“Defund Harvard.” Elise Stefanik & Gary Gensler 4/16/25
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Hi, I'm CNBC producer Katie Kramer. Today on SquawkPod: A call to defund one of America's most elite institutions from an Ivy League alum in the GOP leadership. Congresswoman Elise Stefanik explains her stance on the Harvard versus government debate that has captured national attention. These schools get billions of dollars of U.S. taxpayer funds. We have a responsibility to be good stewards, to make sure that they are protecting Jewish students, and they've abjectly failed.

And in his first interview since leaving office, former SEC Chair Gary Gensler, his tip for the Trump administration on negotiating with China. When they see inconsistency in policy, they tend to veer back. They lean back and they don't like to engage.

Plus, is avoiding a trade war with China even possible? This shows global trade. They have things we want. We have things they want. We have the Boeing plane, but they make the MAGA gear. Maybe it's all about coming to the table. We're both on the same side. We're on the same side. How odd is that? It's Wednesday, April 16th, 2025. SquawkPod begins right now. Stand and are by in 3, 2, 1, cue and are.

Good morning. Welcome to Squawk Box right here on CNBC. We're live at the Nasdaq Market Center in Times Square. I'm Andrew Ross Sorkin, along with Joe Kernan and Kelly Evans, hanging out all week long. You're almost there. It's a shortened week, so today, tomorrow.

Thank you for over the huddle. You thought about that futures moved higher. That was a little bit ago after Bloomberg said that China was open to trade talks with the U.S. If and if is the important point here, it names a point person on the effort and shows China some more respect. I don't know what that means, but we'll see. Yeah, they said, according to someone familiar with this, with the Chinese government's thinking, they want more respect by reigning in disparaging remarks by members of his cabinet.

Among other things. And it's all, you know, translated in English. I guess, you know, respect, whatever. We were in makeup, Andrew, just a couple of gals getting their makeup done this morning. And I did mention, here's the big headline in the journal, Boeing hit from all sides because they won't accept deliveries in China now. And here's Xi on his world tour. That's a beautiful plane he's on, isn't it? It's a 747.

So, you know, it's a 747. And I look, why does he use it? Because of reliability and suitability. And they make a wide body in China, but he prefers that now.

It's just an allegory for what we're talking about. The United States has unbelievable stuff that it's going to be, it'll be a hardship for the rest of the world. But I will take the other side and say, you ever see when they've got a bunch of MAGA merchandise, the hats and the shirts and make it here. I think one of the shirts that said make it here, if you look on the tag, it said made in China.

So, I mean, we've both got things from this shows global trade. They have things we want. So we can we have things they want. We have the Boeing plane, but they they make the MAGA. Well, it's not I'm not exactly. There's a lot of things that we still take for granted that are cheap to come from China. So it's going to be hard to extricate ourselves. But you want to be on this this tour. You know, you wonder if there would ever be a headline, you know, next plane built by Airbus. Yeah. Yeah.

Have you guys been following Kimball Musk on Twitter recently? What, now? You don't follow him. Lately, yes. Of course I do. You follow him on Twitter. Does his picture have that stupid hat he always wears, that cowboy hat?

He's got to be distinctive somehow. Would you like to be the brother of Elon Musk? He has his hat on, but he's going straight at this trade stuff. I mean, straight at the president. Elon, I think, is a liminal. No, they both are. And I think it's fascinating just to watch what he's saying. He's making the argument, when you mentioned the Boeing planes, he says the reality is the Boeing planes are manufactured in America for Americans, including 10,000 Chinese-made parts.

In each plane. In China, they use American-made avionics and engines in their planes. Pretty important parts.

