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Joining us now Meredith Whitney here for too short a conversation this morning. Meredith, I want to go with all of the acclaim of what you and I did years ago. The golden goose keeps delivering for finance companies. All my radars up on private equity, private credit. I'm hearing the same phrases you and I heard in two thousand and six. Am I off the mark?
It reminds me more of nineteen ninety four, nineteen ninety six, to the extent that you see so much specialized demand for consumer loan products duration consumer loan products. So when the securitization market expanded from mortgage to this is in the nineties and democratization of credit, they called it into auto loans to home equity. Home equity is a very new product in terms of it had been around a lot with household and beneficial but in terms of the expansion,
it went from zero to sixty really quickly. And you're seeing, I mean, home equity has exploded over the.
Path past year.
And that is after seventeen year contraction. Private credit cannot get enough supply to meet its demand.
Let's come back with Meredith threatening thrilled she's with us for this good conversation this morning to get the markets open. Here, huge upmoves in the markets two hours ago. It was still up right now, but it's not going to be the enthusiasm of seven am as well. Right now. The dough up thirty eight points on first print. We'll look to the NASDAK to settle out here. In the last couple minutes, SI helped me here with Intel. What's the symbol right now?
It she?
You know, I did I nail that? Okay, all of it. I'm just nervous meritis here and you know up twenty five thirty one is Meredith whitning with us this morning. You have a paragraph in here which you know, I think a lot of people aren't aware of seniors owned nearly sick. This is classic Meredith. Seniors owned sixty percent of all homes. They have seventy nine percent of on their homes. Seventy six percent of those home owners have no three quarters of the seniors have no mortgages. They're
the golden goose for consumers. How do you play it?
They're the golden goose for consumer lenders? Excuse me?
Sorry, how you play it is their so SOFI has been a rocket ship. Rocket mortgage has been a rocket ship. Sorry for the for the pun. But here's what's interesting. Ice Mortgage Monitor came out and said that seventy percent of cash out refinances were at higher rates than people had on their first mortgages so they could access cash. So seniors are taking out first mortgages. That seventy six percent of seniors with no mortgage, I expect to go down.
And they're taking out there all these products that are catering to seniors interest.
It's it's a real estate.
Interest only product for seniors that exists in the UK, retirement interest only.
Excuse me, that exists only in the UK. That's coming to the US.
All of these lenders, and I think a lot of these companies are private that it will soon be going public because a lot of these companies are funded by private equity and their loans are funded by private credit.
Meredith, you talked to and investors all over the world. What are they asking you most about these days?
I think they're asking what the next shoe to drop in terms of credit is and yeah, how well, okay?
The two things.
There's an incredible interest over the government getting out of Fanny Freddy, when that will happen, how what that will look like, and you know what structure will happen, and and then what's going on with student debt? And then also what's going on with with.
Home equity and private credit?
Because one thing, I mean, you know, one of the biggest thesis that we've had has been on names like Rocket and so far because of this originate and cell model to a certain extent, Upstart and others.
What else are they asking.
Is Fanny and Freddy talk to us about that, because that could be a monster deal for a Wall Street, for b the US government, see I guess homeowners.
It will be a monster deal for the US government. So in the vein of how the US government was great after this Intel deal, how the US government looked great after the Mountain Pass MP materials deal, how the administration will look great after Fanny Freddy, I mean, it is a no brainer for Fanny Freday.
I got to get this in and you did a PG at Lawrence phil You show up in Brown to get a history degree, and then you said to me you must have been like twenty four years old. Hey, stupid by Visa. Who's the new Meredith Whitney Visa up to twenty three per year?
I mean this year it's been rocket and so far.
Yeah, but for the next five years, ten years, who's the new Visa? Just buy more Visa.
That's a tough one because Visa was effectively a demutualization, so there are very few number crudentials. Like all those insurance companies were demusualization. It's hard to have an exact fit. That's a moment in time. Visa MasterCard, this is the same extent. But it's hard for me to go out.
I look at names, like, you know, there was a name that is not in my sector, Axon, which is the original taser company that has been just an unbelievable name, and you think about police enforcement, I think that's just maybe an Axon.
Yeah, Meredith, with this, let me squeeze this in and I want you to stay over for one more section with this as well. Meredith, you're on Park Avenue, the new rebuilt Park Avenue, James Diamond's Fortress Diamond Citadels above a fancy restaurant at the Waldorf's reopen. What's a symbolism for New York of Park Avenue as redo.
