29th Annual Milken Institute Global Conference Special: Day One

20:03I know you don't concern yourself with a day's worth of trader or a few days, but what do you make of the reception that it got, that it did fall considerably? Is this an issue with bankers mispricing it? No. I mean, we sold a pile of cash. I don't know why anyone would buy a pile of cash and then the next day sell it at a discount. What I think I didn't appreciate when we last spoke is we did something different in this offering that people don't normally do. Normally, retail investors get kind of a very small allocation, and they're disappointed by the shares they get in an IPO. In our case, we give the retail investors what they ask for, and we cut the institutions back.

20:39And I think the impact of that was retail investors woke up with more shares than they had intended to buy and were put in kind of a forced selling position. And that has to work its way through. I think once that's done, I mean, again, the package of securities is modestly down from where we price the offering. Remember, you get an interest in a TSUS, which is either you think of it as an investment holding company, You can think of it as a closed-end fund. There you're getting$49 in cash that we're in the process of deploying in the market. And you get an interest in our business, which is a very good business.

21:11It's a bit like a Blackstone or a KKR, but some important differences. Substantially, all of our assets are in these sort of permanent capital vehicles. And so the business model itself is like owning a royalty on compounding. And that's why all I have to do is focus on generating returns. I generate returns. That generates an increase in our assets. That generates more cash flow for the business. and it's a bit of a self-fulfilling prophecy as long as we do a good job allocating the money. One of the things that's different, and I kind of hinted this at the beginning from you, from the other big publicly traded asset managers, is just how slim you are.

21:44And this was brought up actually in one analysis of Pershing Square. I like being slim. I think we all do, especially in this day and age. But this idea that there is key man risk, because so much of it is your ideas and your ability to fundraise. It's actually not true. So yeah, so talk about that. How do you mitigate it? I actually think we have the least key man risk of any hedge fund in the world. And that sounds surprising because usually you put me on, I do more TV appearances than other Pershing Square employees. But what causes a hedge fund to go out of business is something happens to a key person.

22:13And then investors, the first thing they do is they ask for their money back. And then the assets shrink and the rest of the team leaves. In our case, the assets are in these public corporations where the money can't leave. And so if something happened to me, the money stays. The assets stay, the team stays. The team owns 45 % of the business, right? So the company equity is widely spread throughout the firm. And it's unusually about our firm. In an industry where there's a lot of turnover, there hasn't been a Pershing Square. So my CIO, Ryan Israel, and I, we've worked together now 17 years. He's been CIO for almost four.

22:45If I disappeared tomorrow, nothing would really change. In the early days of Pershing Square, I generated most of the ideas, and I worked with analysts on analyzing those ideas. Today, I'm generating a minority of the ideas. So I'm not saying I'm unimportant. Hopefully I can still generate value for the firm. But the firm itself is very robust. It's the only firm in the world that if something happened to all of the employees, because the assets are forever, the board would just hire a new team or put the assets in an index fund. And you'd still build a very valuable kind of business over time.

23:17So it's one of the most robust businesses in the world. And it's one of the highest quality businesses in the world. By the way, just kind of on a similar note, as a Warren Buffett fan, This past weekend was the first Berkshire Hathaway annual meeting where Abel was at the helm. You're obviously a young man, but have you thought at all about setting up succession, what that eventually looks like at Pershing? Well, I think it's really effectively set up, you know, identified as CIO, Ryan, as I mentioned. He's really leading the investment team at this point. Ben Hakim, president of the firm, he kind of runs everything other than the investment side of the operation.

23:47It's amazing there's anything for me to do. I have the privilege of thinking about big ideas and you know occasionally big idea drives some value. Can we talk about one of those big ideas? Sure. In Universal Music Group? Yeah. You come forward with an offer to buy this company and a lot of people scratch their heads. Why would you do this with a company that has very large majority shareholders where it's tough to put through? What is the game plan? Actually the game plan there is absolutely we need the support of Bollaret Group but what we're proposing I think is very much aligned with what they're interested in.

