June 4, 2025 • 42 mins
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The Education Department said Columbia University no longer appeared to meet accreditation standards after concluding that the school is in violation of anti-discrimination laws, the latest effort by the Trump administration to target elite schools over their handling of pro-Palestinian protests.
Education Secretary Linda McMahon said in a statement that the school’s leadership “acted with deliberate indifference towards the harassment of Jewish students on its campus” after the Oct. 7 attack by Hamas on Israel. The Education Department said it had notified the Middle States Commission on Higher Education that the administration found that the school failed to meaningfully protect students during the protests, violating Title VI of the Civil Rights Act. The department also cited federal law which they said required accreditors to notify member institutions if they were in noncompliance and establish a plan to bring them back into compliance.
Any revocation of the school’s accreditation could have significant implications for students. Some 21% of Columbia College and Columbia Engineering undergraduates receive the Pell Grant, a type of federal aid for high-need students, according to figures on the university’s website. Removing access to federal student loans would also increase borrowing costs for many students financing their education, while federally-backed work-study programs could also be under threat.
McMahon has been in communication with university President Claire Shipman since the administration pulled some $400 million in federal grants and contracts from the school in March. Last month, Shipman announced that Columbia was cutting nearly 180 staff members after reductions to its federal funding.
President Donald Trump and McMahon have previously suggested that conversations with Columbia were headed in the right direction, especially compared to another Ivy-League institution, Harvard University, which has launched legal challenges against the administration’s decision to cancel its federal funding and revoke its license to admit international students.
The Department of Education does not have the authority to revoke a school’s accreditation, that authority lies with accrediting agencies like MSCHE. But the federal government can stop recognizing an accreditor as a reliable judge of the quality of higher education, which chokes off federal aid from an agency’s member schools.
Today's show features:
- Bloomberg News White House Reporter Akayla Gardner on the White House saying Columbia University no longer meets accreditation standards
- Henrietta Treyz, Co-Founder and Director of Economic Policy at Veda Partners on key fiscal policy and trade issues facing the Trump administration and the GOP-led Congress
- Brent Schutte, Chief Investment Officer of Northwestern Mutual Wealth Management on the outlook for US monetary and fiscal policy changes
- Bloomberg News Senior Technology Reporter Dana Hull on the Big Take detailing Elon Musk’s push to bring robotaxis to Austin, Texas even as federal regulators investigate whether the system is safe
- Bloomberg Businessweek Editor Brad Stone on his Dan Gilbert feature story
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
David Gerro here with Emile Griffeo on Bloomberg Business Week
on Bloomberg Radio and YouTube from the Interactive Broker Studio
in New York City, where there's some news about a
university just up the street from US. That is Columbia
University no longer meeting the accreditation standard set by the
Department of Education. Some breaking news here in the last
few minutes. Of course, this is one of a handful
of schools that have been in the crosshairs of the
Trump administration. The Secretary of Education Linda McMahon saying in
(00:55):
a statement the school's leadership quote acted with deliberate indifference
towards the harassment of Jewish students on its campus after
the October seventh attack by Hamas on Israel. I'm reading
there from a piece by Kayla Gardner, who covers the
White House for US here at Bloomberg News and joins
US now from Washington. Okay, let's just start with the
basic facts of this year. We've seen the government go
after Columbia's finances, threaten to withhold funding for research and
(01:17):
the like. This seems to be ratcheting up its fight
even more. What does it mean in effect that the
government taking away this accreditation for Columbia.
Speaker 3 (01:26):
So we should clarify that the Education Department is notifying
the entity that has given Columbia University its accreditation, which
basically gives them the power to issue degrees. Basically is
the definition for why they are a university. So they're
notifying here Middle States Commission on Higher Education that they
believe that the university is an in violation of anti
(01:47):
discrimination laws. That is, of course, tied to antisemitism that
they see is happening on campus and the protests that
we've seen on the war in Gaza here. And this
is really a turn and narrative when it comes to
the relationship between the administration and Columbia. Because there had
been signals from President Trump, from Secretary McMahon that conversations
were in the right direction between her and the university's president.
(02:09):
And of course Harvard took a big step with lawsuits
against the administration. Now Columbia has not been doing that.
So this certainly suggests that conversations perhaps are not going
in the direction that certainly Columbia hopes that they are.
Speaker 4 (02:20):
Kayla, you write from a quote here from Linda McMahon
that accreditors have an enormous public responsibility as gatekeepers a
federal student aid. They determine which institutions are eligible for
federal student loans and pelgrants. So just talk about this
is they're not deifying Columbia, but actually, like in practice,
(02:42):
is anything changing for the university or its students yet.
Speaker 3 (02:46):
So the responsibility is really on the accreditor here to
take these findings and assess them and assess Columbia's accreditation
going forward here. But this is really a concept or
a theme, if you will, that the president has been
talking about on the campaign trail. He has long believed
that the accreditation system is unfair, and he has talked
about alternatives from traditional universities, and a huge part of
(03:08):
that is they believe that there is bias on a
lot of these private campuses, a lot of these Ivy
League campuses that they believe is not a welcoming place
for conservatives, and certainly the ideals that are driving his movement.
Speaker 2 (03:19):
I want to go back to something that you mentioned
just a moment ago, and that is the kind of
status of dialogue or the relationship between Columbia and the
Trump administration. So we saw it really deteriorate under the
leadership of a new Shaffik, who was the president of
the school for a very short period of time. She
was succeeded by Katrina Armstrong, who was president for an
even shorter period of time on an interim basis, she
(03:39):
was heading the medical school and moved over to the presidency,
stepped down, and now Claire Shipman, who had been heading
Columbia's Board of trustees, is the interim president. The new
interim president get us up to speed on sort of
how much the two entities are talking, the administration and Columbia,
and sort of what the university has done in recent
weeks to side it kind of comport or talk with
(03:59):
the administration about a path forward here.
Speaker 3 (04:02):
Well, Secretary mc man has been very public that she
has had conversations with the president. She has spoke somewhat
admiringly of the current president, but she says these negotiations
are ongoing, both with Columbia and Harvard, and we saw
Harvard put or excuse me, Colombia put out a statement
where they said that they were not open to some
of these demands that the administration has when it comes
(04:22):
to quote viewpoint discrimination, where they really asked Columbia and
Harvard to make these sort of changes to their faculty
and their students to sort of represent more viewpoints when
it comes to political or ideological beliefs, because again, they
believe that these institutions have a bias, particularly a liberal
bias on campus.
Speaker 4 (04:42):
This is obviously a breaking news situation. And you write
that Columbia did not yet respond to requests for comments,
But how do you think the university is going to respond?
Speaker 3 (04:53):
Well, I can't tell you exactly what they will respond
until they actually do. But Columbia has been very measured
as a posed to Harvard, who has taken now two
lawsuits against the administration, one on student visas and one
to get their federal funding back. So they have been
measured up until this point. Really trying to strike a
deal with the administration through negotiation. So I'm certainly interested
(05:15):
to see if they go the route that we've seen
Harvard go or they continue to try to have these
negotiations behind closed doors to potentially get their funding back,
and of course here also to defend their accreditation as
a university.
Speaker 2 (05:27):
Kayla, great to talk to you, as always a Kayla
Gardner covers the White House for us here at Bloomberg
News with that breaking news story here that the Trump
administration is targeting Columbia's accreditation over protests, and Kayler bringing
up that nuance which is so important here the Education
Department notifying the Middle States Commission, that is the accreditor
that they do not think that Columbia meets the qualifications
for accreditation, and that can have all kinds of ramifications
(05:50):
I'm sure for the university itself, but certainly students who
are attending the school or intending to go there. And
just picking up on one more thing that she mentioned,
that is the role of Harvard Universe and all of that.
Alan Garber, the president of Harvard, has been adamant that
the way in which the administration has dealt with that
school is a warning sign, as he put it, for
what might happen with with other schools. So picking up
(06:10):
on your question, you're very good question, Emily. How they
might respond. I'm curious if they kind of follow in
the mold of what Harvard's done recently, which is to
really stand up against the administration.
Speaker 5 (06:19):
You are listening to the Bloomberg Business Weekdaily Podcast. Catch
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Listen on Applecarplay and Android Auto with the Bloomberg Business Act,
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Speaker 6 (06:34):
Well, let's get.
Speaker 4 (06:35):
Back to the Big Beautiful Bill. On Capitol Hill. Republicans
in the Senate are working on their version of what
President Trump calls this Big Beautiful Bill, and as they
do that, we're getting new details from the non partisan
Congressional Budget Office about what the House version, as passed
would do to the federal deficit. The CBO estimates it
(06:56):
would add two point four trillion dollars to US budget
deficits over the next decade. The CBO also says it
expects it would leave almost eleven million people in the
United States without health insurance in twenty twenty four. Henrietta
Trees is the co founder of Veda Partners, where she
is director of Economic Policy, with a particular expertise in
(07:17):
how the Senate works. So she joins us, now talk
about these numbers. What exactly do they tell us, Henrietta.
Speaker 6 (07:24):
These are big numbers.
Speaker 7 (07:26):
Two point four trillion is a record breaker. The last
highest reconciliation.
Speaker 6 (07:31):
Bill was one point nine trillion.
Speaker 7 (07:33):
So this whilbe winning some awards for sheer deficit increases
on that account, which is exciting. The bill is going
to change a lot from here. In my base case
expectation knowing the Senate is that it's going to become
more deficit financed.
Speaker 6 (07:48):
I think for bond investors there's something.
Speaker 7 (07:50):
To watch for here, and that the Senators are going
to use a current policy baseline where the House does not.
And this is a big differential between the two chambers.
The House assumes that passing an extension of the twenty
seventeen tax cuts plus some of the other components of
the bill will generate two and a half trillion dollars
of economic activity dynamic growth. On the Senate side, they're
(08:10):
not going to use that formula to wipe away some
of the budget costs. They're going to instead assume that
extending the existing rates costs nothing. Three point eight trillion
dollars or one point three billion dollars. One point three
trillion dollars more will be deficit financed. So the scale
of the Senate bill is going to be quite a
bit more substantial. They're going to try to make some
of the business provisions more permanent than the House bill.
(08:32):
The salt cap is going to have to come down,
the IRA cuts are going to have to come down,
the Medicaid cuts are going to have to come down.
The deficit is going to grow, is the bottom line.
As the Senate spends the next four weeks crafting their
version of this bill.
