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First Move with Julia Chatterley
President Trump Argues He Controls States, The New York Governor Tells CNN, He Is No King; JPMorgan And Wells Fargo Prepared For A Consumer Cash Crunch; Global Healthcare Systems Coming Under Attack. Aired 9-10a ET
Aired April 14, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:23]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
Total authority. President Trump argues he controls states, the New York Governor tells CNN, he is no king.
Bad debts. JPMorgan and Wells Fargo prepared for a consumer cash crunch.
And a cyber warning. Global healthcare systems coming under attack.
It's Tuesday. Let's make a move.
Welcome once again to FIRST MOVE, great to have you with us, as always. We've seen plenty of history being made since the start of the coronavirus
outbreak and our global attempts to fight it.
We've also seen some pretty unprecedented moves in financial markets, too, whether it's central banks, but also an increasing jobs crisis around the
world, too. But what we haven't heard yet is the damage being wrought on some of the biggest companies in the world.
Their views on restarting global economies, too, well that changes today. With the start of us earnings season.
Financial giants JPMorgan and Wells Fargo have been up first, both companies announcing that they're setting aside billions of dollars to
cover for potential losses on things like loans, mortgages and credit cards even as we've seen their trading revenues soaring.
That's certainly the case for JPMorgan and for Wells Fargo. All the details on what we're seeing next.
U.S. futures meanwhile, are holding on to solid gains. Tech -- the tech sector is outperforming. To be specific, stay-at-home tech stocks like
Amazon, Netflix Zoom, and medical teleconferencing company Teladoc, which all soared on Monday. Netflix, in fact, hit a 52-week high.
What about what we're seeing in Europe? Well, that picture is mixed. Also in Asia, stocks closed higher, as you can see across the board encouraging
economic numbers from China, I think helping what we saw in the Asia session.
Exports and imports in China falling far less than expected. That's good news on the economic front, but at the same time, it's also early days, and
it still comes amid some dire predictions from the International Monetary Fund, about the growth outlook from around the world.
You know my views. More support is needed, particularly for the most vulnerable in society all around the world.
Now part of that conversation centers on getting economies back to work safely. In Europe, the focus remains on easing the lockdown restrictions in
places like Italy and Austria.
While here in the United States, the discussion has been perhaps a little bit more contentious. Let's get to the drivers and bring you up to speed.
States in the United States on the East and the West Coast come together to form regional PACs, and in a couple of hours' time California is expected
to release plans to ease restrictions, too.
And what though sounded like an implicit warning to President Trump, California Governor Gavin Newsom says the West Coast Governor's decision
will be driven by facts and science.
The President, however, says his authority is total. He says that means he has the power to lift the restrictions that the governors themselves have
imposed.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I'm going to put it very simply, the President of the United States has the authority to do what the
President has the authority to do, which is very powerful.
The President of the United States calls the shots. If we weren't here for the states, you would have had a problem in this country like you've never
seen before. We were here to back them up, and we're back -- and we've more than backed them up. We did a job that nobody ever thought was possible.
It's a decision for the President of the United States. Now, with that being said, we're going to work with the states because it's very
important.
Well if some states refuse to open, I would be -- I would like to see that person run for election. They're going to open. They're going to all open.
(END VIDEO CLIP)
TRUMP: Well, the Governor of New York, Andrew Cuomo was on CNN earlier today, and he says, the Constitution makes it pretty clear who is calling
the shots.
(BEGIN VIDEO CLIP)
GOV. ANDREW CUOMO (D-NY): The Federal government does not have absolute power. It says the exact opposite of what the President said. It says that
would be a king. We would have had King George Washington, and we didn't have King George Washington and we don't have King Trump. We have President
Trump.
And remember the colonies created the Federal government. The states created the Federal government, not the other way around. We have the 10th
Amendment that is explicit.
Certain responsibilities or state responsibilities -- health, welfare, quarantine -- those are health responsibility. So the President should not
even think of going there.
That would be divisive and political, and it would be totally contrary to everything we've been trying to do by working in a cooperative fashion.
(END VIDEO CLIP)
[09:05:19]
CHATTERLEY: The question is, what is the plan? Well, later today, White House Chief of Staff Mark Meadows, is expected to head up a newly formed
economic working group to help come up with a plan to reopen the country.
The President's daughter, Ivanka Trump also expected to play a role, too. Greg Valliere is Chief U.S. Policy Strategist at AGF Investments, and he
joins us now.
