RADIOSeptember 01, 2022

THIS bank's policy hints we learned NOTHING from 2008 crash

A new Bank of America policy designed to help certain Americans own homes hints that U.S. financial leaders have learned NOTHING from the 2008 crash. Carol Roth, ‘recovering investment banker’ and author of 'The War On Small Business,' joins Glenn to detail how policies like this one not only put our economy at risk of another financial crash but could wipe out the middle class as well. Plus, Roth and Glenn discuss signs that China — thanks to its bursting property bubble — is heading towards financial DEPRESSION...

Transcript

Below is a rush transcript that may contain errors

We have Carol Roth joining us now, the author of the war on small business. Former -- as she likes to say, recovering investment banker. And I want to get her on today, and ask her, what this means. This is according to the Wall Street Journal. The real estate giant in China has said, China's property market has slid into severe depression.

Hi, Carol, that sounds scary.

KENNEDY: Hi, Glenn. Happy September. What a great way to kick off the last four months of the year, with a big tee pregnancy in China.

GLENN: Right. Right. (?) what does it mean?

KENNEDY: So China is basically a giant mess. Obviously, outside of their demographic issues. Outside of the fact that they're not really an emerging market. And that's putting pressure on their manufacturing. They have sort of the confluence of things going on. The covid disruptions. They have heat and water power issues, that are basically rationing energy. They have youth unemployment, at 20 percent. And then they have this property bubble that has bursted. So basically China did something similar to what we did. It was a communist version of what we did here leading up to the great recession, financial crisis, where they just plowed a bunch of cheap money into creating lots of and lots of real estate.

GLENN: Like ghost cities. Not lots of real estate. Whole cities that had no one in them.

KENNEDY: Yeah. That literally in the middle of nowhere, that no one wanted to live in. And then the prices just started to get out of control. One of the things that are a little bit different -- well, there are a lot of things different about China. One of those things is that housing is about 70 percent of household wealth. People that have money, that the middle class, they don't trust the stock market. Which they should not. And over 90 percent of households in China actually own their residence. So that compares to about 65 percent of the United States. So a huge, huge alternate of the wealth of the middle class is tied up. Within real estate. And the property has gotten crazy. Like in the major cities, it's about 50 times the average income, in a -- in a crazy place in New York, it's about ten times the average income. So you can see that that has really gotten completely out of control. And we all knew that it was unsustainable. It was just sort of a question of when. Chinese policy and then all these other events kind of came together at the same time, and now like we suffered through 20 years ago, they are going to have to endure the same thing, but, you know, with a different tenure because it's a communist country. China owns the bank, they have -- the whole middle class is sort of involved, and their wealth is tied up in this. So this is a major issue for the Chinese economy.

GLENN: I will tell you, that this should strike everyone as more than a little odd. You know, it's not odd for us to see protests in front of banks.

KENNEDY: Yeah.

GLENN: In China, that is akin to protesting the Communist Party. They've rolled in with tanks and soldiers. And people are still protesting. That shows how unhappy people are, with what is going on.

Because in China, as I understand it, please correct me if I'm wrong. Here, we go out, find a house, then we go to a bank. In China, you go to a bank, you get a loan, you start paying on that loan. And then you go to a builder, and it might take five years. But you're paying on that. And what happened is, these builders (?) paying on this loan, and they, had a? Lose their money.

KENNEDY: Yeah. There's actually reports of people living in unfinished homes, so as you mentioned the middle class in China, they've started to band together, and they're basically saying, we're not paying our mortgages anymore. And you have to remember, that China has implemented their social credit system. And one of the dings for social credits is not paying your debts. Which your mortgage would obviously fall into. So the fact that they're willing to stand up against the Communist Party. Against the social credit pushback, just goes to show, as you said, just what a complete disaster this is for the Chinese people. And the governments.

GLENN: So President Xi, he is elected one more time. I think it's in November, isn't it?

KENNEDY: Mid-October. October 16th.

GLENN: So he's running for reelection, and he did change the Constitution that he could be dictator for life, but only after this election. When Pelosi went out, the word is from people that I know in China, that are high up in -- in the banking world, that do business in banking over there, that they've been watching their press very closely. Because there's a -- there's half of China, and the leadership. They don't want Xi.

And so some of the reports, that came out, when he -- when -- when Pelosi was going over, where they said, he's going to shoot that plane out of the sky. They made all of these -- you know, of these demands or expectations of Xi, knowing he couldn't do it, because humiliation is one of the worst things -- weakness is horrible in China. So they set him up to be weak. How does this play in his election?

