker 7: with was the CEO of Palantir, Alex Karp. I asked
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Speaker 7: him about the fact that you're going to have House
2:23
Speaker 7: Speaker Mike Johnson inside that room. That of course is
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Speaker 7: important because it means that Congress could be looking at
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Speaker 7: some way forward, though the expectation is we're not going
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Speaker 7: to get legislation anytime soon. But as you're about to hear,
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Speaker 7: Alex Karp told me he'll speak to anyone. Have you
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Speaker 7: been talking with lawmakers.
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Speaker 4: On Capitol Hill?
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Speaker 8: You know, as you see, I will avoid specifics. Part
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Speaker 8: of the reason, people would be stunned how many people
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Speaker 8: call me. People call me, don't like me. I know
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Speaker 8: you wouldn't think that's possible. People call me who do
2:53
Speaker 8: like me. People call me who fake like me. And
2:56
Speaker 8: you know one of the reasons they call me? Because
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Speaker 8: I never talk about what they say. But I talk
3:01
Speaker 8: to everybody who wants to talk to me. And I
3:03
Speaker 8: tell them what I think about where the benefits are
3:06
Speaker 8: and where the dangers are. And I basically, honestly, if
3:10
Speaker 8: you heard my conversation with them, it would sound exactly,
3:13
Speaker 8: pretty much exactly with a couple more probably vulgar words
3:17
Speaker 8: that I'm telling you.
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Speaker 7: You hear Alex Karp there, Joe and Kayleigh, talk about
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Speaker 7: the line that these executives do have to walk when
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Speaker 7: they are talking to regulators in Washington, to lawmakers, to politicians,
3:31
Speaker 7: because the main point here is that nobody wants to
3:33
Speaker 7: cede competition to when it comes to China. And that
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Speaker 7: really has been the main message that we could repeatedly
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Speaker 7: hear from the White House, including President Trump earlier today,
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Speaker 7: when he said, quote, we do not surrender to fears
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Speaker 7: of what technologies will do, and we have to stay
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Speaker 7: ahead when it comes to the AI race.
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Speaker 9: All right.
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Speaker 6: Bloomberg's Tyler Kendall staked outside of this important meeting just
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Speaker 6: outside the White House. Tyler, thank you so much for
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Speaker 6: joining us. And to expand on this conversation around artificial
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Speaker 6: intelligence and a few other areas as well, including prediction markets,
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Speaker 6: we turn now to the chair of the House Oversight Committee,
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Speaker 6: Republican Congressman James Comer of Kentucky, is joining us once
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Speaker 6: again on Bloomberg TV and radio.
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Speaker 10: Mr.
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Speaker 6: Chairman, welcome back. to balance of power. And we do
4:17
Speaker 6: want to get to your announcement on the expansion of
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Speaker 6: a probe into insider trading on prediction markets. But if
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Speaker 6: we could begin with AI, the president has suggested that
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Speaker 6: this is not a space that should be reined in,
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Speaker 6: instead that it should be encouraged. Do you see reason
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Speaker 6: for safeguards around technology and the capabilities it might possess?
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Speaker 10: Of course, we see reason for safeguards.
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Speaker 11: I think there's bipartisan support in Congress to provide safeguards
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Speaker 11: to the American people to put guardrails. We don't want
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Speaker 11: to have any unintended consequences with AI. But I think
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Speaker 11: that most people in Congress will acknowledge that Congress really
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Speaker 11: doesn't know where to begin in creating a regulatory framework
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Speaker 11: for AI.
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Speaker 10: We do know this.
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Speaker 11: We want America to be the leader in artificial intelligence.
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Speaker 11: We do not want China to be the leader. And
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Speaker 11: I think that's the message that President Trump is trying
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Speaker 11: to convey, that we need to do this in the
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Speaker 11: United States and we can't cede this to China. But
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Speaker 11: having said that, there is overwhelming bipartisan support in Congress
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Speaker 11: to create a regulatory framework. A lot of Republicans, when
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Speaker 11: those four CEOs came out and, you know, cautioned of
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Speaker 11: a potential doomsday scenario. We're concerned about a potential doomsday scenario,
5:32
Speaker 11: but we don't want to do what we feel has
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Speaker 11: happened in healthcare. Anytime the healthcare companies came to Congress
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Speaker 11: wanting changes or reforms, it always ended up being less
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Speaker 11: competition and bigger healthcare companies that were too big to fail.
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Speaker 11: So we don't want to see that happen with AI.
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Speaker 11: We don't want to create a regulatory framework which prohibits
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Speaker 11: the next big startup from emerging and being a player
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Speaker 11: in AI. And that was what some of us feared
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Speaker 11: initially when those four CEOs came out, that maybe their
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Speaker 11: framework would somehow create a monopoly, and we certainly do
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Speaker 11: not want to stifle competition.
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Speaker 10: Well, Mr.
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Speaker 1: Chairman, the president has been pretty clear.
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Speaker 3: He wrote on Truth Social that he doesn't think there
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Speaker 3: should be any changes and that winning the race with
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Speaker 3: China should in fact be the purpose and the goal
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Speaker 3: here that companies should carry their own liabilities. If there
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Speaker 3: is a bipartisan rationale on Capitol Hill for action, do
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Speaker 3: you believe the president would support it?
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Speaker 10: I think he would if it was within reason.
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Speaker 11: The president has every reason in the world to have
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Speaker 11: little confidence in Congress right now.
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Speaker 10: Because the U.S.
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Speaker 11: Senate hasn't been very prolific this year in passing legislation.
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Speaker 11: That's frustrated the president a lot. It's frustrated a lot
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Speaker 11: of the members of Congress in the House. We've worked
6:51
Speaker 11: hard to pass bills that have lingered in the Senate
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Speaker 11: for months and months and months. So I understand the
6:56
Speaker 11: president's frustration with Congress, but I do think If we
7:01
Speaker 11: can all agree, and I applaud the president for having
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Speaker 11: those leaders to the White House today, I think that
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Speaker 11: a good, open, transparent discussion sets the stage for congressional action.
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Speaker 10: Congress shouldn't be in any rush. to set up a
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Speaker 10: regulatory framework.
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Speaker 11: Every time Congress rushes to do things like the PPP.
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Speaker 10: Loan program, we end up with.
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Speaker 11: A lot of unintended consequences, a lot of waste, fraud, abuse.
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Speaker 11: So that's not what we wanna see. We wanna protect
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Speaker 11: the public. We don't want to allow any type of
7:37
Speaker 11: potential doomsday scenario to happen. If there is such a
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Speaker 11: thing as a kill switch, those of us in Congress,
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Speaker 11: I think, would overwhelmingly support that. But we want to
7:46
Speaker 11: make sure that we do not do anything to hinder
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Speaker 11: any startups. We don't want to create a monopoly in
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Speaker 11: a new emerging industry that's at the forefront of all
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Speaker 11: the growth on Wall Street right now.
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Speaker 6: Well, let's talk, Mr. Chairman, about another emerging industry that
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Speaker 6: you are investigating, and that is prediction markets and insider
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Speaker 6: trading on them. Of course, you had already opened investigations
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Speaker 6: in the Kalshi and Poly market. You announced today you're
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Speaker 6: requesting documents from Hyperliquid, Crypto.com, the owner of PredictIt as well.
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Speaker 6: Is the root of your concern here about the platforms
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Speaker 6: themselves or the users of them?
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Speaker 11: Well, it's a little bit of both, and we're not
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Speaker 11: accusing anyone of any wrongdoing. We have seen reports of
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Speaker 11: insider trading with some of the other prediction markets. There
8:34
Speaker 11: should never be a scenario where a government employee profits
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Speaker 11: off of insider trading. or classified information. If you look
8:43
Speaker 11: at all the congressional races that are taking place this midterm,
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Speaker 11: you're seeing candidates in both parties have a big part
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Speaker 11: of their platform prohibiting members of Congress from trading stocks.
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Speaker 11: I think that same amount of support in the public
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Speaker 11: is out there to ensure that insiders aren't profiting off
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Speaker 11: the prediction markets with insider knowledge, with classified information. And
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Speaker 11: we do know there have been people that have done that.
