Welcome to today's webcast on financial services. What next from the new administration? I'm David Young, the president of the Committee for Economic Development, the public policy centre of the Conference Board, with indications that it will ease banking regulations and promote digital asset technologies, including cryptocurrencies. The new administration promises to remake the financial services policy landscape in key areas. These efforts will impact a broad range of issues, including consumer protection, bank capital requirements, and digital assets. At the same time, private and public sector plans to bring employees back to the office have potential implications for the commercial real estate sector. We'll consider today a range of issues, including how the administration's anticipated actions may affect banks and financial services companies, other major changes in financial regulation, what legislation establishing a regulatory framework could mean for digital assets, and of course, the outlook for commercial real estate. Today, I'm joined by a distinguished panel including Ann Bowser, the Senior Executive Vice President, Chief of Government Relations and Public Policy at the Independent Community Bankers of America, Vincent de Lee, Chairman, President and CEOFNB Corporation and First National Bank and delighted to say ACED Trustee. Also David Finkelstein, CEO and CIO at Annalee Capital Management and also aced trustee, Hollis Hart, former President at the International Finance Management at City, and also aced trustee and our very own Principal Economic Policy Analyst, PJ Tabit. So welcome to all of you. If you need a attendance certificate for the webcast, please click the icon shown to download your certificate at the end of the webcast. You can use that to claim continuing education credits if you hold a certification. Now sadly to say, Vince has to leave us a little bit early today, so we're going to start with a few questions from him to set the scene for the broader discussion. And it also want to offer my hearty congratulations, Vince on being selected as the CEO of the Year for 2024 by the CEO magazine. So many congratulations to you, Sir. So Vince, from your perspective as we as we kick off the discussion from from your side, what, what do you think of some of the key policy issues facing the financial services sector and what do you hope the new administration will accomplish? Well, there, there were several economic objectives. Actually, there are four primary economic objectives that the administration has laid out, which I think everybody kind of rallies behind. It's balancing the budget and deficit reduction, sustained revenue growth from AGDP perspective, controlling inflation and improving the wage gap, growing earnings potential for Americans. So you know, that's those are the four key areas that they've laid out economically. There's quite a bit bundled into those four areas that impacts financial institutions and, and you know, just about every industry, you know, the administration's focusing to, to accomplish those objectives, they're focusing on deregulation or predictability in regulations, particularly those that that impact the financial services sector. They're looking at reducing the size and complexity of government. We've seen it, we've, we've all seen it in the news, the actions that they're taking to, to shrink the size of government. You know, some may disagree with how they're going about it, but you know, in economic based on basic economic principles, it seems to make sense to gain efficiency. The government has grown tremendously over time. They're using tariffs to rebalance trade, to promote onshoring and improving the US manufacturing sector, creating more middle class jobs. Hopefully that pays off. There's tax reform that's talked about that, you know, basically is, is the kind of a linchpin piece of their policies to drive economic growth later in in this process. And you know, they're really focusing on controlling inflation as well. I mean, these are tall workers. So, you know, there there's been quite a bit that's gone on economically. All of this impacts the banks. So, you know, it's a fairly complex environment that we're in. You know, deregulation will start there. I think, you know, we coming out of the financial crisis, there's quite a bit of regulation. The regulations that were written were done, you know, fairly quickly given the circumstances. Many of the, the, the rules that were written by Congress were not, you know, very prescriptive. So they're pretty broad. And I think you can see it all over the place. The application of those rules changes from time to time from administration to administration. There's a lot of unpredictability and how those rules are being administered both within each Regulatory agency and and more broadly across the industry. And in particular, because of Dodd Frank, the application of those rules varies pretty wildly depending on the size of the financial institution, because there were three thresholds for for size that many of those regulations apply to. So my expectation over time is that the regulators become more prescriptive in the application of regulations for banks, that they narrow the focus. You know, it's, I always say it's like speeding down a highway. You get pulled over and the police officer says to you, you were speeding and you said, I didn't see a speed limit sign. They say the speed limit's 35 mph. And then you go 35 mph and you drive down the road 10 more miles and a different police officer pulls you over and says, no, the speed limit's 25 mph because I think it's 25 mph. Obviously, you would not know how to drive that car. So the same is true for the economy. So we need to narrow the focus of regulation. And I think that's that's what the administration and the secretary of the Treasury is trying to do so that it becomes more predictable and we begin to focus a little more on safety and soundness. Some of the regulations that came out of of Dodd Frank are focused more on process, not necessarily on the strength of a balance sheet. I think there needs to be a refocus on the strength and durability of the balance sheet and the the risk management model within the financial institution, maybe a little more than emphasis on that than the processes and and procedures that are going on within the company. Anyway, those are the things that I think will be coming. And you know, basically based on the interactions