August 20, 2025 • 43 mins
Watch Bloomberg Businessweek Daily LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump called on Federal Reserve Governor Lisa Cook to resign after a staunch ally called for an investigation of the board member’s mortgages, intensifying his campaign on the central bank.
Federal Housing Finance Agency Director Bill Pulte urged Attorney General Pam Bondi to investigate Cook over a pair of mortgages, the latest in a series of moves by the Trump administration to increase legal scrutiny of Democratic figures and appointees. Cook was nominated to the Fed by former President Joe Biden.
Trump said Wednesday that Cook “must resign now,” citing Pulte’s allegations, while the FHFA head posted on social media that the accusations give Trump “cause to fire” her.
The dollar declined, yields pared losses and gold rose after Trump’s call for Cook’s ouster.Pulte wrote a letter to Bondi and Justice Department official Ed Martin on Aug. 15 suggesting that Cook may have committed a criminal offense. The letter, which was first reported by Bloomberg News, alleges that Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.” The Justice Department has received the letter, according to an official, who declined to elaborate further.
Today's show features:
- Bloomberg TV Radio International Economics and Policy Correspondent Mike McKee on President Donald Trump calling on Federal Reserve Governor Lisa Cook to resign
- Bloomberg News Space Reporter Loren Grush on recent struggles at SpaceX
- Bloomberg News US Finance Reporter Todd Gillespie on his story about Citigroup hiring a law firm to investigate complaints about the behavior of the bank's wealth-management chief
- David Haber, General Partner at Andreessen Horowitz, and Bloomberg News Consumer Finance Reporter Paige Smith on opportunities in fintech-related venture capital
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily 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 news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
I want to bring in Michael mcke's international economics and
policy correspondent for Bloomberg TV and Radio. He joins us
from Jackson, Wyoming, where he's gearing up for the Jackson
Hall Economic Symposium. It officially starts tomorrow. Mike, though getting
a lay of the land, Mike, I want to bring
you in just on the latest that we heard from
Stewart and from the Federal Reserve. With regards to these minutes,
the Treasury two year yield paris has decline after the
(00:55):
FOMC minutes came out. The majority saw inflation risk outweigh
employment risk. Several members flag the risk of inflation expectations unanchoring.
Several said current rate may not be far above neutral,
and several expected companies are passed tariffs to consumers. What
is your instant reaction to these minutes.
Speaker 3 (01:12):
Well, it was very interesting because what we had seen
is a fairly strong employment report for June. In July,
and then we got the CPI and PPI numbers that
were more worrisome in terms of inflation going up, and
FED met at the end of July, so they were
already looking under the hood and seeing some issues with
inflation growing and that sort of mitigates, as Stuart said,
(01:35):
against perhaps a cut in September. If we get the
same kind of numbers again, the question is what are
we going to get. Are we going to see more inflation?
And if that's the case, the minutes offer support for
the idea that the majority on the FED isn't going
to move if we get a weak employment report unless
it's very weak.
Speaker 4 (01:55):
Mike, when you look at some of these heads and
just I know, we still have to kind of parse
through where tariffs come up. In the minutes, many noted
the full effect of tariffs could take some time. What's
your understanding right now of just what that length of
time means. What do most FED economists think about just
(02:17):
kind of how long it takes for us to really
see the pass through effects of tariffs.
Speaker 3 (02:23):
In general, they were looking for about six months, say
the end of the third quarter of the beginning of
the fourth quarter this year. But it's been complicated by
the fact that the Trump administration has been on and
off about the tariffs.
Speaker 5 (02:35):
First they put them.
Speaker 3 (02:35):
On, then they pause them, then they bring them back,
and now some more have gone on and there are
more to come, So this could stretch out over a
period of time.
Speaker 5 (02:43):
And the other thing is a lot.
Speaker 3 (02:45):
Of companies brought in imports from overseas early to try
to build their inventories so they could sell things to
people without raising prices. Those inventories are getting run down
and prices are going to have to start going up.
We've seen in earnings reports some companies Home Depot yesterday
say they were going to have to start raising prices.
So we should start seeing it as the months go on.
(03:05):
But the question is does it happen all at once
or does it happen over months and months and months
and take away people's belief that inflation is anchored.
Speaker 5 (03:13):
We saw friday the.
Speaker 3 (03:15):
University of Michigan numbers suggests that people are getting a
little worried about inflation.
Speaker 2 (03:20):
All of this is going to be top of mind
for policymakers and officials gathering in at jackson for the
Jacksonville Economic Symposium officially kicks off tomorrow. As I mentioned,
so too, I think will be among the things people
talk about is what's happening with allegations that the President
is leveling and others in the administration are leveling against
members of the Federal Reserve. This time, Bill Polti added again,
(03:43):
it's the most read story on the Bloomberg. It's about
the director of the Federal Housing Finance Agency urging ag
Pambondi to investigate Federal Reserve Governor Lisa Cook over a
pair of mortgages. President Trump posted our Bloomberg news story
to social media and said Cook quote must resign now, Mike,
is this all about remaking the FED?
Speaker 3 (04:04):
Partly about remaking the Fed and partly about the efforts
that Trump administration has had to weaponize the government against Democrats.
Speaker 5 (04:12):
The thing about the Fed.
Speaker 3 (04:13):
Aspect of it is Lisa Cook is not a decisive policymaker.
Speaker 5 (04:17):
She's not a swing vote.
Speaker 3 (04:18):
She'll generally vote with the majority, generally vote with the chair.
In terms of leaving interest rates unchanged in recent months,
Removing her wouldn't make a big difference in the president's
goal of driving down interest rates, but it would give
him the opportunity to name another person to the FED,
and they could name somebody who is much more sympathetic
to low interest rates, and that's going.
Speaker 5 (04:41):
To have people's backs up.
Speaker 3 (04:42):
A lot of economists already reacting negatively to this news,
But we don't know what the bottom line is in
terms of what Lisa Cook may or may not have done,
and the FED doesn't know, and so at this point
I wouldn't expect Cook or the FED to comment on it.
We're going to have to see where the Attorney General
(05:02):
takes this, if she takes it at all.
Speaker 2 (05:04):
Mike, you're not a politics reporter, but you were for
many years, so I think it's fair to ask about
this pattern of alleged wrongdoing that seems to be coming
from the Trump administration pursuing mortgage fraud allegations against other
high profile Democrats California Center Adam Shift, New York Attorney
General Letician James. There's also the alleged impropriety that you've
covered a lot at the FED with Powell in regard
(05:26):
to the remodel how do you look at that.
Speaker 3 (05:29):
Well, I think a lot of it is basically just
an attempt to influence public opinion. You throw the charges
out there, and the public remembers that because they get
big headlines, and then if somebody is cleared, or if
the Attorney General and the Justice Department don't even take
up the case, you don't hear much about that. And
the idea is to build some skepticism in about these
(05:51):
various people so that when they take on the Trump
administration or they do something the administration doesn't like, like
voting to keep interest rates steady, President can blame them
instead of himself or his own policies.
Speaker 4 (06:04):
We want to get to Jackson Hole because I can
at least say I'm very envious of the background that
you're sitting in front of right now.
Speaker 6 (06:11):
It looks beautiful.
Speaker 4 (06:13):
Can you talk about the tone, the mood? What are
I guess how much of the discussions at this meeting
are actually going to be about fed independence and who
the next chair is. There's been so much talk, at
least headlines about Trump weighing in on who.
Speaker 6 (06:31):
His pick is going to be.
Speaker 4 (06:32):
Who's going to be the next pick? Is that really
going to take up a lot of the conversations, or
is it going to be more an economic symposium.
Speaker 3 (06:39):
Well, I suspect it'll be dinner party conversation. It's not parties,
but dinner conversations and maybe on the sidelines. But the
official subject here is labor markets in Transition, which is
a very timely topic given the fact that the labor
market seems to be in transition, at least with the
July jobs report. The only thing is these are academic
papers looking forward into the future, and they don't have
(07:03):
a lot of bearing on what is going to be
happening in terms of policy in the near term. So
I think it's going to be a bifurcated session where
people are talking on the sidelines about what's going to
happen next at the FED, but the main program is
going to be about what could happen down the road
six months, a year or so from now.
Speaker 4 (07:24):
Talk a little bit more about labor this topic here
because it was interesting in the minutes, and although these
are backdated that the FED officials seem to be more
concerned about inflation and they're saying that outweighs concerns over
the labor market. But what's the I guess tone going
to be on that Pale speech on Friday about the
(07:45):
labor market.
Speaker 3 (07:47):
Well, I would imagine that he's going to say, we
need more information. The FED looks at the unemployment rate
as sort of a proxy for US growth, and in
this case, the unemployment rate really hasn't moved. We saw
a week hiring, but not a lot of firing, and
so the Fed is probably going to be looking to
see what happens with the August payrolls report and if
anything bleeds over into the unemployment rate. That's maybe the
(08:08):
point that Powell would make in a perhaps less direct way.
The papers that are going to be presented here and
the talk that we're going to have here is going
to be more about things like what's AI going to
do the workforce to the workforce in the future, and
what's happening with the retirement of the baby boomers and
the inability we've seen so far of recent college graduates
(08:30):
to get jobs.
Speaker 5 (08:31):
So it's more about the structure.
Speaker 3 (08:33):
Of the labor market than about what's happening because of
tariff's or fiscal policy.
Speaker 2 (08:38):
Yeah, you had immigration to that mix, something we've spoken
quite a bit about Mike this week when it comes
to how that changes and potentially changes the labor picture
moving forward. Hey, before we let you go one more
on the next potential FED share. David zervis over at Jeffries,
formerly of the FED. That's where he began his career.
Then he went to Wall Street. He was on CNBC
(08:58):
earlier today. He said the FED has never been independent.
The political pressures on the FED have always been growing
and continue to grow. He highlighted pressure from Democratic lawmakers
in recent years on monetary policymakers to lower interest rates.
