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00:00♪ DAVID: FROM BLOOMBERG'S WORLD HEADQUARTERS IN NEW YORK TO OUR TV AND RADIO AUDIENCES WORLDWIDE, WELCOME TO "BALANCE OF POWER," WHERE THE WORLD OF POLITICS MEETS THE WORLD OF BUSINESS. I AM DAVID WESTIN. WE START WITH A CHECK ON THE MARKETS. JOINING US IS ABIGAIL DOOLITTLE. NASDAQ DOWN AGAIN. ARE THE MARKETS WAITING TO HEAR FROM THE FED? ABIGAIL: IT IS ALL ABOUT THE FED. TYPICALLY AHEAD OF FED MEETINGS YOU SEE MARKETS FALL. TODAY WE HAVE BIG MOVES ACROSS ASSET CLASSES. RELATIVE TO STOCKS, WE MAINLY HAVE STOCKS LOWER. THE NASDAQ LEADING THE WAY AS YIELDS ARE CLIMBING. RIGHT NOW WE HAVE THE 10 YEAR YIELD AT 1.68%, ITS HIGHEST AND MORE THAN A YEAR. THAT BRINGS INTO QUESTION THE VALUATION, THE REFLATION, INFLATION. I THINK THAT IS THE BIG QUESTION. TRADERS AND INVESTORS LOOKING FOR COLOR AS TO WHETHER OR NOT FED CHAIR JAY POWELL STAND BY WHAT HE SAID A COUPLE WEEKS AGO IN TERMS OF NOT BEING WORRIED ABOUT INFLATION, AND IF IT SHOULD POP UP THE FED HAS TOOLS TO DEAL WITH IT. THIS YEAR IT IS EXTRAORDINARY, THE 10 YEAR YIELD CLIMBING, RIGHT NOW BACKING UP MORE THAN 70 BASIS POINTS ON THE YEAR. IT IS ONLY MARCH. THIS IS EVEN GREATER THAN THE TAPER TANTRUM. IT TECHNICALLY APPEARS MORE COULD BE AHEAD. THERE WILL STILL BE MORE VOLATILITY AHEAD. DAVID: IT SEEMS LIKE A WEEK AGO YOU AND I WERE TALKING ABOUT CONCERNS ABOUT MAKING IT 1.5, NOW WE ARE TALKING ABOUT CONCERNS OF PUSHING TO 1.7. ABIGAIL: THAT IS PROBABLY WHAT IS CONCERNING STOCKS. IDEALLY TRADERS WOULD PROBABLY LIKE TO SEE A GRADUAL RISE IN RATES. WHEN YOU HAVE RATES MOVE SO FAST SO FAR VERY UGLY, THAT CAUSES CONCERNS ABOUT INFLATION. THERE WAS ONE GUEST ON EARLIER TODAY WHO WAS TALKING ABOUT BOB MICHELE OF JP MORGAN -- HE WAS TALKING ABOUT THE IDEA WE ARE NOW A KEY LEVEL ON THE 10 YEAR YIELD, THE LEVEL RIGHT BEFORE THE TAPER TANTRUM IN 2013 WHEN RATE SHOT UP ANOTHER 100 BASIS POINTS. THAT ON TOP OF THE BIG MOVE WE'VE ALREADY HAD. DAVID: HOLD ONTO YOUR SEATS. LET'S STAY ON THE SUBJECT OF THE FED. IT JUST UNDER JUST TWO HOURS WE WILL HEAR FROM THE FEDERAL RESERVE, WITH SOME PEOPLE CONCERT THE 1.9 TRILLION DOLLAR RELIEF PACKAGE COULD TRIGGER INFLATION. ECONOMIST PAUL ROMER TOLD US YESTERDAY HE IS COMFORTABLE WITH THE INCREASED SUPPORT. PAUL: THERE ARE ALWAYS TWO DANGERS, YOU GO TOO FAR OR NOT FAR ENOUGH. I THINK WE ARE AT RISK OF NOT GOING FAR ENOUGH. WE MADE THE MISTAKE REPEATEDLY IN THE NEXT SEVERAL DECADES OF NOT GOING FAR ENOUGH. I AM COMFORTABLE WITH THE LEVEL OF STIMULUS THAT HAS ALREADY BEEN ENACTED. I THINK IT IS APPROPRIATE TO THINK SERIOUSLY ABOUT AN EXPANSION OF INVESTMENT IN INFRASTRUCTURE AND THINGS THAT COULD DRIVE JOBS FOR PEOPLE IN THE UNITED STATES. DAVID: DAN TARULLO WAS ONE OF THOSE FORMULATING FED POLICY WHEN HE SERVED AS THE GOVERNOR OF THE FEDERAL RESERVE BOARD. HE IS NOW PROFESSOR AT HARVARD LAW SCHOOL. WELCOME. IT DOES STRIKE ME THAT YOU'VE BEEN IN THE ROOM. GIVE US A SENSE OF WHAT THEY ARE LOOKING AT, HOW THEY ARE DECIDING WHAT THEY SHOULD SAY. MOST PEOPLE THINK THEY WILL NOT DO MUCH, BUT WHAT THEY SHOULD SAY ABOUT THE DEVELOPMENTS WE HAVE HAD. DAN: THEY ARE IN A DIFFERENT POSITION THAN WE WERE IN 2009 TO 2017. HERE IS WHERE I THINK THE DISCUSSION IS CENTERING, MAYBE IN THE ROOM AND CERTAINLY IN THE CORRIDORS. THEY CAME OUT LAST YEAR WITH A NEW FRAMEWORK FOR MONETARY POLICY, ONE THAT WAS GOING TO PAY LESS ATTENTION TO EXPECTED INFLATION, MORE ATTENTION TO ACTUAL INFLATION, MORE ATTENTION TO RATES LOOKING FOR MAXIMUM EMPLOYMENT. THAT NEW FRAMEWORK HAS NOT HAD A CHANCE TO AGE. IT CAME OUT AND CONDITIONS CHANGED QUICKLY WITH A STIMULUS PACKAGES LAST DECEMBER, AND NOW THIS ONE JUST ENACTED. THEY HAVE BOTH THE PROBLEM THEY DO NOT HAVE A TRACK RECORD IN THAT NEW FRAMEWORK, AND A CONDITION UNDER WHICH THEY DEVELOP THE NEW FRAMEWORK HAS CHANGED DRAMATICALLY. FOR JAY POWELL AND THE REST OF THE FOMC, THE QUESTION IS VERY MUCH ONE OF COMMUNICATION, AND COMMUNICATING HOW IT IS THEY ANTICIPATE THEIR NEW FRAMEWORK WILL FUNCTION IN WHAT IS AN ENVIRONMENT THEY WOULD NOT HAVE EXPECTED WITH HIGH PROBABILITY LAST YEAR. DAVID: IT IS NOT JUST THE $1.9 TRILLION. IT IS ALSO THE APPARENT IMMINENCE OF VACCINES BEING WIDELY DISTRIBUTED, WHICH WOULD CHANGE THE DYNAMICS OF THE ECONOMY FUNDAMENTALLY FROM WHAT WE HAVE HAD. AS THEY LOOK AT THINGS LIKE EMPLOYMENT, HOW THEY ANTICIPATE WHAT THOSE SORT OF THINGS MIGHT ME TO THE ECONOMY OVER THE NEXT SIX MONTHS OR SO? DAN: PROBABLY THE DISCUSSION IS GOING TO BE TO WHAT DEGREE HAS THIS BOUNCED BACK? WE CONTINUE TO HAVE HIGHER UNEMPLOYMENT. WE CONTINUE TO HAVE PEOPLE UNDEREMPLOYED. WE CONTINUE TO HAVE PEOPLE WORKING PART-TIME WHO WOULD LIKE TO BE FULL-TIME. THERE IS CLEARLY ADDITIONAL SLACK IN THE ECONOMY. I DO NOT THINK THERE'S ANY QUESTION ABOUT THAT. AT THE FED, WHAT