This is Bloomberg Wall Street Week.

This is Bloomberg Wall Street Week.

The global push into infrastructure, breaking the IPO logjam in text.

The global push into infrastructure, breaking the IPO logjam in text.

The financial stories that sheep.

The financial stories that sheep.

Are work cutting inflation without losing jobs. Do we need rate cuts and if so, how many? Investing in the time of geopolitical turmoil?

Are work cutting inflation without losing jobs. Do we need rate cuts and if so, how many? Investing in the time of geopolitical turmoil?

Through the eyes of the most influential voices.

Through the eyes of the most influential voices.

Tim Roguoff Economists of Harvard, former FDIC had Shila bet Ge CEO, Larry Coulp, San Francisco FED President Mary Daily Bloomberg.

Tim Roguoff Economists of Harvard, former FDIC had Shila bet Ge CEO, Larry Coulp, San Francisco FED President Mary Daily Bloomberg.

Wall Street Week with David Weston from Bloomberg Radio.

Wall Street Week with David Weston from Bloomberg Radio.

More tragedy in the Middle East, more promises from presidential candidates, and more hopes for FED rate cuts. This is Bloomberg Wall Street Week. I'm David Weston this week. Former IBM had Sam Palmisano on what went wrong at Intel.

More tragedy in the Middle East, more promises from presidential candidates, and more hopes for FED rate cuts. This is Bloomberg Wall Street Week. I'm David Weston this week. Former IBM had Sam Palmisano on what went wrong at Intel.

Intel is behind in the technology.

Intel is behind in the technology.

They're no longer driving the innovation cycles.

They're no longer driving the innovation cycles.

Scott Reckler of rx R on the state of commercial real estate.

Scott Reckler of rx R on the state of commercial real estate.

Commercial real estate is facing sort of this new paradigm.

Commercial real estate is facing sort of this new paradigm.

Aaron Walker on his tenure as head of the Ford Foundation leading to the new field of public interests technology.

Aaron Walker on his tenure as head of the Ford Foundation leading to the new field of public interests technology.

Because there are so many ways in which we need a more public minded technology sector.

Because there are so many ways in which we need a more public minded technology sector.

We start with US jobs numbers out on Friday and what they tell us about the state of the US economy with our special contributor Larry Summers of Harvard. So, Larry, thanks so much for being back with this sort of a mixed bag. I would say, in the jobs numbers, what do you take away from them?

We start with US jobs numbers out on Friday and what they tell us about the state of the US economy with our special contributor Larry Summers of Harvard. So, Larry, thanks so much for being back with this sort of a mixed bag. I would say, in the jobs numbers, what do you take away from them?

Not only it was a green light or a red light for the FED.

Not only it was a green light or a red light for the FED.

The numbers certainly didn't show hugely pronounced weakness, But if you were concerned by the recent trend in the statistics, they certainly didn't give you a clean bill of health for the economy. So I think because of the weakness, it's looking like a closer call for twenty five verses fifty in September than was my guess a month, a month or two ago. I don't think it's ultimately very important.

The numbers certainly didn't show hugely pronounced weakness, But if you were concerned by the recent trend in the statistics, they certainly didn't give you a clean bill of health for the economy. So I think because of the weakness, it's looking like a closer call for twenty five verses fifty in September than was my guess a month, a month or two ago. I don't think it's ultimately very important.

Or One of the things that's been in the news a lot this week has been the transaction, the proposed transaction of Nippon Steel buying US steal. We have both candidates speaking on as Kamala Harris has come out very strong in this week. Something you've addressed before. In the law, we talk about hard cases making bad law. Is this hard politics potentially making bad trade policy.

Or One of the things that's been in the news a lot this week has been the transaction, the proposed transaction of Nippon Steel buying US steal. We have both candidates speaking on as Kamala Harris has come out very strong in this week. Something you've addressed before. In the law, we talk about hard cases making bad law. Is this hard politics potentially making bad trade policy.

Hard cases have to make bad law. Easy cases should not make bad law and should not set terrible presence. This is not something that should be brought to final resolution in a heated political climate. Of course, there's going to be skirmishing between the different parties, the union, potential acquirer, the incumbent company about just what the terms of any deal are going to be. That's what happens in these things. But there is, on the basis of everything I know, no legitimate national security or reasonable economic rationale for the.

Hard cases have to make bad law. Easy cases should not make bad law and should not set terrible presence. This is not something that should be brought to final resolution in a heated political climate. Of course, there's going to be skirmishing between the different parties, the union, potential acquirer, the incumbent company about just what the terms of any deal are going to be. That's what happens in these things. But there is, on the basis of everything I know, no legitimate national security or reasonable economic rationale for the.

Prevention of this deal.

Prevention of this deal.

Indeed, I believe that this deal will strengthen our national security by generating a far larger infusion of capital into the US steel industry than would otherwise be possible. I believe that it will favor broad US competitiveness by providing for lower cost steel as an input to key American industries like automobiles, with the whole automobile industry favoring this deal, and they have a huge stake in reliable, inexpensive steel as an input. And I believe strengthening our connections with Japan and with a major Japanese company is also strengthening our broad national position and the position of American corporations in the world. But to stop this, or to embrace the principle that somehow these specific steel companies need to have an American owner, would be to make a grave error and throw out large amounts of US tradition.

Indeed, I believe that this deal will strengthen our national security by generating a far larger infusion of capital into the US steel industry than would otherwise be possible. I believe that it will favor broad US competitiveness by providing for lower cost steel as an input to key American industries like automobiles, with the whole automobile industry favoring this deal, and they have a huge stake in reliable, inexpensive steel as an input. And I believe strengthening our connections with Japan and with a major Japanese company is also strengthening our broad national position and the position of American corporations in the world. But to stop this, or to embrace the principle that somehow these specific steel companies need to have an American owner, would be to make a grave error and throw out large amounts of US tradition.

And the irony is that I, as.

And the irony is that I, as.

Someone who grew up in Pennsylvania, have pretty high confidence. There are no certainties, but pretty high confidence that the state of Pennsylvania will be prosperous and with more employment opportunities. If that cash is infused into US steel, then if this steal is.

Someone who grew up in Pennsylvania, have pretty high confidence. There are no certainties, but pretty high confidence that the state of Pennsylvania will be prosperous and with more employment opportunities. If that cash is infused into US steel, then if this steal is.