Speaker 6 (09:12):
Is the Fed independent?
Speaker 3 (09:17):
The Fed is independent, at least in terms of the
way it acts. Republicans are pulling out old or trying
to make.
Speaker 5 (09:25):
Coincidences into causation.
Speaker 3 (09:28):
The fact that the FED lowered interest rates in the
past was not because they were trying to necessarily help
a politician, but because the economy called for it. Remember
last summer, we saw the unemployment rate rise significantly, and
that's just before the Fed cut rates fifty basis points,
which is why they did that. That was the reason
they cited, and it makes sense. It wasn't an attempt
(09:49):
to help Joe Biden, but because the two things happened
at once. People like David Zervos are trying to make
the case that the FED is biased, But the FED
is not biased. They are biased only towards what the
economy is telling them to do.
Speaker 5 (10:03):
You could argue about.
Speaker 3 (10:04):
Whether it's the right move to raise or lower interest
rates at this point for what will happen down the road,
but it's not a political decision.
Speaker 2 (10:13):
We are biased towards Michael McKee here on a Bloomberg
TV and Radio. That's Michael mcke's Bloomberg News International Economics
and Policy correspondent joining us from Jackson, Wyoming. Stay tuned
to Bloomberg for continuing live coverage from Jackson Hole through
the rest of the week. Mike mckeeon company are on
the ground in Wyoming to cover the Kansas City Fed's
Annual Economic Policy Symposium. We've got a great programming Thursday
(10:35):
and Friday coming up there.
Speaker 6 (10:38):
Stay with us.
Speaker 2 (10:38):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (10:46):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
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Speaker 2 (11:00):
Well, you might remember looking up at the sky, or
if you were there, or looking up at the TV
and seeing the explosion of one of SpaceX's Starship rockets
earlier this year. Certainly people are used to seeing the
rockets succeed, not necessarily the Starship rockets, but SpaceX's Falcon
rockets that are doing routine satellite delivery. It's become so
(11:24):
routine that's not even an event anymore when these things
go up in the air. Not so with the Starship.
Lauren Grush and Kyle Porter write all about the Starship's
challenges for Bloomberg Business Week and Bloomberg News. Lauren Grush's
Bloomberg News Space Reporter. She's also the author of the
six The Untold Story of America's first women Astronauts. She
(11:44):
joins us this afternoon from Austin, Texas.
Speaker 6 (11:48):
Lauren, what is Starship?
Speaker 7 (11:50):
Well, to put it simply, it's Elon's answer to starting
SpaceX in the first place. It's the primary vehicle that
he wants to use to send people to Mars and
start a self sustaining settlement there. Obviously there's a long
road from here to there, but that's ultimately what it's
(12:11):
for and then for other reasons. It's going to become
essentially SpaceX's workhorse rocket. Once it's ready, it'll be responsible
for launching all of their satellites. It's also on track
to send humans to the Moon bring them back, so
it's got a lot of responsibilities and SpaceX is hanging
a lot.
Speaker 8 (12:32):
Of hopes on it.
Speaker 2 (12:33):
Well before it gets there, it's got to successfully get
off the launch pad and.
Speaker 6 (12:38):
I guess into orbit, which hasn't.
Speaker 7 (12:40):
Done that at all yet, so it hasn't done a
full orbit around the Earth. But SpaceX has been conducting
a period or periodically done flight tests with Starship over
the last few years, and they've been pretty spectacular. I'm
sure people have seen footage from them, but these are
(13:01):
flight tests and they don't do a full lap around
the Earth just because they're trying to test out certain
capabilities that they're going to need to prove with Starship
before it becomes fully operational U And so far it's
been able to go into space and it has achieved
near orbital speeds. But this year it's been a little
(13:23):
awkward for the Starship test flights. Two of the flights
have exploded prematurely, and then the most recent one, it
did reach space and get into those near orbital speeds,
but then it started to spin out of control on
the way back to Earth and was ultimately disintegrated. And
(13:43):
then of course there was also another explosion. It wasn't
during a launch, but it was on during a test.
They were fueling up the vehicle for an engine test
and it exploded while on a test stand. So it's
not been a great year for the Starship Test pro
in terms of, you know, pushing the envelope forward each time.
Speaker 4 (14:04):
And now, Lauren, you write that Elon Musk the company
at least well, I'm not sure if this is Elon
Musk's directive or someone else of the company, but they're
rearranging the employees and they're putting more people now working
here on this Starship program.
Speaker 1 (14:20):
Is that right?
Speaker 7 (14:21):
Right?
Speaker 4 (14:21):
Yeah?
Speaker 7 (14:22):
After the pad explosion that I mentioned, the company decided
to do something called the Surge where they took twenty
percent of their resources from their engineering their Falcon engineering
team and then relocated them onto the Starship program to
help with reliability and testing. And it's a pretty common
tactic Adam Musk company to you know, if something is
(14:45):
needing extra help, needing extra hands on the problem. You know,
they'll rearrange from parts of the company, so we'll see
if that actually works. But it sounds like they're putting
much more of an emphasis on individual component testing and
making sure there's more reliability before they get to the
launch pad.
Speaker 4 (15:01):
These setbacks that you talk about with Starship, these explosions,
the footage is quite jarring. But I'm wondering how common
is that in this industry. I feel like I often
see on my x feed like videos of rockets failing
to launch.
Speaker 2 (15:19):
You're only supposed to see the successful launches on that
here's a problem with the algorithm.
Speaker 4 (15:23):
Yeah, I must be having an issue and YouTube as well.
Speaker 6 (15:27):
That would make sense.
Speaker 4 (15:29):
Isn't it kind of common that there are issues like
these when you're trying to do something so ambitious like
build a.
Speaker 7 (15:35):
Oh absolutely, I mean, especially for a new rocket. You know,
rarely is a new newly developed rocket reach orbit or
or work perfectly as intended on its first launch. What
makes SpaceX and Starship a bit unique though, is that they,
uh most most companies will try their best to have
(15:57):
a perfect launch when they get to that first that
day view with SpaceX, they have this kind of fly fast, fail,
fixed repeat approach where they like to fly as often
as possible, knowing that they might actually have an issue
and an explosion, and then taking that information, learning from it,
(16:18):
and incorporating it into the next flight. I think what
the issue with these latest setbacks has been is, you know,
are they actually pushing the envelope forward, Are they actually
learning from those issues and then reincorporating them, are they
actually creating new issues? You know, SpaceX likes to do
a lot of updates, a lot of upgrades, and sometimes
they might introduce an upgrade that has, you know, an
(16:41):
unintended consequence that they weren't able to test until that
upgrade was introduced, you know, So but they still like
to they still consider these failures learning experiences. So I
would say it's it's common for new rockets to have issues,
but for SpaceX, they kind of barrel right into it without,
(17:02):
you know, and kind of have that expectation of explosions
up front.
Speaker 2 (17:08):
We're speaking with Lauren Grush, Bloomberg News Space reporter, also
the author of the six The Untold Story of America's
First Women Astronauts. Her story, along with Kyle Porter among
the most read on the Bloomberg terminal today. I'm wondering, Lauren,
about the success of SpaceX in the private markets, because
every few months we still seem to read about tender
(17:30):
offers or share sales or raising money that value SpaceX
even higher. Investors don't seem to be deterred by the
series of unsuccessful attempts to orbit Starship.
Speaker 7 (17:43):
Yes, but we did find that, you know this, with
this latest funding round that they had discussed, it might
have actually had could have been bigger if there weren't
these very visible explosive setbacks that Starship has had. So
I think that it does have an impact. But you're right,
you know, they have not had any issues with fundraising
(18:04):
and they probably will continue to be able to fundraise
moving forward. So I think the dream and the promise
of Starship is definitely very enticing. And then of course
there you can't forget about all the other parts of
SpaceX's business that are extremely successful, including their Falcon launch business,
but also Starlink, which is producing the majority of the
(18:27):
company's revenue these days. So I think there's a lot
of other factors at play when it comes to, you know,
making those decisions as an investor.
Speaker 4 (18:35):
Okay, Lauren, you're the space expert here, so you can
help us kind of put into context. So Starship is
a reusable rocket. Is that the only reusable rocket out
on the market. It sounds intuitively pretty remarkable to have
a rocket that lands back down and comes back.
Speaker 7 (18:56):
Am I am?
Speaker 4 (18:56):
I am? I years behind the space advantage.
Speaker 7 (18:59):
No, No, it does sound remarkable, and I think that
is part of you know, the grand vision that makes
Starships so enticing to people. Right, it is billed as
being fully reusable. Now it hasn't actually demonstrated that yet.
That's kind of why it's taking so long for SpaceX
to get it right, because it's such an you know,
(19:19):
a daunting task to perfect. Obviously, we've had reusability incorporated
into rockets before. SpaceX, for instance, is kind of known for,
you know, revitalizing reusability efforts with its Stalk and nine rockets. So,
but that rocket's only partially reusable. The first stage is
able to come back, but the second stage does not.
(19:41):
And then of course the Space Shuttle was also partially
reusable when it was running for NASA, but again parts
of that didn't actually come back. Intact, and it had
to be furbished, refurbished quite a bit between flights. But yes,
the promise of Starship, which would make it unlike any
other rocket that has ever been developed, is that both
of the pieces, the Starship vehicle on top and the
(20:04):
super heavy booster on the bottom, are supposed to come
back intact, and supposedly, you know, from what SpaceX has advertised,
that will make it extremely cheap and capable of flying rapidly.
So you know, they've made quite big promises of flying,
you know, hundreds of times a day. I don't think
we're very I don't think we're quite at that level yet.
(20:26):
We're pretty pretty far away from that reality. But supposedly
that's going to be the key that unlocks that future.
Speaker 3 (20:32):
Right?
Speaker 1 (20:33):
Is that full reusability, Lauren?
Speaker 2 (20:35):
Is it based on the folks you spoke to for
this piece, the reporting that you and Kyle did, Is
it really a question of when not if this thing
is as successful as Elon has laid out?