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Speaker 11: We wanna know what these companies do to have guardrails
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Speaker 11: and to have safeguards. What do they do if they
9:16
Speaker 11: identify a suspicious trade or anything like that? We just
9:20
Speaker 11: wanna know what these prediction markets are doing and how
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Speaker 11: they're handling potential insider trading, especially with government insider information,
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Speaker 11: so that Congress can come in and set a regulatory framework.
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Speaker 11: The predictions markets, AI, data centers, all of these things
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Speaker 11: are really new industries that have just really caught the
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Speaker 11: attention of the American public. The American public expects Congress
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Speaker 11: to do something about it. We want to do something
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Speaker 11: about it. We're just not 100% sure what.
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Speaker 10: The best path forward is. And I don't think that's
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Speaker 10: a partisan disagreement.
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Speaker 11: It's just the fact that this industry is so relatively new,
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Speaker 11: it's growing so rapidly, we don't want to do anything
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Speaker 11: to stifle that growth or hurt competition.
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Speaker 1: How many of your colleagues, Mr.
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Speaker 3: Chairman, how many of their staff are using sites like
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Speaker 3: Polymarket and Calshi on a regular basis?
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Speaker 10: I don't know, but.
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Speaker 1: Do you see them in the cloakroom? I mean, how
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Speaker 1: prolific is this problem?
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Speaker 11: I've not seen members of Congress do it.
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Speaker 10: It's not illegal. It probably needs to be.
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Speaker 11: And if we can get our information back from these companies,
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Speaker 11: we're going to try to pass some type of legislation
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Speaker 11: banning members of Congress, banning government employees from doing this.
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Speaker 10: If you want to bet on sports games or.
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Speaker 11: Things like that, there are other platforms to do that.
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Speaker 11: These prediction markets, which I support, I think that's a
10:52
Speaker 11: great concept. But it doesn't need to be abused by
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Speaker 11: government employees. That could lead to national security concerns. And again,
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Speaker 11: no government employee should profit off of a bet based
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Speaker 11: on insider information or classified information. And that's kind of
11:09
Speaker 11: the goal of what we're trying to do. We're trying
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Speaker 11: to learn from these companies how they how they identify
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Speaker 11: suspicious trades and try to craft legislation that won't hinder
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Speaker 11: their growth, but ensures that there's ethics in the prediction
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Speaker 11: markets and that government employees or politicians aren't profiting from
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Speaker 11: these prediction markets.
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Speaker 6: Well, what about family members, including that of the first family,
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Speaker 6: like Don Jr., Mr. Chairman, who has had business ties
11:41
Speaker 6: to both Kalshi and Polly Market? That was actually in
11:44
Speaker 6: a letter that Republican Senator John Curtis sent to the
11:47
Speaker 6: Judiciary Committee last week, saying that that, along with a
11:50
Speaker 6: Russian oligarch paying for celebrations around his wedding festivities, should
11:54
Speaker 6: be investigated. He said, hold— Don Jr., to the same
11:59
Speaker 6: standard that Hunter Biden was held, you, of course, has
12:02
Speaker 6: investigated former President Biden's son. Would you open an investigation
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Speaker 6: into Don Jr.
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Speaker 11: I think that anything a president's immediate family does is
12:13
Speaker 11: subject to transparency.
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Speaker 10: I think the American people deserve to know. Again, there
12:20
Speaker 10: are no laws on the books.
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Speaker 11: With respect to prediction markets and government employees and immediate
12:25
Speaker 11: family members of politicians, but I.
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Speaker 10: Think there should be.
12:28
Speaker 11: So I'm all about trying to create a legislative package
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Speaker 11: that will ensure that politicians or their immediate families don't
12:37
Speaker 11: profit from.
12:38
Speaker 10: From insider government information. I don't know that Don Jr.
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Speaker 4: Trades.
12:43
Speaker 10: That's a fair question. I think he should answer that.
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Speaker 11: But as far as having an investment in some of
12:50
Speaker 11: these private companies, that's not illegal. But with respect to trading,
12:55
Speaker 11: that's what our investigation is based on. No government employee,
12:58
Speaker 11: no politician, no immediate family member from a politician should
13:02
Speaker 11: be trading and profiting on information insider government information. And
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Speaker 11: I think that's where there's bipartisan agreement in Congress. And hopefully,
13:13
Speaker 11: these prediction markets will work with us at a quick
13:17
Speaker 11: pace so that we can craft legislation to get passed
13:20
Speaker 11: before the end of this Congress.
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Speaker 3: You know, a lot of Democrats tell us on the air,
13:24
Speaker 3: a lot of Democratic lawmakers, Mr. Chairman, that if they
13:27
Speaker 3: win the majority of the House in November, there will
13:29
Speaker 3: be a series of hearings coming. And you're going to
13:32
Speaker 3: see a lot of corporate CEOs and maybe members of
13:35
Speaker 3: the Trump family as they investigate any number. of instances
13:39
Speaker 3: of funneling money and benefits to the Trumps, some of
13:42
Speaker 3: the president's trading specifically, which has been in the thousands
13:46
Speaker 3: of transactions a month based.
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Speaker 1: On our reporting. What if the polls are wrong?
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Speaker 3: If Republicans maintain the majority of the House, would you
13:54
Speaker 3: as chairman of the Oversight Committee promise any investigations into
13:58
Speaker 3: this yourself?
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Speaker 11: If we find any instances of wrongdoing, we will investigate.
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Speaker 11: We brought in four sitting cabinet secretaries who have been
14:07
Speaker 11: subpoenaed by me in the oversight committee pertaining to the
14:11
Speaker 11: Epstein investigation. So it doesn't matter if you're a Republican
14:15
Speaker 11: or Democrat. If we seek information, we're bringing you in.
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Speaker 11: And I think that a lot of ethics laws need
14:24
Speaker 11: to be reviewed and There's a lot of the things
14:28
Speaker 11: that the Democrats are on TV saying they're gonna investigate
14:32
Speaker 11: President Trump on. If President Trump, in fact, has done
14:36
Speaker 11: those things, they're not illegal. Now, should they be illegal?
14:39
Speaker 11: That's up to Congress to decide. I think there's gonna
14:42
Speaker 11: be a lot of discussions on what a president or
14:46
Speaker 11: their immediate family member is allowed to do in business
14:49
Speaker 11: in the future. It's just a relatively new thing for
14:53
Speaker 11: our president. We've seen in the last two presidents that
14:57
Speaker 11: their families have been involved in business endeavors while the
15:01
Speaker 11: president's been in family or while the president's been in office.
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Speaker 10: And that's kind of a new thing. And I think that,
15:09
Speaker 10: you know, as....
15:11
Speaker 11: This politics evolves, and Congress has to evolve with it
15:14
Speaker 11: and ensure that the ethics laws are current and that
15:17
Speaker 11: the American people have transparency.
15:19
Speaker 10: So if you're a president.
15:22
Speaker 11: And you're a family, you deserve to tell the people
15:25
Speaker 11: exactly where you're making money, and hopefully President Trump's doing that.
15:29
Speaker 7: Got it.
15:30
Speaker 1: Chairman James Comer, live with us.
15:32
Speaker 10: This is Bloomberg.
15:33
Speaker 1: Stay with us on Balance of Power. We'll have much
15:35
Speaker 1: more coming up after this.
15:39
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15:58
Speaker 6: I'm checking out America.gov again, popping some questions into this
16:03
Speaker 6: AI-focused service that apparently is supposed to aggregate 29,000 government
16:08
Speaker 6: websites and put it into one. Joe, I just asked
16:10
Speaker 6: America.gov how I register to vote. It goes through the
16:13
Speaker 6: basic eligibility, including that you have to be a U.S. citizen,
16:16
Speaker 6: that non-citizens cannot register to vote already.
16:19
Speaker 10: It's illegal.
16:21
Speaker 6: And points you to vote.gov as rules differ by state
16:24
Speaker 6: or territory. But that's where you start. So this was
16:26
Speaker 6: the point of today. This is what President Trump held
16:29
Speaker 6: an event this morning about.
16:30
Speaker 1: Instead of going to 100 different websites to find your thing.
16:32
Speaker 6: Yeah, using AI to perhaps make navigating the massive United
16:36
Speaker 6: States government a little simpler for users. But of course,
16:39
Speaker 6: America.gov launching today has also led to a number of
16:42
Speaker 6: tech executives being here in D.C.