Blocked, Larry, it wasn't just about Nippon Steel that we heard from the candidates this week. We also heard a fair amount an economic policy. We heard more from Vice President Kamala Harris. We also had the former president Donald Trump come to the Economic Club in New York and set out a lot of different ideas. Start with Donald Trump. You haven't always been supportive of his economic policies. Did you hear anything you sort of liked?

Blocked, Larry, it wasn't just about Nippon Steel that we heard from the candidates this week. We also heard a fair amount an economic policy. We heard more from Vice President Kamala Harris. We also had the former president Donald Trump come to the Economic Club in New York and set out a lot of different ideas. Start with Donald Trump. You haven't always been supportive of his economic policies. Did you hear anything you sort of liked?

Look, I think his instinct that there are places where we have excessive regulation and where we need to be able to do things faster and more vigorously. I think that's a legitimate instinct, and I think that's important. It's something that's longstanding. Bill Clinton and Al Gore used to talk about reinventing government. Do I think that having Elon Musk advise on reforming government procedures is likely to be an effective strategy or a strategy that's free of all sorts of conflicts of interest. I think that's pretty unlikely to work out very well.

Look, I think his instinct that there are places where we have excessive regulation and where we need to be able to do things faster and more vigorously. I think that's a legitimate instinct, and I think that's important. It's something that's longstanding. Bill Clinton and Al Gore used to talk about reinventing government. Do I think that having Elon Musk advise on reforming government procedures is likely to be an effective strategy or a strategy that's free of all sorts of conflicts of interest. I think that's pretty unlikely to work out very well.

Okay, Larry, thank you so much.

Okay, Larry, thank you so much.

Always great to have you with us. That's our special contributor here on Wall Street Week is Larry Summers of Harvard. The Biden administration made chip production a hallmark of its economic strategy. One of its main beneficiaries. Intel is struggling with its plans to move back into chip manufacturing, with reports that it's weigh its options to take us through the strategy of both Intel and the US government. We welcome back now our very special friend here on Wall Street Week. Here's mister Sam palmas On, a former CEO of IBM. Sam, great to see you, so give us your perspective on Intel strategy. Here, what they're trying to do. They once were really bestride the earth. They were the leaders. Then they lost that they're trying to get it back.

Always great to have you with us. That's our special contributor here on Wall Street Week is Larry Summers of Harvard. The Biden administration made chip production a hallmark of its economic strategy. One of its main beneficiaries. Intel is struggling with its plans to move back into chip manufacturing, with reports that it's weigh its options to take us through the strategy of both Intel and the US government. We welcome back now our very special friend here on Wall Street Week. Here's mister Sam palmas On, a former CEO of IBM. Sam, great to see you, so give us your perspective on Intel strategy. Here, what they're trying to do. They once were really bestride the earth. They were the leaders. Then they lost that they're trying to get it back.

Yes, well, David, thank you for having me as always, and kind of it's interesting if you think back in time. You mentioned the point they were the leaders when they had an integrated business, I mean design and fabrication and manufacturing R and D manufacturing design, they controlled the RIP and the thing was called the X eighty six architecture, which is really the PC class over here. And in collaboration with Microsoft, they drove the innovation cycles.

Yes, well, David, thank you for having me as always, and kind of it's interesting if you think back in time. You mentioned the point they were the leaders when they had an integrated business, I mean design and fabrication and manufacturing R and D manufacturing design, they controlled the RIP and the thing was called the X eighty six architecture, which is really the PC class over here. And in collaboration with Microsoft, they drove the innovation cycles.

Those guys led in the drove. Well, it's no longer the.

Those guys led in the drove. Well, it's no longer the.

Case Intel is behind in the technology. They're no longer driving the innovation cycles. And the bringing back the fabricators or the production side of the company is very very capital intents, but it requires large amounts as well as patient capital, which, as you know and Wall Street Week, most of our investors today in the public markets aren't really keen on the strategy of patient capital.

Case Intel is behind in the technology. They're no longer driving the innovation cycles. And the bringing back the fabricators or the production side of the company is very very capital intents, but it requires large amounts as well as patient capital, which, as you know and Wall Street Week, most of our investors today in the public markets aren't really keen on the strategy of patient capital.

So one are the prospects of Pat Gelsinger, who came back to Intel, had a grand plan to restore rebuild the original great Intel. What are the prospects of really being able to do the design as well as the manufacturer the way it once did.

So one are the prospects of Pat Gelsinger, who came back to Intel, had a grand plan to restore rebuild the original great Intel. What are the prospects of really being able to do the design as well as the manufacturer the way it once did.

I mean it's plausible.

I mean it's plausible.

The problem associated's the industry is shifted, and you have focused companies like ARMED who are focused on design and we're very, very advanced and do a lot of the work for companies as a Qualcomm and those kinds of folks. So at the same time, you have massive capacity in the fabrication of the production side of the house school with TSMC and Samsung and the others. So if you think about it, you need basically very deep technical R and D skills and the designs you quite honestly need great skills as far as production moving down. They called the natometer curve to suffer choice self atomic at this point in time, and that requires massive capital. One tool loan is of one hundred million dollars to ASML, so you can imagine the expense associated with doing both of these at the same time. So it's hard technically, it's also difficult operationally, and I think in many ways that the skill set that would required at one point in time that run integrated business has now changed because people now seeing opportunities both either in design or in manufacturing or production.

The problem associated's the industry is shifted, and you have focused companies like ARMED who are focused on design and we're very, very advanced and do a lot of the work for companies as a Qualcomm and those kinds of folks. So at the same time, you have massive capacity in the fabrication of the production side of the house school with TSMC and Samsung and the others. So if you think about it, you need basically very deep technical R and D skills and the designs you quite honestly need great skills as far as production moving down. They called the natometer curve to suffer choice self atomic at this point in time, and that requires massive capital. One tool loan is of one hundred million dollars to ASML, so you can imagine the expense associated with doing both of these at the same time. So it's hard technically, it's also difficult operationally, and I think in many ways that the skill set that would required at one point in time that run integrated business has now changed because people now seeing opportunities both either in design or in manufacturing or production.

Now the US government has thought it could perhaps prime the pump here a bit with the Chips and Science Act, among other things. Intel stand to benefit something in a tune of eight point five billion dollars in various forms of financing. As you say, that's not enough to get you there, But how much of a help is that to sort of get you ahead in the right direction.