I've had with people that have either been pointed to positions within the government to run these agencies or are up for appointment, you know, I think they're focused on those areas as well. So you'll see a narrowing of focus on regulation, an emphasis on safety and soundness. And I think you had a question here on M&A. I'm sorry, I'm going so fast trying to fit a lot in this answer, but you know, I, I think the administration in general is going to be more open to M&A and that'll reverberate through those regulatory bodies where it was much like done to the prior administration. Yeah. And so I want to, I want to get on to your, your thinking and thoughts with regards to this whole world of like the post pandemic world and, and real estate and, and employees returning back to work. But before I do you, you mentioned deregulation. There's obviously this, this new administration has a different tone than the Biden administration just from from the conversations that you're having from your sector. How is that new tone being received? Oh, I think being received by the regulators or the regulatory bodies or by the banking industry, which. By by the banking, by the banking industry. Yeah. I, I think the banking industry is very optimistic that there will be some changes in the application rules. I, I, I do think, as I've said before, I, I believe that, you know, we're looking at a period where there's an administration that's more open to making modifications to the rules adjustments. You know, there's, there's always a place for regulation because it's really set to protect people. But when there's too much regulation and there's too much uncertainty about the application of those rules, it really casts this blaze on the economy and on the banking sector itself. So I, I think we need to cut through that and, you know, become a little more precise in the application of those rules and regulations. And, you know, it's become, it's so broad that, you know, from time to time, from administration to administration. And I've been here long enough to see it because I've been through many administrations. I'm, you know, going to be all 18 years as president of a bank, right? So it changes over time politically and the changes are fairly abrupt from administration to administration that makes it very challenging to run your organization to prepare yourself for the changes in regulation and to deploy capital and serve the customers that we have. So I think getting more precise and prescriptive is really important and having, you know, a more predictable environment is, is very for us. Great, thank you. The pandemic and this whole world of like this post, you know post COVID environment, the pandemic obviously had significant impacts on commercial real estate. What are the trends that you are now seeing as many firms are calling back employees into the office and what do those trends now mean for lenders? Yeah. I mean, that's kind of interesting because we built a 500,000 square foot office building in Pittsburgh during the pandemic. So our people are back in the office. You know, when we looked at the construction of that office building, we did have an opportunity to pivot and basically make sure that the space is, you know, state-of-the-art, accommodate shifting attitudes or desires by the employees. And we're 100% back in the office for the most part. There are a handful of departments that operate remotely and have done that before the pandemic. And, you know, there's some inherent flexibility in some of the roles here at this company. So we're not, you know, managing everybody day-to-day, But you know, many of the departments do come in day-to-day and have to work five days a week in the office here. I see that as the optimal environment. Having lived in the, we did go hybrid for a while, The level of productivity fell off dramatically. And, you know, I'm in the camp of, of others like Jamie Dimon and others. I, I think in this particular industry, this is an apprenticeship business. You learn by being around other people and particularly for younger people, it's critically important for them to be in the office and, and to learn and grow. Once you become established in your career and you move into a different role and you're able to have more flexibility in your work life, then you should be able to, to, to do what you need to do to deal with violence in your life. But I, I think five days a week is coming and you know, it, it's, it's going to be bad. Having said that, you know, we build a building in Pittsburgh because the existing infrastructure was not good. The older buildings, the class B&C buildings in most of the major cities are in trouble, right? The vacancy rate has gone up. You know, I, I think you're going to see a transformation from office to, to maybe housing or some other use for those properties. It's going to be a multi year effort, right, to restore normal vacancy rates in many of these cities. And I, I think that that will happen over time because the, the preferences are shifting back and there hasn't been a lot of new office space brought online, at least in the urban that we interact with. So, you know, I think that that will turn over time, but for now, you know, it is a little bit of a challenge, right. If you're in the urban office financing space, it's it's been a challenge. Class A space like this building that's new tends to lease up, older buildings do not. So, you know, there's, there's still a little bit of an issue, but I see that changing over time with economic expansion and, and just a, a change in philosophy on work habits. Vince conscious of your of your time. SO11, last question you mentioned, you mentioned Pittsburgh, obviously Pennsylvania is a key manufacturing state. I'd be curious of your thoughts just more broadly your broad take on the state of the US economy generally and particularly the impact of of tariffs. I know that's a bit of a tough question given that April 2nd is around the corner and we're going to have a laundry list of of what tariffs actually mean, but it'd be good just to close close you out just with your thoughts on on the state of the economy and the impact of tariffs. Yeah, I. Think we have a very, I think we have a sound economy. I think you know, having financed companies in across Pennsylvania and and you know, Eastern Ohio, Western New York, which is very industrial, I've watched over the last 35 years our manufacturing capacity being exported