Speaker 6 (20:47):
Is that up in the air still?
Speaker 7 (20:50):
I don't want to make that judgment call, but one
thing I will say is I never bet against SpaceX.
You know, their mo is kind of proving the haters wrong, right.
You know, when they were first forming, they made all
of these big promises and we're going to promise to
disrupt the industry, and a lot of you know, legacy
(21:10):
space companies were you know, very you know, scoffed at
their claims and what they said they were going to do.
But then look at what they've achieved. You know, they
have been able to bring down the cost of going
to space. They did achieve that partial reusability that I
was talking about, and they've become, you know, the predominant
launch provider for NASA and the US government. So you know,
(21:35):
I will never say that SpaceX can't do with something
that it sets out to do. So maybe that is
a roundabout way answering your question.
Speaker 6 (21:44):
It works for me.
Speaker 4 (21:45):
Lauren Grush, Bloomberg News Space Reporter, Thank you so much again.
That was Grush on her article with keel Porter about
Musk's races to finish SpaceX starship after failures and explosions.
Speaker 6 (22:00):
Stay with us.
Speaker 2 (22:00):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (22:08):
This is the Bloomberg Business Week Daily podcast. Listen live
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Just Say Alexa play Bloomberg eleven thirty.
Speaker 2 (22:26):
It is one of the most read stories on the
Bloomberg terminal today. It's about City Group hiring the firm
Paul Weiss to investigate complaints about the behavior of the
bank's wealth management chief Andy Sigg. He was brought in
by chief executive Jane Fraser on a high profile hire
to drive a key part of her turnaround plan. Join
(22:47):
us now is Todd Gillespie's US finance reporter for Bloomberg News.
He joins us here in the Bloomberg Interactive broker's studio.
Andy Sieg who is he?
Speaker 8 (22:55):
Well, Tim Yeah, I mean Andy Seig was brought on
in September of twenty twenty three by Jane Fraser to
you know, really lead a pillar of what everyone knows
really is one of Wall Street's biggest turnaround stories right now.
City Group, you know, one of the laggards on Wall Street,
one of the least profitable big banks has you know,
really struggled to keep pace with its rival over the
years and the building a wealth management franchise that could
(23:17):
compete with the likes of Morgan Stanley JP Morgan. That
has been a big task for Jane Fraser and a
big priority for her, So she makes this star higher.
This man who ran Merrill Lynch or Merrill as it's
now known for six years as part of Bank of America.
He comes over and obviously a lot then happens, but
he has overseen so far some positive changes for the business.
(23:38):
The you know, it has posted record revenues along with
the rest of the US wealth management sector, as wealth
management generally has been doing very well. But he has
implemented a lot of key changes that have been welcomed
by investors. But crucially, we now find out he's also
done it at some cost to perhaps morale and human capital,
(23:59):
and the in which he's been treating people internally have
raised some big red flags at senior management level, and
we know that the head of human resources at the
bank asked white Shoe law firm Paul Weiss to come
in and investigate these claims. We know that this investigation
has finished, the bank has declined to comment on its outcome,
so we don't actually know what they found, what they concluded,
(24:21):
whether there were any repercussions, for instance, but the bank
so far is standing by him.
Speaker 4 (24:25):
What has your reporting shown so far about just Sieg's
management style and what could have potentially led to that
Paul Weiss investigation.
Speaker 8 (24:36):
Right, we know that he's sidelined and intimidated senior female executives,
one of whom Ida lu was one of the most
high profile female executives at City groups. She was there
for eighteen years until.
Speaker 6 (24:47):
She interviewed her many times.
Speaker 8 (24:48):
Indeed, yeah, I mean she left the bank suddenly in January.
A lot of people were still wondering what the real
story was there, and this seems to be at least
part of that. We know that he called you know,
people work pathetic in rooms, launched into expletive filled ramps
against them. He made a male managing director cry and
(25:09):
banked his fist on the table. And yeah, so it
seems to be you know, this isn't just sort of
old school Wall Street necessarily. It seems to be, particularly
in twenty twenty five. You know, this sort of seems
to be another level of you know, what some people
might argue as toxic behavior.
Speaker 2 (25:25):
I want to bring up a response from City. This
is according to a City Group spokesperson. You can see
it on the screen if you're watching us on Bloomberg
Originals or on YouTube. It is quote quote, it is
standard practice for us to engage an outside law firm
to investigate allegations made against a senior member of the
management team to ensure independence and prevent even the appearance
(25:48):
of a possible conflict of interest. This is according to
a City Group spokesperson. What else did you hear from
the bank is.
Speaker 8 (25:55):
That it well, the bank is standing by him, and
that they are highlighting that, you know, at least more
than forty percent of his leadership team are women. You know,
they mentioned that he has driven positive results and that
he apparently continues to attract you know, leading talent from
outside the bank, so that that really is the bank
stance right now. Again, they've declined to comment on the
(26:16):
specifics of the investigation or the outcomes. But but you know,
what we've reported is, you know, is there and we're
you know, it's unclear exactly how this might develop longer
term and what this you know, whether there might be
any other impacts, but for now, it seems like the
bank is standing by him.
Speaker 4 (26:34):
It's interesting, you write in your article that while it's
not entirely clear which allegations were reviewed by Paul Weiss,
at least six City Group managing directors made complaints. That
stands out to me because that number six is a lot,
and it's at the m D level as well. This
is that's the most senior position you can have at
(26:54):
a big bank like this.
Speaker 8 (26:55):
Yeah, that's right, Emily. And it's also worth noting that
a large, you know, focus of some of these complaints
was his treatment of a woman called Kristin Bitterly, who's
also been on Bloomberg TV repeatedly herself. She runs the
Wealth at Work division, which is one of the three
core businesses of the Wealth business at the City. So
she's a direct report, I guess, one of the three
P and L heads underneath Andy Seek. She is still
(27:18):
at the bank, she is still running that business and
you know, and we know that there were complaints over
his treatment of her. So there is still, perhaps one
might say, ongoing tension and ongoing questions about the relationship
of senior executives here which haven't yet been answered.
Speaker 2 (27:35):
Paul Weis did not respond to requests for comment. Idoloo
did not decline to comment, I should say when reached
by Bloomberg News. And then Kristin Bitterly, who you just
spoke about, remains at the bank. She didn't respond to
requests for comment either. I todd back out a little
bit and talk a little bit about the role of
wealth management at the firm, especially under Jane Frasier, the
(27:57):
goals there and how successful it's been.
Speaker 8 (27:59):
Yeah, City Group traditionally, I mean, it's been known as
one of the most global banks. Right we have the
private bank, which caters to particularly super high net worth
you know, individuals with global footprints. They might have, you know,
assets across the world. Cities Private Bank is quite big
in Asia in particular in the US that their market here,
(28:19):
they're trying to I guess, become a bit more of
a wire house, a bit more of a meeral. They're
trying to focus on a slightly more mass affluent market,
bring in more investment assets that way, and they're also trying, interestingly,
to reduce dependence on the balance sheet. They're trying to
lend less and we all know, you know, big banks
right now capital constrained, and City in particular as well
(28:42):
as trying to find ways around that. How do you
make revenue without lending? What are the best ways of
doing that? In their banking business, for instance, they're sending
more deals to Apollo through a private credit partnership that
they have now in the private bank. They're trying to
reduce how much money that they are lending you to
billionaires or the intensity of that at least, and instead
they're trying to get more revenue by getting you know,
(29:04):
up and coming emerging wealth to to come on board
at City and to invest more money through the firm's platform.
Speaker 4 (29:11):
You had mentioned, you know that this hire of Siege
was was part of a turnaround. Does how do you
anticipate this ends? I know, we you know, there's still
a lot of information that's that's unknown. You look at
the shares of City. They did drop as much as
three percent today, but now they're down less than one percent.
What are the implications Does this impact that turnaround story
(29:35):
at all?
Speaker 8 (29:36):
You think, yeah, I mean it's I mean, it's obviously
unclear how this might affect things like his ability to
hire talent and you know, confidence in his leadership for instance.
But you know, it's hard to speculate right now. And
obviously we should refrain from doing that too much.
Speaker 5 (29:50):
You know.
Speaker 8 (29:50):
For now, you know, the Wealth business has posted solid returns.
You know, City Group will be posting results for the
you know, for the next quarter in October, so we'll
see how the Wealth business performs. Dan. But for now,
you know, the wealth business City is the smallest of
the five businesses. It's grow it's growing rapidly, and you know,
we'll we'll sort of see how that how that pans
(30:12):
out really.
Speaker 2 (30:13):
Todd Gillespie, US finance reporter for Bloomberg News, joining us
here in the Bloomberg Interactive Brokers studio.
Speaker 6 (30:19):
Check out his story. It's on the Bloomberg Terminal.
Speaker 2 (30:22):
It's the most reader among the most read stories on
the Bloomberg terminal. Today, City investigated HR complaints against wealthhead Sieg.
Speaker 6 (30:31):
Stay with us.
Speaker 2 (30:32):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (30:39):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (30:53):
I want to talk fintech financial technology. Chime Financial. It's
a prominent fintech recently i PO. The stock actually fell
below its IPO price of twenty seven dollars for the
first time sixty nine days after going public. This is
traders dump shares of fintech companies during a sell off,
and US equities over the last couple of days today included,
we see Sofi Block Affirm selling off yesterday and today
(31:16):
as declines in big tech stocks push major indexes lower.
I want to bring in David Haber. He watches this
stuff closely. He's general partner at the VC Firm and
recent Horowitz. It's perhaps among the most well known in
the world, having made early bets on Airbnb, Coinbase, Facebook
when it was called Facebook, Instagram, Figma, Lifts, Slack a firm, Skype,
and more than seven hundred other companies. Also joining us.
