Gary Cohn

National Economic Council. He spearheaded the effort on tax reform and stuck with the president before resigning after fourteen months following a battle over tariffs with other factions of the Trump team. What's his time with the White House worth it? Where is he spending his time and money now? The answer is in part technology. Joining me on this edition of Bloomberg Studio one point, oh, former head of the National Economic Council, Gary con I'd like to start with

your big picture mid pandemic view. We're in a very different place than when you left the White House a couple of years ago. How would you characterize the state of the U. S economy right now? So one thing is we have to remember how resilient the United States economy is. If we all think of what we've been through since March of this year and where we are

now in December. I think it's nothing short of extraordinary to how resilient we've been, how well the consumer has held up, and how well the economy has held up, in spite of the fact that we've gone through almost every negative iteration we could go through, from completely shutting down the economy at one point, which we now understand all of the ills both for the economy as well as the emotional and psychological well being of the country,

having all these little micro events in different parts of the country go on one by one. In spite of all that, the U. S economy continues to recover, It continues to find ways to find a path forward. Since you left government, you have explored new territory, You have a spack of course, you are on some tech startup boards. Tech has cushioned the blow of the pandemic and also accelerated huge changes in human behavior. What COVID borne technologies

do you think are here to stay? So Emily, we've learned a lot in the last eight months, and we'll continue to learn, And I think the covi IS has accelerated a lot of the technologies that were coming naturally. If it's payment or fintech today. We didn't invent fintech eight months ago, but we're using more and more of the payment apps and we all want to be uh touchless or hands free. We don't want to be touching pens or writing or signing pieces of paper, so we're

using touchless what touch us payment systems? I think the biggest question coming out COVID for me is going to be this data and freedom of data issue because we've seen a lot of the problems. Think about the whole issue. When we went through the Cares Act. One of the big cornerstones of the Cares Act is that we sent money out to individuals, well deserving individuals in the United States.

It took the federal government, using all of their powers, months to find people and and to actually be able to disseminate cash to them, cash that they wanted and cash for the government was trying to get to help. We have technology solutions that would solve that. I'm just not sure people are willing to give up the freedom to have technology solve that problem. We just went through

an election. Think of the the the the maybe controversy or maybe not controversy around the election, um and all the discussion around standing in line to vote, UM, and all the discomfort that that created. We have the technology to create your real biometrically enhanced voting where you literally could vote anywhere biometrically, whether it's voting from your iPhone or go into a polling place and using your biometrics

to vote. We would have a accuracy on knowing who voted, when they voted, where they voted from, not who they voted from. But there are a lot of technology solutions that we could be using, and maybe we should be using. But we're going to run into this natural antibody of what information people are comfortable having out in the system and what information people are are free having are comfortable with the government having. And I know you're investing across

biometrics and cybersecurity. What about the security concerns and the risks associated with incorporating more biometrics, more of us giving our own data into these solutions. Well you you you've said, I am a huge fan of biometrics. UM. I think that biometrics are going to play a bigger and bigger role in our lives. Um. We we only have one set of the biometrics. You only have one handprint. You only have one retina scan and you were born with it, and you die with it, and you carry it with

you for life. Now, when I went to vote, and I'm not criticizing my voting system, you know, I literally went in there and said, hey, I'm Gary Cone. They looked me up and I signed, and as long as my signature looked like the signature before I got to go vote, if I said hey, I'm Gary Cone, I put my hand on a biometric hand reader, there would be no way I wasn't Gary Cone. They would know exactly who I was. I wouldn't even have to tell my name. I could just put my hand down on

the scanner and it would come up life. How bullish are you on bitcoin and cryptocurrency and how much do you believe they will fundamentally transform our economy? So when we talk about blockchain, and we can come back and talking about the infrastructure, that's the highways and the pipes that are necessary for bitcoin, but they're necessary for many other applications, and I think they're very useful and I'm

very bullish on that. When you talk about bitcoin in itself, I don't have a strong opinion on bitcoin I'm in asens I'm not a strong believer in bitcoin. Why not it? Is it developing assets potentially, and for all the reasons it's a strong developing asset class, it may fail. Remember, part of the integrity of an asset class, or part of the integrity of a system, is knowing who owns it and knowing who has it, and knowing why it's being transferred and is it being used for legitimate causes?