overseas. It's quite sad. You know, I have many clients that I had that I financed throughout my career are gone. And you know, I would love to see a return to bringing manufacturing back to the United States. And I, I do believe that over time we have for whatever reason followed into trading habits that weren't necessarily favourable to the United States. So I do think that there is a, A use for, for tariffs if, if we can get a fairer playing field established that, you know, we need to reset what's been going on. You know, I, I think manufacturing in the US is critically important. And we've seen that. We saw that through the pandemic and we had supply chain issues. You know, I think it's really important and I, I'm hoping that the pain that we're going to experience in the short run with tariffs actually benefits us in the long run. And obviously FNB, most of our clients are not global players. So if you're, if you're producing in other markets and you're importing into the United States, even if you're a domestic company, there's going to be a pain associated with those tariffs. But for most domestic manufacturers that are selling domestically, they, they should be OK. So you know, my view is let's see how they play out. Depends on the severity, right? That's the unpredictable part. I don't know how far the US government would go with tariffs, but, you know, there is a place for them. They're a tool in the toolkit to try to level the playing field. And I'm hopeful that that all starts to to work in our favor. And economically, tax reform will be a huge benefit if if we can get not, you know, dramatic changes, but a continuation of the tax reform that took place several years ago. If, if that can be extended, I think that will create, you know, some it, it'll be an economic driver for the economy, like it, like it wasn't in the past. Well, Vince, I know you've got a busy day ahead of you, so thank you so much for making time for us and and setting setting the same. We'll, we'll let you drop and wish you all the best and congratulations again. Sorry. I appreciate you having me. Thank you. You have a great panel. Thank you. Pleasure. Thanks, Vince and David Hollis, welcome again. Great to have you all here with us. Let's start with just a very similar question that I asked. I asked Vince and David, I can see you on the screen here. So we'll we'll start with you and then go David Ann and and Hollis. But the general question from your perspective, what are the key policy issues facing the financial services sector and what do you hope the new administration will accomplish? Sure. Thank you, David, and thanks for having us today. So I think the number one policy issue that we face particularly in the financial services industry, but overall is the unsustainable fiscal path that we happen to be on and it is not getting any better. This year. We're expected to run roughly a $2 trillion deficit. Ultimately the extension of the TC JA will make this more problematic. I understand certainly Vinces point about tax reductions leading to growth projected to be a trillion dollars over the next 10 years in GDP. However, it also adds $2 trillion to the deficit by most even conservative estimates in terms of the benefits of of of extension the tax cuts. So, so the point being is that deficits are not getting any better, notwithstanding the efforts on the part of the Doge Group, which I, I certainly support reduction in waste, fraud and abuse, but it's just not going to move the dial to the extent that we needed to, to, to shore up deficits, which should be 6 to 7% of GDP over the next number of years. Now, as it relates to financial services, what it means is that there's going to be more and more issuance of Treasuries. Somebody has to finance this debt. And there's been an increase in Treasury debt just since COVID of roughly $10 trillion. And as a consequence, the market is overburdened with the amount of Treasury debt outstanding. And banks need to serve either as a investor in Treasury debt or as an intermediary or is a financer of Treasury debt on the part of other participants. And So what the administration can do related to what we're talking about today is, is making regulations more accommodative to opening up bank balance sheets both from the standpoint of capital flexibility through ultimately. The Basel end game proposal, but also other measures the government can do to alleviate some of the bottleneck associated with intermediating and financing treasuries, namely the supplemental leverage ratio, which I'm sure probably Hollis will even like to talk about there. So that's it in, in, in short, it's the debt. It's the debt issue and the regulatory environment makes it difficult to finance it. Anne, I want to bring you in here. David's mentioned the debt, the regulatory environment, thoughts and comments and reflections from your side. Absolutely and thank you so much for having me. You know ICBA we represent banks from 10 million in assets all the way to 70 billion. So our perspective is a little bit different than perhaps some of the larger institutions. But really what, what both, you know, Vincent David have already touched on has been the uncertainty and just really the the burden of the, the last four years with the regulatory environment, You know, where we've seen more than I think 5000 pages of new regulations were, were implemented in some form. So we actually, we launched what we call repair reform and Thrive, which is a plan to really capitalize on voter sentiment when we saw, you know, both chambers and the White House turn to Republican control really based on, you know, the old adage of it's the economy, stupid, right? And, and, and what is it that is keeping and, and preventing the economic growth at that micro, you know, local level that that then feeds up and, and fuels the the broader U.S. economy. And so we're really, you know, excited and energized to be able to work with particularly Treasury Secretary of Dissent and some of the other nominees in the administration to try to, you know, fast track and repeal some of the, you know, some of the regulations, such as don't sort of match the risk we see. You know, I think Vincent mentioned something about, you know, the rules have come out of Dodd Frank. Well, the banking industry and the ability and method of offering products and services to customers is very different now than it was under Dodd Frank. But yet we still have these prescriptive rules that not