Main Bloomberg Host (2:23)

They're ready to come, but but who knows. It is unclear if a final product will emerge or if it will be palatable to either side. Which is where we start our conversation with Liana Fix, senior Fellow for Europe at the Council on Foreign Relations. Liana, I'm guessing your expectations are pretty low here what could come from this meeting today.

Liana Fix (2:44)

So what we are certainly going to see is at least some kind of simulation from the Russian side that they are willing to negotiate because this whole new negotiation effort, from a Russian perspective, really served the purpose of averting increased pressure from the United States and Europe. And so far it has been successful. Pretending to be willing to negotiate from the Russian side makes actually much more sense than just refusing any negotiation proposal from the outset.

Main Bloomberg Host (3:15)

Interesting optics. Yesterday, ahead of this meeting, Vladimir Put Putin decided to visit the troops, went to a battlefield command post and grew visibly angry and emotional, based on the reporting that we've seen here, after a commander reported that Ukrainian soldiers were dying by the hundreds, their bodies littering the tree lines. This is a tragedy, he said, with the Ukrainian audience, I guess, in mind, a tragedy for the Ukrainian people connected to the criminal policies of, of the thieving junta that seized power in Kyiv. This doesn't sound like somebody who's prepared to sit across the table from President Zelensky, does it?

Congressman Carlos Jimenez (3:56)

No.

Liana Fix (3:56)

And it also signals that from Russia's perspective, there's no future for a Western Ukraine, even if Ukraine accepts a Russian occupation and de facto control over Eastern Ukraine. That Vladimir Putin does not see a future for Western Ukraine in as a free society that can choose freely its leaders, leaders freely, its alliances and its liberal, democratic and prosperous. He wants to have all of Ukraine under his control, either militarily in the east or politically, by influencing Ukrainian elections, by weakening the Ukrainian state after any ceasefire agreement on Russian terms has been found. So this ISA ceasefire would, from Russia's perspective, just be a different continuation of warfare, political warfare for the rest of Ukraine, instead of military warfare in the east of Ukraine.

Main Bloomberg Host (4:51)

Well, as Russia continues to make military advances, it's why he was in the battlefield, to show off the momentum that his troops are enjoying. In what world does anyone think that Vladimir Putin wants to negotiate or bring this to an end?

Liana Fix (5:08)

Apparently, the administration, the US Administration does see such signs of willingness to negotiate. But the problem here really is that the US negotiation team seems to be very open of taking Russian demands at face value and seems much more reluctant to accept Russian, to accept Ukrainian and European red lines. So if you go into a negotiation with the assumption that you just have to pressure the weaker side enough to make a compromise work that basically undermines Ukraine's existence as an independent state, then of course you can get an outcome. And that is what we are seeing right now. That is what the Europeans and the Ukrainians are pushing against. And now we have to see how the Kremlin is playing this new proposal. If he's trying to drag out negotiations, Vladimir Putin, or if he tries another way of averting pressure from Russia and trying to achieve his still maximalist gains in Ukraine.

Main Bloomberg Host (6:15)

So what are you going to be watching after this meeting? Steve Witkoff is going to call the boss, obviously, and then we'll get presumably a readout from President Trump on Truth Social. How different will that read than what we hear from the Russians.

Liana Fix (6:31)

In the past? Vladimir Putin has not been particularly smart about meeting with Trump and negotiating these ideas in Alaska. Remember, he apparently, as was reported, entertained Trump with historical lessons for really long time, something that Trump obviously is not interested in at all. Distorted historical lessons all the more about Ukraine belonging to Russia and so on. So I'll be watching if Vladimir Putin has become a little bit more flexible tactically, if he sees the need to give the Trump administration more reason to believe that he's actually willing to negotiate, or if he's just going back to his maximalist talk about a Ukrainian junta, about the need for Russia to occupy all of Ukraine's east and the end of any military support for Ukraine by Western allies. I think it will be difficult to spin maximalist Russian position as a success for the Trump administration. But if they don't get that, it would be the third failed attempt to negotiate over Ukraine, which then might result in another round of frustration and perhaps increased pressure on Russia. Thinking Tomahawks here, thinking the Congress bill, sanctions bill on Russia.

