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tv   Wall Street Week  FOX Business  February 12, 2017 9:00am-9:31am EST

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and check out our website at i'm bob massi. i'll see you next week. [ woman vocalizing ] good night from new york. >> announcer: from fox business headquarters in new york city, the new "wall street week." gary: welcome to "wall street week." the show of record for long-term investing. i'm gary kaminsky. trish: i'm trish regan. here are some of the rally aftereffects from donald trump. scaling back the dodd-frank banking bill. banking sector is the big gain sense donald trump won the election. gary: bob diamond the former barclays ceo. an excellent tweak review everything that happened in washington and why the bank
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stocks have reacted so favably to what is happening. >> if you look at the equity valuations of global equities without financial services since the crisis. equity prices are up 100%. until the selection, financials were down 20% to 30%. so you are starting with a phenomenal valuation discount. that's why i think this will be sustainable for a while. i think discussion of rolling back the parts of regulation that have been not effective and by no means am i a proponent of rolling back all regulation. we can see there are portions of this that have been costly and ineffective and slowed the growth of banks. i think there is some wind in the sails here. trish: you couple that are
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higher interest rates and that's feeding this as well. >> i don't think there is any business that won't benefit from higher interest rates. gary: viewers talk about how the financial industry suffered from regulation. but i always ask what kind of thing will make the earnings grow faster for the banks? i can't think of anybody in a better position to explain. what will be rolled back that will increase the earnings so they will have more money to shelf. >> 2008-2009 what were we focused on? make banks safer and sounder, and create an environment where we have jobs and economic growth. that's kind of a formula. within that in my view, even today what we should be focused on is capital, liquidity and leverage.
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those are the key levers in the bigger banks. and i understand all that and i think it's been healthy. but when you get to the european union directive which says you can't pay people. or here dodd-frank and many parts are being applied to small banks in minneapolis. i had the chance to meet with chairmachairman volkar. the rule is 900 pains, and we are applying to it small community banks in minneapolis, and there are thousands of people. a third bank is subject to dodd-frank and subject to the stress test. in 2011 their report to the fed was 2,000 pages. this year, 19,000 pages was the
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qualitative stress test report from that bank to the fed. you think of the thousands and thousands and thousands of people that are unproductive adding to cost and reducing lending. trish: the thinking is this will friep liquidity. banks won't be hindered by all the requirements that they keep capital around for a rainy day. so they will be able to lend it to people so you get more money and leverage in the system again. it's 8 years on. we can look back on dodd-frank and volcar. centralized clearing has been effective. is it applied to all banks or is it for certain sectors. my biggest worry is some of the community banks which can provide a lot of lending to
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small businesses and consumers are adversely impacted and it's unnecessary. the second thing is a no-brainer. take the level from $50 billion to $150, $250. raise that level so you are reducing the burdens on the region. >> banks. trish: people are talking about tax reform and less regulation but things are not hunky dory in washington. it's pretty much out in the open. at what point does all of that dischord start to inhip it the reforms people want to see take place. look what happened this week. jeff sessions, elizabeth warren going after jeff sessions on the senate floor. >> mr. president, i'm surprised that the words of coretta scott
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king are not suitable for debate in the united states senate. i ask leave of the senate to continue my remarks. >> is there objections. >> i have got. >> i peel the ruling. >> objection is heard. the senator will take her seat. gary: you said you are optimistic on bipartisan support. >> it's good theater. all of us yearn for the day when we had people in congress like the senator from the great state of maine, olympia snow. most people would not know if she was republican or democrat. she voted on substance and what was right. the way to get back to that is to focus on things that are bipartisan. the united states of america has the highest rate of corporate taxes of any country in the developed world.
