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tv   Whatd You Miss  Bloomberg  November 22, 2021 4:30pm-5:00pm EST

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caroline: from bloomberg world headquarters in new york, i'm caroline hyde. this is a momentous day as president biden makes his pick for the federal reserve. the economy is still licking its wounds from the pandemic and today, we are going to talk about what it means for
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regulation. the president delaying a decision on the key job. we will discuss where the central bank is headed when it comes to crypto oversight. let's talk about some of the highlights from today's announcement. president biden: when our country was hemorrhaging jobs last year and there was panic in the financial markets, his steady and decisive leadership help to stabilize markets and put our economy on track. >> along with vaccines that enabled the economies reopening set the stage for a strong recovery. today, the economy is expanding at its fastest pace in many years, carrying the promise of a return to maximum employment. >> i'm deeply honored you are trusting me with this responsibility at a creek cult time. i'm committed to perk -- to putting working americans at the center of my work at the federal reserve. this means getting inflation
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down at a time people are focused on their jobs and how far their paychecks will go. taylor: for more insight, let's bring in the professor of economics who previously served as a special advisor to the fed on monetary policy, strategy and communication. we have had a few hours to digest these headlines. how are you thinking about the composition of what a federal reserve may look like heading into next year and how they are equipped to handle a hot economy and rising inflation. >> i'm a big believer in teamwork and i think this has a promise to be a really great team. they are incredibly well qualified and as the new vice chair, she is going to be not only overseeing a lot of the work on monetary policy but overseeing the federal reserve board staff and helping to make the staff innovative and as diverse as possible.
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as others have mentioned, we are still waiting to hear who will be the new vice chair for supervision. that's a critical job. but the point is we need teamwork at the fed as there are tough, challenging times ahead. katie: most of the people we've spoken to today said there probably won't be too much of a fight when it comes to the confirmation. i'm curious what you would expect to hear about the path forward. andrew: an important thing to say is commerce is the fed's boss. it reports to congress and the boss in the senate is the senate banking committee that will be having hearings with both chair powell and the vice chair nominee. this will be an important opportunity for the two of them to help explain the fed's
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strategy for the coming year. we are facing a very tough situation. the federal reserve has a dual mandate -- ask mom employment and priced ability. they are both important to ordinary people and they have to take a balanced approach to both of those things. high inflation is bad for ordinary people. there are still a lot of people who haven't fully recovered and are not back at work yet. so the fed has to keep an eye on both of those. caroline: you really helped steer the federal reserve in terms of commute occasion and it was interesting -- at the very top, many in the market thought she would be more dovish. is this going to be more semantic but the federal reserve will give the bandwidth to the market to run a little hot? andrew: they need to have a
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clear plan and strategy how they are going to bring inflation back down to their target. the target is a 2% target for a specific index. inflation is currently running more than double that. consumers are expecting inflation to continue running high, 5%, 6% or more for the coming years. the fed needs to preserve ordinate -- convince families that if inflation comes back down toward the target, it has to do it carefully because if it hits the brakes too hard, we could have a big economic slowdown and that would hurt the job market. it's a tough challenge. taylor: from your perspective, on economics, how big is that tap dance at this moment? we've had a lot of guests say this is one of the more difficult years the fed will face since the vulgar era. andrew: i agree with that.
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when ben bernanke became chairman, we called it the great moderation because there had been one recession in the previous 20 years and it looked like the skies were blue. but as it turned out, it wasn't long after that we had a terrible financial crisis. in this case, we know inflation is running far above where fed officials want us to get and far above what ordinary families want to see. so the federal reserve has to balance the parts of its mandate . employment is critical, wages are critical, but having an affordable cost of living is also important. the federal reserve is like a team of doctors to the nation and to our economy and they need to explain in this year coming up, it's a great opportunity for chair howell and the vice chair nominee to help explain to our country and to ordinary people
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how they are going to help make things work out over the coming year. caroline: really great to get your perspective. coming up, the search for a new wall street watchdog. we discussed that and the future of financial regulation, what does it look like? first, as we had to break, take a listen to what was said about today's nomination. >> this is sort of a dream team. chair powell is a force for the ability and good sense and monetary policy. brainerd is somebody i've known for many years, and extreme he talented person and i think you'll see a better alliance and combination and i think the combination is very powerful.