Main Bloomberg Host (7:52)

Just lastly, Liana, this is the sixth visit for Steve Witkoff, who has said openly that he's a big fan of Vladimir Putin. I think they met for six and a half hours at one point. I don't know what kind of a party is going on over there or what kind of a meeting is going on over there. But when you see two people get close like this, what is the other side? What do Ukrainians make of Steve Witkoff? Do they trust him.

Liana Fix (8:17)

From a Ukrainian perspective? I think the main problem with Rytkov is that he lacks expertise. It's difficult for him to really distinguish what is a Russian bluff, what is a Russian lie, and what is the actual reality. He also does not have advisers around him or note takers who can not only help with some fact checking of Vladimir Putin, but also some note taken what the Russian side actually says. In the past, there have been confusion about issues that Witkov reported back to the United States. A willingness to compromise from the Russian side, which is not actually what the Russians or what Vladimir Putin has said. So Wybtkov, from a Ukrainian perspective, is an unreliable negotiator who tends to be too open from a Ukrainian perspective for Russian positions and does not fully seem to understand the history of the conflict and also the history of Russian imperial ambitions in the region. Fully.

Main Bloomberg Host (9:20)

Well, yeah. Wow. Great conversation, Leona. Appreciate your joining us. Liana Fiks with the Council on Foreign Relations, where she's senior fellow for Europe. We assemble our panel for their take on this. We've been talking about it with Rick and Jeannie since this war began. Bloomberg Politics contributors Jeannie, Shan Zaino and Rick Davis. He is our Republican strategist and partner at Stone Court Capital. Jeanne is democracy visiting Fellow at Harvard Kennedy School's Ash Center. Really interesting, Rick, to hear her refer to Steve Witkoff as an unreliable negotiator, unable to tell what is a Russian bluff, what is a Russian lie. No note takers in the room. What's Witkoff going to get done here tonight?

Rick Davis (10:02)

Look, I think it's going to be just more of the same. I mean, we've seen this act now for over a year where, you know, Witkoff will go and spend a lot of time with Vladimir Putin and come back and basically ape the Russian propaganda. I mean, when you're meeting with Vladimir Putin, you have to assume everything he's telling you is a lie. And it's all part of a Russian propaganda campaign. I mean, nobody does it better than Vladimir Putin. And so if you don't see through the smoke, you'll never make progress toward a achievable end. And most people I've talked to who are watching these negotiations with experience on, you know, dealing with Vladimir Putin for the last few decades, all agree that we're nowhere near getting anything done on a deal because at some point, the US has to make it clear to the Russians, to Vladimir Putin, that, that they have to accept a deal or it's only going to get worse for them. Either more sanctions. The congressional sanctions that, that are being talked about now are exactly the kind of thing that can help break the back of this negotiation. Not Witkoff building a trust relationship with Vladimir Putin. Vladimir Putin doesn't trust anybody. He doesn't trust Russians. He doesn't trust Americans. He doesn't trust Ukrainians. So all that effort, effort going forth to build that level of trust in that relationship is, is frankly a waste of time.

Main Bloomberg Host (11:29)

So, Jeannie, why is President Trump so patient with Vladimir Putin?

Podcast Host (11:35)

You know, I think the headline we saw the other day in one of the newspapers about making money, not war. I think this is a president who likes to make deals. And I think he and people he associates with see this as a deal that he can make. He can just strong arm Ukraine and Europe to go along with it. So I think there is some of that. I also think he sees realistically that Ukraine is, does not have much in, in terms of its ability going forward to win on the battlefield without a lot more support from Europe and the United States, which he doesn't see it forthcoming from the U.S. so I think there are a lot of reasons like that. We understand this is Jared Kushner's first face to face visit with Putin on this issue, which I is going to be fascinating. But I agree with Rick. I don't see much coming out of this. The 28 point plan that Witkoff originally brought forward was a surrender document that is not going to sell in Ukraine or Europe. Even though Zelensky is politically weakened in his own country, given this corruption scandal, it's just not going to fly. And so they're going back with this 19 point plan. And yet you just discussed the fact that Putin is describes the Ukrainian government as a junta and has said publicly numerous times he cannot and will not make a deal with Zelensky. So you sort of throw up your hands and say if he's not even willing to make a deal with Zelensky, who is the leader of the other side, how is this going to happen? And of course what we're seeing is he's not dealing with Zelensky, he's dealing with Wyckoff and Kushner. So I think this is a nonstarter and I think the President's going to have some really tough decisions to make going forward. But I am not confident he is going to side with Europe and Ukraine on this any more than he already has.