24:18I mean, Universal is sort of an interesting case of a company that's done well in its core business, right? Universal remains the dominant company in the recorded music industry. They remain very close to being the number one company in the music publishing industry. It's done a very good job with that. But they've not sort of graduated from operating like a private company into being a public company. And they've lost, I would say, the confidence of kind of the shareholders and the analyst community, which is why the stock, you know, the business value has has grown and the multiple that people assigned to the earnings of the company has declined.

24:48The result is a stock that trades at the same price that traded, you know, the company first day of trading was 25 euros and this is in September of 21. Here we are almost five years later, the stock is 19 euros, 18 euros. So that's not a good performance. The company really needs a reset. It's also listed really in the wrong exchange. It's really a U.S. company. So our transaction moves the company from Amsterdam to a U.S. listing. That alone is meaningfully value creating. We kind of recast the balance sheet. The company has unmonetized assets on the balance sheet. There's stake in Spotify. Now, notably, the company announced in the last couple of days that they're going to sell half their interest in Spotify.

25:26We think they should sell the balance. The company announced a more aggressive buyback program. We think there's an opportunity to do more. But our transaction effectively enables a cancellation of about 17 % of the outstanding shares, a migration of the company here, a new board of the directors led by Mike Ovitz. You know, Mike, I've known a very long time. I think he can be a very value-added to the operations of the company. And then just a better program in terms of how the company communicates with shareholders. You know, the company right now is sort of analyzing the proposal. We'll hear back from them soon.

25:56We've been engaged with the big shareholders. And you're hopeful that they will be receptive to this? I mean, the company has to do something. This is a very good solution to the various issues that confront the company. By the way, on this idea of European versus U.S. exchanges, it feels like that is something that a lot of companies see that they can unlock, that they move to a U.S. exchange. On the day we talked, for example, I had the AstraZeneca CFO, and they did something similar. Does Europe have a real problem, Bill? I mean, yes. Look, the exchanges are natural monopolies. And, you know, if you today, if you're not listed in a market which has the most demand, your stock, your cost of capital is going to be higher than it should be.

26:35And so they're sort of and I think, you know, Europe has too many exchanges. If I were in charge of Europe, I would consolidate the London Stock Exchange, Euronext, kind of bring the various exchanges. Because, again, it's a natural monopoly and you want the maximum liquidity and demand in one place. But there's sort of nationalism, I think, prevents that. One of the kind of newer features of markets is the prevalence and the explosion of betting markets. And there's been this real criticism that we're seeing almost a casinofication in the world where you can bet on anything. There are ETFs listing this week where you can bet on whether the Dems or the Republicans are going to be winning the House or the Senate.

27:12Is it a problem? Does this concern you at all, this trend? I think the negative is that there's a positive and a negative. I think the negative is it's not the most productive activity in the world. and there is a lot of gambling that goes on, whether it's sports betting or otherwise. And there are people, and particularly young people, losing money they can't afford to lose, betting on the outcome of things that are difficult to predict. So that's obviously the unfortunate. It's a bit like lottery tickets. It's a net loss, I think, for society. On the positive side, what betting markets allow is they allow people to hedge risks that they're exposed to.

27:47It also creates information. You know, looking at where things are priced, you know, the betting markets have done a better job of predicting outcomes of elections. Some could say because, well, maybe not elections, but there's more insider trading that incentives exist for that to happen. Look, the people make arguments that the insider trading should not be illegal because that would bring sort of more transparency. Are you one of those people that believe that? I'm not, but you can make some arguments for it. So I think it's sort of interesting. But, you know, the more the market becomes casino-like, I think the risk is, I guess, people get, they withdraw capital because they lose confidence.

28:27And, you know, I think markets are becoming more and more short-term. And if you think about what a stock market is, these are very long-term assets. So the short-termism drives liquidity, which I think on the margin is a positive. But it also can lead to short-termism in the way businesses are run. Well, I would love to just leave on the note of your hometown city, New York. There's been a lot of discussion about Mayor Mondani making very public pronouncements against specific people, against Ken Griffin, announcing a pied -à-terre tax, directly attacking some of the business leaders of this city.