16:44
Speaker 1: Yes, indeed.
16:45
Speaker 6: And afterward gathering. for lunch with the President, which is
16:47
Speaker 6: ongoing as we speak.
16:48
Speaker 3: With the President and the Speaker of the House, which
16:51
Speaker 3: is interesting. We were just talking to Congressman James Comer.
16:55
Speaker 3: You wonder if there is any dialogue about a framework
16:57
Speaker 3: here or maybe some attempt at regulation. The Speaker will
17:01
Speaker 3: be there to listen to it, but he's largely been
17:04
Speaker 3: echoing the President's.
17:05
Speaker 1: Thoughts on this, that this is not an industry in
17:06
Speaker 1: need of.
17:08
Speaker 3: Regulation, that the laws on the books when it comes
17:10
Speaker 3: to liability are pretty clear.
17:12
Speaker 6: Yeah, and it was interesting. We just talked to the
17:13
Speaker 6: chair of the House Oversight Committee, James Comer, who said, yes,
17:16
Speaker 6: there is agreement that some guardrails need to be in place,
17:19
Speaker 6: but he doesn't want to see another industry regulated to
17:21
Speaker 6: the point of reducing competition.
17:24
Speaker 3: Let's get into this with our political panel. Rick and
17:26
Speaker 3: Jeannie are both here, Bloomberg Politics contributors Rick Davis and
17:29
Speaker 3: Jeannie Shanzano. Rick is our Republican strategist and a partner
17:32
Speaker 3: at Stonecourt Capital. Jeannie, our Democratic analyst and Democracy Visiting Fellow.
17:36
Speaker 3: at Harvard Kennedy School's Ash Center. Rick, what is your
17:40
Speaker 3: thought on this? OpenAI at the moment is the poster child,
17:44
Speaker 3: I guess, of doing something right, self-policing by delaying the
17:47
Speaker 3: release of its next model, which is apparently not secure
17:50
Speaker 3: enough to be unleashed on the world. Is it showing
17:53
Speaker 3: us what the model should be, or does the government
17:55
Speaker 3: need to get involved?
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Speaker 9: Well, you got to like self-policing. I think, you know,
18:01
Speaker 9: that shows a level of.
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Speaker 2: Responsibility that I think the American public are kind of
18:06
Speaker 2: scratching their head wondering, you know, are these people who
18:08
Speaker 2: we really don't know that well, you know, going to
18:12
Speaker 2: be able to contain any kind of contagions that come
18:15
Speaker 2: out of their sandbox at the other side of the equation?
18:20
Speaker 2: I think it also alerts the American people that there
18:23
Speaker 2: aren't really that many regulations governing these things, right? I mean, like,
18:27
Speaker 2: you can't presuppose that everybody knows so much about the
18:31
Speaker 2: AI industry that they would know that it's not thoroughly regulated,
18:37
Speaker 2: especially considering the only thing you're hearing these days is
18:40
Speaker 2: how systemic the problems are and how consequential they could be.
18:46
Speaker 9: And so I think the more the public.
18:48
Speaker 2: Is informed, the more likelihood is that there'll be pressure
18:52
Speaker 2: in future Congresses to regulate. And I think this is
18:57
Speaker 2: kind of the tip of the iceberg when it comes
18:59
Speaker 2: to companies actually saying, hey, we're not going to go
19:02
Speaker 2: public or we're not going to release this model or
19:04
Speaker 2: we're not going to do something because we're concerned about
19:07
Speaker 2: the product that we ourselves have developed.
19:12
Speaker 6: Well, and that's exactly what we are seeing happening, to
19:15
Speaker 6: Joe's point, with Chash EBT delaying the newest Astra model
19:18
Speaker 6: genie over safety concerns. The president, of course, has argued
19:22
Speaker 6: that we shouldn't be doing things like slowing or pacing,
19:25
Speaker 6: though that definition perhaps is open to interpretation, due to
19:28
Speaker 6: a competition that exists with China. And to kind of
19:31
Speaker 6: get back to Rick's point about the public kind of
19:34
Speaker 6: fluency in this issue, how much does who is concerned
19:38
Speaker 6: about hearing about the capabilities of this technology care about
19:41
Speaker 6: whether or not the U.S. or China is going first?
19:46
Speaker 12: You know, what Americans care about and why this summit
19:49
Speaker 12: is so important so tone deaf, quite frankly, is they
19:53
Speaker 12: care about their jobs, their future, their kids' future, and
19:58
Speaker 12: their lives, which they look around and see are so
20:01
Speaker 12: much tied up with this new technology of which the
20:05
Speaker 12: federal government has not regulated. You know, if this summit
20:10
Speaker 12: was serious in terms of regulation and not just celebrating billionaires,
20:16
Speaker 12: what they would have, for example, would be dissenting voices
20:20
Speaker 12: from Silicon Valley and elsewhere. They would have reflected the views,
20:25
Speaker 12: for instance, of the Pope, who in his May encyclical
20:29
Speaker 12: talked about the fact that we need guardrails. This idea
20:33
Speaker 12: of AI as, you know, this whole Doomer idea is
20:37
Speaker 12: not a hoax. capitalism has never been predicated on the
20:41
Speaker 12: idea of an unfettered, unregulated industry. We've had a lot
20:47
Speaker 12: of industries come up very successfully in capitalist systems, and
20:51
Speaker 12: all of them have been regulated from the auto industry
20:54
Speaker 12: to the nuclear industry, to the airline industry, to the
20:58
Speaker 12: shipping industry, particularly when they have such a huge impact
21:04
Speaker 12: or potential impact on the lives of the people, their
21:07
Speaker 12: children and grandchildren. And so the idea that there's not
21:12
Speaker 12: going to be regulation, for instance, because we want to
21:15
Speaker 12: beat China, Well, you know who has a lot of
21:18
Speaker 12: regulation on AI?
21:19
Speaker 10: China.
21:20
Speaker 12: And they're doing quite well in terms of their development.
21:23
Speaker 12: Not as well as us, but they could threaten to
21:26
Speaker 12: because they know how to draw a line on this.
21:29
Speaker 12: And so our government, as it has been for a
21:31
Speaker 12: long time at the federal level, is woefully inadequate here.
21:35
Speaker 12: And Mike Johnson, he's been in Congress since 2017. We've
21:39
Speaker 12: had AI for more than two decades, a decade and
21:42
Speaker 12: a half. This is not new, and the need has
21:44
Speaker 12: been great a long time, and this summit is not
21:47
Speaker 12: up to the task beyond celebrating these billionaires and this America,
21:52
Speaker 12: this new AI government site that they're talking about, which
21:57
Speaker 12: is wonderful but doesn't address the regulatory issues.
22:01
Speaker 3: Rick, what's the investor supposed to do with all of this?
22:04
Speaker 3: You spent enough time working on Capitol Hill to know
22:07
Speaker 3: how long things take to become law, but you also
22:10
Speaker 3: know how quickly things can happen when there's suddenly urgency,
22:14
Speaker 3: like we're feeling around this whole topic nationally. Do investors
22:18
Speaker 3: see through this, or could this actually be a game-changing
22:22
Speaker 3: moment when it comes to the financials behind artificial intelligence?
22:27
Speaker 2: Yeah, look, I mean, there's an enormous amount of investigation,
22:31
Speaker 2: research and work being done around every aspect of the
22:36
Speaker 2: AI ecosystem. You know, we talk a lot about the
22:40
Speaker 2: politics of data centers. But when you look at investing communities,
22:45
Speaker 2: they're looking at every aspect of that transmission power generation aspect.
22:49
Speaker 2: Where are you going to get the chips? How much
22:50
Speaker 2: are the chips? What are the economics of cooling systems?
22:53
Speaker 2: I mean, it has been pulled apart a number of
22:56
Speaker 2: different ways. And I would say the same goes for
22:59
Speaker 2: the competitive advantages or disadvantages of any one of these systems.
23:04
Speaker 2: And now you see sort of pre-organized agents hitting the
23:11
Speaker 2: public markets with just amazing valuations that echo You know,
23:16
Speaker 2: real changes in in what we're going to see, you know,
23:19
Speaker 2: in public markets.
