Transcripts For BLOOMBERG Bloomberg Markets Balance Of Power 20240712

Making more ppp loans than one of the Major National banks did nationwide. That is just the success of the ppp, but it is because of the engagement. Before i go, i have two questions. I would like to respond to something my colleague from california brought up about the recovering economy. There are areas of the country the economy is recovering strong , the state of georgia is one of those. Our revenue reports came out over a week ago. The tax revenues for 2020 r. 7 higher than 2019 because instead heavyhanded government putting longterm restrictions on the people, we decided to trust the people they would be safe and secure and opened our economy. I think of other states would like to see that type of economic recovery, maybe they should address the way their states are being governed. I know the Federal Reserve is looking at ways of broadening the main Street Lending program, which we all realize needs to be broadened. Areas i would like to see us take a look at. That ishose industries interested in main Street Lending is specialized Consumer Finance firms which are nonbanks that purchase credit card receivables from card issuing banks and they securitize those assets, which enables consumers with subprime credit to access a credit card, which is some of the most vulnerable in our society right now. Ebitaople to the requirements prevent them from receiving alone. Would you consider modifying firms to allow them to access this program . Sec. Mnuchin i would have to look at that in particular. Ebita is a standard cash flow measure. The alternative is something assetbased. I do not know these companies to know what we are talking about, but im happy to take a look. I will make sure our staff engages with yours to give looking to do that. I think it would be wise. Another issue is back to the ppp program. Mr. Secretary, the forgiveness of the ppp loans is very cumbersome and is putting some of the banks, such as the one ive brought up earlier into a situation where they are keeping the loans on their books longer than what they had intended. Is there something we can do to streamline this Forgiveness Program so it is less cumbersome so we can start getting those loans off the books of the small banks to open them up to make other more traditional Business Loans . Sec. Mnuchin we have tried to streamline the process through the smaller loans as you outlined. I know there are some proposals in congress. As part of legislation week worked with both committees, making sure we have the right balance of protecting for fraud with simplification. I assume you would be willing, if Congress Took action, to work with us for that. I know this has been challenging times but i think the has responded well. We can get through this and make our economy as strong as it was if not stronger. I yield back. I now recognize the gentleman from texas for five minutes. Chair, andu, madam thank you chairman powell and secretary mnuchin. I represent many Small Business hotels in my district, many of whom are first and Second Generation americans. As a result of covid19 and subsequent travel shutdowns, and through no fault of their own, familyowned and operated hotels in texas and across the country are facing an unimaginable economic crisis with no ability to access a lifeline through main Street Lending programs. Despite repeated requests from , mslpss, including my own facts released september 18 say conditions do not warrant changes to allow lending to assetbased borrowers. There is nothing else for these people to turn to. I want to make sure i understand your message to them. Right now we have money on the table, programs not being used, and programs being used theyre not quite compliant with the cares, and programs that have been drained of funding because they worked. Your position that these businesses should be allowed to hardworking americans should lose their livelihoods and you will do nothing to help them. You want to carefully follow the law, right . On the cares act . When we passed the cares act, and to the extent you are not in compliance with the programs included, it is time to get that done. Failure to do so would not constitute following the law. You either are or you are not compliant. If you did not have programs that comply with the cares act we may be in a crisis but i am sure you can imagine what happens after the crisis when we start picking up the pieces and scrutinizing the actions of your agencies. Right now we are using the powers given to you for explicitly this purpose. Powers for youe so you can help the country. Businesses need a lifeline. They are not asking for bailouts. Money for 102030 years at a low Interest Rate creates liquidity markets need and recognizing his that of all commercial Properties Start defaulting, we are looking at another wave of the crisis. What are we doing to prepare now and help them now and do the work now . I would first say, i think we are following the law. The second thing i would say is we want to help the types of businesses you are talking about. In many cases, they need grants and not loans. As part of additional sba appropriations, we support longterm loans, particulate for the types of businesses you are focused on. What specific loans do you have available for folks like these small hotel years . Again, we support additional money to small hotels because that is what they need. Aretional sba loans something we have looked at, as well as ppp loans. Hotels not fit the small do not fit into main street because they already have other indebtedness, and in many cases they are not allowed to take additional