Wilbur Ross, chairman of WL Ross & Co., spoke with Bloomberg Television’s Betty Liu and Cristina Alesci today about talks about investment strategy, Federal Reserve Chairman Janet Yellen’s congressional testimony and Charter’s takeover bid for Time Warner Inc (NYSE:TWX).
“I agree that the 1 percent is being picked on for political reasons,” Ross said when asked whether he agreed with Sam Zell’s comments about the 1%. “I think the right focus would be how do you help the lower classes elevate themselves. And I think what’s disappointing with all the rhetoric, they’re not doing anything to fix the educational system. Education is the way that people get out of the ghetto and into if not the 1 percent something close to it.”
On Janet Yellen, and whether she will diverge much from Bernanke, he said “I don’t think so. And I don’t think she should. I think Bernanke will go down as one of the superior Federal Reserve chiefs that we’ve ever had.”
*FED SHOULD TAPER IN $5 BILLION MONTHLY INCREMENTS
*BERNANKE WILL GO DOWN AS ONE OF BEST FED CHIEFS
*LOOKING OUTSIDE U.S. FOR DEALS
*CHINESE HAVE DONE BEST JOB MANAGING EVOLVING ECONOMY
*TOP 1% BEING PICKED ON FOR POLITICAL PURPOSES
*`NO CHANCE’ OF NYC MAYOR SUCCEEDING IN RAISING INCOME TAX
*PUERTO RICO GOVERNMENT DOING EXACTLY RIGHT THING TO FIX ITSELF
BETTY LIU, HOST: Wilbur, you were just listening in on what Peter said were the highlights from her testimony. Is she on the right track? Should the Fed continue with this program?
WILBUR ROSS: I think it definitely should. What I’ve been advocating is pre-announce the longer-term program. Maybe cut it to $5 billion a month of taper. That would take it down over about a year and a quarter time period. And I think that the –
LIU: So in $5 billion increments.
ROSS: Yeah. They’ve been 210 (ph). I would do even more gradually to make it easier for the market to adjust.
LIU: But the markets, as we’ve seen, have been so volatile over the last several – several weeks even that even if you were to pre-announce, you would have to change if something dramatically changed in the global economy.
ROSS: Sure, sure, but I think if people knew it was going to be a very gradual glide path – and I’m glad to hear that she used that word, words about very small increments, very measured increments I think is the word that she used – that’s the right thing. But I think predictability is something of great value to Wall Street. So if there were a clear course laid out —
LIU: Then you would know where you could put your money.
ROSS: Yes, and then people could adjust. Because it’s very hard to adjust to uncertainty.
LIU: Well Peter mentioned the grilling that she might receive from Republican lawmakers on the committee. And some of those topics might include regulation. Perhaps Republican lawmakers will say we want you to peel back a bit on regulation, and we actually want you to take away that stimulus program even earlier. Would you agree on at least the first part?
ROSS: Well on the regulatory side, the big complaint that people have is with the Consumer Financial Protection Bureau. But as I understand it, while it’s housed at the Federal Reserve, the Federal Reserve really has no control over it. That’s an agency that really doesn’t report to anyone. It doesn’t report to Federal Reserve. It doesn’t report to the Congress. I think you’re going to find that there’ll be a lot of Republican questioning about that.
LIU: So maybe it’s misdirected, in your view?
ROSS: Well, that it’s maybe not under control. Normally a government agency, both its budget and its policies, are under some sort of control by a higher authority.
LIU: But do you have any – on a larger front, do you have any questions on Janet Yellen over regulation? Do you think she’ll diverge much from Bernanke on that?
ROSS: I don’t think so. And I don’t think she should. I think Bernanke will go down as one of the superior Federal Reserve chiefs that we’ve ever had. And indeed, I look forward to seeing more of him at Brookings. As you know, he’s joining Brookings. And I’m chair of the Economic Studies Council at Brookings.
LIU: So what do you have planned for him?
ROSS: He’s not reporting to me. He’s a little like the consumer financial agency. He’s unto himself.
LIU: We are back with my guest host this hour, billionaire investor and deal maker Wilbur Ross. He’s known for acquiring assets all over the world. And speaking about deals, we’ve got some breaking news, Cristina Alesci, on Charter Communications, Inc. (NASDAQ:CHTR) making yet another move in its deal to acquire Time Warner Cable Inc (NYSE:TWC).
CRISTINA ALESCI: Yeah, this deal got even more hostile. It was hostile from the get go because obviously Time Warner wants a much higher price from Charter Communications, Inc. (NASDAQ:CHTR) and there’s a big gap between what the seller is wiling to pay here. So this is their attempt to go directly to shareholders and say, hey, if you want a deal done, elect a new slate of directors that we back, obviously that will back a deal – will back the acquisition from Charter Communications, Inc. (NASDAQ:CHTR). So this just —
LIU: They proposed a whole slate of independent directors for Time Warner Cable Inc (NYSE:TWC).
ALESCI: Yeah. So this is – this is more evidence of further deal – further risk taking in the deal market, right? We’ve seen a lot of cross-border deals this year. We’ve seen now a hostile deal – a very hostile deal. Traditionally when the deal market isn’t hot you’re not going to see those kinds of risky moves that companies are going to make.
LIU: That’s absolutely true. Wilbur, would you agree with that?
ROSS: Yeah, I do. Generally when you have a strong stock market you see more deals, both friendly deals and hostile deals, because the acquirers have their animal juices coming up.
LIU: They feel like they’ve got the wind at their back.
ROSS: And so even if they’re using cash instead of paper, they feel better about it. It’s a more expensive kind of activity.
LIU: But if – if the deal environment is so healthy then, then why do we have so many companies with billions and trillions of dollars on their balance sheet?
ROSS: Well, I think that’s for a different reason. Some of it is our primitive tax laws that don’t permit them to bring it back without paying —
LIU: Isn’t that just an excuse, Wilbur?
ROSS: Pardon me?
LIU: Isn’t that just an excuse?
ROSS: I don’t think so. I think it’s real. If the government said for one year for a 1 percent or a 2 or a 10, some small tax, you could bring it back, that money would be back here in 10 minutes. I don’t have any doubt about that. The other thing though is that the growth is not so much in the US. Growth is in other countries. And naturally you’re going to be investing capital where the most growth and most rate of return comes. So it isn’t just the tax thing, but I