Greg, great to have you with us and glad to know you're keeping well. Let's talk about the first part of that conversation first. How much authority
does the President have to coordinate, let's say at least with the individual heads of state here, particularly since he was the one that let
them decide whether they will lock down or ordering stay-at-home orders in the first place?
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS (via phone): Well, you make a very good point. Good morning, Julia, I think any first
year law student would know that the 10th Amendment grants states certain powers.
Trump in the ultimate irony, a couple of weeks ago, refused to order the Florida Governor to shut down Florida citing constitutional reasons. And
now he's -- now he is saying the exact opposite. This makes absolutely no sense, and it further inflames the situation when people should be focusing
on the victims of this virus rather than this bizarre debate about presidential powers.
CHATTERLEY: Yes, protecting lives and protecting jobs. It's good to hear that this economic working group is being formulated. The expectation is
that will include business leaders as well from across the country. Greg, surely these business leaders are not going to say anything other than we
need more stringent testing in order to safely bring back workers back into the workplace.
VALLIERE: Yes, I think there's two things that they'll have to tell the President. You know, and the other one, you mentioned the first -- the
other one is simply going to be they need more assistance.
And inexplicably, Congress has derailed. They've gridlocked on any new assistance for business, small business, state and local government, and it
doesn't look like we're going to get a deal anytime soon.
CHATTERLEY: I mean, that's part of the challenge. It's not just about pumping money to small businesses, which is the lifeblood, it's also to
your point, the states that need more money, the healthcare sectors around the country also need more money at this stage.
How safe do you think Anthony Fauci -- Dr. Anthony Fauci is in his job after what we saw from that press conference last night, too?
VALLIERE: Well, last night was so bizarre, but I do think that the President knows he can't fire Dr. Fauci right now. The President's polling
numbers have dropped radically, in fact, the Rasmussen Poll, which is his favorite, now shows Trump with a 56 percent disapproval level, it's gone
way up.
So I think Trump can't afford politically to fire Fauci. To me, the more interesting angle, Julia, is that at some point later this spring, Fauci
may decide he has had enough.
And if there's a real conflict between the scientist and the President, Fauci might leave rather than get pushed out.
CHATTERLEY: I mean, he's become the figurehead, I think, for Americans desperate for information, trying to understand what progress is being made
on the health front.
Greg, what's your sense of timing in terms of what you're seeing playing out in the economy? Because what we can't get away from is the economic
cost of the measures that are being taken here.
VALLIERE: Well, with the caveat as Fauci often says that the virus dictates what's going to happen. You know, I would say some states, Texas,
maybe Florida could open in early May. Other states may wait until the end of May or well into June.
But it's coming. It's a very, very difficult decision, and I think the great fear for the country, for the markets, for all of us is a second
wave. And no one can predict whether there will be a second way. But we're going to find out because I think some states will be open in two and a
half weeks.
CHATTERLEY: Yes, we have to continue to watch what the rest of the world is doing, I think and learn some lessons there which we will be discussing
later in the show.
Greg Valliere, great to have you with us, sir. Chief U.S. Policy Strategist at AGF investments.
Now, clearly the economic impact very much at the heart of what we're hearing in earnings season kicking off as I mentioned with reports from
some of the big U.S. banks this week.
JPMorgan Chase says its first quarter profit dropped nearly 70 percent from a year ago. Wells Fargo also missed profit and revenue expectations. Clare
Sebastian has all the details.
Clare, I said earlier on our programming, we've been operating in a snowstorm, a snow blizzard since the beginning of March really and we've
got no idea when the snow melts. The key is protecting against future losses, consumer losses. And we heard that in huge size from these banks.
[09:10:14]
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia. Billions and billions of dollars have been set aside by these banks. In the case of
JPMorgan, they've built up their reserves by $6.8 billion. This, by the way, is a forward-looking number compared to all the other backward looking
numbers in these earnings reports. That's to cover future credit losses, and most of that is concentrated in the consumer division, especially
credit cards.
So this really shows that this is the kind of crisis that we don't have to wait for it to trickle down to regular people, to consumers. It already is.
They are expecting people not to be able to pay back loans and credit card payments.
The same goes for Wells Fargo. They've set aside, they've built up their reserves by $3.1 billion, and I think the question for the markets, the
question for investors and frankly, everyone who is watching the course of the economy over this crisis is, is that going to be enough? JPMorgan,
interestingly, on the call just now said that there are assumptions that are built into that reserve build of $6.8 billion.