only were are not predictable in terms of enforcement, but also have not been tiered appropriately. So it's this sort of blunt instrument across all banks of all sizes. And that's really prevented and you know, interfered with their ability to to really funnel growth at a very local level. And our community banks in particular are usually, you know, they're, they're the ones making the small business loans. They're the ones that are doing the agricultural lending. You know, again, what we think about an American First agenda, the community banks are really fueling that growth. So, you know, we are, we are thrilled that the, you know, first day of, of Congress this year, the the very first hearing in the House Financial Services was around making community banking great again. And, and we think really, you know, that's, that's the appropriate tone and we are really looking forward to that possibility there. There's a lot going on right now as we see new executive orders every day and, and you know, a a lot of rhetoric. So really it's, you know, we, we are hopeful and continuing to work with the administration to really ensure that that becomes meaningful and impactful change, you know, not simply, you know, a, a good headline. And in doing so, we don't inadvertently harm, you know, the, the customer service, the consumers and the, the businesses that our banks are are serving. Thank you, Anne Hollis, how are you, Sir? Let's let's get you involved here. Your your general perspective on the key policy issues facing financial services. I, I thank you for having me here. First, I agreed with David on the macro issue that the fiscal deficit absolutely is a giant elephant in the room and one that frankly has to be addressed sooner rather than later on a more micro basis. And I think we'll talk about a little bit more later. He and I may have a slightly different view on the impact of the regulation on the balance sheets. I, I think to a certain extent some of the lending and I'd like to talk about it more in particular around Basel, has much more to do with the offerings in the market, the risk reward component than it necessarily does the regulation. I do agree with both what David and Ann said that about the need for more consistency and regulation. And I think we'll talk about the need for consolidation of the regulatory at the federal level in more detail. On the safety and soundness, which I think we do need to keep focusing on, I have a concern that we're going to see some laxative. I'm I've seen the current administration promoting not only crypto funds, but some of the private credit, which I think have some real significant material risks. And then on the soundness, liquidity is not getting enough attention, liquidity management. And if you looked at Silicon Valley Bank and the debacle there, that was a classic example that liquidity has to be at the top of the of the discussion. And I just don't think the matching liabilities to assets is getting nearly enough attention with the current administration. Thank you, Hollis. And I want to come back to you on something. As you know, the Supreme Court's decision with regards to LOPA Bright Enterprises versus Ramondo eliminates the requirement that courts defer to agencies reasonable interpretations of ambiguous statutes. How do you think this will impact banking regulation moving forward? And do you think the recent executive orders that we've mentioned seeking to bring the banking supervision functions of the Fed under greater control of the executive branch will have an impact as well? I, I, I think that's a great question. And I would just like to remind folks, in addition to Liper Loper Bright, we also had two other important Supreme Court decisions that I think we have to look at all sort of in in context. There was the corner post against brought suit against the Fed and this is where the statute of limitations sort of rulings had been revised so that now the court determines statue limitations begins at a time of plaintiff is harm, not the date of the rule being finalized. And then there was an SEC versus Jarski, which prohibited the SEC from pursuing civil penalties for securities fraud and requiring a jury trial in federal court. So we, we collectively look at all of these three and expect a significant impact around agency rulemaking because this is always going to be in the back of your mind as you're going forward with, with rulemaking at the agencies. You know, most likely outcome is it, it slows the pace by which agencies will promulgate new rules. Because there are, you know, at least in our experience there, there are a lot of attorneys that are writing these rules. And they're going to want to, you know, try to, to make sure that they are really sound and, and aligned with whatever the perceived congressional intent was at the time that the, the, the acts were put into place. I think it's also going to limit types of enforcement actions brought before administrative law judges, which, you know, our, our courts already pretty backed up right now. So I'm not sure that this will be necessarily a positive. This leads to more action brought in federal court. And we also anticipate, you know, it really expands the and extends the length of time that that plaintiffs have to challenge certain rules and regulations in federal court. So, you know, just to level set, we think Chevron was cited by federal courts over 18,000 times in the, the decades since its existence. So it's really the, the most cited administrative law ever, probably. I mean, I, you know, I'm speculating there, but I have to believe that is the case. And that there was a study in, in 2017 that found the courts of appeals on average applied Chevron 3/4 of the time for agency interpretations. So, you know, clearly that it, it made it very difficult for the, you know, the parties that are subject to these rules to be able to challenge those and effectively even when they have been inconsistently applied. So, you know, we, we anticipate some aggressive interpretations of statutes now where, where we think, you know, the, the agencies may now unfortunately be less likely to offer guidance. And that doesn't always help us when they're they're less likely to offer formal or informal guidance because while that cuts both ways and sometimes we don't agree with the guidance, it does also, you know, in some cases serve as a a backstop against class action or other, you know, litigation and, and liability