The trade war shows a stunning misunderstanding of how global supply chains work. I pencil. This is not a new concept. It's really not. Comparative advantage. Do we want to be? Tell, tell, tell the people. I did yesterday. I tried. And that's when I went in. But, you know, you're not necessarily. We're both on the same side. We're on the same side on this. How odd is that? I saw a cartoon this morning somewhere and it has President Trump and he's

Here's his feet, and he's got a gun, and there's all these holes in his two feet. Shooting himself. Shooting himself. Some would say that that's the end result. But I think it's maybe negotiating. And he may just show, this is what I'm capable of. I'm going to come back from this, but there's nothing we can do to stop it. I don't even think you can stop it.

But to your analogy, is it using all of the bullets? And is it you? So now that we're going, I don't know. There's like 10 holes in each foot. So right. So what are the bullets left if there's a move on Taiwan? You know, I'm just saying, are there are too many of the bullets being deployed here for, you know, for where we are? I'm not sure we want to make a lot of the things that they or even robots want to make a lot of the things that the rest of the world produces very cheaply. We want to make AI like servers. Right.

that I'm definitely not going to help design or... Or manufacture. You might, because you're such a geek. That's so nice. I wish I were geeky enough to design. That's nice that I said that. Very nice. I was a compliment. Yeah, thank you. ♪

NVIDIA says it'll take a $5.5 billion charge tied to exporting computer chips to China and other destinations. This came last night in an SEC filing. They said the government, the U.S. government, told them last week they'll need a license to export the H20 chips that were designed specifically to comply with U.S. export restrictions.

That bars Nvidia from shipping its newest chips to China. Sales of H20 generated $12 to $15 billion in estimated revenue for Nvidia last year. It's based on a previous generation of AI architecture that, despite not being top of the line, is still powerful. They used H20s, DeepSeek did, in research before unveiling that competitive AI model earlier this year that upended markets at the time. So Nvidia shares are down 5.5% still, AMD 6.5%. That's why we're seeing a lot of pressure on the NASDAQ

in particular this morning. So it's not the water processors. It's H20. It's not H2O. Not H2O. Okay. It's H20. I got it. I knew that. The White House is ordering an investigation that could lead to new tariffs on U.S. imports of critical minerals. An executive order signed by the president directs Commerce Secretary Howard Lutnick to begin a national security review of these minerals. He's required to report his findings within six months.

Six months?

We're going to be doing this? That's a lifetime in this latest world. It's only been two, three months since he took office. So we're going to decide about the tariffs in six months after an investigation by Howard, by the Commerce Center. But is that bullish? Does that mean that the can is now just way down the road? It means that so much uncertainty. Six months, I don't even, I hope we're around. I don't know. Six months in this world sounds... A long time.

United Airlines maintaining its full year forecast, but alongside first quarter earnings, the airline took the unusual step of offering a second forecast to cover the possibility that the U.S. slips into a recession. United said booking trends are currently stable.

It left in, in place expectations that were given back in January for full year adjusted earnings per share of $11.50 to $13.50. And a filing United said that the company's outlook is dependent on the macro environment the company believes is impossible to predict.

This year, with any degree of confidence, I don't think you should do that. You think you've got to let it go, man. Let it fly. So I just sneezed, everybody. Let it fly. I was trying to hold back the sneeze because we're here on television, folks. I know, but something's going to happen. Something's going to happen. And I've done that before where I've tried to hold in the sneeze. I know, but I just... And you think that you can't hold in the sneeze, that it actually is bad for your...

Physically. I hold in sneezes all the time. I don't think it's good. I didn't want to make too much noise. You were talking. You will get to an age where if you do that, you could really be screwed. Sure. Okay. Teas will be next.

Coming up, Elise Stefanik, a Harvard alumna, now chair of the Republican leadership. The New York representative is calling to defund her alma mater. We should have strings attached to our taxpayer dollars. We should have strings attached to $9 billion in taxpayer dollars when it goes to Harvard.

to make sure that they are living up to their founding mission. The $2.2 billion in Harvard grants now frozen by the Trump administration, protecting Jewish students on American campuses, and debating the government's role in free speech. All of that coming up. SquawkPod will be right back. How does Arizona become America's chipmaker? How does Arizona deliver healthcare professionals? How does Arizona provide great teachers for its classrooms? With

With the help of AZ Opportunity. AZ Opportunity invests in Arizona's students and their families to meet workforce demands in high technology, healthcare, education, and more. AZ Opportunity, Arizona's path forward. Supported by the Arizona Board of Regents. Learn more at azopportunity.com.