Main Bloomberg Host (13:32)

Well, as we talk potential peace here in Ukraine, Rick, another attack on a Russian tanker here purportedly from Ukraine. It was a drone attack that has now prompted Vladimir Putin to warn Russia may consider striking the ships of other countries supporting Ukraine if the surgeon attacks on Moscow's tanker fleet does not stop. I don't know how many nations that includes, but we're looking at you, Europe and Maybe even the U.S. rick, when you hear this kind of rhetoric against the backdrop of a peace negotiation, he's sitting down with Witkoff and Kushner maybe as we speak right now. What does that tell you?

Rick Davis (14:11)

You know, it's just another piece of, you know, Vladimir Putin's Russian propaganda. I mean, the one thing that is absolutely certain is that he cannot afford anyone else to enter this fight. But, but Ukraine, he feels like he can beat Ukraine on a one on one. And it's of course been four years and he hasn't accomplished that. So it's been no easy task for him. But if any Western organization country gets into this fight, it's, it's over for him. He cannot sustain a multi front battle against a western well equipped, well trained military. He's got a killing field going on right now. And as long as he's got young men to put into it, he has an army. But against a sophisticated, technologically advanced, well trained army of the west, he doesn't stand a chance. So all of this is just a big bluff. Remember, he was going to use nuclear weapons. You know, if certain acts were perpetrated against him by the Ukrainians, this is all the same thing. And so again, you just can't take him on face value. Everything's a game to Vladimir Putin. And if we're not playing the same game and understand what he's trying to accomplish, we're going to let him get the upper hand.

Main Bloomberg Host (15:33)

Well, maybe he's met a gamer in Donald Trump. Genie in our remaining 30 seconds. Remember when Trump was talking about putting nuclear subs in the waters of Russia?

Podcast Host (15:42)

Yeah, absolutely. And you know, they are quite an interesting match. And Joe, I also wanted to add the corruption scandal in Ukraine that people describe as playing out like a Netflix documentary or a movie online and on the Internet is just another wrinkle in this entire thing that weakens the landscape.

Main Bloomberg Host (16:01)

Wow. It's not getting any easier, guys. But very glad to have you with us. Rick Davis and Jeanne Shan Zaino, Bloomberg Politics contributors, the best in the business and a great panel. We thank you. We're going to turn to what's happening in the Caribbean next. Congressman Carlos Jimenez will be with us only here on Bloomberg. Stay with us on balance of power. We'll have much more coming up after this.

Chase Business Card Advertiser (16:23)

Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets them. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com, paid for by public investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC crypto trading provided by ZeroHash. Complete disclosures available@public.com disclosures.

Podcast Host (17:24)

You'Re listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business Apple app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

Main Bloomberg Host (17:40)

Thanks for joining us on the Tuesday edition of Balance of Power here on Bloomberg TV and radio. The Cabinet meeting is still underway. The President's going to hit 2 hours in just about 20 minutes time here as he goes around the table. We've done this together a few times now, the round robin of agency heads giving him an update on what's happening inside each agency that falls under the executive. The first person we heard from, interestingly, after the President's own remarks that he opened with, was the Defense Secretary, someone we have heard a heck of a lot about over the past couple of days here, Pete Hegseth speaking to a couple of matters within the Pentagon, including retention rates, enlistment levels. And then he went directly for the story in Venezuela, having been accused effectively in the Washington Post of ordering a kill everyone order when we attacked the first alleged drug boat coming out of Venezuela. Didn't get everybody with the first missile, as we discussed yesterday. There were two men clinging to wreckage and a second missile was fired, killing them as well. Washington Post suggesting that was Pete Hegseth with the order. But it was in fact, as we learned from the White House, Admiral Frank Bradley, well regarded in the Pentagon, a man of deep experience, knowing as well that Hegseth was watching all the while, he had said very clearly he watched the attack live and in real time. So there are questions about chain of command, which Hegseth did not address when he spoke to reporters a short time ago.