29:02I know you were concerned heading into this election and the outcome of it, too. How are you feeling now? Not great about things. I mean, I think Mondami is not, if your goal is to make New York City kind of financially solvent, what you don't want to do is drive out the Ken Griffins of the world, right? Ken brings very valuable business. That's a$6 billion project, which will generate thousands of construction jobs, architecture jobs, marketing jobs, make your list. Employees will pay material amounts of taxes because they're highly compensated employees. And it's that, it's sort of the Wall Street and the tax revenues from Wall Street are what enable New York City, kind of all the people in New York City to have a better life.

29:46And if you drive out the Ken Griffins of the world, who notably, you know, has made a major contribution to New York, not just from bringing his business there, but he's been very philanthropic. a$400 million donation to Morris Lom Kettering, which is an institution that doesn't just help New York, it's it helps people with cancer all over the world to go to get treated there. So it's just not it's not a very smart approach. I can't think about Pershing Square without thinking about New York City. But could you ever see yourself being driven out of New York? I think it's unlikely. I'm more of the kind of guy to fight to make sure New York City is a great city than someone who's going to leave.

30:20The problem is, though, that with these policies, even if they have dire economic consequences. Mondawney is incredibly popular, and he's still very popular with his base. So how do things change then? How do you fight this tide if there still is this broad-based popular support for these types of ideas? It's an issue. I mean, I think the answer is a better candidate. You know, look, where Mondawney was correct is that New York is not a very affordable place to live. but you're not going to make it more affordable by getting rid of the biggest drivers of tax revenues for the city. Mondami already has a budget crisis, but we've got to figure out how to run New York City much more efficiently.

30:57But when you raise taxes, you know, the most mobile people, frankly, are the Ken Griffiths of the world. Ken can choose to locate his business wherever he wants, and he can locate his pied -à-terre wherever he wants. Very true. Though we are heading into midterms, and again, affordability is on the ticket, and that's pushed a lot of people left. Are you worried about how this shakes out, that we might get more candidates who want to put forward these types of ideas into economic policy? Yeah, look, I think, you know, you look at a country like Argentina and how far it fell, right? One of the most Argentinian GDP, whatever, 100 years ago, was one of the most significant countries in the world and fell off the map because of socialism and other bad policies.

31:38Now you see Malay coming back and the country dramatically recovering. It's sort of a great example. And it's crazy to me that socialist ideas can travel into a country like this one. I have only about 30 seconds, but I'd be remiss if I didn't ask about some of the work that you've been doing trying to make 401ks, those types of investment vehicles, more broadly accessible. We had an executive action last week. What are you pushing for at this moment? I think every American has to own a piece of capitalism. And when you do, you're excited when the stock market goes up and it allows you, you know, power of compounding allows you to save for your retirement.

32:15You know, we can't, you know, unfortunately, wages cannot compound as fast as the stock market. And so I think it's very important for every American to participate in capitalism or we'll end up in socialism. And that's so I think the president's plan is a great one. you know you have to be able to you know I think if you believe that you're going to be able to retire comfortably maybe even leave something for your kids so they get a head start you know that makes you believe in the country and if you can't it makes you angry so I think a very important program

32:46Carol Massar:You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App Listen on demand wherever you get your podcasts or watch us live on YouTube. Everything markets, economy, and certainly all different kinds of worlds. And the business leaders are certainly watching right now what's going on in the Middle East, the tensions, the uncertainty. It makes it tough to kind of figure out strategy. You make a great point, though. It's a moment that is made for Bloomberg. When we consider what we talk about in cover every day, it's all together in one here.

33:22And it's a great opportunity to bring John Denton back into the conversation. The International Chamber of Commerce Secretary General is with us now live in Los Angeles. Great to have you back on Bloomberg TV. Great to be here. What do you make of this different flavor at Milken this year? There's an urgency. There's an uncertainty that you might not normally find at this conference. Well, yeah, I've been honored to speak at Milken before. And there's definitely a different tone and a level of urgency. And actually, I must say, as you said, Milken's actually a very important conference now on a global basis.