(31:39):
Someone else who watches fintech's closely, Page Smith. She's consumer
finance reporter for Bloomberg News. Everybody is here in the
Bloomberg Business Week studio. David, I want to start with
you the FinTechs I mentioned chime, Sofi Block Affirm, one
of which Dendresen Horowitz has invested in. How do you
think about these in the context of where we are
in fintech? Is this like a sort of web one?
(32:00):
Why O in where we are with fintech?
Speaker 9 (32:03):
It's a great question. I think, you know, we were
chatting about Page and I were chatting about this earlier.
You know, I think a lot of fintech from you know,
call it twenty twelve to twenty eighteen were these style
of companies. These were businesses that lead with a financial product,
and they got started by really unbundling the bank, you know,
kind of building a wedge, whether it's a trading product
or a fee free mobile first bank account in chimes case.
(32:24):
And as they've scaled, they've kind of rebundled product to
try to become the primary sort of financial relationship with
their end customer. I think where I've been spending time.
And you know, I used to run a lending business,
which you know wasn't a direct competitor with these, but
was a very challenging, you know, company to lead has
been different. Right, The types of fintech companies that I
look for and most like investing in are those that
lead with software or have the potential for network effect.
Speaker 6 (32:48):
Right.
Speaker 9 (32:48):
So often selling into large financial institutions is supposed to
trying to compete with them directly, and it's been one
of the things that I've been spending time the last
four years here to indrees and is just trying to
bridge the gap between you know, what's happening on the frontier,
you're in the startup ecosystem and many of these large
financial institutions.
Speaker 10 (33:05):
No, David, I have a question for you as well
about one of the companies that we've chatted about, which
is Plaid, and kind of this interesting dynamic right now
around charging. There were theoretically the negotiations are ongoing, discussions
are ongoing, and the regulatory environment is a little bit
uncertain right now. But the idea of charging for access
(33:27):
to customer financial data, it was kind of an issue
that was settled for a hot minute and has now
sort of come back. I guess I would be curious
about your from your perspective, how does this discussion of
kind of the banks sort of essentially like digging these
modes around themselves to charge for this financial data. What
(33:49):
are your thoughts on this?
Speaker 9 (33:51):
Yeah, So, look, JP Marking came out recently saying they
wanted to charge the fintech ecosystem. I think three hundred
million dollars for access to consumer data, you know, and
it was done under the auspices of you know, consumer
protection and their own kind of cost structure to support
this information. I think it's really just hiding the true intention,
which is sort of an anti competitive move.
Speaker 8 (34:11):
Right.
Speaker 9 (34:12):
Ultimately, Plaid you know, which again in full transparency, helped
see the company back in twenty thirteen and try somewhere
you know, large investors in the business, so you know,
I have a strong point of view here, but PLAT
ultimately sits at the intersection between the bank, a fintech application,
and the end customer, right, and so they do play
this sort of intermediated role. But ultimately I think it's
(34:35):
who owns this information, right. JP Morgan has a strong
point of view that they owned the information. I believe
that consumers own their own data, and then we need
more open kind of standards, you know, for how people
are able to share their own information with other third
party applications. The analogy that I use often is, you know,
do you own the photos in your iPhone or does Apple?
Speaker 3 (34:56):
Right?
Speaker 9 (34:57):
Should Apple be able to charge Instagram? Are you authenticating
access to your photos? I don't think so, right, I
think you ultimately owned. You should be able to share
your photos with any application that you want to connect to,
and JP Morgan is basically saying, no, your photos are mine,
and we're going to be able to charge their Instagram
equivalent three hundred million dollars for access to your information.
(35:17):
I just don't think that's fair, and I think it's again,
I think it's veiled under this sort of thread of
consumer protection and their own construct. The reality is, you know,
data infrastructure costs have come down so precipitously, and we're
talking about your account and routing number right in your
transaction history. It's really not that sort of technology intensive.
And for many you know, banks, they don't actually have
(35:38):
real tam APIs right, and so for the long tail
of community and regional banks, I think plaid plays an
more important role in becoming this sort of like data
utility and enabling kind of this ecosystem of intech companies
to build interesting applications on top of those products.
Speaker 4 (35:53):
Aside from Plaid, are you seeing investing opportunities that kind
of capture that theme of perhaps consumers getting their their
rights to whether it be data finances or maybe even
iPhone photos back.
Speaker 6 (36:08):
It's it's an interesting question.
Speaker 9 (36:09):
I mean, there's a lot happening kind of in consumer
fintech broadly, and I think, you know, AI is sort
of changing the conversation here in a lot of ways.
You know, maybe it's a different answer your question, but
you know, my partner Alex recently announced an investment in
a company called Salient, which has launched voice agents for
auto loan servicing. Right. And what's interesting in this in
(36:31):
this capacity is, you know, these are large non bank
and bank auto lenders that have you know, very large
you know armies of call center folks now using voice
agents who can speak in you know, fifty languages, twenty
four to seven fully compliantly, you know, in many of
these markets. And so I think it's an interesting question
of how is sort of technology and the software actually
(36:52):
doing the work, and how is that changing the relationship
with you know, with the end customer. And so that's
I think one of the bigger things that were in
consumer financiers. A lot happening also in the back office,
you know, in many of these bigger financial institutions.
Speaker 2 (37:05):
You know, I want to talk a little bit about
It's funny you don't necessarily think of venture capital and
politics until like the twenty twenty four election, and I
think and recent Horowitz really find itself at the center
of the political ecosystem right now. Mark's very close with
the Trump administration. He's advised President Trump, He's been outspoken
with his support. The firm hired Daniel Petty after his acquittal.
(37:27):
I think people would say that's political there. And Resent
Horowitz is very first hired Scott Cooper now a month
into his gig as HR chief for the federal government.
We had some reporting recently on the Bloomberg terminal Riley
Griffin noting that Scott was introduced to Commerce Secretary by
Mark and Ben. What is you know, they have this
(37:47):
connection to a relationship with the Trump administration. What is
what do how do you feel about that in the
sense of like having a direct line to the administration
or a direct line to Washington, given and Resent Horowitz's
involvement in this administration.
Speaker 9 (38:02):
Look, I think I think from a macro perspective, you know,
fifteen years ago, technology was sort of this industry that existed,
you know, only in Silicon Valley. It was sort of
not part of the conversation. D C wasn't really a
conversation in most industries. Mark you know, famously wrote this
essay Software's eating in the world. I think that's happened right.
Technology is now proliferated across every industry, you know, in
(38:22):
our society, in our economy, and as a result, is
directly impacted by you know, DC and the regulatory environment.
And so I think their point of view is not
it's really not partisan. I know that there's a lot
of headlines that have happened, you know, from the presidential election,
but fundamentally, I think our view is we want to
support what we call the little Tech Agenda. We want
(38:43):
to you know, back the on both sides of the aisle,
people who support innovation and support sort of technologies advancement.
So we've donated to you know, Democrats and Republicans in
support of this issue.
Speaker 2 (38:55):
Well, do you feel like you have a more direct
line now than you did during the Biden administration?
Speaker 9 (39:00):
Certainly. I think as a firm we've taken a much
more front leaning approach. I think Mark and Ben and
others at the firm tried to spend a lot more
time with you know, in the prior administration. I think
that was part of what governed their decision to be
more vocal, you know, in this presidential election. I think
it's important in general to have a dialogue with DC
because again I think technology has just you know, permeated
(39:20):
every part of society, and you have the largest technology
companies with massive lobbying arms in DC. There is sort
of this tragedy of the commons challenge in the startup
ecosystem and then the French ecosystem because it's highly fragmented, right,
It's these are relatively small institutions, and so I think
their belief is, you know, if not us, than whom.
And so I think we're trying to be sort of
a convening force and creating a voice for this tech
(39:43):
ecosystem again to drive innovation and ultimately I think better
outcomes for society, for the economy, et cetera.
Speaker 2 (39:48):
We're speaking with David Haber, general partner at the venture
capital firm Andentries and Horowitz.
Speaker 10 (39:53):
And you know, David, I have another question for you.
I cover consumer finance here at Bloomberg, and you know,
we did just see the chime ipo. We've seen a
number of sort of consumer facing fintech's do quite well
in the last couple of years, and kind of there
are these sort of household names frankly that you and
I use for a lot of our corners, a lot
of corners of our financial ads. Robin Hood comes to
mind as well. But you know, I guess I'm curious, like,
(40:16):
are we is consumer fintech dead? Like are we kind
of shifting to a lot of these you know, like
we mentioned a few names earlier of kind of infrastructure companies,
financial services infrastructure companies where it's still fintech for sure,
but it's not like fintech that you and I would
know the name of or see the brand. And you know,
(40:38):
we might see the ads on the subways, but we
don't interact with them. What are your thoughts?
Speaker 9 (40:42):
Yeah, look, I think part of it is just like
how the market has evolved. Right when many of these
companies started, and you know, twenty twelve, like early early
twenty tens, many of the largest banks didn't have mobile
banking products, right, many of them weren't acquiring customers online,
and so as much easier, you know, candidly to launch
with the wedge product to spend money and acquire customers
and build in a much larger user base. I think
(41:04):
the challenge over the past several years is, like KAC
is the new rent right, a lot of that spending
has now gone to the largest technology platforms to help,
you know, these big institutions acquire their own customer and
it's just become a lot more competitive. It's much more difficult,
I think, to break through and compete now directly with
a Robinhood or a chime or so Far, et cetera.
It's one of the reasons. I think there are other
(41:24):
reasons culturally within these financial institutions, their willingness to leverage
third party technologies changed dramatically in the last five or
six years and as a result made it much more
interesting to back software led companies and infrastructure companies selling
into these institutions to again solve real problems change their workflows,
and I think that part of the kind of more
B to B side of the market has become more interesting,
(41:46):
at least to me.
Speaker 2 (41:46):
Dave, we only have thirty seconds left. What is the
most interesting company that you've made an investment in that
our audience hasn't yet heard of that should be on
their radar.
