Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Effocarplay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
It was a bombshelf that happened in the last twenty four hours, and that is New York City Mayor Eric Adams indicted after federal corruption probe. Are there's video and pictures of officers rating Gracie Mansion, where the mayor lives. It's something. It is definitely a moment here in New York political history. So we wanted to talk to Scott Stringer, former New York City Comptroller, on.
All of this.
Scott, the latest that we've heard is that Mayor Adams is going to fight this. He definitely doesn't look like he's resigning. What is your take on that?
Look, he should and must fight it. This is his life and he has to have full focus on a very serious federal indictment. But that is what he has to do for himself. Unfortunately, you can't govern the city and fight the indictment. And that is why he should step aside for the good of the city. I presume no guilt or no innocence. That's for the courts to decide, But I do think we have to be laser focused
on the city. Look, the business community in particular has invested billions of dollars in the financial capital of the world called New York City. We have citizens, middle class people who are struggling to pay their rent, struggling to get their kids through school. The job of mayor is to be that person who works every single day laser focused. That cannot happen anymore in an administration where not only is the mayor indicted, but almost the entire leadership team
is under some indictment or federal investigation. So, with great respect to the man, recognizing innocent until proven guilty, it is time to step aside. We've got to govern this town in a way that's never been governed before, and I think he's got to just step back and Scott.
If he doesn't do that, how what's your view on the timeline of how these events can unfold? Because I just think back to last November when the FBI agents rated the home of an Adams campaign fundraiser that's really what kickstarted that, and that's ten months in the rearview mirror.
Well, look, at the end of the day, that's what investigations are for. I mean, the federal government has obviously taken time to look at all of this. They're announcing charges probably as we speak. And my concern as a citizen, as a public school parent, as somebody who's managed the finances of this city for eight years. You know, this is a tender moment for New York. We have to send a signal internationally that we are open and ready for business. We cannot play the you know, the political
game back and forth. We need strong leadership now. We need leadership and finance. We need leadership to actually get things done. Look, I love this city. This is a sad day for me, but I've seen corruption scandals over the years. I fought corruption my entire life, and it's a very sad moment at this point that we have to be going through this.
So there's a couple of things to unpack to that with me. So as a parent of a child in public school, I totally hear you on that. In terms of a business or CEO making an investment in New York City. I'm struggling to see how this really moves the needle in that a lot of us are now desensitized to these kind of indictments and scandals, rightly or wrongly. When you have a former president also accused and convicted of crimes, everyone here is like, yeah, okay, and then
let's move on. So is it really going to impact it in the way that maybe twenty years ago we would or should have.
Well, I'm not going to give up on the sensibilities of both the American public and certainly New York City residents. First of all, we New Yorkers, we get this stuff. We are savvy, We've seen it all. So I don't think this is going to sit well with the public. I don't think people are going to shrug their shoulders walking to work today saying it doesn't matter. I don't think Trump's getting re elected in part because he's had criminal conduct. I think people want stable leadership. I mean,
let's talk about the public schools. We have kids who are still struggling with COVID. I see, I see the difference between parents who have some resources and parents that don't. The whole public housing developments are collapsing. We're not building affordable housing fast enough. And look, the job mayor is to reach out and get to those entrepreneurs, the tech entrepreneurs, the communities that we reliant, jumpstart and pump up our economy. We want business leaders to say, you know what, we
want that old New York City Compact back. We will attract the best writers to our workforce. But the job of mayor is to provide open space, public space, safety in the streets, safety in the subways, a real mental health initiative to help with homelessness. But also we've got to make sure that rather than tout a robot called K five to do policing, we actually need a policing strategy that's fair but strong, and we have to make these challenges. This mayor cannot focus on it because rightfully,
he's got to focus on a major federal indictment. And I don't blame him for doing that at all.
All right, Scott, we appreciate it. Thank you very much for that insight. Satstringer, former New York City Comptroller.
Joining us there, you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play 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 and I want to get more with Doctor Basil Smigel, Professor of Practice at Columbia University School at Professional Studies. He's also former executive director of the New York State Democratic Party. He's been a political strategist and policy advisor for almost twenty years with local, international, and national experience. This is quite a bombshell here, doctor, What do you think this means? How does this unfold? Can Eric Adams keep a seat?