I think it's incredible, but those are long term projects. Those are long, long live projects. The symbol to me, I'm mixed. Look, I've loved New York. New York has given me an incredible opportunity. It's really exciting to look at at those it seems like a vestige from their PASTOK.
We continue with Meredith Whitney, just iconic on Wall Street forever for me with OpCo, but with many others. And she retired for a cup of coffee or something like that. She's in Washington now we say good morning ninety nine one FM Nathan Hager Radio in Washington. What is it like being financial person in Washington? Is there any legit financial literacy down there? Or are they just worried about what the cook political reports said this morning?
I think they're certainly at the Treasury, they're very smart people at the Commerce Department. There's some very smart people at the different You know, everybody has a vested interest outside of politics to be inside of politics. So it's almost like everybody's on, you know, getting something out of somewhere. So there's you know, their their pundits all over the place. It's it's nerdy to be sure, but it's not like there's only one New York and there's nothing, nothing that compares to being.
Okay within the deregulation milieu that mister Trump is invented. Do you look at it as continuing or is it just simply a one off to whatever the outcome of the next time.
Here's what I hear inside the Beltway, which is the the departments that have been incredibly successful. So the Treasury has gotten a tremendous amount done so far.
Trump is throwing.
More their way, so whatever they they've accomplished, they're doing more. So the Genius Act was effectively written before Ump came into office, so a lot of the stuff they're putting out was already was already done.
So now they're working on new things.
So people are not sleeping and are trying to get this agenda passed as quickly as there's a lot to do in terms of deregulation. Michelle Bouman has still not come out with her new guideline guideline, so that's something in terms of supervision, so that's something we're waiting on and that's going to be a big deal for the banks.
That's where I wanted to go one of the when President Trump was elected the second time. You know, one of the calls on Wall Street was by the banks because this administration is really going to be pulled back as much as they can some of the regulatory yoke from a great financial crisis. So my question to you is is that happening? Do you think it's going to happen? Is that a real thing?
Well, I can just tell you P and C that made an acquisition a couple of weeks ago, said that they don't dem TEK spoke last week, I believe, and said that he doesn't expect any big bank mergers to happen, but they will have capital relief and buying the banks. It has all been a financial engineering play. So they bought backstock, they've increased their dividend. It's not really sexy stuff. What is happening that is very sexy is the IPO pipeline is wide open and I don't think that's going
to change. So I don't know how long it takes for Bowman to come out with new supervisory guidelines set. She's already told the market what she's planning on doing. You know, the three quarters of the banks or two thirds of the banks had unsatisfactory ratings on the banks so they couldn't do anything. So lifting those and those a lot of those writings were subjective management governments governments. Lifting those will should put a lot in terms of
consolidation in the banks. The outside of the bank systems. The system like the traditional banks have done better. So my pure play model lines have done better than the banks, even City that's up a bunch this year. But the underwriting pip pipeline should be underrestivated the.
Heart of the matter. Good morning, Jillian Ted, writing at the ft is zillion years ago, gave me the phrase cdo squared. I'm hearing the same language now. I got so angry at something the other day. I started doing a trunch analysis on air, which is like major folks pot. It's like sort of complicated. But are we reliving five oh six where we're we're living securitized jargon that's going to lead us to upset down the road.
I don't see it. I don't I don't see it.
Certainly not in the mortgage and the mortgage space has been dead for two years, so there's no market debt market big art.
Sorry, come on, asset back AI is.
Coming right right right, I don't see it because also I don't expect the housard market to improve anytime time soon. So outside of whatever they're going to do with government, I mean, I don't think you're going to have a yeah ten years.
Lisa, can we blow up the interview?
Okay?
Here, I saw a bar chart yesterday. I'm upset. Two thirds of the nation is flat under back. Then there's like New York and Milwaukee's doing well. And right at the bottom of the chart, you too, is Summit New Jersey. I mean, Summit Jersey is killing it. Right now. You're telling me housing prices in Summit, New Jersey are at risk.
Oh, I don't know that.
I'm saying deal activity is the lowest it's been in over twenty five years. Housing prices are staying high because there's so little activity and the high end that can get it qualified for mortgages or pay cash.
That's where the transactions.
Summit never goes down.
Bro for the beach.
The beach and spring Lake never goes down.
Forget it.
I picked two of the most expensive places in the world to live, right.
But it's yeah, it's worth that the big box on Wall Street, Right, Yeah, it used to be Big Bucks.