Speaker 9 (41:54):
Oh, there's a bunch, but it's hard to pick Page
wrote a great article on a called moment that is
building fixed income trading infrastructure and so again kind of
a wonky part of the world.
Speaker 6 (42:05):
But if you're a wealth.
Speaker 9 (42:07):
Management client, getting a bond letter is still a manual
process today at most large financial institutions. Soon that will
be done programmatically. I think this is a company, albeit
more infrastructure, that's going to become much more well known
over time.
Speaker 2 (42:19):
You're a man who knows his audience. We can talk
about bond ladders and bond infrastructure all day here on
a Bloomberg David Haber, general partner at the venture capital
firm andreessen Horowitz, also with US Paige Smith. She is
consumer finance reporter for Bloomberg News.
Speaker 1 (42:34):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(42:55):
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
I want to bring in Michael mcke's international economics and
policy correspondent for Bloomberg TV and Radio. He joins us
from Jackson, Wyoming, where he's gearing up for the Jackson
Hall Economic Symposium. It officially starts tomorrow. Mike, though getting
a lay of the land, Mike, I want to bring
you in just on the latest that we heard from
Stewart and from the Federal Reserve. With regards to these minutes,
the Treasury two year yield paris has decline after the
(00:55):
FOMC minutes came out. The majority saw inflation risk outweigh
employment risk. Several members flag the risk of inflation expectations unanchoring.
Several said current rate may not be far above neutral,
and several expected companies are passed tariffs to consumers. What
is your instant reaction to these minutes.
Speaker 3 (01:12):
Well, it was very interesting because what we had seen
is a fairly strong employment report for June. In July,
and then we got the CPI and PPI numbers that
were more worrisome in terms of inflation going up, and
FED met at the end of July, so they were
already looking under the hood and seeing some issues with
inflation growing and that sort of mitigates, as Stuart said,
(01:35):
against perhaps a cut in September. If we get the
same kind of numbers again, the question is what are
we going to get. Are we going to see more inflation?
And if that's the case, the minutes offer support for
the idea that the majority on the FED isn't going
to move if we get a weak employment report unless
it's very weak.
Speaker 4 (01:55):
Mike, when you look at some of these heads and
just I know, we still have to kind of parse
through where tariffs come up. In the minutes, many noted
the full effect of tariffs could take some time. What's
your understanding right now of just what that length of
time means. What do most FED economists think about just
(02:17):
kind of how long it takes for us to really
see the pass through effects of tariffs.
Speaker 3 (02:23):
In general, they were looking for about six months, say
the end of the third quarter of the beginning of
the fourth quarter this year. But it's been complicated by
the fact that the Trump administration has been on and
off about the tariffs.
Speaker 5 (02:35):
First they put them.
Speaker 3 (02:35):
On, then they pause them, then they bring them back,
and now some more have gone on and there are
more to come, So this could stretch out over a
period of time.
Speaker 5 (02:43):
And the other thing is a lot.
Speaker 3 (02:45):
Of companies brought in imports from overseas early to try
to build their inventories so they could sell things to
people without raising prices. Those inventories are getting run down
and prices are going to have to start going up.
We've seen in earnings reports some companies Home Depot yesterday
say they were going to have to start raising prices.
So we should start seeing it as the months go on.
(03:05):
But the question is does it happen all at once
or does it happen over months and months and months
and take away people's belief that inflation is anchored.
Speaker 5 (03:13):
We saw friday the.
Speaker 3 (03:15):
University of Michigan numbers suggests that people are getting a
little worried about inflation.
Speaker 2 (03:20):
All of this is going to be top of mind
for policymakers and officials gathering in at jackson for the
Jacksonville Economic Symposium officially kicks off tomorrow. As I mentioned,
so too, I think will be among the things people
talk about is what's happening with allegations that the President
is leveling and others in the administration are leveling against
members of the Federal Reserve. This time, Bill Polti added again,
(03:43):
it's the most read story on the Bloomberg. It's about
the director of the Federal Housing Finance Agency urging ag
Pambondi to investigate Federal Reserve Governor Lisa Cook over a
pair of mortgages. President Trump posted our Bloomberg news story
to social media and said Cook quote must resign now, Mike,
is this all about remaking the FED?
Speaker 3 (04:04):
Partly about remaking the Fed and partly about the efforts
that Trump administration has had to weaponize the government against Democrats.
Speaker 5 (04:12):
The thing about the Fed.
Speaker 3 (04:13):
Aspect of it is Lisa Cook is not a decisive policymaker.
Speaker 5 (04:17):
She's not a swing vote.
Speaker 3 (04:18):
She'll generally vote with the majority, generally vote with the chair.
In terms of leaving interest rates unchanged in recent months,
Removing her wouldn't make a big difference in the president's
goal of driving down interest rates, but it would give
him the opportunity to name another person to the FED,
and they could name somebody who is much more sympathetic
to low interest rates, and that's going.
Speaker 5 (04:41):
To have people's backs up.
Speaker 3 (04:42):
A lot of economists already reacting negatively to this news,
But we don't know what the bottom line is in
terms of what Lisa Cook may or may not have done,
and the FED doesn't know, and so at this point
I wouldn't expect Cook or the FED to comment on it.
We're going to have to see where the Attorney General
(05:02):
takes this, if she takes it at all.
Speaker 2 (05:04):
Mike, you're not a politics reporter, but you were for
many years, so I think it's fair to ask about
this pattern of alleged wrongdoing that seems to be coming
from the Trump administration pursuing mortgage fraud allegations against other
high profile Democrats California Center Adam Shift, New York Attorney
General Letician James. There's also the alleged impropriety that you've
covered a lot at the FED with Powell in regard
(05:26):
to the remodel how do you look at that.
Speaker 3 (05:29):
Well, I think a lot of it is basically just
an attempt to influence public opinion. You throw the charges
out there, and the public remembers that because they get
big headlines, and then if somebody is cleared, or if
the Attorney General and the Justice Department don't even take
up the case, you don't hear much about that. And
the idea is to build some skepticism in about these
(05:51):
various people so that when they take on the Trump
administration or they do something the administration doesn't like, like
voting to keep interest rates steady, President can blame them
instead of himself or his own policies.
Speaker 4 (06:04):
We want to get to Jackson Hole because I can
at least say I'm very envious of the background that
you're sitting in front of right now.
Speaker 6 (06:11):
It looks beautiful.
Speaker 4 (06:13):
Can you talk about the tone, the mood? What are
I guess how much of the discussions at this meeting
are actually going to be about fed independence and who
the next chair is. There's been so much talk, at
least headlines about Trump weighing in on who.
Speaker 6 (06:31):
His pick is going to be.
Speaker 4 (06:32):
Who's going to be the next pick? Is that really
going to take up a lot of the conversations, or
is it going to be more an economic symposium.
Speaker 3 (06:39):
Well, I suspect it'll be dinner party conversation. It's not parties,
but dinner conversations and maybe on the sidelines. But the
official subject here is labor markets in Transition, which is
a very timely topic given the fact that the labor
market seems to be in transition, at least with the
July jobs report. The only thing is these are academic
papers looking forward into the future, and they don't have
(07:03):
a lot of bearing on what is going to be
happening in terms of policy in the near term. So
I think it's going to be a bifurcated session where
people are talking on the sidelines about what's going to
happen next at the FED, but the main program is
going to be about what could happen down the road
six months, a year or so from now.
Speaker 4 (07:24):
Talk a little bit more about labor this topic here
because it was interesting in the minutes, and although these
are backdated that the FED officials seem to be more
concerned about inflation and they're saying that outweighs concerns over
the labor market. But what's the I guess tone going
to be on that Pale speech on Friday about the
(07:45):
labor market.
Speaker 3 (07:47):
Well, I would imagine that he's going to say, we
need more information. The FED looks at the unemployment rate
as sort of a proxy for US growth, and in
this case, the unemployment rate really hasn't moved. We saw
a week hiring, but not a lot of firing, and
so the Fed is probably going to be looking to
see what happens with the August payrolls report and if
anything bleeds over into the unemployment rate. That's maybe the
(08:08):
point that Powell would make in a perhaps less direct way.
The papers that are going to be presented here and
the talk that we're going to have here is going
to be more about things like what's AI going to
do the workforce to the workforce in the future, and
what's happening with the retirement of the baby boomers and
the inability we've seen so far of recent college graduates
(08:30):
to get jobs.
Speaker 5 (08:31):
So it's more about the structure.
Speaker 3 (08:33):
Of the labor market than about what's happening because of
tariff's or fiscal policy.
Speaker 2 (08:38):
Yeah, you had immigration to that mix, something we've spoken
quite a bit about Mike this week when it comes
to how that changes and potentially changes the labor picture
moving forward. Hey, before we let you go one more
on the next potential FED share. David zervis over at Jeffries,
formerly of the FED. That's where he began his career.
Then he went to Wall Street. He was on CNBC
(08:58):
earlier today. He said the FED has never been independent.
The political pressures on the FED have always been growing
and continue to grow. He highlighted pressure from Democratic lawmakers
in recent years on monetary policymakers to lower interest rates.
Speaker 6 (09:12):
Is the Fed independent?
Speaker 3 (09:17):
The Fed is independent, at least in terms of the
way it acts. Republicans are pulling out old or trying
to make.
Speaker 5 (09:25):
Coincidences into causation.
Speaker 3 (09:28):
The fact that the FED lowered interest rates in the
past was not because they were trying to necessarily help
a politician, but because the economy called for it. Remember
last summer, we saw the unemployment rate rise significantly, and
that's just before the Fed cut rates fifty basis points,
which is why they did that. That was the reason
they cited, and it makes sense. It wasn't an attempt
(09:49):
to help Joe Biden, but because the two things happened
at once. People like David Zervos are trying to make
the case that the FED is biased, But the FED
is not biased. They are biased only towards what the
economy is telling them to do.
Speaker 5 (10:03):
You could argue about.