Speaker 2 (08:44):
Henrietta, I'm curious, as I'm sure you are, about how
a Senator Ran Paul is looking at the numbers from
CBO today, maybe a Rick Scott, maybe a Ron Johnson,
as well as I kind of make the argument for
deeper cuts in the Senate version of this bill. I
heard Senator Paul talking about the power that he thinks
he and these other holdouts have here in these negotiations,
and I'm curious if you think that he's right about that,
(09:07):
that these holdouts are going to be able to exert
some real sway here as the Senate gets down to
brass tacks and reshapes this BILM great question.
Speaker 7 (09:15):
I actually think this is some of the most interesting
change that we've seen since the Senate has taken up
this bill and gotten back from recess. Rant Paul's material
objection is to the five trillion dollar increase to the
debt ceiling that the Senate bill is going to include,
and so there's already discussion of trying to get him
back into the fold as a potential yes vote in
(09:35):
changing the debt ceiling numbers associated with the Senate package.
So right now, the sort of whisper around the Senators
in the Republican conference is that, hey, maybe we just
cut that in half and get rand Paul over to
our side again, Because right now, if rand Paul is
in no, just on the debt ceiling alone, then Senator
Fune only has two votes to lose from there. So
(09:56):
cutting the debt ceiling hike, which is not the same
as the deficit but a really important part for Rand
Paul down at two and a half trillion dollars, which
would get the Senate and Congress functionality through about March
of twenty twenty six instead of November twenty twenty six, is,
I'm told a part of the conversation. So we're really
trying to move the parameters of what might get Ran Paul,
(10:19):
which to me really underscores the trouble that Leader Thun
is going to face when we get back to what
you were just mentioning the ten point nine million individuals
will be kicked off Medicaid, nine and a half million
of whom are not in the undocumented migrant space that
Republicans talk about a lot. These are just regular everyday Americans,
so will be kicked off of the Medicaid program. So
(10:42):
there's going to be a lot of loss from West Virginia,
Susan Collins in Maine, the Alaska senators that's Sullivan who's
up for reelection next year, and Murkowski. So there's a
lot of moving parts that they needs to walk through here.
Getting Rand Paul on board by cutting the debt ceiling
hike in half might be very helpful.
Speaker 4 (11:02):
So how then do you anticipate the timeline of this
bill eventually making its way to President Trump? Maybe assuming
that we do get those holdouts, the Rand Paul's you know,
signing off on. It is the timeline really realistic that
this this does get on Trump's desk by July fourth.
Speaker 7 (11:21):
No, it's going to go through the Senate by July fourth.
That's the strategy that Senator Foone is working with right now.
There are three committees who are rolling out their bill
this week, there will be another next week, and then
the Senate Finance Committee, which is responsible for almost all
the package, all the tax provisions and the Medicaid.
Speaker 6 (11:37):
Cuts, they're going to go last.
Speaker 7 (11:39):
And that'll come either the week of the sixteenth, right
before Juneteenth, or it will come the following week, the
week of June twenty third. This bill is going to
get very messy, very complicated. They have a lot of
changes that they need to make with the House Republican package,
and as I mentioned, the Salt Caucus alone is going
to raise holy hell with them and they're going to
be in a meeting at some point. They haven't been
(11:59):
given an audience yet, but they will have to do that.
And then what that creates is a scenario where the
House and the Senate actually go to conference first and foremost,
for investors, what you should hear when I say that
is this is the time suck. It can be one, two,
three weeks even so that paints the picture for passages
of this legislation. At the end of July. July twenty
fourth is when the House is scheduled to go on recess.
(12:20):
August first is when the Senator's scheduled to go on recess.
The X date for the debt ceiling is in mid August.
That's the time horizon folks should work with very quickly.
Speaker 2 (12:29):
Here just what is happening at this moment, drawing on
your experience working set, what's happening at this moment in time.
I know committees are releasing their legislation sor have one
by one, But in the minute that we have left,
sort of what's the actual state of play. What's happening
on the ground in Senate office buildings today.
Speaker 7 (12:44):
Lobbyists are fanned out everywhere. They're trying to get their
IRA tax credit back in. They're trying to tweet the
eight ninety nine provision that gives the Treasury Secretary of
the authority to tax unfair fact tax countries, foreign entities,
and such. There's a lot of behind the scene's work
going on before that bill gets released. The rule of
thumb in DC is you want to get your provision
(13:05):
out before the bill gets released, Get it out before
it's in.
Speaker 6 (13:08):
Once it's in, you can't get it out.
Speaker 7 (13:10):
So the aggressive lobbying happening behind the scenes right now.
Speaker 2 (13:13):
Henrietta always good to talk to you to get your update.
That's Henrita Trace. She's the co founder of Vada Partners,
where she's the director of Economic Policy'll.
Speaker 7 (13:23):
Bet you let me drive.
Speaker 1 (13:24):
Oh no, no, no no, this is not a twin.
Speaker 8 (13:28):
Honey, please, I'll do the velcase. I want to try it.
Speaker 5 (13:34):
It's good question.
Speaker 1 (13:39):
This is the Drive to the Clothes Punk's thing well
on Bloomberg Radio.
Speaker 6 (13:46):
All right, time now for the Drive to the Clothes.
Speaker 4 (13:48):
Today, we're joined with Brent Shooty, chief investment officer of
Northwestern Mutual Wealth Management. They have over three hundred billion
in assets under management. Brent joins us on Zoom from
Millwall Hockey. I want to get your reaction to the
economic data that we got today, the subsequent reaction in
the treasury market yields our down, traders betting that maybe
(14:11):
we'll get up to three rate cuts this year. What's
your reaction to the data and those fed bets? Right
now sure.
Speaker 9 (14:19):
So I think the question that most have been asking
is does the soft data, so the survey data that
it has been weak, does it start leaking into the
hard data. And that's where I think most people believed
that potentially, there was hope that it would not, But
I think this morning with ADP, you're starting to see
that potentially it's leaking into the hard data, which is
labor markets and job hiring, and you saw those come
down quite a bit. You have the ISM Services, which
(14:39):
is still soft data, but a good data source historical.
That's where the Services index, which has held up the
economy while manufacturing's in week the past few weeks, our
past few years, it faltered. Then the last but not
least you had the page book where it showed weakness
and it had a comment about consumer spending declining slightly
in most districts or even faltering or even being neutral.
(15:00):
So that's where I think you're starting to see after
yesterday's euphoria about the JILT report kind of wear in
this yoyog economy to where today the data was weaker.
That brought in the belief that the Fed may cut rates,
and I think from the fixed income perspective, because I
think a lot of people are nervous about yields. To me,
it still shows that the long end of the curve
will hedge against the potential for economic contraction, which I
(15:21):
think the word recession might start coming up a bit
more if we have more data.
Speaker 10 (15:25):
Like today, you.
Speaker 2 (15:26):
Talk about the nervousness of a lot of people here,
and I wonder how you're seeing through all of that,
how you're sort of positioning amidst the uncertainty about trade policy,
the prospects that maybe they're being a recessions you indicated
that could could come into play a little bit more.
Are there clients who are nervous and panicking so or
what's the council that you're giving folks right now?
Speaker 9 (15:46):
I think the big antidote for uncertainty is called diversification,
and so I think a lot of people want to
run and hide in cash and do whatever else. But
to me, that always means that you think you know
exactly what's going to happen, because that wins only in
a few circumstances. I think diversification has been the big
thing we continue to preach, and that's where I think
a lot of people over the past few years have
called it diversification because they've only wanted to own US
(16:08):
large cap stocks, which have benefited from the past couple
of years, and that's where most people want to only
own those. I think there is different leadership going forward.
This is a macroeconomic trend change. I think the administration
wants a cheaper dollar. I think from a purchasing power
parity perspective, the dollar needs to be cheaper. This is
where there's going to be repatriation of cash possibly, and
(16:29):
that's where I want people to branch out beyond just
large cap stocks and look at places that have been
under loved and underinvested in, like international stocks. I think
about small and mid cap stocks, which are obviously domestic.
They've been under the gun a bit the last couple
of years because you have had a really narrow economy
pretty much just driven by AI stocks and AI companies,
and that's where I think whatever happens on the opposite
side of this, whether it's recession or not, you will
(16:51):
see the economy broadened back out. And that's where the
message I think is the same as it always has been,
which is essentially to diversify and to make sure that
you're tilting towards those things that I just mentioned, which
I think offer value for longer term investors.
Speaker 4 (17:03):
I know that you had mentioned kind of the longer term,
the long end of the treasury curve. A lot of
those bets have not really posted positive returns, you know,
over the last couple months. Just walk us through kind
of the rationale for really extending out further out onto
(17:23):
the curve when you know you can pretty much collect
a pretty decent yeal if you just stay in the
two year or even a money market fund.
Speaker 9 (17:31):
Yeah, if you stand the two year and money market fund,
what happens if today is two thousand and eight, two
thousand and nine, and the yields on the two year
or higher than the tenure, but for the next fifteen
twenty years, the tenure, you know, basically yield sub two
and you have to reinvest that two year multiple times
because it goes to zero. And so that's where I think,
at a minimum, you should invest across the curve. The
thesis is is back to diversification. And you look at
(17:53):
today's action. I use the R word and I use
the word contraction, and people are now thinking about that
just a bit. And you can see on days today,
it does hedge downside risk that would occur if and
when we actually do have a recession, and so I
do think longer term, higher yields or more normal yields
are here to stay. And I think you can possibly
see higher inflation as a result of the deglobalization, the
(18:16):
desire to actually maybe inflate away a little bit of
our debts. But in the here and now, I think
despite all the noise that's out there, days like today,
days like we've had over the past few years, where
you see fears of recession grow, I think it still
shows that people will run the US treasuries. And that's
how I think about hedging a portfolio against adverse outcomes.
I think the one area that people don't have exposure
(18:37):
to that they should because for the last fifteen twenty years,
the way that you hedged a portfolio was only through
long treasuries because you really only had one side of
the distribution that was essentially deflation. I think your question
probably ties into the other side of the distribution, which
now is probably just as likely, which is higher inflation.
And that's where we, from a diversification standpoint, still think
(18:58):
people should own real assets like come on these as
a hedge against a different outcome. Both of those are
kind of the outside outliers in the tails. We want
to maintain investments, but we want to make sure that
we own things that can actually had just through downturns.
Speaker 2 (19:11):
Brandon, I want you to be perspective in the time
we have left here. So let's look ahead to Friday.