THEY WILL BE ASKING THEMSELVES IS TO WHAT EXTENT ARE DEVELOPMENTS OVER THE COURSE OF THE NEXT QUARTER OR TWO BEYOND WHAT THEY WOULD'VE ANTICIPATED, EVEN WITH A QUICK SNAP BACK. YOU AND I HAVE TALKED ABOUT IT ON YOUR SHOW FOR THE LAST YEAR OR SO. THIS WAS AN UNPRECEDENTED ECONOMIC HIT WITH THE SHUT DOWN AND ITS DRAMATIC IMPACT ON THE REAL ECONOMY. I THINK WE WOULD ALL HAVE ANTICIPATED OR HOPED FOR A PRETTY DRAMATIC SNAPBACK AS WELL. THE QUESTION IS TO WHAT DEGREE ARE YOU BASICALLY WHERE YOU WERE IN EARLY 2020? TO WHAT DEGREE ARE YOU IN A FUNDAMENTALLY DIFFERENT SITUATION? DAVID: THE UNPRECEDENTED WORD IN THAT ANSWER IS WHAT STRIKES ME. UNPRECEDENTED CAN MAKE US NERVOUS BECAUSE WE ARE NOT SURE IF OUR GPS IS WORKING ANY LONGER. WE HAVE HAD DIFFERENT MODELS. YOU HAD PAULA KRUGMAN SAYING THIS IS NOT ABOUT INFLATION, ON THE OTHER HAND YOU HAVE LARRY SUMMERS TALKING ABOUT OUTPUT GAPS AND THEN PAUL KRUGGMAN SAYS THE OUTPUT GAP IS NOT RELATIVE -- NOT RELEVANT. DAN: I THOUGHT FOR SOME TIME WE DO NOT HAVE A WORKABLE THEORY OF INFLATION THAT IS USEFUL FOR REAL-TIME POLICYMAKING PURPOSES. THAT IS OBVIOUSLY MORE THAN A LITTLE DISCONCERTING FOR MONETARY POLICYMAKERS. THE RATIONAL EXPECTATIONS MODEL WAS DISPENSED WITH SOME TIME AGO. THE PHILLIPS CURVE OUTPUT APPROACHES, WHICH ARE DRIVEN QUITE LITERALLY BY ECONOMIC MODELING DO NOT SEEM TO HAVE PERFORMED VERY WELL FOR THE LAST COUPLE OF DECADES. PEOPLE HANG ON THE NOTION THAT INFLATION EXPECTATIONS IS THE MOST IMPORTANT VARIABLE. EVEN IF THAT IS TRUE, WE DO NOT HAVE A GOOD SENSE OF HOW THE PUBLIC INFLATION EXPECTATIONS CHANGE, WHEN THEY CHANGE, WHEN THOSE EXPECTATIONS BECOME UNANCHORED. HAVING WATCHED POUL KRUGMAN -- PAUL KRUGMAN AND READ SOME OF THE THINGS HE HAS WRITTEN, HE IS CAREFUL TO SAY PEOPLE IDENTIFYING RISKS ARE NOT BEING UNREASONABLE, BUT HE SAYS IN THE END HE IS NOT OVERLY CONCERNED ABOUT THE IMPACT OF INFLATION. LARRY SUMMERS AND OTHERS ARE MORE FOCUSED ON THE RISKS. DAVID: TALKING ABOUT THE RISKS, ARE THEY SYMMETRICAL? IF YOU LAY OUT THE RISKS OF GETTING IT WRONG ONE WAY OR THE OTHER. DAN: IN THE NEAR-TERM, I WOULD SAY I AGREE WITH PAUL ROMER, WHOSE CLIP YOU PLAYED JUST BEFORE WE BEGIN TO SPEAK. IN THE NEAR TERM THE RISKS OF DOING TOO LITTLE ARE GREATER THAN THE RISKS OF DOING TOO MUCH. I ALSO AGREE WITH THE PROPOSITION THAT HAS BEEN TRUE SINCE 2009. THAT IS FAIRLY STRAIGHTFORWARD, FAIRLY CLEAR. THE QUESTION WILL BECOME, OVER TIME, WHERE AND HOW ARE THERE CONSTRAINTS ON HOW MUCH IS DONE AND WHERE TO THE DANGERS BEGIN TO ARISE? I WOULD SAY IF ONE WERE LOOKING FOR CONCERNS, I WOULD FOCUS ON -- I THINK THE TREASURY MARKET IS A GOOD ONE TO BE LOOKING AT BECAUSE IT BRINGS TOGETHER A LOT OF ISSUES. IT BRINGS TOGETHER INFLATION, IT BRINGS TOGETHER THE DEBT AND SERVICEABILITY OF THE COUNTRY'S DEBT, AND ALSO PULLS IN THE U.S. POSITION GLOBALLY, WHICH MATTERS BOTH FOR ECONOMIC AND POLITICAL REASONS. DAVID: IF THE FED IS GOING TO PAY ATTENTION TO THE TREASURY MARKET, THE TREASURY MARKET IS SENDING POWERFUL SIGNALS. THE 10 YEAR YIELD HAS SHOT UP. IT APPEARS IT WILL CONTINUE TO KEEP GOING. AT WHAT POINT DOES THE FED SAY WE HAVE TO DO SOMETHING ABOUT THAT TO MAKE SURE IT DOES NOT GET OUT OF CONTROL? DAN: ONE WOULD THINK THEIR APPROACH WOULD BE, TO THE DEGREE THE RISE IN YIELDS REFLECTS INCREASED OPTIMISM ABOUT THE ECONOMY, WHICH ALSO MEANS INCREASED INFLATION, WHICH FROM WHERE WE HAVE BEEN WOULD BE A GOOD THING, THE DEGREE TO WHICH THOSE RISING YIELDS REFLECT THE POSITIVE FACTORS, THE REASON WHY YOU WANT A YIELD CURVE WITH A POSITIVE SLOPE ON THE ONE HAND, OR ON THE OTHER HAND, AS YOU AND ABIGAIL WERE DISCUSSING JUST BEFORE THIS SEGMENT, WHETHER THERE IS A ROILING IN MARKETS THAT REFLECTS SOMETHING ELSE. WHAT THAT SOMETHING ELSE MAY BE ALSO MATTERS. SOMETIMES THE ROILING REFLECTS PEOPLE WHO HAVE BEEN CAUGHT, INVESTORS WHO HAVE BEEN CAUGHT WITH POSITIONS THAT NO LONGER LOOK PROFITABLE AND THEY'RE TRYING TO CHANGE THOSE POSITIONS PRETTY QUICKLY. THAT IS NOT THE SORT OF THING YOU WANT THE FED RESPONDING TO. ON THE OTHER HAND, THE CHANGE IN YIELDS REFLECTS A FUNDAMENTAL REORIENT PATIENT TO WHAT PEOPLE THINK IS GOING TO BE HAPPENING -- REORIENTATION TO WHAT PEOPLE THINK WILL BE HAPPENING IN THE ECONOMY, THEN THE FED MAY WANT TO REACT. PULLING THOSE TWO THINGS APART IS VERY DIFFICULT. YOU HEAR PEOPLE TALK ALL THE TIME ABOUT RISK PREMIUMS. HOW MUCH OF THE INCREASE IN THE YIELD CURVE IS RISK RHENIUM? -- RISK PREMIUM? RISK PREMIUM IS NOT OBSERVABLE. WHAT AM I SAYING? I AM SAYING THAT IN THESE CIRCUMSTANCES, A LOT OF JUDGMENT IS REQUIRED. THAT IS WHY I COME BACK TO THE COMMUNICATION. I THINK THE FED NEEDS TO AND WILL TRY TO EXPLAIN HOW IT IS ASSESSING ALL OF THIS, EVEN THOUGH THEY CANNOT GIVE US A RIGHT LINE AND SAY HERE WERE -- SAY HERE IS WHERE WE WILL BEGIN TO ACT. DAVID: THANK