September 20, 2025 • 36 mins
As promised in Tuesday's episode, Everybody's Business will carry the Elon, Inc. banner moving forward. In the latest episode, Max Chafkin and Stacey Vanek Smith discuss a plane crash carrying illicit cargo with a SpaceX twist, fed independence and salary caps in sports.
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Episode Transcript
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Speaker 1 (00:00):
Hey, Elon Inc. Listeners.
Speaker 2 (00:01):
Max Chafkin here, I know you and I and everybody
else are still sort of recovering from that monster episode
that we published on Tuesday. I wanted to just record
a little introduction to the latest episode of Everybody's Business,
which we just taped and which is really interesting. It
is about salary cap and sports. Really awesome conversation there,
(00:23):
as well as a conversation with Rohit Chopra about the
future of the FED, and there is a little Elon
related Easter egg. It is a unique branding story involving SpaceX.
I'll just leave it there, but it's a pretty funny segment.
I think you'll like it, and we, of course will
be back talking about Elon Musk on the Everybody's Business
(00:44):
Podcast with Dana and Kurt and all the people that
you've been hearing on Elon Inc.
Speaker 1 (00:50):
Very soon. Hope you enjoyed the episode and talk to
you later.
Speaker 3 (00:57):
Bloomberg Audio Studios Podcast Radio News.
Speaker 1 (01:06):
This is Everybody's Business from Bloomberg BusinessWeek.
Speaker 4 (01:08):
I'm Max Shafton and I'm Stacy Vannick Smith and.
Speaker 2 (01:11):
Stacy we have a big conversation coming up about your
favorite topic, the Federal Reserve. Our guest is Rohitschopra. He
was a big deal guy in the Biden administration and
he has provocative things to say about Jerome Powell.
Speaker 5 (01:24):
We're also talking about salary caps in professional sports leagues.
Teams and players have been finding some pretty interesting ways
around those limitations.
Speaker 2 (01:32):
And our underrated story, Stacy, I have a idea, a
brand idea for Elon Musk.
Speaker 1 (01:38):
Warning may not be leaked.
Speaker 4 (01:41):
I will keep that in mind.
Speaker 1 (01:45):
Okay.
Speaker 5 (01:45):
Obviously, the big economic news this week was the Federal Reserve,
but we also got some pretty big business news last night.
Speaker 4 (01:54):
We're recording Thursday morning.
Speaker 2 (01:55):
We should say, yeah, another late night host is down,
Stacy amid some political pressure from the Trump administration. Disney
essentially pulled Jimmy Kimmel, who is the ABC late night host,
a competitor to Stephen Colbert, off the air, amid political
pressure from the Trump administration. For me, this story really
(02:16):
has echoes of the one that we talked about with
Felix Gillette a couple weeks ago with Stephen Colbert, where
you have a combination of factors. One is the threat
of regulation of not approving mergers, and the other is
like this format the late night format is basically failing,
and all of these late night shows are not doing well.
So Trump is giving these networks essentially an excuse to
(02:39):
kill a product that is not working super well.
Speaker 5 (02:41):
I would argue the bigger story in a certain way,
could be a potential threat to free speech and news
organizations feeling like if one of their hosts or commentators
says something or does something that the administration disagrees with,
they might end up facing the very real wrath of
like governmental regularly.
Speaker 1 (03:00):
Yeah, one hundred percent.
Speaker 2 (03:01):
And we have another story related to political pressure that
just so happens to me going.
Speaker 1 (03:06):
On right now.
Speaker 5 (03:06):
We have another story related to political pressure, which is
the Federal Reserve. For the first time this year, the
Federal Reserve cut interest rates, which we were all kind
of expecting.
Speaker 2 (03:15):
But there was a cut it by three hundred percent,
right as Donald Trump want.
Speaker 5 (03:18):
Yeah, a quarter of a percentagey, which was like what
was expected but by economists.
Speaker 4 (03:24):
Yes, well, there there was a lot of drama around this.
Speaker 5 (03:26):
We will get into kind of what was going on
behind the scenes with Row hitch Chopra in just a minute.
But the Fetchair did say something that I thought was
kind of interesting for the rest of us, us in
the economy, which is he he started to talk about stagflation,
how prices are going up, how the economy is slowing down,
and this is a really dangerous combination. And so I
(03:48):
thought I would like ask people how they were feeling
about the economy right now. How do you feel about
the economy right now?
Speaker 6 (03:55):
I'm not good. All the prices are going up, and
not especially food shopping. Before you could just put everything
in your cart, and now you have to start cutting
back on things.
Speaker 1 (04:05):
It's a real have and have not economy. And you know,
you look around, people are making a lot of money,
and some professions and the champagne's flowing and in others,
you know, things are definitely a lot tighter.
Speaker 5 (04:17):
I kim here because this is the only not.
Speaker 1 (04:19):
Going to fall right now.
Speaker 5 (04:21):
The pizza the dogphis to slice. Yeah.
Speaker 7 (04:23):
Yeah, when I got the job, I think I'm going
to go back to like chicken and eggs.
Speaker 5 (04:28):
Eggs are like a luxury a little bit exactly. Is
there something that like, if you had more money or
felt better about the economy, something.
Speaker 1 (04:35):
That you would buy.
Speaker 4 (04:36):
It's a new car. What's your car like now?
Speaker 6 (04:39):
It's a terrible Nissan that keeps having one hundred problems
because it's almost at ninety thousand.
Speaker 2 (04:44):
Miles, Prices going up, economic opportunities stagnating. There's a word
for that stacy that is that's Stagflation's stagulation.
Speaker 4 (04:53):
It's the worst of all the plations, I think. And
it's like kind of a.
Speaker 5 (04:58):
Trap for the Federal Reserve because if they cut interest rates,
it does help grow the economy, but it can also
make inflation worse, so it puts everybody in tough position.
Speaker 2 (05:08):
Yeah, and it's not clear to me what the fix
is at this point. I mean, we are we've got
economic challenges that I don't know, you know, whatever you
feel about Jerome Powell or whoever's running the Fed, Like,
I don't know how fixable it is at this point.
Speaker 5 (05:22):
Well, I agree, and like prices are going up and
with tariffs are going to go up more, at least
a little bit more. It could be a one time thing,
but it is a really tough position, Like it's not
obvious what they should do. But the Federal Reserve yesterday
said jobs right now are the most important, and I
think most of us would probably agree. Although if inflation
gets out of control.
Speaker 4 (05:42):
That could be really bad.
Speaker 5 (05:50):
So Max, we talked earlier in the show about the
big economic news of the week, which is the Federal
Reserve and interest rate cuts, and somehow everyone in the
country like knows about out the Federal Reserve and interest rates.
Speaker 4 (06:01):
Now it has become huge news.
Speaker 2 (06:04):
Yeah, And we've also been talking about this question of
like FED independence and the sense that Trump and members
of his administration are doing things to kind of attack
the FED or to push them in various directions. And
I was excited about the conversation we're going to have
because we've been sort of talking about the FED. And
I know this is kind of partly how you feel,
(06:26):
but some of it has to do with conventional was whatever,
like that there is this beautiful jewel of public policy
that is the US Federal Reserve.
Speaker 1 (06:33):
I am a.
Speaker 5 (06:34):
Huge fan of the central Bank and like the structure
of it and the system.
Speaker 2 (06:38):
And I appreciate that, but I also thought it'd be
fun to have a guest who would kind of challenge
that a little bit.
Speaker 4 (06:45):
Fair enough, Yes, I mean, I think it's good to
challenge these things. That's what they're there for, all right.
Speaker 2 (06:50):
So we have Rohit Chopra, who was the director of
the Consumer Financial Production Bureau under Joe Biden. He served
on the FTC under Trump, helped actually set up the
CFPB as its assistant director. Basically, he is a heavyweight
on the kind of like progressive left, and he has
kind of an interesting perspective on these issues, and I
(07:12):
thought it'd be fun to kind of hash it out here.
Speaker 1 (07:14):
Roha, thanks for being here, Thanks.
Speaker 8 (07:15):
So much for having me.
Speaker 5 (07:17):
So we got the rate cut, that was the big
headline quarter of a percentage point rate cut, but there
was a lot of stuff going on behind the scenes
that was also making news. Do you mind just kind
of laying out some of the things happening in the
FED right now, which has always loomed very large in
my world, but is somehow also looming large in the
regular world now.
Speaker 4 (07:37):
Very strange, Yes, Stacy.
Speaker 3 (07:39):
There had these sets of meetings to determine what to
do with those interest rates, and it had to have
been a really awkward meeting because one of the governors
who was going to vote there sitting deliberating and voting,
was actually the target of an attempted firing by President Trump.
That's Lisa Cook, who is battling in court. She has
(08:01):
won many rounds of that court room battle and cast
to vote. Another person sitting in that room is newly
confirmed Governor Stephen Myron, who is currently the chair of
the Council of Economic Advisors and is in some ways
dual hatting taking both jobs, which is unusual.
Speaker 1 (08:24):
Now anyway, just in general in the work for economy.
Speaker 4 (08:28):
It's for everybody now.