We're going to get this job support. Do you see
it as just another element of hard data here does
a take on kind of increased importance in light of
what we saw today from the ADP. Is that more
important than we saw last months? Or what are you
looking for when the Labor Department releases those data on Friday.
Speaker 9 (19:30):
I think it's incredibly important because I think you've had
a market rally on the belief that we were at
max tariff uncertainty, which I'm not for sure that we're
at and I don't think this is just in a
goation negotiation. I do believe that if you parse the
words of the administration, they want the revenue and they
believe in tariffs, and they're not going away. The second part
is that hard data into soft data, or soft data
into hard data I think last week we saw jobless
clim spike just a bit, we saw continuing claims rise,
(19:52):
we had ADP today, and so I think Friday's jobs report,
Friday's labor market report is incredibly important. I think the
oddity is that right now, people believe that even if
the labor market were to weekend, or even if the
data were to weeken, think about days like today, when,
as Emily mentioned, fed Thatt's go up, the market believes
that it's a buying opportunity either way, and that the
(20:14):
FED can actually cushion the blow. I'm not for sure,
at least historically that the FED can absolutely cushion the blow.
And so to me, that's where I do think the
jobs market and the data on Friday will be incredibly important.
If it's good, it's probably coastal clear for a while.
If it's bad, then we'll see what actually happens. I
suppose the reaction will be different than what it is
today because ADP is kind of thought of as maybe
(20:35):
a secondary type of employment index. But we'll see on Friday,
just very.
Speaker 4 (20:39):
Quickly before we let you go twenty seconds here. It's
interesting then to see kind of these more speculative areas
of the market rallying. You look at the Nasdaq, one
hundred is higher, A basket of the most shorted stocks
from Goldman Sachs is hired today, and yet you're seeing
that this economic data is weaker. Just in thirty seconds,
(21:00):
help us understand the difference there between what's going on
and animal spirit.
Speaker 9 (21:03):
I think there's an inefficial demand from individual investors to
buy things that I've worked in the past, and that's
been the formula for a while, and that's where you've seen.
Most of the buying over the past few months has
been through individual investors, not institutional and we'll see if
they continue to follow along those lines. That's where momentum
buying has worked. And that's what I'd be cautious of
going forward, because I do believe that if you did
have a downturn, some of those speculative areas might get hit.
Speaker 7 (21:26):
Quite a bit.
Speaker 4 (21:27):
Brent Shoody, thank you so much. It's always great to
talk to you. He's the chief investment officer of Northwestern
Mutual Wealth Management.
Speaker 5 (21:35):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm. Eastern Listen
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Speaker 2 (21:49):
One of the most read stories on the Terminal today
is the Bloomberg Big Take, a harrowing account of a
fatal twenty twenty three car crash involving a Tesla model
why that was using full self driving. A crash took
place in Arizona on Interstate seventeen between Flagstaff and Phoenix.
Bloomberg News Senior technology reporter and contributor to the Elon Inc. Podcast,
Dana Hall writes that as Elon Musk tounts robotaxis in Austin,
(22:12):
federal regulators are investigating whether the system in the Tesla
is dangerous even with a human behind the wheel. Dana
joins us now from the Bloomberg San Francisco Bureau, and
I should commend this piece to everybody. It's sobering. It
includes very dramatic video captured by this car as it
goes at highway speed and crashes into someone next to
her Toyota Rev four. Dan talk a bit about the
(22:35):
video that you were able to obtain that Bloomberg News
was able to obtain here. It was through a public
records request. But what it shows, what it reveals about
what seems to be a huge flaw here in this
feature that Elon Musk has touted.
Speaker 6 (22:49):
Yeah, so thanks David. To back up for a little bit.
Speaker 10 (22:52):
You know, in October, NITSA announced that it was investigating
what Tesla calls FSD because of four crashes where the
system seemed to struggle with fog, glare, dust storms, things
like that, And they mentioned one of the crashes was
a fatality involving a pedestrian. And I read the nitzav
report and was like, wait, what a pedestrian was killed?
Speaker 6 (23:14):
Like what was this? What happened?
Speaker 10 (23:15):
And there weren't any other details, So I filed a
record's request and got the crash report, over two hundred
and fifty photographs and some pretty harrowing footage, some of
which we shared with everyone today. And it just really
shows this vehicle not slowing down despite the glare on
the screen, and not seeing parked cars with their hazard
lights on, not seeing another human being like desperately kind
(23:38):
of signaling to them to slow down, and then hitting
this one. You know, we stopped before the impact, but
then obviously this woman has sort of hit.
Speaker 6 (23:46):
Straight on and it just raises a lot of questions.
Speaker 10 (23:49):
And you know, Tesla fans will say that the software
and the hardware since then has been upgraded, and I'm
sure that it has. But at the time, you know,
the driver was using what was likely the most up
to date version of that FSD that existed. And it's
just a really tragic case that a lot of people.
Speaker 6 (24:08):
Don't know about.
Speaker 4 (24:09):
So talk a little bit about full self driving and
in the case of this of this crash, what we
know about what the driver was doing. What drivers of
Tesla's with FSD are told. Are they supposed to keep
their hands on the wheel? Do they have full control
over the brak?
Speaker 1 (24:29):
Well?
Speaker 6 (24:29):
Does that work?
Speaker 10 (24:30):
So that's been that's been a big issue in terms
of how Tesla has marketed this. It is marketed as FSD,
but Tesla makes very clear in all of its literature
to its owners that the owner of the car is
responsible for the car at all times and should be
ready to take over. So we don't really know, you know.
All we have is what the driver said in the
(24:52):
crash report, which was I'm sorry. It all happened so fast.
All of a sudden, there were cars in front of
me and I couldn't stop, so we don't know more
than what he told police right in the aftermath of
the crash. I do think it's significant that Tesla ultimately
reported this crash to Nitza and the investigation that you know,
Nissa's investigation is ongoing.
Speaker 2 (25:13):
Danna, you could step outside our bureau in San Francisco
and you could hail a Weimo, a self driving taxi.
And I think it's useful to explain the difference in
the way these self driving systems work. So we're talking
about a Tesla system here that relies predominantly, if not exclusively,
on cameras. How does that differ from what Weimo is
doing from its competitor.
Speaker 10 (25:34):
Yeah, So if you live in a city like San
Francisco or Austin where Weimo is ubiquitous, now you know
they have a lot of sensors. They use cameras, they
use radar, they use light r light RS is the
thing that kind of spins around on the top. A
lot of people complain that it looks very clunky, but
they have a very robust sensor suite so that the
vehicles not rely on on one input. They are kind
(25:56):
of gathering actively gathering data from around the are using
multiple sensors, and that is one approach.
Speaker 6 (26:04):
That is the approach that Weimo has taken.
Speaker 10 (26:05):
It's the approach that you know, others like Aurora and
Zooks have also taken. Elon Musk has taken a very
different approach, and his idea is that a vision based
system or a camera based system with a lot of
machine learning and these incredible neural nets can basically do
the same job for much cheaper. And part of the
argument is that Tesla has so many cars on the
road that they have a lot of data that they
(26:26):
have trained their their systems on and so you know,
there's a big debate in autonomous vehicle vehicle development about
whether you can truly be self driving without lidar or not.
I just think what this crash shows is that a
camera based system struggles sometimes with blair and this was
one of those very tragic educases.
Speaker 4 (26:47):
What if the regulators said, if anything about these systems
that just use cameras.
Speaker 10 (26:55):
I mean, they have not you know, they are investigating
or crashes where you know, they seem to struggle in
these certain conditions like glare, but they have not like
I mean, they're not ordering a recall or anything like that.
And just note that investigations do take quite a lot
of time. There's typically a lot of back and forth
between NITZ and automakers. You know, they ask for a
(27:18):
lot of engineering details, and they often do take several months.
Speaker 2 (27:23):
I'm curious here sort of about the way that this
administration and the Department of Transportation particularly see the advent
of and the adoption of self driving vehicles like the
one that's featured in this story. Do they see it
as the future? Do they see it as kind of
a compliment to the way that we drive today? Sort of?
How are they looking at the prospect of these cars
being on their own.
Speaker 10 (27:42):
I think they very much see it as the future.
And you know, we have to remind everyone that, sorry,
we have to remind everyone that roughly forty thousand people
die in traffic accidents in the United States every year.
A lot of traffics are because of speeding, because of
drug and alcohol use, and if there is anything that
we could do to really drive that number down, that
(28:03):
would be terrific. And that has always been the promise
of autonomous vehicles that you know, autonomous vehicles can drive
when you're tired and they can do long haul freight
runs that kind of thing. But as we're seeing these vehicles,
you know, being deployed, either in testing situations or you know,
starting to become commercialized, there have been accidents, and I
think that the industry needs to be very upfront about
(28:25):
what those accidents have been.
Speaker 4 (28:28):
We only have about a minute left, but I'm wondering
if you could compare you know, where Tesla currently is
in this race for autonomous driving versus other US automakers.
Speaker 10 (28:39):
I mean, I think the big competitor to Tesla is Weimo.
As David mentioned, I can you know, step outside of
my San Francisco office and hail a Weimo and it
will show up and there is not a driver there.
Tesla does not yet have a functioning robotaxi, you know,
customer service based system. Yet they are talking about kind
of launching one in Austin this month. We'll see whether
(29:02):
that's a big event or like a soft launch, but
you know, they are definitely they don't have a commercial
business doing a robotaxi yet. However, you know, that's been
the big promise of the company for quite some time.
Now that you know we're going to see robotax. He's
everywhere and eventually you, if you own a Tesla, we'll
be able to add your vehicle to this growing fleet.
Speaker 2 (29:21):
Dana, thank you very much and thanks for the reporting
as well. The piece is a fatal Tesla crash shows
the limits of full self driving by Dana Hall. She
wrote it with Craig Trudell and features again this very
sobering video. We didn't show any of it to our
audience on television and YouTube, but you can see up
until the moment that that self driving Tesla hits a
pedestrian in Arizona just a couple of years back, and
it's well worth reading just to hear about the limitations
(29:42):
of that software, of that feature in the Tesla. It
can be the full story and more from the Bloomberg
Big Take on the Bloomberg Terminal and at Bloomberg dot
Com slash a Big Take again that piece there by
Dana Hall with Craig Trudell.