Is it being used for good or is it being used for illegitimate causes? Is it being used in corrupt practices and corrupt way is the big coin system today has no transparency to it. So there are a lot of people that question, why would you need a system that does not have an audit trail, does not have integrity. You don't know who owns it, You don't know exactly how much exists today, how much has been mine, how much has been lost, how much has been thrown away

on hard drives because they don't exist anymore. So it lacks some of the basic integrityes of a real market. And then you have to get into the idea or the concept that it's a theoretical value. It's a theoretical value, and there's a lot of other things that happens. It's a theoretical value because someone is willing to buy it or someone is willing to sell it at that price today,

but there's nothing tangible behind it. At least, when you buy announce of gold, you can deliver announce of gold isign Someone may think it's worth two thousand dollars today. In six months from now, it maybe where but at least you know you're getting announced a goal which is no different than a house, or no different than a piece of art, or no difference than something else. It's tangible. At no point in time are you ever going to

be able to take tangible delivery of a bitcoint? How should the FED in a new administration be approaching alternative assets?

So I think as bitcoin continues to evolve, it will get more and more regulatory scrutiny, because at the end of the day, the regulatory community always is looking out to make sure that no one gets hurt, and they want to make sure that there's no unsuspecting investor that ends up owning something that they didn't know what they own and they lost a lot of money because they didn't understand it. So how does the payments landscape look

different than and let's say a decade. Does cash disappear in this unprecedented economy and new economic activity that we're seeing, Well, I think can easily disappear. I mean, the idea of paper currency in the legitimate world is becoming more and more obsolete and and I believe it can become totally obsolete. But the fintech payment systems are also not going to replace the banks. There's a big difference between a fintech payment system and a fintech ability to move cash and

the banking systems. And remember, the banking systems are big, they're highly regulated, and they're regulated again to protect investors. They're they're they're regulated and protect depositories. So when someone puts money into a bank that is highly regulated, they are a hundred percent confident that they can get their

money out at and moments notice. And there's an enormous amount of very expensive and very costly regulation that goes around owned that concept that if I put a dollar in, or I put fifty cents in, or I put a hundred dollars in, whenever I want to withdraw it, it will be there for me and therefore to take deposits and pay interest on them. When you agree to be in that business, you agree to have an enormous amount

of regulatory birth. If you're just in the money movement business, you have a lot less regulatory for burden on you. But the question is how does the money get into the money movement system. So today, if you want to put your money into a money movement system, you can either charge your credit card and put it into the system,

which is going back into the traditional banking system. You can do a money movement from a traditional bank into one of these bind tech platforms, but you're still relying upon the regulated part of the system to initiate the cash flow into the unregulated part of the system. This is my conversation with the former director of the National Economic Council, Gary com Up Next. Much like big banks have faced regulation, what are his thoughts on big tech

regulation now and his outlook on the public markets. I'm Emily Chang, this is Bloomberg Studio. At one point, oh now, you said that Janet Yellen will make an excellent Treasury Secretary. Biden's economic team is now shaping up. What is your advice for them? My advice overall is the growth and stability and statements in the economy has to be their

number one objective. So when you look at where we are in COVID, you look at where the economy is right now, and you look at the danger we have of still fairly massive unemployment, especially unemployment in the unskilled part of the labor sector. The fact that we've lost over fifty small businesses in America. And we all know that small businesses are the drivers of jobs and and of job growth. And I always remind people every large

business in America started as a small business. So if we want to get new larger businesses, we have to stimulate small businesses. I would say, look, the first thing you have to do is figure out how to get more stimulus into this system. As we evolve into the Biden administration, the key job for a lot of these people is to make sure that we build sound fundamental economic growth into the United States. We have to become a doctor. We have to stay, not become We have

to stay a dominant economic power. I remind people where we were in the in the early part of this year, which is not that long ago, in January and February we basically had an economy growing in three percent. We had three percent wage growth, and we had three percent GDP growth. Those were good numbers. Those are numbers that we were striving for. I think the new administration would be ecstatic to get back to those numbers over the next four years. Biden's nomination of Yellen is now official.