They are assuming a 25 percent drop in U.S. GDP and unemployment rising over 10 percent. They are including in that assumption, the effect of their
forbearance programs for consumers, things like waiving certain fees, extending deadlines for payments and things like that, and they are
including government stimulus, but they say since they closed the books on this quarter, just two weeks ago, their economist forecasts have darkened.
So I think that shows you that A, they are probably going to have to build up reserves more in the second quarter and B, how fast the situation is
changing and how difficult it is for companies, even the likes of JPMorgan, the biggest U.S. bank by assets to really figure out how to deal with this
and how much money to set aside.
CHATTERLEY: Yes, I mean, the estimates from analysts on this were astonishing, between one and a half billion dollars and $20 billion. So
everyone was just guessing at what the damage could be here from what the bank was going to say.
One of the other areas and we were just discussing it with Greg Valliere there, the PPP, the Paycheck Protection Program. What did these banks have
to say about this? Because our understanding is they are writing loans, they're making loans. The holdup is with the Small Business Administration.
Do we get any clarity today?
SEBASTIAN: We are still waiting for clarity on that, Julia. The calls are still ongoing, we are awaiting to hear. This is certainly something that
investors are going to be watching very closely because the banks have a difficult balancing act. They have to maintain their liquidity ratios,
their capital positions.
They are at pains, by the way today, both of them to stress that they are very well capitalized, that they've got strong balance sheets, even in the
face of this crisis. This isn't 2008. This isn't a crisis in sort of bank security and safety.
But I think you know, these loan programs and their role in dispersing that is something that's going to play into that delicate balancing act. So
clearly, that in addition to the programs that the banks themselves are offering, those delays in payments, waiving fees, forbearance programs,
that will certainly be something that that investors and analysts are watching.
It all plays into the question of credit quality going forward.
CHATTERLEY: Yes. Credit, credit, credit for sure. Clare Sebastian, thank you so much for that analysis there.
Now, the International Monetary Fund warns that we're on the precipice of the worst recession since the 1930s. It says global growth will shrink by
some three percent in 2020, and that's their best case scenario.
The fund warned worse outcomes are "possible," maybe even likely.
John Defterios joins us now. I have to say with the International Monetary Fund, they do have a habit of revising their findings and revising them
again, John, so you have to be a bit cautious about these numbers. But whichever way you look at them, they're pretty devastating.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, they are, Julia, a pretty dire reading because there's not one corner of the world
that won't be touched by the coronavirus in terms of the overall numbers and I think the downside risk here, two fronts on the emerging markets
because many are just coming into the front line of the coronavirus strike mind is China, of course, which is at the front end of this.
Number two that we've seen, the developed economies of the world, pull out all their gunpowder and use it. So there's not much left in the reserve
here for the developing world.
The top line numbers you suggested, a contraction of three percent. They're saying there's more risk on the downside. But how about the shift from
January, Julia? That was 3.3 percent on the upside.
The United States, worse since 1946, negative 5.9 percent, and they're saying that could be worse going forward. And as emerging markets -- can
they avoid what we see here and the second largest economy in the world, and that is China, the top line number for the emerging market is negative
one percent, China. The worst growth since 1976, a very paltry growth for India at 1.9 percent.
It's interesting to me that if you stripped out China because of the size of that mix into the emerging markets, Julia, the drop in the developing
world would be negative 2.2 percent.
And I have not forgotten about Europe about the export dependent economies of Europe, like Germany. Steady growth all the time, slow growth, but the
engine for growth, about a negative seven percent for Germany and the U.K. also facing Brexit in time ahead, but right now in the fire of the
coronavirus, a negative six and a half percent. I can't find any positive pieces of news to point on this from the IMF at this stage.
[15:15:22]
CHATTERLEY: I mean, this is -- one, you're talking about growth levels like that in China. I'm just trying to imagine what that equates to in
terms of unemployment risks, social tensions, for example, even in a country like India, and as much as we talk about the problems this is
creating for developed market economies, for developing nations that can't respond with the kind of cash buyer power that we have in the West.
I mean, this goes back to the conversations we've been discussing about the need for debt write-downs, forgiveness, at the very least.
DEFTERIOS: Well, you know what, Julia, I think we're having an impact in terms of that narrative, because that's starting to happen right now, the
International Monetary Fund was suggesting the advice to the developing world, pivot as fast as you can to healthcare spending and stimulate where
you can.
So they singled out Indonesia, South Africa and China, which has $3 trillion of reserves for moving quickly on that front.
But there is no silver bullet. That is the big challenge right now. I wanted to bring up those that are overly dependent on commodities, Julia.
