Latest / Bloomberg Intelligence / Trump Agenda Would Radically Alter U.S. Economy, Millstein Says

Transcript

Trump Agenda Would Radically Alter U.S. Economy, Millstein Says · Bloomberg Intelligence

• 0:00
  Speaker 1: P and L is brought to you by proper Cloth,
• 0:02
  Speaker 1: a leader in men's custom shirts with proprietary smart sized
• 0:05
  Speaker 1: technology and top rated customer service. Ordering a custom shirt
• 0:08
  Speaker 1: has never been easier. Visit proper cloth dot com to
• 0:11
  Speaker 1: order your first custom shirt today. Welcome to the Bloomberg
• 0:20
  Speaker 1: P and L Podcast. I'm Pim Fox. Along with my
• 0:22
  Speaker 1: co host Lisa Abramowitz. Each day we bring you the
• 0:25
  Speaker 1: most important, noteworthy, and useful interviews for you and your money,
• 0:29
  Speaker 1: whether at the grocery store or the trading floor. Find
• 0:32
  Speaker 1: the Bloomberg P and L Podcast on iTunes, SoundCloud and
• 0:36
  Speaker 1: at Bloomberg dot com. The intersection of business and government.
• 0:44
  Speaker 1: Who but Jim Millstein, the co found the founder, rather
• 0:48
  Speaker 1: and the CEO of Millstein and Company, also former chief
• 0:51
  Speaker 1: of Structuring officer at the U. S. Department of the Treasury.
• 0:54
  Speaker 1: Who better but Jim Millstein to have on and tell
• 0:57
  Speaker 1: us this intersection. Uh, it can in some cases be
• 1:01
  Speaker 1: looked at as a collision. You don't know, but Jim,
• 1:03
  Speaker 1: thanks very much for being here. Give people just a
• 1:06
  Speaker 1: little bit a quick run down, I said, Chief Restructuring
• 1:08
  Speaker 1: officer at the U. S. Department of the Treasury. That's
• 1:11
  Speaker 1: a fancy title for you were working on a I
• 1:14
  Speaker 1: G right, Yeah, no, I had. I kind of had
• 1:17
  Speaker 1: the big messes, the big natural crisis. I was gonna
• 1:20
  Speaker 1: get under your ages at the advisory firm, clients include
• 1:25
  Speaker 1: Puerto Rico. We're gonna get to that, Cypress, Greece, US Airways,
• 1:28
  Speaker 1: acquisition of American Airlines. I don't know how many Chapter
• 1:32
  Speaker 1: eleven's you've worked on. I mean it's many, too many,
• 1:36
  Speaker 1: all right, So where do you want to start? You
• 1:38
  Speaker 1: want to start with with with Puerto Rico. They bought
• 1:40
  Speaker 1: a little bit of time, but they're they're not paying
• 1:42
  Speaker 1: their debts. Is there a way out here? Yeah? I
• 1:45
  Speaker 1: mean the Congress um at the urging of the last administration,
• 1:49
  Speaker 1: passed a law that really gives a framework for recreating
• 1:54
  Speaker 1: fiscal sanity and stability and also giving them a bankruptcy
• 1:58
  Speaker 1: like process to restructure the debt. And so you know,
• 2:00
  Speaker 1: this is a this these the commonwealth got um you know, uh,
• 2:06
  Speaker 1: they went off track, uh, fiscally and economically, and uh
• 2:10
  Speaker 1: that's a diplomatic way. Well, I mean, you know, there
• 2:14
  Speaker 1: there are many hands and in this mess. Uh, you know,
• 2:17
  Speaker 1: the federal government played Puerto Rico played an important role
• 2:21
  Speaker 1: in the strategic defense of the United States during the
• 2:25
  Speaker 1: Cold War given its proximity to Cuba. There were, you know,
• 2:28
  Speaker 1: many military bases and lots of employment on the island
• 2:31
  Speaker 1: in the fifth Naval Base, but there was a big
• 2:35
  Speaker 1: Air Force base on the west, there was a big
• 2:37
  Speaker 1: naval base in the south, and there was lots of
• 2:40
  Speaker 1: employment and economic activity associated without Obviously, the peace dividend
• 2:44
  Speaker 1: was not invested in Puerto Rico. The bases first to close.
