00:00What does the Fed do? Is it just sort of sit on your hands and just wait for the economic
00:04ripples, if at all, when they do show up?
00:07Yeah, I think there's so much uncertainty. They're wise just to stand pat.
00:11They really don't know which direction this could go.
00:15Inflation was high even before this energy shock.
00:18It was above their preferred measure was well above 2 percent, a little over 3 percent.
00:24So inflation is still a problem.
00:27And the thing about inflation is it hurts everybody.
00:30Borrowing costs, lower rates, that helps borrowers. It hurts savers.
00:33But inflation hurts everybody.
00:35So in my view, if there's uncertainty, you kind of lean towards being a little more hawkish, not a little
00:40more dovish, especially in a situation like this.
00:44And, you know, we don't know what this war could bring, what kind of economic disruptions, how it might spread.
00:49And I think they want to keep the powder dry, too.
00:52So, yeah, I think there are wise just to stand pat and see what happens.
00:56And there was actually we saw some real time data coming out of the Chicago Fed and others kind of
01:01showing that monetary policy, at least for right now, is not restrictive, at least in their view.
01:06And it gets to the idea, too, and particularly drawing on your experience in the banking sector, this idea that
01:11we haven't, at least right now, seen any material slowdown in loan growth.
01:15We've had, you know, some pockets of stress when it comes to delinquencies, et cetera.
01:19But nothing that's coming even close to what we saw in previous down cycles.
01:25Is that your view as well?
01:26Yeah, that's right.
01:27And I think, if anything, I think we have a little too much credit.
01:30Look what's been going on in the private credit with the private credit funds.
01:33Some of the loans they've been making, you know, I think it's certainly not restrictive, maybe a little loose.
01:39So, again, there's no if there was evidence of that, that would change the equation.
01:44But there's not.
01:45If anything, it's a little loose, in my view, at this point.
01:48Do you feel comfortable, though, right now when we talk about regulatory oversight, given, and I don't mean just the
01:54oil shock that we're going through right now,
01:56but obviously what's been going on with private credit, obviously the potential impact of tariffs,
02:01this idea that we do have a financial regulatory system in place that can respond effectively if we do get
02:09to a more critical precipice?
02:11Yeah, well, I think so.
02:15You know, there has been some fairly significant deregulation going on with the new administration,
02:22a significant weakening of a key capital requirement called the leverage ratio.
02:27Today, they were proposing more rules on what it's called risk-based capital standards, and we'll see where that goes.
02:35That might be weakened as well.
02:36So, it does concern me, and not that the post-crisis rules were perfect.
02:41They're not.
02:41They were too complicated.
02:42They reached too far.
02:44The smaller banks, some of the entities, it really had nothing to do with the crisis.
02:47But overall, they were needed, especially with the largest systemic financial institutions.
02:53And to weaken them is really ill-advised.
02:55So, I do hope that while they're looking at, you know, all this list of deregulatory measures that they want
03:02to move forward with,
03:03they're also looking at things like what's going on in Iran, those uncertainties, private credit exposures that could come back
03:11and impose some significant losses on banks, and they need to have enough capital to absorb them.
03:17I'm also curious, too.
03:18I mean, we were speaking just a little bit earlier in the program with the SEC Director of Corporation Finance
03:24about this potential proposal,
03:26whether it comes true or not, of loosening the quarterly reporting requirements, potentially going to a semi-annual system.
03:32And it's kind of a head-scratcher.
03:33I understand why companies want it.
03:35But given all the talk right now about private, what's going on, private credit, and the lack of transparency there,
03:40and the idea that for public companies, we might create a system where at least they wouldn't have to be
03:46as transparent,
03:46at least with the same frequency, is there a potential risk there?
03:50Or are you comfortable maybe allowing companies to say, yeah, maybe a semi-annual system is better for us?
03:55Yeah.
03:56I actually don't think that's a big deal one way or the other.
03:59They do semi-annual in Europe.
04:02You know, I've been on several boards, served on audit committees.
04:05Quarterly reporting is very resource and time-intensive, and it's helpful to investors.
04:11I don't begrudge it, but, you know, I can understand why some companies would want to go semi-annual,
04:18and I don't think that would be particularly harmful if they do.
04:22Investors still may want it, even if the SEC allows it.
04:25I think, you know, broader picture, what Paul Atkins is trying to do is make it easier to become public,
04:31because there's been such a decline in publicly traded companies.
04:35I don't think this is going to help much, but I think I'm sympathetic to his objective.
04:39But if he really wants to make it more attractive for companies to go public,
04:43I think he needs to make it less attractive for companies to, say, private.
04:47But accredited investors now, which can invest in non-public companies, they're like 40 million people.
04:53The standards are not high.
04:55They haven't been adjusted for decades.
04:57And so that, you know, if you're looking at public-private and you can access all of this money without
05:03being public,
05:04then your incentives to go public are reduced.
05:06So I think that's part of the solution here.
05:08That would be much harder.
05:09But, again, I do applaud the fact that he's trying to make it easier to be public,
05:13because we do need more of these companies entering the public space.
05:17Even with semi-annual disclosure, they still have a lot better transparency and regulatory oversight.
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