Now the US government has thought it could perhaps prime the pump here a bit with the Chips and Science Act, among other things. Intel stand to benefit something in a tune of eight point five billion dollars in various forms of financing. As you say, that's not enough to get you there, But how much of a help is that to sort of get you ahead in the right direction.

Well, you remember you have the US and you also have the EU both of giving a providing funds investment funds to Intel.

Well, you remember you have the US and you also have the EU both of giving a providing funds investment funds to Intel.

So it is a large amount of money.

So it is a large amount of money.

But to move a fab or build a fab, we're talking about somewhere between ten or fifteen billion dollars today.

But to move a fab or build a fab, we're talking about somewhere between ten or fifteen billion dollars today.

So I mean it's.

So I mean it's.

Good to have a partnership in the capital model, needless to say, with true up the balance sheet of any company, even when as large as Intel.

Good to have a partnership in the capital model, needless to say, with true up the balance sheet of any company, even when as large as Intel.

But fundamentally it'll add capacity.

But fundamentally it'll add capacity.

But I don't know if it's going to have enough capacity to differentiate Intel versus the large fabricators that exist already today. So therefore I mean they serve I think a strategic purpose for the US around national security, which is employing I mean securing the supply chain of these key important technologies around chips, and today it's the graphics chips, not only the traditional chips.

But I don't know if it's going to have enough capacity to differentiate Intel versus the large fabricators that exist already today. So therefore I mean they serve I think a strategic purpose for the US around national security, which is employing I mean securing the supply chain of these key important technologies around chips, and today it's the graphics chips, not only the traditional chips.

Of the past, that's very, very important.

Of the past, that's very, very important.

But the question is, you know, how much of that capacity can my company really provide to the US.

But the question is, you know, how much of that capacity can my company really provide to the US.

Government associaly in a return if you were here at the end to Intel, what should Patkelsenery.

Government associaly in a return if you were here at the end to Intel, what should Patkelsenery.

Focus on at this point?

Focus on at this point?

Well, I think, quite honestly, I really do think he needs to and I believe he's doing that, is revisit the strategy that they've left out, and then based upon that strategy, can they go it on their own? It appears I don't have the details, David to be a fair to Pat, but it doesn't appear that that's a significant challenge at this point in time to go it on their own. So therefore, either you change your strategy, which is go back to the industry model, which is separate design from the fabrication or production, and that will appeal to investors because it's less capital intens even less risk. Or you form a partnership with companies that can help you do that. The challenge with that for a company like an Intel or an IBM. Have you been through it when lou Gerster came in and I replaced Little is the culture. It's the management system. People were number one, They were the leaders IBM was the leader of its day.

Well, I think, quite honestly, I really do think he needs to and I believe he's doing that, is revisit the strategy that they've left out, and then based upon that strategy, can they go it on their own? It appears I don't have the details, David to be a fair to Pat, but it doesn't appear that that's a significant challenge at this point in time to go it on their own. So therefore, either you change your strategy, which is go back to the industry model, which is separate design from the fabrication or production, and that will appeal to investors because it's less capital intens even less risk. Or you form a partnership with companies that can help you do that. The challenge with that for a company like an Intel or an IBM. Have you been through it when lou Gerster came in and I replaced Little is the culture. It's the management system. People were number one, They were the leaders IBM was the leader of its day.

Intel is the leader.

Intel is the leader.

Vistay get back to the Microsoft before they made the transitions, they.

Vistay get back to the Microsoft before they made the transitions, they.

Were all the leaders.

Were all the leaders.

So you have a management system and a culture that's very, very insular, and that's what you have to break down. So it's not only just the technology and the capital structures in your balance sheet, it's also you have to deal with the culture of the management system.

So you have a management system and a culture that's very, very insular, and that's what you have to break down. So it's not only just the technology and the capital structures in your balance sheet, it's also you have to deal with the culture of the management system.

And that's hard.

And that's hard.

Now Pat knows that because he grew up at Intel with Andy Grow and those guys.

Now Pat knows that because he grew up at Intel with Andy Grow and those guys.

So he certainly understands it.

So he certainly understands it.

But even understanding it as I grew up at IBM, even to understand that, it is a very difficult challenge to get all those people to get to make this change in the buy end of the change and help you execute it and get it done successfully.

But even understanding it as I grew up at IBM, even to understand that, it is a very difficult challenge to get all those people to get to make this change in the buy end of the change and help you execute it and get it done successfully.

Sam, it's always such a treat to have you with us on Wall Street Week. That is Sam Pomasuno. He is chairman of the Center for Global Enterprise, coming up the outlook for commercial real estate his investors look for FED rate cuts. In September, we talked with Scott Reckler of our x R.

Sam, it's always such a treat to have you with us on Wall Street Week. That is Sam Pomasuno. He is chairman of the Center for Global Enterprise, coming up the outlook for commercial real estate his investors look for FED rate cuts. In September, we talked with Scott Reckler of our x R.

There was this period of time whereas the real estate industry where we're really being hurt by higher for longer, and I think now we got to get used to the fact that it's going to be higher. Is the new normal.

There was this period of time whereas the real estate industry where we're really being hurt by higher for longer, and I think now we got to get used to the fact that it's going to be higher. Is the new normal.

That's next on Wall Street Week on Bloomberg.

That's next on Wall Street Week on Bloomberg.

This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

This is Wall Street Week.

This is Wall Street Week.

I'm David Weston.

I'm David Weston.

Commercial real estate has been on investors' minds ever since the FED started hiking rates, with a particular focus on office space and a handful of big cities.

Commercial real estate has been on investors' minds ever since the FED started hiking rates, with a particular focus on office space and a handful of big cities.

For a read on.

For a read on.

Where we are today, Welcome back now, Scott Reckler. He is chairman and CEO of our XR, So welcome back, Scott.

Where we are today, Welcome back now, Scott Reckler. He is chairman and CEO of our XR, So welcome back, Scott.

Great to have you here. David, it's great to be her.

Great to have you here. David, it's great to be her.

Thanks. So we all focus on offices and we'll talk about offices, but are there other parts of commercial state we should have been paying attention to.

Thanks. So we all focus on offices and we'll talk about offices, but are there other parts of commercial state we should have been paying attention to.