23:20
Speaker 9: And so I know that I talk quite a few.
23:25
Speaker 2: Investors in this space who, you know, are very, very
23:29
Speaker 2: interested in knowing what a new Congress would look like regulatorily.
23:32
Speaker 2: I mean, as Jeannie said, it's a kind of Wild
23:34
Speaker 2: West out there. Nobody expects that to last forever. And
23:38
Speaker 2: that's not terribly different than a lot of new industries,
23:41
Speaker 2: the telecom industry and others. And even Jeannie's talked about
23:44
Speaker 2: they weren't regulated before they grew. They were regulated after
23:47
Speaker 2: they grew. And that's the cycle we're in today. And
23:51
Speaker 2: so I think there's actually an enormous amount of interest
23:55
Speaker 2: to figure out, OK, you know where Donald Trump is.
23:57
Speaker 2: But if he has a Congress from a different party,
24:00
Speaker 2: then there's likely to be a lot of efforts around
24:03
Speaker 2: regulatory activity.
24:06
Speaker 6: Well, and to the notion of being regulated after growing,
24:10
Speaker 6: what we heard from the chair of the oversight committee,
24:12
Speaker 6: James Comer, Jeannie, was that they don't want to regulate
24:15
Speaker 6: to the point that no one else is capable of
24:17
Speaker 6: growing other than the pre-existing players who then just have
24:21
Speaker 6: too great of a foothold and the barriers of entry
24:24
Speaker 6: become too large for others to get involved. Is there
24:27
Speaker 6: merit to that argument?
24:30
Speaker 12: There absolutely is, and that is always the line that
24:33
Speaker 12: we hope our government walks, is that they have an interest,
24:38
Speaker 12: and this is what governments do, in protecting us, our
24:41
Speaker 12: national security, and ensuring that our economy is secure and
24:46
Speaker 12: stable and growing. And that's part of the reason we
24:49
Speaker 12: need regulation by the government. This idea that these tech
24:53
Speaker 12: billionaires and these corporations are going to self-regulate or that
24:57
Speaker 12: they are going to design a regulatory scheme work for
25:01
Speaker 12: the government likely means that that scheme is going to
25:04
Speaker 12: benefit them and hurt the small people, the up and
25:08
Speaker 12: coming small companies. I always think about my students who
25:13
Speaker 12: are interested in breaking into these areas. We want to
25:17
Speaker 12: keep it robust for them, but we want to do
25:19
Speaker 12: it safely.
25:21
Speaker 4: And this is.
25:22
Speaker 12: Where we have to focus our attention. And this is
25:25
Speaker 12: why this idea that it's either got to be one
25:28
Speaker 12: or the other, you've got to either, you know, have
25:30
Speaker 12: a hard hand at regulation or you've just got to
25:33
Speaker 12: let it run amok, just completely.
25:35
Speaker 1: Falls by the wayside.
25:36
Speaker 12: That's never how the United States has done business, because
25:40
Speaker 12: when you don't regulate at all, that is a Wild West.
25:44
Speaker 4: And you know what?
25:45
Speaker 1: Somebody takes control there.
25:47
Speaker 12: And, you know, when we're talking about Comer or any
25:49
Speaker 12: member of Congress, Democrat or Republican, let's see how much
25:54
Speaker 12: money these tech executives at this dinner with Donald Trump
25:58
Speaker 12: today have invested in this campaign. This is what the
26:01
Speaker 12: American people are concerned about. The same people that put
26:05
Speaker 12: our congresspeople and our president in office are benefiting from
26:08
Speaker 12: what is coming out of there. So we need to
26:10
Speaker 12: have transparency on the amount that they are investing as well,
26:14
Speaker 12: because that's an enormous concern. as it pertains to corruption.
26:20
Speaker 12: All right.
26:20
Speaker 6: Jeannie Shanzano and Rick Davis, Bloomberg Politics contributors, both of
26:24
Speaker 6: them in our political panel on this AI Day in D.C.
26:28
Speaker 6: Thank you so much. And it's unclear to me, Joe,
26:31
Speaker 6: whether or not we're actually going to get any visibility
26:33
Speaker 6: into what was discussed at this meeting, if there's something...
26:38
Speaker 6: tangible to this conversation because i know a lot of
26:41
Speaker 6: the people tyler kendall was speaking with on the way
26:43
Speaker 6: in were reluctant to provide too much right.
26:45
Speaker 3: Yeah ask the president yeah look we could actually see
26:49
Speaker 3: action maybe not on ai regulation but on data centers
26:52
Speaker 3: on capitol hill the ratepayer protection act senator john houston
26:55
Speaker 3: ohio whether or not democrats hold their nose and give
26:59
Speaker 3: him a win ahead of the midterms is the question
27:01
Speaker 3: but that would be one to mark on the.
27:03
Speaker 6: Calendar and it's one we'll be watching here on.
27:05
Speaker 1: Balance of power Stay with us on Balance of Power.
27:08
Speaker 1: We'll have much more coming up after this.
27:14
Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
27:17
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27:20
Speaker 5: Apple CarPlay and Android Auto with the Bloomberg Business app.
27:24
Speaker 5: Listen on demand wherever you get your podcasts or watch
27:27
Speaker 5: us live on YouTube.
27:30
Speaker 3: We're still trying to recover from this number. $ 1. 4 trillion. OpenAI,
27:35
Speaker 3: Kaylee Lyons, seeking evaluation at that level, not including the
27:40
Speaker 3: money raised with news that it plans to raise at
27:42
Speaker 3: least $ 30 billion from investors in a new round of funding,
27:46
Speaker 3: remembering that they just recently delayed the IPO. So this
27:50
Speaker 3: timing is interesting as Sam Altman rubs elbows with his
27:54
Speaker 3: colleagues and the president of the United States today.
27:57
Speaker 7: Yeah.
27:57
Speaker 6: When we consider that IPO timing, Sam Altman has pointed
28:00
Speaker 6: to the safety issue, saying that because of that, it
28:02
Speaker 6: is an ill-advised time for this company to go public.
28:04
Speaker 6: So perhaps this funding is just simply a bridge to
28:06
Speaker 6: eventually raising via the IPO process, keeping in mind that
28:10
Speaker 6: the last raise was back in March. At that time,
28:13
Speaker 6: they raised $ 122 billion at a post-money valuation of $ 852 billion.
28:19
Speaker 6: So we're talking what? Can't do the math that quickly.
28:22
Speaker 6: It's more than $ 600 billion roughly in value added just
28:26
Speaker 6: since marches we consider of the growth of this company.
28:29
Speaker 6: The question, of course, is the extent to which the
28:31
Speaker 6: growth is going to be able to continue if they
28:34
Speaker 6: do intend to pursue, at least in some form or fashion,
28:37
Speaker 6: a pacing of new models, keeping in mind that Astra
28:41
Speaker 6: 6.1 has been delayed due to safety concerns.
28:43
Speaker 1: It's on ice.
28:44
Speaker 3: Anthropic, meanwhile, will likely beat OpenAI to market. And of course,
28:49
Speaker 3: the Dario Amadei story is its own thing. He's there
28:52
Speaker 3: as well, by the way. We keep referring to the
28:54
Speaker 3: meeting that's underway right now at the White House With
28:56
Speaker 3: President Trump, with the Speaker of the House, and all
28:58
Speaker 3: of the executives.
29:00
Speaker 1: Altman, interestingly, delivered the keynote.
29:03
Speaker 7: Yeah.
29:03
Speaker 1: I wonder how they made that choice. Jensen Wong's in
29:05
Speaker 1: the room, too. Pretty good speaker.
29:07
Speaker 6: Yeah, of course, what Sam Altman is delivering a keynote
29:09
Speaker 6: at is a developer day in which they're announcing an
29:12
Speaker 6: always-on agent, DOTS, trying to compete with Muse that just
29:16
Speaker 6: came out. And we should point out that Sam Altman
29:19
Speaker 6: also will be making himself available to Bloomberg TV and
29:22
Speaker 6: radio this afternoon. He's going to talk to our colleague,
29:24
Speaker 6: Ed Ludlow, in the 3 o'clock hour, 3 p.m. Eastern.
29:27
Speaker 1: Fantastic.