YOU SO MUCH TO DAN TARULLO. FORMER FEDERAL RESERVE BOARD GOVERNOR. BLOOMBERG WILL HAVE LIVE COVERAGE STARTING AT 2:00 EASTERN TIME. COMING UP, WELLS FARGO CEO CHARLIE SCHARF JOINS US AN EXCLUSIVE INTERVIEW ON HIS COMPANY'S RESPONSE TO THE COVID PANDEMIC ONE YEAR ON. THIS IS "BOUNDS OF POWER" DAVID: THIS IS "BALANCE OF POWER" ON BLOOMBERG TELEVISION AND RADIO. IT HAS BEEN ONE YEAR SINCE MOST OF US WERE SENT HOME AS THE PANDEMIC SHUTDOWN OFFICES AND BUSINESSES. WELLS FARGO HAS MORE EMPLOYEES THAN ANY U.S. BANK. IT IS ONE OF THE COMPANIES THAT HAD TO ADAPT QUICKLY TO A DIFFERENT WORLD. WE WELCOME IT CEO, CHARLIE SCHARF. TAKE US BACK A YEAR, BUT ALSO FORWARD. WHAT HAS BEEN THE EFFECT ON WELLS FARGO EMPLOYEES? WHAT DID YOU DO AND WHEN YOU THINK YOU WILL BE ABLE TO GET THEM BACK IN THE OFFICE? CHARLIE: THANKS FOR HAVING ME. IT IS GREAT TO BE HERE. I THINK BACK TO A YEAR AGO. IT SEEMS LIKE YESTERDAY IN SOME RESPECTS. I'D BEEN AT THE COMPANY FOR FOUR MONTHS AND WAS STILL GETTING TO KNOW PEOPLE AND TRAVEL AROUND AND UNDERSTAND WHAT HER ISSUES WERE AND WHAT HER OPPORTUNITIES WERE. I WAS ON A CALL WITH SOME FOLKS AT JOHNS HOPKINS, AND THE SERIOUS OF THEIR VOICES UNDERSTOOD HOW SERIOUS THIS ISSUE WAS ABOUT TO UNFOLD. THE FIRST THING THAT WENT THROUGH MY MIND IS WE HAVE A RESPONSIBILITY IN TERMS OF THE WAY WE CAN CARE FOR OUR EMPLOYEES, BUT ALSO OUR CUSTOMERS AND OUR COMMUNITY. FIRST AND FOREMOST YOU SAY WHAT YOU HAVE TO DO TO ENSURE THE SAFETY OF THE PEOPLE THAT WE ARE RESPONSIBLE FOR? WE, LIKE MANY OTHER INSTITUTIONS , DID EVERYTHING WEEKEND TO ENABLE THOSE THAT COULD WORK FROM HOME TO WORK FROM HOME, AND VERY QUICKLY AND STILL TODAY WE HAVE AROUND 200,000 PEOPLE WORKING FROM HOME. AT THE SAME TIME WE HAVE AN AMAZING GROUP OF DEDICATED PEOPLE THAT COME IN EVERY DAY TO SERVE THEIR CUSTOMERS. TRY TO FIGURE OUT HOW TO KEEP THEM SAFE FROM EVERYTHING FROM MASKS TO BARRIERS, SOCIAL DISTANCING, UTILIZING DRIVE UPS, APPOINTMENTS. WHILE RECOGNIZING -- CONTINUE TO SERVE OUR CUSTOMERS THAT NEED US. DAVID: DO YOU HAVE A SENSE OF WHEN YOU MIGHT BE ABLE TO BRING SOME OF THOSE BACK? CHARLIE: RIGHT NOW WE HAVE ABOUT 90% OF OUR BRANCHES OPEN. WE HAD DIPPED DOWN TO ABOUT 70% AT THE PEAK OF THE CRISIS. WHEN WE THINK ABOUT BRINGING OUR EMPLOYEES BACK, I AM A FIRM BELIEVER THAT GREAT THINGS DO COME FROM PEOPLE BEING TOGETHER. FIRST AND FOREMOST, THIS IS A HEALTH CARE ISSUE. WE AS A MANAGEMENT TEAM, AND I'M PARTIALLY NOT INTERESTED -- I AM PERSONALLY NOT INTERESTED IN RUSHING PEOPLE BACK TO THE OFFICE. WE WILL BRING PEOPLE BACK WHEN IT IS SAFE AND WE WILL GIVE PEOPLE NOTICE. I AM HOPING WITH THE INCREASE IN VACCINATIONS THAT IT IS SOMETIME AROUND THE SUMMER, TOWARDS THE END OF THE SUMMER WHEN WE CAN BACK TO -- WHEN WE CAN GET BACK TO LIFE AS NORMAL. CITY BY CITY, STATE BY STATE, WE WILL MAKE THOSE DECISIONS WHEN THEY THINK IT IS SAFE. DAVID: ONE OF THE THINGS THIS PANDEMIC BROUGHT HOME WAS SOME OF THE DIFFERENTIAL EFFECTS THE PANDEMIC HAD ON DIFFERENT COMMUNITIES, PARTICULAR MINORITY COMMUNITIES, BLACK COMMITTEES AND HISPANIC COMMUNITIES. I AM TERRY'S ABOUT WELL -- I AM CURIOUS ABOUT WHAT WELLS FARGO IS DOING. THERE IS A SHAREHOLDER INITIATIVE ABOUT DOING AN AUDIT OF DIVERSITY THAT YOU'VE RESISTED. WHY NOT JUST DO IT? CHARLIE: JUST TO GO BACK WHERE WE STARTED, THERE IS NO QUESTION THE PANDEMIC HAS NOT AFFECTED PEOPLE EQUALLY. WHEN YOU LOOK AT WHITE UNEMPLOYMENT RATE, IT IS 5.5%. THE BLACK UNEMPLOYMENT RATE IS 10% IN THE HISPANIC IS 8.5%. THE IMPACT IS DISPROPORTIONATE. WE ARE DOING AN EXTRAORDINARY AMOUNT, BOTH INTERNALLY AND EXTERNALLY TO FIGURE OUT HOW WE CAN HAVE A DIRECT IMPACT, BUT WE CAN ALSO WORK WITH OTHERS. ONE OF THE THINGS WE DO IS WE TOOK ALL OF THE MONEY WE WERE ENTITLED TO EARN FROM THE GOVERNMENT LAST YEAR THROUGH PPP , WHICH FOR US WAS OVER $400 MILLION AND SAID WE WANT TO PUT THAT BACK TO THOSE WHO CAN HELP THOSE MOST IN NEED. $250 MILLION OF THAT WILL HELP CDFI'S THAT CAN HELP THE UNDERSERVED COMMUNITIES. ANOTHER 100 MILLION TO SMALL BUSINESSES AND THEN $50 MILLION FOR TECHNICAL ASSISTANCE. WE HAVE COMMITTED TO DOUBLING THE LEADERSHIP RANKS OF THE BLACK COMMUNITY WITHIN WELLS FARGO WITHIN THE NEXT FIVE YEARS. WE HAVE OPERATING COMMITTEE REPRESENTATION TODAY WHICH WE DID NOT HAVE WHEN I TOOK THE ROLE. AVENUE ROLE, DIVERSITY INCLUSION, INCLUDING RESPONSIBILITY FOR DRIVING MORE EFFECTIVE BUSINESS PROPOSITION FOR DIVERSE SEGMENTS AND ALL OF OUR BUSINESS. THAT REPORTS DIRECTLY TO ME. WE ARE DOING A TREMENDOUS AMOUNT. WE ARE GOING TO CONTINUE TO LOOK FOR WAYS WE CAN DO THINGS THAT ARE IMPACTFUL. IT IS NOT ABOUT HEADLINES, IT IS ABOUT DOING THINGS THAT WILL MAKE A MEANINGFULLY DIFFERENT IN THE COMPANY AND OUR COMMUNITY. DAVID: BUT NOT AN AUDIT? CHARLIE: WE ARE DOING OUR OWN WORK TO MAKE SURE WE UNDERSTAND EVERYTHING. WE WILL