loans or they are too levered to qualify. So the small ones that do fit in, you are saying sba has a program for them . Sec. Mnuchin as part of additional legislation, the sba committee has proposed additional money, longterm money for Small Businesses as part of a new program. That is something we have looked at and we would support. Many of the small hotels you are talking about do not have any revenues. Those hotels would qualify for additional ppp loans. There is over 130 million appropriated by congress that we need authorization to use, and that would be the best solution for them. Thank you. I asked we stay cognizant of these folks. They are good americans, there hardworking, they are an important part of our economies and they deserve our attention. Thank you very much. Thank you remise. I now recognize the gentleman from tennessee for five minutes. Chairwoman. , madam i would like to thank the witnesses for your leadership during this crisis. You have both displayed tremendous leadership. Secretary mnuchin, if i could, we have talked a lot about the ppp program today and the success, the Ranking Member talked about the 51 million jobs it is estimated it saved, with 12veat 12 minnen million rural jobs in rural communities. On what wasowup asked a few moments ago as it relates to the forgiveness. What i have heard from Small Businesses throughout my district, it might be throughout the state of tennessee, very thankful about ppp and it literally saved our business, but there is the concern about the complexity of the forgiveness. My question is, if you considered administratively for giving certain loans, say loans of 150,000 or less, again through administrative action . Sec. Mnuchin we have considered that. We do not think we have the authorization to do that in the context of the law. We have tried to make it very simple for Small Businesses, but again there were some proposals out of congress that said we should automatically forgive all of those loans come in that we need congressional action. Your interpretation is you do not have the authority to administratively forgive those certain loans . Less. Sing 150,000 or administratively you do not have the authority to do that . Sec. Mnuchin we think we have the obligation to get the documents, have them fill out what is an easy form, and have the ability to audit those. Unfortunately, there has been some fraud, and we are working with our ig on that. We do not think it would be appropriate and we do not think we have the authorization to do blanket forgiveness across the board. Can, we have heard from people, all of us have about how ppp save their businesses, kept their employees on the payroll. One criticism you all deserve credit for crafting that. I think Congress Deserves credit that they acted swiftly in a bipartisan nature. The one criticism i have heard from businesses, specifically in my district is they cannot compete with the enhanced Unemployment Benefits, that it was set too high. An area like tennessee or mississippi or arkansas, maybe it was generous. In other states maybe it is not. I do not want to get ahead of the negotiations, but if there is additional enhanced Unemployment Benefits in the next package, is there a way to somehow tie that to locality . Time, wehin at the knew there were certain places that would be too high and certainly too low. We thought the fair way of doing it was one number across the board. As part of the president s executive action, he is now authored that to go forward with up to 400, 300 if the state does not contribute. We have proposed as part of additional legislation having it at Something Like 75 of wage replacement. With that be uniform across all 50 states or based on locality . Sec. Mnuchin ideally each state would take some time for them to implement that technology, but it would be capped on 75 of vious wages one mo 75 of previous wages. One more question on phase one of our agreement with china that was executed earlier in the year. Obviously we know we have faced a pandemic. China can meetnt its commitment to purchase 36. 5 billion in Agricultural Products this year . Sec. Mnuchin i believe they are on track for that, and ambassador lighthizer and i are monitoring that carefully. Thank you, mr. Secretary. The yield back my time. Now five minutes to the gentleman from florida. Thank you. I would like to thank you. I would like to welcome the gentleman to the meeting. Very good hearing you all speak this morning. Many of my colleagues joined me in writing a letter regarding the impact of covid19 on commercial real estate. Others talked earlier. The commercial Real Estate Market continues to be hit hard due to the economic shutdown, the covid19 theemic had turned financial Real Estate Market upside down. Byjune, i was joined representative taylor in over 100 of our colleagues requesting the department of the treasury and the Federal Reserve set up economic support to bridge deficiencies facing commercial real estate created by the unforeseen crisis. Believe the Federal Reserve has the ability to bridge the gap to various facilities to have many benefits survive economic disruption. Reservey, the federal released an update on the main Street Lending program stating that conditions were not to allow financial assistance. Would you care to comment on that for me . Let me say chair powell and i agree with you that the commercial Real Estate Market has an issue. I want to clarify, when people talk about asset based lending, they traditionally do not include real estate in that. The Real Estate Market is its own market. That would not necessarily be part of an asset based program. There are structural