29:27
Speaker 3: A little more than an hour from now on this
29:30
Speaker 3: AI day in D.C.
29:31
Speaker 1: We've settled on that name. Yeah.
29:33
Speaker 3: Laura Galante is with us, principal, West Exec Advisors, former
29:37
Speaker 3: director of the Cyber Threat Intelligence Integration Center at the
29:39
Speaker 3: office of of the Director of National Intelligence.
29:42
Speaker 1: Laura, welcome back. It's great to see you.
29:43
Speaker 13: Good to see you, Joe.
29:44
Speaker 3: This debate is not going to be settled today, but
29:47
Speaker 3: as the President brings the who's who of AI into
29:50
Speaker 3: the White House, and it's a big rah-rah moment, we're
29:52
Speaker 3: winning the race, is the message from the administration. Does
29:57
Speaker 3: that sort of quell the the chorus calling for regulations,
30:02
Speaker 3: this exercise today?
30:04
Speaker 14: I don't think today's AI summit at the White House
30:07
Speaker 14: is significantly changing the crisis of trust that we've been
30:11
Speaker 14: seeing here in D.C. especially, but really across the country,
30:14
Speaker 14: play out over key AI issues over the last couple
30:17
Speaker 14: weeks here. And that crisis of trust is really more
30:21
Speaker 14: than just how safe are the models. It's about how
30:25
Speaker 14: AI gets deployed. across industries, across the economy. And right now,
30:30
Speaker 14: the AI companies, the government, everyone's sitting here saying, I
30:34
Speaker 14: think we've got some fundamental issues where the frontier models, Claude, GPT, Gemini,
30:40
Speaker 14: don't have their alignment, as the industry would call.
30:44
Speaker 13: It, set in a way where they really have control
30:46
Speaker 13: over their product.
30:47
Speaker 14: And you see OpenAI delaying the release of the next
30:50
Speaker 14: version of 6.1.
30:51
Speaker 1: Is that a good look today?
30:53
Speaker 13: Are they doing the right thing?
30:54
Speaker 14: I think that's smart on a ton of different levels.
30:57
Speaker 14: But this is where the labs themselves, these frontier labs,
31:00
Speaker 14: have to show that they aren't just talking the talk
31:03
Speaker 14: on AI safety and security and saying.
31:06
Speaker 13: Dear government, come help us. No.
31:09
Speaker 14: You're at the real forefront of figuring out what benchmarks
31:12
Speaker 14: make sense to deploy models, what's safe, what's not, what's controlled,
31:16
Speaker 14: what's not. So take the responsibility, not just as your
31:19
Speaker 14: own company, but together to figure out how we build
31:22
Speaker 14: the right safeguards into the products while you're still innovating.
31:27
Speaker 6: And you think that they ultimately, if this is a
31:28
Speaker 6: crisis of trust, can be trusted to do that on
31:31
Speaker 6: their own?
31:32
Speaker 14: I don't think they've shown that over the last couple
31:34
Speaker 14: of weeks. And that's the state of fear that you're
31:38
Speaker 14: feeling across this issue. If you rewind back to 2023,
31:42
Speaker 14: there was this forum called the Frontier Model Forum that
31:46
Speaker 14: was put together across these AI labs and a few
31:50
Speaker 14: other of the.
31:50
Speaker 13: Leading AI companies. And in that, they said, look, we
31:53
Speaker 13: need a way to be able to talk to each
31:54
Speaker 13: other here. Well, we're pretty deep into this at this point, right?
31:59
Speaker 14: The incident around Hugging Face, all these other security and
32:03
Speaker 14: model misalignment issues that have come out have really raised
32:06
Speaker 14: a question of, Do you have the right speed in
32:09
Speaker 14: operational work to build trust back into the system? That's
32:13
Speaker 14: what we need here. And this discussion on regulation is fine,
32:16
Speaker 14: but really the focus has to be for the people
32:19
Speaker 14: who have their hands on the gears, who are looking
32:21
Speaker 14: at how the models work and testing them, do they
32:24
Speaker 14: have the dialogue on a fast enough pace with their
32:27
Speaker 14: peers in the other two or three labs to be
32:30
Speaker 14: able to really build safety back in? That's how we
32:33
Speaker 14: start automating trust into these products.
32:36
Speaker 3: Does that dialogue need to span countries as well, the U.S.
32:40
Speaker 1: And China?
32:41
Speaker 13: I think it does, but let's start it here.
32:43
Speaker 14: One of the developments that I thought was fascinating is
32:45
Speaker 14: a couple weeks ago, the Minister of State Security in China,
32:48
Speaker 14: so China's top intel guy, came out publicly in a
32:52
Speaker 14: journal and wrote that AI control issues... could threaten the
32:57
Speaker 14: regime in China, could threaten the Chinese Communist Party. Now,
33:01
Speaker 14: he's not just making that as a political statement. He's
33:04
Speaker 14: also talking about how do you pace the development in
33:09
Speaker 14: a way where they can control, for Chinese purposes, what
33:13
Speaker 14: they want AI to do in their society. So they
33:16
Speaker 14: want to backstop their values into their model. We have
33:19
Speaker 14: a very messy and different type of dialogue going on
33:21
Speaker 14: in D.C., But the same urgency around how do you
33:25
Speaker 14: couple innovation with the ability to securely deploy these models.
33:30
Speaker 6: So let's talk about some of those innovative ideas around security.
33:33
Speaker 6: NVIDIA yesterday announces basically a software layer to go over
33:37
Speaker 6: their hardware to try to rein in agents from Rogue. behavior,
33:40
Speaker 6: Anthropic then came out, announced a partnership with NVIDIA. They
33:43
Speaker 6: have a layer on top of that. Is that the
33:45
Speaker 6: right idea?
33:46
Speaker 14: I think the ecosystem around this, whether it's the compute
33:48
Speaker 14: side and NVIDIA, but then also the enterprise deployers, the
33:52
Speaker 14: companies who are investing in how they put AI models
33:55
Speaker 14: into all the services you and I touch every day,
33:59
Speaker 14: those are the forcing functions. Those are the people who
34:01
Speaker 14: are going to say, I'm only going to use this
34:04
Speaker 14: if you can give me assurance that that I can
34:07
Speaker 14: trust this model, right? So the more of those partnerships
34:10
Speaker 14: that actually become working models that have some guts to them,
34:14
Speaker 14: that say, this is what an incident response disclosure is
34:17
Speaker 14: going to look like. We're going to tell you, here's
34:19
Speaker 14: how we're going to report it. Here's some of the
34:22
Speaker 14: assurance frameworks that we're using before we deploy a new model.
34:26
Speaker 14: Those are the sorts of frameworks and systems that these
34:31
Speaker 14: labs need to start putting out to their core customers
34:34
Speaker 14: and partners, and then also finding ways to talk about
34:37
Speaker 14: that with the government.
34:38
Speaker 13: And with the public.
34:39
Speaker 1: Is Jensen Wong right.
34:42
Speaker 3: That if the world decides to develop AI on the
34:46
Speaker 3: Huawei stack, as opposed to the Nvidia stack, the US
34:50
Speaker 3: inherently has lost?
34:53
Speaker 14: The stack underneath AI deployment is so varied already that
35:00
Speaker 14: I think, in a sense, the horse is out of
35:03
Speaker 14: the barn on the ability to even have a peer,
35:06
Speaker 14: let's say, American stack versus Chinese stack. There's so many
35:10
Speaker 14: different dependencies here. There's energy, there's compute, there's talent, and
35:14
Speaker 14: then there's all these different types of models that are
35:16
Speaker 14: built on top of each other. What we've got to
35:19
Speaker 14: go back to is what an organization can control. What
35:22
Speaker 14: do I give the model consent to look at? So
35:25
Speaker 14: what does deployment look like, right? How do I put
35:29
Speaker 14: the right safety and governance models around how it's used?
35:32
Speaker 14: These are the basics of how we deploy technology and
35:35
Speaker 14: have for 20 years.
35:36
Speaker 13: We know how to do this, but we need to
35:38
Speaker 13: apply it freshly.
35:40
Speaker 14: And we need to put the same kinds of rigor
35:43
Speaker 14: into how we talk with the AI companies to be
35:46
Speaker 14: able to have the assurance that we can use this.