KENNEDY: Well, you know, we would assume, that there would be fair elections. Obviously, that's in question, even in the United States. It certainly is not the case in communist China. And so I think that, you know, being entrenched in the party, even though there is pushback. I think it would be a giant surprise, if he wasn't elected again. And I do think that censorship has played a big issue, in this. You know, part of the reason, I've been told that they had these covid lockdowns, is because they're trying to control information -- not let people talk to each other. Not let people in the country, to let the real tenure of what is going on out into the broader population. So there are a lot of people in China, who even though they may be upset about this one particular thing, don't really have a scope on the real story, and who knows what they're being told.

GLENN: That's unbelievable. This story leads me to something. Bank of America has just started a policy that sounds very familiar, except race is involved now. Zero down payment, for mortgages for first time buyers. And I believe this is minorities. To help minorities -- black and Hispanics grow ownership of homes.

Zero down payment. Zero closing costs. So just come on in. It's like renting a house. Isn't this what caused 2008?

KENNEDY: You know, I know that history always repeats itself. And human beings have a hard time learning from the past. But really, this wasn't that long ago. You would think there would be some grace period. Where we would go, okay. This probably isn't a good thing to do.

And it's really frustrating. Because it's one of those things that sounds very nice on the surface. Oh, we'll help these underserved communities build wealth. That's a good thing. We want everybody in this country, to participate in wealth creation opportunities. The last way that you do that, is at a point where we're having a top in the housing market. The bed is raising rates. We're heading into a recession. Prices will come down. And then you take somebody, who can't afford a down payment. And you get them paying on a house, that you know they won't be able to afford over the long-term. That's basically stealing equity from them in the long-term, making them very afraid to continue to do that, in the future.

GLENN: This is -- this is what they called predatory lending.

And it's being pushed, I'm sure, by the government. It's being pushed by these big banks. They're all in collusion with the great reset. It's going to impoverish people, even more.

KENNEDY: Yeah. If you want to tie this to the ESG, right? This is part of the -- the social initiative, we have to make housing more affordable. But that doesn't do that. I mean, this creates more fees for banks, at a time when they may be losing fees in origination. Because the fed is raising interest rates. And that's flowing through the market. You know, it's not like they're creating a fund, and saying, we're going to buy up properties. And we're going to allow to you rent to loan. There are ways you can do this for underserved communities, that will be fantastic. But zero down mortgage -- and, by the way, it's not like a veteran zero down mortgage, where there's a strict underwriting process. This is a non-underwritten process. (?) we've seen how this has gone awry in college lending. Now they're bringing it back to the mortgage industry. Once again, because there wasn't enough damage the first time around.

GLENN: O they want to make sure that there's nothing (?) left for people to learn.

KENNEDY: Or. Or maybe they want the correspond to be able to have this, at the expense of the (?) middle class. And they'll just forgive those loans. Like, you know, they're on the kick of forgiving every other loan. There's a buffet of possible, fantastic --

GLENN: And none of them are good. None of them are honest. None of them are free market-based. None of them are ethical. None of them.

KENNEDY: No. It's picking winners and losers. It's letting the government and these big entities play venture capitalists in a way that she shouldn't.

And it's not teaching sort of the discipline, so that we allow for these broad creation opportunities. Which is the future of prosperity. Because we know at the end of the day, big business. Big government. Big special interest, doesn't want that. They want to gut the middle and working class. They want to consolidate power. So every one of these (?) ultimately ties back to that in some way.

GLENN: Energy prices. Goldman Sachs is now saying, just the energy prices will push the UK inflation to 22 percent.

That is a near post-war record of 22 percent inflation.

That's -- I mean, we -- let me get another story here. Because I read here, cost of living. Shoppers despair, at cost of staple foods, soar up to 20 percent in a year.

That's remarkable! I mean, we're all going to see this.

And it's -- a lot of this is coming from this craziness of ESG with the energy.

KENNEDY: Absolutely. This is entirely self-inflicted. That's the most frustrating part of this. It could have been avoided. But it was the liberty by policy. And who is going to pair the brunt of it. It is the small businesses. It is the million dollars and working class. It is the core to people, who really can't have this happen. I've seen this all over Twitter. I've been sharing all the stories coming out of Europe and the UK in particular. With small businesses who are getting their energy bills. And something like 10,000 euros, or, you know, like multiple tens of thousands of euros. And it's just completely non-sustainable. I mean, obviously nobody is going to be able to operate under those types of conditions. It's going to be a really ugly winter.

And as we're talking about, not learning. This should be a giant neon sign to say, okay. They made a mistake. Let's (?) they just passed the biggest climates bill. And are telling about what a great deal it is. As if there's not more pain and suffering on the other side.

GLENN: I know. I will tell you, Marx said for a Communist Revolution to happen, you need to have the working class rise up, and then they could close it down.

And that -- if you can't get them naturally, you have to create the conditions for that. And everything, including the IRS, all of these things are designed to abrupt the middle and lower class. (?) to wipe them out entirely. And when that happens, you will have revolution on the street. It is -- yeah. Go ahead.