problems. Some people in the house tried to work on a proposal of preferred equity so it could be going below the existing or chair powell and i will continue to work on this. It is an issue we do not have a solution. We wish we did. Powell . Man i know i was on a call with him several weeks ago on this issue along with representative taylor. Chair powell yes. Both of us are very familiar with the letter you sent and have studied it carefully and looked hard at how we can reach the problem we are talking about. A lot of the problem is not just with commercial mortgagebacked securities. Those loans contain a provision that says you can incur additional debt. The secretary referred to a way around that. That would not involve the fed, that would be something for legislation. We do understand and appreciate this is a significant problem in the economy, and to keep looking for a solution. We do not have a solution with the tools we have. I understand we do not have a solution. One of the things that bothers me as a lawmaker, when we turn back about 130 billion in ppp funds, then you find out all of these people that are suffering tremendously, and they are a release to a large group of employees. We had the opportunity to talk to the chair, congresswoman waters, about some of the things happening in her area in california. I am glad you are considering it. Legislation. I do not know how quickly we can get legislation. I know the senate still has not cast anything. I do not have much time left. I am glad you continue to keep that at the forefront because a lot of these employees are everyday people that need help. With that, i yield back. Thank you. I now recognize mr. Hollandsworth of indiana for five minutes. Thank you. First to you, chair powell. I was recently excited by the news about creating a more symmetrical inflation target. I think that was great news. It is something you and i had discussed at length privately and publicly at the hearings. I am sure it had a lot of discussion and research underpinnings it was not just my annoyance that led to it. I think it will be a positive for the fed and the American Economy going forward. I wanted to turn to the temporary exclusion of treasuries and the deposits from the Federal Reserve bank done through march of 2021 on concerns that increased reserves during this period did not want to count against them during slr. It was not extended to nor does it flow through to the size indicator. I was wondering why that was the case, and is there any further discussion or dialogue about extending it through the size indicator . Chair powell i have to check on that for you. Im not aware of any of those discussions. Great. If you would mind checking on it, that is important for us to see that flow through given that in the Fourth Quarter many of our largest institutions will begin to see those impacts. On to you, secretary mnuchin. What you said a few minutes ago, theres been a proposal around Congress Talking about preferred equity. Some of our real estate borrowers that are most troubling. That is troubling, that proposal. You said it does not feel like theres a good solution. Can you talk about why that is not a good solution . Sec. Mnuchin ideally we would rather lend as debt cannot do preferred equity. Valuation issues, government ownership issues, how you get paid back issues, those sorts of things. One of the things i want to emphasize is there is real distress in this community, their real challenges, but the longer we talk about solutions that are not Real Solutions the longer it will take to get to a legislative and administrative fix that will provide a real solution to those that are hurting across my district, across my state in this country. Thank you. I appreciate your clarity on that. I yield back. I now recognize the gentlelady from michigan. Five minutes. Thank you, so much. Thank you both for being here. Some ofhe questions, or the basic ones i want to review with both of you, chairman powell and secretary mnuchin, what do you think your role is during this pandemic . I was there with you, chairman . Chair powell we are here to serve the American People. Is it to stabilize the economy . Chair powell that is a big part. How about you . Sec. Mnuchin that is correct, and to operationalize like prevent an economic collapse, right question prevent economic collapse, right . Sec. Mnuchin i hope so. I hope so, too. Chariman powell him every time i talk to you you have said there is nothing the fed can do to help state and local facilities, but you did the program is restrictive. Is it true only the state of illinois has applied . Chair powell no. We have done two loans, and that facility has resulted in 250 billion of borrowing in the private sector, where there was none taking place before the facility was announced. You think state and local government going bankrupt would create instability in our economy . Chair powell that is an issue outside my bailiwick. You do not think it is an integral part to ensure state and local governments in the Public Sector stabilize and will not go bankrupt like the city of detroit did . Chair Powell States cannot go bankrupt. There is no means for them to. Cities can. When detroit went bankrupt, did you think there was an impact on the economy . Chair powell yes. My district has not benefited from the program, and one of the things i want to point out to you, chairman powell, is you do not have to land with penalty rates to state and local government. This regulation you have about penalty rates, that was not created by statute, correct . That was created by you internally . Chair powell it is in our regulation and our practice. Why