33:53It's the reason I come here. In fact, I don't go to Davos. I actually come here now because you think about some of the biggest challenges we're confronting are going to require the private sector to really step up. And what we see here is probably the biggest gathering of private capital, which will actually be incredibly important if we're ever going to align to fix some of the problems we've got, just at a global macro sense. You said geopolitics. It's really a geoeconomic environment we're in now, where the economics become so much more important. I mean, I'm working on the Strait of Hamuz at the moment because one of the issues there, and I think people are starting to realize that, the Strait of Hamuz is actually not just a combat, between combatants between US and Iran.

34:37It's also framed very much in oil and gas, but people are forgetting or not seeing it, which is one of the most important elements, is a crisis which is emerging around access to fertilizer. Now, we're in 170 countries, of things we've discussed before and we see very quickly in the real economy the impact of an access issue so we've got not just a pricing issue so a pricing cost issue we've also got a challenge to actually get get access to the product itself so you've got the combination of a price shock and a supply shock which is about to create a huge cataclysmic problem in the real economy but in particular on food and we saw this with the black sea because we So we developed the Black Sea Agreement for the UN Secretary General, and we see similarities there.

35:25Because food pricing, the access to food, the inability to feed yourself, that's what gave rise to the Arab Spring. That's actually what causes political instability. So as you say, this is not just an important conference. There's a series of important conversations, but there's an urgency about getting some of these issues better understood. And the private sector understands these issues sometimes a lot better than the policymakers themselves.

35:49Carol Massar:John, I feel like there's something going on. You talk about this moment in time for Milken, but go back to the Russian invasion into Ukraine and the breadbasket to the world. And we saw grain prices certainly impacted. Go back to COVID. And, you know, we didn't have masks. We didn't have a lot of supplies, things that Americans took for granted. We're all looking at our supply chains. And it does feel like there's each country on a grab to make sure that they have what they need. that's got to create just a different market environment, a different economic environment going forward. And we talk about inflation, prices, things are going to be more expensive going forward.

36:22Well, I mean, what you articulate that can be wrapped up in one concept, it's the level of uncertainty, which is actually really compounding. I think we talked about this before, the uncertainty that business finds, and not just in the US, but on a global basis, As I said, we're everywhere. We're seeing a level of inhibition towards engaging in commerce across borders because people just don't know what the rules are. There's no policy settings. And then you've got the complication, I think, of the geopolitical side feeding into the geoeconomic side where, you know, the disputes. Where's the multilateral system?

36:57Where are the institutions that are actually supposed to be able to be used here in these environments? So it's not clear to people. We actually did an economic... Where are they?

37:05Carol Massar:Where are they? Why aren't they working? Why isn't there that respect anymore? Well, in the end, one of the challenges for the institution is actually the willingness of their member states to do something. I was just in Yaoundé at the WTO ministerial meeting. And if there's one takeaway from that, is that the idea of consensus-based multilateralism is over. What you're going to see much more is coalitions of the willing, pluralaterals, these sorts of issues. Because you do not have alignment between a lot of the major players. And that is a problem. And that actually makes it very difficult for the institutions to function.

37:39The institutions have got a lot to answer for anyway, because in many respects they've failed. I'd use this term to allow the spirit of modernity to flow through them to actually move forward. And it's actually stuck.

37:49Carol Massar:We've seen that in the U.S., right? We talk about this K-shaped economy. And we have guests who come on and say, well, look at the market. It's record after record. Well, there's a half of Americans who are not necessarily feeling that. There's detachment between the market and the real economy. Exactly. And what I was describing, the consequence of the straight term, was these are real economy issues. These are not market issues. So ultimately, we need to work out a way to get the fertilizer flowing again. We've already lost capacity. And that capacity is meaning that farmers in Africa and Latin America, because they couldn't get access to fertilizer or the price of it was too high.

38:24What are they doing? They're actually replanting without fertilizer or not planting, which means yields are going to suffer quite dramatically. And we see that coming in three months. And it's unusual because, in a way, we see it coming, but it's shrouded by the oil and gas story and shrouded by the battle between the combatants. We have to wrap.

38:42Carol Massar:This is not fair. I don't want to. John Denton, you rock. Stay with us on Balance of Power. We'll have much more coming up after this.