CONTINUE TO DISCLOSE MORE. I'M CONFIDENT THE WORK WE ARE DOING IS GOING TO ACHIEVE THE GOALS WE ALL HAVE SET FOR OURSELVES. DAVID: WE ARE SEEING THE ECONOMY ABOUT TO TAKE OFF BECAUSE THERE'S BEEN A LOT OF MONETARY AND FISCAL STIMULUS. IT IS BENEFITING THE BANKS ACROSS THE BOARD. WHEN YOU CAME TO WELLS FARGO LAST FALL, YOU HAD A LITTLE BIT OF A TIED BEHIND YOUR BACK WITH THE ASSET CAP FROM THE FED. WHEN YOU THINK YOU MIGHT BE ABLE TO GET RID OF THAT? CHARLIE: EVERYONE ASKS ME THAT QUESTION AND I WISH I COULD BE MORE SPECIFIC. WE KNOW THE WORK WE HAVE TO DO TO GET THE ASSET CAP LISTED. WE ARE DOING IT. I AM CONFIDENT WE WILL GET THE WORK DONE. IN THE MEANTIME, I HAVE AN AMAZING FRANCHISE, WE COME TO WORK EVERY DAY AND WE SERVE OUR CUSTOMERS EXTRAORDINARILY WELL. IT IS THE DEDICATION OF ALL OF OUR PARTNERS AND TEAMMATES AROUND THE COUNTRY THAT DO IT. WE WILL CONTINUE TO WORK THROUGH EVERYTHING WE NEED TO WORK THROUGH. WHEN WE CAN GROW THE ASSET, WE WILL DO IT. DAVID: WE ARE SEEING REMARKABLE PROJECTIONS ON GDP GROWTH IN 2021 AND 2022. WHAT ARE YOU LOOKING AT IN TERMS OF OVERALL GROWTH AND HOW DOES THAT SPECIFICALLY TRANSLATE INTO BUSINESS FOR WELLS FARGO? CHARLIE: WE ARE A PREDOMINANTLY U.S. BANK. WE LIVE AND BREATHE BY THE SUCCESS OF U.S. CONSUMERS, SMALL BUSINESSES, AND MIDDLE-MARKET COMPANIES AND LARGER COMPANIES AS WELL. TO THE EXTENT THEY ARE DOING WELL, WE DO WELL, AND WHEN THEY ARE NOT DOING WELL WE WILL NOT DO SO WELL. WHAT WE HAVE SEEN HIS REMARKABLE PROGRESS WITH THE ROLLOUT OF THE VACCINES. CONSUMER DEMAND IS EXTREMELY HIGH. OVER THE LAST COUPLE OF WEEKS WE HAVE SEEN MATERIAL IN PIECES IN CONSUMER SPEND, AND THAT IS BEFORE THE STIMULUS CHECKS HAVE ARRIVED, WHICH THE DEPOSITS ARE JUST ARRIVING TODAY. YOU PUT ALL OF THOSE THINGS TOGETHER PLUS ONGOING SUPPORT FOR THE FED AND WE ARE BULLISH IN TERMS OF WHAT THE THIRD AND FOURTH QUARTERS COULD LOOK LIKE. WE WILL SEE GDP GROWTH OF 6.5% FOR SURE. ULTIMATELY THAT IS GOOD FOR THE ENTIRE COUNTRY, AS LONG AS THE RECOVERY IS EVEN AND ALL BENEFIT , NOT SOME INDUSTRIES AND NOT SOME SEGMENTS OF THE POPULATION? DAVID: THAT IS WHAT I WAS GOING TO ASK ABOUT THE EVENNESS. WELLS FARGO, YOU DEAL WITH SMALL AND MEDIUM-SIZED COMPANIES, NOT JUST THE BIG ONES. ARE YOU SEEING A PICKUP IN THE SMALL AND THE MEDIUM? CHARLIE: WHAT WE ARE STARTING TO SEE IS WE WERE SEEING LOAN UTILIZATION DECLINING AND NOT A LOT OF DEMAND FOR LOANS. THAT APPEARS LIKE IT COULD BE BOTTOMING, WHICH DOES SAY SOMETHING ABOUT THE WILLINGNESS OF THOSE COMPANIES TO INVEST IN THE WAY THEY ARE THINKING ABOUT THE FUTURE. IT IS ALL VERY REAL TIME. WHEN YOU LOOK AT ALL OF THE THINGS THAT LINE UP TO WHAT COULD BE A STRONG SECOND HALF OF THE YEAR, THAT IS CERTAINLY THE WAY THOSE BUSINESSES WILL BE THINKING ABOUT IT. DAVID: REALLY APPRECIATE YOU SPENDING TIME WITH US. THAT IS WELLS FARGO CEO CHARLIE SCHARF. NOW WE WANT TO GET REACTION WITH BLOOMBERG SPECIAL CORRESPONDENT FOR BANKS, SONALI BASAK. THANKS FOR BEING WITH US. TELL US WHAT YOU TOOK AWAY FROM WHAT CHARLIE HAD TO TELL US. SONALI: REALLY INTERESTING INTERVIEW. ON ONE HAND, THE BRANCH STRATEGY. THE FACT THAT 90% ARE OPEN IS A BIG DEAL. SO MANY EMPLOYEES ARE IN THOSE BRANCHES. ANOTHER INTERESTING STATISTIC ABOUT THOSE BRANCHES IS WELLS FARGO WAS ONE OF THE BIGGEST NET CLOSURES OF BRANCHES IN 2020 ACCORDING TO S & P ANALYSIS. ANYTHING AROUND HIS STRATEGY AROUND THOSE BRANCHES IS INTERESTING. DAVID: HE SAID HE IS NOT GOING TO FORCE PEOPLE TO COME BACK. HE SEEMED TO HAVE A FAIRLY GENTLE TOUCH. SONALI: THAT GENTLE TOUCH, THE INVESTMENT BANKS ONE PEOPLE BACK RIGHT AWAY BUT IT IS A TALENT RETENTION ISSUE. WHEN YOU HAVE THOSE FIVE GIANT FIRMS THING YOU CAN TAKE YOUR TIME, IT BEHOOVES SOME OF THESE BANKS TRYING TO ATTACK TALENT SAYING WE ARE SLOW WALKING SOMETHING LIKE THIS. DAVID: TALK ABOUT THE ASSET CAP. HE SAID WE KNOW IT WE HAVE TO DO, WE WILL DO IT. WE HAVE ANY SENSE OF WHAT THAT TIME HORIZON IS FOR THAT? SONALI: THE GREAT NEWS IS THAT DISCUSSIONS WITH THE FED ARE MOVING IN THE RIGHT DIRECTION IT COULD BE LATER THIS YEAR, IT COULD BE INTO NEXT YEAR. IT WILL TAKE THEM TIME, BUT THE IDEA THAT THE CAP IS GOING TO LIFT, THAT HAS BEEN A REAL DRIVER FOR WELLS FARGO THIS YEAR, THE IDEA THEY COULD LEND AGAIN. WELLS FARGO, PRICE-TO-BOOK IS TRADING AT PAR, WHICH IS A BIG DEAL FOR CHARLIE SCHARF. THAT IS BETTER THAN CITIGROUP. DAVID: IF YOU'RE CHARLIE SCHARF, WHAT ARE THE BANK -- WHAT ARE THE PARTS OF YOUR BANK YOU THINK YOU CAN GROW AS OPPOSED TO THE ONES THAT DO NOT GROW AS MUCH? SONALI: INTO A BOOMING ECONOMY YOU WANT TO KEEP THE CORE BUSINESSES, CONSUMER, SMALL BUSINESSES, MORTGAGES GOING STRONG. CHARLIE SCHARF HAS ANOTHER OPPORTUNITY. THAT IS INVESTMENT BANKING. IT IS SOMETHING HE KNOWS WELL GIVEN HIS TIME AT JP MORGAN AND SOMETHING HE HAS THE OPPORTUNITY TO GAIN