Speaker 3 (08:30):
Yeah, And this comes after, of course, months and months
of the President targeting J. Powell, essentially trolling him online
and infamously showing up in hard hats to do a
site inspection of a construction project. So right now there
is a lot of debate about what's the right role
for the President and Congress in the Federal Reserve, and
(08:54):
a lot of people are fiercely defending the status quot
But I think the story is sometimes triggier than that.
Speaker 5 (09:01):
Well, also we should say that Stephen Myron, who was
in his new role this is his first time voting
on interest rates, was the loan dissenter and very much
in line with what the President has said he wanted.
Myron said he wanted like a bigger cut, bigger cutt Yes,
bigger cut.
Speaker 1 (09:19):
So Rohit.
Speaker 2 (09:21):
You have thoughts about the FED, and and we've talked,
you know, off off this podcast about this a little bit.
But I'd love for you to just explain when you
say like they're sort of assuming everything's great or whatever,
like what you mean or like at a high level,
like what is wrong with the FED today?
Speaker 8 (09:38):
Yeah, Well, I would put it this way.
Speaker 3 (09:40):
There's lots of reasons why in a democratic society we
create some anti democratic features in certain parts of our government.
For example, we make sure the judges are confirmed for life,
the idea being this should stand for election all the time.
Speaker 8 (09:58):
Be subjected to the political process.
Speaker 3 (10:01):
And we also cordon off some of our regulators to
make sure that they're not put in the middle of
a total political slugfest. That's some of the agencies I've
served at, the CFPB, the FTC, others. And then you
really have the Federal Reserve System, which has in many
(10:22):
ways an enormous amount of power. We talk about it
as a central bank, but another way to put it,
it's a price control agency. It sets the price and
supply of money that has so much effect throughout the
entire economy.
Speaker 8 (10:39):
And one of the things that is important to me
is that even.
Speaker 3 (10:44):
If an agency is independent, it can't be unaccountable. And
I think there is questions about whether the FED has
always been accountable to the public or if it's often
serving the interests of a narrow set of financial stakeholders
and really prime Among those examples is the Fed's lack
(11:08):
of preparation when it came to an epidemic of subprime
mortgage lending, for which the Federal Reserve had an enormous
amount of authority to crack down on, chose not to,
and the results were really catastrophic.
Speaker 5 (11:25):
So what would your vision be for a FED going forward?
If it's not a politicized FED, but it's not the
FED it is? Now Like, what if you were designing.
Speaker 4 (11:35):
It and the CFPB is part of the funded?
Speaker 5 (11:39):
Is it technically part of the bed? Or Okay, yeah,
so you've been in the I don't want.
Speaker 4 (11:43):
To say the belly of the beast, but I'll just
say it, belly of the beast.
Speaker 8 (11:46):
How would I want it?
Speaker 3 (11:47):
I actually do think it's really important for us to
think what is the role of these Federal Reserve banks.
Remember it's not just a Federal Reserve Board appointed by
the President.
Speaker 8 (12:00):
There are also federal reserve banks. We're sitting some of
them all over the est. We're sitting uptown.
Speaker 3 (12:06):
From an extremely powerful one at the Federal Reserve Board
of New York. I think we also have to make
sure that do we have the right structure in terms
of allocating what powers the FED should use as to
what powers should be located elsewhere. I think there are
some legitimate criticisms about the Fed's expansive view of its
(12:31):
interpretation of law, including its interventions in money markets and
other actions that have moved the flow of credit away
from local banks toward the global money markets that has
a real impact on our economy.
Speaker 2 (12:48):
I mean, one thing that I find really interesting is
on some level, Stephen Meran, the new governor, is like
a total He's like a trunk guy, right, He's a
white house economic He seems like a loyalist. On the
other hand, he in addition to being those things, he
has advocated for some of the very things that you're
(13:09):
talking about right now. And like reading there was an
Elizabeth Warren op ed that you pointed me to back
in August essentially bring up some of these issues that
you're talking about right now. And there was an op
ed by Scott Besson in the Journal just a couple
of weeks later that has kind of a very similar,
very different words Like Bessen is using kind of conservative buzzwords.
Speaker 1 (13:31):
He accuses the FED of like gain of function.
Speaker 2 (13:34):
Monetary policy, little little COVID hat tip there, but kind
of ultimately pointing in the same direction.
Speaker 1 (13:41):
Right, Yeah.
Speaker 3 (13:42):
I think what you're seeing is not a political debate
about it, but what's the right place for this institution.
When the financial crisis occurred, there was a lot of
discussion about whether core consumer regulation should ever be at
the FED. Every FED governor I have spoken to you
(14:06):
likes to say I'm glad the Fed's powers were stripped
and a CFPB was created because that was last on
our list of attention.
Speaker 5 (14:15):
Well, yeah, you've got inflation, you've got unemployment numbers like those.
Speaker 3 (14:19):
Are two big I mean the dual manda totally, it's
a big deal. And I think that there's there we
got to ask ourselves what do we want them doing.
I think what we want them doing is stewarding the
money supply in ways that creates stability, that still create
the conditions for growth. And I would also argue trying
(14:41):
to ensure that the United States has a currency that
a payment system that is working. But there's a lot
of things that they do, including on the regulatory front,
where there's long been concern that they are captured by
big Wall Street interest rather than representing the borrowers and
(15:03):
the business owners that are really affected by their decisions.
Speaker 2 (15:07):
It feels like what you're saying partly is like, hey,
there's there's a lot at play right now. It's kind
of an opportunity to think about where where should the
FED go?
Speaker 8 (15:15):
Like what what what what should the.
Speaker 4 (15:16):
FED look like?
Speaker 2 (15:17):
And part of me wonders if like we're just sort
of playing fantasy politics here, because like the CFPB is
gone basic. I mean CFPP is still technically.
Speaker 1 (15:25):
Exists there, but it's not doing anything.
Speaker 2 (15:28):
And and Trump, you know, maybe like there are there
are a bunch of these like populist ideas that are
are floating around the Trump administration, but he's actually doing
is like goosing the stock market. And it's like this
conversation we're having feels very far away from what's actually happening.
And I was wondering, like, do you see opportunities for
for change that that could actually happen in this direction
(15:48):
during you know, the next whatever three years.
Speaker 8 (15:51):
So Max I would I would push.
Speaker 3 (15:53):
Back a little on that, which is that, of course
it's idiotic to to defund and defang the CFPB. That's
just stupid, and I agree with that. But the truth
is is that the FED has changed dramatically over the
years without any legal change. It happens because of those
(16:15):
governors and chairs who sit in those seats.
Speaker 8 (16:18):
The concept of federal reserve independence actually is relatively new.
Speaker 3 (16:24):
It's from the last generation where there was acceptance around
the world that some insulation from politics was beneficial to
achieving stable prices. But you'll start seeing with people who
are now sitting in those seats, many of them who
want to salute the president rather than really focus on
(16:46):
their mandate. That's going to change this FED. There are
going to also be people who really are thinking differently
about what those tools are, and I think we have
to pay attention to that. There's a ready rumblings what's
going to be the Fed's role in stable coin and crypto?
(17:07):
Would the FED potentially not just target one interest rate
but intervene in the market with their balance sheet in
other ways. I don't think you need a law change
on some of that's fort to witness that change occurring.
And frankly, a great example is that Donald Trump has
not changed a lot of laws in this country, but
(17:28):
he has changed a lot of agencies pretty dramatically. And
we need to really think and debate what is it
that we want our FED to be doing, because again,
I just don't think independence should ever mean unaccountable.
Speaker 4 (17:44):
I mean, obviously things are changing a lot right now.
Speaker 5 (17:47):
If you kind of project forward, looking at some of
the changes that are possibly going to happen, and some
of the changes that have already happened, like what does
the Federal Reserve look like in five years?
Speaker 3 (17:59):
I think there should be quite less power when it
comes to bailouts and backdoor bailouts. Especially Congress did was
very angry about the FEDS backdoor bailouts and frankly, front
door bailouts during the financial crisis curtailed that.
Speaker 8 (18:18):
I do think it is important.
Speaker 3 (18:21):
To really limit the power to backstop and pick and
choose winners and losers in the financial sector. I think
we have to do things that give them less ability
to subsidize certain types of activities. Borrowing by hedge funds,
borrowing by some other financial institutions and get them focused
(18:43):
on their core mandate, especially when it comes to making
sure that they are a lender of last resort for
local banks, running a stable monetary policy, and not being
seen by presidents as a cure all to nacked their
agendas with no consent from the governed.
Speaker 1 (19:04):
Have you converted?
Speaker 8 (19:06):
I mean, I.
Speaker 4 (19:07):
Still am I this is quite a look.
Speaker 1 (19:10):
I'm I'm sorry.
Speaker 4 (19:11):
I mean, I don't. I'm not sure. I like, totally,
I'm not sure.
Speaker 3 (19:16):
I really think a good central bank is like really
good for democracy and really good for people. But I
think it has to also change with the time so
that it is responsive and that it is not seen
as a group of priests and priestesses who make determinations
about our lives without really understanding how the economy is
(19:38):
working on the ground.
Speaker 5 (19:39):
There is something of an ecclesiastical vibe around the FED,
that is true.
Speaker 3 (19:44):
Yeah, I worry about this, Actually, I worry about that
many of them spend their time traveling around the world
to economics conferences. In reality, Stacy, back in the day,
there was actually a FED governor who was a hog farmer.