Speaker 1 (29:55):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us a live weekday afternoons from two to five East
during Listen on Apple Karplay and Android Auto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 2 (30:09):
David Dura here with Emily graffeo in for Tim Stenovek
and Carol Master there off today. It was a good
time to be in the mortgage business back in twenty twenty,
That is when Dan Gilbert billionaire Dan Gilbert took his
Quickened Loans now Rocket Companies public, as Bradstone, the editor
of Bloomberg BusinessWeek, rights Americans enjoying cheap money and still
warm stimulus checks were happily refinancing at a rapid clip,
(30:31):
and Dan Gilbert was then one of the richest people
on earth. Of course, mortgage rates have gone up since then,
and Rocket Company's annual revenue is expected to go down,
its share price down almost thirty percent since that company
went public. Good occasion for Bradstone to check in with
Dan Gilbert to see how he's doing, how the company's doing,
talk about both of those things with him. Now, Brad
joins us from our bureau in San Francisco. Bred We're
(30:53):
going to talk about Dan Gilbert the person here in
just a moment, but let's start with the company and
the challenges it faces. How different is this company from
what it was back in twenty twenty.
Speaker 11 (31:03):
Maybe not that different, You know they are in a
cyclical industry. They have seen rates go up and rates
go down. You know, Dan is someone who you know
runs not just a company, but a little bit of
a corporate cult.
Speaker 8 (31:17):
You know.
Speaker 11 (31:18):
They he doesn't like to lay people off, but you
know as a result, you know, the company's lost about
thirty percent of its market cap since rates started creeping
up after the pandemic, and they're getting a little bit of.
Speaker 8 (31:31):
Outside pressure for the first time.
Speaker 11 (31:33):
There's an activist investor in the stock and he's really rethinking, well,
what is Rocket? And so recently they made two kind
of rapid fire acquisitions. One is a brand that most
people probably know, Redfin, the home listing a company. And
then another one is called mister Cooper, a Dallas company
that does underwriting that they have announced a tenpt to acquire.
Speaker 8 (31:55):
For about nine billion dollars.
Speaker 11 (31:57):
Both of those deals have yet to close. But the
idea the Dan relates to me is like, let's not
just see our customer once every seven ten years when
they're ready to take out a new mortgage or refinance,
but maybe have a relationship with them through the entire
life span of a mortgage.
Speaker 4 (32:15):
I found it interesting that you write that Gilbert, who
owns about seventy percent of Rocket, is responding to a
lot of the uncertainty with the most significant changes to
his company since nineteen ninety eight. So talk a little
bit more. I know you mentioned the acquisitions, but just
about what makes the changes that he's undergoing just so significant?
Speaker 8 (32:36):
Yeah, I mean it's really the acquisition.
Speaker 11 (32:38):
Well, first of all, he's hired a new CEO of
Arun Krishna, a former PayPal guy. He ran the turbo
tax business and into it. You know, Dan hasn't been
the CEO for quite some time, but we all know
a little bit about founder led companies, and Dan is
really brought in a kind of Silicon Valley guy to
sort of run the company and to steer Rocket through
(32:59):
the revolution. Now underwriting a loan servicing alone, it's an
enormously employee human intensive business, and so AI is offering
a lot of opportunities for Rocket to get slimmer. So
I think the changes are twofold one making these two
acquisitions and saying Rocket is not just going to be
(33:20):
your refi company, but it's going to hold the customer's
hand through the entire home buying process. They want to
get into the real estate business essentially with Redfin, and
then it's this mindset of what can we do with
AI to make the process more efficient? And that will
be very interesting because, as I said, Danzi's his employees.
Speaker 8 (33:39):
Is sort of an extended family.
Speaker 11 (33:41):
And so the question that value Act and some of
these other shareholders and value Act is the activist shareholder,
they probably want to see steeper cuts. And so I
think there's a little bit of tension and suspense building
around how Dan will be navigating the next few years.
Speaker 2 (33:55):
Brad, pardon, please excuse the obligatory question about artificial intelligence,
but I have to ask it, what does Dan Gilbert
think the role of artificial intelligence is going to be
here in the mortgage and mortgage servicing industry.
Speaker 11 (34:07):
Yeah, And maybe this kind of comes through in the piece,
which is I think he's putting a little bit of
a happy face on it. He thinks that it can
aid the customer in the paperwork filling out a loan,
it can be a help to the company in servicing
customer service calls.
Speaker 8 (34:26):
And yet he doesn't.
Speaker 11 (34:27):
Necessarily project like great displacement.
Speaker 8 (34:30):
In his workforce. I don't know about that.
Speaker 11 (34:32):
I mean, it does seem like, you know, these models
are now quite good enough that maybe you could start
to replace some of the human labor behind the underwriting process. So,
you know, I think the big, the overarching answer is
it makes the process more efficient. You know, it simplifies
this labyrinth of paper county by county, state by state paperwork.
(34:53):
Rocket is a big company because it's been able to
do that. But then the question is how much does
it automate? How much does it mean that Rocket doesn't
need it's thousands of employees anymore.
Speaker 4 (35:04):
Brad, you had the opportunity to actually sit down with
the billionaire businessman. How is he staying positive amid all
of these changes in his company, amid health issues that
he's experienced, right.
Speaker 11 (35:20):
And I think you know that is and Emily and David,
you're gonna appreciate this.
Speaker 8 (35:25):
I'll give you a little bit of background.
Speaker 11 (35:27):
I'm a Cleveland guy, okay, and so Dan Gilbert, he
owns the Calves. He has always loomed very large in
the civic life of not just Cleveland, but Detroit, where
he's based. I've always wanted to meet him, and in
particular history has gotten very interesting because he's one of
the richest people in the world. But in twenty nineteen
he suffered a debilitating stroke, and really over the past
six years he's been just battling back. He lost the
(35:50):
entire use of the left side of his body. He
really can't walk. He's only now beginning to stand and
take a few steps unaided without a cane.
Speaker 8 (35:59):
And so I.
Speaker 11 (35:59):
Think, you know, Emily, the way you phrase a question
is a good one. He does remain positive. He doesn't
have control over some central things in his life, not
only his own physical health, but interest rates, which has
a major impact on his business. He is almost single
handedly reviving downtown Detroit by buying and rehabit buildings. So
(36:21):
I think it's just a point of view, you know,
despite these massive challenges, despite things that are out of
his control, he has an entrepreneurial mindset, and he's kind
of continued to battle. And you know, he has amazing resources.
And so it's not just the rehab, but stem cell
treatments and testosterone shots, and he's doing everything he can.
I think he's really defied the odds, not just in business,
(36:44):
but also in his personal life.
Speaker 2 (36:45):
Just a wonderful photograph of him made bade Bier photographer
at the beginn at the end of that piece, you
can see him standing up. So despite those difficulties, making
the effort to stand up for photograph there at the end.
Keeping in mind all that you were talking about, you
mentioned his role in Cleave, his role in Detroit. Talk
a bit, if you would, about his aspirations in kind
(37:05):
of the civic life of both of those places. You
were talking about sports here a moment ago. But he
has made a name for himself as someone who's very
philanthropically minded brat right.
Speaker 11 (37:15):
I mean, look, you go ten years ago, you go
to downtown Detroit, and you know, it looks like something
out of a seventies dystopian science fiction movie. I mean,
it was just a central Core was totally abandoned. Cleveland,
a city I'm more familiar with pretty similar lots of
sort of development starts and stops. And look, we're very
(37:38):
familiar with the tech CEOs who have used their wealth
to get to space, you know, to solve global disease
on the other side of the world. Dan just decided
that he's going to have an impact closer to home
and in downtown Detroit alongside the central Woodward Avenue. He's
been buying properties. He's building a skyscraper where GM is
(37:59):
going to move its headquarters when it's when it's completed.
Speaker 8 (38:02):
He moved Rocket from a suburb.
Speaker 11 (38:04):
Downtown I don't know, I think twenty years ago and
it and the idea is to really, like, you know,
rehabilitate these industrial Midwest cities with glorious architecture and amazing
flourishes in the buildings. He's taken a building, I think
it's called the Library Building in downtown Detroit completely rehabited.
(38:25):
There's a there's a hotel there. All the original touches
were there. And he's brought life back to these abandoned
city city cores. And so that is his mission, as
well as addressing the disease that took the life of
one of his children.
Speaker 8 (38:40):
He's donated a lot of money to that.
Speaker 11 (38:42):
So it's really philanthropy around the things, around things close
to him that is important to him, and that's where
he wants to leave a legacy.
Speaker 4 (38:51):
And for those just tuning in, we're speaking with Bloomberg
BusinessWeek editor Brad Stone on his story is feature story
about Dan Gilbert Brett. I want to finish off by
going to the headline of your story that Calv's owner
Gilbert wants to donate his billions. You write that he
told you he wants to pretty much donate all of
(39:11):
his wealth before he passes away. It seems like we're
hearing more billionaires do that. Like there's the billionaires that
go into space, but then there's also these these businessmen
that have these major pledges, right.
Speaker 11 (39:25):
Right, I mean, he has signed the giving pledge and
that I think that you guys could check me on this,
but I think the goal there is to give away
half your wealth in your during during your life, right,
you know, but Bill Gates recently said his intention is
to spend down the you know, his his his fortune, and.
Speaker 8 (39:43):
Dan Gilbert is very much the same.
Speaker 11 (39:45):
You know, he told me that he is having more
fun giving the money away than he was accumulating it.
He's got these causes, the health of downtown Detroit, downtown Cleveland,
solving not just the disease that took the life of
a son, but addressing the challenges faced by stroke victims.
And you know, he wants he wants to leave an impact,
(40:07):
and so he's still very much focused on Rocket.
Speaker 8 (40:10):
He's there two days.
Speaker 11 (40:11):
A week, but you know, he's also totally invested in
these other causes and wants to see the impact of
his philanthropy during the course of his life.
Speaker 8 (40:20):
Brad, great to talk to you.
Speaker 2 (40:21):
It's a great piece as well. Bradstone interviewing Dan Gilbert,
of course, the founder of Rocket Companies formerly Quicken Loans,
a really strong profile looking at him and the personal
struggles he's facing on right now and struggles at the
company as well, amidst this environment where interest rates are
higher than they were back when it went went public.