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yet we have successful companies paying no taxes because of the exesm shuns. that's ridiculous. trish were elizabeth warren might say it's not fair that the big corporations get a break. why are we giving the fat cats a break? >> everyone has an ax to grind. certainly in presiden presidentt obama's administration especially in the first term. there is a play book. it's not that complex. it's good for our country. good for jobs and it's ridiculous right now. gary: we are going to talk after the break about where you find the opportunities to deploy your own capital. "wall street week" will be right back. [♪] >> announcer: as the u.k. parliament votes to leave the european union, bangs and
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trish: the british parliament voting this week to give theresa may the official power to ditch the european union. gary: we are back with bob diamond. you spend some time in london as ceo of barclays. what do you make of the brexit situation? are you surprised it hasn't had more an impact in terms of asset prices? >> actually, i am. i love the fact that i can vote in the u.k. as well as the u.s. my family was there long enough that we had passports in the
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u.k. as well as the u.s. i voted to leave and i was wrong. but i have to say it's bench more calm post that decision than i would have expected. i think the financial services industry in london will be a dominant financial services industry, by think it will be smaller. i think the biggest beneficiary of that financial center is not paris or dublin. i think it's new york. the bismght s. firms doing bert than the european firms will be more and more reluctant to be in london when they could be in new york. and i think there will be far fewer people outside of london. it's having an impact. the u.s. has a strong economy. the challenge is more for europe than the u.k. >> the stability to help with the financial system. we haven't seen a tremendous amount of evidence that it's
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taken its toll it don't sound like you think things will unwind over this in any way ala2008. there were a lot of dooments dayers out there that were concerned this could fell trouble. >> i don't think from a solvency point. view, i don't think there is an issue. europe is still in a fragile position. gary: let's talk about what you are doing now with the her channel bank. you had a lot of investments but you are putting a lot of money into europe even with the uncertainty. >> there are a couple of themes. we are focused on the developed economics and we see a couple of themes that the other thing i would say, the her channel bank, we like to have stakes that are substantive. even a majority so we are able to be part of management and driving growth. so we are actively involved. one of the these is the broker
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deal. i think the bank holding company is the wrong model to be holding a brokered dealer. it's all the issues around the supplemental capital and the leverage rule. the large u.s. treasury business or derivative or foreign exchange business best housed in a holding company where the regulators would prefer not to see that risk. or brokered and regulated by the fc cd the sec. the brokered business coming out of banks is real. for 20 or 30 years it's been global, global, global.
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and wript was universal notments about focus and selectivity. when we look across europe we are looking at asset management business within the banks and until they resolve the non-perform loan on the italian banks and some of the other banks, you wouldn't see real investment. but we are close to today it laying to that and the support of the governor is important on that. >> it's important about the locality. and that's a trends in a different direction. we see sit with what's happening in the u.s. anticipation is it will happen more so through europe. what is it going to do to your view of global growth? is there a chance the record is going to grow less has a result of this focus inward or minus -- might this all be okay. >> i always like togo to a real example. what's the math?
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i look at the challenge that ceo of bar claifs has to exit africa. as he explained, the penny hasn't dropped. the math he's facing is simple. the business they own 50% of has a 17% returnen equity. it's the best bank across africa. when it gets to barclays it's 8%. the u.k. tax on their global balance sheet. the charges can't be allocated to a subsidiary. because the regulators charge them 100% capital for a 50-60% ownership. we had capital, product, and client sinner jis. so the global business model is no longer the best for reasoning a regional bank. i think that will have a knock
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on implications. trish: it will hinder growth? >> if it gives an opportunity for the local and regional banks to be much stronger, it can foster growth. gary: if you can identify within the specific countries, we'll benefit by being homegrown, indianapolis where you will get the growth. all right. trish: bob, good to see you, thank you so much. >> announcer: the market loves a tax cut. >> we'll be announcing something i would say in the next two or three weeks that will be phenomenal. phenomenal. >> announcer: we'll explain
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>> why wasn't fixing the tax code job one instead of repeeling and reform obamacare. the country wants growth and the way to get growth is to cut tax and stimulate the economy. neil remember it' not as important as tax cuts and goosing the economy and giving it a pickup because things are slowing down. and this should not be the signature leadoff event for republicans. >> i'm pretty sure our president donald trump watches fox business. after stuart and neil called out this need for tax reform. what do you know, the president announced it's coming. take a listen. >> lowering the overall tax burden on americans and businesses, it's coming along very well.