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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

This is Squawk Pod from CNBC. Today with Joe Kernan, Andrew Ross Sorkin, and Kelly Evans. Stand by, Joe. Here's Mike. Here. Harvard's rejection of the Trump administration's request has prompted a debate over free speech in the government's role on American campuses. Join us now, a lawmaker.

who calls Harvard her alma mater. Why is it not true? No, it's true. Oh, it's true. OK. Yeah. That would be interesting if you call it your alma mater, but you know, didn't go anywhere. No, I graduated there in 2006. Very good. OK. I knew that. I'm kidding. And has called to defund the institution New York representative Elise Stefanik represents parts of Central and Upstate New York. She's also chairwoman of the House Republican leadership.

I mean, I've been watching every day. I can't be a fanboy. I cannot do that. So I'm not going to. So I'm not going to. But you see what I'm saying. She's pretty phenomenal in general. And even if you're a Democrat, I...

I probably wouldn't. But thank you for joining us this morning. What did the president say about Harvard? Just now, so the president just posted a long post on Truth Social about the whole Harvard issue. Long, long post. Everyone knows that Harvard has lost its way. It goes on and on. I'll skip to the very bottom. Get some really good. It involves parts calling the radical left idiots and bird brains who are capable of teaching failure to students and so-called future leaders. Anyway, he then criticizes the president

president uh... for the new firm and the conclusion is that harvard uh... can no longer be considered even a decent place of learning he says uh... it should not be on any list of the world's great universities or colleges it is a joke in capital letters teaches hate and stupidity and should no longer receive federal funds

So with that in mind, I will mention a journal piece today, Congresswoman, that says that the Supreme Court has already weighed in that the federal government should not be withholding even grants to try to force colleges to do certain things. Do you think it's been over? I mean, anti-Semitism violence is one thing, but...

thought that we want the government deciding what people can think. These schools are not entitled to U.S. taxpayer dollars if they're not living up to the standards and not protecting civil rights of Jewish students on campuses. That's probably true. And let's take a step back to what has led to this earthquake within higher education. After October 7th, we saw a skyrocketing of anti-Semitism on college campuses, particularly our known most elite college campuses, whether it was Harvard or Columbia.

You saw physical assaults against Jewish students. You saw takeover of classroom. We saw riots of property at school, destruction. And then you didn't see enforcement of these universities against those who violated the rules, violated the standards of the university. These schools get billions of dollars of U.S. taxpayer funds. We have a responsibility to be good stewards, to make sure that they are protecting Jewish students and they've abjectly

Harvard has been the epitome of this failure. They didn't enforce the rules. They gave the diplomas to those that committed these anti-Semitic crimes against fellow students. I mean, we're talking about physical assaults. And the other issue is these schools rank among the lowest when it comes to protections of free speech. They only want to protect students

on a protect free speech when it comes to calling for the genocide of jews when you saw very famously in that committee hearing which by the way is the most viewed committee hearing in the history of the united states congress went three university presidents failed to condemn calls for the genocide of jews remember you don't disagree with anything she just said that that that this point up to this point we do not have disagree i think that what's happened at harvard

It sends me to my core. By the way, when you asked those questions, I was happy about it. And you know what? I asked those expecting them to answer correctly. Correct. And I was disgusted by the answer. I was shocked. Like the rest of America. Go down to the list of things that Trump is demanding that you think he shouldn't be doing. I was disgusted by it. The question then becomes the idea of defunding the university at the federal level

and what is the right approach for them to change their behavior? Now, I think, this is my own view, that you asking those questions