They really represented a broader swaff of America, and I
don't think that's a bad thing.
Speaker 1 (20:04):
See.
Speaker 2 (20:04):
I think if they're going to be so above the fray,
they should wear cool outfits like the Catholic Church. They
should have rogues and ceremonies and just either really lean
into it or bring back the hot.
Speaker 5 (20:16):
It would make the press conferences a lot more exciting
to kind of.
Speaker 1 (20:20):
Like a purple gown that he had to wear like
whenever he.
Speaker 4 (20:23):
In said it just the tie he went full down.
Speaker 3 (20:26):
And by the way, you know, I'm not sure that
we should be happy that usually they take unanimous votes
and usually that everything is scripted.
Speaker 8 (20:37):
We should probably want a degree of.
Speaker 3 (20:39):
Debate when it comes to issues that are so important
to our economy.
Speaker 4 (20:44):
Yeah, that's true. There should be descent, especially to a
moment like now when.
Speaker 5 (20:47):
The path forward is really is unclear and it seems
like there are valid reasons to go in a bunch
of directions.
Speaker 1 (20:53):
Ro hitch Opra, thank you for being here. Thanks again, Stacey.
Speaker 2 (21:03):
I don't know if you've been following this, but there
is a huge story in the world of sports happening
right now, a sports business in particular involving one of
the biggest stars in basketball, Kawhi Leonard one of the
richest people in the world, Steve Bamber, the longtime executive
of Microsoft. I think he's the seventh richest person in
the world and a massive tech company that the Justice
(21:26):
Department described as a quote two hundred and forty eight
million dollar scheme to defraud investors and lenders. In brief,
the NBA is investigating whether Bamber, the owner of the
La Clippers, funnel payments through this weird tech company, which
is called Aspiration to Kawhi Leonard, and in so doing
circumvented the salary cap. I know it sounds like really complicated,
(21:47):
but like I'm telling you, this is everyone is.
Speaker 1 (21:49):
Talking about this, and so I thought we would have to.
Speaker 2 (21:51):
Talk about it, okay, okay, And to do that we
have Randall Williams here, Bloomberg, BusinessWeek, sports columnists, Everybody's business regular.
Speaker 1 (21:58):
Randall, how are you.
Speaker 9 (22:00):
I'm doing all right, doing all right? Thank you for
having me.
Speaker 2 (22:02):
So, Randald, what can you just give us the kind
of like quick the one oh one on what this
controversy is about?
Speaker 1 (22:09):
What is accusation here?
Speaker 9 (22:11):
Sure?
Speaker 2 (22:11):
And like why why is it like causing people to
sort of lose their minds?
Speaker 9 (22:16):
It's a big deal.
Speaker 7 (22:16):
Because sports leagues like the NFL and the NBA have
something called a salary cap. A salary cap is set
up so that players are paid a specific amount and
teams can only play players a specific amount. And so
what Balmber is accused of doing is going outside of
that through this company called Aspiration, and then paying Kawhi
Leonard even more than what he's already paid. And I'm
(22:39):
sure if we looked up Kawhi Leonard turnings, he's probably
made close to half a billion dollars and he's making
even more because of these accusations.
Speaker 2 (22:46):
And this we should say this was originally reported on
a podcast Pablo Torre Finds.
Speaker 9 (22:50):
Out Right, the Great Pablotori.
Speaker 2 (22:51):
Yeah, but the basic allegation is that Balmer, a rich
guy who like he has more money than he knows
what to he could do with, is like using his
personal wealth to funnel money.
Speaker 1 (23:05):
And essentially cheat. All right, right, like this is this
is this would be like a cheating thing.
Speaker 9 (23:09):
In some ways.
Speaker 7 (23:10):
Yes, I mean that salary cap issue is very fundamental
to all the leagues because if you are able to
pay someone outside of the salary cap, then then what
could happen is that an owner could persuade a player, hey,
don't go play here, because on top of the money
that I'm already going to be paying you through the
salary cap system, I'll get you a deal on the side.
And so why this is against the rules is that
(23:32):
what happens is a sponsor can go to an owner
and say, hey, I want to do a deal with
let's just say Smow Joe from California, and the owner
is then supposed to be like, Okay, that's fine, I'll
connect you to and the owner's supposed to move out
of the way. In this case, that's not what's happening.
There's three parties involved. Allegedly it's Bamber, it's Aspiration, and
(23:54):
Kawhi Leonard, all working together to make sure that Kawhi
Leonard gets paid. And that's against the rule. If Bomber
had said, hey, here is Aspiration, you two make a deal,
I think this will be perfectly fine. But that's not
what's being alleged.
Speaker 5 (24:05):
So essentially, this player was hired by this company Aspiration,
Like what what is this company supposed to do?
Speaker 1 (24:13):
Saying like, what was he paid twenty eight million dollars to? Yeah, yeah,
what exactly was he?
Speaker 4 (24:17):
What does the company do and what's he supposed to
be endorsing.
Speaker 7 (24:19):
So I'll read straight from ESPN because I think they
summarize it the best. Okay, this is think of Aspiration
as a digital bank, but environmentally conscious. The company's product
includes savings accounts and debit cards with cash back from
a select number of businesses who were quote doing the
right thing, plus an option to plant a tree with
every purchase roundup. The company also offered access to investment
(24:42):
funds that are one hundred percent fossil fuel free, so they.
Speaker 2 (24:46):
Were essentially as iron or stand it, getting paid to
plant trees for businesses that wanted to like see like
an online bank do good or something sounds good? Right?
Oh yeah, and this is where I should say Balmer
has denied wrong doing. Of course, Kawhi has said nothing,
but I don't think anyone that's kind of his thing,
right saying nothing. But I don't even know if anyone's
(25:07):
accused him of wrongdoing in this case because he just
signed a sweetheart deal. Also, Andre Cherney, who is the
other co founder of Aspiration, has essentially disputed the story
as well, saying this contract, which has been characterized as
a no show job was not, in fact, a no
show job, just getting all that stuff out of the way.
Speaker 1 (25:28):
Go ahead, Stacy.
Speaker 5 (25:29):
So I guess my question is why is this such
a big deal.
Speaker 4 (25:34):
First of all, why are their salary caps in place?
Speaker 5 (25:36):
And why is it a like, why is it a
big deal that they're going over the salary Sure.
Speaker 9 (25:41):
Salary caps are fairness.
Speaker 7 (25:42):
I mean, if you look at baseball in particular, there
are baseball teams that just can afford to Baseball does
not have a salary cap, to MLB does not, and
so moneyball right, Yes, I mean that's a good example.
But if you look at the Yankees, if you look
at the Dodgers, there are two of the highest spending
teams in the MLB. Now do they always win, No,
but they give they win a lot, and it is
(26:03):
in some ways some people say it is an advantage
in the NFL and the NBA not so much. There
is a salary cap, so everybody has the exact same
money to spend. Now you'll have owners who some fans
would argue are not in the business of winning because
the leagues are naturally profitable. But at the same time,
as it pertains to the salary cap, yes, the players
(26:24):
are being paid.
Speaker 9 (26:24):
A lot more.
Speaker 7 (26:25):
But for the owners who really want to win, who
this is their pride and joy. If you find out
that someone is manipulating the system and you were in
the running to sign Kawhi Leonard, and Kawhi Leonard went
to the Clippers because of the fact that he was
offered an extra twenty eight million dollars to not show up,
that's a problem.
Speaker 4 (26:42):
And it's like a dummy job exactly.
Speaker 7 (26:44):
And another thing about this is it is a no
show job I have never seen. And as Pabulatory reported,
there are no tweets about from Kawhi Leonard about aspiration.
Speaker 4 (26:53):
There was job supposed to be he was in.
Speaker 9 (26:56):
This company, right, it was an endorsement.
Speaker 2 (26:58):
Basically, there are all these things that Kawhi could or
could not do, depending on how he felt about it.
So it's like some autographs he could tweet, but there
are no there were no mechanisms in the contract essentially
forcing him to do it, whereas in I think in
most endorsement contracts.
Speaker 1 (27:14):
You're required you've got to do something.
Speaker 7 (27:16):
So an example of this, like a big endorsement deal,
would be Nike with Lebron James. He's everywhere that they
ask him to be a smaller one is like nil
deals in college name image and likeness deals in college
was often are just like post on Instagram a couple
of times and then we'll pay you out and that's that.
Speaker 9 (27:31):
But Kawhi is not on social media.
Speaker 7 (27:33):
I mean even in his new balanced advertisements, he's he
doesn't say a lot, and even in press conference like
no one has heard from him because outside of his
media obligations, he does not speak. To be clear, athletes
are allowed to do endorsement deals. It's just that your
owner cannot be paying them outright.
Speaker 1 (27:51):
To you without counting it against the right.
Speaker 7 (27:53):
Without counting it against against the cap. And there are
there have been plenty of deals with teams, players and
owners where again an owner will introduce someone to a
sponsor and they go and do a deal, and then
there's a billboard outside of a stadium with said sponsor
and an athlete. There's no NBA rules to prohibit that.
It's just in what Pabablatory reports is like, Balmer has
(28:14):
invested in this company, some of his co owners have
also invested in this company, and so the NBA has
to do some due diligence and they're taking us very seriously.