• 2:48
  Speaker 1: With the bases in Puerto Rico. Is there a clock
• 2:50
  Speaker 1: ticking with Puerto Rico, because I note that the unemployment
• 2:52
  Speaker 1: rate is over twelve Yeah. This is the thing that we,
• 2:55
  Speaker 1: you know, talked to the governor about and talked to
• 2:57
  Speaker 1: the creditors about, which is, at the end of the day,
• 2:59
  Speaker 1: you know, the ability to provide basic services to your
• 3:02
  Speaker 1: people and the ability to pay your debts or some
• 3:05
  Speaker 1: portion of your debts depends on the strength or weakness
• 3:08
  Speaker 1: of the economy. And so the economy is the thing
• 3:10
  Speaker 1: that's been really weak for the last really fifteen years,
• 3:13
  Speaker 1: and so turning the economy around is really the first
• 3:17
  Speaker 1: business of both the politicians and the and the creditors. Well,
• 3:20
  Speaker 1: then you talk about the economy and that confluence of
• 3:23
  Speaker 1: businesses and and creditors and government officials. I'm sure you've
• 3:26
  Speaker 1: been watching the news that President Trump met earlier today
• 3:30
  Speaker 1: with a group of business leaders his business counsel, UH,
• 3:33
  Speaker 1: put together by Stephen Schwartzman of Black black Stone. Is
• 3:39
  Speaker 1: there a is there something that you probably know many
• 3:42
  Speaker 1: of the people on this council. What what can we
• 3:44
  Speaker 1: take away from this? Well? I haven't seen any reports
• 3:47
  Speaker 1: of of you know, statements coming out of it, but
• 3:50
  Speaker 1: you know, the Trump Agenda is a in a sense
• 3:54
  Speaker 1: as a radical refashioning of America's place in the world economy.
• 3:58
  Speaker 1: If if it's fulfilled, whether it's a destination cash flow
• 4:02
  Speaker 1: based tax, tax on import or tariffs new tarists back
• 4:06
  Speaker 1: on Chinese goods or with Mexico and Canada, you know,
• 4:11
  Speaker 1: the emphasis on a kind of a mercantilist approach to
• 4:15
  Speaker 1: US trade and economic policy would be a radical departure
• 4:19
  Speaker 1: from what we've done in the post War World, post
• 4:21
  Speaker 1: war era. UM. And so you know, I think the
• 4:25
  Speaker 1: guys in the room are probably telling him, are reacting
• 4:29
  Speaker 1: to that, because I think if the full agenda is implemented, UH,
• 4:33
  Speaker 1: we're talking about real economic dislocation in the United States
• 4:36
  Speaker 1: and maybe for the good I don't think so. Um,
• 4:39
  Speaker 1: but it'll have huge transformation costs on the American economy.
• 4:44
  Speaker 1: But you're but you're confident that the people in the
• 4:46
  Speaker 1: room that he has assembled, and they're not just the
• 4:48
  Speaker 1: ones that he met today, but I mean he's met
• 4:50
  Speaker 1: with the pharmaceutical industry and the energy industry that they
• 4:53
  Speaker 1: are really going to give him some unvarnished responses and thoughts. Yeah,
• 4:58
  Speaker 1: and and and look, we have three branches of government,
• 5:01
  Speaker 1: and most of what the President is uh in is broader,
• 5:06
  Speaker 1: more aggressive, ambitious agenda want to achieve is stuff that's
• 5:10
  Speaker 1: going to require legislation. And you know, we all have
• 5:12
  Speaker 1: what witnessed how hard it is to get anything passed
• 5:15
  Speaker 1: in Congress. Uh So you know, while there's there may
• 5:20
  Speaker 1: be great excitement in some quarters for aggressive implementation of
• 5:24
  Speaker 1: the Trump Agenda, I think we're going to see the
• 5:26
  Speaker 1: rollout and its implementation both changed as it goes through Congress,
• 5:31
  Speaker 1: and it's going to take a lot longer. There is
• 5:33
  Speaker 1: something called the Order Liquidation Authority, the Orderly Liquidation Authority. Yes,
• 5:39
  Speaker 1: you know about this because you helped put it together.
• 5:41
  Speaker 1: The Living will for major financial institutions. What should take
• 5:45
  Speaker 1: on how well it has performed so far? Well, thankfully
• 5:48
  Speaker 1: we haven't had to employ it. You know, the last
• 5:51
  Speaker 1: eight years or six years since the passage of Dodd
• 5:54
  Speaker 1: Frank and the implementation of the regulations under it, you know,
• 5:57
  Speaker 1: have resulted in a much better capital is, less levered,
• 6:00
  Speaker 1: more resilient set of financial institutions. And we've had a
• 6:05
  Speaker 1: you know, relatively benign recovery with lots of stimulus from
• 6:10
  Speaker 1: the Federal Reserve, not so much from Congress, and as
• 6:13
  Speaker 1: a result of financial system you know, has had an
• 6:16
  Speaker 1: opportunity to heal. And so we haven't had a test
• 6:18
  Speaker 1: the living wills or the Orderly Liquidation Authority. Well, thanks
• 6:21
  Speaker 1: for putting it in place in case we need it.