But commend that to everybody. You can read Brad's story
(40:41):
on the Bloomberg and at Bloomberg dot com, Slash, BusinessWeek
Bradstone the editor of BusinessWeek magazine and Emily I was
just struck. I mean, he details so well the way
that Dan Gilbert has faced these personal challenges himself. And
again I go back to that photograph. It's such a
clearly must have been a very poignant moment when having
taken a number of photographs sitting down, he stood up
(41:02):
for a couple shots standing up as well as he
tries to get his ability to walk once again, and
Brad alluding to the fact that this is a company
now that's facing a bit of activist pressure talking about
Value Act taking a nine point nine percent stake in
this company, and I think a lot of that has
to do with this issue of AI and the degree
to which this company embraces it and begins to kind
of use it in the mortgage business. You'll be fascinating
(41:24):
to watch that going forward.
Speaker 4 (41:25):
And let's not forget that he's also the owner of
an NBA.
Speaker 2 (41:29):
Team, Evliers.
Speaker 4 (41:30):
Bradstone pointed out that Gilbert actually persuaded Lebron James to
return to the Calves after he had departed for the
Miami Heat. Of course, now, yes, he's not at Cleveland,
but I'm sure Bradstone, as a Cleveland guy, a Midwest guy,
was happy.
Speaker 2 (41:45):
About that you could season send a championship while he
was there, no small thing.
Speaker 5 (41:50):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from from two to five pm Eastern on Bloomberg
dot com, the iHeartRadio app, tune In, and the Bloomberg
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Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
David Gerro here with Emile Griffeo on Bloomberg Business Week
on Bloomberg Radio and YouTube from the Interactive Broker Studio
in New York City, where there's some news about a
university just up the street from US. That is Columbia
University no longer meeting the accreditation standard set by the
Department of Education. Some breaking news here in the last
few minutes. Of course, this is one of a handful
of schools that have been in the crosshairs of the
Trump administration. The Secretary of Education Linda McMahon saying in
(00:55):
a statement the school's leadership quote acted with deliberate indifference
towards the harassment of Jewish students on its campus after
the October seventh attack by Hamas on Israel. I'm reading
there from a piece by Kayla Gardner, who covers the
White House for US here at Bloomberg News and joins
US now from Washington. Okay, let's just start with the
basic facts of this year. We've seen the government go
after Columbia's finances, threaten to withhold funding for research and
(01:17):
the like. This seems to be ratcheting up its fight
even more. What does it mean in effect that the
government taking away this accreditation for Columbia.
Speaker 3 (01:26):
So we should clarify that the Education Department is notifying
the entity that has given Columbia University its accreditation, which
basically gives them the power to issue degrees. Basically is
the definition for why they are a university. So they're
notifying here Middle States Commission on Higher Education that they
believe that the university is an in violation of anti
(01:47):
discrimination laws. That is, of course, tied to antisemitism that
they see is happening on campus and the protests that
we've seen on the war in Gaza here. And this
is really a turn and narrative when it comes to
the relationship between the administration and Columbia. Because there had
been signals from President Trump, from Secretary McMahon that conversations
were in the right direction between her and the university's president.
(02:09):
And of course Harvard took a big step with lawsuits
against the administration. Now Columbia has not been doing that.
So this certainly suggests that conversations perhaps are not going
in the direction that certainly Columbia hopes that they are.
Speaker 4 (02:20):
Kayla, you write from a quote here from Linda McMahon
that accreditors have an enormous public responsibility as gatekeepers a
federal student aid. They determine which institutions are eligible for
federal student loans and pelgrants. So just talk about this
is they're not deifying Columbia, but actually, like in practice,
(02:42):
is anything changing for the university or its students yet.
Speaker 3 (02:46):
So the responsibility is really on the accreditor here to
take these findings and assess them and assess Columbia's accreditation
going forward here. But this is really a concept or
a theme, if you will, that the president has been
talking about on the campaign trail. He has long believed
that the accreditation system is unfair, and he has talked
about alternatives from traditional universities, and a huge part of
(03:08):
that is they believe that there is bias on a
lot of these private campuses, a lot of these Ivy
League campuses that they believe is not a welcoming place
for conservatives, and certainly the ideals that are driving his movement.
Speaker 2 (03:19):
I want to go back to something that you mentioned
just a moment ago, and that is the kind of
status of dialogue or the relationship between Columbia and the
Trump administration. So we saw it really deteriorate under the
leadership of a new Shaffik, who was the president of
the school for a very short period of time. She
was succeeded by Katrina Armstrong, who was president for an
even shorter period of time on an interim basis, she
(03:39):
was heading the medical school and moved over to the presidency,
stepped down, and now Claire Shipman, who had been heading
Columbia's Board of trustees, is the interim president. The new
interim president get us up to speed on sort of
how much the two entities are talking, the administration and Columbia,
and sort of what the university has done in recent
weeks to side it kind of comport or talk with
(03:59):
the administration about a path forward here.
Speaker 3 (04:02):
Well, Secretary mc man has been very public that she
has had conversations with the president. She has spoke somewhat
admiringly of the current president, but she says these negotiations
are ongoing, both with Columbia and Harvard, and we saw
Harvard put or excuse me, Colombia put out a statement
where they said that they were not open to some
of these demands that the administration has when it comes
(04:22):
to quote viewpoint discrimination, where they really asked Columbia and
Harvard to make these sort of changes to their faculty
and their students to sort of represent more viewpoints when
it comes to political or ideological beliefs, because again, they
believe that these institutions have a bias, particularly a liberal
bias on campus.
Speaker 4 (04:42):
This is obviously a breaking news situation. And you write
that Columbia did not yet respond to requests for comments,
But how do you think the university is going to respond?
Speaker 3 (04:53):
Well, I can't tell you exactly what they will respond
until they actually do. But Columbia has been very measured
as a posed to Harvard, who has taken now two
lawsuits against the administration, one on student visas and one
to get their federal funding back. So they have been
measured up until this point. Really trying to strike a
deal with the administration through negotiation. So I'm certainly interested
(05:15):
to see if they go the route that we've seen
Harvard go or they continue to try to have these
negotiations behind closed doors to potentially get their funding back,
and of course here also to defend their accreditation as
a university.
Speaker 2 (05:27):
Kayla, great to talk to you, as always a Kayla
Gardner covers the White House for us here at Bloomberg
News with that breaking news story here that the Trump
administration is targeting Columbia's accreditation over protests, and Kayler bringing
up that nuance which is so important here the Education
Department notifying the Middle States Commission, that is the accreditor
that they do not think that Columbia meets the qualifications
for accreditation, and that can have all kinds of ramifications
(05:50):
I'm sure for the university itself, but certainly students who
are attending the school or intending to go there. And
just picking up on one more thing that she mentioned,
that is the role of Harvard Universe and all of that.
Alan Garber, the president of Harvard, has been adamant that
the way in which the administration has dealt with that
school is a warning sign, as he put it, for
what might happen with with other schools. So picking up
(06:10):
on your question, you're very good question, Emily. How they
might respond. I'm curious if they kind of follow in
the mold of what Harvard's done recently, which is to
really stand up against the administration.
Speaker 5 (06:19):
You are listening to the Bloomberg Business Weekdaily Podcast. Catch
us live weekday afternoons from two to five pm Eastern.
Listen on Applecarplay and Android Auto with the Bloomberg Business Act,
or watch us live on YouTube.
Speaker 6 (06:34):
Well, let's get.
Speaker 4 (06:35):
Back to the Big Beautiful Bill. On Capitol Hill. Republicans
in the Senate are working on their version of what
President Trump calls this Big Beautiful Bill, and as they
do that, we're getting new details from the non partisan
Congressional Budget Office about what the House version, as passed
would do to the federal deficit. The CBO estimates it
(06:56):
would add two point four trillion dollars to US budget
deficits over the next decade. The CBO also says it
expects it would leave almost eleven million people in the
United States without health insurance in twenty twenty four. Henrietta
Trees is the co founder of Veda Partners, where she
is director of Economic Policy, with a particular expertise in
(07:17):
how the Senate works. So she joins us, now talk
about these numbers. What exactly do they tell us, Henrietta.
Speaker 6 (07:24):
These are big numbers.
Speaker 7 (07:26):
Two point four trillion is a record breaker. The last
highest reconciliation.
Speaker 6 (07:31):
Bill was one point nine trillion.
Speaker 7 (07:33):
So this whilbe winning some awards for sheer deficit increases
on that account, which is exciting. The bill is going
to change a lot from here. In my base case
expectation knowing the Senate is that it's going to become
more deficit financed.
Speaker 6 (07:48):
I think for bond investors there's something.
Speaker 7 (07:50):
To watch for here, and that the Senators are going
to use a current policy baseline where the House does not.
And this is a big differential between the two chambers.
The House assumes that passing an extension of the twenty
seventeen tax cuts plus some of the other components of
the bill will generate two and a half trillion dollars
of economic activity dynamic growth. On the Senate side, they're
(08:10):
not going to use that formula to wipe away some
of the budget costs. They're going to instead assume that
extending the existing rates costs nothing. Three point eight trillion
dollars or one point three billion dollars. One point three
trillion dollars more will be deficit financed. So the scale
of the Senate bill is going to be quite a
bit more substantial. They're going to try to make some
of the business provisions more permanent than the House bill.
(08:32):
The salt cap is going to have to come down,
the IRA cuts are going to have to come down,
the Medicaid cuts are going to have to come down.
The deficit is going to grow, is the bottom line.
As the Senate spends the next four weeks crafting their
version of this bill.
Speaker 2 (08:44):
Henrietta, I'm curious, as I'm sure you are, about how
a Senator Ran Paul is looking at the numbers from
CBO today, maybe a Rick Scott, maybe a Ron Johnson,
as well as I kind of make the argument for
deeper cuts in the Senate version of this bill. I
heard Senator Paul talking about the power that he thinks
he and these other holdouts have here in these negotiations,
and I'm curious if you think that he's right about that,
(09:07):
that these holdouts are going to be able to exert
some real sway here as the Senate gets down to
brass tacks and reshapes this BILM great question.
Speaker 7 (09:15):
I actually think this is some of the most interesting
change that we've seen since the Senate has taken up
this bill and gotten back from recess. Rant Paul's material
objection is to the five trillion dollar increase to the
debt ceiling that the Senate bill is going to include,
and so there's already discussion of trying to get him
back into the fold as a potential yes vote in
(09:35):
changing the debt ceiling numbers associated with the Senate package.