Speaker 5 (28:21):
I mean, do are CAP's a good idea or is
it a better idea to just not have them, to
not try to end up with like a baseball model.
Speaker 7 (28:28):
I think cap systems are great because they stabilize things,
like everyone can a team can spend a certain amount
of money, and that's what it should be in my opinion.
Speaker 9 (28:39):
I think that when you have different.
Speaker 7 (28:41):
Markets like New York, like Los Angeles, like let's say Houston,
some of the bigger markets who have big billionaires who
are ready to spend on this because this is their business,
then that can create some sort of inequality. Now, at
the same time, the players still have to get out
on the field and perform all the same, but I
think that it it creates more more stability when you
(29:02):
have a cap system where this player is making this
and this player is making that.
Speaker 1 (29:07):
It's funny.
Speaker 2 (29:07):
Stacy's reaction to this, I think we were talking earlier,
is like these are such big numbers, you know, and like, wow,
like seven million dollars for a no show job or
an alleged no so job, Like that seems crazy.
Speaker 1 (29:19):
The whole thing seems crazy.
Speaker 2 (29:20):
My reaction was actually like it like I guess Kawhi
Leonard is underpaid and like and and like didn't this
to me feels like a evidence that the players negotiated
a bad deal with the owners, Like that the salary
cap should be a lot higher if there's just like
twenty eight million dollars slashing around and you're probably lots
(29:40):
more like like the players should just get just get
paid more money, because clearly they're worth more money.
Speaker 9 (29:47):
I hear you.
Speaker 7 (29:48):
But I think in what various outlets ESPN the Athletic
have reported over the years is that Kawhi Leonard was
searching for money outside of the cap system even before this,
when his free agency happened after he won the title
in Toronto, there was there was reports that he was
asking for private jet, a private jet access, and he
was asking for deals outside of the salary.
Speaker 1 (30:09):
I'm saying he's worth it. I don't know.
Speaker 7 (30:11):
I would argue that he isn't because of the fact
that he's been injured a lot. He doesn't play a lot,
he's not the brand ambassador. And when you have someone
that you're spending I mean, look, that's putting a lot
and being kind here, I'm being kind, But when you
have someone that you're paying, let's say, three hundred million
dollars to. You do want them on the billboards. You
do want them to have some sort of a personality
(30:33):
that isn't just a claw or or they're not just
going to be like showing up to the press conference
and say five words and then go home and you
don't hear from them. You want them to promote this brand.
Speaker 5 (30:43):
So, Wendle, if we back up from this particular amazing
case a little bit, does this say anything? Do you
think about the state of sports right now and pay
and pay caps And I don't know what is your
takeaway from this.
Speaker 7 (30:57):
I don't think there's anything that huge that takeaway. The
only thing is that there's always going to be money
under the table always, whether it be at the high
school level, the college level, and at the pro sports level,
that there are people who are willing finds a way
exactly exactly. There's always going to be people who are
willing to pay you more should you not show up
for a job and you know, play thirty percent of
(31:20):
the games that you're required to.
Speaker 9 (31:21):
That's my biggest takeaway.
Speaker 7 (31:22):
If there was a player that was worth there are
players who might be worth a no show job. I
just don't think Kawhi Leonard is the guy.
Speaker 4 (31:30):
So that's why I made I want to not do anything.
Speaker 5 (31:33):
You think the person should be more qualified, exactly exactly.
Speaker 7 (31:36):
I don't look Kawhi Leonard's tenure at the Clippers hasn't
been great, but all seriousness, I think there's always going
to be money under the table, and this, allegedly is
is another example of that.
Speaker 5 (31:52):
We are too the part of the show where we
talk about underrated stories. Randall, thank you for sticking around
because you don't know what the I also do not
know what it is. Apparently Max brought us something. I
am also a little nervous. I don't know what is happening.
Speaker 2 (32:07):
This is a story that gets at the future of technology,
the future of branding, and also the future of cocaine.
Speaker 1 (32:15):
Shoes of cocaine.
Speaker 2 (32:18):
All right, So there were some news reports earlier this
week about a plane crash in eastern Brazil. These are
news reports that are coming to us by way of
the UK's Independent, by way of El Globo, the Brazilian newspaper,
and essentially, a plane, a small aircraft crashed in Brazil,
killing the pilot and authorities recovered two hundred kilos of cocaine,
(32:43):
and the cocaine had branding for SpaceX, Elon Musk's rocket company.
Speaker 4 (32:49):
Wow.
Speaker 2 (32:50):
Now, okay, I want to say, first of all, it's
not what you think. This does not prove that Elon
Musk has, you know, put aside rockets and cars and
brand implants and all.
Speaker 4 (33:00):
Relation is not to answer.
Speaker 2 (33:03):
The under the drug business, although as we know he's
not like totally averse to recreational drugs.
Speaker 1 (33:09):
I don't think.
Speaker 4 (33:12):
Yes.
Speaker 2 (33:12):
But what I will say is what's interesting here is
and this came out of a report I read advice.
You know, ilicit drug sellers have basically branded drugs with
tech companies for a really long time, Like.
Speaker 4 (33:25):
Is that true, like used to cocaine there, or like Skype?
Speaker 1 (33:29):
The article ia that Skype had been used like like
maybe ten years ago. I guess, back when Skype was cooler.
Speaker 2 (33:35):
I think it's actually kind of a way to see
how cool your tech company is.
Speaker 9 (33:39):
It's like if you have a under the table cocaine deal.
Speaker 2 (33:42):
If like drug dealers are like this thing is so cool,
I'm gonna stick it on.
Speaker 4 (33:46):
That it makes cocaine even cooler than it already is.
Speaker 1 (33:50):
That's what I'm saying.
Speaker 4 (33:51):
Yeah, I thought cocaine kind of sold itself.
Speaker 1 (33:54):
It's an achievement.
Speaker 5 (33:54):
Are you going to branding like, oh, I don't I
only I only snore SPAACEX cocaine.
Speaker 4 (34:01):
I would never do.
Speaker 7 (34:04):
I don't even feel comfortable if, first of all, never
done cocaine ever. Mean what if I were, I would
not be doing Elon Musk branded cocaine.
Speaker 2 (34:11):
Now, Randall, is that because you have questions about Elon
Musk's capacity to like achieve things? Or is it because
you have questions about the kind of person who would
stamp a SpaceX?
Speaker 1 (34:21):
Oh?
Speaker 9 (34:21):
God both.
Speaker 7 (34:23):
I think that any person who has the time to
brand something like this, I look, that's.
Speaker 1 (34:28):
Just not me looks as Elon ink listeners.
Speaker 2 (34:31):
If you've come over to the Everybody's business feed by now,
well know I am deep in the lore. And I
will say, looking at the pictures of the cocaine that
was stamped with the SpaceX branding, they didn't do.
Speaker 1 (34:42):
Like a very good job.
Speaker 2 (34:43):
The colors aren't quite right, like it's kind of like
a light blue.
Speaker 1 (34:46):
It just it just looks a little grainy. Look.
Speaker 2 (34:48):
It really looks like someone took an inkjet printer that
was like a little low on this is like.
Speaker 4 (34:52):
A discerning client.
Speaker 2 (34:53):
Is it cyan or whatever the blue color was, and
like the toner just it doesn't quite look right.
Speaker 7 (35:02):
I just don't I think anyone who would be buying
SpaceX cocaine.
Speaker 9 (35:06):
Should just go to rehab. That's just what I think.
Speaker 7 (35:10):
I don't think that branding something like this. It's not
appealing to me. If I was doing to be doing
it elon musk.
Speaker 2 (35:18):
No, it's also funny to me because like I don't
even know the reason you do this, Like is it
because if the authorities like poking the plane, You're like, no, no, no,
we got SpaceX stuff.
Speaker 1 (35:28):
In the plane. Like it's just like bricks of cocaine.
Speaker 4 (35:30):
Got to be people trying to get a marketing edge.
That's got to be what it is.
Speaker 5 (35:33):
People feel like they're their cocaine will stand out in
the marketplace of cocaine.
Speaker 7 (35:38):
I get with SpaceX branding, but I just can't see
someone being like, nah, man, I don't want the raw stuff.
Speaker 9 (35:45):
I need the SpaceX.
Speaker 7 (35:47):
Merrik exactly like this, this is this isn't what I'm
looking for.
Speaker 9 (35:50):
This is great value versus.
Speaker 4 (35:52):
A brand markup right, I don't.
Speaker 1 (35:55):
I just think this is significant because we've been talking.
Speaker 2 (35:58):
I've been talking and writing stories about the way that
Elon Musk has harmed his brand, his personal brand, as
well as the brands of his companies. You know, Tesla
sales are in the toilet, but in the marketplace, obviously,
some people still think that that brand is very strong.
Speaker 9 (36:12):
He's winning somewhere.
Speaker 5 (36:19):
This show is produced by Stacy Wong. Magnus Hendrickson is
our supervising producer, and Amy Kean is our executive Producerlake
Maples is our engineer, and Dave Purcell factchecks. Sage Bauman
heads Bloomberg Podcasts Special thanks to Jeff Muscus, Julia Rubin
and Maria Ling.
Speaker 4 (36:34):
If you have a minute, please rate and review the show.
It means a lot to us.