Yeah? Absolutely.

Yeah? Absolutely.

First, I would say across the spectrum, right, commercial real estate is facing sort of this new paradigm as to where interest rates are. Right, And we went through this period where we lived in a world where interest rates were near zero or low for decade plus, which was not normal, right, and then we went through this big spike and that you know, really basically impacted values of every commercial real estate sector and anything that was financed when interest rates were low and now to be refinanced when interest rates are higher is becoming a challenge. And you look at particular sectors like multifamily is an example where there was tremendous transaction activity in twenty twenty and twenty one when rates were low and people expected rents to continue to go higher, and the inverses happened, which is that rates went higher and rents stayed low, and so a lot of those capital structures are broken. And to exacerbate the problem, there was also a record level of new development of multifamily happening in the sun Belt regions that are all coming online. So you have now new supply at the same time that you have these refinancing issues. So this immense re equitization that needs to take place in commercial real estate and particularly on the multifamily space that have good fundamentals, but it's going to require ultimately write downs and have equity injections to reset those balance sheets. And that's why I think when you think about commercial real estate today, this is much less like two thousand and eight in the Great Financial Crisis where we had this distress and then you know, the FED was able to inject capital and values came back up, and it was a relatively quick a solution to this problem. This is much more like the early nineties, where there's going to be waves of loans that mature that then need to be recapitalized restructured. That's going to be a multi year process to work our way through.

First, I would say across the spectrum, right, commercial real estate is facing sort of this new paradigm as to where interest rates are. Right, And we went through this period where we lived in a world where interest rates were near zero or low for decade plus, which was not normal, right, and then we went through this big spike and that you know, really basically impacted values of every commercial real estate sector and anything that was financed when interest rates were low and now to be refinanced when interest rates are higher is becoming a challenge. And you look at particular sectors like multifamily is an example where there was tremendous transaction activity in twenty twenty and twenty one when rates were low and people expected rents to continue to go higher, and the inverses happened, which is that rates went higher and rents stayed low, and so a lot of those capital structures are broken. And to exacerbate the problem, there was also a record level of new development of multifamily happening in the sun Belt regions that are all coming online. So you have now new supply at the same time that you have these refinancing issues. So this immense re equitization that needs to take place in commercial real estate and particularly on the multifamily space that have good fundamentals, but it's going to require ultimately write downs and have equity injections to reset those balance sheets. And that's why I think when you think about commercial real estate today, this is much less like two thousand and eight in the Great Financial Crisis where we had this distress and then you know, the FED was able to inject capital and values came back up, and it was a relatively quick a solution to this problem. This is much more like the early nineties, where there's going to be waves of loans that mature that then need to be recapitalized restructured. That's going to be a multi year process to work our way through.

Some people might be surprised to hear there may be too many multifamily homes in some places, because on the national levels we hear a lot about the cost of housing. We have Kamala Harris, for example, having some pretty dramatic proposals about how to really have more housing because I don't have enough. So how does that work out? Do we have too much or too little?

Some people might be surprised to hear there may be too many multifamily homes in some places, because on the national levels we hear a lot about the cost of housing. We have Kamala Harris, for example, having some pretty dramatic proposals about how to really have more housing because I don't have enough. So how does that work out? Do we have too much or too little?

That's a great question.

That's a great question.

And that's what makes this so interesting from an investment thesis is that in the short term you have this dislocation because if you have this surge of multi family that was developed you know in the last few years as coming online, but as that burns off, you're going to have a drop in supply. It's already down seventy percent and as interest rates have continued to rise. That's curtailed more supply. So coming out of this cycle in twenty twenty six, you're going to have more demand than there is supply available. But the next two years you're going to have a situation where you can actually have entry points to buy multifamily at dislocated prices because they need.

And that's what makes this so interesting from an investment thesis is that in the short term you have this dislocation because if you have this surge of multi family that was developed you know in the last few years as coming online, but as that burns off, you're going to have a drop in supply. It's already down seventy percent and as interest rates have continued to rise. That's curtailed more supply. So coming out of this cycle in twenty twenty six, you're going to have more demand than there is supply available. But the next two years you're going to have a situation where you can actually have entry points to buy multifamily at dislocated prices because they need.

To be recapitalized.

To be recapitalized.

They've broken capital structures today, Scott, you mentioned interest rates a couple of times. Everyone's anticipating some cuts coming from the Federal Reserve. What difference will that make or maybe more to the point, how much does the Fed needed to cut before it really affects your business.

They've broken capital structures today, Scott, you mentioned interest rates a couple of times. Everyone's anticipating some cuts coming from the Federal Reserve. What difference will that make or maybe more to the point, how much does the Fed needed to cut before it really affects your business.

I think you have to think about interest rates a little bit different. Right when you think about interest rates, there was this period of time whereas the real estate industry where we're really being hurt by higher for longer, and I think now we've got to get used to the fact that it's.

I think you have to think about interest rates a little bit different. Right when you think about interest rates, there was this period of time whereas the real estate industry where we're really being hurt by higher for longer, and I think now we've got to get used to the fact that it's.

Going to be higher. Is the new normal, meaning.

Going to be higher. Is the new normal, meaning.

That what we live through the last decade and a half plus of near zero rates wasn't normal. So the Fed's going to normalize rates. Does that mean, you know, three percent to four percent is the rain? But not zero to two percent that existed for a period of time.

That what we live through the last decade and a half plus of near zero rates wasn't normal. So the Fed's going to normalize rates. Does that mean, you know, three percent to four percent is the rain? But not zero to two percent that existed for a period of time.

So that still is going to require us.

So that still is going to require us.

To recalibrate values, recalibrate capital structures.

To recalibrate values, recalibrate capital structures.

Along the way.

Along the way.

But the more that the industry has clarity that rates are coming down, then you'll start seeing transaction activity happening, which creates price discovery and then crystallizes values, which and then I think will create a increase of more transactions.

But the more that the industry has clarity that rates are coming down, then you'll start seeing transaction activity happening, which creates price discovery and then crystallizes values, which and then I think will create a increase of more transactions.

We talked about the people who are providing the capital. We've heard a lot about regional banks, possible challenges for them in commercial real estate, a lot to talk about private credit. Who's providing the capital right now in the housing industry.