• 6:24
  Speaker 1: We look forward to having you in the future, Jim,
• 6:27
  Speaker 1: Not not on the orderly liquidation of no alright, Well,
• 6:30
  Speaker 1: I'm sure there'll be something else by then. Jim Millstein,
• 6:33
  Speaker 1: he is the CEO and the founder of Millstein and Company.
• 6:49
  Speaker 1: As we can see from the imminent snap I p O.
• 6:52
  Speaker 1: Online media is all the rage, but nailing down exactly
• 6:56
  Speaker 1: what friends are hot is tough. But with us too,
• 7:00
  Speaker 1: of us have insight is Ross Levinson, executive chairman of
• 7:03
  Speaker 1: Mundo Media and former Yahoo Interim Chief executive officer. Ross
• 7:07
  Speaker 1: thank you so much for joining us. UH. I first
• 7:10
  Speaker 1: just want to start with when people talk about the
• 7:12
  Speaker 1: online trends, UH, they talk about how Snap is the
• 7:16
  Speaker 1: newest thing. How quickly are these trends changing? And what
• 7:20
  Speaker 1: do you think is the number one thing that media
• 7:23
  Speaker 1: companies should be aware of that's trending now? Great question.
• 7:28
  Speaker 1: I think the most important thing now for media companies
• 7:31
  Speaker 1: is to really figure out their distribution strategy. I think
• 7:35
  Speaker 1: we've seen, you know, the the old ecosystem of distribution
• 7:41
  Speaker 1: just get obliterated over the last two years. UH. You
• 7:46
  Speaker 1: now have companies like Netflix, which is approaching a hundred
• 7:50
  Speaker 1: million worldwide UH users per month, and if you looked
• 7:55
  Speaker 1: at them as a cable operator, they'd be the largest
• 7:58
  Speaker 1: cable operating in the world by by a factor of
• 8:01
  Speaker 1: two and a half. So UH, and that's just one
• 8:04
  Speaker 1: element of the changing landscape. You also have obviously we
• 8:08
  Speaker 1: talked about Snap for a second here at the top
• 8:10
  Speaker 1: of this discussion, reaching you know, a huge audience that's
• 8:15
  Speaker 1: growing each month, and and now you add in Facebook
• 8:20
  Speaker 1: and Amazon, all new entrants. If you look at it
• 8:24
  Speaker 1: chart today of the largest media companies in the world,
• 8:28
  Speaker 1: you know, fifteen years ago would have looked like Time, Warner, Disney,
• 8:32
  Speaker 1: h NBC, etcetera. Today it looks like Google, Amazon at
• 8:37
  Speaker 1: the very top, just in terms of gross revenue and reach.
• 8:41
  Speaker 1: So the entire distribution landscape is changing. The good news
• 8:45
  Speaker 1: for media companies, in my opinion, was that all of
• 8:48
  Speaker 1: these platforms need premium content. You know, there's obviously been
• 8:53
  Speaker 1: a tremendous amount of noise about fake news as of weight,
• 8:57
  Speaker 1: but what these platforms all need to generate a increasing revenues,
• 9:02
  Speaker 1: growing revenues is premium content. Well, Ross Levinson, I was
• 9:06
  Speaker 1: just going to try to compress your your career into
• 9:09
  Speaker 1: less than thirty seconds, which I gotta say is very
• 9:11
  Speaker 1: difficult because it includes sports Line as well as CBS
• 9:15
  Speaker 1: News Corps and a variety of other ventures, plus your
• 9:19
  Speaker 1: time at Yahoo. Can you single out for us maybe
• 9:23
  Speaker 1: what is the most piece of your own personal history
• 9:27
  Speaker 1: that is connected with what you're trying to accomplish now,
• 9:30
  Speaker 1: so people understand this idea of data driven mobile marketing.
• 9:34
  Speaker 1: What is it? Yeah, that's that's that's a great question.