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41:50Carol Massar:You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5 p.m. Eastern on Apple CarPlay 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 1130. All right, everybody. Yes, indeed. We are live here in Beverly Hills at the Milken Institute Global Conference. Carol Master along with Joe Matthew. you. We've got a great guest coming up. I want to set the scene here because we do have President Trump out there out on social. And he says Iran has taken some shots at unrelated nations with respect to the ship movement, Project Freedom, including a South Korean cargo ship.

42:30Carol Massar:He says perhaps it's time for South Korea to come and join the mission. We've shot down several small boats, or as they like to call them, fast boats. It's all they have left other than that South Korean ship. There has been at this moment no damage going through the strait. He also mentions that The Defense Secretary, Pete Hegseth, and, of course, the Joint Chiefs of Staff, Dan Cain, they're going to be holding a press conference tomorrow. I mean, this has become, I hate to say, the norm, but this conflict, again, we can't seem to kind of find our way out of it. And, again, we'll get an update on where we are.

43:00Yeah, and this, of course, follows a weekend in which the president announced this new Operation Freedom, so with naval vessels standing by to help commercial vessels get through the strait, not Iranian vessels. And it's curious still to see what happens. And that might be the point of this Pentagon briefing tomorrow. See how many actually take us up on this offer. And the president's still looking to build a coalition of the willing. It's a good place to start our conversation with the senator. Among the many attendees at Milken, Senator Angela Alsobrooks, the Democrat from Maryland, is with us here.

43:28And it's wonderful to have you back on Bloomberg TV and radio. It brings us, of course, to energy prices, first and foremost. We're ever closer to$4.50 a gallon on a national level. You might have noticed sixes and sevens on the signs going by here, and California's got its own story. In Maryland, it's slightly different. I'm wondering what it means for people living in your state and what they're not spending on as a result. Well, you know what? It's not just people in my state. What we recognize is we are headlong in a war. I mean, I think what you just read demonstrates that we have no idea how to get out of the war.

44:00Furthermore, the cost of the war is being borne by everyday hardworking people. These gas prices, you think about energy costs, the cost of groceries, all of these various costs are being borne by working class people who don't have the option of not paying it. So, you know, it's a really distressing time for us. I think it's going to be really important for us to get out of this war soon. But the cost and the affordability crisis that we're seeing is real life. It is not theoretical. It is being borne by the people we know. I see it in the grocery stores. We see it all over. And it really has to end.

44:31Well, how about for policymakers? You're on the banking committee. What's Kevin Warsh going to do? Does he still cut interest rates when he comes in? Well, we'll see. I mean, part of the issue is, you know, I did not vote to support Warsh. And it's because, you know, I couldn't be I couldn't be sure he would be independent. I think the independence of the Fed, we know, is very important. We know the two jobs there are to to make sure that we are keeping down inflation and also protecting and growing employment. And to do that means we have to have a Fed that is independent. And he dodged questions that I would ask of him.

45:02And I think an independent Fed is going to be really, really important right now when people's lives and livelihood are literally on the line in a way that we've never seen before. You know, I'm the daughter of a receptionist and a car salesman. So I understand how challenging these times are for real people. And the people who make these decisions, they don't care about the cost of gas. They're driven around. You know, it's my colleagues and others. I mean, if we're honest about it, the people who are making these decisions are wealthy people. But the people who bear the cost of all of these decisions are everyday, hardworking, middle class people.

45:33Carol Massar:Senator, we talk a lot about the K-shaped economy. We talk a lot about the gaps that we have in society. Do you blame President Trump for getting in the way of access to capital or affordability issues? Or is the system really the problem? Because I think it's safe to say under multiple administrations we have these gaps. Yeah, you know what, fair enough. I think that obviously it's been exacerbated. I think that's it by any objective measure. our country now. I think the sentiment inside our country, if you look at polling and other numbers, Americans just feel like they are further and further behind.

46:04I think objectively. Feel or are they further and further? They are. It's both. They both feel like they're behind and they objectively are. You think about every measurement we can think of. Home ownership, for example. You know, my parents, when they married at 21 and 22, they could buy a home within five years of their marriage. The average age of a first time home buyer in our country now is closer to 40 years old. You know, add to that, Again, what you're talking about, the cost of just everyday living, I think that this is systemic. The reason I'm here at Milken is because I believe that there's a way for us to focus on creating wealth for people.