We've been talking about oil, how about the lack of demand for the grains? So you have Brazil, Mexico, Russia with drops of five to six percent, even
more, so you live by the sword die by the sword.
If you're overly dependent on commodities, we know the outlook for oil for 2020 right now. So again, there's no easy way out, but I think the debt
relief of the G-20 meeting that's going to be convened again by Saudi Arabia on Wednesday will be coming.
I saw that the Asian Development Bank tripled its lending and support for countries as a result of this conversation. Who is going to step up for the
developing world? It's happening not as fast as we would like to have seen, but it is, the wheels are moving in the right direction. Let's put it that
way.
CHATTERLEY: Yes, they are just slow moving wheels. We need to get some acceleration on them. John Defterios, thank you so much for that update
there.
All right. We're going to take a break here on FIRST MOVE, but still to come. The U.S. President says the World Health Organization "really blew it
on coronavirus." We discuss with the man in charge of the W.H.O.'s global alert network.
And coronavirus cyberattacks as hackers target hospitals and healthcare workers. Microsoft is working on protecting those on our frontlines. We
will hear more after this.
(COMMERCIAL BREAK)
[15:20:41]
CHATTERLEY: Welcome back to FIRST MOVE live from New York. Futures are still pointing higher in Wall Street this morning. U.S. banking giants,
JPMorgan and Wells Fargo reported their first quarter results.
JPMorgan's earnings were its weakest in fact since the financial crisis. They set aside almost $7 billion to cover potential loan losses. Wells
Fargo, which also missed profit estimates is setting aside a greater than expected $4 billion in loan provisions.
That said, shares of both companies are solidly high in premarket trading. Analysts was certainly expecting higher provisions. So taking this news, I
think is a good sign here.
Now nations such as Italy, Austria and Spain are embarking on a phased reopening of their economies. While the debate intensifies, of course on
how to do that in the United States, some believe we should learn lessons from those who've managed the health crisis effectively elsewhere in the
world, places such as Hong Kong, Taiwan and Singapore.
Dr. Dale Fisher runs the World Health Organization's Global Outbreak Alert and Response Network. He's also a professor at the National University of
Singapore. Sir, fantastic to have you on the show.
The key takeaway for me from everything that you discussed in various different regions is liberal testing, strict tracing and isolation
measures. Is that the key?
DR. DALE FISHER, WORLD HEALTH ORGANIZATION'S GLOBAL OUTBREAK ALERT AND RESPONSE NETWORK: Thanks, Julia. Yes, they are the fundamentals of any
outbreak response actually, they're not targeted here. We would do the same things in Ebola or any other sorts of outbreaks.
So, it's important to identify the cases early and with testing freely available, isolating those cases, and then all the contacts around those
cases, to place those people in strict quarantine so that then you break that chain of transmission.
CHATTERLEY: Is that what was going on in China, too? Because I know you were one of the first to go in and see what was happening in Wuhan and we
were all watching what was happening with the temporary beds being created and assuming these were people on ventilators, but you're saying these were
just people who tested positive. They were simply being kept away from everyone else.
FISHER: Yes, that's right. They had three different tiers of hospitals identified and because we know that about 80 percent of the people with
COVID-19 actually have mild disease, then the hospitals that you're referring to that were built in 10 days, and all the makeshift hospitals in
the sporting arenas and things.
They were actually really there as, if you like quarantine facilities, still providing medical care, of course, and looking out for people that
might deteriorate. But, anyone that needed serious care was then shifted to one of the more established hospitals.
CHATTERLEY: They also had thousands of people, I believe, even just Wuhan been working on tracing. It's something that you've also seen in Singapore.
I've heard of people getting text messages on their phones to find out precisely where they are at any given point to make sure that they're
isolating.
FISHER: So yes, Wuhan created 50,000 beds to isolate their cases. South Korea during the peak of their outbreak a month ago, created 4,000
dormitory beds in about 20 different sites to house these people.
Singapore has now got a lot of community isolation facilities where people might start in hospital, but then end up in a sort of a hotel or other
facility where now you're moving into our Expo Center and lots of the mild cases with a little bit of medical attention are there.
Yes, Wuhan had about 8,000 to 9,000 contact traces. Singapore, it's been a very intense effort because -- and you're right, when I came back from
China, I was one of those people in quarantine, and I got one of those messages.
It was strangely reassuring actually, it said, you know, click on this link as a geo locator and I got a message straight back saying, thank you for
your cooperation and I was of course at home.