• 9:37
  Speaker 1: My career has really been I've had. I'd like to
• 9:40
  Speaker 1: think of it as as two careers. The first half
• 9:43
  Speaker 1: of my career was really in traditional media. I worked
• 9:45
  Speaker 1: at I worked at HBO for seven years and and
• 9:49
  Speaker 1: worked on on promoting a variety of sporting events. Um
• 9:54
  Speaker 1: early in my career also worked at Sacchi and Sacchi,
• 9:56
  Speaker 1: which is a big ad agency. And then I sort
• 9:59
  Speaker 1: of found the religion of the Internet. And the next
• 10:04
  Speaker 1: half of my career has all been in sort of
• 10:06
  Speaker 1: the confluence of the convergence of of old media and
• 10:10
  Speaker 1: new media. Now there's just media. So what's happened over
• 10:13
  Speaker 1: the last year or two, I think aggressively has been
• 10:16
  Speaker 1: the changing way that marketers reach UH consumers and and
• 10:22
  Speaker 1: the interesting thing one of the reasons I got involved
• 10:24
  Speaker 1: with Undo Media is, you know, mobile is the fastest
• 10:28
  Speaker 1: growing platform or ecosystem there is in the world. You know,
• 10:32
  Speaker 1: by some estimates, UH say, every consumer on Earth will
• 10:36
  Speaker 1: have four connected devices. So if you think about that,
• 10:40
  Speaker 1: that's pretty overwhelming, right, So so how do you read?
• 10:44
  Speaker 1: You know, and you can't do the same thing on
• 10:46
  Speaker 1: on a small screen that you can do on a
• 10:48
  Speaker 1: television or even on a laptop or a desktop computer.
• 10:51
  Speaker 1: So the idea that you can micro target consumers with
• 10:56
  Speaker 1: the right messages, whether that be content or in Mondo's case, advertising. Uh.
• 11:01
  Speaker 1: That that's the first and foremost I think going to
• 11:04
  Speaker 1: be a big trend going forward already. Is that's why
• 11:07
  Speaker 1: I say Facebook's making so much money talking about making
• 11:09
  Speaker 1: money or not making money. I mean, Snap filed it's
• 11:12
  Speaker 1: registration documents for its initial public offering, and people are
• 11:15
  Speaker 1: talking about the fact that, uh that they their cost
• 11:19
  Speaker 1: of providing the service is outweighing their revenues. How likely
• 11:25
  Speaker 1: do you think it is for them to ramp up
• 11:27
  Speaker 1: their profitability in short order? Based on your understanding of
• 11:31
  Speaker 1: advertiser's appetite. Sure well, advertisers are flocking to Snap right now.
• 11:37
  Speaker 1: It is a place. You know, it's certainly caught the
• 11:40
  Speaker 1: wave of attention of consumers, certainly younger consumers. But if
• 11:44
  Speaker 1: you watch what they're doing with content, you know they
• 11:46
  Speaker 1: are morphing themselves into a media company very quickly and rapidly.
• 11:50
  Speaker 1: You know, they have a they have a tremendous amount
• 11:52
  Speaker 1: of premium content in on their platform. Everyone from the
• 11:57
  Speaker 1: NFL too, you know, the other end of the spectrum,
• 12:00
  Speaker 1: the Daily Mail and everyone in between. So you know,
• 12:03
  Speaker 1: I think they're going to be a company that isn't
• 12:06
  Speaker 1: as focused on profitability over the first few years, nor
• 12:09
  Speaker 1: do they have to be. In my opinion, I think
• 12:11
  Speaker 1: it's all about growth. As you know, that said, it's
• 12:14
  Speaker 1: a double edged sword because as we've seen with Twitter,
• 12:17
  Speaker 1: you know, once the consumer adoption starts to slow a
• 12:19
  Speaker 1: little bit, that's when people start focusing on are they
• 12:23
  Speaker 1: profitable and how much revenue they're getting per per customers.
• 12:26
  Speaker 1: So that's that'll be something to watch down the line.
• 12:28
  Speaker 1: But look, I think that it's gonna be a really
• 12:30
  Speaker 1: exciting I p o uh. It's it's really a telling
• 12:34
  Speaker 1: sign that they chose the New York Stock Exchange over
• 12:37
  Speaker 1: the NASDAC. I think, you know, well, I gets a
• 12:41
  Speaker 1: huge win for the n Y s c UH that
• 12:43
  Speaker 1: they've quietly from you know what I know, been aggressive
• 12:47
  Speaker 1: in in courting uh, you know, high tech or tech companies.