46:37People are tired of the whole maybe we should live to get by. Maybe we can make it so you can afford your groceries. There are pathways to wealth that I am interested in making sure that as we see this whole kind of digital revolution that's happening, I think we ought to be talking about wealth, not just getting by. Wealth creation, generational wealth, and those things happen, of course, again, through home ownership and taking advantage of the whole digital revolution we're seeing. You're coming at this from a governmental approach as a senator, but you came out here to Milken to talk to private enterprise as well.

47:08How does that factor into the solution? How do you get these people roaming the halls at Milken to help you achieve those goals? Well, we recognize there's going to have to be a partnership between the federal government and the private sector to address so many of the longstanding, to your point, these These are long-standing issues, systemic issues. I know it because I came to the Senate as an executive. As a matter of fact, I'm the only part of my Democratic class who didn't come from the House. I came there as an executive. I was county executive of my county where I had to rely on sometimes public-private partnerships.

47:39We did so to build cancer centers, to build schools, and to really get our economy going. And I think that same approach is going to be really important. I love that you said that.

47:47Carol Massar:I think the local level is something that gets so missed in reporting. I think we try to do it really deeply here at Bloomberg. But what's happening on the ground? Having said that you are here at Milken, the financial presence, as you know, is a big one here. It is, you know, trillions of dollars that are being managed globally. What do you want to say to especially a lot of billionaires who are pushing back, whether it's New York City or San Francisco and cities that are fighting taxes and so on? I mean, what do you say to them? Well, you know what? Who do you want to have a conversation with here?

48:16I think we should have a conversation with both. I mean, you're right, the billionaires are here, the government officials are here. The truth of the matter is that we should all be focused on making sure that we are creating additional pathways for more and more people to participate in the system. It makes us better. When we all do better, we all do better. So we're creating these pathways. And you know what? I'm here because I want to hear from all sides. You know, tell us how we can do it better. If you have some ideas about the ways that we can do things more cheaply, more effectively, how we can cut red tape, whatever we can do to make sure we're making a more robust kind of effort to include people in economic opportunity.

48:51I'm also here to listen. I have some ideas of my own. But, you know, what to be effective, it means we're going to have to kind of listen to each other. And, you know, and I'm here to implement those ideas in the Senate. Spoke earlier today with the secretary of housing and urban development, who's at Milken as well. The administration is on the ground here, as we've been discussing. And he talked about the cost savings that came with his decision. the administration's move to eliminate the IECC, the energy efficiency mandate that was put in place by the Biden administration. You talk about red tape.

49:23He says this takes thirty thousand dollars off the cost of a home. Is that the kind of move that you would support? Is there common ground between the administration and Democrats on this? Or is it risky to eliminate energy efficiency right now? I think that it's risky to eliminate energy efficiency. I mean, I think we all agree that we want to have more and more efficiencies. I think that there are some things that should be adjusted. You know, it's the reason I'm on the Environment and Public Works Committee. We're looking at some of the permitting and some of the other things. In some instances, there are – balance is a great word.

49:51You know, I think balance is a great word. I'm looking for what the balance is. It reminds me of what my daughter said. You know, she told me coming to the Senate, make sure you listen out for people who don't necessarily agree with you. Take up some space and find yourself at some tables having conversations where you can get to a real solution. Some of those are right in the middle. I think the fringes are where we've been hanging out. I think we're going to have to come more to the middle to find a balanced approach. Because, again, as I've said, these are not theoretical conversations. If we're talking about homeownership and talking about ways that we can increase the housing supply and other things, energy efficiency is going to be important.

50:25But we also have to do so in a way that is reasonable, that's not burdensome, that doesn't slow us down or prevent us from reaching the goal of getting homeownership into the hands of more and more Americans, where we know, as a matter of fact, is where generational wealth is created. So we've got to listen to each other, but the balance in it, I think, is where we should be.