that that particular our banks face for, for broader consumer protection and other related rules. But you know, with, with corner post removing the statue of limitations, we, we do again assume that, you know, now it, it opens the door to challenging perhaps prior determinations where Chevron was used. And, and in many cases that didn't really seem to to align with what we've seen as the, the congressional intent. But in terms of really the, the executive order consolidation, I mean, still a little early to see how this is going to play out. I will say, while, you know, we, we, we're never the, the, the biggest cheerleaders for the, the regulatory agencies coming from ICBA, We certainly always are flagging and, and trying to hold them accountable, whether through litigation or otherwise. You know, we, we do support a strong and you know, independent agency framework and particularly the the preservation of the dual charter system, the dual banking mandate by which both states or the the federal regulators can issue bank charters. And we do find that that that is critically important, particularly for some of our our smaller institutions operating in more rural areas. Thank you. And Hollis, I want to get to Basel 3 just momentarily. But before I do, just a quick question on on regulation, banking regulation. What is in general your perspective on on banking regulation, Hollis and how can deregulation actually help the industry? And do you think that the change in how the Fed draws regulations and conducts supervisory exercises and enforcement giving greater power to the executive branch, how, how do you think that will have an impact? Thanks, David. I, I like that question. First, let me start with the critical premise. My perspective is the US banking industry is the envy of the world. And despite some of the challenges that we do have with regulation and the legitimate concerns raised, it is absolutely in a leadership position. So I, I start with the fact that regulation to date has really not inhibited the industry the way it's being described. I do think Anne is right to raise the charcassie as well as over and the other case it's going to be much more painful than I, I anticipate, than people expect. I lived with the Patriot Act and had to implement it for Citigroup, and it was the specific type of legislation that's now being requested, and it was virtually unworkable. We did it. It cost hundreds of millions of dollars to get it implemented, and it achieved, I thought, very little. At the same time, anyone that's gone into the US judicial system knows that it's overburdened already. And if you've been in Louisiana or San Francisco courts, you know, you can have a populist outcome completely divergent from what you would expect from customary industry practice. So I think there's a much bigger risk. The executive role is certainly you've, you can see that. But at the end of the day, I am much more concerned about what's being done, going to be done by Congress than the executive. Ironically, I do think that again this tape touches on David's earlier comment, I just don't think the capital restrictions are as big a component as people expect right now. If you look at the lending that's going to the to the private credit sector, the shadow banking, the fintechs, a lot of that underwriting, the standards, few covenants, no covenants and a risk reward proposition that perhaps it wouldn't matter if the balance sheet was available, the bank should not be doing those types of transactions. So I know there is right now a view in the marketplace that banks are being limited and David may have a different viewer and by the regulation. But as I've looked at the quality of the underwriting being done and the size of these deals, I don't think the bank should be doing them even if they didn't have a capital constraint. Thank you. I want to get David involved moment momentarily, but just one, one other question just quickly while I've got you. What do you think will happen to the Basel 3 regulations and how can U.S. banks compete globally in an era where we're seeing increasing global regulation and regulatory divergent, which extends not only to banking regulation, but to areas including data privacy and AI? Well, again, on Basel Three, I think it's going to go through pretty much as it now stands as my expectation. I again, I probably differ from some of my colleagues in the industry. I think that's going to have less impact. However, data privacy is a big issue. There's been a divergent between the US and the EU and Asia over restrictions, limitations on data privacy. And I think you're going to see the same thing on AI. In fact, one of the critical parts that's come up is the issue of ring fencing. I think you'll see ring fencing of data, re fencing of capital, re fencing of cash flows, re fencing of people. And that's something that you're, I think there is a significant risk that we're going to see a much wider divergent and that's going to have a bigger ability, a bigger challenge to international firms being able to compete domestically. I just don't think it'll have as much of an impact as people expect. But internationally, it does. Again, the Patriot Act, where the US reached across the shores had a major impact. If you talk to anybody trying to set up international banking accounts, it made it extremely difficult. The number of international banking accounts that were cancelled for US firms was material because of the legislation that we created. So that's where data privacy, AI ring fencing, I think these are actually going to be major inhibitors internationally. And again, Basel three I think is been pretty much baked from my perspective. Thanks, Hollis. David, let's get you back in back involved here. Hollis has said the US banking industry is the envy of the world. I'd be really curious, just your thoughts, just generally on anything that Hollis has said, but also your thoughts in terms of how deregulation will impact your business and the industry at large. And then also last year, the SEC adopted rules mandating climate related risk disclosures in their filing. These rules faced legal challenges and the SEC under the new administration has now paused its defense of the rules. So how does the industry think about climate risk as well? Sure. So there's a lot to unpack here. Number one, in terms of what Hollis said, I do agree with the the vast majority of what Hollis has said here today, particularly that the