• 12:51
  Speaker 1: You know, I think it's there is a market difference,
• 12:54
  Speaker 1: and you guys cover this all day long between the
• 12:56
  Speaker 1: two exchanges. From the outside, it looks the same, but
• 13:00
  Speaker 1: if you look at the types of companies that are listed, um,
• 13:02
  Speaker 1: the n Y i c is so much bigger, But
• 13:05
  Speaker 1: it's a telling sign that they chose it after the
• 13:08
  Speaker 1: you know what happened with Facebook on the nastack. So
• 13:11
  Speaker 1: I think it's a huge win for for them. And
• 13:13
  Speaker 1: and you know, you've you've got some other big names
• 13:16
  Speaker 1: potentially coming out over the next twenty four months. Who
• 13:18
  Speaker 1: do you think Who do you think is going to
• 13:19
  Speaker 1: be the next IPO after Well? Now the no, I
• 13:24
  Speaker 1: don't think Guber will go this year. It was I
• 13:26
  Speaker 1: thought it was going to be Spotify, but we we
• 13:29
  Speaker 1: read yesterday or the day before that they've they've put
• 13:32
  Speaker 1: that on I think it was yesterday they put that
• 13:33
  Speaker 1: on hold for a little bit, give you give you
• 13:36
  Speaker 1: twenty seconds, ten seconds. Who should be afraid of this
• 13:39
  Speaker 1: new micro targeting, No one. It's it's the best thing
• 13:44
  Speaker 1: there is for marketers and and for consumers. And and
• 13:48
  Speaker 1: that's why I'm excited about Mondo because they really have
• 13:51
  Speaker 1: the technology and the and the data to deliver the
• 13:54
  Speaker 1: right message in a performance way, not where you're buying
• 13:57
  Speaker 1: big CPM advertising, but you're only paying for for what
• 14:00
  Speaker 1: is delivered. Right, But someone's going to get hurt because
• 14:02
  Speaker 1: someone is now offering advertising that's not based on that Well,
• 14:07
  Speaker 1: the big broad you know you have to put it
• 14:09
  Speaker 1: into a couple of buckets. If you've got scale and size,
• 14:13
  Speaker 1: you will adopt this technology and start micro targeting if
• 14:17
  Speaker 1: you people who really get hurt um I think over
• 14:20
  Speaker 1: the next twenty four months are people who don't have
• 14:23
  Speaker 1: size or data and they're dependent on just ad networks
• 14:27
  Speaker 1: or programmatic exchanges. Thanks very much, Ross Levinson, Executive Chairman,
• 14:32
  Speaker 1: Mundo Media, P and L. Is brought to you by
• 14:45
  Speaker 1: proper Cloth, the leader in men's custom shirts. At proper
• 14:48
  Speaker 1: cloth dot com, ordering custom shirts has never been easier.
• 14:51
  Speaker 1: Create your custom shirt size by answering ten easy questions,
• 14:55
  Speaker 1: select from over five fabrics to suit your personal taste.
• 14:58
  Speaker 1: Shirts start from a D five dollars and are delivered
• 15:01
  Speaker 1: in just two weeks with proper clause perfect fit guarantee.
• 15:04
  Speaker 1: Remakes are completely free and expert staff are standing by
• 15:08
  Speaker 1: to help. For premium quality, perfect fitting shirts, visit proper
• 15:12
  Speaker 1: cloth dot com Custom Shirts Made Smarter. I want to
• 15:23
  Speaker 1: bring in Peter Douga, former Deputy Assistant Secretary of the
• 15:27
  Speaker 1: Treasury and current Managing Director at f I s IS
• 15:30
  Speaker 1: Center of Regulatory Intelligence f I s S S a UH
• 15:33
  Speaker 1: Electronic Payments uh, processor, among other among other things. Peter,
• 15:39
  Speaker 1: I want to just get your take on from your perspective,
• 15:43
  Speaker 1: what are the implications from a risk management standpoint, from
• 15:47
  Speaker 1: a secure security standpoint and compliance of this potential repeal. Well,
• 15:53
  Speaker 1: good morning. Well I'd like to start with, you know,
• 15:56
  Speaker 1: looking at the overall discussion and debate in Washington and
• 16:00
  Speaker 1: around the Dot Frank Act. If you look at it,
• 16:02
  Speaker 1: really the discussion is not necessarily around a direct repeal,
• 16:06
  Speaker 1: which will be hard, almost impossible to do with sixty
• 16:10
  Speaker 1: votes needed in the US in it. So we we're
• 16:12
  Speaker 1: really looking at is targeted regulatory relief UM, where you're
• 16:16
  Speaker 1: going to see specific provisions agreed upon where are going
• 16:19
  Speaker 1: to provide some relief uh. And what we will look
• 16:22
  Speaker 1: to is the House Financial Choice Act as the model
• 16:25
  Speaker 1: or the base bill for which we'll kind of see
• 16:28
  Speaker 1: what will be adjusted or agree to. So things included
• 16:32
  Speaker 1: in there which are going to modify and change the
• 16:35