SOME SHARE WITH WELLS FARGO'S BALANCE SHEET. DAVID: GAIN SOME SHARE, BUT DOES HE HAVE ANY ADVANTAGE? THERE ARE SOME PEOPLE IN THAT BUSINESS ALREADY. THEY WILL NOT CEDE MARKET SHARE VOLUNTARILY. SONALI: THAT IS FOR SURE. IT WILL NOT BE EASY FOR THEM. WITH THAT SAID, THEY HAVE THE CHANCE TO DO IT. WE SAW THE BANKS THAT WERE ABLE TO LEAD WITH THEIR BALANCE SHEETS, GOLDMAN SACHS, CITIGROUP, BANK OF AMERICA -- BANK OF AMERICA WAS ONE OF THE TOP UNDERWRITERS LAST YEAR AND BANK OF AMERICA IS IS KNOWN TO NOT BE AS BIG AS MORGAN STANLEY AND GOLDMAN SACHS. ONCE WELLS FARGO WAS ABLE TO DO THAT WITH THEIR OWN BALANCE SHEET IT COULD BRING THEM BACK UP YOUR DAVID: LET'S BE HONEST. WELLS FARGO HAS HAD A ROUGH GO OF IT BEFORE CHARLIE SCHARF CAME IN. WE HAVE ANY SENSE OF WHETHER THEY ARE GETTING PASSED OR HAVE GOTTEN PAST REPUTATIONAL DAMAGE THEY SUFFERED? CHARLIE: IT IS A GREAT QUESTION. WE HEARD MAJOR, ACTORS, JOHN LEGEND CAME DOWN ON WELLS FARGO FOR THE YEARS OF MISTREATING CONSUMERS. THEY HAVE NEW MANAGEMENT ON THEIR SIDE TO DO SO. WHAT YOU ASKED HIM ABOUT DIVERSITY IS REALLY IMPORTANT BECAUSE AS A BIG CONSUMER BANK CANNOT SERVE SO MUCH OF THE COUNTRY IS A BIG DEAL. THERE HEAD OF HOME LENDING WAS PROFILED IN ONE OF OUR STORIES YESTERDAY AS ONE OF THE TOP BLACK BANKERS ON WALL STREET. SHE CALLED CHARLIE SCHARF HIMSELF TO GET THIS JOB AND IT IS SOMETHING SHE IS FOCUSED ON IN-HOME LENDING. DAVID: THANK YOU SO MUCH TO SMALLEY BOSTICK FOR REPORTING ON WELLS FARGO. ♪ GUY: THIS IS "BALANCE OF POWER" ON THE TELEVISION AND RADIO. I'M GUY JOHNSON. LET ME SHOW YOU SOME NUMBERS TO GIVE YOU AN IDEA OF WHAT IS GOING ON AS WE WRAP UP THE DAY. WE ARE WAKING FOR THE FED -- HOUR AND A HALF TO GO, BASICALLY. EVERYTHING IS QUITE QUIET AT THE END OF THE SESSION. STOXX 600 DOWN BY AROUND .4%. LET ME TALK TO YOU ABOUT THE SECTOR STORY. GRR REALLY CLEARLY TELLING US THAT WE ARE IN A POSITION WHERE COMMODITIES ARE UNDERPERFORMING. HERE WE GO, MUTUALLY. AUTOS UP BY 3% TODAY. VOLKSWAGEN AND B & W ABSOLUTELY ROARING AT THE MOMENT. BANKS HAD A RELATIVELY GOOD DAY TODAY. INTERESTING POST-FED TO SEE IF THE BANKING STORY GLOBALLY CONTINUES. BOTTOM END OF THE MARKET, YIELDS ARE UP TODAY. DIVIDEND PAY IS COMING UNDER A LITTLE BIT OF PRESSURE. HEALTH CARE AT THE BOTTOM END OF THE MARKET. MINERS ARE UNDER PRESSURE. LITTLE BIT OF A MOVE OUT OF THE COMMODITIES STORY OVER THE LAST COUPLE OF DAYS. THE REAL STANDOUT STORY WAS THE AUTO SECTOR, DOMINATED BY GERMANY. FTSE, DAX, CAC EUROPE, HAVING ANOTHER SOLID TODAY. FTSE 100 IN LONDON, RELATIVELY GOOD DAY AS WELL. HAVE NOT GOT INDIVIDUAL STOCK STORIES, BUT VODAFONE, 5 SPECTRUM AUCTION IN THE U.K. TODAY-- 5G SPECTRUM AUCTION IN THE U.K. TODAY DID NOT RAISE AS MUCH MONEY AS EXPECTED. TELECOM SECTOR BENEFITING FROM THAT, INTERESTING IN LIGHT OF VERIZON AND WHAT THEY HAD TO PAY AND THE HUGE IMPACT ON THE CORPORATE CREDIT MARKET. FTSE 100 DOWN BY .4%. LET'S TALK ABOUT INDIVIDUAL NAMES. I MENTIONED THE AUTO SECTOR. LET'S FOCUS ON WHAT IS HAPPENING. VOLKSWAGEN IS CONTINUING A SOLID RUN FROM YESTERDAY. THIS IS A HUGE CARMAKER FLAT ON ITS BACK FROM THE SHARE-PRICE POINT OF VIEW FOR QUITE SOME TIME. LAST COUPLE OF MONTHS, STACK ALMOST PARABOLIC AT THE MOMENT. FASCINATING TO WATCH. BMW OUT WITH NUMBERS UP TODAY. CAR SALES OUT OF EUROPE WERE QUITE GRIM. TO BE HONEST BMW NUMBERS WERE NOT GREAT. BUT LIKE VOLKSWAGEN, IT IS FOCUSING ON THE FUTURE AND EV. EGGS IN THAT BASKET. THE OTHER STORY AGAIN -- I FEEL LIKE I'M REPEATING MYSELF, BASICALLY THE SAME STORIES AS YESTERDAY -- AFTER ZENECA DOWN BY -- AFTER ZENECA WHAT -- ASTRAZENECA DOWN BY ONE PERSON AS THE WAR OF WORDS WITH BRUSSELS HEATS UP. WE WILL GET WORD ON WHETHER THE VACCINE IS SAFE CAN BE EXPECTED TO BE GIVEN THE GREEN LIGHT ONCE AGAIN. THE WAR OF WORDS BETWEEN BRUSSELS AND LONDON REALLY HEATING UP. WE WILL WAIT AND SEE WHAT HAPPENS WITH THAT STORY, DAVID, BUT THE STOCKS DOWN BY 1%. DAVID: THANK YOU, GUY JOHNSON. ASTRAZENECA AND CARS, THOSE ARE TWO REALLY IMPORTANT STORIES. BACK IN THE UNITED STATES, BREAKING RIGHT NOW. CONGRESS APPROPRIATED $410 BILLION OF STIMULUS PAYMENTS OUT TO PEOPLE. THEY HAVE ALREADY DISPERSED HALF OF THAT. THE TREASURY AND IRS HAVE ALREADY DISTRIBUTED IT TO AMERICANS. THEY ARE NOT LETTING THE GRASS GROW UNDER THEIR FEET. THAT'S TALK ABOUT EDUCATION, BECAUSE SOME OF THE MONEY FROM THAT $1.9 TRILLION WENT THROUGH K12 AND HIGHER EDUCATION. MOST PARENTS AGREED THAT THE SOONER WE CAN GET SCHOOLS BACK IN THE CLASSROOM, THE BETTER OFF WE WILL BE. WE STILL HAVE A WAYS TO GO. RANDI WEINGARTEN, PRESIDENT OF THE AMERICAN FEDERATION OF TEACHERS, LAID OUT WHAT HER MEMBERS WOULD LIKE TO SEE. RANDI: IF WE HAD TESTING LIKE THE NFL HAD SO YOU COULD NOT ONLY REOPEN, BUT STAY OPEN, BECAUSE YOU ARE MANAGING AND SEEING ASYMPTOMATIC SPREAD, WHICH IS MOST OF THE