35:49
Speaker 6: What is your thought on a kill switch model? concept
35:52
Speaker 6: and who should be empowered to turn that switch on
35:55
Speaker 6: and off?
35:56
Speaker 14: I think it's easy rhetoric, to be honest with you.
35:59
Speaker 14: A lot of what's underneath this idea of a kill
36:02
Speaker 14: switch is how do we have some level of sort
36:06
Speaker 14: of last control, last line, red line that when a
36:10
Speaker 14: model crosses it, something happens, right?
36:12
Speaker 13: That idea is good.
36:14
Speaker 14: How do you put authority and sort of role-based rules
36:18
Speaker 14: around how you want to use AI? But the idea
36:20
Speaker 14: that there's a kill switch or someone could unplug something,
36:23
Speaker 14: at this point, this is such a diffused technology. It's
36:27
Speaker 14: almost like saying, you know, how do you fully cut
36:30
Speaker 14: off something that's really deeply embedded, almost like electricity across
36:35
Speaker 14: corporate America and across a lot of systems that people
36:38
Speaker 14: use today?
36:38
Speaker 3: We just survived, it appears at least. I don't want
36:40
Speaker 3: to drop a flag on this, but we just... appear
36:43
Speaker 3: to have survived the SaaSpocalypse, in which all software companies
36:47
Speaker 3: were left on the side of the road because AI
36:50
Speaker 3: was going to vibe code everything, including cybersecurity. We have
36:55
Speaker 3: changed our viewpoint as a market on this, and my gosh,
36:58
Speaker 3: it's a new all-time high, it seems, every day for
37:00
Speaker 3: CrowdStrike and Palo Alto. Should this be a more pronounced
37:03
Speaker 3: conversation with the companies themselves? How can we secure ourselves
37:09
Speaker 3: from these models If the security providers are not in
37:13
Speaker 3: conversation with the model developers, should CrowdStrike be at that
37:17
Speaker 3: table in there?
37:18
Speaker 14: The cybersecurity companies are a really critical component to how
37:23
Speaker 14: you do and build trust in AI deployment, right? And yes,
37:28
Speaker 14: they need to be in the conversation. Earlier in the spring,
37:31
Speaker 14: you saw these efforts from some of the labs, Glasswing, Daybreak,
37:35
Speaker 14: which were attempts to figure out how do you put
37:38
Speaker 14: AI tools and models in the hands of the cybersecurity
37:42
Speaker 14: industry today? first in order to sort of scale how
37:46
Speaker 14: AI deployment can be used for defense versus offense. And
37:50
Speaker 14: those efforts need to be wider. They need to be stronger.
37:53
Speaker 14: And those are the sorts of trust-building measures, confidence-building measures
37:57
Speaker 14: in old government terms that will start to say, hey,
38:00
Speaker 14: folks on the front line who have to defend the
38:02
Speaker 14: water system or defend an energy plant, right? We want
38:06
Speaker 14: you to have the best tools to be able to
38:09
Speaker 14: know when someone's unauthorized, whether that someone's an AI model
38:13
Speaker 14: or AI agent, or whether that someone is a spy
38:16
Speaker 14: from another country. We want you to have the ability
38:19
Speaker 14: to deploy the best tools out there to know when
38:23
Speaker 14: your system's been breached. So yes, this is an ongoing
38:26
Speaker 14: dialogue between the cybersecurity industry and the AI labs.
38:29
Speaker 6: Well, and are the operators of critical infrastructure such as
38:32
Speaker 6: that ready for this moment right now?
38:34
Speaker 14: I think a lot of them are looking at this,
38:36
Speaker 14: infrastructure operators, and saying, I need to shore up my systems.
38:40
Speaker 14: I always am looking at the best way to do
38:43
Speaker 14: a better job on cybersecurity. But it comes down to basics.
38:47
Speaker 14: least amount of privilege that I can give to a
38:50
Speaker 14: user on a system. I only want them to access
38:52
Speaker 14: what they need to access. I need visibility across all
38:56
Speaker 14: of my operational components, the switches on the tank, and
38:59
Speaker 14: I need it on my corporate network, and I want
39:02
Speaker 14: those to be separate. So this comes down to a
39:05
Speaker 14: lot of the same basics around how you run a
39:08
Speaker 14: good security program. And a lot of infrastructure operators that
39:12
Speaker 14: I work with will say, it's really a red herring
39:15
Speaker 14: to get too focused on how AI is going to
39:18
Speaker 14: change fundamentally the way that I run my plant. I
39:23
Speaker 14: just need to keep running this in a way where
39:25
Speaker 14: I can operate with the minimum viable operations to keep
39:29
Speaker 14: the water going, to keep the electricity running, et cetera.
39:32
Speaker 13: That's good practices.
39:34
Speaker 14: And that's where a lot of these operators are really saying,
39:37
Speaker 14: let's cut through the noise and make sure we're secure.
39:40
Speaker 6: It's great to have you here and really insightful stuff.
39:43
Speaker 6: Laura Galante is principal at West Exec Advisors, also former
39:47
Speaker 6: director of the Cyber Threat Intelligence Integration Center at the
39:50
Speaker 6: Office of the Director of National Intelligence. Here with us
39:53
Speaker 6: in our Washington, D.C. studio at a time when D.C.
39:56
Speaker 6: is fixated on this and the White House, especially as
39:59
Speaker 6: they have gathered all of these AI and tech executives
40:02
Speaker 6: for lunch today to talk about some of these very issues.
40:05
Speaker 1: Stay with us on Balance of Power. We'll have much
40:07
Speaker 1: more coming up after this.
40:12
Speaker 5: You're listening to the Bloomberg Balance of Power podcast. Catch
40:15
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40:19
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40:22
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40:25
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40:31
Speaker 15: Welcome to our Bloomberg television and radio audiences. I'm Scarlett Fu.
40:34
Speaker 15: Joining us now from Washington, D.C., is the former governor
40:37
Speaker 15: of New York State and co-chair of the ICE-OKX joint venture,
40:42
Speaker 15: Andrew Cuomo. He's in our Balance of Power studio along
40:45
Speaker 15: with Bloomberg's Joe Matthew, who will join the conversation in
40:48
Speaker 15: a moment. Governor, thank you for speaking with us today.
40:51
Speaker 15: I want to start on the Clarity Act because you
40:53
Speaker 15: have talked about the need to pass the Clarity Act
40:55
Speaker 15: to help the U.S.
40:56
Speaker 9: Lead the future of finance.
40:57
Speaker 15: You've also told Bloomberg back in July that you hoped
41:01
Speaker 15: lawmakers would include full disclosure and clear ethics guidelines to
41:04
Speaker 15: reassure the public, something the Republicans and the White House resisted.
41:09
Speaker 15: So did the Clarity Act fail for the right reasons?
41:14
Speaker 16: The Clarity Act, first, thank you for having me today.
41:18
Speaker 16: You know, we've been talking about digital assets and the
41:21
Speaker 16: fact that digital assets are the future of finance for
41:24
Speaker 16: over a decade. 2014, I passed regulations in New York
41:29
Speaker 16: on digital assets. The Clarity Act is probably had the
41:34
Speaker 16: best name of any piece of legislation in a long
41:38
Speaker 16: time because it was actually about clarity. And when clarity failed,
41:43
Speaker 16: ambiguity wins and unpredictability wins. And that's the last thing
41:48
Speaker 16: the industry can actually tolerate. And you're seeing jurisdictions all
41:51
Speaker 16: around the world. that are actually putting in regulations and
41:57
Speaker 16: compliance so companies know the rules of the game.
42:01
Speaker 4: Just tell me the rules of the game.
42:03
Speaker 16: And it is passing us by. I'm a New Yorker,
42:07
Speaker 16: if you can't tell. New York, finance capital of the world.
42:13
Speaker 16: And I see this financial future developing outside of the
42:17
Speaker 16: United States. So that's what gives me concern. Did it
42:21
Speaker 16: fail for the right reasons? It failed because of politics.
42:26
Speaker 16: There were differences. There are always differences in a bill.
42:29
Speaker 16: Were there any irreconcilable differences, in my opinion?
42:34
Speaker 14: No.
42:35
Speaker 4: It was politics. We're coming up to an election. Who
42:40
Speaker 4: didn't want to.