Well, you know, to the point that June just made. I mean, this wouldn't have happened had it not gone to the highest levels of the Department of Justice. So this is serious. It's serious as a lifelong in New Yorker. This is serious for me just as a voter and
you know, with care and concern for my city. But if he saw his press conference earlier, he had a lot of supporters with him, and I think that's really what his future hinges on, not just the charges themselves, but politically, you know, will his base stick with him? And we saw, you know, some prominent democratic leaders, particularly
African American leaders, standing behind him. So until we start to see more, if we ever see more prominent African Americans, particularly from some of the communities that he did did very well in in his election, if they sit down and saying that he needs to step down he's unable to fulfill his duties, then I think you'll see the
hastening of that decision. But for now, it sounds like he's doug its heels it in and to this point, I don't really see this sort of watershed moment that would get him to step down.
Doctor. What is the governor's role at Governor Hochel's role in all this? Can she essentially fire him? Would she? If it comes to that. I mean, you mentioned sort of the political delicacy of it all, given his support within the African community and elsewhere, and.
I think it does come down to that she does have a role there is that there is a scenario where the governor can can take him, take him out of his seat. There's another sort of opportunity for that to happen by a separate committee should that get formed. There's a long explanation about that, but the but yes, the governor can step in and take and take him
out of office at some point. But given the fact that you know, the governor has always had you know, has had a tricky election just a couple of years ago where it was a lot closer than people expected. She relies heavily on the same base that Eric Adams has in New York City, and I don't know that she would make a decision to to a very drastic decision like that without really checking with a lot of the a lot of the key leaders in those communities
across the city. Because if she would do that sort of unilaterally, I think the blowback would be it would be really significant and she would feel it when she's up for re election.
When you take a look at the indictment, what we heard from District Attorney Damien Williams, and then excuse me, yes you Attorney Damian Williams, when we also heard from New York City Mayor Eric Adams as well his defense, what stacks up for you? Like if you were with Eric Adams, like what would you be saying, like how does the defense work? Like We're going to keep fighting. I'm going to keep fighting I'm going to keep my day job. This isn't true. They're just kind of stalking
me like all all of that. Does that hold real water?
You know? This is I So the short answer for me is no, because you know him. You know, for him to say that this has been he's being targeted by the Justice Department, I would remind him that the president's own son, Hunter Biden, has been indicted. So I don't think he's I don't think that that holds a
lot of water. Number One one. He's also said that this is a retribution for his challenging of the Biden administration on his handling of migrants, and I would I would also say that I don't think that given everything that's happening in our national politics right now, I don't think that the Biden administration nor the Democrats nationally have the kind of time to specifically be targeting him in this way. They've just got a lot of other things to do. He's also said that you know this is
that that cut. The ways in which you've been targeted are similar to what David Dinkins, the first African American mayor of the City of New York, was similar to what he went through, and I actually that bothers me a bit too, because number one, David Dinkins is not indicted, and number two, you know, he also had an antagonist in Rudi Giuliani for the entire four years that he was mayor, and there was a tremendous racial undertone and
overtone to that tension, which is not present here. But I will say that it is it is true that for a lot of African American voters there is a significant amount of apprehension and concern around the ways that the community is being treated has been treated by the media and by law enforcement. That is that it is something that has been well documented over the years. But I'm also very mindful as an African American myself, I'm also mindful of how that is be how that is used,
and how that's leveraged in situations like this. So I would suggest that he stay away from those kinds of those defensive tactics in that narrative and kind of just focus on saying that he still can run the city, and he's still in charge, and this is the future and envision he has for the upcoming weeks. So I would stick to that.
Can a city as complex as New York City continue to operate with a mayor who's distracted by this, and with any of other department leaders in New York City who just aren't there.