Speaker 3 (10:04):
Whether it's the right move to raise or lower interest
rates at this point for what will happen down the road,
but it's not a political decision.
Speaker 2 (10:13):
We are biased towards Michael McKee here on a Bloomberg
TV and Radio. That's Michael mcke's Bloomberg News International Economics
and Policy correspondent joining us from Jackson, Wyoming. Stay tuned
to Bloomberg for continuing live coverage from Jackson Hole through
the rest of the week. Mike mckeeon company are on
the ground in Wyoming to cover the Kansas City Fed's
Annual Economic Policy Symposium. We've got a great programming Thursday
(10:35):
and Friday coming up there.
Speaker 6 (10:38):
Stay with us.
Speaker 2 (10:38):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (10:46):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (11:00):
Well, you might remember looking up at the sky, or
if you were there, or looking up at the TV
and seeing the explosion of one of SpaceX's Starship rockets
earlier this year. Certainly people are used to seeing the
rockets succeed, not necessarily the Starship rockets, but SpaceX's Falcon
rockets that are doing routine satellite delivery. It's become so
(11:24):
routine that's not even an event anymore when these things
go up in the air. Not so with the Starship.
Lauren Grush and Kyle Porter write all about the Starship's
challenges for Bloomberg Business Week and Bloomberg News. Lauren Grush's
Bloomberg News Space Reporter. She's also the author of the
six The Untold Story of America's first women Astronauts. She
(11:44):
joins us this afternoon from Austin, Texas.
Speaker 6 (11:48):
Lauren, what is Starship?
Speaker 7 (11:50):
Well, to put it simply, it's Elon's answer to starting
SpaceX in the first place. It's the primary vehicle that
he wants to use to send people to Mars and
start a self sustaining settlement there. Obviously there's a long
road from here to there, but that's ultimately what it's
(12:11):
for and then for other reasons. It's going to become
essentially SpaceX's workhorse rocket. Once it's ready, it'll be responsible
for launching all of their satellites. It's also on track
to send humans to the Moon bring them back, so
it's got a lot of responsibilities and SpaceX is hanging
a lot.
Speaker 8 (12:32):
Of hopes on it.
Speaker 2 (12:33):
Well before it gets there, it's got to successfully get
off the launch pad and.
Speaker 6 (12:38):
I guess into orbit, which hasn't.
Speaker 7 (12:40):
Done that at all yet, so it hasn't done a
full orbit around the Earth. But SpaceX has been conducting
a period or periodically done flight tests with Starship over
the last few years, and they've been pretty spectacular. I'm
sure people have seen footage from them, but these are
(13:01):
flight tests and they don't do a full lap around
the Earth just because they're trying to test out certain
capabilities that they're going to need to prove with Starship
before it becomes fully operational U And so far it's
been able to go into space and it has achieved
near orbital speeds. But this year it's been a little
(13:23):
awkward for the Starship test flights. Two of the flights
have exploded prematurely, and then the most recent one, it
did reach space and get into those near orbital speeds,
but then it started to spin out of control on
the way back to Earth and was ultimately disintegrated. And
(13:43):
then of course there was also another explosion. It wasn't
during a launch, but it was on during a test.
They were fueling up the vehicle for an engine test
and it exploded while on a test stand. So it's
not been a great year for the Starship Test pro
in terms of, you know, pushing the envelope forward each time.
Speaker 4 (14:04):
And now, Lauren, you write that Elon Musk the company
at least well, I'm not sure if this is Elon
Musk's directive or someone else of the company, but they're
rearranging the employees and they're putting more people now working
here on this Starship program.
Speaker 1 (14:20):
Is that right?
Speaker 7 (14:21):
Right?
Speaker 4 (14:21):
Yeah?
Speaker 7 (14:22):
After the pad explosion that I mentioned, the company decided
to do something called the Surge where they took twenty
percent of their resources from their engineering their Falcon engineering
team and then relocated them onto the Starship program to
help with reliability and testing. And it's a pretty common
tactic Adam Musk company to you know, if something is
(14:45):
needing extra help, needing extra hands on the problem. You know,
they'll rearrange from parts of the company, so we'll see
if that actually works. But it sounds like they're putting
much more of an emphasis on individual component testing and
making sure there's more reliability before they get to the
launch pad.
Speaker 4 (15:01):
These setbacks that you talk about with Starship, these explosions,
the footage is quite jarring. But I'm wondering how common
is that in this industry. I feel like I often
see on my x feed like videos of rockets failing
to launch.
Speaker 2 (15:19):
You're only supposed to see the successful launches on that
here's a problem with the algorithm.
Speaker 4 (15:23):
Yeah, I must be having an issue and YouTube as well.
Speaker 6 (15:27):
That would make sense.
Speaker 4 (15:29):
Isn't it kind of common that there are issues like
these when you're trying to do something so ambitious like
build a.
Speaker 7 (15:35):
Oh absolutely, I mean, especially for a new rocket. You know,
rarely is a new newly developed rocket reach orbit or
or work perfectly as intended on its first launch. What
makes SpaceX and Starship a bit unique though, is that they,
uh most most companies will try their best to have
(15:57):
a perfect launch when they get to that first that
day view with SpaceX, they have this kind of fly fast, fail,
fixed repeat approach where they like to fly as often
as possible, knowing that they might actually have an issue
and an explosion, and then taking that information, learning from it,
(16:18):
and incorporating it into the next flight. I think what
the issue with these latest setbacks has been is, you know,
are they actually pushing the envelope forward, Are they actually
learning from those issues and then reincorporating them, are they
actually creating new issues? You know, SpaceX likes to do
a lot of updates, a lot of upgrades, and sometimes
they might introduce an upgrade that has, you know, an
(16:41):
unintended consequence that they weren't able to test until that
upgrade was introduced, you know, So but they still like
to they still consider these failures learning experiences. So I
would say it's it's common for new rockets to have issues,
but for SpaceX, they kind of barrel right into it without,
(17:02):
you know, and kind of have that expectation of explosions
up front.
Speaker 2 (17:08):
We're speaking with Lauren Grush, Bloomberg News Space reporter, also
the author of the six The Untold Story of America's
First Women Astronauts. Her story, along with Kyle Porter among
the most read on the Bloomberg terminal today. I'm wondering, Lauren,
about the success of SpaceX in the private markets, because
every few months we still seem to read about tender
(17:30):
offers or share sales or raising money that value SpaceX
even higher. Investors don't seem to be deterred by the
series of unsuccessful attempts to orbit Starship.
Speaker 7 (17:43):
Yes, but we did find that, you know this, with
this latest funding round that they had discussed, it might
have actually had could have been bigger if there weren't
these very visible explosive setbacks that Starship has had. So
I think that it does have an impact. But you're right,
you know, they have not had any issues with fundraising
(18:04):
and they probably will continue to be able to fundraise
moving forward. So I think the dream and the promise
of Starship is definitely very enticing. And then of course
there you can't forget about all the other parts of
SpaceX's business that are extremely successful, including their Falcon launch business,
but also Starlink, which is producing the majority of the
(18:27):
company's revenue these days. So I think there's a lot
of other factors at play when it comes to, you know,
making those decisions as an investor.
Speaker 4 (18:35):
Okay, Lauren, you're the space expert here, so you can
help us kind of put into context. So Starship is
a reusable rocket. Is that the only reusable rocket out
on the market. It sounds intuitively pretty remarkable to have
a rocket that lands back down and comes back.
Speaker 7 (18:56):
Am I am?
Speaker 4 (18:56):
I am? I years behind the space advantage.
Speaker 7 (18:59):
No, No, it does sound remarkable, and I think that
is part of you know, the grand vision that makes
Starships so enticing to people. Right, it is billed as
being fully reusable. Now it hasn't actually demonstrated that yet.
That's kind of why it's taking so long for SpaceX
to get it right, because it's such an you know,
(19:19):
a daunting task to perfect. Obviously, we've had reusability incorporated
into rockets before. SpaceX, for instance, is kind of known for,
you know, revitalizing reusability efforts with its Stalk and nine rockets. So,
but that rocket's only partially reusable. The first stage is
able to come back, but the second stage does not.
(19:41):
And then of course the Space Shuttle was also partially
reusable when it was running for NASA, but again parts
of that didn't actually come back. Intact, and it had
to be furbished, refurbished quite a bit between flights. But yes,
the promise of Starship, which would make it unlike any
other rocket that has ever been developed, is that both
of the pieces, the Starship vehicle on top and the
(20:04):
super heavy booster on the bottom, are supposed to come
back intact, and supposedly, you know, from what SpaceX has advertised,
that will make it extremely cheap and capable of flying rapidly.
So you know, they've made quite big promises of flying,
you know, hundreds of times a day. I don't think
we're very I don't think we're quite at that level yet.
(20:26):
We're pretty pretty far away from that reality. But supposedly
that's going to be the key that unlocks that future.
Speaker 3 (20:32):
Right?
Speaker 1 (20:33):
Is that full reusability, Lauren?
Speaker 2 (20:35):
Is it based on the folks you spoke to for
this piece, the reporting that you and Kyle did, Is
it really a question of when not if this thing
is as successful as Elon has laid out?
Speaker 6 (20:47):
Is that up in the air still?
Speaker 7 (20:50):
I don't want to make that judgment call, but one
thing I will say is I never bet against SpaceX.
You know, their mo is kind of proving the haters wrong, right.
You know, when they were first forming, they made all
of these big promises and we're going to promise to
disrupt the industry, and a lot of you know, legacy
(21:10):
space companies were you know, very you know, scoffed at
their claims and what they said they were going to do.
But then look at what they've achieved. You know, they
have been able to bring down the cost of going
to space. They did achieve that partial reusability that I
was talking about, and they've become, you know, the predominant
launch provider for NASA and the US government. So you know,
(21:35):
I will never say that SpaceX can't do with something
that it sets out to do. So maybe that is
a roundabout way answering your question.