We talked about the people who are providing the capital. We've heard a lot about regional banks, possible challenges for them in commercial real estate, a lot to talk about private credit. Who's providing the capital right now in the housing industry.

Yeah, so I would think the bank industry in general has really pulled back from providing capital to real estate. They're under a lot of pressure from the regulators to reduce their commercial real estate exposure. The commercial real estate loans they have in the books, and many of these regional banks have fifty sixty percent of their loans or commercial real estate loans. A lot of them multifamily can't be refinanced because the plumbing is clogged, and so that's where the challenges and I think where you're seeing step in are the non bank lenders that are coming in and actually providing those financings. We do it ourselves more, i would say, on the on the higher yield side of that equation, but the big private equity shops. And you know, when you think about this cycle, just like we saw in the nineties and we saw get in O eight, when you have these moments of turmoil, it tends that the non bank lender in the sector becomes much more of the future infrastructure. We had that with CMBs in the early nineties, we had it with the private equity coming out of the eight oh nine, and I think this is going to be more of a permanent fixture that banks are going to be more conduit to customers. They're going to focus on more investment grade rated type paper, but they're going to rely on non bank lenders that have longer derated capital that matches those loans, which you know makes sense, right if the posits can be pulled every day, if you have longer term capital that you can actually match to the terminal, that is something that is I think more balanced than could be more resilient in challenging times.

Yeah, so I would think the bank industry in general has really pulled back from providing capital to real estate. They're under a lot of pressure from the regulators to reduce their commercial real estate exposure. The commercial real estate loans they have in the books, and many of these regional banks have fifty sixty percent of their loans or commercial real estate loans. A lot of them multifamily can't be refinanced because the plumbing is clogged, and so that's where the challenges and I think where you're seeing step in are the non bank lenders that are coming in and actually providing those financings. We do it ourselves more, i would say, on the on the higher yield side of that equation, but the big private equity shops. And you know, when you think about this cycle, just like we saw in the nineties and we saw get in O eight, when you have these moments of turmoil, it tends that the non bank lender in the sector becomes much more of the future infrastructure. We had that with CMBs in the early nineties, we had it with the private equity coming out of the eight oh nine, and I think this is going to be more of a permanent fixture that banks are going to be more conduit to customers. They're going to focus on more investment grade rated type paper, but they're going to rely on non bank lenders that have longer derated capital that matches those loans, which you know makes sense, right if the posits can be pulled every day, if you have longer term capital that you can actually match to the terminal, that is something that is I think more balanced than could be more resilient in challenging times.

Scott's always so great to have you on weils Ervig. Thank you for being here, Scott Reckler of our XR. Darren Walker has announced his plan to step down from the helm of the Ford Foundation at the end of next year, a tenure marked by his taking a premier US philanthropy in a different direction. We sat down with him and began with his thoughts on what he tried to accomplish.

Scott's always so great to have you on weils Ervig. Thank you for being here, Scott Reckler of our XR. Darren Walker has announced his plan to step down from the helm of the Ford Foundation at the end of next year, a tenure marked by his taking a premier US philanthropy in a different direction. We sat down with him and began with his thoughts on what he tried to accomplish.

Well.

Well.

I hope that we accomplished several things. First, elevating the challenge of inequality. We were among the first philanthropies to articulate any quality as a problem for our society, for our democracy. That was very important. Secondly, to elevate the issue of technology and its potential impacts both positively and negatively, particularly on people who are poor, who are disadvantaged, who have historically been marginalized in American society. And Thirdly, to introduce the idea of social justice philanthropy, which is different from normal philanthropy as we've thought of it, going back to Andrew Karnak, those are three things I think we've accomplished and that I'm very proud of.

I hope that we accomplished several things. First, elevating the challenge of inequality. We were among the first philanthropies to articulate any quality as a problem for our society, for our democracy. That was very important. Secondly, to elevate the issue of technology and its potential impacts both positively and negatively, particularly on people who are poor, who are disadvantaged, who have historically been marginalized in American society. And Thirdly, to introduce the idea of social justice philanthropy, which is different from normal philanthropy as we've thought of it, going back to Andrew Karnak, those are three things I think we've accomplished and that I'm very proud of.

You've changed the direction of Ford Foundation. When you came in, there was a lot of talk about a lot of coverage, specifically with respect to justice. Focusing on justice as well as inequality. One cannot change without meeting resistance. Where did you meet resistance?

You've changed the direction of Ford Foundation. When you came in, there was a lot of talk about a lot of coverage, specifically with respect to justice. Focusing on justice as well as inequality. One cannot change without meeting resistance. Where did you meet resistance?

I think there are entrenched interests in the status quo in any legacy organization, whether it's a major fourteen five hundred legacy company or a major foundation like the Ford Foundation. What you have to do is take on those entrenched interests and name the problem, name the barrier that they have erected to progress to forward movement, and really take it on head on.

I think there are entrenched interests in the status quo in any legacy organization, whether it's a major fourteen five hundred legacy company or a major foundation like the Ford Foundation. What you have to do is take on those entrenched interests and name the problem, name the barrier that they have erected to progress to forward movement, and really take it on head on.

But importantly, you've.

But importantly, you've.

Got to have your board, your board of trustees in alignment. There is nothing more important in an enterprise, whether public or private, than alignment between the chief executive and the board of directors. And I was very lucky from the very beginning to have had a board who I share values, who appointed me, I think because my vision they were inspired by and wanted to support.

Got to have your board, your board of trustees in alignment. There is nothing more important in an enterprise, whether public or private, than alignment between the chief executive and the board of directors. And I was very lucky from the very beginning to have had a board who I share values, who appointed me, I think because my vision they were inspired by and wanted to support.

How do you measure your success?

How do you measure your success?

That's a great question for a foundation like the Forward Foundation. We're not gates or science based foundation, so we don't invest in disease eradication or agricultural science where you can have randomized control trials to indicate progress. We invest in justice. So how does one measure justice? Because it's hard at any one time, like with a disease or eradication, to declare victory. How do you declare victory? We could have declared victory on the progress around reproductive health for women many years ago, but here we are again at a seminal moment of retreat on access to abortion and reproductive justice. And so we measure impact by the strength of the institutions who we invest in, and they're preparedness and resilience to continue in the face of resistance. So for us, progress looks like in the area of reproductive justice, a strong planned parenthood and other organizations who are litigating, advocating, developing policy response to ensure that ultimately we do live in a society where the idea of reproductive freedom is normalized and is the law of the land.