Well, I mean, that's one of the key concerns because if you think about the biggest agencies, the most prominent agencies in New York Fire, Police, Department of Health, and Education, and you know, for full disclosure, the former school's chancellor. The school chancellor who said he's resigning the end of the year, I've known for twenty five years and he's wanted that job but pretty much his entire career, So
for him to take that step fairly significant. You know, the rating of the current Police Commissioner's House, who himself is acting because the previous one stepped down because of the investigation. All of these challenges to running the city will be on the minds of voters in the next couple of weeks. My guess, however, is that there's to go out and be so much focused on the presidential
that it'll be mitigated by that. But just after and unless, of course, if something happens tragically, and I hope that doesn't happen, there will be more attention on his leadership. But what he has to wonder right now and hope for is that a lot of voters are going to be focused on more on the presidential than on him. But once that happened, all eyes quickly turned back to him because the male primaries in June, it's really right
upon us and just very quickly. There is a succession plan, and I think everybody should understand that that the state and the state constitution, city charter have a succession plan built in. If you work stut Down, the New York City Public Advocate becomes the acting mayor.
All right, doctor, we really appreciate it. That was extraordinarily helpful, Doctor basilsmikel Professor of Practice and Columbia University School of Professional Studies, also former executive director of the New York State Democratic Party.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on FOCAR playing Android outo with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
So let's continue the story. Tom or Lake as Bloomberg Economics Chief Economists, and he joins us now now Tom had lived in Beision for a very long time. He was the chief China economics correspondent over the Wall Street Journal. He also headed Bloomberg economics coverage in China, Japan, and Korea, and now he joins US from DC. But he has a long history of looking at these kind of interventions from the government as well as monetary authority. I hate Tom, Is this the end?
So I think we need to break it down into two different problems. So the first problem is the cycle. And if we think about the cycle, well, growth was very weak, deflation was coming, markets were slumping, and this intervention by China's Central Bank and now the Pollit Bureau,
well it looks pretty decisive. The equity market has broad back higher, the Chinese yuan has strengthened, bond yields have ticked up, and expectations for growth out to the end of twenty twenty four and into twenty twenty five, well they're a little bit stronger. So on the cycle, this is certainly a positive moment, maybe a decisive moment. The second set of issues, though, is around structure, right, and that's where we have to worry about the massive overhang
of property supply. The shrinking workforce, the increasingly fractious relations with the United States. These are the factors which are going to be weighing on China's growth, not just in twenty twenty four, twenty twenty five, but out into the next decade. And on those well, nothing we've seen in the last few days really changes the picture.
Yeah, Tom, With that in mind, we're seeing a tremendous rally across assets, especially in China. Just looking at the Shanghai composite up more than nine percent in the last three days. Does this have sticking power? It feels like in the past we've seen these moments were stimulus is kind of drummed up in China, talks about injecting money into the economy, and then those moments are relatively fleeting.
So the last couple of years has seen what you might call a kind of steady drip drip of micro policy moves. The PBOC cuts interest rates by ten basis points or twenty basis points. The PBOC frees up a bit more funds for China's banks to lend. The Ministry of Finance puts a bit more money in the pockets
of local governments. What we've seen in the last few days is a kind of a package of more powerful measures rolled out at the same moment, and the Pollit Bureau, the twenty four men who kind of call the shots on China's economy, coming out with some pretty sort of firm statements about how they want to turn the cycle round. Hold the decline in property, give equities a boost. Right, So, if we think about markets, if we think about growth for the next few months, maybe even into early twenty
twenty five, this is a pretty important move. If we think about those bigger structural problems, if we think about the millions and millions of empty homes in China, we think about the shrinking working age population. No, nothing which has happened so far is going to move the dial on those big structural problems.
And here's the question we've all been waiting for, right when when is China going to cut checks to people? I mean, they already mentioned that they're going to do it for their low incomes, just to one off, but that's literally what needs to happen. No, So like, when are they going to do that?
So it's a great question, Alex so that I'm sure we're all familiar with the term pushing on a piece of string. Right, At some point, there's just too much debt in the economy. And when you cut interest rates, well, because debt is already so high, no one rushes to borrow more, no one rushes to invest more, right, And I think that's almost where China is, right. Debt's really high, so rate cuts they help a little bit, But there's certainly that pushing on a piece of string aspect to it.