Speaker 6 (21:44):
It works for me.
Speaker 4 (21:45):
Lauren Grush, Bloomberg News Space Reporter, Thank you so much again.
That was Grush on her article with keel Porter about
Musk's races to finish SpaceX starship after failures and explosions.
Speaker 6 (22:00):
Stay with us.
Speaker 2 (22:00):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (22:08):
This is the Bloomberg Business Week Daily podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Auto with the Bloomberg Business app. You can also
listen live on Amazon Alexa from our flagship New York station,
Just Say Alexa play Bloomberg eleven thirty.
Speaker 2 (22:26):
It is one of the most read stories on the
Bloomberg terminal today. It's about City Group hiring the firm
Paul Weiss to investigate complaints about the behavior of the
bank's wealth management chief Andy Sigg. He was brought in
by chief executive Jane Fraser on a high profile hire
to drive a key part of her turnaround plan. Join
(22:47):
us now is Todd Gillespie's US finance reporter for Bloomberg News.
He joins us here in the Bloomberg Interactive broker's studio.
Andy Sieg who is he?
Speaker 8 (22:55):
Well, Tim Yeah, I mean Andy Seig was brought on
in September of twenty twenty three by Jane Fraser to
you know, really lead a pillar of what everyone knows
really is one of Wall Street's biggest turnaround stories right now.
City Group, you know, one of the laggards on Wall Street,
one of the least profitable big banks has you know,
really struggled to keep pace with its rival over the
years and the building a wealth management franchise that could
(23:17):
compete with the likes of Morgan Stanley JP Morgan. That
has been a big task for Jane Fraser and a
big priority for her, So she makes this star higher.
This man who ran Merrill Lynch or Merrill as it's
now known for six years as part of Bank of America.
He comes over and obviously a lot then happens, but
he has overseen so far some positive changes for the business.
(23:38):
The you know, it has posted record revenues along with
the rest of the US wealth management sector, as wealth
management generally has been doing very well. But he has
implemented a lot of key changes that have been welcomed
by investors. But crucially, we now find out he's also
done it at some cost to perhaps morale and human capital,
(23:59):
and the in which he's been treating people internally have
raised some big red flags at senior management level, and
we know that the head of human resources at the
bank asked white Shoe law firm Paul Weiss to come
in and investigate these claims. We know that this investigation
has finished, the bank has declined to comment on its outcome,
so we don't actually know what they found, what they concluded,
(24:21):
whether there were any repercussions, for instance, but the bank
so far is standing by him.
Speaker 4 (24:25):
What has your reporting shown so far about just Sieg's
management style and what could have potentially led to that
Paul Weiss investigation.
Speaker 8 (24:36):
Right, we know that he's sidelined and intimidated senior female executives,
one of whom Ida lu was one of the most
high profile female executives at City groups. She was there
for eighteen years until.
Speaker 6 (24:47):
She interviewed her many times.
Speaker 8 (24:48):
Indeed, yeah, I mean she left the bank suddenly in January.
A lot of people were still wondering what the real
story was there, and this seems to be at least
part of that. We know that he called you know,
people work pathetic in rooms, launched into expletive filled ramps
against them. He made a male managing director cry and
(25:09):
banked his fist on the table. And yeah, so it
seems to be you know, this isn't just sort of
old school Wall Street necessarily. It seems to be, particularly
in twenty twenty five. You know, this sort of seems
to be another level of you know, what some people
might argue as toxic behavior.
Speaker 2 (25:25):
I want to bring up a response from City. This
is according to a City Group spokesperson. You can see
it on the screen if you're watching us on Bloomberg
Originals or on YouTube. It is quote quote, it is
standard practice for us to engage an outside law firm
to investigate allegations made against a senior member of the
management team to ensure independence and prevent even the appearance
(25:48):
of a possible conflict of interest. This is according to
a City Group spokesperson. What else did you hear from
the bank is.
Speaker 8 (25:55):
That it well, the bank is standing by him, and
that they are highlighting that, you know, at least more
than forty percent of his leadership team are women. You know,
they mentioned that he has driven positive results and that
he apparently continues to attract you know, leading talent from
outside the bank, so that that really is the bank
stance right now. Again, they've declined to comment on the
(26:16):
specifics of the investigation or the outcomes. But but you know,
what we've reported is, you know, is there and we're
you know, it's unclear exactly how this might develop longer
term and what this you know, whether there might be
any other impacts, but for now, it seems like the
bank is standing by him.
Speaker 4 (26:34):
It's interesting, you write in your article that while it's
not entirely clear which allegations were reviewed by Paul Weiss,
at least six City Group managing directors made complaints. That
stands out to me because that number six is a lot,
and it's at the m D level as well. This
is that's the most senior position you can have at
(26:54):
a big bank like this.
Speaker 8 (26:55):
Yeah, that's right, Emily. And it's also worth noting that
a large, you know, focus of some of these complaints
was his treatment of a woman called Kristin Bitterly, who's
also been on Bloomberg TV repeatedly herself. She runs the
Wealth at Work division, which is one of the three
core businesses of the Wealth business at the City. So
she's a direct report, I guess, one of the three
P and L heads underneath Andy Seek. She is still
(27:18):
at the bank, she is still running that business and
you know, and we know that there were complaints over
his treatment of her. So there is still, perhaps one
might say, ongoing tension and ongoing questions about the relationship
of senior executives here which haven't yet been answered.
Speaker 2 (27:35):
Paul Weis did not respond to requests for comment. Idoloo
did not decline to comment, I should say when reached
by Bloomberg News. And then Kristin Bitterly, who you just
spoke about, remains at the bank. She didn't respond to
requests for comment either. I todd back out a little
bit and talk a little bit about the role of
wealth management at the firm, especially under Jane Frasier, the
(27:57):
goals there and how successful it's been.
Speaker 8 (27:59):
Yeah, City Group traditionally, I mean, it's been known as
one of the most global banks. Right we have the
private bank, which caters to particularly super high net worth
you know, individuals with global footprints. They might have, you know,
assets across the world. Cities Private Bank is quite big
in Asia in particular in the US that their market here,
(28:19):
they're trying to I guess, become a bit more of
a wire house, a bit more of a meeral. They're
trying to focus on a slightly more mass affluent market,
bring in more investment assets that way, and they're also trying, interestingly,
to reduce dependence on the balance sheet. They're trying to
lend less and we all know, you know, big banks
right now capital constrained, and City in particular as well
(28:42):
as trying to find ways around that. How do you
make revenue without lending? What are the best ways of
doing that? In their banking business, for instance, they're sending
more deals to Apollo through a private credit partnership that
they have now in the private bank. They're trying to
reduce how much money that they are lending you to
billionaires or the intensity of that at least, and instead
they're trying to get more revenue by getting you know,
(29:04):
up and coming emerging wealth to to come on board
at City and to invest more money through the firm's platform.
Speaker 4 (29:11):
You had mentioned, you know that this hire of Siege
was was part of a turnaround. Does how do you
anticipate this ends? I know, we you know, there's still
a lot of information that's that's unknown. You look at
the shares of City. They did drop as much as
three percent today, but now they're down less than one percent.
What are the implications Does this impact that turnaround story
(29:35):
at all?
Speaker 8 (29:36):
You think, yeah, I mean it's I mean, it's obviously
unclear how this might affect things like his ability to
hire talent and you know, confidence in his leadership for instance.
But you know, it's hard to speculate right now. And
obviously we should refrain from doing that too much.
Speaker 5 (29:50):
You know.
Speaker 8 (29:50):
For now, you know, the Wealth business has posted solid returns.
You know, City Group will be posting results for the
you know, for the next quarter in October, so we'll
see how the Wealth business performs. Dan. But for now,
you know, the wealth business City is the smallest of
the five businesses. It's grow it's growing rapidly, and you know,
we'll we'll sort of see how that how that pans
(30:12):
out really.
Speaker 2 (30:13):
Todd Gillespie, US finance reporter for Bloomberg News, joining us
here in the Bloomberg Interactive Brokers studio.
Speaker 6 (30:19):
Check out his story. It's on the Bloomberg Terminal.
Speaker 2 (30:22):
It's the most reader among the most read stories on
the Bloomberg terminal. Today, City investigated HR complaints against wealthhead Sieg.
Speaker 6 (30:31):
Stay with us.
Speaker 2 (30:32):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (30:39):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (30:53):
I want to talk fintech financial technology. Chime Financial. It's
a prominent fintech recently i PO. The stock actually fell
below its IPO price of twenty seven dollars for the
first time sixty nine days after going public. This is
traders dump shares of fintech companies during a sell off,
and US equities over the last couple of days today included,
we see Sofi Block Affirm selling off yesterday and today
(31:16):
as declines in big tech stocks push major indexes lower.
I want to bring in David Haber. He watches this
stuff closely. He's general partner at the VC Firm and
recent Horowitz. It's perhaps among the most well known in
the world, having made early bets on Airbnb, Coinbase, Facebook
when it was called Facebook, Instagram, Figma, Lifts, Slack a firm, Skype,
and more than seven hundred other companies. Also joining us.
(31:39):
Someone else who watches fintech's closely, Page Smith. She's consumer
finance reporter for Bloomberg News. Everybody is here in the
Bloomberg Business Week studio. David, I want to start with
you the FinTechs I mentioned chime, Sofi Block Affirm, one
of which Dendresen Horowitz has invested in. How do you
think about these in the context of where we are
in fintech? Is this like a sort of web one?
(32:00):
Why O in where we are with fintech?
Speaker 9 (32:03):
It's a great question. I think, you know, we were
chatting about Page and I were chatting about this earlier.
You know, I think a lot of fintech from you know,
call it twenty twelve to twenty eighteen were these style
of companies. These were businesses that lead with a financial product,
and they got started by really unbundling the bank, you know,
kind of building a wedge, whether it's a trading product
or a fee free mobile first bank account in chimes case.