Gary Gensler (19:11)

Listen, as I've said, and I'll say.

Main Bloomberg Host (19:13)

Again, we've only just begun striking narco boats and putting narco terrorists at the bottom of the ocean.

Gary Gensler (19:21)

President Trump said no, we're taking the gloves off.

Main Bloomberg Host (19:24)

We're taking the fight to these designated terror organizations and it's exact, exactly what we're doing.

Gary Gensler (19:28)

So we're stopping the drugs, we're striking.

Main Bloomberg Host (19:30)

The boats, we're defeating narco terrorists. Great opportunity to spend some time with Congressman Carlos Jimenez, the Republican from Florida's 28th district. We've got Miami in Our sights is with us now on Bloomberg TV and Radio, a member of the Armed Services Committee, specializing in readiness, tactical, air and land forces. Congressman, welcome back to Bloomberg TV and Radio. It's great to have you. You've made pretty clear that narco terrorists are, in fact, a true threat, a terror threat to the United States. Does this need to end with regime change, or is this program underway now? What we need.

Congressman Carlos Jimenez (20:07)

No, the program is underway with. This is exactly what we need. And even if there is regime change in Venezuela, there are still other narco terrorists running around in the region. In Colombia, Mexico, there's also, you know, we know that they've been responsible for a lot of the fentanyl that's been coming into the United States and killing tens of thousands, if not hundreds of thousands of Americans. And so even if there is regime change in Venezuela, I think that's just the beginning of the fight against these narco terrorists.

Main Bloomberg Host (20:38)

You know, there's a lot of folks who are worried about what might happen to Admiral Frank Bradley. We're hearing the term scapegoat, knowing that there are a couple of important investigations underway. And he's going to be testifying, we understand, on Thursday before armed services. I don't know if you're going to be part of that conversation, Congressman. I'd love to hear what questions you would have for him and whether you are concerned that that order was unlawful.

Congressman Carlos Jimenez (21:00)

Well, look, I don't think the law, any. Any order was unlawful. I think that they have been designated as a foreign terrorist organization. They're carrying deadly drugs, drugs that kill Americans and trying to get them into the United States. And so I don't see that any different. Actually more dangerous than a boat full of Al Qaeda terrorists bringing bombs into the United States. I mean, that's the same thing. To me, they're killing Americans. And frankly, a boatload full of drugs has the potential to kill far more Americans than a boat full of explosives. And so, you know, everybody's hung up on this, that these are drugs. Yeah, these are drugs that are killing Americans, all right? And these are terrorists that are bringing these drugs into America. They have been for years. The fact that no administration has ever deemed it this way, the fact that we're actually taking the fight to them and this war to them. They've declared war on us a long time ago. Right. And now we're taking it to them, and everybody's astounded. To me, I'm saying, hey, it's about time that we took the gloves off and we started treating These people like what they are, they're foreign terrorists that are killing American citizens.

Main Bloomberg Host (22:08)

I do appreciate your position on that. I guess the question is, after the first strike, when you see two people no longer considered combatants when they're floating in the water, is it okay to go after wounded survivors or any survivors and kill them, as we apparently did?

Congressman Carlos Jimenez (22:23)

Yeah, but apparently, you know, that's only, you know, that's what people are saying. Okay. But also, you got to complete the mission. And the mission is to destroy the boat, destroy all the drugs. And I'm not going to second guess, you know, a highly decorated admiral in what he thought was necessary to complete. Complete the mission. Because I'm sure what the mission was is destroy the boat, destroy all the drugs, and maybe, and maybe, just maybe, the boat wasn't fully destroyed, and maybe all the drugs weren't destroyed either. And so, you know, that's what I'm thinking is actually what happened. And I'm not going to second guess this admiral in what was going through his mind when he gave the order to launch a second strike? I mean, a lot of it has to be investigated. And that's fine. Bring the admiral before, you know, the committees, and then we'll. We'll ask him and discuss exactly what happened and the sequence of events. But I'm not going to jump, you know, in front of this and say, oh, my God, you know, it's horrible and all that. No, you know, I'm going to. I'm going to. I'm going to give the admiral the benefit of the doubt. I think he deserves that.