So right now, the sort of whisper around the Senators
in the Republican conference is that, hey, maybe we just
cut that in half and get rand Paul over to
our side again, Because right now, if rand Paul is
in no, just on the debt ceiling alone, then Senator
Fune only has two votes to lose from there. So
(09:56):
cutting the debt ceiling hike, which is not the same
as the deficit but a really important part for Rand
Paul down at two and a half trillion dollars, which
would get the Senate and Congress functionality through about March
of twenty twenty six instead of November twenty twenty six, is,
I'm told a part of the conversation. So we're really
trying to move the parameters of what might get Ran Paul,
(10:19):
which to me really underscores the trouble that Leader Thun
is going to face when we get back to what
you were just mentioning the ten point nine million individuals
will be kicked off Medicaid, nine and a half million
of whom are not in the undocumented migrant space that
Republicans talk about a lot. These are just regular everyday Americans,
so will be kicked off of the Medicaid program. So
(10:42):
there's going to be a lot of loss from West Virginia,
Susan Collins in Maine, the Alaska senators that's Sullivan who's
up for reelection next year, and Murkowski. So there's a
lot of moving parts that they needs to walk through here.
Getting Rand Paul on board by cutting the debt ceiling
hike in half might be very helpful.
Speaker 4 (11:02):
So how then do you anticipate the timeline of this
bill eventually making its way to President Trump? Maybe assuming
that we do get those holdouts, the Rand Paul's you know,
signing off on. It is the timeline really realistic that
this this does get on Trump's desk by July fourth.
Speaker 7 (11:21):
No, it's going to go through the Senate by July fourth.
That's the strategy that Senator Foone is working with right now.
There are three committees who are rolling out their bill
this week, there will be another next week, and then
the Senate Finance Committee, which is responsible for almost all
the package, all the tax provisions and the Medicaid.
Speaker 6 (11:37):
Cuts, they're going to go last.
Speaker 7 (11:39):
And that'll come either the week of the sixteenth, right
before Juneteenth, or it will come the following week, the
week of June twenty third. This bill is going to
get very messy, very complicated. They have a lot of
changes that they need to make with the House Republican package,
and as I mentioned, the Salt Caucus alone is going
to raise holy hell with them and they're going to
be in a meeting at some point. They haven't been
(11:59):
given an audience yet, but they will have to do that.
And then what that creates is a scenario where the
House and the Senate actually go to conference first and foremost,
for investors, what you should hear when I say that
is this is the time suck. It can be one, two,
three weeks even so that paints the picture for passages
of this legislation. At the end of July. July twenty
fourth is when the House is scheduled to go on recess.
(12:20):
August first is when the Senator's scheduled to go on recess.
The X date for the debt ceiling is in mid August.
That's the time horizon folks should work with very quickly.
Speaker 2 (12:29):
Here just what is happening at this moment, drawing on
your experience working set, what's happening at this moment in time.
I know committees are releasing their legislation sor have one
by one, But in the minute that we have left,
sort of what's the actual state of play. What's happening
on the ground in Senate office buildings today.
Speaker 7 (12:44):
Lobbyists are fanned out everywhere. They're trying to get their
IRA tax credit back in. They're trying to tweet the
eight ninety nine provision that gives the Treasury Secretary of
the authority to tax unfair fact tax countries, foreign entities,
and such. There's a lot of behind the scene's work
going on before that bill gets released. The rule of
thumb in DC is you want to get your provision
(13:05):
out before the bill gets released, Get it out before
it's in.
Speaker 6 (13:08):
Once it's in, you can't get it out.
Speaker 7 (13:10):
So the aggressive lobbying happening behind the scenes right now.
Speaker 2 (13:13):
Henrietta always good to talk to you to get your update.
That's Henrita Trace. She's the co founder of Vada Partners,
where she's the director of Economic Policy'll.
Speaker 7 (13:23):
Bet you let me drive.
Speaker 1 (13:24):
Oh no, no, no no, this is not a twin.
Speaker 8 (13:28):
Honey, please, I'll do the velcase. I want to try it.
Speaker 5 (13:34):
It's good question.
Speaker 1 (13:39):
This is the Drive to the Clothes Punk's thing well
on Bloomberg Radio.
Speaker 6 (13:46):
All right, time now for the Drive to the Clothes.
Speaker 4 (13:48):
Today, we're joined with Brent Shooty, chief investment officer of
Northwestern Mutual Wealth Management. They have over three hundred billion
in assets under management. Brent joins us on Zoom from
Millwall Hockey. I want to get your reaction to the
economic data that we got today, the subsequent reaction in
the treasury market yields our down, traders betting that maybe
(14:11):
we'll get up to three rate cuts this year. What's
your reaction to the data and those fed bets? Right
now sure.
Speaker 9 (14:19):
So I think the question that most have been asking
is does the soft data, so the survey data that
it has been weak, does it start leaking into the
hard data. And that's where I think most people believed
that potentially, there was hope that it would not, But
I think this morning with ADP, you're starting to see
that potentially it's leaking into the hard data, which is
labor markets and job hiring, and you saw those come
down quite a bit. You have the ISM Services, which
(14:39):
is still soft data, but a good data source historical.
That's where the Services index, which has held up the
economy while manufacturing's in week the past few weeks, our
past few years, it faltered. Then the last but not
least you had the page book where it showed weakness
and it had a comment about consumer spending declining slightly
in most districts or even faltering or even being neutral.
(15:00):
So that's where I think you're starting to see after
yesterday's euphoria about the JILT report kind of wear in
this yoyog economy to where today the data was weaker.
That brought in the belief that the Fed may cut rates,
and I think from the fixed income perspective, because I
think a lot of people are nervous about yields. To me,
it still shows that the long end of the curve
will hedge against the potential for economic contraction, which I
(15:21):
think the word recession might start coming up a bit
more if we have more data.
Speaker 10 (15:25):
Like today, you.
Speaker 2 (15:26):
Talk about the nervousness of a lot of people here,
and I wonder how you're seeing through all of that,
how you're sort of positioning amidst the uncertainty about trade policy,
the prospects that maybe they're being a recessions you indicated
that could could come into play a little bit more.
Are there clients who are nervous and panicking so or
what's the council that you're giving folks right now?
Speaker 9 (15:46):
I think the big antidote for uncertainty is called diversification,
and so I think a lot of people want to
run and hide in cash and do whatever else. But
to me, that always means that you think you know
exactly what's going to happen, because that wins only in
a few circumstances. I think diversification has been the big
thing we continue to preach, and that's where I think
a lot of people over the past few years have
called it diversification because they've only wanted to own US
(16:08):
large cap stocks, which have benefited from the past couple
of years, and that's where most people want to only
own those. I think there is different leadership going forward.
This is a macroeconomic trend change. I think the administration
wants a cheaper dollar. I think from a purchasing power
parity perspective, the dollar needs to be cheaper. This is
where there's going to be repatriation of cash possibly, and
(16:29):
that's where I want people to branch out beyond just
large cap stocks and look at places that have been
under loved and underinvested in, like international stocks. I think
about small and mid cap stocks, which are obviously domestic.
They've been under the gun a bit the last couple
of years because you have had a really narrow economy
pretty much just driven by AI stocks and AI companies,
and that's where I think whatever happens on the opposite
side of this, whether it's recession or not, you will
(16:51):
see the economy broadened back out. And that's where the
message I think is the same as it always has been,
which is essentially to diversify and to make sure that
you're tilting towards those things that I just mentioned, which
I think offer value for longer term investors.
Speaker 4 (17:03):
I know that you had mentioned kind of the longer term,
the long end of the treasury curve. A lot of
those bets have not really posted positive returns, you know,
over the last couple months. Just walk us through kind
of the rationale for really extending out further out onto
(17:23):
the curve when you know you can pretty much collect
a pretty decent yeal if you just stay in the
two year or even a money market fund.
Speaker 9 (17:31):
Yeah, if you stand the two year and money market fund,
what happens if today is two thousand and eight, two
thousand and nine, and the yields on the two year
or higher than the tenure, but for the next fifteen
twenty years, the tenure, you know, basically yield sub two
and you have to reinvest that two year multiple times
because it goes to zero. And so that's where I think,
at a minimum, you should invest across the curve. The
thesis is is back to diversification. And you look at
(17:53):
today's action. I use the R word and I use
the word contraction, and people are now thinking about that
just a bit. And you can see on days today,
it does hedge downside risk that would occur if and
when we actually do have a recession, and so I
do think longer term, higher yields or more normal yields
are here to stay. And I think you can possibly
see higher inflation as a result of the deglobalization, the
(18:16):
desire to actually maybe inflate away a little bit of
our debts. But in the here and now, I think
despite all the noise that's out there, days like today,
days like we've had over the past few years, where
you see fears of recession grow, I think it still
shows that people will run the US treasuries. And that's
how I think about hedging a portfolio against adverse outcomes.
I think the one area that people don't have exposure
(18:37):
to that they should because for the last fifteen twenty years,
the way that you hedged a portfolio was only through
long treasuries because you really only had one side of
the distribution that was essentially deflation. I think your question
probably ties into the other side of the distribution, which
now is probably just as likely, which is higher inflation.
And that's where we, from a diversification standpoint, still think
(18:58):
people should own real assets like come on these as
a hedge against a different outcome. Both of those are
kind of the outside outliers in the tails. We want
to maintain investments, but we want to make sure that
we own things that can actually had just through downturns.
Speaker 2 (19:11):
Brandon, I want you to be perspective in the time
we have left here. So let's look ahead to Friday.
We're going to get this job support. Do you see
it as just another element of hard data here does
a take on kind of increased importance in light of
what we saw today from the ADP. Is that more
important than we saw last months? Or what are you
looking for when the Labor Department releases those data on Friday.
Speaker 9 (19:30):
I think it's incredibly important because I think you've had
a market rally on the belief that we were at
max tariff uncertainty, which I'm not for sure that we're
at and I don't think this is just in a
goation negotiation. I do believe that if you parse the
words of the administration, they want the revenue and they
believe in tariffs, and they're not going away. The second part
is that hard data into soft data, or soft data
into hard data I think last week we saw jobless
clim spike just a bit, we saw continuing claims rise,
(19:52):
we had ADP today, and so I think Friday's jobs report,
Friday's labor market report is incredibly important. I think the
oddity is that right now, people believe that even if
the labor market were to weekend, or even if the
data were to weeken, think about days like today, when,
as Emily mentioned, fed Thatt's go up, the market believes
that it's a buying opportunity either way, and that the
(20:14):
FED can actually cushion the blow. I'm not for sure,
at least historically that the FED can absolutely cushion the blow.
And so to me, that's where I do think the
jobs market and the data on Friday will be incredibly important.