not remove the penalty rate when there is a high unemployment or when the state and local governments are at risk . Chair powell what that facility has accomplished is it has opened up the private market. State and local governments are borrowing in record amounts at record low yields. That is across the yield curve. Only two states applied . Only two states qualified for the mls program . Chair powell there are barring of the Public Markets at much cheaper rates. Corporations, the fed supports bonds within a five year maturity. You think corporations and debt are more important than local meat is about is . I understand it is five years and you have three years for local governments . Chair powell state and local governments are not generally allowed to borrow to finance deficits. What is is they are borrowing for liquidity. Theres a part of the market which is zero to three years that is about liquidity and that is where we have been willing to lend. Theres been a lot going on longer term issues, 20 year bonds and 30 year bonds have been issued. That is because of our backstop, our facility is performing its backstop function and that has enabled the private market to work very well servicing local governments. I do not think it is. Looking at what happened in detroit, i am worried we are not being flexible enough, we are not being able to accommodate the fact that the state and local governments. You know much of the policy from economy,tabilize the we have to make sure we uplift and mixer committees are protected. I recommend you check out the bill i have, uplifting our local committees act. I would appreciate that. Secretary mnuchin, we have to prevent an economic collapse. This is a huge issue and probably even deeper than the recession we went through. Do you believe another stimulus check to help stabilize the economy . Sec. Mnuchin i do. But youve been on record not supporting the economic passage we passed in may that included another round of stimulus checks for millions of americans that are unable to afford their rent and so forth. Can you explain what your position is . I think the American People are confused. Does the Administration Support a 1200 stimulus payment . Sec. Mnuchin the administration does support another stimulus payment. But you are willing to support within the heroes act, that payment, but it pushes back on the let them go bankrupt bill the senate has proposed . Sec. Mnuchin let me say i take great pride the last two bills we did passed with overwhelming bipartisan support. We cannot pass a bill in the Senate Without bipartisan support, and our job is to continue to work with congress to try to get additional help to the american public. I think you need to be clear ,ith the senators, treasurer that direct payment to individuals is critical to providing the economic collapse of our country. Thank you very much. Member move to the last able to raise questions. At 12 30a hard stop and we have to honor that. I now recognize the german from North Carolina for five minutes. Thank you chairwoman and secretary mnuchin thank you for being here. Less than 1 of the ppp loans have been processed through the forgiveness portal. Many Small Businesses are waiting to see if treasury or congress will act on some sort of bipartisan forgiveness proposal we see in the house and senate. One, the current process is confusing for a lot of these Small Business owners, it is not what they expected when they first took out these loans. The current process is a burden that have a banks lot less resources than our large banks. The time for such a streamlined process to be put in place is weeks ago. Due to this delay, the situation with banks and borrowers is more and more urgent. Under your Current Authority would you and the administrator streamlinednister a process as outlined in the paycheck protection Small Business act . Sec. Mnuchin i would have to look at the specifics of the act and get back to you. I believe the answer is we do not have the authority to implement it the way it is in the act. Again, i would say the forgiveness portal is open. We are encouraging Small Businesses to apply and we are working with sba to make sure they can process those as quickly as possible and we can provide Small Businesses, tools to make it easy for them. Im glad the portal is open and i am assuming it is working. You consider to be a streamlined process . Chair powell sec. Mnuchin we developed an easy form so we try to make it significantly easier. We are happy to work on a bipartisan basis with congress if they want to pass legislation that creates blanket authority for forgiveness. Thank you, mr. Secretary. Chairman powell, thanks again for being here. At your last appearance before the committee, you stated our Banking System is robust and it has been a source of strength throughout this pandemic. Specifically, you cited the unprecedented influx of deposits , forbearance measures taken by banks, and that continued in the to lend banks covid19 environment. Now while Many Industries have understandably needed Government Support and continue to operate in the forced economic set down, my view is that the Financial System has been a crucial partner for the fed and congress in facilitating relief. Because il of this up have heard some call the recent action taken by congress and the fed a bailout for banks. My question is simple, has there been a bailout for banks during covid19 . Chair powell no, i would not say there have been. My office keeps him from companies unable to secure shortterm financing but are using their working Capital Financing to run their operations. They were too large to take advantage of ppp