[09:25:04]
CHATTERLEY: And thank you for your cooperation on that, too. Based on what you've seen and personally experienced in Singapore, and I appreciate it,
and there will be people watching going, this is a far smaller country than the United States. Is the United States in any way capable of phased
reopening without seeing community spread picking up again, without these kind of measures in place in significant size?
FISHER: Well, you know what they say, Julia, if you don't change anything, and you expect the outcome to be different than it won't be. Well, history
is just going to repeat itself.
So, you know, while much of America and other countries around the world are shut down, you know, I believe there's three things to do. Shutdowns
definitely stop transmission, there's no doubt about that. If you stop people interacting, then the virus can't jump from person to person.
So no one should celebrate that a shutdown works because it does. It's just got all the negative benefits for the economy and sort of social
infrastructure.
The second thing that a lockdown will do is because the transmission stops, then over the subsequent weeks, maybe two or three months, the health
system can recover, so the beds will be emptied up, the ventilators will become free one way or the other.
But the third thing that's most important that mustn't be underrated, is building up these essential public health interventions. These are the --
when this comes back, because I don't believe it's likely to be eradicated, so when it comes back, do you have the capacity for isolating your cases
for testing every everybody that needs to be tested for doing the contact tracing and have you got the laws in place to ensure that the quarantining
works?
And I think the public's appetite for isolation of cases and quarantining may not have been there if you'd have done this in in February. But I think
now that people can see the consequences, the economic impact that this virus can have, I think people are generally a bit more inclined to part
with a little bit of their freedom and privacy during this period.
CHATTERLEY: Yes, I agree with you. We have to be ready to give that up, quite frankly, to protect ourselves and others.
Dr. Fisher, I do want to ask you about some of the criticisms of the World Health Organization, the information that they gave, the timing of that
information. The work that was done in communicating with China, and what China was seeing and perhaps what information there filtered out.
Other things that the World Health Organization could have done better here, and do you think China restricted information to the detriment of the
rest of the world?
FISHER: Well, you know, I was there in February and I haven't seen anything -- any difference between what happened in China and what happened
in the rest of the world.
In that report that we put out when we came back towards the end of February, we described that this disease had the potential for sort of
major or catastrophic health, social and economic impact, and the subsequent comment was, but we don't believe the world has the capacity or
the mindset to deal with it.
And as I remember as -- in our report, when we put those words down, I remember thinking, yes, I think this is true. And sadly, that's what we're
finding. I hope now, the world has capacity and mindset to deal with it because it can be dealt with, but it's really not easy, and if you think
you can just open up, it is not going to work.
I don't believe that the W.H.O. could have done much more. It's certainly not their role to police countries, to go into countries and say, hey, you
need to do more. Even when I was in West Africa, you know, during the Ebola outbreak, we didn't go into Ministry of Health and say, get out of the way,
we're taking over.
It was sort of, you know, no one knows your country better than you. You understand the capacities, the potential, the vulnerabilities, and we're
here to help. We're here to support.
In fact, the W.H.O. would lose all its capacity to help if it started policing people --
CHATTERLEY: To be allowed in. Yes, very quickly, could China have told the world sooner?
FISHER: I think all the studies suggest that, you know, it was the end of November or early December that this virus emerged. I think, I first heard
about it on December 31st. So, you know, compared to SARS, you know, this is, you know, very fast and anyone that's ever managed an outbreak knows
that there's a lot of confusion and chaos, you have to validate things.
I think to get it out in a month and to get a test out, you know, in the second week of January was incredible to be honest.
[09:30:14]
CHATTERLEY: Dr. Dale Fisher, sir, thank you for your work. And we appreciate you joining us on the show. Stay in touch and stay well. Thank
you.
All right, the market open is next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE, as you can see, U.S. stocks are up and running and in the green this Tuesday, the first day of U.S. earnings
season. We're seeing encouraging signs on the data front, as well as far as the coronavirus outbreak is concerned.
And we've had banking giants, JPMorgan and Wells Fargo reporting this morning as well. They kicked us off in terms of earning season. They missed
expectations by a pretty wide margin as anticipated, I have to say, predictions were all over the place and they set aside billions of dollars
of money for provisions against loans that might go bad at some point in the future.
It's a lot of guesswork going on in terms of the economic impact of the virus outbreak and the stay-at-home orders that we have in place across the
United States.
In the meantime, Johnson & Johnson earnings came in better than expected. The pharmaceutical firm boosting its dividend by six percent, but they did
cut their 2020 guidance. We also saw brewing giant Anheuser-Busch InBev halving their dividend, too.