  Speaker 1: structure of the THEPB from a single leader into a
• 16:39
  Speaker 1: multi member commission, put the coop be under appropriations process um. Also,
• 16:44
  Speaker 1: there's a lot of discussion around repealing the vocal Rule,
• 16:47
  Speaker 1: repealing Durban Amendment, and fiduciary rule so obviously under those
• 16:52
  Speaker 1: specific provisions, there will be some significant changes to banks
• 16:55
  Speaker 1: and financial institutions under provisions within the Act. Can you
• 17:00
  Speaker 1: explain a little bit more, Peter about the UH, maybe
• 17:03
  Speaker 1: the perspective that you see developing from Gary Cohen, who
• 17:07
  Speaker 1: is the director of the National Economic Council, But also
• 17:11
  Speaker 1: you know you got the House, the Republicans on the
• 17:14
  Speaker 1: House Financial Services Committee, Jeb Henserling. I mean these are
• 17:18
  Speaker 1: people that for example, the fiduciary rule, Um, maybe that's
• 17:22
  Speaker 1: a regulatory relief because you could also apply that what
• 17:26
  Speaker 1: two cities, right, the systemically important financial institutions, you know,
• 17:31
  Speaker 1: tell them don't designate non bank financial firms as cities, correct,
• 17:37
  Speaker 1: So you look at them from two perspectives. Really, Gary
• 17:40
  Speaker 1: Cohn's probably uh a leading voice in the administration right now,
• 17:45
  Speaker 1: really bringing perspective of actually working in a bank and
• 17:48
  Speaker 1: financial tution and understanding the specifics on how the rules
• 17:52
  Speaker 1: and the DoD FRANK specifically impact the bank versus the
• 17:56
  Speaker 1: narrative or general broad discussions about the policy for aspectives
• 18:00
  Speaker 1: in Washington, where people may lose the level of detail
• 18:03
  Speaker 1: and the exact impact to a bank or financial institution.
• 18:07
  Speaker 1: So what we're seeing right now is a lot of action. Obviously,
• 18:11
  Speaker 1: there's been executive orders issued, there's been memorandas issued, and
• 18:15
  Speaker 1: even as of the last night, we understand that there
• 18:17
  Speaker 1: will be a memo regarding the d oil Produciary Rule
• 18:20
  Speaker 1: which will look to rescind the rule. So the effective
• 18:24
  Speaker 1: date is coming up pretty quickly. The President's memo actually
• 18:29
  Speaker 1: asked Department of Agencies, including the Department of Labor, to
• 18:32
  Speaker 1: postpone the effective dates by sixty days. So we'll look
• 18:35
  Speaker 1: to see whether the Oil will actually proposed to just
• 18:40
  Speaker 1: extend the provisions by sixty days or whether they'll look
• 18:44
  Speaker 1: to actually propose a complete repeal of the law. Are
• 18:48
  Speaker 1: the act, So we'll see where the devil is in
• 18:51
  Speaker 1: the details of that and how exactly a Department of
• 18:54
  Speaker 1: Labor and the Administration will propose exactly amending that. And
• 18:58
  Speaker 1: then if you look at the House Financial Services Committee,
• 19:02
  Speaker 1: Chairman hanser Ling is going to propose a new bill,
• 19:05
  Speaker 1: an amended bill. There was one introduced last year which
• 19:09
  Speaker 1: passed the committee but was not considered by the full House,
• 19:12
  Speaker 1: and so we'll see very similar provisions included in that
• 19:15
  Speaker 1: bill that should be introduced with the next six weeks,
• 19:19
  Speaker 1: and then we'll see whether the Senate adopts a similar bill,
• 19:23
  Speaker 1: or Men's the House Financial Choice Act, or decides to
• 19:26
  Speaker 1: move forward with their own bill. From your perspective, what
• 19:29
  Speaker 1: is the main change that could come about as a
• 19:33
  Speaker 1: result of this review of Dodd Frank within the next
• 19:36
  Speaker 1: few years. I would suggest changes to the vocal rule.
• 19:40
  Speaker 1: That's probably been one of the largest complaints, UH is
• 19:44
  Speaker 1: specifically how the vocal rules have been implemented, the detail
• 19:48
  Speaker 1: required to comply with the rules, as well as specific
• 19:53
  Speaker 1: provisions that we're looking at regarding the CPB. Again, as
• 19:57
  Speaker 1: I've talked about, you know, UH, there's being concerns expressed
• 20:01
  Speaker 1: by the industry on not enough guidance provided by the
• 20:04
  Speaker 1: Consumer Financial Protection Bureau and how they potentially would apply
• 20:09
  Speaker 1: specific provisions, whether it's enforcement actions, are regulations that are proposed.
• 20:14
  Speaker 1: In fact, the Senate actually just proposed, I think this week,
• 20:18
  Speaker 1: to reject the upcoming final rule on Trepp prepaid cards.