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we'll be announcing something in the next two or three weeks that will be phenomenal. trish: markets want it. the dow, that's when president trump made the comments. it took off like a rocket. gary: but don't think everyone is in agreement. we are joined by the former director management and budget under president reagan. our friend david stockman. the market wanted the president to talk about tax reform. he did and the market rallied. >> the market is delusional by the hour. what's happening is ahead of schedule the white house is a political train wreck. capitol hill has erupted into partisan warfare. administration is distracted with his ridiculous immigration ban. gary: the president said he will
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deliver a tax cut across the board, corporate, personal, and he's going to do it i am mentally. >> -- imminently. >> that's a fond hope. but it will take months to put together a detailed 10-year budget plan to do all the forecast and analysis. without that -- trish: how do you think that breakdown will happen? is that paul ryan and company, the status quo republicans who say when can't afford this? >> of course we do. but he's inheriting a $10 trillion built-in deficit the next 10 years. he wants to raise the defense by over a trillion dollars. his generals are running around doing that. the debt ceiling which has been suspended will go back into effect march 15 at $20 trillion. and to do any of this he's going
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to need to raise the debt ceiling by a trillion. where are the votes going to come from. the democrats aren't going to help. there is a large segment of republicans that will not vote for another 10 or 12 trillion worth of national debt on top much what we have already. wall street is talking about hope and aspirations. they are not looking at what's possible. nothing is possible in the mess that has been created over 20 years in washington. trish: we asked this question of bob diamond. when you see elizabeth warren quoting coretta king and the fallout that happened on capitol hill. the question is, is it going to impede the ability for law makers to get through tax reform? >> these are all distractions.
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gary: what is the stock market saying? i have to believe as an investor the stock market is smarter than any single individual. the market likes it. the market has reacted very positively. why is that going to change? >> the market liked it in february, 2000. the market liked what was going on in july and awning of 2007. -- july and august of 2007. they inflated and the problem is they inflated the bubbles. the markets are unhinged. the shorts have been killed. there is no two-way trade in the market. there is the machine driving you have the stock by a day or two. but then you get a black suwannee vent. trish: ways your black suwannee vent? >> the real -- your back
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swan event. trish: ways the black swan event? >> the realization washington is broke. gary: you are say regular they bring it to the hill it will never happen. >> you have to have reconciliation instructions to avoid the fill busker 60 votes. that will have embed tonight under trump's policy because he doesn't want to cut social security or medicare. he wants to raise defense web wants big revenue reductions. it will be over $10 trillion and there aren't the votes to pass it. if you can't pass the budget resolution you have no instruction. without instruction you have a filibuster. without instruction you have the k street lobbies eating alive the legislative process. >> on a week the markets reacted
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favorably to the talk about the fact that the tax cuts are imminent, we thank you for sharing it with us in terms of what you think will happen. trish: that does it for us on this is the silverado special edition. this is one gorgeous truck. oh, did i say there's only one special edition? because, actually there's 5. aaaahh!! ooohh!! uh! holy mackerel. wow. nice. strength and style. which one's your favorite? come home with me! it's truck month! find your tag for an average total value over $11,000 on chevy silverado all star editions when you finance through gm financial. find new roads at your local chevy dealer.
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that $100k is not exactly a fortune. well, a 103 how long did it take you two to save that? a long time. then it's a fortune. i told you we had a fortune. get closer to your investment goals with a conversation.
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good night from new york. >> announcer: from fox business headquarters in new york city, the new "wall street week." gary: welcome to "wall street week." the show of record for long-term investing. i'm gary kaminsky. trish: i'm trish regan. here are some of the rally aftereffects from donald trump. scaling back the dodd-frank banking bill. banking sector is the big gain sense donald trump won the election. gary: bob diamond the former barclays ceo. an excellent tweak review everything that happened in


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