SPREAD HERE, AND IF WE HAD VACCINE ACCESS. MITIGATION, TESTING, 88% OF MY MEMBERS SITE THAT -- SAY THAT THEY WERE WILLING TO BE IN SCHOOL WITH A PLAN LIKE THAT BECAUSE THEY KNOW HOW IMPORTANT IT IS FOR KIDS TO BE IN SCHOOL AND DO IN-SCHOOL LEARNING. DAVID: FOR MORE ON THIS, WE WELCOME MARGARET SPELLINGS, WHO SERVED AS SECRETARY OF EDUCATION AND WENT ON TO HEAD 17 INSTITUTIONS COMPRISING THE NORTH CAROLINA SYSTEM. THANK YOU FOR BEING BACK WITH US. LET ME PICK BACK UP ON WHERE RANDY WEINGARTEN WAS. SHE SAYS 88% OF HER MENTORSHIP WOULD LIKE TO GO BACK TO THE CLASSROOM PROVIDED THEY HAD TESTING. THAT IS NOT NECESSARILY REALISTIC FOR WHAT IS KEEPING STUDENTS AND TEACHERS OUT OF THE CLASSROOM NOW? MARGARET: I THINK IT IS UNCERTAINTY, BUT AS WE GET MORE VACCINE PENETRATION, THAT GOES AWAY. WE ALL KNOW THAT BEING OUT OF SCHOOL IS TAKING AN ENORMOUS TOLL ON OUR CHILDREN -- THEIR MENTAL HEALTH AND THEIR EDUCATIONAL PROGRESS. HE, THEIR FUTURES ARE GOING TO SUFFER MIGHTILY -- OUR ECONOMY, THEIR FUTURES ARE GOING TO SUFFER MIGHTILY IF WE DON'T START TRIAGING THE LEARNING LOSS THEY HAVE SUFFERED THIS YEAR. DAVID: MY UNDERSTANDING FROM PUBLIC HEALTH OFFICIALS IS THE CHILDREN ARE SAFER IN THE CLASSROOM THAN THEY ARE AT HOME. IF THAT IS TRUE, I DON'T UNDERSTAND WHY WE AREN'T ALREADY BACK IN THE CLASSROOM. I UNDERSTAND THERE IS UNCERTAINTY, I UNDERSTAND THERE IS SOME RISK. BUT IF WE ARE TRAINED TO SOLVE THIS EQUATION IN THE BEST INTEREST OF CHILDREN, WOULDN'T THEY BE BACK IN THE CLASSROOM? MARGARET: WELL, THE DATA DOES TELL US THAT YOU ARE SAFER IN YOUR SCHOOL THAN IN YOUR COMMUNITY OVERALL, ANOTHER GREAT REASON LET'S GET OUR STUDENTS BACK IN SCHOOL FOR THE FRANKIE,--FRANKLY, SCHOOL DISTRICT HAVE BEEN VERY ACCOMMODATING FOR PARTICULAR EXIGENT SITUATIONS WHERE A STUDENT NEEDS TO LEARN VIRTUALLY ONLY, AND THERE ARE OPTIONS. BUT WE HAVE SEEN OUR PRIVATE SCHOOLS OPEN SUCCESSFULLY IN PERSON, AND THOSE OFTEN DISADVANTAGED STUDENTS AND ADVANTAGED STUDENTS ARE MAKING PROGRESS AND SPEEDING AHEAD. IT IS THOUGH STUDENTS IN PUBLIC SCHOOLS THAT ARE, FRANKLY, BEING UNDERSERVED BY NOT BEING IN SCHOOL. DAVID: SECRETARY SPELLINGS, LET'S PICK UP ON THE LOSS OF EDUCATION WE ARE SUFFERING. I TALKED TO SOMEBODY YESTERDAY WHO STUDIED 63 SCHOOL DISTRICT IN AND AROUND PHILADELPHIA, AND WHAT THEY CAME UP WITH IS THAT ELEMENTARY SCHOOL CHILDREN WHO ARE NOT ABLE TO GO INTO A CLASSROOM, THEY WILL LOSE 10% OF THEIR LIFETIME EARNINGS -- THAT IS OVERALL, AND IT IS DOUBLE THAT LOSS FOR BLACK CHICKEN BECAUSE THEY TEND TO BE EXCLUDED--BLACK CHILDREN BECAUSE THEY TEND TO BE EXCLUDED WORSE THAN THAT. CAN WE MAKE UP THAT KIND OF LOSS? MARGARET: WE CAN, ABSOLUTELY CAN, AND WE HAVE TO TRIAGE IMMEDIATELY THROUGH EXTENDING THE SCHOOL YEAR, EXTENDING THE SCHOOL DAY, TUTORING PROGRAMS, USING RESEARCH-BASED PRACTICES AROUND MATH AND DEVELOPMENT THAT WORKS. EDUCATION IS SEQUENTIAL. IF WE DON'T GET THESE KIDS CAUGHT UP, THEY, AS YOU SAY AND AS THAT STUDY SAYS, WILL SUFFER BIG CONSEQUENCES THROUGHOUT THEIR LIFETIME, AND OBVIOUSLY OUR ECONOMY WILL SUFFER AS WELL. DAVID: ONE OF THE THINGS THAT I LEARNED FROM THAT STUDY WAS IN FACT THERE IS A DIFFERENTIAL IN THE LOSS BETWEEN READING ON ONE HAND AND MATH ON THE OTHER. MATH, FOR THE STUDY INDICATES IS IT IS ALL MOST WORTHLESS TO DO REMOTE LEARNING. INCREASED KNOWLEDGE FROM REMOTE LEARNING WAS ALMOST ZERO. IS THAT YOUR EXPERIENCE IN GENERAL? IS THERE DIFFERENTIATION BETWEEN READING AND MATH ON REMOTE LEARNING? MARGARET: YOU KNOW, THE POINT YOU ARE MAKING IS THAT DATA AND ASSESSMENTS ARE CRITICAL TO CORRECTLY DIAGNOSING AND SOLVING THE PARTICULAR ISSUES AND HAND. INDIVIDUAL STUDENTS, CLASSROOMS, SCHOOL SYSTEMS. BUT YES, THE POINT ABOUT SEQUENTIAL LEARNING AND BEING GUIDED BY A TEACHER FROM A TUTOR EFFECTIVE CURRICULUMS, WE KNOW WHAT TO DO, BUT WE HAVE TO GET THESE KIDS IN SCHOOL AND DIAGNOSE WHERE THEY ARE TODAY AND TRIAGE ESPECIALLY AROUND READING AND MATH, THE BASIC BUILDING BLOCK SKILLS. DAVID: THERE ARE REAL EDUCATION LOSSES THAT ARE DOCUMENTED AS WE SPEAK, BUT WHEN WE HAVE FOCUSED ON WHAT IS THAT PUBLIC SCHOOLS FOR MANY CHILDREN DO A LOT MORE THAN JUST EDUCATE. THEY ARE PLACES WHERE YOU GET FED, PEOPLE WERE PEOPLE PAY ATTENTION AND MAKE SURE YOU'RE OK AND NOTHING IS GOING ON AT HOME THAT IS THAT FOSSIL WHAT KIND OF LOSS IS THERE FROM SOCIAL SERVICES FROM NOT HAVING SCHOOLS OPERATING? MARGARET: YOU'RE RIGHT, OBSOLETE, THEY ARE STARK. MENTAL HEALTH SERVICES CAN FOOD SERVICES, VACCINATION, SUPPORTS AROUND CHILD ABUSE AND THE LIKE, IT IS REALLY, REALLY -- I THINK WE HAVE SEEN IN THE PANDEMIC THIS PAST YEAR THE CRITICAL NATURE OF OUR SCHOOLS TO THE FUNCTIONING OF OUR FAMILIES, THE FUNCTIONING OF OUR ECONOMY, AND THE GROWTH OF OUR YOUNG PEOPLE. DAVID: ONE MORE QUESTION, SUBJECT YOU KNOW TERRIBLY WELL. HIGHER EDUCATION. WHAT HAS