• 20:24
  Speaker 1: You know, I just want to point out that earlier
• 20:25
  Speaker 1: this morning, when Gary Cohne, the current economic advisor to
• 20:30
  Speaker 1: President Trump and former CEO of Goldman Sachs, was asked
• 20:33
  Speaker 1: by Bloomberg television's David weston what about the vocal rule.
• 20:37
  Speaker 1: He did not give any particular answer. I mean, it
• 20:40
  Speaker 1: wasn't specific. It was basically, you know, we're looking at everything.
• 20:43
  Speaker 1: We want to just basically make sure everything functions again.
• 20:46
  Speaker 1: So to your point, Peter, it seems like certainly it
• 20:48
  Speaker 1: is at least of the things that is up for review,
• 20:52
  Speaker 1: well amongst amongst other things. I want to thank you
• 20:54
  Speaker 1: very much, Peter Douga. He is managing director of Government
• 20:58
  Speaker 1: Affairs at f I s UH and it's a center
• 21:02
  Speaker 1: of a regulatory intelligence that's a UH fidelity and national
• 21:18
  Speaker 1: and here to make us smarter about banks, financial institutions
• 21:22
  Speaker 1: and potential changes. To Dodd Frank is Allison Williams, senior
• 21:25
  Speaker 1: financial research analyst for Bloomberg Intelligence. Alison, thank you for
• 21:29
  Speaker 1: being with us. Good morning. Where do you want to start?
• 21:32
  Speaker 1: You want to start about maybe the Department of Labor
• 21:35
  Speaker 1: fiduciary rules. Do you want to talk about vocal rule?
• 21:40
  Speaker 1: Where's the most important? I mean, they're all important. Well,
• 21:43
  Speaker 1: I think I think speaking of starting sort of this
• 21:47
  Speaker 1: embox start that we got today is Trump signing the
• 21:50
  Speaker 1: executive order um on Dodd Frank and fiduciary duty. Nathan Dean,
• 21:55
  Speaker 1: who's our regulatory expert here and b I, has pointed
• 21:58
  Speaker 1: out that the Dodd Frank one is really symbolic. It's
• 22:01
  Speaker 1: gonna UM direct Treasury to come up with a plan
• 22:04
  Speaker 1: to roll back um Dodd Frank um, but by putting
• 22:08
  Speaker 1: it asking for a review. Right yeah, and as the
• 22:12
  Speaker 1: Financial Stability Oversight Council as well as the Order Liquidation Authority. Right.
• 22:18
  Speaker 1: So I think I think the important thing is that
• 22:22
  Speaker 1: Trump is basically um putting into motion the review of
• 22:25
  Speaker 1: Dodd Frank. UM. What Nathan would say is it's still
• 22:28
  Speaker 1: going to take a lot of time um. With regard
• 22:31
  Speaker 1: to the fiduciary rule. This is something that I think
• 22:34
  Speaker 1: has been widely anticipated. UM. But you know, I think
• 22:40
  Speaker 1: most most managements, brokers other participants in the industry will
• 22:45
  Speaker 1: say that, you know, with with implementation which was set
• 22:49
  Speaker 1: to start UM shortly, most of the companies have already
• 22:52
  Speaker 1: made moves sort of towards um implementing that rule. And
• 22:57
  Speaker 1: so even though you might at some relief UM again,
• 23:01
  Speaker 1: Nathan thinks that we're not gonna get full scale roll back,
• 23:05
  Speaker 1: perhaps just some tweaks UM. So so we're really that rule.
• 23:10
  Speaker 1: What was expected UM. So, so the rule specifically affects
• 23:14
  Speaker 1: retirement accounts. It specifically UM focuses brokers on doing what's
• 23:19
  Speaker 1: best for the client UM. And so the expectation was
• 23:22
  Speaker 1: that this rule would really lead to sort of an
• 23:24
  Speaker 1: acceleration of some key trends that were in place, So
• 23:27
  Speaker 1: the shift from active to passive, the shift towards cheaper products, UM,
• 23:32
  Speaker 1: the shift perhaps more towards these robro advisory type products.