US banking system is the envy of the world. However, I do think capital has had or capital constraints have had a big impact on on the extension of credit within the banking sector. Not just the willingness as Hollis suggests, but the but the ability. So let's talk private credit as as you that very good example here. Look that sector post Dodd Frank or pre Dodd Frank pre financial crisis was within the banking system, okay. And it got pushed out because of Dodd Frank and, and regulatory and capital requirements associated with banks. It's grown to I think roughly a $1.7 trillion sector today. And the credit performance has been impeccable, which is why it's grown so much. And just as an example, if you think about, there's a very large M and a transaction that just occurred. HPS was bought by BlackRock for $10 billion. That business used to be housed within JP Morgan and they spun it out eight or nine years ago, maybe 10 years ago or thereabouts. And it's and it's, it's grown to a very successful business. So the point being is that yeah, covenants can be, can be light on certain transactions or or even non existence. But the performance of the sector overall has been, has been very strong over the past number of years. And that is a business that banks used to make a lot of money in. As it relates to our business which is somewhat related, we're mortgage finance and we're another industry that has been pushed outside of the banking sector. So to the extent there is regulatory relief on the part of banks, what I'll just to give you a depiction of how the industry operates. You have the largest mortgage originators are are non bank financial institutions, firms like Rocket Mortgage and the like. And these are largely operating companies that are reasonably well capitalized, but they rely on the banking sector, large commercial banks to provide financing for their operations both on a on a warehouse capacity and more longer term financing. And so the the reduction in regulations that free up liquidity in banks will help smooth the process for the non bank sector to provide mortgage finance. Now my company actually is is an investor in mortgage assets, but we do use banks to finance a portion of of those investments. And so rate relief will also enable us to utilize our banking partners more from that from a balance sheet perspective. And, and we've already seen some signs that the banking sectors be more accommodative with respect to the extension of balance sheet. So I'm, I'm, I'm enthusiastic about the outlook. To your third question on climate and I'll try and be quick here. Obviously the current administration is relaxing a lot of the disclosure related rules around client climate for public companies. Certainly which I can tell you as those as those rules were coming to fruition and we were, we were managing how we were going to present that over, over, over the phasing period. It's an onerous set of rules for from a disclosure standpoint. And so it's, it's encouraging that at the federal level that those would be reduced. However, states are doing the same thing. So for a company like us that operates all across the country, we have to comply with effectively the path of greatest resistance, which is the most stringent standards in terms of climate disclosure. So effectively, we're not seeing much change in how we're preparing for that disclosure. There could be some influence from the administration and the federal government to relax at the state level. We'll see how that plays out, but for now we just simply have to prepare for reasonably extensive disclosures that relates to climate risk, which I, I, I respect certainly because every business should understand that exposure and shareholders should be aware of it. So so I'm supportive, but I hope it's just not that onerous, or as onerous as drafts have suggested it will be. David, you, you just mentioned something where you operate all across the country and one of the questions I asked Vince earlier on the call was the trends with regards to commercial real estate in this post COVID, this post pandemic environment. So just kind of the same question to you, what, what type of trends are you now seeing and experiencing with regards to commercial real estate and and how they're impacting the market? Sure. It's a great question. So just by way of background, we are no longer in the commercial real estate sector. We actually sold that business in 2021, which we're fortunate to do. However, we do follow it quite quite closely. So I do have a perspective certainly on that. And, and just to kind of give a backdrop of how the sector has evolved. So you understand where we're at today, there's been three sources of pressure on commercial real estate. Obviously, the usage of of commercial real estate, primarily office with remote work as well as malls and and and and other factors that have reduced the usage which hurt commercial real estate over the last number of years #2 is the cost of financing. With interest rates going up dramatically in 2022, refinancings occurring, it became somewhat problematic for CRE. Now the difference between commercial real estate and residential real estate is during COVID 2020-2021 households turned out they're dead 30 years they refied, everybody took that opportunity. And so housing residential is in very good shape compared to commercial. Commercial real estate. Just the structure of the loans are typically five year with a couple of extensions and largely floating rate. So that's been very impactful. So you have top line revenue is down from usage, you have the cost of financing up. And then lastly, cap rates for the valuation metric to to apply to the, the net income has gone up. So it's all had a really big impact on commercial real estate over the past number of years. However, because the economy has been quite strong coming out of COVID, commercial real estate has muddled along from a financing standpoint, banks, etcetera, lenders have amended loans and extended maturities. So we've gotten through it today. Where we sit is is to Vince's point, there's a huge bifurcation between Class A office and class B&C. Class A office is in high demand and rents per square foot are as high as they've been certainly here in New York City, whereas B&C are continuing to to decline have have somewhat stabilized, but they're they're lower than they were pre COVID, at least from the indications we've seen. So how it plays out from here is going