(32:24):
And as they've scaled, they've kind of rebundled product to
try to become the primary sort of financial relationship with
their end customer. I think where I've been spending time.
And you know, I used to run a lending business,
which you know wasn't a direct competitor with these, but
was a very challenging, you know, company to lead has
been different. Right, The types of fintech companies that I
look for and most like investing in are those that
lead with software or have the potential for network effect.
Speaker 6 (32:48):
Right.
Speaker 9 (32:48):
So often selling into large financial institutions is supposed to
trying to compete with them directly, and it's been one
of the things that I've been spending time the last
four years here to indrees and is just trying to
bridge the gap between you know, what's happening on the frontier,
you're in the startup ecosystem and many of these large
financial institutions.
Speaker 10 (33:05):
No, David, I have a question for you as well
about one of the companies that we've chatted about, which
is Plaid, and kind of this interesting dynamic right now
around charging. There were theoretically the negotiations are ongoing, discussions
are ongoing, and the regulatory environment is a little bit
uncertain right now. But the idea of charging for access
(33:27):
to customer financial data, it was kind of an issue
that was settled for a hot minute and has now
sort of come back. I guess I would be curious
about your from your perspective, how does this discussion of
kind of the banks sort of essentially like digging these
modes around themselves to charge for this financial data. What
(33:49):
are your thoughts on this?
Speaker 9 (33:51):
Yeah, So, look, JP Marking came out recently saying they
wanted to charge the fintech ecosystem. I think three hundred
million dollars for access to consumer data, you know, and
it was done under the auspices of you know, consumer
protection and their own kind of cost structure to support
this information. I think it's really just hiding the true intention,
which is sort of an anti competitive move.
Speaker 8 (34:11):
Right.
Speaker 9 (34:12):
Ultimately, Plaid you know, which again in full transparency, helped
see the company back in twenty thirteen and try somewhere
you know, large investors in the business, so you know,
I have a strong point of view here, but PLAT
ultimately sits at the intersection between the bank, a fintech application,
and the end customer, right, and so they do play
this sort of intermediated role. But ultimately I think it's
(34:35):
who owns this information, right. JP Morgan has a strong
point of view that they owned the information. I believe
that consumers own their own data, and then we need
more open kind of standards, you know, for how people
are able to share their own information with other third
party applications. The analogy that I use often is, you know,
do you own the photos in your iPhone or does Apple?
Speaker 3 (34:56):
Right?
Speaker 9 (34:57):
Should Apple be able to charge Instagram? Are you authenticating
access to your photos? I don't think so, right, I
think you ultimately owned. You should be able to share
your photos with any application that you want to connect to,
and JP Morgan is basically saying, no, your photos are mine,
and we're going to be able to charge their Instagram
equivalent three hundred million dollars for access to your information.
(35:17):
I just don't think that's fair, and I think it's again,
I think it's veiled under this sort of thread of
consumer protection and their own construct. The reality is, you know,
data infrastructure costs have come down so precipitously, and we're
talking about your account and routing number right in your
transaction history. It's really not that sort of technology intensive.
And for many you know, banks, they don't actually have
(35:38):
real tam APIs right, and so for the long tail
of community and regional banks, I think plaid plays an
more important role in becoming this sort of like data
utility and enabling kind of this ecosystem of intech companies
to build interesting applications on top of those products.
Speaker 4 (35:53):
Aside from Plaid, are you seeing investing opportunities that kind
of capture that theme of perhaps consumers getting their their
rights to whether it be data finances or maybe even
iPhone photos back.
Speaker 6 (36:08):
It's it's an interesting question.
Speaker 9 (36:09):
I mean, there's a lot happening kind of in consumer
fintech broadly, and I think, you know, AI is sort
of changing the conversation here in a lot of ways.
You know, maybe it's a different answer your question, but
you know, my partner Alex recently announced an investment in
a company called Salient, which has launched voice agents for
auto loan servicing. Right. And what's interesting in this in
(36:31):
this capacity is, you know, these are large non bank
and bank auto lenders that have you know, very large
you know armies of call center folks now using voice
agents who can speak in you know, fifty languages, twenty
four to seven fully compliantly, you know, in many of
these markets. And so I think it's an interesting question
of how is sort of technology and the software actually
(36:52):
doing the work, and how is that changing the relationship
with you know, with the end customer. And so that's
I think one of the bigger things that were in
consumer financiers. A lot happening also in the back office,
you know, in many of these bigger financial institutions.
Speaker 2 (37:05):
You know, I want to talk a little bit about
It's funny you don't necessarily think of venture capital and
politics until like the twenty twenty four election, and I
think and recent Horowitz really find itself at the center
of the political ecosystem right now. Mark's very close with
the Trump administration. He's advised President Trump, He's been outspoken
with his support. The firm hired Daniel Petty after his acquittal.
(37:27):
I think people would say that's political there. And Resent
Horowitz is very first hired Scott Cooper now a month
into his gig as HR chief for the federal government.
We had some reporting recently on the Bloomberg terminal Riley
Griffin noting that Scott was introduced to Commerce Secretary by
Mark and Ben. What is you know, they have this
(37:47):
connection to a relationship with the Trump administration. What is
what do how do you feel about that in the
sense of like having a direct line to the administration
or a direct line to Washington, given and Resent Horowitz's
involvement in this administration.
Speaker 9 (38:02):
Look, I think I think from a macro perspective, you know,
fifteen years ago, technology was sort of this industry that existed,
you know, only in Silicon Valley. It was sort of
not part of the conversation. D C wasn't really a
conversation in most industries. Mark you know, famously wrote this
essay Software's eating in the world. I think that's happened right.
Technology is now proliferated across every industry, you know, in
(38:22):
our society, in our economy, and as a result, is
directly impacted by you know, DC and the regulatory environment.
And so I think their point of view is not
it's really not partisan. I know that there's a lot
of headlines that have happened, you know, from the presidential election,
but fundamentally, I think our view is we want to
support what we call the little Tech Agenda. We want
(38:43):
to you know, back the on both sides of the aisle,
people who support innovation and support sort of technologies advancement.
So we've donated to you know, Democrats and Republicans in
support of this issue.
Speaker 2 (38:55):
Well, do you feel like you have a more direct
line now than you did during the Biden administration?
Speaker 9 (39:00):
Certainly. I think as a firm we've taken a much
more front leaning approach. I think Mark and Ben and
others at the firm tried to spend a lot more
time with you know, in the prior administration. I think
that was part of what governed their decision to be
more vocal, you know, in this presidential election. I think
it's important in general to have a dialogue with DC
because again I think technology has just you know, permeated
(39:20):
every part of society, and you have the largest technology
companies with massive lobbying arms in DC. There is sort
of this tragedy of the commons challenge in the startup
ecosystem and then the French ecosystem because it's highly fragmented, right,
It's these are relatively small institutions, and so I think
their belief is, you know, if not us, than whom.
And so I think we're trying to be sort of
a convening force and creating a voice for this tech
(39:43):
ecosystem again to drive innovation and ultimately I think better
outcomes for society, for the economy, et cetera.
Speaker 2 (39:48):
We're speaking with David Haber, general partner at the venture
capital firm Andentries and Horowitz.
Speaker 10 (39:53):
And you know, David, I have another question for you.
I cover consumer finance here at Bloomberg, and you know,
we did just see the chime ipo. We've seen a
number of sort of consumer facing fintech's do quite well
in the last couple of years, and kind of there
are these sort of household names frankly that you and
I use for a lot of our corners, a lot
of corners of our financial ads. Robin Hood comes to
mind as well. But you know, I guess I'm curious, like,
(40:16):
are we is consumer fintech dead? Like are we kind
of shifting to a lot of these you know, like
we mentioned a few names earlier of kind of infrastructure companies,
financial services infrastructure companies where it's still fintech for sure,
but it's not like fintech that you and I would
know the name of or see the brand. And you know,
(40:38):
we might see the ads on the subways, but we
don't interact with them. What are your thoughts?
Speaker 9 (40:42):
Yeah, look, I think part of it is just like
how the market has evolved. Right when many of these
companies started, and you know, twenty twelve, like early early
twenty tens, many of the largest banks didn't have mobile
banking products, right, many of them weren't acquiring customers online,
and so as much easier, you know, candidly to launch
with the wedge product to spend money and acquire customers
and build in a much larger user base. I think
(41:04):
the challenge over the past several years is, like KAC
is the new rent right, a lot of that spending
has now gone to the largest technology platforms to help,
you know, these big institutions acquire their own customer and
it's just become a lot more competitive. It's much more difficult,
I think, to break through and compete now directly with
a Robinhood or a chime or so Far, et cetera.
It's one of the reasons. I think there are other
(41:24):
reasons culturally within these financial institutions, their willingness to leverage
third party technologies changed dramatically in the last five or
six years and as a result made it much more
interesting to back software led companies and infrastructure companies selling
into these institutions to again solve real problems change their workflows,
and I think that part of the kind of more
B to B side of the market has become more interesting,
(41:46):
at least to me.
Speaker 2 (41:46):
Dave, we only have thirty seconds left. What is the
most interesting company that you've made an investment in that
our audience hasn't yet heard of that should be on
their radar.
Speaker 9 (41:54):
Oh, there's a bunch, but it's hard to pick Page
wrote a great article on a called moment that is
building fixed income trading infrastructure and so again kind of
a wonky part of the world.
Speaker 6 (42:05):
But if you're a wealth.
Speaker 9 (42:07):
Management client, getting a bond letter is still a manual
process today at most large financial institutions. Soon that will
be done programmatically. I think this is a company, albeit
more infrastructure, that's going to become much more well known
over time.
Speaker 2 (42:19):
You're a man who knows his audience. We can talk
about bond ladders and bond infrastructure all day here on
a Bloomberg David Haber, general partner at the venture capital
firm andreessen Horowitz, also with US Paige Smith. She is
consumer finance reporter for Bloomberg News.
Speaker 1 (42:34):
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