50:44Carol Massar:A lot of wealth created in the crypto market, although it goes up and down, as we know. Let's talk about the crypto bill. Last Friday, you and Senator Tillis unveiled a compromise bill, so-called, you know, got into stablecoin rewards. What's the progress on this, and when do you expect or anticipate a possible vote? And how do you deal with the ethics issue of an administration, a presidential family who has a lot of exposure investments in crypto? So, you know, I think I've come a long way. I mean, I'm going to answer that question as well. But if you're asking where we are, Senator Tillotson, I've done a lot of work to make sure that we are not only allowing innovation to grow, but protecting also many of the community banks that have been really important, making sure that deposit flight does not happen, that we're not allowing interest and yield to be paid solely on a balance, or that we're mimicking bank-like products without the protections of a bank.

51:37So we have been working on that, but also making sure that we are allowing innovation to grow. And I believe it's important for us to have regulated an industry that is already growing. We don't want America to be behind the rest of the world where crypto is concerned, AI and other things. And so really being at the table to to make sure we're negotiating. Having said that, you're right. There's some other issues. Illicit finance ethics. These are issues that absolutely have to be addressed. And and we're working with our colleagues. I know that on our side, we have Senator Cortez Masto, Senator Schiff and others who are working along in a bipartisan way to come up with some smart solutions so that ethics can be addressed on the larger public.

52:17Do the Republicans have those same concerns, those ethical concerns? I think some do. I think that some do. You know, not all, but I mean, similar to what we found on this banking issue and the interest issue. Senator Tillis made a tremendous difference when he joined me in raising this as an issue. And we found in doing so that we have colleagues on either side who agree with us. So there are some Republicans who are concerned about the ethics issue and have said that they want to see it addressed. And I want to see it. There's nothing more powerful than a retiring Republican in the Senate right now.

52:49You're making friends with the right people, Senator. I'm curious. Look, our audience has really basic questions when it comes to clarity. Is it going to pass and is it going to happen this year? Because when you talk about it, you make it sound like there's still a pretty long road. You know what? I think it can pass. I really do. I mean, I think we've come a long way. I think I hope so. It's a full calendar. We've had a lot of work. We've put a lot of work into this. I mean, we've been working tirelessly for months. What it will mean is we're going to have to have some compromise. You know, I think everyone will walk away from the clarity table just a little unhappy, both the banks and the crypto industry.

53:19What do you compromise on, though, potentially? Well, you know what? We've compromised and said we want the innovation to grow, but we don't want to create bank-like products without the protections of a bank. You cannot pretend to be a bank-like product without the protections. So was stablecoin yield the biggest holdup? That was a big holdup. We're still there, though, right? Well, I think we've resolved the yield issue. We did. We have resolved the yield issue in a way that I think prevents evasion of the laws, again, allows the innovation to grow. But, you know, we put some some I think some barriers in place that will allow both to be a little unhappy.

53:53But I think it's a way forward. How does it create more access for wealth creation for a broader public? Well, generally what we see when we see these kind of revolutions that we see that people who are underserved generally can't get in. The only people who can who can benefit from them are wealthy people. In this case, when we think about small businesses who, using, for example, a stable coin, can do transactions more quickly and more cheaply, this is a change. You know, it is something that will allow businesses to grow and allow more and more people, I think. How about for the debanked? That's where you're going here, right?

54:27Yeah, I think for the underbanked and the debanked, these are really game changers to allow more and more people to participate in a marketplace where they have been shut out before now. But again, we have to do so making sure we have the right regulation, that we have consumer protections in place, making sure we're protecting them. But for the underbank and the debank, this is a complete game changer to allow more and more people to get into the marketplace and to be able to participate and to make money.

54:56Carol Massar:I, you know, I ask this of our last guest. I have no idea how much time we have because I can't hear a thing. I think we're about 30 seconds out, so we'll keep it tight. Number one question everybody wants to know from you, just quickly. What are you being asked the most? Well, you know what? I think everyone wants to know what the way forward is. The people that I tend to serve are concerned about economic opportunity. They want to know what we're going to do to fix the place we are in our country where people are feeling really discouraged. And I think it's by participating in things like this to work together to find those ways forward.

55:34Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify, or wherever you get your podcasts. And you can find us live every weekday from Washington, D.C. at noontime Eastern at Bloomberg.com.

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