Speaker 5 (36:37):
And if you have a story that should be our business,
email us at Everybody's at Bloomberg dot net. That is
Everybody's with an s at Bloomberg dot net. Thank you
for listening and see you next week.
Hey, Elon Inc. Listeners.
Speaker 2 (00:01):
Max Chafkin here, I know you and I and everybody
else are still sort of recovering from that monster episode
that we published on Tuesday. I wanted to just record
a little introduction to the latest episode of Everybody's Business,
which we just taped and which is really interesting. It
is about salary cap and sports. Really awesome conversation there,
(00:23):
as well as a conversation with Rohit Chopra about the
future of the FED, and there is a little Elon
related Easter egg. It is a unique branding story involving SpaceX.
I'll just leave it there, but it's a pretty funny segment.
I think you'll like it, and we, of course will
be back talking about Elon Musk on the Everybody's Business
(00:44):
Podcast with Dana and Kurt and all the people that
you've been hearing on Elon Inc.
Speaker 1 (00:50):
Very soon. Hope you enjoyed the episode and talk to
you later.
Speaker 3 (00:57):
Bloomberg Audio Studios Podcast Radio News.
Speaker 1 (01:06):
This is Everybody's Business from Bloomberg BusinessWeek.
Speaker 4 (01:08):
I'm Max Shafton and I'm Stacy Vannick Smith and.
Speaker 2 (01:11):
Stacy we have a big conversation coming up about your
favorite topic, the Federal Reserve. Our guest is Rohitschopra. He
was a big deal guy in the Biden administration and
he has provocative things to say about Jerome Powell.
Speaker 5 (01:24):
We're also talking about salary caps in professional sports leagues.
Teams and players have been finding some pretty interesting ways
around those limitations.
Speaker 2 (01:32):
And our underrated story, Stacy, I have a idea, a
brand idea for Elon Musk.
Speaker 1 (01:38):
Warning may not be leaked.
Speaker 4 (01:41):
I will keep that in mind.
Speaker 1 (01:45):
Okay.
Speaker 5 (01:45):
Obviously, the big economic news this week was the Federal Reserve,
but we also got some pretty big business news last night.
Speaker 4 (01:54):
We're recording Thursday morning.
Speaker 2 (01:55):
We should say, yeah, another late night host is down,
Stacy amid some political pressure from the Trump administration. Disney
essentially pulled Jimmy Kimmel, who is the ABC late night host,
a competitor to Stephen Colbert, off the air, amid political
pressure from the Trump administration. For me, this story really
(02:16):
has echoes of the one that we talked about with
Felix Gillette a couple weeks ago with Stephen Colbert, where
you have a combination of factors. One is the threat
of regulation of not approving mergers, and the other is
like this format the late night format is basically failing,
and all of these late night shows are not doing well.
So Trump is giving these networks essentially an excuse to
(02:39):
kill a product that is not working super well.
Speaker 5 (02:41):
I would argue the bigger story in a certain way,
could be a potential threat to free speech and news
organizations feeling like if one of their hosts or commentators
says something or does something that the administration disagrees with,
they might end up facing the very real wrath of
like governmental regularly.
Speaker 1 (03:00):
Yeah, one hundred percent.
Speaker 2 (03:01):
And we have another story related to political pressure that
just so happens to me going.
Speaker 1 (03:06):
On right now.
Speaker 5 (03:06):
We have another story related to political pressure, which is
the Federal Reserve. For the first time this year, the
Federal Reserve cut interest rates, which we were all kind
of expecting.
Speaker 2 (03:15):
But there was a cut it by three hundred percent,
right as Donald Trump want.
Speaker 5 (03:18):
Yeah, a quarter of a percentagey, which was like what
was expected but by economists.
Speaker 4 (03:24):
Yes, well, there there was a lot of drama around this.
Speaker 5 (03:26):
We will get into kind of what was going on
behind the scenes with Row hitch Chopra in just a minute.
But the Fetchair did say something that I thought was
kind of interesting for the rest of us, us in
the economy, which is he he started to talk about stagflation,
how prices are going up, how the economy is slowing down,
and this is a really dangerous combination. And so I
(03:48):
thought I would like ask people how they were feeling
about the economy right now. How do you feel about
the economy right now?
Speaker 6 (03:55):
I'm not good. All the prices are going up, and
not especially food shopping. Before you could just put everything
in your cart, and now you have to start cutting
back on things.
Speaker 1 (04:05):
It's a real have and have not economy. And you know,
you look around, people are making a lot of money,
and some professions and the champagne's flowing and in others,
you know, things are definitely a lot tighter.
Speaker 5 (04:17):
I kim here because this is the only not.
Speaker 1 (04:19):
Going to fall right now.
Speaker 5 (04:21):
The pizza the dogphis to slice. Yeah.
Speaker 7 (04:23):
Yeah, when I got the job, I think I'm going
to go back to like chicken and eggs.
Speaker 5 (04:28):
Eggs are like a luxury a little bit exactly. Is
there something that like, if you had more money or
felt better about the economy, something.
Speaker 1 (04:35):
That you would buy.
Speaker 4 (04:36):
It's a new car. What's your car like now?
Speaker 6 (04:39):
It's a terrible Nissan that keeps having one hundred problems
because it's almost at ninety thousand.
Speaker 2 (04:44):
Miles, Prices going up, economic opportunities stagnating. There's a word
for that stacy that is that's Stagflation's stagulation.
Speaker 4 (04:53):
It's the worst of all the plations, I think. And
it's like kind of a.
Speaker 5 (04:58):
Trap for the Federal Reserve because if they cut interest rates,
it does help grow the economy, but it can also
make inflation worse, so it puts everybody in tough position.
Speaker 2 (05:08):
Yeah, and it's not clear to me what the fix
is at this point. I mean, we are we've got
economic challenges that I don't know, you know, whatever you
feel about Jerome Powell or whoever's running the Fed, Like,
I don't know how fixable it is at this point.
Speaker 5 (05:22):
Well, I agree, and like prices are going up and
with tariffs are going to go up more, at least
a little bit more. It could be a one time thing,
but it is a really tough position, Like it's not
obvious what they should do. But the Federal Reserve yesterday
said jobs right now are the most important, and I
think most of us would probably agree. Although if inflation
gets out of control.
Speaker 4 (05:42):
That could be really bad.
Speaker 5 (05:50):
So Max, we talked earlier in the show about the
big economic news of the week, which is the Federal
Reserve and interest rate cuts, and somehow everyone in the
country like knows about out the Federal Reserve and interest rates.
Speaker 4 (06:01):
Now it has become huge news.
Speaker 2 (06:04):
Yeah, And we've also been talking about this question of
like FED independence and the sense that Trump and members
of his administration are doing things to kind of attack
the FED or to push them in various directions. And
I was excited about the conversation we're going to have
because we've been sort of talking about the FED. And
I know this is kind of partly how you feel,
(06:26):
but some of it has to do with conventional was whatever,
like that there is this beautiful jewel of public policy
that is the US Federal Reserve.
Speaker 1 (06:33):
I am a.
Speaker 5 (06:34):
Huge fan of the central Bank and like the structure
of it and the system.
Speaker 2 (06:38):
And I appreciate that, but I also thought it'd be
fun to have a guest who would kind of challenge
that a little bit.
Speaker 4 (06:45):
Fair enough, Yes, I mean, I think it's good to
challenge these things. That's what they're there for, all right.
Speaker 2 (06:50):
So we have Rohit Chopra, who was the director of
the Consumer Financial Production Bureau under Joe Biden. He served
on the FTC under Trump, helped actually set up the
CFPB as its assistant director. Basically, he is a heavyweight
on the kind of like progressive left, and he has
kind of an interesting perspective on these issues, and I
(07:12):
thought it'd be fun to kind of hash it out here.
Speaker 1 (07:14):
Roha, thanks for being here, Thanks.
Speaker 8 (07:15):
So much for having me.
Speaker 5 (07:17):
So we got the rate cut, that was the big
headline quarter of a percentage point rate cut, but there
was a lot of stuff going on behind the scenes
that was also making news. Do you mind just kind
of laying out some of the things happening in the
FED right now, which has always loomed very large in
my world, but is somehow also looming large in the
regular world now.
Speaker 4 (07:37):
Very strange, Yes, Stacy.
Speaker 3 (07:39):
There had these sets of meetings to determine what to
do with those interest rates, and it had to have
been a really awkward meeting because one of the governors
who was going to vote there sitting deliberating and voting,
was actually the target of an attempted firing by President Trump.
That's Lisa Cook, who is battling in court. She has
(08:01):
won many rounds of that court room battle and cast
to vote. Another person sitting in that room is newly
confirmed Governor Stephen Myron, who is currently the chair of
the Council of Economic Advisors and is in some ways
dual hatting taking both jobs, which is unusual.
Speaker 1 (08:24):
Now anyway, just in general in the work for economy.
Speaker 4 (08:28):
It's for everybody now.
Speaker 3 (08:30):
Yeah, And this comes after, of course, months and months
of the President targeting J. Powell, essentially trolling him online
and infamously showing up in hard hats to do a
site inspection of a construction project. So right now there
is a lot of debate about what's the right role
for the President and Congress in the Federal Reserve, and
(08:54):
a lot of people are fiercely defending the status quot
But I think the story is sometimes triggier than that.