Chase Business Card Advertiser (23:22)

Sure.

Main Bloomberg Host (23:23)

Well, and I know that you'll have a chance to question him, so we don't want you to jump to conclusions here. I guess I just wonder if some of these alleged narco terrorists would be more valuable if we took a prisoner, try to go up the chain of command.

Congressman Carlos Jimenez (23:36)

Well, maybe they would be all right. But you know, remember, you somehow think that there are assets in the area that somehow can activate a rescue operation or, or an apprehension. Yeah, you know, a lot of these things happen because, you know, you're talking about a really large area of the Earth and we don't have assets everywhere. Now, can we reach out and touch you? Yeah, we can reach out and touch you, but it doesn't necessarily mean that we have a boat in the area, a ship in the area that can actually go out and effectuate that rescue. And so, you know, again, I don't have all the details of what was in the area. I don't have all the details of what could have happened. And again, I'm not going to second guess the admiral on this instance, unless, you know, some action that he took was actually something that we can second guess and we don't have that information yet.

Main Bloomberg Host (24:26)

President's talking to Maduro. Congressman, could you see a diplomatic solution here or does this need to end militarily?

Congressman Carlos Jimenez (24:33)

No, I think I can see a diplomatic solution where Maduro leaves quietly or leaves publicly, goes to a. A country that will offer him asylum. I think the, the president has actually offered him and said, you got to leave. Now. The president didn't offer him his amnesty because, you know, Maduro is guilty of crimes. We have a $50 million bounty on, on his head. And, and so the President can't offer amnesty. But I can see where Maduro can end up in a third and, you know, some other country where maybe there's no extradition and then he can, you know, live out his life, him and his family. I'd rather see that. I don't see. I don't want to see any further bloodshed. You know, the final thing has to. That has to happen. Maduro has to leave. He's the illegitimate ruler of Venezuela. There's a legitimate government in waiting. He is the head of a designated terrorist organization, the Cartel de los Olives. They have been killing Americans for years. There's blood on his hands. And so, yeah, for the benefit of the people of Venezuela, but also for the benefit of the security United States and its citizens, Maduro has to go.

Main Bloomberg Host (25:42)

How do we rationalize that with the President's decision to pardon the former president of Honduras, Juan Orlando Hernandez, who was convicted for moving hundreds of tons of cocaine into this country? How is that coming from the same administration, Congressman? And is that something that you supported?

Congressman Carlos Jimenez (26:00)

No, nobody asked me. And look, I'm not a, I'm not a big fan of pardons by anybody. If somebody's been convicted, the President has his, his reasoning. He felt that it was unjust. And so, you know, he has that power, but, you know, it doesn't negate the fact of the actions that he's taken against Maduro and the narco traffickers from Venezuela. So I fully support that. I really didn't have that much information on this former president and what he was convicted on. Frankly, the first time I'd heard his name was a couple days ago when they mentioned the pardon.

Main Bloomberg Host (26:39)

President says it looks like Honduras is trying to change the results of their presidential election. He posted last evening. If they do, there will be hell to pay. Are you concerned about the US getting involved in the Honduras election?

Congressman Carlos Jimenez (26:51)

You know, I'm concerned about the Honduran government, which is a leftist government, far left government, is trying to steal the elections. They stopped counting after 46% of the vote was put in with the two opposition leaders far out in front of the incumbent. And so we had had some conversations with some of these, you know, other candidates in the last couple of weeks told us what was going to happen if in fact the results weren't coming their way. And sure enough, they stopped counting. And yeah, I have concerns that in Honduras they're going to try to steal the election just like Maduro stole the election last year. This is how these government work works, okay? They use democracy against democracy to make sure that democracy doesn't win out in the end. And it's no joke to the people of Honduras. And so I'm very concerned of the fact they stopped counting after 46% when they knew and they saw the results, these, these results that they were going to get blown out of the water. How convenient that there's a stop counting and now they're going to probably declare themselves the winner and steal the election. That's not democracy and that shouldn't exist in our hemisphere.