She has said she will work towards rebuilding. What are your thoughts on her in particular? I know that you've worked with her and the leadership you expect her to bring. We worked extremely well together when I was in the White House. We had a very good working relationship. I find her to be very practical, very pragmatic, have a very deep and broad understanding of the U. S economy, And I'm very confident that she's going to step in and do a very good job. She needs the help though,

she needs help of Congress to get stimulus going. She can't do this by herself. You know, every in Washington is a team effort. She can be a leader and she can show real leadership, but other people are going to have to show followship. Now. I want to talk a little bit about the public markets, because they have

been on a tear. Can this keep up? We've got to complete disconnect in some respects between the largest companies in America, which are the companies we talk about every day when we're talking about the stock market and what's going on in the real economy, and when we look back at what happened during covid in, one of the big takeaways should be and I pray that this is one of the big takeaways, is that when we made a decision and I'm not criticizing this, this decision at

the time to shut down the US economy and deem certain businesses as essential and other businesses non essential. We unfortunately deem the largest companies in America as essential. So we allowed the big companies to stay in business, but unfortunately the local neighborhood business that sold the identical products we deem to be not essential and we shut them down. And so what ended up happening is the largest companies in America got a market share, and they got that

market share for zero costs. We would force as consumers in the United States to go to the largest companies because they were the only ones open. So we needed food, or we needed prescriptions, we were forced to go to the big box retailers. But when we were in those big box retailers, we were able to buy clothes, We were able to buy shoes, we were able to buy appliances, things that the smaller companies on main street all over

America's soul. So the stock market right now is representing the fact that the largest companies in America got substantially bigger during this crisis because they were the ones that were open well. And some of those are tech companies Apple, Google, Facebook, Amazon? Has big tech gotten too big? Do tech companies need regulation like uh Dodd Frank legislation, which some in Silicon Valley has been have been advocating. So look, I think

you can't generalize on big needing regulation. Sometimes you can be very big and not need regulations. Sometimes you cannot be huge and need regulation. You know, it really depends on what are the barriers to entry? Can people come in and compete with you? Are you horizontally and vertically integrated? So therefore, do you have a huge competitive advantage because not only are you providing you know, one product, but the one product you provide leads you to another product,

and another product and another product. So therefore a new startup couldn't get there and could compete with you initially. And also are you competing against other businesses that are regulated now? So are you therefore on a unfair or not a level playing field? And if you started seeing those questions, yes, then you're going to or you should be regulated to look like you're on a on a fairly level playing field with the existing companies that are

regulated today. You're listening to my conversation with Gary Khane, former director of the National Economic Council. Up next, the former CEO of Goldman Sachs shares his thoughts on the spac crates and was his time with Trump worth it. I'm Emily Chang and this is Bloomberg Studio. At one point, Oh, stay with us. Let's talk about your spack. What is the latest on your SPACK efforts. In the kind of

companies you're looking for. We're looking for goods, sound companies that are going going to be around for the next hundred years. So I want to buy a company that I'm happy to own for the next twenty or thirty years. And do you think this BAC process will change the traditional I P O process fundamentally? Like, is this the beginning of a sea change and how companies get to the public markets. So I've been in the financial services long enough to know that I've seen new products coming.

I've seen new products go, I've seen new opportunities. I do think we are at a watershed moment in the SPAC world, and the spacts are now here to stay. The general acceptance of spects, both on the cell side and the buy side for companies, companies being willing to sell themselves the spects and spects being more better buyers of assets. That has changed dramatically. The management teams and the spacts have gotten better and better. It's not gonna

look in the future like it looks today. The SPAC world will will it more mature, it will define itself. That will redefine itself. But I think the product, the back product, is here to stay as a mechanism for existing companies to merge into pre existing publicly listed blank check companies. The challenges of the time are unprecedented, but returns have also been phenomenal. If you were running a big bank today, would you be giving big bonuses this year?