That's absolutely what should happen. You should embarrass these people into changing their behavior. There should be public pressure that should change their behavior. Donors should change their behavior. Hopefully teachers might change their behavior. Where I think it gets more complicated is when the government, if you will, using taxpayer dollars

starts to try to change the behavior around the speech portion. Look, violence and the idea that these classes are being... But if you look at, Andrew, what the Department of Education has laid out to both Harvard and Columbia, it is not

about speech it is specifically about elimination of d_e_i_ which in its basis specifically at harvard is anti-semitic there countless examples i brought this up in one of the congressional hearings that the office of d_e_i_ at harvard refused to respond to jewish students this is prior to october seventh when there was a concern rise in anti-semitism

In addition, a mask ban where so many of these rioters and, frankly, criminals are hiding behind these masks. And it doesn't allow the university to actually enforce the rules, the time and place, not allowing them to take over buildings. And the reality is the only way to get these institutions to respond is to withhold those U.S. taxpayer dollars. They are not in.

title i mean as a representative united states congress i represent nearly a million people who are working hard when it comes to paying their taxes and they don't want their taxes to go to properties universities if these universities choose not to take taxpayer dollars and want to continue going down that road right that is their choice is this is your size here one of the things that they're talking about is

who is being hired at these universities, right? Which professors are being hired, what their ideological belief is. This gets to this, and look, you know my ideological belief is not to support people who are anti-Semitic at all. I think they should be fired and removed from their job. - But the problem is, if you look at the ideological diversity, there is nearly zero ideological diversity at Harvard. In my own experience, listen, Harvard does not protect free speech. I was removed from a board at Harvard because of a speech that I gave on the House floor.

and they decided to do their opinion. They didn't like it. They didn't like the fact that I am a proud Harvard graduate. It wasn't like that when I was there. So for them to say on one hand they're protecting free speech, they don't have a history of doing so. On the one hand, the right hates DEI.

the government is insisting on viewpoint diversity in each department, field, or teaching unit. How's that any different? It's micromanaging. It just seems like it's overstepping. Some of the stuff I agree with. We want viewpoint diversity. The problem in higher education, particularly at Harvard and Columbia and some of these sort of elite schools, is you have 97%... I preach into the choir. ...ideologically far-left progressives. And that has fueled this deeply out of touch. And it also suppresses

viewpoint diversity of students. What was interesting to me is Harvard, the response from self-identified conservative students or maybe students that don't know and are there to learn and want to hear different viewpoints, they feel suppressed. They're not able to speak up in classrooms. Look, all of the things that you're talking about, I agree with.

The harder part is I don't know if the government should be imposing that on a private institution. Now, yes, you're saying to me, well, we have these taxpayer dollars and we can use them how we want. I don't know that the American taxpayer has voted

to change the way the university operates itself. And so, and one last piece. I would push back on that because this was a determinative issue in this last election cycle. People paid attention to higher ed and they're very concerned that billions are going to these institutions and they're not standing up for American values. But let me ask you about talking about American values. I think one of the things that's made America great is...

a lot of the people who have come out of these universities including harvard who've done amazing things for this country so jennifer dowdner created crispr she's a phd graduate of harvard these are by the way science programs that are going to get defunded okay eric lander who who managed to actually sequence our dna is a graduate of harvard i can go down the list of of people who have managed their way in and out of harvard and by the way taxpayers have have a

have effectively subsidized that. And I think, by the way, that is a great thing. If you look at the letter from the Trump administration to Harvard, in the first line, it talks about academic excellence and scholarly pursuits. What these schools have pursued in sort of this race to far left, this propping up

of anti-Semitism is the opposite of that. So those examples are prime examples, but again, we need to make sure that the schools are focused on that and using, being good stewards of US taxpayer dollars and not propping up this ideological bias and frankly, this anti-Semitism that has put students at risk. And you made the point, people are making,

People are voting with their feet. Look at the matriculation rates they have gone down. But I like the idea that the free market can do that. And by the way, I like that you're raising these issues and highlighting them for the public. I think it's harder when the government is effectively implementing these things. And let me just take it one step further. These are requirements with our taxpayer dollars. They're not entitled to that. But let me make it even more complicated.