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caroline: today, we are focused on the future of the fed. while wall street seems to welcome the announcement, not everyone felt the same. taylor: it's great when the banks are in the best position they've been in since the financial crisis and still call powell a dangerous man -- pretty strong words for him as well. take a look at this -- he's a failure on regulation, climate and ethics. and the still vacant position of vice chair is critical he important. the position must be filled with a proven track record and it needs to be done quickly.
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you could argue that leaving that position open was a little confusion. i think some analysts were wondering why not just fill it and give the market more clarity? caroline: the former u.s. -- u.s. treasury, larry summers is inking about what the fed takes work and the opportunity to update that regulation. larry: there's room for substantial change from the policies pursued by outgoing regulatory vice chair randy quarles and i think jay powell could use pressure from the pro-regulatory side from within the board of governors, but it has to be balanced and sometimes senator warren can overstep in her enthusiasm for attacking
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financial institutions. caroline: let's debate more what the future of the institution might look like. talk to us about what purpose the federal reserve will fill in terms of regulation and whether the administration is looking to other areas to oversee the bank. >> the vice chair for supervision, senator warren is correct, it is critical for any administration to determine what the policy of bank regulation will be. that's the main regulatory post in the entire federal government, not just at the fed. so all eyes are on president biden. who will he pick and what direction will they take the regulatory and supervisory direction? those are two different things -- regulations about creating rules of the game and the
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supervision is about being the referee of the game and interact with the banks as they play. the question is what kind of posture will the new fed have under this still vacant addition? katie: when it comes to the vice chair of supervision, senator warren said she's going to be closely watching that appointment in particular. do you have any names in mind of who could be appointed? peter: one name that has been floated a lot is sarah raskin, a former governor on the fed board of governors. she would be an outstanding pick. there are others who have been floated for various regulatory positions as he would a comptroller of the currency, people like michael barr. and the point is the democratic party then shone supervisory regulation is deep. my hope is they will not repeat what they did with the powell
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versus brainard fed chair sweepstakes. by prolonging that debate unnecessarily -- the time is past due for us to get the name of that nominee. there are some any good candidates that could fill it, it's time to get that candidate so he or she can be vetted by the senate banking committee so we can get a better sense on his or her worldview. katie: you bring up a good point. some of the commentary i read said by delaying this, you let the politicians lead where the president is going and set of saying the president can make the ticket and the rest can get in line. where does that happen with the -- when you give the time for politicians to weigh in and front run a decision. peter: there are pluses and minuses to president biden's approach. the pluses you get to have this public vetting. senator warren's views on regulation and how central they are to the federal is an important perspective and it is porton to eat -- it is important to be part of the vetting.
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conversations about how it should fit in the fed monetary policy reactions are also important. but it is time to ring the bell. it's time to say we've had that good bait, let's get on with things. it's difficult for an objective observer to give the biden administration high marks for how they have managed to vacancies. it has stretched far too long and we are getting to the point where no new arguments are being made and instead we are just having factions dig in and that is not healthy to promote the fed and give it its best chance at making the kinds of policies the biden administration wants to see. caroline: talk to us about other areas -- perhaps why it has taken so long as the administration wants to be looking at diversity in particular. you say these are -- you say there is a deep encz there. but what about the scope of the federal reserve?