Speaker 5 (09:01):
Well, also we should say that Stephen Myron, who was
in his new role this is his first time voting
on interest rates, was the loan dissenter and very much
in line with what the President has said he wanted.
Myron said he wanted like a bigger cut, bigger cutt Yes,
bigger cut.
Speaker 1 (09:19):
So Rohit.
Speaker 2 (09:21):
You have thoughts about the FED, and and we've talked,
you know, off off this podcast about this a little bit.
But I'd love for you to just explain when you
say like they're sort of assuming everything's great or whatever,
like what you mean or like at a high level,
like what is wrong with the FED today?
Speaker 8 (09:38):
Yeah, Well, I would put it this way.
Speaker 3 (09:40):
There's lots of reasons why in a democratic society we
create some anti democratic features in certain parts of our government.
For example, we make sure the judges are confirmed for life,
the idea being this should stand for election all the time.
Speaker 8 (09:58):
Be subjected to the political process.
Speaker 3 (10:01):
And we also cordon off some of our regulators to
make sure that they're not put in the middle of
a total political slugfest. That's some of the agencies I've
served at, the CFPB, the FTC, others. And then you
really have the Federal Reserve System, which has in many
(10:22):
ways an enormous amount of power. We talk about it
as a central bank, but another way to put it,
it's a price control agency. It sets the price and
supply of money that has so much effect throughout the
entire economy.
Speaker 8 (10:39):
And one of the things that is important to me
is that even.
Speaker 3 (10:44):
If an agency is independent, it can't be unaccountable. And
I think there is questions about whether the FED has
always been accountable to the public or if it's often
serving the interests of a narrow set of financial stakeholders
and really prime Among those examples is the Fed's lack
(11:08):
of preparation when it came to an epidemic of subprime
mortgage lending, for which the Federal Reserve had an enormous
amount of authority to crack down on, chose not to,
and the results were really catastrophic.
Speaker 5 (11:25):
So what would your vision be for a FED going forward?
If it's not a politicized FED, but it's not the
FED it is? Now Like, what if you were designing.
Speaker 4 (11:35):
It and the CFPB is part of the funded?
Speaker 5 (11:39):
Is it technically part of the bed? Or Okay, yeah,
so you've been in the I don't want.
Speaker 4 (11:43):
To say the belly of the beast, but I'll just
say it, belly of the beast.
Speaker 8 (11:46):
How would I want it?
Speaker 3 (11:47):
I actually do think it's really important for us to
think what is the role of these Federal Reserve banks.
Remember it's not just a Federal Reserve Board appointed by
the President.
Speaker 8 (12:00):
There are also federal reserve banks. We're sitting some of
them all over the est. We're sitting uptown.
Speaker 3 (12:06):
From an extremely powerful one at the Federal Reserve Board
of New York. I think we also have to make
sure that do we have the right structure in terms
of allocating what powers the FED should use as to
what powers should be located elsewhere. I think there are
some legitimate criticisms about the Fed's expansive view of its
(12:31):
interpretation of law, including its interventions in money markets and
other actions that have moved the flow of credit away
from local banks toward the global money markets that has
a real impact on our economy.
Speaker 2 (12:48):
I mean, one thing that I find really interesting is
on some level, Stephen Meran, the new governor, is like
a total He's like a trunk guy, right, He's a
white house economic He seems like a loyalist. On the
other hand, he in addition to being those things, he
has advocated for some of the very things that you're
(13:09):
talking about right now. And like reading there was an
Elizabeth Warren op ed that you pointed me to back
in August essentially bring up some of these issues that
you're talking about right now. And there was an op
ed by Scott Besson in the Journal just a couple
of weeks later that has kind of a very similar,
very different words Like Bessen is using kind of conservative buzzwords.
Speaker 1 (13:31):
He accuses the FED of like gain of function.
Speaker 2 (13:34):
Monetary policy, little little COVID hat tip there, but kind
of ultimately pointing in the same direction.
Speaker 1 (13:41):
Right, Yeah.
Speaker 3 (13:42):
I think what you're seeing is not a political debate
about it, but what's the right place for this institution.
When the financial crisis occurred, there was a lot of
discussion about whether core consumer regulation should ever be at
the FED. Every FED governor I have spoken to you
(14:06):
likes to say I'm glad the Fed's powers were stripped
and a CFPB was created because that was last on
our list of attention.
Speaker 5 (14:15):
Well, yeah, you've got inflation, you've got unemployment numbers like those.
Speaker 3 (14:19):
Are two big I mean the dual manda totally, it's
a big deal. And I think that there's there we
got to ask ourselves what do we want them doing.
I think what we want them doing is stewarding the
money supply in ways that creates stability, that still create
the conditions for growth. And I would also argue trying
(14:41):
to ensure that the United States has a currency that
a payment system that is working. But there's a lot
of things that they do, including on the regulatory front,
where there's long been concern that they are captured by
big Wall Street interest rather than representing the borrowers and
(15:03):
the business owners that are really affected by their decisions.
Speaker 2 (15:07):
It feels like what you're saying partly is like, hey,
there's there's a lot at play right now. It's kind
of an opportunity to think about where where should the
FED go?
Speaker 8 (15:15):
Like what what what what should the.
Speaker 4 (15:16):
FED look like?
Speaker 2 (15:17):
And part of me wonders if like we're just sort
of playing fantasy politics here, because like the CFPB is
gone basic. I mean CFPP is still technically.
Speaker 1 (15:25):
Exists there, but it's not doing anything.
Speaker 2 (15:28):
And and Trump, you know, maybe like there are there
are a bunch of these like populist ideas that are
are floating around the Trump administration, but he's actually doing
is like goosing the stock market. And it's like this
conversation we're having feels very far away from what's actually happening.
And I was wondering, like, do you see opportunities for
for change that that could actually happen in this direction
(15:48):
during you know, the next whatever three years.
Speaker 8 (15:51):
So Max I would I would push.
Speaker 3 (15:53):
Back a little on that, which is that, of course
it's idiotic to to defund and defang the CFPB. That's
just stupid, and I agree with that. But the truth
is is that the FED has changed dramatically over the
years without any legal change. It happens because of those
(16:15):
governors and chairs who sit in those seats.
Speaker 8 (16:18):
The concept of federal reserve independence actually is relatively new.
Speaker 3 (16:24):
It's from the last generation where there was acceptance around
the world that some insulation from politics was beneficial to
achieving stable prices. But you'll start seeing with people who
are now sitting in those seats, many of them who
want to salute the president rather than really focus on
(16:46):
their mandate. That's going to change this FED. There are
going to also be people who really are thinking differently
about what those tools are, and I think we have
to pay attention to that. There's a ready rumblings what's
going to be the Fed's role in stable coin and crypto?
(17:07):
Would the FED potentially not just target one interest rate
but intervene in the market with their balance sheet in
other ways. I don't think you need a law change
on some of that's fort to witness that change occurring.
And frankly, a great example is that Donald Trump has
not changed a lot of laws in this country, but
(17:28):
he has changed a lot of agencies pretty dramatically. And
we need to really think and debate what is it
that we want our FED to be doing, because again,
I just don't think independence should ever mean unaccountable.
Speaker 4 (17:44):
I mean, obviously things are changing a lot right now.
Speaker 5 (17:47):
If you kind of project forward, looking at some of
the changes that are possibly going to happen, and some
of the changes that have already happened, like what does
the Federal Reserve look like in five years?
Speaker 3 (17:59):
I think there should be quite less power when it
comes to bailouts and backdoor bailouts. Especially Congress did was
very angry about the FEDS backdoor bailouts and frankly, front
door bailouts during the financial crisis curtailed that.
Speaker 8 (18:18):
I do think it is important.
Speaker 3 (18:21):
To really limit the power to backstop and pick and
choose winners and losers in the financial sector. I think
we have to do things that give them less ability
to subsidize certain types of activities. Borrowing by hedge funds,
borrowing by some other financial institutions and get them focused
(18:43):
on their core mandate, especially when it comes to making
sure that they are a lender of last resort for
local banks, running a stable monetary policy, and not being
seen by presidents as a cure all to nacked their
agendas with no consent from the governed.
Speaker 1 (19:04):
Have you converted?
Speaker 8 (19:06):
I mean, I.
Speaker 4 (19:07):
Still am I this is quite a look.
Speaker 1 (19:10):
I'm I'm sorry.
Speaker 4 (19:11):
I mean, I don't. I'm not sure. I like, totally,
I'm not sure.
Speaker 3 (19:16):
I really think a good central bank is like really
good for democracy and really good for people. But I
think it has to also change with the time so
that it is responsive and that it is not seen
as a group of priests and priestesses who make determinations
about our lives without really understanding how the economy is
(19:38):
working on the ground.
Speaker 5 (19:39):
There is something of an ecclesiastical vibe around the FED,
that is true.
Speaker 3 (19:44):
Yeah, I worry about this, Actually, I worry about that
many of them spend their time traveling around the world
to economics conferences. In reality, Stacy, back in the day,
there was actually a FED governor who was a hog farmer.
They really represented a broader swaff of America, and I
don't think that's a bad thing.
Speaker 1 (20:04):
See.