• 23:35
  Speaker 1: So these are all things that have a lot of
• 23:37
  Speaker 1: different drivers. But perhaps if this rule, UM, you know,
• 23:42
  Speaker 1: is tweaked, then you might get like a little bit
• 23:44
  Speaker 1: of relief on those. You know. Earlier, we were talking
• 23:46
  Speaker 1: to Peter Duga. He's the former Deputy Assistant Secretary for
• 23:50
  Speaker 1: the Treasury UH, and he was talking about how the
• 23:53
  Speaker 1: vocal rule may be the main place where Congress could
• 23:56
  Speaker 1: make a big difference quickly. Do you re with that
• 24:00
  Speaker 1: and do you see the likelihood of provoking the vocal rule,
• 24:05
  Speaker 1: which oversees proprietary trading as as increasing dramatically in the
• 24:10
  Speaker 1: recent days, I think for the vocal rule, UM, you know,
• 24:15
  Speaker 1: the the key negative impact of that rule has been
• 24:17
  Speaker 1: on bond market liquidity and UM that's widely debated, and
• 24:21
  Speaker 1: that's because liquidity is tough to measure. Uh, you know,
• 24:24
  Speaker 1: there's there's different studies you can look at. You can
• 24:27
  Speaker 1: look at how brokers have dramatically reduced their balance sheet.
• 24:30
  Speaker 1: We actually UM had a panel it's you know, sort
• 24:33
  Speaker 1: of an informal survey result of market participants, Treasures and
• 24:37
  Speaker 1: the like, and about half of them had said that
• 24:40
  Speaker 1: they felt that VOCAL had had UM the more significant
• 24:43
  Speaker 1: impact across a number of regulations on liquidity. And you know,
• 24:47
  Speaker 1: for me personally, it's talking to managers that are in
• 24:51
  Speaker 1: the market every day, UM Treasures that have to think
• 24:54
  Speaker 1: about how they fund their companies, talking about that it
• 24:57
  Speaker 1: has had an impact. And so I think that for
• 25:00
  Speaker 1: those reasons, UM, there is support for pulling back the
• 25:04
  Speaker 1: vocal rule. It's obviously a little tricky because um, you know,
• 25:09
  Speaker 1: no one wants to go back to proprietary trading, and
• 25:13
  Speaker 1: even there might be some people who want to go there,
• 25:15
  Speaker 1: no one wants, no one wants, no one wants to
• 25:19
  Speaker 1: vocally support. So that's that's an important they want thing
• 25:21
  Speaker 1: to point out. Right, So if you listen to what
• 25:23
  Speaker 1: all the banks have said, no one's going to come
• 25:25
  Speaker 1: out and say, oh, yes, we want to go back
• 25:28
  Speaker 1: to the way things were. What they've said across several
• 25:31
  Speaker 1: managements is, look, we we don't do proprietary trading. We
• 25:35
  Speaker 1: don't want to go back there. Even Goldman, who made
• 25:37
  Speaker 1: the most money from the business and clearly has had
• 25:40
  Speaker 1: less revenue since, has said, oh, you know, it's not
• 25:43
  Speaker 1: mtarily important. But what they do want is to reduce
• 25:46
  Speaker 1: a regular tory costs associated with it. And so if
• 25:50
  Speaker 1: you think about the costs and the impact that it's
• 25:51
  Speaker 1: had on all the banks, that is really one of
• 25:54
  Speaker 1: the main benefits that they can argue UM. Similar with
• 25:58
  Speaker 1: the producer rule with Vocal is look, there's there's certain aspects.
• 26:02
  Speaker 1: There's this one aspect of book or called rendy that
• 26:04
  Speaker 1: creates a lot of paperwork. And so what managements will
• 26:07
  Speaker 1: say is like, you know, we don't want to go
• 26:08
  Speaker 1: back to proprietary trading, but if you can loosen up this,
• 26:11
  Speaker 1: you know, you would really reduce the cost and the burden.
• 26:13
  Speaker 1: The issue is if you take that back, then how
• 26:16
  Speaker 1: do you really measure UM that they're not proprietary trading.
• 26:20
  Speaker 1: Good point and a good question to keep delving into.
• 26:23
  Speaker 1: Allison Williams senior bank analyst for bloom Brick Intelligence, talking
• 26:27
  Speaker 1: about the possible repeal of the Dad Frank Act, written
• 26:31
  Speaker 1: in two thousand and ten to prevent another financial crisis.
• 26:40
  Speaker 1: Thanks for listening to the Bloomberg P and L Podcast.
• 26:43
  Speaker 1: You can subscribe and listen to interviews at iTunes, SoundCloud,
• 26:47
  Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox. I'm
• 26:51
  Speaker 1: out there on Twitter at pim Fox. I'm out there
• 26:54
  Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.
• 26:57
  Speaker 1: You can always a catch us worldwide. I'm bloom of Radio.
• 27:08
  Speaker 1: P and L is brought to you by proper Cloth,
• 27:10
  Speaker 1: a leader in men's custom shirts with proprietary smart sized
• 27:13
  Speaker 1: technology and top rated customer service. Ordering a custom shirt
• 27:17
  Speaker 1: has never been easier. Visit proper cloth dot com to
• 27:20
  Speaker 1: order your first custom shirt today