That's a great question for a foundation like the Forward Foundation. We're not gates or science based foundation, so we don't invest in disease eradication or agricultural science where you can have randomized control trials to indicate progress. We invest in justice. So how does one measure justice? Because it's hard at any one time, like with a disease or eradication, to declare victory. How do you declare victory? We could have declared victory on the progress around reproductive health for women many years ago, but here we are again at a seminal moment of retreat on access to abortion and reproductive justice. And so we measure impact by the strength of the institutions who we invest in, and they're preparedness and resilience to continue in the face of resistance. So for us, progress looks like in the area of reproductive justice, a strong planned parenthood and other organizations who are litigating, advocating, developing policy response to ensure that ultimately we do live in a society where the idea of reproductive freedom is normalized and is the law of the land.

Justice is a big idea, It's been around since ancient times. The quest for justice. Can even the Ford Foundation as big as it is, and who shows is can it actually move the needle on justice in our society?

Justice is a big idea, It's been around since ancient times. The quest for justice. Can even the Ford Foundation as big as it is, and who shows is can it actually move the needle on justice in our society?

Well, I think we in philanthropy have to approach our work with great humility. No, the answer is the Ford Foundation alone doesn't move the needle. The Ford Foundation, hopefully, in collaboration and supporting and in partnership, can make some progress. But we philanthropists sometimes approach our work with a degree of self satisfaction or a degree that we're right, and it's a trap. The rural villages of Africa are littered with the carcasses of development projects funded by philanthropists who didn't understand that the people closest to the problems should be in charge. The design of strategies and approaches is not only to be left to the experts and the credentialed PhDs, but to people who are in these communities and in partnership with them, developing the responses to the problems that they identify as their priorities.

Well, I think we in philanthropy have to approach our work with great humility. No, the answer is the Ford Foundation alone doesn't move the needle. The Ford Foundation, hopefully, in collaboration and supporting and in partnership, can make some progress. But we philanthropists sometimes approach our work with a degree of self satisfaction or a degree that we're right, and it's a trap. The rural villages of Africa are littered with the carcasses of development projects funded by philanthropists who didn't understand that the people closest to the problems should be in charge. The design of strategies and approaches is not only to be left to the experts and the credentialed PhDs, but to people who are in these communities and in partnership with them, developing the responses to the problems that they identify as their priorities.

When we come back, we explore with Darren Walker the new realm of public interest technology. Something he sees is the logical next step on the path begun with public interest law. That's next on Wall Street Week on Bloomberg.

When we come back, we explore with Darren Walker the new realm of public interest technology. Something he sees is the logical next step on the path begun with public interest law. That's next on Wall Street Week on Bloomberg.

This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.

This is Wall Street Week. I'm David Weston. Public Interest law came into being in response to the social and political upheaval of the nineteen sixties, bringing the energy and discipline of lawyers to the social problems of the era. Now, many of the cutting issues in society arise from technology rather than the law, and Darren Walker of the Ford Foundation thinks we need to develop a sense of directing technology to serve the public interest the way we directed law a generation ago. On the question of technology, you have really espouse something called public interest technology, as I understand it here at the Ford Foundation. Explain what that is.

This is Wall Street Week. I'm David Weston. Public Interest law came into being in response to the social and political upheaval of the nineteen sixties, bringing the energy and discipline of lawyers to the social problems of the era. Now, many of the cutting issues in society arise from technology rather than the law, and Darren Walker of the Ford Foundation thinks we need to develop a sense of directing technology to serve the public interest the way we directed law a generation ago. On the question of technology, you have really espouse something called public interest technology, as I understand it here at the Ford Foundation. Explain what that is.

Well, in the.

Well, in the.

Nineteen sixties, the Ford Foundation helped to create the field of public interest law. You and I were both trained in law, went to law school. There were public law clinics when we went to law school, and those law clinics were about providing legal services for the poor, the disadvantaged, working to protect the environment. These ideas came out of a body of work that Ford and others invested in the nineteen sixties because lawyers were critical to the progress of society. Well, today technologists are critical and within the field of the industry and the Academy of computer science, computational math and the systems that build our AI and all of this digital world that we now are living in. There is no UH sector, There is no within UH the the space of technology. A public interest identified. The public interest is what the private sector has told us it is. And so we need UH computer scientists, technologists trained who might go into private industry to say, we're gonna use these skills in the public interests to support uh I issues of UH environmental rights, UH, protecting UH the rights of of women, UH of UH people UH in in vulnerable s circumstances. There are so many ways in which we need uh a more public minded uh UH technology sector. When you look at UH some of those early hearings in Congress, the lack of preparation to engage on the part of our elected officials was a reflection of the lack of capacity within the offices of our congress people. There are very few people you can count on two hands with Masters of PhDs in computer science on the hill. If any other industry or sector financial services, healthcare, a group of CEOs of peers before a congressional hearing sitting behind those congress people are smart, credentialed experts who are their eyes and ears on the issue.

Nineteen sixties, the Ford Foundation helped to create the field of public interest law. You and I were both trained in law, went to law school. There were public law clinics when we went to law school, and those law clinics were about providing legal services for the poor, the disadvantaged, working to protect the environment. These ideas came out of a body of work that Ford and others invested in the nineteen sixties because lawyers were critical to the progress of society. Well, today technologists are critical and within the field of the industry and the Academy of computer science, computational math and the systems that build our AI and all of this digital world that we now are living in. There is no UH sector, There is no within UH the the space of technology. A public interest identified. The public interest is what the private sector has told us it is. And so we need UH computer scientists, technologists trained who might go into private industry to say, we're gonna use these skills in the public interests to support uh I issues of UH environmental rights, UH, protecting UH the rights of of women, UH of UH people UH in in vulnerable s circumstances. There are so many ways in which we need uh a more public minded uh UH technology sector. When you look at UH some of those early hearings in Congress, the lack of preparation to engage on the part of our elected officials was a reflection of the lack of capacity within the offices of our congress people. There are very few people you can count on two hands with Masters of PhDs in computer science on the hill. If any other industry or sector financial services, healthcare, a group of CEOs of peers before a congressional hearing sitting behind those congress people are smart, credentialed experts who are their eyes and ears on the issue.

We don't have that widespread.