If it's good, it's probably coastal clear for a while.
If it's bad, then we'll see what actually happens. I
suppose the reaction will be different than what it is
today because ADP is kind of thought of as maybe
(20:35):
a secondary type of employment index. But we'll see on Friday,
just very.
Speaker 4 (20:39):
Quickly before we let you go twenty seconds here. It's
interesting then to see kind of these more speculative areas
of the market rallying. You look at the Nasdaq, one
hundred is higher, A basket of the most shorted stocks
from Goldman Sachs is hired today, and yet you're seeing
that this economic data is weaker. Just in thirty seconds,
(21:00):
help us understand the difference there between what's going on
and animal spirit.
Speaker 9 (21:03):
I think there's an inefficial demand from individual investors to
buy things that I've worked in the past, and that's
been the formula for a while, and that's where you've seen.
Most of the buying over the past few months has
been through individual investors, not institutional and we'll see if
they continue to follow along those lines. That's where momentum
buying has worked. And that's what I'd be cautious of
going forward, because I do believe that if you did
have a downturn, some of those speculative areas might get hit.
Speaker 7 (21:26):
Quite a bit.
Speaker 4 (21:27):
Brent Shoody, thank you so much. It's always great to
talk to you. He's the chief investment officer of Northwestern
Mutual Wealth Management.
Speaker 5 (21:35):
You're listening to the Bloomberg Business Weekdaily podcast. Catch us
live weekday afternoons from two to five pm. Eastern Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (21:49):
One of the most read stories on the Terminal today
is the Bloomberg Big Take, a harrowing account of a
fatal twenty twenty three car crash involving a Tesla model
why that was using full self driving. A crash took
place in Arizona on Interstate seventeen between Flagstaff and Phoenix.
Bloomberg News Senior technology reporter and contributor to the Elon Inc. Podcast,
Dana Hall writes that as Elon Musk tounts robotaxis in Austin,
(22:12):
federal regulators are investigating whether the system in the Tesla
is dangerous even with a human behind the wheel. Dana
joins us now from the Bloomberg San Francisco Bureau, and
I should commend this piece to everybody. It's sobering. It
includes very dramatic video captured by this car as it
goes at highway speed and crashes into someone next to
her Toyota Rev four. Dan talk a bit about the
(22:35):
video that you were able to obtain that Bloomberg News
was able to obtain here. It was through a public
records request. But what it shows, what it reveals about
what seems to be a huge flaw here in this
feature that Elon Musk has touted.
Speaker 6 (22:49):
Yeah, so thanks David. To back up for a little bit.
Speaker 10 (22:52):
You know, in October, NITSA announced that it was investigating
what Tesla calls FSD because of four crashes where the
system seemed to struggle with fog, glare, dust storms, things
like that, And they mentioned one of the crashes was
a fatality involving a pedestrian. And I read the nitzav
report and was like, wait, what a pedestrian was killed?
Speaker 6 (23:14):
Like what was this? What happened?
Speaker 10 (23:15):
And there weren't any other details, So I filed a
record's request and got the crash report, over two hundred
and fifty photographs and some pretty harrowing footage, some of
which we shared with everyone today. And it just really
shows this vehicle not slowing down despite the glare on
the screen, and not seeing parked cars with their hazard
lights on, not seeing another human being like desperately kind
(23:38):
of signaling to them to slow down, and then hitting
this one. You know, we stopped before the impact, but
then obviously this woman has sort of hit.
Speaker 6 (23:46):
Straight on and it just raises a lot of questions.
Speaker 10 (23:49):
And you know, Tesla fans will say that the software
and the hardware since then has been upgraded, and I'm
sure that it has. But at the time, you know,
the driver was using what was likely the most up
to date version of that FSD that existed. And it's
just a really tragic case that a lot of people.
Speaker 6 (24:08):
Don't know about.
Speaker 4 (24:09):
So talk a little bit about full self driving and
in the case of this of this crash, what we
know about what the driver was doing. What drivers of
Tesla's with FSD are told. Are they supposed to keep
their hands on the wheel? Do they have full control
over the brak?
Speaker 1 (24:29):
Well?
Speaker 6 (24:29):
Does that work?
Speaker 10 (24:30):
So that's been that's been a big issue in terms
of how Tesla has marketed this. It is marketed as FSD,
but Tesla makes very clear in all of its literature
to its owners that the owner of the car is
responsible for the car at all times and should be
ready to take over. So we don't really know, you know.
All we have is what the driver said in the
(24:52):
crash report, which was I'm sorry. It all happened so fast.
All of a sudden, there were cars in front of
me and I couldn't stop, so we don't know more
than what he told police right in the aftermath of
the crash. I do think it's significant that Tesla ultimately
reported this crash to Nitza and the investigation that you know,
Nissa's investigation is ongoing.
Speaker 2 (25:13):
Danna, you could step outside our bureau in San Francisco
and you could hail a Weimo, a self driving taxi.
And I think it's useful to explain the difference in
the way these self driving systems work. So we're talking
about a Tesla system here that relies predominantly, if not exclusively,
on cameras. How does that differ from what Weimo is
doing from its competitor.
Speaker 10 (25:34):
Yeah, So if you live in a city like San
Francisco or Austin where Weimo is ubiquitous, now you know
they have a lot of sensors. They use cameras, they
use radar, they use light r light RS is the
thing that kind of spins around on the top. A
lot of people complain that it looks very clunky, but
they have a very robust sensor suite so that the
vehicles not rely on on one input. They are kind
(25:56):
of gathering actively gathering data from around the are using
multiple sensors, and that is one approach.
Speaker 6 (26:04):
That is the approach that Weimo has taken.
Speaker 10 (26:05):
It's the approach that you know, others like Aurora and
Zooks have also taken. Elon Musk has taken a very
different approach, and his idea is that a vision based
system or a camera based system with a lot of
machine learning and these incredible neural nets can basically do
the same job for much cheaper. And part of the
argument is that Tesla has so many cars on the
road that they have a lot of data that they
(26:26):
have trained their their systems on and so you know,
there's a big debate in autonomous vehicle vehicle development about
whether you can truly be self driving without lidar or not.
I just think what this crash shows is that a
camera based system struggles sometimes with blair and this was
one of those very tragic educases.
Speaker 4 (26:47):
What if the regulators said, if anything about these systems
that just use cameras.
Speaker 10 (26:55):
I mean, they have not you know, they are investigating
or crashes where you know, they seem to struggle in
these certain conditions like glare, but they have not like
I mean, they're not ordering a recall or anything like that.
And just note that investigations do take quite a lot
of time. There's typically a lot of back and forth
between NITZ and automakers. You know, they ask for a
(27:18):
lot of engineering details, and they often do take several months.
Speaker 2 (27:23):
I'm curious here sort of about the way that this
administration and the Department of Transportation particularly see the advent
of and the adoption of self driving vehicles like the
one that's featured in this story. Do they see it
as the future? Do they see it as kind of
a compliment to the way that we drive today? Sort of?
How are they looking at the prospect of these cars
being on their own.
Speaker 10 (27:42):
I think they very much see it as the future.
And you know, we have to remind everyone that, sorry,
we have to remind everyone that roughly forty thousand people
die in traffic accidents in the United States every year.
A lot of traffics are because of speeding, because of
drug and alcohol use, and if there is anything that
we could do to really drive that number down, that
(28:03):
would be terrific. And that has always been the promise
of autonomous vehicles that you know, autonomous vehicles can drive
when you're tired and they can do long haul freight
runs that kind of thing. But as we're seeing these vehicles,
you know, being deployed, either in testing situations or you know,
starting to become commercialized, there have been accidents, and I
think that the industry needs to be very upfront about
(28:25):
what those accidents have been.
Speaker 4 (28:28):
We only have about a minute left, but I'm wondering
if you could compare you know, where Tesla currently is
in this race for autonomous driving versus other US automakers.
Speaker 10 (28:39):
I mean, I think the big competitor to Tesla is Weimo.
As David mentioned, I can you know, step outside of
my San Francisco office and hail a Weimo and it
will show up and there is not a driver there.
Tesla does not yet have a functioning robotaxi, you know,
customer service based system. Yet they are talking about kind
of launching one in Austin this month. We'll see whether
(29:02):
that's a big event or like a soft launch, but
you know, they are definitely they don't have a commercial
business doing a robotaxi yet. However, you know, that's been
the big promise of the company for quite some time.
Now that you know we're going to see robotax. He's
everywhere and eventually you, if you own a Tesla, we'll
be able to add your vehicle to this growing fleet.
Speaker 2 (29:21):
Dana, thank you very much and thanks for the reporting
as well. The piece is a fatal Tesla crash shows
the limits of full self driving by Dana Hall. She
wrote it with Craig Trudell and features again this very
sobering video. We didn't show any of it to our
audience on television and YouTube, but you can see up
until the moment that that self driving Tesla hits a
pedestrian in Arizona just a couple of years back, and
it's well worth reading just to hear about the limitations
(29:42):
of that software, of that feature in the Tesla. It
can be the full story and more from the Bloomberg
Big Take on the Bloomberg Terminal and at Bloomberg dot
Com slash a Big Take again that piece there by
Dana Hall with Craig Trudell.
Speaker 1 (29:55):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us a live weekday afternoons from two to five East
during Listen on Apple Karplay and Android Auto with the
Bloomberg Business app, or watch us live on YouTube.
Speaker 2 (30:09):
David Dura here with Emily graffeo in for Tim Stenovek
and Carol Master there off today. It was a good
time to be in the mortgage business back in twenty twenty,
That is when Dan Gilbert billionaire Dan Gilbert took his
Quickened Loans now Rocket Companies public, as Bradstone, the editor
of Bloomberg BusinessWeek, rights Americans enjoying cheap money and still
warm stimulus checks were happily refinancing at a rapid clip,
(30:31):
and Dan Gilbert was then one of the richest people
on earth. Of course, mortgage rates have gone up since then,
and Rocket Company's annual revenue is expected to go down,
its share price down almost thirty percent since that company
went public. Good occasion for Bradstone to check in with
Dan Gilbert to see how he's doing, how the company's doing,
talk about both of those things with him. Now, Brad
joins us from our bureau in San Francisco. Bred We're
(30:53):
going to talk about Dan Gilbert the person here in
just a moment, but let's start with the company and
the challenges it faces. How different is this company from
what it was back in twenty twenty.