and dont have access to the capital markets. How can the fed use its 133 authority to provide assistance to these companies, provide services and supplies up and down the supply chain that is critical to our economy, what can the fed do to provide assistance to them . Chair powell on working capital, looking at the idea of an assetbased facility, we came away thinking that working Capital Financing was pretty broadly available. I am surprised, not a good thing that i am hearing that it is difficult for some. We will go back and look at that. Is there something i should relate to these midsized businesses that maybe they have not found, are not aware of, that they should look to for support . Chair powell we have the main street facility which of course has three different loan products. All companies are welcome to borrow there. We have growing interest there. Program. The ppp be a you think there might gap between the ppp and the main Street Lending facility, where some could get caught . Chair powell we have been looking for gaps, we did look at the working Capital Financing, and did not see a big problem to solve there, but we will taken at that. Thank you. I yield back my time. Our distinctthank witnesses for their testimony today. Without objection, all members have five legislative days in which to submit additional written questions which will be forwarded to the witnesses for their response. I ask our witnesses to respond as properly as you are able. David that concludes the testimony of jay powell and Stephen Mnuchin between the House Financial Services committee. They spoke for a bit more than 90 minutes, got started a little late. Asked,nge of questions subjects covered. A couple of the principal ones were chairman powell saying although the economy has made progress, we have a long way to go, mentioning 11 million unemployed. He thought it was likely that further fiscal and monetary stimulus would be needed for the economy. Secretary mnuchin said that if there should be more stimulus, it should be targeted, talking about jobs and kids, some talk about Small Businesses as well. A lot of talk about commercial real estate and that main Street Lending program. For more, we welcome in michael mckee. What struck you about the testimony . Neither secretary mnuchin or chairman powell at specific answers as to what kind of fiscal help could be brought. The treasury secretary a little more able to talk politics, looking at the idea of targeted help, but they are both leaving it up to members of congress on what should be done. A lot of people asked both of them about whether they should come up with some sort of smaller main Street Lending as 100, perhaps as low thousand dollars, and they said that would not work under the system they have right now. They would have to come up with a new program, or congress could pass another round of ppp funding. Secretary mnuchin says there is still 130 million in that fund they could use if they reauthorize it. One of the bigger aspects was the commercial real estate section. A lot of members asked what could be done to help commercial real estate landlords because so Many Companies are going out of business. At this point, both of them said they didnt know, have the authority under the law to do something. Again, leaving it up to congress. David secretary mnuchin at one point said this is a problem, we dont have an answer, and congress has to fix it. I did not hear a suggestion from him or the chairman about what that would look like. Mike secretary mnuchin would be working to looking to work with members on capitol hill. Chairman powell steps out of any specifics when he is speaking to the public. David it strikes me, the chairman had a challenging time today. Almost at the same time he had one of the regional fed president s, Charlie Evans, saying we may have to raise rates at some point. Did people misunderstand . The 30year actually moved on the news. Unusual was an situation, Charlie Evans doing a speech today. Rates asked whether zero apply to the idea of a 2 average inflation. You leave rates at zero until you get there, and he said maybe not, we may have to raise a little bit before getting to 2 . That caused a market reaction. The fed has not specified what wouldns by how long it raise rates, how far it would go over to percent. The markets filling in the holes, and unfortunately, that is a problem for jay powell. This was not the venue for him to respond. David some talk about the coronavirus. Chairman powell saying we need to get the economy reopened but we have to do it in a sustainable way, in particular, talking about masks. Mike the fed chair has always made it clear that controlling the virus is the way to get the economy back. I think he wanted to make that clear to members of congress, some of them whom, for political reasons, do not want to support that. Secretary mnuchin did not take up a position on that comment, but was wearing a mask, so both of them reinforcing that idea. David what about the main Street Lending program . A lot of time to get it up and running, but some criticism, why arent you doing more . There wasair so that no appetite to go beyond 100,000. Mike part of it was that it took a long time to stand up, and it is onerous, banks are worried about losing money, so they dont want to bank loans. Beenabout 1. 