to be almost entirely dependent on how the economy plays out. And if if the economy does perform well, I think we'll get through just fine. Banks will be OK. There's about a trillion dollars that are that are coming due in commercial debt half this year in 25, half of which is on bank balance sheets. We'll manage through that if the economy stays stable, but you could look for another leg down in commercial real estate if there's fragility in in, in the economy. And, and I also think the Fed's very aware of that possibility and how they're thinking about policy. Thank you, David. I want to shift the conversation now from from regulation to to crypto and let's get you back involved. One one of the major changes in the new administration is the approach to financial services and it's it's far greater openness here with regards to digital assets. Congress has been considering legislation creating a regulatory framework for stable coins. What what are your expectations here with regards to progress in in Congress on this area? Can the administration do much without Congress in this area, or would that simply provoke litigation? Great question and I will I will openly share crypto is one of my least favorite topics to talk about given the amount of focus on it these days. But you know, we we have we have agreed with with the administration here that there needs to be a regulatory framework, particularly the stable coin space. You know, we were pleased to see an executive order come out that prohibits, you know, national CBDC, which the which the Fed wasn't really eager to issue anyway. But now we have, we have two competing bills right now in Congress, without getting too far into the weeds in it, but one in, in the Senate and one of the House side that both, you know, purport to, to provide some type of operating framework for stablecoin issuance in a way that both permits, you know, the state licensing regime, but then also now brings an under, under the federal fold. You know, again, we we agree that there needs to be some, some type of framework. I think, you know, it's a lot of the conversation today. We've already touched on, you know, the, the payment system and, you know, sort of overall risk and vulnerability of our, our broader financial system. And so I, I will say one of the, one of the concerns that we have is, you know, that the ability of the, the stable coin issuers to really have access to the same, you know, the master account access, access to the Fed discount window, really a disintermediating, disintermediating effect that really takes liquidity out of the, the financial sector and out of the sort of traditional, you know, way in which while our banks, you know, are, are the mostly the smaller institutions, it's still as liquidity is removed from the system, even if from the largest institutions, there still is that downstream effect. So we, you know, we saw this when money markets became, when money markets were were issued and, and banks were capped at what interest they could allow to accrue in money market accounts. And we saw a direct correlation between limiting certain types of, of loans, credit availability, as well as interest rates increasing. So we're working right now with, with folks both in House Financial Services under, under Chairman Hill, as well as in the Senate side with Tim Scott and Senator Scott. And so, you know, ultimately we're, they, they are amenable and, and, and concerned about this. I think, you know, we do always have concerns that sometimes, you know, we, the, the, it's a shiny object, right? And, and there's a lot of, there's a lot of money flowing, particularly through Washington where, where I am lobbying on behalf of, of one side or the other of this. So ultimately at the end of the day, you know, we want to make sure that our you know, that, that banks remain the safe and sound source of credit that they are and that we don't see liquidity exit the system. You know, because again, those that that critical lending that comes through having those deposits remain in in sort of traditional banking. You know, certainly executive orders can go so far, administration can, can do a number of things. The OCC already does have quite a bit of authority now you know to issue some types of of national charters that are are not necessarily specific to kind of traditional FDIC insured commercial banking. But any framework you know would be obviously if it does not come through Congress, it's going to be subject to the the very strong swings that we've seen from administration to administration in terms of just the even attitude and and tone around these products. There still is a stability risk to the overall financial sector. Again, you know the volatility of these assets even when they are pegged to AUS dollar, you know there is still a degree of volatility. And then also, you know, that the, the Bank Secrecy Act or AML types of concerns that aren't really fully addressed with the, the legislation that we're seeing. But we are, you know, we want to make sure that whatever framework comes about allows for banks to be able to, we say play in the space, so to speak. So banks could issue stablecoin, they can use the distributed Ledger system. You know, there already are a number of institutions that that use tokenized deposits. So really making sure that the, you know, the, the envy of the world, the free world, as we've talked about with the, the US economy and banking sector remains that way. And it's not, you know, it's not disrupted by a new form of, of technology that could really interrupt or, or disrupt the, the payment sector overall. We do think there's really a safe and some way to do this in terms of keeping, you know, some of the reserves in US insured depository institutions, learning some of the lessons from the Silicon Valley Bank collapsed a few years ago. But there, there is certainly a way to do this in a safe and sound manner. So we're, you know, we're, we're meeting on this issue. That's why I say this is probably my least favorite topic because we are probably meeting on this both with, with folks on the Hill and in, in the administration just about every day. Just to make sure that our, you know, the banking sector is fully represented. And in the event of a failure or collapse or, you know, some type of volatility, we don't see it resulting in a loss to the, you know, whether it's the FDIC Deposit Insurance fund or otherwise that, you know, banks would would