THAT PANDEMIC MEANT FOR HIGHER EDUCATION? MARGARET: WELL, GOOD NEWS, BAD NEWS. THE GOOD NEWS IS WE HAVE LEARNED WE CAN ADAPT. WE HAVE LEARNED WE CAN USE TECHNOLOGY MORE EFFECTIVELY. WE HAVE MADE A LOT OF PROGRESS IN A SHORT PERIOD OF TIME. WE HAVE LEARNED THAT THOSE RELATIONSHIPS JUST LIKE IN K-12 EDUCATION ARE SO ABSOLUTELY CRITICAL TO PROGRESS. STUDENTS NEED TO BE WITH THEIR PEERS. THEY NEED TO BE WITH ADULTS CARE ABOUT THEM. THEY NEED TO BE ON TRACK TO GRADUATION AND MAKING PROGRESS. A LOT OF THE SAME LESSONS WE HAVE LEARNED THE HARD WAY IN K12. DAVID: I READ THAT COMMUNITY COLLEGES HAVE BEEN HIT PARTICULARLY HARD. MARGARET: IN TERMS OF ENROLLMENT DECLINE, ABSOLUTELY. WHEN YOU THINK ABOUT THE KIND OF STUDENT THAT ATTENDS A COMMUNITY COLLEGE, THAT IS OFTEN THE PERSON THAT IS GETTING SKILLS FOR A NEW JOB BECAUSE THEY HAVE BEEN LAID OFF, BECAUSE AFFORDABILITY IS AN ISSUE. WE'LL SEE THE STIMULUS FUNDS HELP SUPPORT INSTITUTIONS AND STUDENTS THAT ARE TRYING TO GAIN THOSE SKILLS. BUT YES, IT IS A WORRISOME SIGN NOT ONLY FOR THEM, BUT FOR OUR ECONOMY AS WELL FOR DAVID: SEC. SPELLINGS, THANK YOU SO MUCH FOR DRAWING US. MARGARET SPELLINGS, FORMER U.S. EDUCATION SECRETARY. COMING UP, THE CHANGING OF THE GUARD AT THE SEC. WE TALK WITH THE FORMER SEC CHAIR MARY JO WHITE ABOUT WHAT TO LOOK FOR. THIS IS "BALANCE OF POWER" ON BLOOMBERG TELEVISION AND RADIO. DAVID: THIS IS "BALANCE OF POWER " ON BLOOMBERG TELEVISION AND RADIO. I AM DAVID WESTIN. PRESIDENT BIDEN'S NOMINEE FOR SEC CHAIR GARY GENSLER IS AWAITING A VOTE BY THE FULL SENATE. FOR SOME THOUGHTS WE HEAR FROM SOMEONE WHO HAS HELD THAT JOB. MARY JO WHITE HELD THE TITLE UNDER PRESIDENT OBAMA. THANK YOU SO MUCH FOR BEING WITH US. REALLY APPRECIATE IT. IN BROADBRUSH, I KNOW YOU KNOW GARY AND SLUR SOME. OR YOU EXPECT FROM THE -- WHAT WOULD YOU EXPECT FROM THE GARY GENSLER SEC? MARY JO: PLEASURE TO BE HERE. GARY GENSLER AND I OVERLAP BITE NINE MONTHS. FIRST OF ALL, HE IS EXTRAORDINARILY KNOWLEDGEABLE ABOUT THE MARKETS AND EARNED A REPUTATION THAT IS AN AGGRESSIVE POST DODD-FRANK REGULATOR AND I EXPECT TO SEE HIM CARRY THAT OVER. GENERALLY I THINK IT WILL BE A MORE REGULAR REGIME THAN THE PAST FOUR YEARS ON THE ENFORCEMENT SIDE OF THINGS. I THINK HE WILL SEE MORE ATTENTION TOWARDS WALL STREET THAN IN THE LAST FEW YEARS ON THE ENFORCEMENT SIDE. DEEP KNOWLEDGE OF THE MARKETS, NATURALLY LEADING VARIOUS KINDS OF MARKET STRUCTURE ISSUES INCLUDING THOSE WE SEE WITH GAMESTOP AND THE ONLINE BROKERS FOR RETAIL INVESTORS, ALL OF THOSE. AND HE WENT ON AND I DID CATCH A BIT OF HIS CONFIRMATION HEARING, AND YOU WILL FOCUS ON ENHANCING-- EH WILL-- HE WILL FOCUS ON ENHANCING ESG DISCLOSURES, ADMINISTRATION-WIDE PRIORITY. I THINK YOU WILL SEE HIM PRETTY AGGRESSIVE IN THAT SPACE. ACTING CHAIR OF THE SEC NOW IS QUITE PROACTIVE IN THAT SPACE ALREADY. AND WHETHER OR NOT THAT IS IN CONSULTATION, DON'T KNOW, BUT IT IS CONSISTENT WITH WHAT YOU EXPECT FROM HIM. THE OTHER PLACE I EXPECT HIM TO GO BECAUSE IT IS AN EXPERTISE OF HIS AND IT IS A PRIORITY TO FIGURE OUT IS WHO SHOULD REGULATE AND HOW SHOULD YOU REGULAR CRYPTOCURRENCY--HOW YOU SHOULD REGULATE CRYPTOCURRENCY. THERE WAS REPORT ABOUT EIGHT DIFFERENT REGULATORS CLAIMING TERRITORY WITH RESPECT TO CRYPTOCURRENCY. THAT NEEDS TO BE SORTED OUT, AND I THINK HE WILL BE ACTIVE IN THAT SPACE. DAVID: LET'S PICK UP ON TWO OR THREE OF THOSE. GOODNESS KNOWS IT IS IN THE NEWS A LOT. GAMESTOP LOST OVER $60,000. I'VE HEARD IT SAID THAT CRYPTOCURRENCY CANNOT SURVIVE WITHOUT GOVERNMENT REGULATION, THAT THE GOVERNMENT CANNOT ALLOW IT TO GO UNREGULATED. WHERE DOES THAT REGULAR INCOME FROM BES--REGULATION COME FROM BEST? SOME PEOPLE TALK ABOUT THE CFTC. MARY JO: THAT IS A HARD ONE TO ANSWER, BECAUSE FRANKLY WHAT IS GOING ON NOW IS A ROUND PEG IN A PROVERBIAL SQUARE HOLE SOMEPLACE, WHETHER IT IS COMMODITY CURRENCY, IF IT IS SECURITY, A BIG ISSUE. IF IT IS THE SEC, SHOULD BE DONE TOGETHER LEGISLATIVELY YOU HAVE TO DO THIS, AND SOME WAYS THAT IS THE BEST SOLUTION BUT NOT THE REALISTIC SOLUTION. THE FIRST THING THAT I EXPECT IN THIS SPACE GERMAN CHANCELLOR IS WHO -- CHAIRMAN GENSLER IS WHOSE JURISDICTION. NOT SHYING AWAY FROM REGULATION, BUT THEY NEED CLARITY OF REGULATION. I THINK PEOPLE WORKED VERY HARD AT THAT. DAVID: YOU MENTIONED THE ONLINE BROKERAGE AND THE ORDER FLOW, GAMESTOP, BUT NOT JUST GAMESTOP BY ANY MEANS. IS THAT A MATTER OF NEW REGULATION? IS IT A MATTER OF EXISTING LAWS IN RELATION TO -- REGULATIONS? MARY JO: THERE IS PLENTY TO BE DONE WITHIN THE EXISTING REGIME. THE CHAIR AS INDICATED HE WILL TAKE A CLOSE LOOK AT THE PACE OF ORDER FLOW, RESULTING IN NOT ONLY SOME COSTS TO RETAIL INVESTORS BUT BEST EXECUTION OTHERWISE. THE SEC HAS THE AUTHORITY TO DO SOMETHING ABOUT THAT. THE FUTURES OF THE ONLINE BROKERAGE. SOME OF THE GAME LIKE FUTURES NEEDS TO