KENNEDY: You will own nothing. And you will not be happy. Because as we've seen throughout history, those who do not own anything, are not the ones who are happy.

GLENN: Yes. Thank you very much, Carol. Appreciate it.

KENNEDY: Another uplifting segment, Glenn.

GLENN: One of these days it will turn around. One of these days. Yeah. Thank you so much. I appreciate it.

EXCLUSIVE: Chip Roy Explains His FIERY Rejection of Spending Bill

According to the media, there’s a big fight going on between Republicans over the House’s new slimmed-down continuing resolution spending bill. Some, including President-elect Donald Trump, wanted the bill to pass. But others, like Texas Representative Chip Roy, argued that it still wasn’t ready. However, is the Republican “unity coalition” really crumbling, like the media claims? Rep. Chip Roy joins Glenn to explain what’s really going on. He argues that he IS trying to give Trump and DOGE a 100-day “runway” to fix the country. But he makes the case that, by increasing the debt ceiling by $5 trillion without agreeing on other cuts, this bill gives bad actors the ability to be an “obstacle” to Trump’s agenda further down the line. Plus, he reveals to Glenn that he believes some of these bad actors LEAKED false information about his stance to Mar-a-Lago.

Transcript

Below is a rush transcript that may contain errors

GLENN:

I think we have a great opportunity today. To show you how to have a -- tough conversation, with friends, friends. Where you deeply disagree on something.

But you know that their intent is good. They know my intent is good. Or our intent is good.

And we actually have the same end goal, but we disagree on the path. And we're going to walk away friends.

Chip Roy is joining us today. And, Chip, I love you. And I always will. And I agree with your, we've got to cut spending. We have to. But Liz Wheeler is with me. And we've been talking about it all morning. It's the -- the -- the -- the system of DOGE and Trump, the call-out to the world, in saying, you've got to surrender the Capitol. You know, the bad guys are in and about to take all the money.

Surround, and tell them, come out with your hands up. And that happened. And we scored a massive win, in an entirely new way.

Ask then you stood on principle, one we both agree with.

And it failed!

And so here's -- here's what Liz and I were talking about. Here's what we want to say to you.

And then get your response.

LIZ: Hi, Congressman Roy, this is the way I see it. I want your take on it. I love you. I think you're one of the best members of Congress. I disagree with you on the process that's happening. And I think that is the difference. The process. We elected Donald Trump to be a disruptor. Because Republican members of Congress for decades have been telling they're fiscal conservatives. They want to decrease the debt SEAL. It hasn't happened.

It hasn't -- it hasn't been done. And so Donald Trump comes in with Elon Musk, and uses this DOGE process to first identify these pieces of garbage in the first 1500-page bill. And take those things to the people. We took them to members of Congress. Congress said, okay. We'll listen to you.

So that new process was very effective.

And my question to you is: Once that process was proved to be effective. Which I think is exciting and wonderful.

How do we bridge this divide, with you, to say, okay.

Let's put some faith in this new process. And trust Elon Musk and Donald Trump and the Dow Jones process, to eventually address the debt ceiling, but get this done right now?

GLENN: And not blind trust. Chip.

CHIP: So appreciate you guys. Appreciate being on the show. Particular order. I have to go through a couple of things.

GLENN: Yep.

CHIP: Number one, it's important to remember that my job and my duty is to the Constitution, to God, and the people I represent. I told them, when I came to Washington, I would not -- I would not let the credit card and the debt ceiling and the borrowing of the United States without the spending restraints necessary to offset it.

GLENN: Okay.

CHIP: Right now, all we have are promises and ideas and notions. What I know, that neither of you respectfully no, and that none of your listeners respectfully no are the people that are in the room, that I was in with yesterday. And the day before, who are recalcitrant.

And do not want to do the spending cuts that we need to do.

That I believe the president and the DOGE guys. And everybody want to do.

My job, is to force that through the meat grinder. To demand that we do our damn job. Okay?

GLENN: Okay. So hang on. Okay. So wait. Wait. You're right. You're right. You're right. Go ahead.

CHIP: Number thee, when we were going through the bill, I'm glad the bill dropped from 1,550 pages to 116 pages. Three-quarters of Twitter or X or whatever you want to call it, have been out there spreading false facts that we supported a bad bill and didn't like the better bill.

That's not true. But let's be Lear. The 1400 pages that were cut out. It's a panacea.

There were some good stuff in there. There were some bad stuff in there. There was a lot of disinformation.

There wasn't a $70,000 pay raise. There was a 3,000-dollar pay raise.

I didn't support any pay raise. I didn't support a lot of the stuff in there.

But there's a lot of misinformation. And here's the thing: The 116 pages that were left, and I opposed violently the first bill. I was leading the charge on fighting and killing the first bill.

GLENN: And I love you.