We don't have that widespread.

It's just now taking off with the work of organizations like Tech Congress and organizations working, many of whom we support, to provide more technology, more technologists to work for the public interest, for.

It's just now taking off with the work of organizations like Tech Congress and organizations working, many of whom we support, to provide more technology, more technologists to work for the public interest, for.

Public interests technology. How do you move the needle as it were? I mean, looking back when we talk about clinical law, both of us know about from law school, as I recall, Ford Fund actuation actually funded the original clinical law programs in the United States. Do you do this in the universities to try to expose young computer sciences, as it were, to the ideas of public interests technology? Do you do it in private corporations? It is in the government? Is it up on Capitol Hill? Where do you try to get into this?

Public interests technology. How do you move the needle as it were? I mean, looking back when we talk about clinical law, both of us know about from law school, as I recall, Ford Fund actuation actually funded the original clinical law programs in the United States. Do you do this in the universities to try to expose young computer sciences, as it were, to the ideas of public interests technology? Do you do it in private corporations? It is in the government? Is it up on Capitol Hill? Where do you try to get into this?

So it is a multiprong approach. One we need within the academy to impact the curricula of what computer science students are taught needs to be broader, not just ethics. But we're going to solve these problems when we have a technologist, a political scientist, a policy researcher in the room together. So we need affect the curriculum.

So it is a multiprong approach. One we need within the academy to impact the curricula of what computer science students are taught needs to be broader, not just ethics. But we're going to solve these problems when we have a technologist, a political scientist, a policy researcher in the room together. So we need affect the curriculum.

We need to.

We need to.

Create pathways from the university through internships, and then ultimately we need pro bono programs. The same way we have in the law, where you have some of the best and brightest law students who choose initially or maybe never to go into private industry. But to say I'm going to work for a nonprofit, I'm going to work for the government, as opposed to working in private industry, or just as we have in the law, you work in private industry where you have an allocation of hours in a year that you can devote to a public interest technology issues.

Create pathways from the university through internships, and then ultimately we need pro bono programs. The same way we have in the law, where you have some of the best and brightest law students who choose initially or maybe never to go into private industry. But to say I'm going to work for a nonprofit, I'm going to work for the government, as opposed to working in private industry, or just as we have in the law, you work in private industry where you have an allocation of hours in a year that you can devote to a public interest technology issues.

This is a big idea and it's early going. I dare say, do you think it's taken route? Will it continue and grow? Do you believe?

This is a big idea and it's early going. I dare say, do you think it's taken route? Will it continue and grow? Do you believe?

Well, recently there was a congressional hearing on technology issues, and one of the organizations we support how to list of all of the staffers who were helping support the congressmen and women on that committee with research and policy and the evidence they need to be able to engage on behalf of the public. So, yes, it is small and incremental, and I wish it moved faster. But at the end of the day, we're seeing progress and we should be very encouraged.

Well, recently there was a congressional hearing on technology issues, and one of the organizations we support how to list of all of the staffers who were helping support the congressmen and women on that committee with research and policy and the evidence they need to be able to engage on behalf of the public. So, yes, it is small and incremental, and I wish it moved faster. But at the end of the day, we're seeing progress and we should be very encouraged.

As you look toward not that, but toward the time you stepped down and forward. What's the biggest thing you didn't get a chance to get to. I would say we haven't done enough for rural America. I feel we have.

As you look toward not that, but toward the time you stepped down and forward. What's the biggest thing you didn't get a chance to get to. I would say we haven't done enough for rural America. I feel we have.

Through our programming there made progress in elevating some of the challenges, but we need to do more in this country to understand the plight of people in rural communities. The degree of devastation as a result of the opioid epidemic, for example, is something that we were late to the game, and all candor believe we're now working on these issues in rural America. But I think our politics today in part reflect that too many people feel left behind and left out, not only in rural America and many parts of this country, but we particularly those of us who live in places like New York City, need to understand what is happening in our country and the degree to which some people some communities feel marginalized, feel left out and left behind.

Through our programming there made progress in elevating some of the challenges, but we need to do more in this country to understand the plight of people in rural communities. The degree of devastation as a result of the opioid epidemic, for example, is something that we were late to the game, and all candor believe we're now working on these issues in rural America. But I think our politics today in part reflect that too many people feel left behind and left out, not only in rural America and many parts of this country, but we particularly those of us who live in places like New York City, need to understand what is happening in our country and the degree to which some people some communities feel marginalized, feel left out and left behind.

When you talk about inequality, we've seen growing inequality economic inequality in our society in recent years for all sorts of reasons that we know in trying to address that, one of the issues is how much money is going to capital as opposed to labor. It's really shifted over a lot more of what we generate now goes to people and capital versus labor. What can be done to actually even that back out, to redirect some of the assets back toward labor.

When you talk about inequality, we've seen growing inequality economic inequality in our society in recent years for all sorts of reasons that we know in trying to address that, one of the issues is how much money is going to capital as opposed to labor. It's really shifted over a lot more of what we generate now goes to people and capital versus labor. What can be done to actually even that back out, to redirect some of the assets back toward labor.

Well.

Well.

One of the things that can be done is to demonstrate how we can address and reduce economic inequality through policy, through private sector prioritization, for example, the idea of ownership. My grandfather was semi literary at a third grade education. He was a porter for an oil company in Texas, but he benefited from an old fashioned profit sharing program. When the oil company made money, some of that was shared with every employee who participated in that program. Those programs have gone away. Why can't we bring more of them back? Why can't we, as we are doing with KKR and ownership works, create programs within companies to ensure that employees are indeed shareholders.

One of the things that can be done is to demonstrate how we can address and reduce economic inequality through policy, through private sector prioritization, for example, the idea of ownership. My grandfather was semi literary at a third grade education. He was a porter for an oil company in Texas, but he benefited from an old fashioned profit sharing program. When the oil company made money, some of that was shared with every employee who participated in that program. Those programs have gone away. Why can't we bring more of them back? Why can't we, as we are doing with KKR and ownership works, create programs within companies to ensure that employees are indeed shareholders.

Many thanks to Darren Walker, CEO of the Ford Foundation. Handlingway wrote that the first panacea for a mismanaged nation is inflation of the currency. The world has seen a fair amount of inflation over the past few years, whether from mismanagement or otherwise. Turkey this week could brag that it had made great strides in its fight against inflation, getting the rate down to a mere fifty two percent, which is certainly better than the sixty two percent of the months before. Thanks to interest rates of fifty percent, by.