ultimately have to bear the cost of. And we would see a complete downstream effect on, on, you know, lending and credit availability overall. Thank you. And Hollis And then David, kind of same question, what lies ahead with regards to regulation of digital assets? But as Anne pointed out, having a framework, it's critical because right now there is no customary practice and there's no legislation. Therefore there's no safe harbor. So people really having to operate very much in the dark, not knowing where, where, what they can or cannot do. And so that's that's been a concern with Paul Atkins, who I believe is still CED trustee going into the SEC. You have somebody who has a legacy of being a pro digital currencies, digital tokens. And so I think the combination of Trump's promotion, Paul being in the saddle, the legislation, I think we are going to see some framework and there are major challenges, as it was pointed out, particularly the AM LKYC problem is not being addressed at all. My guess for the financial industry is that FOMO is going to take place, the fear of missing out. So we're going to see a lot of institutions, even though they feel it's not necessarily prudential, get involved in the crypto side. And I do have a concern, again, I'm sorry to sound so negative, but that in fact, if these funds that are being promoted by the administration and by default by the SEC fail, there isn't a doubt in my mind you'll see the investors turn to those people who've created the funds is also be the deep pockets they'll try to they'll be trying to access. That's the that's been our history. And so I think this is an issue that really needs more open discussion because I think we're creating a potential moral hazard problem. David Thoughts on digital asset regulation. Sure. I'll just make a couple of comments. First of all, I don't think there's that much that the administration can can really do. Obviously, we've seen activity thus far in terms of designating David Sachs as the White House AI cryptos are, you know, Trump commenced its first of its kind summit on crypto and the executive order stockpile, creating the ability to stockpile crypto through asset seizures. But beyond that, I think it lies within Congress. And look, what we've seen come out of Congress thus far has been encouraging, particularly on payment stable coins. And just by way back, we're not involved in the crypto sectors or digital assets, nor do I personally own crypto. I'm not a huge fan of it. But payments stable coins actually does have a real purpose in I in the economy, particularly because the genie is out of the bottle with respect to digital assets. And, and I think this is a thoughtful, there's a couple of thoughtful pieces of legislation, the genius Act and, and the stable act on the House side. And and what effectively it does is it creates a a federal supervisory and licensing framework for payment stable coins with with pretty rigid regulatory authority over issuers of stable coins, particularly as it relates to capital. So for example, one for one assets to coins issued similar to how a bank would be regulated. And what this does is, is, and they're the assets are all pegged to the dollar, that the coins are pegged to the dollar. So what it does is it effectively creates a, a coin that enhances dollar liquidity globally potentially. And and that's something that I think is, is, is to our benefit in so far as the dollars, the work reserve currency. And if you have a significant expansion of, of a coin that is pegged to the dollar, then it creates more liquidity for other countries that are dollarized, which I think around 11 now or thereabouts, and adds to the strength of the dollar as the the world's reserve currency. That's a, that's a far stretch from where we're at now or where we can be at in the near term, but it does have potential longer term. But also there's other points that both Ann and Hollis brought up with respect to the compliance around, around the rules for example is mentioned by both the Federal Bank Secrecy Act. It is critical that you subject these issuers to the full range of anti money laundering compliance obligations etcetera. And I believe there is discussion in that in the legislation. But there's a there's a lot of work to do, particularly by folks like Dan, certainly to make sure that any legislation is done thoughtfully. Thank you, David. Well, sadly, we're approaching the top of the hour. I have endless questions here for all of you but David Hollis. And thank you very much for the for the insightful discussion. We will of course, keep a close watch on these developments in financial services regulation in the weeks and months ahead. With that in mind, I just want to call your attention to our new Navigating Washington hub here at the Conference Board. You can find it at www.tcb.org, in which all five of the Conference Board centers, including CED, are contributing content to help navigate the many rapid changes coming out of the new administration. And to that point, I want to bring in PJ, our own CED Principal Economic Policy analyst, just to describe quickly some of the work that we're doing in this area. Thanks baby, I'll just say that. Since the Navigating Washington Hub was launched in January, we've covered a variety of subjects relating to financial services and regulatory policy. We've included policy alerts and backgrounders on the global minimum tax, climate finance, digital finance, technology, the proposed sovereign wealth fund investment policy, the status of independent regulatory agencies including the Fed and the SEC, prospects for U.S. tax legislation, and many other important. Policy issues. So you can visit this content and look for future content on the Navigating Washington hub on our website, which as Davey said, is www.tcb.org. Thank you, PJ. Also, I just want to highlight in closing some upcoming web casts. Next Tuesday, March 25th, we're hosting a web cast entitled Are We Educating the Workforce of the Future, featuring a few of CEDS trustees and some of the most prominent university presidents in the United States. Also on April 17th, another policy watch webcast entitled Sustainable Energy Independence. That's on April 17th. So please do look out for emails marketing those two webcast. But in closing again, David Hollis and PJ, thank you so much for the insightful discussion and we wish you all a wonderful afternoon. Take care. Thank you. Thank. You thank. You. _1742600191053