BE AT LEAST DEALT WITH BY REGULATION. ANOTHER CLEAR JURISDICTION ISSUES CAPITAL REQUIREMENTS FOR THE BROKERS. YOU DON'T FALL SHORT, VERY VOLATILE, ACTIVE MARKET. MUCH OF THAT TO BE DONE WITH EXISTING REGIME. ONE PLACE THEY WILL NEED TO PAY A LOT OF ATTENTION TO, MORE CLARITY TO, WHAT IS MARKET MANIPULATION. I DON'T SEE CALLING FOR LEGISLATIVE CHANGE, BUT IT REQUIRES SOME REGULATORY CHANGE OR CHANGED BY GUIDANCE. DAVID: ANOTHER THING IS WE CALL IT ESG, ENVIRONMENTAL SOCIAL GOVERNANCE, ISSUES ON THE MIND OF THE WHITE HOUSE. PUT ASIDE THE SEC, PRESIDENT BIDEN COMES AND FOCUSED ON THE ISSUE THROUGHOUT HIS ENTIRE ADMINISTRATION. IS THAT A MATTER OF DISCLOSURE? WHAT CAN BE DONE IN THE ENVIRONMENTAL SPACE? MARY JO: CLIMATE CHANGE IN THE ENVIRONMENTAL SPACE, WORKFORCE ISSUES, CLEARLY A PRIORITY OF THE ENTIRE ADMINISTRATION. YOU HAVE TO THINK ABOUT THE SEC IS AN INDEPENDENT AGENCY, A DISCLOSURE AGENCY, PRIMARY POWER. YOU HAVE SEEN THE CHANGE ALREADY UNDER THE ACTING CHAIR, AND YOU HAVE GOT SPECIAL ADVISOR TO THE CHAIR ON ESG ISSUES COMMISSIONING THE DIRECTIVE TO LOOK AT THE FILINGS OF PUBLIC COMPANIES AND COMPARE IT TO THE GUIDANCE THE SEC ACTUALLY PUT OUT UNEMPLOYMENT RISKS, THE NEW TASK FORCE, LOOKING AT THE DISCLOSURES THAT ARE BEING MADE IN THE ENVIRONMENTAL SPACE IN THE CLIMATE-CHANGE SPACE, ARE THEY ACCURATE. THE DIVISION OF EXAMINATIONS OF THE SEC LOOKS AT BROKER-DEALERS AND ADVISORS, FOCUSING ON THOSE ISSUES. THERE IS A LOT THE SEC CAN DO IN THAT SPACE, BUT THE CHALLENGE IS WHERE DOES THE JURISDICTION END IN TERMS OF THE PROPER ROLE OF THE SEC? YOU ARE GOING TO SEE A LOT OF ACTIVITY THIS WEEK. THE ACTING CHAIR PUT OUT HER OWN REQUEST FOR COMMENT AND INPUT FROM THE PUBLIC ON THAT. IT IS EASIER SAID THAN DONE. INVESTORS WANT THAT INFORMATION. IT IS DONE IN A WAY THAT IS COMPARABLE IN THE METRICS CAN BE COMPARED TO EACH OTHER. THAT IS A HEAVY LIFT, AND WHO SHOULD REALLY DO IT? THE SEC CAN PROVIDE GUIDANCE, BUT YOU NEED ANOTHER ENTITY UNDER THE JURISDICTION MUCH LIKE THE ACCOUNTING RULES FOR SUSTAINABILITY BORDER THAT LOOKS AT THE VARIOUS DISCLOSURE ISSUES IN THE ESG SPACE. A LOT OF ACTIVITY IN THE CHALLENGE FOR CHAIRMAN GENSLER TO BE WHERE THE PROPER ROLE OF THE SEC IS. DAVID: A LOT FOR ALL OF US TO WATCH IT FOR YOU TO DEAL WITH. MARY JO WHITE, FORMER SEC CHAIR. FOR "FIRST WORD" NEWS CAN WE GO TO MARK CRUMPTON. MARK: THE WORLD HEALTH ORGANIZATION SAYS ASTRAZENECA'S COVID-19 VACCINE SHOULD CONTINUE TO BE ADMINISTERED AS THE BENEFITS OUTWEIGH ITS RISKS. REPORTS OF BLOOD CLOTS AND SOME PEOPLE WHO RECEIVED THE ASTRAZENECA SHOTS LED TO SEVERAL EUROPEAN UNION MEMBER STATES PAUSING THE USE OF THE VACCINE. THE EUROPEAN MEDICINES AGENCY IS EXPECTED TO PROVIDE THE DEFINITIVE ASSESSMENT ON THURSDAY. MEXICO AND CANADA ARE REPORTEDLY AT THE TOP OF PRESIDENT BIDEN'S LIST OF COUNTRIES TO RECEIVE EXPORTS OF U.S.-MADE CORONAVIRUS VACCINES. BLOOMBERG HAS LEARNED THAT NO OFFICIAL DECISION HAS BEEN MADE, BUT THE TWO COUNTRIES ARE THE TOP-OF-THE-LINE. THE TIMING OF ANY EXPORTS IS UNCLEAR. PRESIDENT BIDEN AS IT SAID THE U.S. WON'T SHARE VACCINES UNTIL THERE WERE ENOUGH DOSES FOR EVERY AMERICAN WHO WANTS TO BE VACCINATED. THE NEW YORK STATE ASSEMBLY HAS HIRED A LAW FIRM TO CARRY OUT AN IMPEACHMENT INVESTIGATION INTO GOVERNOR ANDREW CUOMO. THE INVESTIGATION IS EXPECTED TO SPAN MULTIPLE ACCUSATIONS OF SEXUAL MISCONDUCT AND HARASSMENT AGAINST THE GOVERNOR, AS WELL AS CLAIMS THAT HIS ADMINISTRATION WITHHELD INFORMATION ON COVID-19 NURSING HOME DEBTS. MILLIONS OF AMERICANS HAVE ALREADY RECEIVED THEIR STIMULUS PAYMENTS. THE TREASURY DEPARTMENT AND THE INTERNAL REVENUE SERVICE HAVE DISTRIBUTED MORE THAN HALF OF THE $410 BILLION IN FUNDS THAT INDIVIDUALS THAT CONGRESS APPROVED EARLIER THIS MONTH. 90 MILLION HOUSEHOLDS HAVE BEEN SENT $242 BILLION IN PAYMENTS. THE FIRST ROUND OF THE $1400 PAYMENTS WERE MOSTLY SENT BY DIRECT DEPOSIT. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM MARK CRUMPTON. THIS IS BLOOMBERG. DAVID: COMING UP "BALANCE OF POWER" CONTINUES ON BLOOMBERG RADIO. WE WILL TALK TO THE EXECUTIVE VICE PRESIDENT OF THE U.S. CHAMBER OF COMMERCE. PLUS, WE WILL PREVIEW THE FED DECISION, WHICH COMES OUT AT 2:00 P.M. EASTERN TIME, FOLLOWED BY JAY POWELL'S NEWS CONFERENCE AT 2:30. THIS IS "BALANCE OF POWER" ON BLOOMBERG TELEVISION AND RADIO.

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'Balance of Power' Full Show (03/17/2021)

"Bloomberg: Balance of Power" focuses on the intersection of politics and global business. Wells Fargo CEO Charlie Scharf discusses the state of his bank, a year into the pandemic. Plus, comment on cryptocurrency regulation from former SEC Chair Mary Jo White and a look at the Fed decision with former Fed governor Dan Tarullo (Source: Bloomberg)

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