Speaker 2 (20:04):
I think if they're going to be so above the fray,
they should wear cool outfits like the Catholic Church. They
should have rogues and ceremonies and just either really lean
into it or bring back the hot.
Speaker 5 (20:16):
It would make the press conferences a lot more exciting
to kind of.
Speaker 1 (20:20):
Like a purple gown that he had to wear like
whenever he.
Speaker 4 (20:23):
In said it just the tie he went full down.
Speaker 3 (20:26):
And by the way, you know, I'm not sure that
we should be happy that usually they take unanimous votes
and usually that everything is scripted.
Speaker 8 (20:37):
We should probably want a degree of.
Speaker 3 (20:39):
Debate when it comes to issues that are so important
to our economy.
Speaker 4 (20:44):
Yeah, that's true. There should be descent, especially to a
moment like now when.
Speaker 5 (20:47):
The path forward is really is unclear and it seems
like there are valid reasons to go in a bunch
of directions.
Speaker 1 (20:53):
Ro hitch Opra, thank you for being here. Thanks again, Stacey.
Speaker 2 (21:03):
I don't know if you've been following this, but there
is a huge story in the world of sports happening
right now, a sports business in particular involving one of
the biggest stars in basketball, Kawhi Leonard one of the
richest people in the world, Steve Bamber, the longtime executive
of Microsoft. I think he's the seventh richest person in
the world and a massive tech company that the Justice
(21:26):
Department described as a quote two hundred and forty eight
million dollar scheme to defraud investors and lenders. In brief,
the NBA is investigating whether Bamber, the owner of the
La Clippers, funnel payments through this weird tech company, which
is called Aspiration to Kawhi Leonard, and in so doing
circumvented the salary cap. I know it sounds like really complicated,
(21:47):
but like I'm telling you, this is everyone is.
Speaker 1 (21:49):
Talking about this, and so I thought we would have to.
Speaker 2 (21:51):
Talk about it, okay, okay, And to do that we
have Randall Williams here, Bloomberg, BusinessWeek, sports columnists, Everybody's business regular.
Speaker 1 (21:58):
Randall, how are you.
Speaker 9 (22:00):
I'm doing all right, doing all right? Thank you for
having me.
Speaker 2 (22:02):
So, Randald, what can you just give us the kind
of like quick the one oh one on what this
controversy is about?
Speaker 1 (22:09):
What is accusation here?
Speaker 9 (22:11):
Sure?
Speaker 2 (22:11):
And like why why is it like causing people to
sort of lose their minds?
Speaker 9 (22:16):
It's a big deal.
Speaker 7 (22:16):
Because sports leagues like the NFL and the NBA have
something called a salary cap. A salary cap is set
up so that players are paid a specific amount and
teams can only play players a specific amount. And so
what Balmber is accused of doing is going outside of
that through this company called Aspiration, and then paying Kawhi
Leonard even more than what he's already paid. And I'm
(22:39):
sure if we looked up Kawhi Leonard turnings, he's probably
made close to half a billion dollars and he's making
even more because of these accusations.
Speaker 2 (22:46):
And this we should say this was originally reported on
a podcast Pablo Torre Finds.
Speaker 9 (22:50):
Out Right, the Great Pablotori.
Speaker 2 (22:51):
Yeah, but the basic allegation is that Balmer, a rich
guy who like he has more money than he knows
what to he could do with, is like using his
personal wealth to funnel money.
Speaker 1 (23:05):
And essentially cheat. All right, right, like this is this
is this would be like a cheating thing.
Speaker 9 (23:09):
In some ways.
Speaker 7 (23:10):
Yes, I mean that salary cap issue is very fundamental
to all the leagues because if you are able to
pay someone outside of the salary cap, then then what
could happen is that an owner could persuade a player, hey,
don't go play here, because on top of the money
that I'm already going to be paying you through the
salary cap system, I'll get you a deal on the side.
And so why this is against the rules is that
(23:32):
what happens is a sponsor can go to an owner
and say, hey, I want to do a deal with
let's just say Smow Joe from California, and the owner
is then supposed to be like, Okay, that's fine, I'll
connect you to and the owner's supposed to move out
of the way. In this case, that's not what's happening.
There's three parties involved. Allegedly it's Bamber, it's Aspiration, and
(23:54):
Kawhi Leonard, all working together to make sure that Kawhi
Leonard gets paid. And that's against the rule. If Bomber
had said, hey, here is Aspiration, you two make a deal,
I think this will be perfectly fine. But that's not
what's being alleged.
Speaker 5 (24:05):
So essentially, this player was hired by this company Aspiration,
Like what what is this company supposed to do?
Speaker 1 (24:13):
Saying like, what was he paid twenty eight million dollars to? Yeah, yeah,
what exactly was he?
Speaker 4 (24:17):
What does the company do and what's he supposed to
be endorsing.
Speaker 7 (24:19):
So I'll read straight from ESPN because I think they
summarize it the best. Okay, this is think of Aspiration
as a digital bank, but environmentally conscious. The company's product
includes savings accounts and debit cards with cash back from
a select number of businesses who were quote doing the
right thing, plus an option to plant a tree with
every purchase roundup. The company also offered access to investment
(24:42):
funds that are one hundred percent fossil fuel free, so they.
Speaker 2 (24:46):
Were essentially as iron or stand it, getting paid to
plant trees for businesses that wanted to like see like
an online bank do good or something sounds good? Right?
Oh yeah, and this is where I should say Balmer
has denied wrong doing. Of course, Kawhi has said nothing,
but I don't think anyone that's kind of his thing,
right saying nothing. But I don't even know if anyone's
(25:07):
accused him of wrongdoing in this case because he just
signed a sweetheart deal. Also, Andre Cherney, who is the
other co founder of Aspiration, has essentially disputed the story
as well, saying this contract, which has been characterized as
a no show job was not, in fact, a no
show job, just getting all that stuff out of the way.
Speaker 1 (25:28):
Go ahead, Stacy.
Speaker 5 (25:29):
So I guess my question is why is this such
a big deal.
Speaker 4 (25:34):
First of all, why are their salary caps in place?
Speaker 5 (25:36):
And why is it a like, why is it a
big deal that they're going over the salary Sure.
Speaker 9 (25:41):
Salary caps are fairness.
Speaker 7 (25:42):
I mean, if you look at baseball in particular, there
are baseball teams that just can afford to Baseball does
not have a salary cap, to MLB does not, and
so moneyball right, Yes, I mean that's a good example.
But if you look at the Yankees, if you look
at the Dodgers, there are two of the highest spending
teams in the MLB. Now do they always win, No,
but they give they win a lot, and it is
(26:03):
in some ways some people say it is an advantage
in the NFL and the NBA not so much. There
is a salary cap, so everybody has the exact same
money to spend. Now you'll have owners who some fans
would argue are not in the business of winning because
the leagues are naturally profitable. But at the same time,
as it pertains to the salary cap, yes, the players
(26:24):
are being paid.
Speaker 9 (26:24):
A lot more.
Speaker 7 (26:25):
But for the owners who really want to win, who
this is their pride and joy. If you find out
that someone is manipulating the system and you were in
the running to sign Kawhi Leonard, and Kawhi Leonard went
to the Clippers because of the fact that he was
offered an extra twenty eight million dollars to not show up,
that's a problem.
Speaker 4 (26:42):
And it's like a dummy job exactly.
Speaker 7 (26:44):
And another thing about this is it is a no
show job I have never seen. And as Pabulatory reported,
there are no tweets about from Kawhi Leonard about aspiration.
Speaker 4 (26:53):
There was job supposed to be he was in.
Speaker 9 (26:56):
This company, right, it was an endorsement.
Speaker 2 (26:58):
Basically, there are all these things that Kawhi could or
could not do, depending on how he felt about it.
So it's like some autographs he could tweet, but there
are no there were no mechanisms in the contract essentially
forcing him to do it, whereas in I think in
most endorsement contracts.
Speaker 1 (27:14):
You're required you've got to do something.
Speaker 7 (27:16):
So an example of this, like a big endorsement deal,
would be Nike with Lebron James. He's everywhere that they
ask him to be a smaller one is like nil
deals in college name image and likeness deals in college
was often are just like post on Instagram a couple
of times and then we'll pay you out and that's that.
Speaker 9 (27:31):
But Kawhi is not on social media.
Speaker 7 (27:33):
I mean even in his new balanced advertisements, he's he
doesn't say a lot, and even in press conference like
no one has heard from him because outside of his
media obligations, he does not speak. To be clear, athletes
are allowed to do endorsement deals. It's just that your
owner cannot be paying them outright.
Speaker 1 (27:51):
To you without counting it against the right.
Speaker 7 (27:53):
Without counting it against against the cap. And there are
there have been plenty of deals with teams, players and
owners where again an owner will introduce someone to a
sponsor and they go and do a deal, and then
there's a billboard outside of a stadium with said sponsor
and an athlete. There's no NBA rules to prohibit that.
It's just in what Pabablatory reports is like, Balmer has
(28:14):
invested in this company, some of his co owners have
also invested in this company, and so the NBA has
to do some due diligence and they're taking us very seriously.
Speaker 5 (28:21):
I mean, do are CAP's a good idea or is
it a better idea to just not have them, to
not try to end up with like a baseball model.