LIZ: The second bill for 116 pages. Turned off -- turned off the pay go requirement. That we slash 1.7 trillion automatically.

And added a 5 trillion that are increase.

My view was, I could not support that, without a clear understanding of what cuts we would get, in mandatory spending next year. And undo any of the Inflation Reduction Act.

The undoing of the student loans. The undoing of the crap with the food stamps.

And everything else. I yield back.

GLENN: Okay. I yield back.

Chip, you're not in a hostile room. We love you. And we agree with your end goals. It's our end goal too. We didn't make that promise that you made to the people that voted for you. So we have more wiggle room here.

But you say -- I think our big difference is, you say, I know the guys in the room.

You're right. You do. And we -- we ceded that earlier today on the show.

You are -- one of us is wrong on trust.

I don't trust any of the weasels in Washington.

But I think Donald Trump and Elon Musk and Vivek Ramaswamy have earned enough trust, to get a grace period, here for the first -- maybe the first year.

Or at least six months.

To turn the economy around, and also reduce the size of the government.

And totally flip this thing.

And I know, as somebody who is -- you know, run a company, mainly into a ground. But run a company, and have to switch it, in the middle, and totally reshuffle. That -- that actually costs money, while you're doing it, to bridge the gap.

Because you have to fill up holes while you're filling in the gap.

You don't trust the people in the room. Neither do we.

But we do trust the system that worked on Wednesday with DOGE and Donald Trump.

Where do we disagree?

Can you give them --

CHIP: We don't disagree. And yesterday morning, I was making that precise argument in a room full of conservatives and then a follow-up room with people who will call it, less conservatives.

GLENN: Republican. Yes.

CHIP: And so we were making this argument. And then someone infamously. Something leaked out of the room, somehow out to Mar-a-Lago. That I was being resistant. Because I was negotiating trying to get the agreement to achieve the objective that you just said. I was trying to get, okay. In fact, yesterday morning, I made the argument to a group of conservatives. We need to give the president runway. We need to give him his first 100 days. We need to appreciate JD, and Vivek, and all the people -- and everybody involved. For the president to achieve the objective.

But to get there. We have to make sure that the guys in the room, that are an obstacle to that, don't have the ability to block it.

Because information flow matters. And when those guys tell the president, they can't achieve X.

Then the president will not achieve X. Our job was to force and demand, guys, we need actual understanding of what the cuts will be.

And because otherwise, we're asking us to accept a 5 trillion-dollar limit in our credit card increase. In exchange for nothing!

Literally, in exchange for nothing, but -- but hope.

So our job was to force that change.

Unfortunately, while I was trying to make the argument that we needed something in order to get the votes, someone leaked that down to Mar-a-Lago, and the president reacted.

But now I have to now manage that.

GLENN: Right. I know. I know.

CHIP: They're trying to enforce change in town.

GLENN: So hang on.

We have to leave this. Because I'm going to run against the clock.

I could talk to you all day about this. You were in a meeting this morning about J.D. Vance. Can you tell us anything about that meeting?

CHIP: That meeting happened, because despite what happened yesterday, I'm trying to get this done. Last night, talking to JD, we worked to get this meeting done. We had some good progress this morning.

But there still remains people concerned about spending. That we can work out, what agreement we can reach. On what spending cuts. We can actually get next year, in exchange for giving the vote on a debt ceiling increase.

So it remains fluid. Progress was made. But we have to keep working on it.

And I left that meeting to talk to you. Soil get an update in a minute.

GLENN: Thank you for that, by the way.

I hear there is a new bill that may be coming today.

Is that the one you're talking about?

Or is this another bill that could be another nightmare?

CHIP: Despite other people leaking crap, I refused. I can't say, because it's not been decided by the speaker.

And it's not right to talk about things they're talking about in private meetings.

GLENN: Yeah, but it's -- it's this speaker. I mean, is he really the speaker anymore, Chip, really?

CHIP: We need to hear what bill we need to get forward. And I can't talk about the private meetings. But, look, I'm going to keep fighting for what I promised people that I represent.

I'm going to fight to cut spending. I am going to represent article one.

I'm going to support the president's agenda, but we've got to do that together.

GLENN: Okay.

Chip, thank you.

I think we can -- I think we agree, but I await to see what that means to you. Because we may just have to agree to disagree on this.

But I love you. And I still want you to replace Cornyn.

CHIP: The short version is, for inflation's sake, we cannot increase the debt ceiling $5 trillion without knowing what we're getting for it.

And I don't think anybody should disagree with that.

GLENN: But you don't disagree that Elon Musk and Trump and Vivek are serious about gutting the system.

CHIP: I believe that is their objective. I believe there are obstacles to that objective. And I need to know the sincerity of how we deal with those obstacles, both structural, and human. And we have to figure that out. And that's my job.