Now, in the meantime, Tesla shares have been on a pretty solid drive rising today for a seventh straight session on solid Q1 delivery numbers. Tesla
shares up more than 65 percent year-to-date, so within the broader changes that we've seen, individual stories are playing out here as well.
Now to manage the economic fallout from the virus here in the United States, the government approved a $350 billion program for small
businesses. The aim, to help cover payroll costs and other expenses like rent and mortgage interest.
However, technical glitches and red tape means a lot of that cash has yet to get into the hands of small businesses. So what edge do recently added
FinTech players like PayPal, Square and Intuit have?
[09:35:21]
CHATTERLEY: Well, FinTech industry representative, Brian Peters. He's the Executive Director of Financial Innovation Now joins us to explain. Brian,
great to have you with us. Talk to me about the lending capacity of some of these FinTech players and who they provide money for what kind of
businesses.
BRIAN PETERS, EXECUTIVE DIRECTOR, FINANCIAL INNOVATION NOW: Hi, Julia, thanks for having us. It's great to be here. These companies have, just in
the last couple years, actually dispersed quite a bit of money to small businesses, and I would say it's truly the smallest businesses. Some of
this data is remarkable.
So PayPal, has done about 15 billion in loans, Square has done over five billion in loans, and these loans are going to very, very small businesses.
Some of the loans are as low as $500.00 and they get up to about $200,000.00.
The average size loan is about $8,000.00 to $10,000.00. So these are truly small businesses and pre-COVID-19, these are working capital loans there to
help stock inventory, to help make repairs, those kinds of things.
Interestingly, PayPal loans -- the data shows that those loans are filling gaps in the country that have been left by banks since the 2008 financial
crisis. In the case of Square's loans, 56 percent of those loans are going to women-owned businesses versus 18 percent for traditional lenders.
And Square loans are going to 37 percent minority-owned businesses, so 37 percent of their loans are going to minority-owned businesses, compared to
25 percent for traditional lenders.
So we're really filling gaps, and I think this is a big part of the reason policymakers appropriately decided to include FinTech companies in the
solution to the challenge facing the country right now.
CHATTERLEY: It's interesting for me, I mean, these size of loans, at least, are not going to be of interest to some of the larger lenders in the
country. I think that's clear. They're not going to make money in terms of the scale on these loans, but also, it cuts to the heart of what the
Democrats are pushing for, and that's less inequality, in terms of how the cash gets out there and who ultimately this cash goes to.
The problem here for me is that you still have to get approval for these loans to get the cash out to people from the Small Business Administration,
and that's been the overwhelming blockage in the system. Is that right?
PETERS: That's right. I think there are some significant limitations with the throughput of the Small Business Administration, the SBA. Sometimes it
feels a little bit like there's so much demand out there that we're trying to drain a lake through a garden hose, and that's tough.
There's a kind of a single point of entry, and the system was designed to handle a traditional underwriting process, kind of a manual -- manually
intensive process. And so even though companies like the ones I represent, an Intuit, a Square, a PayPal have effectively built maglev high speed
trains, we are somewhat reverse engineering those systems into more of a kind of a steam engine approach. And then, along with everybody else, we
are running through the same train station.
That's my tortured analogy for it. But it's not without challenges. These companies are committed to making it work, though, and we're working
overtime, putting in a lot of hours burning the midnight oil to make it happen.
CHATTERLEY: Yes, I mean, I feel like the train is a steam engine, quite frankly. We're in the relative Dark Ages in technology terms. Brian, is
there a way to circumvent the Small Business Association? Does that conversation need to be had whether it's some of the larger lenders or for
the FinTech players, especially if we want to get this money out to people as soon as possible and to protect jobs, we need to bypass some of the
infrastructure holdups that are being seen.
PETERS: Well, I think we're all working on the SBA program and the Paycheck Protection Program is a laudable policy. It's designed to promote
payroll and keeping people in their jobs. That's a good thing, and I think we're committed to that.
In addition, really what we've been seeking is sort of an all of the above approach. As of this morning or late last night, 880,000 applications had
been made to the Small Business Administration totaling over $200 billion in loans. The program only has $350 billion, so it's going to run out soon.
Congress is likely, once they get through some negotiations, they're likely to plus that up. But even then, I think we would like to see, like I said,
and all of the above approach and perhaps look at some additional support from the Federal Reserve and Treasury to help make sure that we can take
advantage of every system that's out there to kind of push support out into the capillaries of the economy, so to speak.