It seems like from the reports that we're all seeing that if you are a law firm, for example, that's, by the way, going to represent one of these universities potentially against the government, that now we're going to effectively go after the lawyers. So I'm just saying that they're talking about free speech.

it just becomes very complicated because what's really happening is we're trying to enforce certain types of speech. And I'm saying I don't like this other speech. I hate this other stuff. The only time these schools have testified when it comes to protecting a free speech, again, these schools are ranked among the lowest when it comes to protection of free speech.

I've experienced that myself when I was removed from a board of Harvard for giving a speech on behalf of my constituents on the House floor on election integrity issues. And yet they want to stand up for free speech when it calls for the genocide of Jews. It is anti-Semitic at its core. Look, and the hate speech, by the way, the hate speech, people should be arrested for the hate speech. The other issue is the lack of academic integrity. You had in the case of Harvard the

president multiple examples of plagiarism scandals which i think the president referenced in the tweet that he just put out as well so there are a lot of academic integrity issues as well as academic excellence no problem with the prep i mean i don't love it with the president

tweeting or truth social or whatever he's doing to raise these issues. I think it's totally fair game that politicians raise these issues. The question is whether you think the use of the funding. Absolutely. In the context. Because they had an opportunity to look at the past two years. They still don't get it.

they are appeasing the anti-semitic professors they are not enforcing the rules these schools had an opportunity after that bombshell congressional here to get on the right some level anyway you don't think at some level the government is now in the business of trying to enforce something around speech just in that in the in the nothing it is about what the administration laid out it is protecting jewish students on campus protecting by the way we should do that and if they're doing a terrible and they're not doing

that so why should we be popping up over nine billion dollars in the case of harvard the president's absolutely correct into freeze those federal funds congress is correct and you know what's interesting and this is not just republicans who believe this there are a number of democrats they were you and i will agree across the country if it was narrow if you said i'm withholding these funds because i think it is not safe for what's happening with jewish students on campus to either get to their classes or to feel comfortable that they're not going to be injured or or around by cv with it was narrow

I would be with you. If you look at what is being asked, it's a lot broader than that. Did you read the letter, though, from the administration? I did. It lays out very common sense. The elimination of DEI, which, again, in the case of Harvard, was one of the reasons that fueled anti-Semitism. The mask ban to ensure protection of Jewish students, addressing anti-Semitism on campus, ideological diversity, that has been part of the issue, fueling this as well. All of what you're talking about, there's a common sense issue.

piece to it. I'm saying the imposition of the federal government on, for example, DEI is actually a very interesting thing. Now, to the extent that the courts have decided that DEI is... We should have strings attached to our taxpayer dollars. We should have strings attached to $9 billion in taxpayer dollars when it goes to Harvard to make sure that they are living up to their founding mission, which was academic excellence. We talked about it yesterday. There wasn't money involved, but the government

A few years ago with Facebook and Twitter and all social media, and you argued at the time it's perfectly within the government's rights to talk to a private company. Sometimes they have opinion pages. Perfectly within the government's rights to try to influence the public opinion of all these social media companies.

Remember? To influence them. But now we know it was blackmail. They were withholding. They were not. And that's wrong. And that's wrong. And my only point yesterday, which I'd say today is a similar situation. By the way, and that's wrong. And the point is, if we're going to have a consistent, if we care about consistency, you can say we can't go back in time to fix what happened in the past. But to the extent that we're all going to agree that the government should not be blackmailing companies over these issues around COVID and laptops and other things.