Bonuses in line with the enormity of the returns. So I think that. Remember, banks are very competitive beasts and beings, and banks not only compete with other banks, they compete with asset managers, they compete with private equity firms, they compete with hedge funds. And remember the bank's asset base is its human capital. So bank is only as good as the people that they can attract and they can retain. So banks therefore need to pay competitively in line with

what their competitors are paying paying. And their competitive universe is fairly wide. It includes all of the other different financial intermediaries as well. As you point out technology companies. A lot of these financial institutions today, a big majority of what they're doing is tech and tech related. So when they're going out to hire the best people today, they're competing with the technology firms, so they have to

be competitive. So banks are gonna look at what makes them competitive to attract and retain the best people in the world, and they'll pay commensurate with that. What would you do? I would make sure I'm competitive. I would make sure that I'm competitive with all of my natural competitors and my new found competitors, which is the technology world. And I would make sure that I'm attracting the best people, and I'm retaining the best people because the cost of

losing great people is really high. Not only do lose great people in their production, but then you lose the momentum of the organization. You have to spend money to go out and hire a new person, and then you have downtime while you train the new person. So it's very important for financial institutions and other institutions, not a financial services entery. It's important for technology companies to stay competitive and make sure that they can they can retain

their best peak. Now you've worked a long time in banking, you spent some time in the administration, You've spent some time exploring since then, would you be open to public service again. I thought my time in the government was literally the most amazing couple of years of my life, and the ability for me to give back to the country was extraordinary. I was very happy doing it. If a if a great opportunity comes along again, of course

I'll consider it. I'm curious how you reflect on where the Trump administration is leaving this country right now and how you separate your time from that. You know, it sounds like it was worth it to you. But do you feel that President Trump is leaving the United States in a good place? Look, I think it's worth it from any individual who gets the opportunity to serve their

country and give back to the country. I feel like we all owe it to the country if we're in a position where we can leave our normal life, get out of our our our normal job, and get back to the country. And I think that's important, and I think more and more people need to do that, and it's important for the country. I think the president, you know,

is leaving the country in an interesting place. You know, if it weren't for COVID, and and that's a big if it weren't for and I understand it, but weren't

for COVID, you know. I always remind myself where we were in February and March of this year, where we were from an economic standpoint, where we were going economically, where we were going wage growth, where we were going with minority and underprivileged wage growth, wage growth, how many people we were bringing back into the into the workforce, What the GDP was doing, what the economy was doing. Uh, how we how we got through smart deregulation. I'm not

an antiregulation person. I'm a smart regulation How we deregulated some of the medium and smaller banks in the United States to make them more competitive so they could lend more money into the economy and stop spending that money on regulation that didn't make them safer and didn't make them sounder. When I think of the things that were achieved, it is a pretty good track record. Um, Look, COVID has been devastating. COVID has been devastating to every individual

in this country. I don't care who you are, COVID has had a dramatic effect on you, and it will have a dramatic effect on the legacy of any president who would have been in office during this time. So where are we going to see you? Digging? Like? What? What? What are we going to see Gary Kny next? I

still think there's enormous opportunities in the technology world. I'm one of those that does agree that we're still in very very early innings of what's going on in technology and what's going on in the world and how technology and the cloud is going to affect our lives. So as I keep looking at opportunities, and I keep looking at companies, and I look at places where I'm spending

more and more of my time. They all revolve around technology, cloud and how our lives are going to change because of further, I would say revolution or evolution of technology. All Right, Garry Come, former Director of the National Economic Council, Thank you so much for joining us today on Studio one Point. Oh, it has been great to have you. Bloom Book Studio one Point was produced and edited by

Kevin Hines. Our executive producer is Alison Weiss. Our managing editor is Daniel Culbertson, with production assistance from Mallory Abelhausen and editing assistance from Daniel Wallenstein. I'm Emily changing your host and executive producer. This is Bloomberg