[09:40:10]
PETERS: These truly small businesses that may not necessarily be served by the traditional finance system.
CHATTERLEY: Yes, this can't be the only lending program that allows forgiveness for payrolls, if you keep your employees on board that's out
there.
We spoke to a former head of the Small Business Association yesterday, Karen Mills. She suggested that even in a best case scenario, 20 percent of
small businesses in this country, so we're potentially talking six million small businesses could fail as a result of what we're going through. Does
that sound reasonable to you?
PETERS: It absolutely sounds reasonable. Most businesses only have two to three weeks of working capital. So under the current circumstances, they're
completely shut down. And if it is six million businesses or maybe 10 million small businesses, this is a significant source of employment for
the country.
Half of the country's employees work for small businesses, so if you kind of get rid of those opportunities for those employees, we're going to have
some very difficult kind of downward cyclical pressure in the economy that's going to be tough to overcome.
I think Karen is wonderful. She's been excellent in her examination of the changing landscape in finance, and particularly how technology companies
can help serve those small businesses.
But this is a significant challenge, and I think that it's an emergency, you know, these small businesses need help now.
CHATTERLEY: Yes, I agree. And we need to protect jobs as well. Brian Peters, great to have you with us, Executive Director of Financial
Innovation Now. Sir, stay safe. And thank you for chatting with us this morning.
PETERS: Thank you, Julia.
CHATTERLEY: All right. We're going to take a break. After this, though a virus of a different kind is infecting healthcare worker's computer
systems.
We'll look at the rise in cyberattacks and what Microsoft is doing to help. That's after this.
(COMMERCIAL BREAK)
[09:45:05]
CHATTERLEY: Welcome back to FIRST MOVE. Microsoft says it's increasingly concerned about cyberattacks aimed at those on the front lines of the
coronavirus battle, including hospital computer systems in Paris, Spain and Thailand and in the United States.
As a result, test results and critical guidance are being delayed. Tom Burt is Corporate Vice President for Customer Security and Trust at Microsoft,
and he joins us now.
Tom, great to have you with us. This is incredibly worrying. It's not just about health medical services, the World Health Organization itself has
been targeted. Just explain what you're seeing.
TOM BURT, CORPORATE VICE PRESIDENT FOR CUSTOMER SECURITY AND TRUST, MICROSOFT: Well, at Microsoft, we are seeing a wide range of activity and
we're closely monitoring the eight trillion signals we get every day for indications of nation states that are attacking healthcare or Human Rights
organizations.
What we're seeing is consistent what you've seen reported in the press. There are attacks both cybercriminal attacks and trying to extort money,
but also nation states who are infiltrating these organizations to gather information or potentially to do some damage.
And so we wanted to take steps to help protect our healthcare institutions and human rights organizations from these attacks. That's why we've offered
our free AccountGuard service, which is a threat notification service to these organizations.
CHATTERLEY: I want to ask you about what specifically you're providing to some of these healthcare services and companies that are being targeted
here. But what do you mean when you say nation states? Who specifically is targeting healthcare services around the world? Can we be specific?
BURT: Well, we have typically seen the same kinds, the same countries who are involved in nation state activity in the cyber realm, and I've talked
about that on other occasions. It's Russia, China, North Korea and Iran are the principal countries engaged in nation state conduct.
In this particular instance, we haven't established a pattern enough that we want to identify any particular nation as being involved in these
attacks. But we've seen enough to give us concern, and especially as our healthcare providers begin to work hard on treatments for COVID-19, and on
vaccination, we want to make sure that that information is protected and not disrupted.
CHATTERLEY: Absolutely, and is the effort here being made to disrupt care for individuals? Because I mentioned in the introduction there that it
actually was in certain cases, impacting the availability of test results, the timing, perhaps of test results.
Are these attempts based on what you're seeing to deliberately delay impact, negatively impact healthcare being provided in the countries?
BURT: We're certainly seeing cyber criminals do that by using ransomware to tie up the data to healthcare provider and then extort the provider for
money. And we've seen in the past, not that long ago in 2017, when North Korea launched the WannaCry attack that targeted the national health
systems in the U.K. We saw that there was an effort there to actually disrupt the provision of healthcare.
We haven't seen anything that egregious yet, but we wanted to provide this service to healthcare organizations and to Human Rights organizations and
now to help them defend against those attacks should they come.
CHATTERLEY: Okay, so explain what the AccountGuard threat notification system is and how you want healthcare workers that are then using this to
react.