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they wanted it to be a more inclusive labor market but when that factor in climate change. where do you see regulations going that direction? peter: the focus on full employment president biden place at the center of his agenda is squarely within the fed's monetary policy. naming powell, re-nominating powell and naming brainard as vice chair is putting an exclamation point behind the chair in a way that privileges employment more. the climate change issue is interesting and divisive. the question is what can and should the central bank do to combat what most people would regard as the existential crisis of this generation and coming generations? there, there's much less daylight between powell and brain hard than may have suppose -- powell and reynard as many
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have suppose. the fed's primary mechanism for engaging with climate risk will be supervision and regulation, not monetary policy. that's different from other central banks. the ecb looks at climate risk through its monetary policy and lending programs. the fed does not have the statutory authority to do that. it does have the authority to be aggressive in requiring banks through regulation and supervision to be ever mindful of climate risks and how they will do that will be priority number one for the new vice chair of supervision. taylor: really appreciate your time and perspective. we will continue all of these themes. coming up, we will dig deeper into the regulation outlook and discuss what biden's fed picks mean for the crypto industry. did you see that curveball coming? this is bloomberg. ♪
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pres. biden: he has underscored the importance of the fed taking a more important role, making sure our financial regulations are staying ahead of emerging risks. be they from innovations in cryptocurrency or the practice of less-regulated non-bank institutions. katie: that was president biden discussing the fed chair stance on financial regulation. for more on the crypto part of that conversation, let's bring in michelle bond, the ceo on the association for digital asset markets, promoting best practices in digital asset markets. right too heavy with us. i'd love to hear your reaction on the renomination and what it means for crypto regulation. michelle: thank you for having you on. the news of chair powell's renomination in the pick for
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vice chair are welcome from an industry perspective. governor brainard has been highly involved working in digital assets as well as payments and a macro prudential standpoint. with all the work she has put in , i think she is going to be really helpful to have as vice chair and the same with powell. i think continuation in the leadership at the fed is critical. it means we are not going to have this topic restudied and we've seen that at other agencies when the administration changes. we are not going to have a new slate of upping these and i think that's great from an industry perspective. caroline: what about the occ? we are still going through the
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process of finding whether or not the proposition is going to get through congress. is that an open question? how much of an issue is that? michelle: the fact of the matter is we do have an acting comptroller who has been very engaged on crypto right now. i would say we did see the nomination hearing last week and there were concerns from both sides of the aisle. it's really unclear she has sufficient support to get through and a lot of her views about nationalizing banking are not necessarily mainstream and certainly in the banking industry uniformly oppose her nomination. the american bankers association , the banking policy issue -- they have all publicly opposed. so that will be an interesting to watch. but the acting comptroller has
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been extremely engaged and gave remarks about digital assets. i would not put him in the red light camp. i would say a yellow light. but he's engaged on the topic and has been active on crypto, which the biden administration has been working on. the occ and fed and fdic are all members of the crypto task force and they are expected to put something out any day now. so the occ is active in working on these issues. taylor: a lot of people say you can't have a highway without speed limits and communities would welcome regulation because then at least we know the rules by which we are playing. do these self-regulating entities help enough to show regulators they are in control and do you have the appropriate
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rules in place? michelle: absolutely. my organization has a widely adopted code of conduct which governs the crypto soft market which is the governing document for market integrity for the crypto market. and we are in the best position to become a regulatory agency if there were to be one which would need to be creative bite -- created by a legislative initiative. we work closely with regulators similar to the way we saw finra created. but to be clear, i see no regulation and the status quo to continue is not going to happen. no regulation is a mess and is going to continue to be a mess. we see a lot of regulators looking at crypto and what the extent of their authority and jurisdiction is. i'm expecting to see continued
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enforcement. i'm expecting to see continuing policy in the space and i think this space is going to be changing substantially from a regulatory standpoint. so i think adam is well in this. there's going to be a lot of opportunities for bipartisan participation. the hill is paying a lot of participation, so there is a lot more to come. caroline: hopefully we will speak to you again about it. michelle bond, thank you for your time. what a day -- we have almost as many questions as we have answers, but a key answer has been given. katie: we do have some clarity. we know more than we did this time last week, so perhaps that is a good thing. taylor: the one thing we have learned is three positions, the important one is still open, and that is what the market will be looking for next when we think
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about some of the regulatory environments going forward as well. caroline: that does it for "what'd you miss?" . this is bloomberg. ♪
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announcer: from the heart of where it ovation, money and power collide in silicon valley and beyond -- this is bloomberg technology with emily chang. caroline: i'm caroline hyde in for emily chang. in the next half-hour, we will take a deep dive in two president biden's pick for chair and vice chair of the federal reserve. has tsi

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