42:41
Speaker 16: Pass the legislation? Because the other side would look like
42:44
Speaker 16: they were winners. But there are no right reasons for
42:49
Speaker 16: that bill to fail. We desperately needed it, and we
42:53
Speaker 16: still do.
42:54
Speaker 4: And I hope.
42:55
Speaker 16: The lame duck Congress, when the politics subsides, they could
43:00
Speaker 16: pass it. Otherwise, January 1, it should be right on
43:04
Speaker 16: the desks because it's a major priority.
43:07
Speaker 1: The same version of this, Governor?
43:10
Speaker 17: Or do changes need to be made to it to
43:12
Speaker 17: get everybody on board? I mean, we live in a
43:14
Speaker 17: political world, whether midterms are five weeks away or not.
43:19
Speaker 4: Look, the difference is just before.
43:24
Speaker 16: the midterms, the political temperature goes way up. That's the difference.
43:31
Speaker 16: Post midterms, the temperature comes down. Hopefully some rationality returns
43:39
Speaker 16: and responsibility returns. And since the political temperature is down,
43:47
Speaker 16: The lawmakers will do what's actually responsible and do their
43:51
Speaker 16: public duty and pass a law that provides a framework.
43:56
Speaker 4: For the digital asset system.
43:58
Speaker 16: Future of this country, which is now leading in nations
44:04
Speaker 16: around the globe. So I think the politics derailed it.
44:09
Speaker 16: I think when the politics relaxes, you can see the
44:13
Speaker 16: bill pass because the differences were not irreconcilable.
44:16
Speaker 4: Should we have ethics reform?
44:18
Speaker 7: Yes.
44:19
Speaker 16: Obviously, and not just on on the executive, but also
44:25
Speaker 16: for the legislature. Should we have consumer protection? Of course
44:29
Speaker 16: we should. We just heard about another hack. Yes, this
44:33
Speaker 16: this industry has.
44:34
Speaker 4: To be policed.
44:35
Speaker 16: So it's not a these are no brainers that they
44:40
Speaker 16: have to be addressed.
44:42
Speaker 4: Politics is what got in the way.
44:45
Speaker 15: So you had mentioned this about how you oversaw the
44:47
Speaker 15: introduction of BitLicense, one of the first U.S. regulatory frameworks
44:50
Speaker 15: designed for virtual currency businesses back in 2015.
44:53
Speaker 13: That's when it was implemented.
44:55
Speaker 15: And you're here now to help us learn what Europe
44:57
Speaker 15: can understand from.
44:59
Speaker 13: New York's experiment.
45:01
Speaker 15: The thing is, if you were to give an honest
45:03
Speaker 15: assessment of BitLicense, it actually drove more than a dozen
45:06
Speaker 15: crypto companies out of the state. Kraken, Bitfinex, Shapeshift all
45:11
Speaker 15: left rather than comply. Only five companies got licensed in
45:15
Speaker 15: the first three years. So I guess my question is,
45:18
Speaker 15: was BitLicense too aggressive? And is that something that European
45:23
Speaker 15: regulators should learn from?
45:25
Speaker 13: And if so, what should they learn from that?
45:27
Speaker 7: Yeah.
45:28
Speaker 16: Well, the New York bid license, you're right, first in
45:32
Speaker 16: the country. And there are only a handful of states
45:35
Speaker 16: that have passed a license since. And the federal government
45:40
Speaker 16: still doesn't have a framework, as we discussed. And more
45:46
Speaker 16: companies have been licensed by New York than any other
45:49
Speaker 16: state in the United States. But the point of the
45:53
Speaker 16: bid license was, This is the future. Let's recognize it.
45:58
Speaker 16: We want it here, but it has to be regulated.
46:01
Speaker 16: You can have innovation and regulation. They're not mutually inconsistent.
46:06
Speaker 16: I think the BitLicense, as it was implemented in later years,
46:10
Speaker 16: was in many ways too stringent, and some companies said
46:17
Speaker 16: it's easier to do business elsewhere. But look, the point
46:21
Speaker 16: of the license was We wanted a true framework. We
46:27
Speaker 16: wanted a framework that protected the consumer. And that was
46:32
Speaker 16: the point of the law in the first place.
46:34
Speaker 4: But as it was.
46:35
Speaker 16: Implemented, and at the time, if you recall, this is
46:38
Speaker 16: going back to the FTX, et cetera, there were scandals,
46:43
Speaker 16: and I think they became very cautious.
46:46
Speaker 1: About I want to shift gears a little bit.
46:48
Speaker 17: You mentioned BitGet, and we just spoke with Gracie Chen
46:52
Speaker 17: a few moments ago. OKEx launching a customer protection program
46:55
Speaker 17: providing up to 500,000 euros of coverage against account takeovers
47:00
Speaker 17: and third-party attacks. The $ 387 million that BitGet lost to
47:05
Speaker 17: North Korean hackers, that's been well-documented.
47:07
Speaker 1: We just spoke to Gracie about that.
47:09
Speaker 17: The protection, though, that you're offering covers individual account compromises,
47:12
Speaker 17: not exchange-level hacks. So if North Korea can drain nearly
47:15
Speaker 17: $ 400 million... from exchanges, hot wallets. What good is 500,000
47:20
Speaker 17: euros of individual account protection?
47:24
Speaker 16: Yeah, well, I obviously don't know the details of what
47:27
Speaker 16: happened with BitGet, but our point at OKEx is we
47:32
Speaker 16: believe we have the best technology. That's step one. Step
47:36
Speaker 16: two is consumers have to trust that they are dealing
47:40
Speaker 16: with a platform or company, an app, that actually understands
47:46
Speaker 16: the fiduciary obligation and has the protections in place. And
47:52
Speaker 16: our way of reassuring consumers and consumer protection is to
47:57
Speaker 16: say we are so confident in our system that we
48:02
Speaker 16: will provide insurance if you are attacked and defrauded.
48:08
Speaker 7: Not.
48:09
Speaker 16: That you're part of the fraud or it was your fault,
48:12
Speaker 16: but if you have a secure account and we'll work
48:17
Speaker 16: with you on the security of the account, we are
48:19
Speaker 16: so confident in our system that we will provide protection.
48:23
Speaker 4: And to me.
48:25
Speaker 16: I was former governor. I was also former attorney general.
48:29
Speaker 16: Consumer protection is key. This is finance. This is about trust.
48:35
Speaker 16: You put your money in a company that you trust.
48:39
Speaker 16: And crypto has had questions. Do I trust crypto? I've
48:45
Speaker 16: heard a lot of different things about crypto. And it's
48:48
Speaker 16: OKEx's way of saying we're going to put our money
48:51
Speaker 16: where our mouth is, so to speak, and we will
48:55
Speaker 16: provide protection if your account is attacked.
49:01
Speaker 3: Let's keep talking about the temperature rising as we head
49:03
Speaker 3: for the midterms. Governor, it's great to have you in
49:05
Speaker 3: our Washington studios, by the way. 35 days to go.
49:09
Speaker 3: You must be feeling that sensation as you creep up
49:13
Speaker 3: on another election day. The Cook Political Report is talking
49:16
Speaker 3: about as many as 15 seats in the House flipping.
49:18
Speaker 1: We're hearing about a blue wave.
49:20
Speaker 10: Wave.
49:20
Speaker 3: When we talked to Charlie Cook last night, though, he
49:22
Speaker 3: said it's not so much a blue wave as a
49:24
Speaker 3: red undertow.
49:25
Speaker 1: Is that how you see it?
49:26
Speaker 4: That's a great term. That's why Cook is Cook. Well, yes.
49:32
Speaker 16: I don't think this is about the Democrats. It's about
49:35
Speaker 16: the Republicans. And it's also about history.
49:40
Speaker 7: Right.
49:41
Speaker 16: We were chatting earlier. I saw this movie. I was
49:44
Speaker 16: HUD secretary to Bill Clinton in 1992.
49:49
Speaker 4: Hallelujah. Clinton Gore. It was a new era, new leadership.
49:54
Speaker 4: Ninety four. We lose the House and the Senate.
50:00
Speaker 7: Why?
50:01
Speaker 16: Because that is the historical pattern. I think it's more
50:05
Speaker 16: pronounced now. There is a lot going on in the world.