BURT: So the service we closely monitor the activity of nation state organizations, using all of the signals that come in Microsoft from the
Microsoft environment, and we watch for activity by those nation states.
And when we see an AccountGuard account, under attack or compromised, then we notify you that you are under attack so that you can take steps to clean
up your system or to defend against that attack.
And one of the things that's unique about AccountGuard is that if you are an institution who has signed up for AccountGuard, you can also include in
that threat monitoring the personal accounts of affiliates who opt in, so your CEO, your members of the Board, the workers or volunteers who work
with you, any of those affiliates can also opt in and we will monitor those accounts as well because we see that nation states often start their
attacks by trying to attack the personal accounts of someone involved in an organization and then to move from there into the organization's network.
CHATTERLEY: And just to be clear, you're giving this away free to healthcare providers.
BURT: Yes. That's right. This is a free service for the healthcare providers and the Human Rights and humanitarian organizations. You know, on
our website are all the details for who is eligible, but it's very easy to go to the Microsoft AccountGuard website and see how you are eligible and
how to sign up.
[09:50:22]
CHATTERLEY: You know, one of the things that I think the whole world at various degrees are dealing with is working from home to some degree, being
in touch from home, even if for essential workers you're in the workplace, too.
And based on what you just said there about the initial entry point tending to be of a more personal nature here, is that also complicating the service
that you're providing, the protections in place, but also allowing perhaps more of these cyberattacks to be happening at this given moment in time.
BURT: It's absolutely true that during this time of crisis with so many people working from home, that that expands the scope of the security
problem than an organization faces because they now have workers working from home.
For those of us who still are fortunate to have jobs and to still continue to be working, many of us, like all of us from Microsoft are working from
home, and that does expand the scope of the security environment that has to be protected.
And that's one of the reasons we think that this free AccountGuard service is going to be valuable to the healthcare and human rights organizations is
because they can monitor not just their corporate accounts, but also the personal accounts of their people that opt into the service.
CHATTERLEY: You know, Tom, you're one of our many guests that we see coming from their home, I assume, it's your home. I just wondered what your
view is on what protections you want to see your company have in place before you will be confident enough to go back into the work place. Would
you be willing to share your views on this with us? Because I think this is a discussion that's going to be happening more and more in this country as
we continue the conversation on what getting back to work in an official environment actually looks like.
BURT: Well, I certainly look forward to the opportunity to get back to work and meet in person with my colleagues. But that's going to be I think,
a very challenging process that companies, that states, that government organizations, the healthcare industry professionals who really know the
science and the data are going to have to work together to think about how can we gradually go back to work in the way that's the safest.
And at Microsoft, I know the executives who are working on that issue are involved every single day in talking to other companies, to officials in
the healthcare industry, as well as to government officials about what are the -- what are the steps that we need to take to work our way back into
being able to go to the office and do that in a way that is safe, and ensures that all the sacrifices that many people around the country, around
the world have already made, that those sacrifices are not in vain.
So we don't want to rush back so quickly that we just reinvigorate the virus and then have to take these extreme steps all over again. So we're at
a point now where I think everyone is thinking about that very seriously, and I'm going to follow the cadence of the company as we work our way back
to getting back to the office.
CHATTERLEY: Well said, sir. There's no rush here. Safety first and make the sacrifice that we've already seen worth it.
Tom Burt, great to have you with us, Corporate Vice President of Customer Security and Trust at Microsoft. Stay well, sir. Thank you.
BURT: Thank you.
CHATTERLEY: All right, after the break here, on the frontline and on the front porch, two tales that will raise a smile and maybe a glass, too. I'll
explain next.
(COMMERCIAL BREAK)
[09:56:03]
CHATTERLEY: Welcome back to FIRST MOVE. We honor our healthcare workers on a daily basis as we shared, but how about a thank you just for staying at
home? This is 93-year-old Olive Veronesi from Pittsburgh who sign appealing for more beer went viral.
(BEGIN VIDEO CLIP)
OLIVE VERONESI: I was on my last 12 cans. Anyway, I have a beer every night.
(END VIDEO CLIP)
CHATTERLEY: Molson Coors responded with a delivery of 150 beers, and Olive wasted no time in cracking open the first one on her porch as you can see.
It's very nice.
We raise a toast to Olive and millions like her stuck at home, but doing the right thing. And of course, to our healthcare workers, too. We'll see
you tomorrow. Stay safe.
(COMMERCIAL BREAK)
[10:00:56]
END