Main Bloomberg Host (28:02)

Congressman Carlos Jimenez, Republican from Florida. We thank you Congressman for your time. That initial digital push will be followed up by hand counted votes. This is Bloomberg. Stay with us. On balance of Power. We'll have much more coming up after this.

Chase Business Card Advertiser (28:19)

Support for the show comes from public.com, you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long. Stocks, bonds, options, crypto. It's all there. Plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com marketing and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by ZeroHash. Complete disclosures available@public.com disclosures.

Podcast Host (29:19)

You're listening to the Bloomberg Balance of Power podcast. Catch us live weekdays at noon and 5pm Eastern. Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg 11:30.

Main Bloomberg Host (29:38)

We've been watching bitcoin almost as much as stocks lately because it's been so intrinsically tied to the markets. Remember when it was supposed to be its own universe? That was the whole point. The decentralized cryptocurrency, it is bouncing back today, up 50, $400 and approaching $92,000 a coin. So maybe it bottoms Unclear, as we've had multiple folks, including Mike McGlone at Bloomberg Intelligence, predict another crypto winter. Michael Saylor also preparing for one at strategy. Despite the love this administration has shown, the embrace of the crypto industry as we remember the ways with Donald Trump since he took office. Listen, last year I promised to make.

Congressman Carlos Jimenez (30:21)

America the bitcoin superpower of the world and the crypto capital of the planet. With the right legal framework, institutions large and small will be liberated to invest, innovate, and take part in one of the most exciting technological revolutions in modern history. For years, you were mocked and dismissed and counted out. You were counted out as little as a year and a half ago. But this signing is a massive validation.

Main Bloomberg Host (30:50)

A massive validation as we watch the gyrations in the crypto market. Pleasure to spend some time with Gary Gensler as we consider the crypto space regulations and the plumbing and the market. He's with us live now, former chair, of course, of the securities and Exchange Commission, professor of the practice at MIT Sloan School of Management. Mr. Gensler, welcome back to Bloomberg TV and Radio. Is that you buying the dip in bitcoin.

Gary Gensler (31:19)

Joe? It's good to be back and could be with all of your viewers, but no, I'm not participating in that market.

Main Bloomberg Host (31:29)

Well, what do you think of this? We've spent a lot of time talking about this when you were in the job at the SEC and the many warnings that you made about this potentially risky asset. And we're witnessing a reckoning in the marketplace right now. What do you think is behind it?

Gary Gensler (31:47)

Look, I think it's a risk asset. And in the American public and the worldwide public has been fascinated with crypto currencies, but it's a highly speculative, volatile asset. And putting aside bitcoin for a minute, all the thousands of other tokens, not, not the stablecoins that are backed by US Dollars, but all the thousands of their tokens, you have to ask yourself, what's the fundamentals, what's underlying it. You don't get a dividend, you don't get usual returns. And so the investing public just needs to be aware of those risks in this highly volatile space.

Main Bloomberg Host (32:27)

What do you make of the politicization of crypto? The fact that the Trump administration has become involved to this extent has reportedly turned off some investors as they watched the Trump family enrich themselves, themselves with gains like this. Is this a Democrat versus Republican thing now?

Gary Gensler (32:47)

No, I don't think so. I mean, it's about our capital markets. The US have the greatest capital markets and they benefit from common sense rules of the road. When you buy and sell a stock or a bond, you want to get, you know, various information and you want to know that you're getting the same treatment as, you know, the big investors. That's, that's the fairness in these capital markets that are so important for a.

Main Bloomberg Host (33:15)

Lot about the impact of ETFs on this space. That's something you know a lot about. The initial ETFs that were greenlit to start buying crypto, did that just change the plumbing in the crypto market here by tying it directly to the stock market market?