So you mentioned City, one of the many banks I used to work at. Arguably the greatest trade of my life is the day I left City. I sold everything literally before I got out the door, which was a great trade. Stocks of forty five percent this year. Has Jane Fraser found the secret sauce to finally turn SUP around?
Do you think?
Okay, let's take that into contact. So what banks have done incredibly well, The European banks have done unbelievably well. A lot of that is because of the infrastructure and investment plans, and there's going to be a huge revival in those stocks. But they were all trading below book, and they were all trading a blow tangible book, and so it's a reversion to the mean, and things weren't getting worse, and so the reason why the stock is up is because it was the cheapest.
Going into the year.
I'm not taking anything away from the execution, but there's a lot to do.
And is it still.
Too big of a bank, too sprawling of the bank. They kind of do everything for everybody everywhere. That's kind of been in one of the critiques, and I think Jane Fraser is trying to get some focus there, but it.
Just takes a long time to move a ship.
But the fact of what she had in her, you know, she looks like she looks very good because of the stock performance is a novalidate whether it's deserved or not. Her performance it was just cheap going into the year.
You're at the Hey Adams Hotel. You have lunch four times a week. The Secretary of treasure walks in. You're sitting with mister Bessett. What's your number one advice to him? Right now?
Ooh, I think I think deal with Fanny Fridday. It's you know, the fisticuffs fight between Poulty and Bassett. I think is all over Fanny Freddy. So I think that's what the market's waiting for.
I can't give you my opinion. I can't give you my opinion right now. Let's go there then. I mean, this is really sensitive stuff and we don't do rumor and speculation. Your whole career has been fact based as well. He's going to prosecute what the privatization of these two great mortgage companies and push aside the pretenders. Is that what you're saying push aside the pretenders.
I don't know that anyone gets pushed in political types. Oh oh, oh oh, I see what you mean. It's look, it's a knife fight down John and DC. And so it's like, you know, I don't believe like it's a zero S game in politics. So whoever comes out ahead, it's I think it's yes.
With the Federal Reserve, we had the you know, their decision cutting twenty five basis points. How do you think that the Federal Reserve is kind of how do you think they're performing these days? Are they behind the curve do you think? Or are they kind of dealing with the data as those come up.
Well, they're not saying the S word, right, which is stagflation, which it seems we're you know, very very close to from a from a growth standpoint. It's I hope I'm wrong, but it's hard to see from an inflation standpoint. You don't see it in the hard numbers, but you see it in anecdotal And I think what you do see is homeowners insurance. I think insurance costs are going to go up. So they're two. They're a couple of factors.
Number one, you know, auto insurance and homeowners insurance AUTO, and so our homeowners insurance has gone up close to seventy percent in the last five years, and that's been a real sticking point in terms of affordability for seniors, and that's why they're tapping into home equity. Auto insurance has also gone up tremendously, tell me so, yeah, So I think you're seeing sticky points. There's all this also things that happen in terms of the American Rescue Act,
which subsidized healthcare premiums for everyone who's self insured. Fifty plus percent of Americans who are self insured. The ends at the end of the year, so healthcare premiums will spike at the end of the year. So I think the Fed's got to be really, really careful. I mean, they probably did cut yesterday to save face and risk management, because they'd get in trouble if they didn't.
They'd be blamed if they didn't.
But TVD, Meredith and your coverage. What's most interesting to you these days? Is it the new fintech just broadly defined, or is something else specifically you're looking at.
There are a lot of things that I think are interesting. I think that I always think that the consumer's incredibly interesting. The consumer had been bifurcated. I think the consumer gets even more segmented in terms of the strength I think student debt. So the Department of Education is now going to start garnish as August is going to start garnishing wages to fifteen percent of salaries. That's going to put a sting serious delinquencies or over almost eleven percent, and
that's rising quickly. So I think you're going to see I've always the most interested in the consumers of the data, so granular, I think you're going to see different strains on the consumer. The very high end will continue just you're you know, you're some in New Jersey, where I was born, is going to still spend robustly and carry the economy.
So Meredith, we're going to have to leave it there. We've got news in England as well. Thank you so much, generous, so much.
I'm such a man.
If we come down to Washington, we got a first guest. I mean, you know, Secretary Treasurer here, Meredith Whitney, who do you take first? I mean, it's all there was to it. Meredith Whitney, thank you so much for being with some important perspective here on the ebbs and flows of our finance