Speaker 7 (28:28):
I think cap systems are great because they stabilize things,
like everyone can a team can spend a certain amount
of money, and that's what it should be in my opinion.
Speaker 9 (28:39):
I think that when you have different.
Speaker 7 (28:41):
Markets like New York, like Los Angeles, like let's say Houston,
some of the bigger markets who have big billionaires who
are ready to spend on this because this is their business,
then that can create some sort of inequality. Now, at
the same time, the players still have to get out
on the field and perform all the same, but I
think that it it creates more more stability when you
(29:02):
have a cap system where this player is making this
and this player is making that.
Speaker 1 (29:07):
It's funny.
Speaker 2 (29:07):
Stacy's reaction to this, I think we were talking earlier,
is like these are such big numbers, you know, and like, wow,
like seven million dollars for a no show job or
an alleged no so job, Like that seems crazy.
Speaker 1 (29:19):
The whole thing seems crazy.
Speaker 2 (29:20):
My reaction was actually like it like I guess Kawhi
Leonard is underpaid and like and and like didn't this
to me feels like a evidence that the players negotiated
a bad deal with the owners, Like that the salary
cap should be a lot higher if there's just like
twenty eight million dollars slashing around and you're probably lots
(29:40):
more like like the players should just get just get
paid more money, because clearly they're worth more money.
Speaker 9 (29:47):
I hear you.
Speaker 7 (29:48):
But I think in what various outlets ESPN the Athletic
have reported over the years is that Kawhi Leonard was
searching for money outside of the cap system even before this,
when his free agency happened after he won the title
in Toronto, there was there was reports that he was
asking for private jet, a private jet access, and he
was asking for deals outside of the salary.
Speaker 1 (30:09):
I'm saying he's worth it. I don't know.
Speaker 7 (30:11):
I would argue that he isn't because of the fact
that he's been injured a lot. He doesn't play a lot,
he's not the brand ambassador. And when you have someone
that you're spending I mean, look, that's putting a lot
and being kind here, I'm being kind, But when you
have someone that you're paying, let's say, three hundred million
dollars to. You do want them on the billboards. You
do want them to have some sort of a personality
(30:33):
that isn't just a claw or or they're not just
going to be like showing up to the press conference
and say five words and then go home and you
don't hear from them. You want them to promote this brand.
Speaker 5 (30:43):
So, Wendle, if we back up from this particular amazing
case a little bit, does this say anything? Do you
think about the state of sports right now and pay
and pay caps And I don't know what is your
takeaway from this.
Speaker 7 (30:57):
I don't think there's anything that huge that takeaway. The
only thing is that there's always going to be money
under the table always, whether it be at the high
school level, the college level, and at the pro sports level,
that there are people who are willing finds a way
exactly exactly. There's always going to be people who are
willing to pay you more should you not show up
for a job and you know, play thirty percent of
(31:20):
the games that you're required to.
Speaker 9 (31:21):
That's my biggest takeaway.
Speaker 7 (31:22):
If there was a player that was worth there are
players who might be worth a no show job. I
just don't think Kawhi Leonard is the guy.
Speaker 4 (31:30):
So that's why I made I want to not do anything.
Speaker 5 (31:33):
You think the person should be more qualified, exactly exactly.
Speaker 7 (31:36):
I don't look Kawhi Leonard's tenure at the Clippers hasn't
been great, but all seriousness, I think there's always going
to be money under the table, and this, allegedly is
is another example of that.
Speaker 5 (31:52):
We are too the part of the show where we
talk about underrated stories. Randall, thank you for sticking around
because you don't know what the I also do not
know what it is. Apparently Max brought us something. I
am also a little nervous. I don't know what is happening.
Speaker 2 (32:07):
This is a story that gets at the future of technology,
the future of branding, and also the future of cocaine.
Speaker 1 (32:15):
Shoes of cocaine.
Speaker 2 (32:18):
All right, So there were some news reports earlier this
week about a plane crash in eastern Brazil. These are
news reports that are coming to us by way of
the UK's Independent, by way of El Globo, the Brazilian newspaper,
and essentially, a plane, a small aircraft crashed in Brazil,
killing the pilot and authorities recovered two hundred kilos of cocaine,
(32:43):
and the cocaine had branding for SpaceX, Elon Musk's rocket company.
Speaker 4 (32:49):
Wow.
Speaker 2 (32:50):
Now, okay, I want to say, first of all, it's
not what you think. This does not prove that Elon
Musk has, you know, put aside rockets and cars and
brand implants and all.
Speaker 4 (33:00):
Relation is not to answer.
Speaker 2 (33:03):
The under the drug business, although as we know he's
not like totally averse to recreational drugs.
Speaker 1 (33:09):
I don't think.
Speaker 4 (33:12):
Yes.
Speaker 2 (33:12):
But what I will say is what's interesting here is
and this came out of a report I read advice.
You know, ilicit drug sellers have basically branded drugs with
tech companies for a really long time, Like.
Speaker 4 (33:25):
Is that true, like used to cocaine there, or like Skype?
Speaker 1 (33:29):
The article ia that Skype had been used like like
maybe ten years ago. I guess, back when Skype was cooler.
Speaker 2 (33:35):
I think it's actually kind of a way to see
how cool your tech company is.
Speaker 9 (33:39):
It's like if you have a under the table cocaine deal.
Speaker 2 (33:42):
If like drug dealers are like this thing is so cool,
I'm gonna stick it on.
Speaker 4 (33:46):
That it makes cocaine even cooler than it already is.
Speaker 1 (33:50):
That's what I'm saying.
Speaker 4 (33:51):
Yeah, I thought cocaine kind of sold itself.
Speaker 1 (33:54):
It's an achievement.
Speaker 5 (33:54):
Are you going to branding like, oh, I don't I
only I only snore SPAACEX cocaine.
Speaker 4 (34:01):
I would never do.
Speaker 7 (34:04):
I don't even feel comfortable if, first of all, never
done cocaine ever. Mean what if I were, I would
not be doing Elon Musk branded cocaine.
Speaker 2 (34:11):
Now, Randall, is that because you have questions about Elon
Musk's capacity to like achieve things? Or is it because
you have questions about the kind of person who would
stamp a SpaceX?
Speaker 1 (34:21):
Oh?
Speaker 9 (34:21):
God both.
Speaker 7 (34:23):
I think that any person who has the time to
brand something like this, I look, that's.
Speaker 1 (34:28):
Just not me looks as Elon ink listeners.
Speaker 2 (34:31):
If you've come over to the Everybody's business feed by now,
well know I am deep in the lore. And I
will say, looking at the pictures of the cocaine that
was stamped with the SpaceX branding, they didn't do.
Speaker 1 (34:42):
Like a very good job.
Speaker 2 (34:43):
The colors aren't quite right, like it's kind of like
a light blue.
Speaker 1 (34:46):
It just it just looks a little grainy. Look.
Speaker 2 (34:48):
It really looks like someone took an inkjet printer that
was like a little low on this is like.
Speaker 4 (34:52):
A discerning client.
Speaker 2 (34:53):
Is it cyan or whatever the blue color was, and
like the toner just it doesn't quite look right.
Speaker 7 (35:02):
I just don't I think anyone who would be buying
SpaceX cocaine.
Speaker 9 (35:06):
Should just go to rehab. That's just what I think.
Speaker 7 (35:10):
I don't think that branding something like this. It's not
appealing to me. If I was doing to be doing
it elon musk.
Speaker 2 (35:18):
No, it's also funny to me because like I don't
even know the reason you do this, Like is it
because if the authorities like poking the plane, You're like, no, no, no,
we got SpaceX stuff.
Speaker 1 (35:28):
In the plane. Like it's just like bricks of cocaine.
Speaker 4 (35:30):
Got to be people trying to get a marketing edge.
That's got to be what it is.
Speaker 5 (35:33):
People feel like they're their cocaine will stand out in
the marketplace of cocaine.
Speaker 7 (35:38):
I get with SpaceX branding, but I just can't see
someone being like, nah, man, I don't want the raw stuff.
Speaker 9 (35:45):
I need the SpaceX.
Speaker 7 (35:47):
Merrik exactly like this, this is this isn't what I'm
looking for.
Speaker 9 (35:50):
This is great value versus.
Speaker 4 (35:52):
A brand markup right, I don't.
Speaker 1 (35:55):
I just think this is significant because we've been talking.
Speaker 2 (35:58):
I've been talking and writing stories about the way that
Elon Musk has harmed his brand, his personal brand, as
well as the brands of his companies. You know, Tesla
sales are in the toilet, but in the marketplace, obviously,
some people still think that that brand is very strong.
Speaker 9 (36:12):
He's winning somewhere.
Speaker 5 (36:19):
This show is produced by Stacy Wong. Magnus Hendrickson is
our supervising producer, and Amy Kean is our executive Producerlake
Maples is our engineer, and Dave Purcell factchecks. Sage Bauman
heads Bloomberg Podcasts Special thanks to Jeff Muscus, Julia Rubin
and Maria Ling.
Speaker 4 (36:34):
If you have a minute, please rate and review the show.
It means a lot to us.
Speaker 5 (36:37):
And if you have a story that should be our business,
email us at Everybody's at Bloomberg dot net. That is
Everybody's with an s at Bloomberg dot net. Thank you
for listening and see you next week.
Host
David Papadopoulos
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