Many thanks to Darren Walker, CEO of the Ford Foundation. Handlingway wrote that the first panacea for a mismanaged nation is inflation of the currency. The world has seen a fair amount of inflation over the past few years, whether from mismanagement or otherwise. Turkey this week could brag that it had made great strides in its fight against inflation, getting the rate down to a mere fifty two percent, which is certainly better than the sixty two percent of the months before. Thanks to interest rates of fifty percent, by.

The end of next series, inflation to come down to around thirty three percent. That's still higher than the central Bank's forecast of fourteen percent by the end of next year. If the central Bank is going to be sincere in achieving the fourteen percent year end goal by the end of twenty twenty five, there needs to be a more significant deceleration and this inflation program.

The end of next series, inflation to come down to around thirty three percent. That's still higher than the central Bank's forecast of fourteen percent by the end of next year. If the central Bank is going to be sincere in achieving the fourteen percent year end goal by the end of twenty twenty five, there needs to be a more significant deceleration and this inflation program.

For years now, Japan has been struggling with the opposite problem, a yen that hasn't been inflated enough, leading to hyper low interest rates that the central bank is just starting to raise, throwing the markets into a different sort of turmoil.

For years now, Japan has been struggling with the opposite problem, a yen that hasn't been inflated enough, leading to hyper low interest rates that the central bank is just starting to raise, throwing the markets into a different sort of turmoil.

The yen has been particularly weak and inflation has actually been pretty strong in Japan itself. So I think the new incoming Prome Minister, whoever he is, will actually be very very cognizant of the fact that you know, you can't have the end to week and might actually shift, might actually lead to a shift where the policy of the Japanese is concerned so.

The yen has been particularly weak and inflation has actually been pretty strong in Japan itself. So I think the new incoming Prome Minister, whoever he is, will actually be very very cognizant of the fact that you know, you can't have the end to week and might actually shift, might actually lead to a shift where the policy of the Japanese is concerned so.

Governor Uaita says he'll stay the course if prices keep going up.

Governor Uaita says he'll stay the course if prices keep going up.

Kim tosts you out, if we are nunable to confirm a rising certainty that the economy and prices will stay in line with forecasts, then there's no change to our stands and will continue to adjust the degree of easing.

Kim tosts you out, if we are nunable to confirm a rising certainty that the economy and prices will stay in line with forecasts, then there's no change to our stands and will continue to adjust the degree of easing.

Great Britain has certainly put its pounds sterling the test, first with Brexit hitting growth prospects, and then with Liz Trust proposing a budget that sent bond markets into a tail spin.

Great Britain has certainly put its pounds sterling the test, first with Brexit hitting growth prospects, and then with Liz Trust proposing a budget that sent bond markets into a tail spin.

We saw it happen in the UK when Liz Trust announced her mini budget and then people worried about sustainability. Suddenly interest rate spiked and you couldn't adjust that.

We saw it happen in the UK when Liz Trust announced her mini budget and then people worried about sustainability. Suddenly interest rate spiked and you couldn't adjust that.

But Kuerstarmer's new labor government was rewarded this week with demand for his bonds that matched the record and brought in one hundred and ten billion pounds. And of course in the United States we saw that spike in inflation in twenty twenty two, which led to a rapid and dramatic hike in interest rates.

But Kuerstarmer's new labor government was rewarded this week with demand for his bonds that matched the record and brought in one hundred and ten billion pounds. And of course in the United States we saw that spike in inflation in twenty twenty two, which led to a rapid and dramatic hike in interest rates.

They have to have slowly economy down sufficiently to generate enough slack in the layer market, so wage trends come down to be consistent with two percent inflation.

They have to have slowly economy down sufficiently to generate enough slack in the layer market, so wage trends come down to be consistent with two percent inflation.

That drove the dollar higher, though that may be turning around even as inflation comes down.

That drove the dollar higher, though that may be turning around even as inflation comes down.

The dollar has clearly weakened in the last five weeks against the majors. One of the reasons this has happened is because the Fed has moved in a much more dubvish towards a much more dubbish narrative in the last few weeks.

The dollar has clearly weakened in the last five weeks against the majors. One of the reasons this has happened is because the Fed has moved in a much more dubvish towards a much more dubbish narrative in the last few weeks.

But of all policies that have driven currencies up, down, and all around, the most dramatic probably is found as before, in Argentina, President Javier Milay promised to get runaway inflation back under control, inflation that had peaked as high as two hundred and ninety percent a year, cutting the value of the peso to fourteen hundred to the dollar. In his battle with ever higher prices, President Malay cut subsidies to the provinces, leading one of them, La Rioja, simply to run out of money. So the governor took things into his own hands. He decided to issue a new currency to replace the peso, dubbed the chacho, and began handing it out to government employees who make up about two thirds of the province's workforce. No word yet on what President Malay thinks of the chacho, but it it didn't seem like what he had in mind when he talked with our editor in chief John Michelswaite back in April.

But of all policies that have driven currencies up, down, and all around, the most dramatic probably is found as before, in Argentina, President Javier Milay promised to get runaway inflation back under control, inflation that had peaked as high as two hundred and ninety percent a year, cutting the value of the peso to fourteen hundred to the dollar. In his battle with ever higher prices, President Malay cut subsidies to the provinces, leading one of them, La Rioja, simply to run out of money. So the governor took things into his own hands. He decided to issue a new currency to replace the peso, dubbed the chacho, and began handing it out to government employees who make up about two thirds of the province's workforce. No word yet on what President Malay thinks of the chacho, but it it didn't seem like what he had in mind when he talked with our editor in chief John Michelswaite back in April.

But when you also ask around for the word that reflects the sentiment of argentis now you know what it is.

But when you also ask around for the word that reflects the sentiment of argentis now you know what it is.

Hoax.

Hoax.

Even though we are undertaking the largest adjustment in the history of humanity, my approval ratings are on the rise because people know that I'm telling them the truth.

Even though we are undertaking the largest adjustment in the history of humanity, my approval ratings are on the rise because people know that I'm telling them the truth.

Let's see whether that truth includes the chacho that does it. For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.

Let's see whether that truth includes the chacho that does it. For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.