So if you really want to accelerate China's growth, what do you have to do? Well, the government has to open its checkbook and put money in household's pockets. Now we've seen the Polyt Bureau say they're going to amp up fiscal stimulus, so it seems like the checkbook, the government wallet is starting to creak open. The question is, well, how much money are they going to put to work and where are they going to put it to work.
Is it going to be a kind of traditional infrastructure style stimulus, let's build some more bridges, or is it going to be the consumer stimulus, let's put money in household's pockets so they can upgrade their Electroney baby switch to electric vehicle?
All right, Tom, we appreciate that. Thank you very much, Tom or like Bloomberg Economics chief economists joining us on the China Latest.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play 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.
We bring you all the tough news and business economics and finance through a lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries worldwide. The news that broke yesterday is that open ai is going to transition from being a nonprofit organization to a for profit company. I have no idea what that means, but the goal of the company was supposed to quote benefit humanity as a whole, unconstrained by a
need to generate financial return. If that changes, what does that due to the actual company? Joining us now, as Man Deep Sing, Bloomberg Intelligence senior tech industry analyst joins, now, Okay, I don't get it. What does it mean?
Well, I mean they've been looking to do that for a while in terms of becoming a profitable company similar to other tech companies that are out there. And I guess we had hints all along because they never open source their model. You know, they are the leaders when it comes to generative AI, and there are two approaches right now with companies keeping their model proprietary versus open source, and they are one of those who have kept it proprietary.
So it's not a surprise that they wanted to convert to a profit structure. Given all this has happened, I think the bigger thing here is the CTO Mira Murrati leaving and pretty much all the co founders of the company leaving at this point, with Altmann being the only one there. So that's to me the bigger news.
Capitalism strikes again. But real question though, if it's valued around one hundred and fifty billion dollars and you mentioned CTO Mira Muradi resigning, does she keep her stock like is she leaving the company with a nest egg worth a few billion dollars?
Well, again, I think once the entity changes, there are a lot more things that will happen subsequently in terms of you know, the new profitable structure, what sort of equity sam Altman would have. So in terms of the prior structure, they already had a subsidiary which was profitable.
So it's a pretty convoluted structure. So when the November thing happened, number twenty twenty three, when sam Altman was asked to leave and then he came back, at that time, they changed the board composition and they created a profitable subsidiary. Now this is like converting the full company to a profitable entity, and there will be changes that will come along. So hard to say exactly who keeps what at this point of time, but suffice to say that you know,
the Microsoft relationship would come into play as well. I mean, they are one of the biggest stakeholders in the company, and all the signs are they want more investors in the company. So sam Altman is trying to raise more money and it will be at a higher valuation one hundred and fifty billion dollars. That's expected, and at some point I think they will go public as well.
When you brought up the CTO leaving, wasn't that also expected? Hasn't she stayed on longer than everyone had anticipated because she covered for Sam Welt when he was out, so it was understood that she was leaving once he came back.
Well, I mean, I look at it this week again, it's from the outside. I obviously I am not privy to anything that's going on inside the company, but there is clearly some tension. Whether it's tied to the you know, the profitable or non profitable aspect, or any other risks related to large language models, whether it's come down to
safety issues or copyright issues. We don't know that level of transparency, and I think the fact that all the co founders have left clearly there is disagreement and tension. And we can only speculate from the outside, but it's never a good sign when you know the core team that started the company and these are the technical guys who have left. So Sam Altman is the face of the company, is the CEO, but these are the real
technical guys who built the product. So I mean, look, they have a big bench and the company is much bigger now. The fact that we haven't heard a lot about GPT five that worries me a little bit because when you are a company like open ai, who is leading the charge, you want that product roadmap to be out there. You want to set expectations when is the next version of the large anglid model coming out? And I think that's where they could be delayed.
All right, Mandy, really appreciate it. Thank you so much, many saying, joining us Boomberg Technology senior analysts for Bloomberg Intelligence.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecar Play 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.
In other news, Wells Fargo is said to send some fed crucial review for lifting cap. Shares rise by about two percent to a session high.