Gary Gensler (33:35)

Well, ever since antiquity, finance goes towards centralization. So it's not surprised that that which started as a decentralized ecosystem and that was the vision, has become more integrated and more centralized. Investors can express themselves in gold and silver through exchange traded funds. And as of a couple of years ago, actually all the way back to my first year in the job, they were exchange traded funds on bitcoin futures, just as there is for gold and silver.

Main Bloomberg Host (34:14)

Yeah. Well, Mr. Chairman, I want to ask you about, speaking of plumbing in the markets, what happened at the CME last week and whether you think the CFTC should be investigating this outage? Should the CME be facing additional scrutiny?

Gary Gensler (34:31)

Look, it's something really well understood that our major stock exchanges and futures markets, the Chicago Mercantile Exchange trades very consequential parts of our US treasury market, interest rates, markets, their critical infrastructure. On Thanksgiving evening, they had an outage at a data center. Importantly, it was, it wasn't actually their computers, it was the chillers, as I understand it, the cooling system in this data center. And they had an outage for about 10 hours. And so markets planned for that. The Chicago Mercantile Exchange considered. They didn't go to their backup data center. They stayed partly because it was Thanksgiving evening thing, as I understand it. I'm sure that they, at the Chicago Mercantile Exchange and the various regulators will keep looking at it. And look for lessons learned. You always look for lessons learned. And how can we do things better in the future?

Main Bloomberg Host (35:35)

Well, we've experienced an incredible number of inquiries about this at Bloomberg. Our readers are asking, our viewers and listeners are asking about this. It put a real chill in the markets to use a terrible punishment pun in this case. Mr. Chairman, you don't sound that worried about this being systemic.

Gary Gensler (35:53)

Look, I think that the New York Stock Exchange, cme, the clearinghouses are systemically important. No doubt about it, systemically important. But what happened here at this specific moment is the cooling system, as I understand had a glitch. By the way, this data center is operated by a third party. It's not operated by cme, so they have a contract for certain performance levels and they didn't go to their backup data center in which is I think located elsewhere in New Jersey. If this were to happen at 10am on a Monday, I think the management team would make a different decision and probably would switch over to the backup data center more quickly. The markets probably would have a little less liquidity. Not every high frequency trading shop or principal trading firm has the same connectivity to the backup data center. So that's an interesting business choice. And for your institutional listeners, if that happened, they'd probably see a little less liquidity until they get back to that primary data center.

Main Bloomberg Host (37:09)

Always fascinating to look under the hood with. Gary Gensler, Former Chair of the SEC, professor of the Practice, MIT Sloan School of Management thank you Mr. Chairman for the time. Thanks for listening to the Balance of Power podcast. Make sure to subscribe if you haven't already at Apple, Spotify or wherever you get your podcasts. And you can find us live every weekday from Washington D.C. at noontime eastern@bloomberg.com if a Lenovo computer for your business.

Chase Business Card Advertiser (37:36)

Is on your holiday list, don't shop.

Main Bloomberg Host (37:38)

Around, just go directly to the source.

Chase Business Card Advertiser (37:40)

Lenovo.Com you'll find exclusive deals on the PCs you want for your business like.

Main Bloomberg Host (37:45)

The ThinkPad X914, Aura Edition and Yoga.

Chase Business Card Advertiser (37:48)

7I 2 in 1. So avoid all that shopping chaos and price comparing and just go directly to.

Main Bloomberg Host (37:54)

The source Lenovo.com, where PCs are up to 50% off.

Chase Business Card Advertiser (37:58)

That's Lenovo.com.

Main Bloomberg Host (38:04)

This podcast is brought to you by FedEx. The new power Move hey, you know those people in your office who are always pulling old school corporate power moves? Like the guy who weaponizes eye contact. He's confident, he's engaged, he's often creepy. It's an old school power move. But this alpha dog laser gaze won't keep your supply chain moving across borders. The real power move Having a smart platform that keeps up with the changing trade landscape. That's why smart businesses partner with FedEx and use the power of digital intelligence to navigate around supply chain issues before they happen. Set your sights on something that will actually improve your business. FedEx the new power move.