50:11
Speaker 16: And there's a lot of anxiety. War in Iran, tariffs.
50:16
Speaker 16: The American people want stability. They want predictability. And they
50:22
Speaker 16: believe they get that with a balance of power. And
50:26
Speaker 16: the past two years, the president and the Republicans have
50:31
Speaker 16: been dominant. And there's a lot of drama. And I
50:37
Speaker 16: think what Americans are saying is. We want to have
50:41
Speaker 16: a more balance in the system. And the way we
50:44
Speaker 16: will achieve more balance is by electing Democrats. I don't
50:47
Speaker 16: think they're saying, wow, the Democratic agenda blows me away.
50:53
Speaker 16: These Democrats are really phenomenal.
50:55
Speaker 3: They're saying the Democratic socialist agenda blows us away.
50:58
Speaker 1: That's where a lot of the energy is. And you
51:00
Speaker 1: know a lot about this.
51:01
Speaker 3: Having run against Soran Mandani, you said a lot of
51:03
Speaker 3: things about him during the campaign.
51:05
Speaker 1: And I'm wondering now that you've seen him in action.
51:07
Speaker 3: What went through your mind when you see him in
51:09
Speaker 3: the Oval Office or Donald Trump at Gracie Mansion? Does
51:12
Speaker 3: he have the playbook for making this work on a
51:14
Speaker 3: mainstream level?
51:15
Speaker 16: You know, I don't believe the democratic socialists. I don't
51:18
Speaker 16: believe socialism is viable nationwide. Can you sell it in
51:24
Speaker 16: New York City? Can you sell it in Detroit? Can
51:27
Speaker 16: you sell it in Chicago? Can you sell it in L.A.? Yes.
51:30
Speaker 16: Can you sell it nationwide?
51:32
Speaker 4: No.
51:33
Speaker 16: This is in big cities that have a lot of
51:38
Speaker 16: new immigrants, a lot of young people. My election for mayor,
51:43
Speaker 16: I won with people born in New York City. If
51:47
Speaker 16: you were born in New York City.
51:49
Speaker 4: I won with those voters.
51:51
Speaker 16: It was the young people who came into New York City.
51:54
Speaker 4: It was the new immigrants.
51:56
Speaker 16: So in those cities, I think you see these this
52:00
Speaker 16: socialist faction. I don't believe it works nationwide. And I
52:06
Speaker 16: don't believe that has anything to do with what's going
52:08
Speaker 16: on right now. I think the Democrats are winning despite
52:13
Speaker 16: them because the candidates they have put forth have tended
52:17
Speaker 16: to be highly problematic candidates who are winning anyway.
52:24
Speaker 7: Why?
52:25
Speaker 4: Because it's not about them.
52:28
Speaker 16: It's about just restoring balance, just changing red to blue candidates.
52:34
Speaker 16: So the American people take a deep breath and say
52:38
Speaker 16: there's balance restored to the system. I believe that's what's happening.
52:41
Speaker 16: How are you talking about a Democrat winning Texas, right?
52:46
Speaker 16: Winning Alaska? That doesn't happen. Republicans can lose Texas. Republicans
52:52
Speaker 16: can lose Alaska. And I think that's what's happening. If
52:56
Speaker 16: you see that shift in the House and if you
53:01
Speaker 16: believe the prediction markets in the Senate— you're going to
53:06
Speaker 16: see a radical shift in what's happening in this town,
53:11
Speaker 16: this town being Washington.
53:13
Speaker 17: Governor Cuomo, we only have about one minute left, and
53:15
Speaker 17: I want to just end with crypto because the crypto
53:18
Speaker 17: industry loves to talk about this crypto voter. But you
53:21
Speaker 17: know that is not top of mind for many voters.
53:24
Speaker 17: It's the economy. It's affordability. It's government ethics, immigration, health care.
53:28
Speaker 1: Is there really.
53:30
Speaker 17: such a thing as a meaningful crypto voter block? Or
53:33
Speaker 17: is this something that the industry is overstating?
53:37
Speaker 4: There should be. There should be.
53:40
Speaker 16: I think as the crypto industry matures, political maturity will
53:46
Speaker 16: be part of it. And I think you will see
53:49
Speaker 16: them mobilize the crypto voters. You do have tens of
53:52
Speaker 16: millions of Americans who use crypto. Where were they in
53:57
Speaker 16: the debate about the Clarity Act? Where are they as
54:01
Speaker 16: a political force? They haven't really been organized. They haven't
54:06
Speaker 16: really been mobilized, which is ironic because they're probably the
54:10
Speaker 16: most reachable audience by definition. But in a general election,
54:17
Speaker 16: is crypto on the top five issues?
54:22
Speaker 7: No.
54:23
Speaker 16: But when it came to something like the Clarity Act,
54:26
Speaker 16: could the industry have done a better job of mobilizing them?
54:30
Speaker 4: Yes, 100 percent.
54:33
Speaker 16: And I think what the crypto industry realized is you
54:35
Speaker 16: can't just go to Washington with a boatload of money
54:39
Speaker 16: and make political contributions and think that the bill is
54:43
Speaker 16: going to pass.
54:44
Speaker 4: It doesn't work that way.
54:45
Speaker 15: So, Governor Cuomo, if you think there should be a
54:47
Speaker 15: crypto block, a crypto voter block, what do Democrats misunderstand
54:52
Speaker 15: about this?
54:52
Speaker 13: What can they do better?
54:54
Speaker 15: What can they learn from the Republicans when it comes
54:56
Speaker 15: to catering to crypto voters?
54:59
Speaker 16: Well, I think that the Democrats, it became hyperpolitical quickly.
55:04
Speaker 16: I don't believe Democrats are inherently against crypto, right?
55:10
Speaker 4: As I said, New York is a blue state.
55:12
Speaker 16: I passed it in 2014 with an all blue legislature
55:17
Speaker 16: in an all blue town. So they're not inherently against crypto.
55:23
Speaker 16: It is a highly charged political issue right now. And
55:27
Speaker 16: they have questions about corruption in crypto. That's the political
55:34
Speaker 16: hot button. And that's why I think it's problematic. We
55:40
Speaker 16: saw clarity pass. We now see these agencies passing regulations.
55:44
Speaker 16: If the Congress changes, you will see these agency regulations
55:50
Speaker 16: put under a microscope. And all these companies who said,
55:54
Speaker 16: this is great.
55:55
Speaker 4: We now have regulations.
55:56
Speaker 16: And by the way, I understand in the void they had.
55:59
Speaker 4: To do something.
56:00
Speaker 16: And the SEC has come up with novel programs. We're
56:04
Speaker 16: participating in them. But when the Congress changes, regulation is
56:10
Speaker 16: not legislation.
56:12
Speaker 4: I was HUD secretary. I went through this.
56:15
Speaker 16: And regulations can easily be challenged, investigated, and undone. And
56:20
Speaker 16: that's going to add more chaos to the system rather
56:24
Speaker 16: than clarity.
56:25
Speaker 17: Governor Cuomo, just before we let you go, 10 seconds.
56:27
Speaker 17: You're now chair of the Intercontinental Exchange OKEx joint venture.
56:32
Speaker 17: Is this it for you, for politics? Are you going
56:34
Speaker 17: to ever run for anything again?
56:37
Speaker 4: Never say never. Who knows? A lot of opportunities.
56:40
Speaker 16: I may be a Bloomberg broadcaster walking around the studio.
56:45
Speaker 4: It looks quite.
56:46
Speaker 1: Well, what would you.
56:46
Speaker 4: I think I want Joe's job.
56:49
Speaker 1: I mean, I think Joe.
56:50
Speaker 17: Joe, you're going to have to fight Joe for that one.
56:52
Speaker 17: I think Joe does a great job. Governor, great to
56:54
Speaker 17: see you. Thank you so much for joining us on
56:56
Speaker 17: Bloomberg Crypto. That's former New York governor and chair now.
57:01
Speaker 17: Now chair of the ICE OKEx joint venture, Andrew Cuomo.
57:06
Speaker 3: Thanks for listening to the Balance of Power podcast. Make
57:09
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57:12
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57:15
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57:17
Speaker 1: At noontime Eastern at Bloomberg.com.