This is like the deal.
This is the It's like consistent things that Wells Fargo has to do, Bailey in order to get that asset cap lifted so they can really start to grow again exactly.
And when you look at kind of some of these updates, so it's a big step in trying to kind of write the ship, if you will, for Wells Fargo. As you mentioned, stock right now at more than four percent so when you see these sharp immediate reactions, it's Wall
Street obviously applauding those deals. And the big thing going forward is how can Walls Fargo kind of again re emerge from some of those issues that they had a number of years ago and the kind of reworking of the company that's been taking I believe it's just over five years, six years at this point, and trying to get over some of these regulatory sanctions. And obviously the
stock again of four percent. I want to say it's been underperforming relative to some comps, but I'm waiting on a terminal to load right now.
And also the idea is that you know, you'd like to say that they do this one thing and the asset cap is lifted, but in actuality it's going to be chipping away at compliance, transparency, getting all their ducks in a row, and that it takes a lot of time not to be bested. There is other breaking news here.
FED Vice Chare for Supervision Michael Barr delivers in a speech that he says the FED is exploring liquidity rule tied to uninsured deposit Now that rule would address those constraints on hold to maturity assets Part of the issue that brought down SVB. At the end of the day, have an asset on your books, you're holding for safety, You're going to hold them till the end of the term. Yet when rates move violently up or down, it really
creates a disparity. Then in that asset price. You also have potential requirements that could complement some of the existing rules, exploring some large bank requirement on minimum liquidity. So many things, so many things happening. It's so exciting.
Good thing.
Alison Williams is here Bloomberg Intelligence, chief US Bank's asset manager person. She covers all of these things just in terms of Wells Fargo moving forward to lifting the cap in your estimate, like how close is Wells Fargo to actually be able to lift their cap their asset cap.
You know, it's tough to say, you know, certainly this has been unprecedented, right, I mean, this began with a fine in twenty sixteen. I think Wells Fargo initially thought it would be a few months. It's been several years, but you know, they one of the biggest things I think, you know, one of the biggest changes I thought was, you know, they changed over the boar they brought in
all new management, Charlie Sharf as the CEO. He was the sort of the third CEO in a short time period, but almost fully turned over the board, brought in a lot of x JP Morgan people, and then it's just been sort of locking and tackling since. And we've seen a number of the consent orders get resolved, but there still are a few more out there that they need to take care of.
Yeah, just looking at the Bloomberg News story stands out the caps lifespan so far, JP Morgan has swelled sixty four percent to more than four trillion dollars of assets, meaning they've added almost an entire Wells Fargo to the balance sheet. What's the timeline for Wells Fargo to potentially catch up?
Is that possible?
How would that work out?
Yeah?
I mean to some extent, there was, you know, a lost opportunity, right, So, I think the biggest, you know, the biggest hurt from the asset cap was during COVID when JP Morgan and Bank America were able to add all these retail deposits, right and Wills far Ago really could not participate because they they did, but it was a lot more work right, because it wasn't the loan
side of the balance sheet. It was really the deposit side of the balance sheet that was a constraint because they were growing so rapidly, and they did do things to try to manage their balance sheet in the most profitable way, you know, getting rid of things like non operational deposits that are you know, less profitable and less
valuable long term than core deposits. They have sold off businesses over time, so I mean, but for banks such as Bank American and JP Morgan, granted, some of those balances did go away over time, but they were able to retain at least, you know, some of those customers, and so I would say that's where sort of the big harm from the assa cap has come from. You know, if you fast forward to today, the balance sheet constraint
is not as significant. They have started investing in banks like businesses like card and trading where they're under index, so they are growing their businesses. So one, you know, if the cap was removed, that would certainly give them more flexibility in those businesses. But on the deposit, But on the deposit point, that's that's really sort of a lost opportunity.
Yeah, Allison.
Thank you.
You weren' booked on this, but you came in exactly the right time, so thanks so much. We really appreciate you. Alson Williams of Bloomberg Intelligence senior analysts for global banks and asset managers.
This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, and anywhere else you will get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg trunnem