5 billion has lent, so there are questions about what went wrong here. It seems if you are a credit worthy company, you got out and got a bank loan, you are ok. But if you have problems, banks are reluctant to make loans to you because they dont want to take losses, and they are worried about what regulators would say. Friday, the fed put a new guidance to the banks saying that you can take a chance on these people. Whether that helps, we dont know. An idea,000 is also that relates to the size of the companies. The fed originally said it was a milliondollar company, for the Mediumsized Companies they would lend to. Congress aref talking about Smaller Companies because so many are facing financial difficulty. Neither said it was a bad idea but basically said we dont have the facility to do that right now. Maybe go back and look at the ppp again. David i have heardebitda talked about and congress more than i ever thought i would have been congress. Thank you so much to michael mckee. We turn to mark with first word news. Mark President Trump addressed the United Nations General Assembly today and remarks taped at the white house. The president blamed china for the global spread of the coronavirus. President trump we must hold accountable the nation which unleashed displayed onto the world, china. In the earliest days of the virus, china lockdown travel domestically while allowing flights to leave china and infect the world. Mark President Trump also called for the International Body to punish beijing. He also criticized chinas environmental record. European union summit has been postponed for a week because the Eu Council President has gone into quarantine after close contact with a Security Officer who tested positive for covid19. The summit was set to address issues as wideranging as brexit negotiations, climate change, and the tension between greece and turkey over energy rights. Britain is taking major steps to stem the spread of the coronavirus. News johnson announced restrictions today, saying the nation has reached a perilous turning point. He asked people to work from home if possible and also ordered pubs and restaurants to close early. The measures are likely to last six months. Face coverings will become mandatory for passengers in taxis and workers in the hospitality and retail sectors with tougher five for those that do not comply. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. David thank you. Coming up, we will talk about the partisan battle over the replacement for Ruth Bader Ginsburg, and what that could mean for any stimulus bill, or even for keeping the government going. This is balance of power on Bloomberg Television and radio. Mberg television and radio. David this is balance of power on Bloomberg Television and radio. Im david westin. Supreme Court Justice Ruth Bader Ginsburg well lie in state at the Supreme Court tomorrow even as a patterson battle rages across the street at the capital with the republicans meeting today on whether and how to move forward on a vote on whomever President Trump nominates this saturday. We welcome jeannie is a no. Give us your take. We heard from senator mitt romney today saying he would go forward with a vote. They are having a caucus lunch today, the republicans. Is it a foregone conclusion . ,eanne with romney on board very hard to stop the momentum of the republicans in the senate, that they will move forward. We dont know the date of an actual vote, the timeframe is pretty narrow. If the president makes a nomination on saturday, you are talking amongst the quickest nomination votes in history, but it is possible. Whether they do it before or after the election, i think they will do it before the end of the year. If they do it after the election, does it become more difficult . What if the senate switches over to democrats, effective january 2 . Do you have people voting on this who have lost their jobs . Jeanne absolutely. Imagine the republicans lose the senate and the white house, you would have people voting who would no longer have their jobs in january. Constitutionally, there is nothing to stop a lameduck senate from voting. But politically it makes it that much more difficult for republicans. I think the push will be to get this done before the election, if that is possible, because this is a process that takes some time, even if you are talking about a nomination of someone who has been recently vetted. It is not as timeconsuming, they have met with senators recently, but it takes time. Democrats can slow it up by a week or so but republicans want to get it done quickly. David talk about the senate race in arizona and mark kelly, running against senator cmsally. If he were to win, he could take his seat in the senate before the new year. Polls, he could be the winner out there. Since this is a special election , this was finishing mccains term, since this is a special election, he could be sworn in as soon as the results are officially certified. Imagine,ere the case, kelly would now be summit on the democratic side taking a vote away from republicans. That could throw a Monkey Wrench into a vote, if it does not occur until after the election. Course, and if the vote is certified quickly. We dont know how quickly we will get a certification. But he will be the first democrat, if he wins, to take a seat in the senate this year. David in congress, there are other things they have to do about other than the replacement for Ruth Bader Ginsburg. We have the stimulus and we have a continuing resolution to keep the government going after october. Jeanne just a few small things on the table for the senate, as all senators and members of the house are trying to run for election or reelection. We did hear nancy pelosi over the weekend talk about the fact that there is still widespread support to keep the government open. Will gone the cr forward and they will agree on that, but nothing is off the table at this point. Democrats want to slow this down, so you can imagine there will be