Speaker 11 (31:03):
Maybe not that different, You know they are in a
cyclical industry. They have seen rates go up and rates
go down. You know, Dan is someone who you know
runs not just a company, but a little bit of
a corporate cult.
Speaker 8 (31:17):
You know.
Speaker 11 (31:18):
They he doesn't like to lay people off, but you
know as a result, you know, the company's lost about
thirty percent of its market cap since rates started creeping
up after the pandemic, and they're getting a little bit of.
Speaker 8 (31:31):
Outside pressure for the first time.
Speaker 11 (31:33):
There's an activist investor in the stock and he's really rethinking, well,
what is Rocket? And so recently they made two kind
of rapid fire acquisitions. One is a brand that most
people probably know, Redfin, the home listing a company. And
then another one is called mister Cooper, a Dallas company
that does underwriting that they have announced a tenpt to acquire.
Speaker 8 (31:55):
For about nine billion dollars.
Speaker 11 (31:57):
Both of those deals have yet to close. But the
idea the Dan relates to me is like, let's not
just see our customer once every seven ten years when
they're ready to take out a new mortgage or refinance,
but maybe have a relationship with them through the entire
life span of a mortgage.
Speaker 4 (32:15):
I found it interesting that you write that Gilbert, who
owns about seventy percent of Rocket, is responding to a
lot of the uncertainty with the most significant changes to
his company since nineteen ninety eight. So talk a little
bit more. I know you mentioned the acquisitions, but just
about what makes the changes that he's undergoing just so significant?
Speaker 8 (32:36):
Yeah, I mean it's really the acquisition.
Speaker 11 (32:38):
Well, first of all, he's hired a new CEO of
Arun Krishna, a former PayPal guy. He ran the turbo
tax business and into it. You know, Dan hasn't been
the CEO for quite some time, but we all know
a little bit about founder led companies, and Dan is
really brought in a kind of Silicon Valley guy to
sort of run the company and to steer Rocket through
(32:59):
the revolution. Now underwriting a loan servicing alone, it's an
enormously employee human intensive business, and so AI is offering
a lot of opportunities for Rocket to get slimmer. So
I think the changes are twofold one making these two
acquisitions and saying Rocket is not just going to be
(33:20):
your refi company, but it's going to hold the customer's
hand through the entire home buying process. They want to
get into the real estate business essentially with Redfin, and
then it's this mindset of what can we do with
AI to make the process more efficient? And that will
be very interesting because, as I said, Danzi's his employees.
Speaker 8 (33:39):
Is sort of an extended family.
Speaker 11 (33:41):
And so the question that value Act and some of
these other shareholders and value Act is the activist shareholder,
they probably want to see steeper cuts. And so I
think there's a little bit of tension and suspense building
around how Dan will be navigating the next few years.
Speaker 2 (33:55):
Brad, pardon, please excuse the obligatory question about artificial intelligence,
but I have to ask it, what does Dan Gilbert
think the role of artificial intelligence is going to be
here in the mortgage and mortgage servicing industry.
Speaker 11 (34:07):
Yeah, And maybe this kind of comes through in the piece,
which is I think he's putting a little bit of
a happy face on it. He thinks that it can
aid the customer in the paperwork filling out a loan,
it can be a help to the company in servicing
customer service calls.
Speaker 8 (34:26):
And yet he doesn't.
Speaker 11 (34:27):
Necessarily project like great displacement.
Speaker 8 (34:30):
In his workforce. I don't know about that.
Speaker 11 (34:32):
I mean, it does seem like, you know, these models
are now quite good enough that maybe you could start
to replace some of the human labor behind the underwriting process. So,
you know, I think the big, the overarching answer is
it makes the process more efficient. You know, it simplifies
this labyrinth of paper county by county, state by state paperwork.
(34:53):
Rocket is a big company because it's been able to
do that. But then the question is how much does
it automate? How much does it mean that Rocket doesn't
need it's thousands of employees anymore.
Speaker 4 (35:04):
Brad, you had the opportunity to actually sit down with
the billionaire businessman. How is he staying positive amid all
of these changes in his company, amid health issues that
he's experienced, right.
Speaker 11 (35:20):
And I think you know that is and Emily and David,
you're gonna appreciate this.
Speaker 8 (35:25):
I'll give you a little bit of background.
Speaker 11 (35:27):
I'm a Cleveland guy, okay, and so Dan Gilbert, he
owns the Calves. He has always loomed very large in
the civic life of not just Cleveland, but Detroit, where
he's based. I've always wanted to meet him, and in
particular history has gotten very interesting because he's one of
the richest people in the world. But in twenty nineteen
he suffered a debilitating stroke, and really over the past
six years he's been just battling back. He lost the
(35:50):
entire use of the left side of his body. He
really can't walk. He's only now beginning to stand and
take a few steps unaided without a cane.
Speaker 8 (35:59):
And so I.
Speaker 11 (35:59):
Think, you know, Emily, the way you phrase a question
is a good one. He does remain positive. He doesn't
have control over some central things in his life, not
only his own physical health, but interest rates, which has
a major impact on his business. He is almost single
handedly reviving downtown Detroit by buying and rehabit buildings. So
(36:21):
I think it's just a point of view, you know,
despite these massive challenges, despite things that are out of
his control, he has an entrepreneurial mindset, and he's kind
of continued to battle. And you know, he has amazing resources.
And so it's not just the rehab, but stem cell
treatments and testosterone shots, and he's doing everything he can.
I think he's really defied the odds, not just in business,
(36:44):
but also in his personal life.
Speaker 2 (36:45):
Just a wonderful photograph of him made bade Bier photographer
at the beginn at the end of that piece, you
can see him standing up. So despite those difficulties, making
the effort to stand up for photograph there at the end.
Keeping in mind all that you were talking about, you
mentioned his role in Cleave, his role in Detroit. Talk
a bit, if you would, about his aspirations in kind
(37:05):
of the civic life of both of those places. You
were talking about sports here a moment ago. But he
has made a name for himself as someone who's very
philanthropically minded brat right.
Speaker 11 (37:15):
I mean, look, you go ten years ago, you go
to downtown Detroit, and you know, it looks like something
out of a seventies dystopian science fiction movie. I mean,
it was just a central Core was totally abandoned. Cleveland,
a city I'm more familiar with pretty similar lots of
sort of development starts and stops. And look, we're very
(37:38):
familiar with the tech CEOs who have used their wealth
to get to space, you know, to solve global disease
on the other side of the world. Dan just decided
that he's going to have an impact closer to home
and in downtown Detroit alongside the central Woodward Avenue. He's
been buying properties. He's building a skyscraper where GM is
(37:59):
going to move its headquarters when it's when it's completed.
Speaker 8 (38:02):
He moved Rocket from a suburb.
Speaker 11 (38:04):
Downtown I don't know, I think twenty years ago and
it and the idea is to really, like, you know,
rehabilitate these industrial Midwest cities with glorious architecture and amazing
flourishes in the buildings. He's taken a building, I think
it's called the Library Building in downtown Detroit completely rehabited.
(38:25):
There's a there's a hotel there. All the original touches
were there. And he's brought life back to these abandoned
city city cores. And so that is his mission, as
well as addressing the disease that took the life of
one of his children.
Speaker 8 (38:40):
He's donated a lot of money to that.
Speaker 11 (38:42):
So it's really philanthropy around the things, around things close
to him that is important to him, and that's where
he wants to leave a legacy.
Speaker 4 (38:51):
And for those just tuning in, we're speaking with Bloomberg
BusinessWeek editor Brad Stone on his story is feature story
about Dan Gilbert Brett. I want to finish off by
going to the headline of your story that Calv's owner
Gilbert wants to donate his billions. You write that he
told you he wants to pretty much donate all of
(39:11):
his wealth before he passes away. It seems like we're
hearing more billionaires do that. Like there's the billionaires that
go into space, but then there's also these these businessmen
that have these major pledges, right.
Speaker 11 (39:25):
Right, I mean, he has signed the giving pledge and
that I think that you guys could check me on this,
but I think the goal there is to give away
half your wealth in your during during your life, right,
you know, but Bill Gates recently said his intention is
to spend down the you know, his his his fortune, and.
Speaker 8 (39:43):
Dan Gilbert is very much the same.
Speaker 11 (39:45):
You know, he told me that he is having more
fun giving the money away than he was accumulating it.
He's got these causes, the health of downtown Detroit, downtown Cleveland,
solving not just the disease that took the life of
a son, but addressing the challenges faced by stroke victims.
And you know, he wants he wants to leave an impact,
(40:07):
and so he's still very much focused on Rocket.
Speaker 8 (40:10):
He's there two days.
Speaker 11 (40:11):
A week, but you know, he's also totally invested in
these other causes and wants to see the impact of
his philanthropy during the course of his life.
Speaker 8 (40:20):
Brad, great to talk to you.
Speaker 2 (40:21):
It's a great piece as well. Bradstone interviewing Dan Gilbert,
of course, the founder of Rocket Companies formerly Quicken Loans,
a really strong profile looking at him and the personal
struggles he's facing on right now and struggles at the
company as well, amidst this environment where interest rates are
higher than they were back when it went went public.
But commend that to everybody. You can read Brad's story
(40:41):
on the Bloomberg and at Bloomberg dot com, Slash, BusinessWeek
Bradstone the editor of BusinessWeek magazine and Emily I was
just struck. I mean, he details so well the way
that Dan Gilbert has faced these personal challenges himself. And
again I go back to that photograph. It's such a
clearly must have been a very poignant moment when having
taken a number of photographs sitting down, he stood up
(41:02):
for a couple shots standing up as well as he
tries to get his ability to walk once again, and
Brad alluding to the fact that this is a company
now that's facing a bit of activist pressure talking about
Value Act taking a nine point nine percent stake in
this company, and I think a lot of that has
to do with this issue of AI and the degree
to which this company embraces it and begins to kind
of use it in the mortgage business. You'll be fascinating
(41:24):
to watch that going forward.
Speaker 4 (41:25):
And let's not forget that he's also the owner of
an NBA.
Speaker 2 (41:29):
Team, Evliers.
Speaker 4 (41:30):
Bradstone pointed out that Gilbert actually persuaded Lebron James to
return to the Calves after he had departed for the
Miami Heat. Of course, now, yes, he's not at Cleveland,
but I'm sure Bradstone, as a Cleveland guy, a Midwest guy,
was happy.
Speaker 2 (41:45):
About that you could season send a championship while he
was there, no small thing.
Speaker 5 (41:50):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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