pressure on democrats to do what they can. I am not sure how this will pan out in terms of the continuing resolution. Of course, we are in the midst of a pandemic, we still dont have a deal on that. A lot on the table as these people try to go out and run for reelection and deal with a nomination. David always wonderful to have you with us, jeanne zaino. Coming up, we are talking with max baucus, former ambassador to china, and member of the senate for some 36 years. This is balance of power on Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. Im david westin. Baucus was u. S. Emissary to beijing under president obama, but before that he served for nearly 36 years serving his home state of montana in the senate, including as chairman of the finance committee. Thank you so much for being here. Lets start with the senate hat because there is so much going on with respect to the possible confirmation of the successor to ruth peter ginsberg. The senate used to be the deliberative body, commenting among the members. Are those days gone . Max it is a Different Senate today. Earlier, the process was much more orderly. I voted on 12 different nominees. The first was sandra day oconnor, and she was treated very respectfully. That continued for a time. After a while, the process became more political. Later nominees, cavanaugh, for example. It is very disturbing because the rules are changing. By rules are basically set the majority party. Whenever the majority wants to set the rules. The other point to me is that the court itself is becoming more political. The classic situation in the constitution is we have a congress that rights legislation , a president executes the law, of course, political in a sense, but the court was supposed to be the independent arbiter, but now that is starting to change. The composition of the court is becoming political as well. Starting to subtly undermine a basic american tenant, the rule of law. The rule of law is being shaken. Little bit me have afeels like rivalry going on between democrats and republicans. Remember when harry reid was majority leader, he did away with the 60 rule to get some court of appeals judges in. If the democrats take power in the senate and white house, could we expand the number of justices on the Supreme Court . That is something being talked about. Max it is being talked about. Because itisturbing really is evidence that the Congress Wants to be continually political in the appointment of Supreme Court nominees. Course, if President Trump is successful in getting a conservative member confirmed by the senate this year, that changes the court sconces and the courts composition. Bidenhe argument is, if becomes president , if the senate flips to the democrats, why shouldnt they add two more justices to the court . I find that disturbing because it makes the court continually political. Presumably, those nominees will be progressives. So what are we doing here . Each time we get a new president , senate, we are going to put our men and women on who fit our political points of view . That is not what the courts should be. David i could not agree more, bringing into question the rule of law. Lets move to your other hat now, as former ambassador to china. President trump today addressed the United Nations General Assembly, and he had some harsh things to say about china. Trump we must hold accountable the nation which unleashed this plague onto the world, china. In the earliest days of the virus, china lockdown travel domestically while allowing flights to leave china and infect the world. David there you have it, mr. Ambassador, not very diplomatic talk. Is this Just Campaign rhetoric that we can expect from both sides, former Vice President biden and President Trump . Max i think its about two thirds Campaign Rhetoric and about one third real. The feeling in the United States today, with some justification, is that china has not been behaving appropriately, whether in handling the virus, trade, geopolitical matters. Starting to be anxious about china, reacting against china. Show the number of americans that have an unfair view toward china is up around 60 , skyrocketing the last few years. It is partly politics, partly real. It begs the deeper question. Ok, how do we deal with china appropriately . I think we have to recognize that china is not going anywhere. China is not going to leave the earth, they are huge. They will be a major player. We have to figure out a way to work with china in a way where china respects us. If china begins to respect us more, in addition to trust us, then i think we will have a more stable policy. And we have to have a policy not based on tweets. More you criticize china, the more difficult it becomes. David thank you so much to max baucus. Coming up, we will continue on bloomberg radio. In the second hour, we will talk to the founder of the Voter Participation center. That is coming up on bloomberg. Vonnie it is 1 00 p. M. In new york, 6 00 p. M. In london, and 1 00 a. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. Here are the top stories from around the world we are following. Before the House Financial Services committee, jay pamela said the u. S. Economy has a long way to go before fully recovering from the coronavirus pandemic. And will likely need further report. Point and aurning uturn. Boris johnson imposing new restrictions over rising covid19 cases. He says the measures could last six months. To longterm lung damage. Covid19s lingering problems alarming scientists. Lets get a quick check on the markets. A little mixed but also quiet today in the markets, except for currency markets. The dow is down. 3 . The nasd u