It also seems to me consistently we shouldn't be doing the same thing to a private university. At least it almost seems that both sides have free speech that they want protected. It's just different free speech. It's just free speech, and that's the problem. This is about protecting Jewish students on campus. But we already went to all the other things. Go back to that question. Does calling for the genocide of Jews violate your university's code of conduct? We're not disagreeing with that. They said it depends on the context.

you take a terrible answer to have a little answers and they wanted to get in there trying to fix it for me and they did it and they failed to take action and it is continued to skyrocket and they have been enforced the rules they didn't hold these anti-semites accountable for their physical assaults of students and by the way you and i agree on that and the question is then why isn't the using but if the mandate is to make sure that they comply with the law if the mandate was narrowed to comply with the

the law. The mandate is very common sense. It goes beyond the law, though. It is very common sense. It goes beyond the law, and that's the distinction. You and I have a fundamental disagreement. When you're representing U.S. taxpayers, you want to make sure taxpayers represent our values. These schools are not entitled. If they want to walk away from federal tax dollars, which some higher education institutions do, they can do so. But these schools, it's not a sense of entitlement, and we have to hold them accountable to demand change. We've got to go. Hold on. I know we've got to go.

How do you feel about the law firms? And the reason I raised the issue of law firms, no, is because there is a more general view that this administration and parts of Washington are using the power and authority that they have and force that they have to influence, if not talk about threaten or whatever,

folks around their perspective. And that's where this free speech thing gets very complicated. Well, the law firms, I mean, I know after that hearing there was a hiring spree of law firms, of lobbying firms, because it was such an abject disaster. I support the administration's actions. Some of these law firms have been used in terms of lawfare, politically targeting the president and his administration. But the reality is no amount of lawyering up is going to help these universities. They are fundamentally out of touch with the American people. The question is whether this administration is engaged in lawfare itself.

No, no, no. This is about accountability measures and bringing back the rule of law. Correct. I agree with you. This goes back to the hypocrisy issue. If you think that the last administration was involved in lawfare... You're not arguing that the left is the hypocrisy. You're arguing the right. The left. And here we are in New York, the epitome of illegal lawfare against President Trump and Republicans. And...

And by the way, these schools have not, when we go back to, just to bring it back to higher education, they have not defended free speech rights when it comes to conservatives. I can speak to this from my own personal experience. So on one hand, they only want to talk about freedom of speech when it's protecting anti-Semitic speech. I get it. By the way, I get it. And they're not applying it elsewhere. You and I are...

are in more agreement with us. Can you stay? Can you stay till 9 o'clock? Were they going to lose the special election? Like, the whole drama that just happened. You can stay till 9? Can you come in tomorrow? I can't come tomorrow. Can you be my wing person?

It brings you more balance. Eric Lander, MIT. He went to Harvard Medical School, but he teaches at-- No, he teaches at MIT. Professor of biology. But he graduated from Harvard. I don't think he-- maybe Harvard Medical School. But he graduated from University of Oxford, Princeton University. He also was a co-founder of the Broad Institute at MIT. Of course he was. I know that's where you went. With Whitehead. Right. So let's give you some credit, too. So I need to stand up for-- when you're wrong about something, I need to--

Next on Squawk Pod, former SEC Chair Gary Gensler weighs in on tariffs, how he learned to negotiate with China on the job, and whether this administration's strategy to rebalance trade will actually work. This president wants to adjust tariffs

our trade relations around the globe. But doing an all of the above strategy, trying to do it with 150 or 200 countries and doing it so aggressively and so jarringly at one time is like a home field goal, a self-inflicted injury. Plus the betting markets, crypto and much more. Gary Gensler's first interview since leaving Wall Street's top regulator is right after this break.

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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.

This is Squawk Pod. You're watching Squawk Box on CNBC. I'm Joe Kernan, along with Andrew Ross Sorkin and Kelly Evans. Becky's off today. As the trade war between the U.S. and China escalates, Florida Republican Senator Rick Scott now calling upon the SEC to delist

Chinese companies joining us in an exclusive interview to discuss this and so much more. It's his first time speaking out since leaving office. Former SEC chair Gary Gensler. Gary, great to have you on the broadcast. And I'll start with what Rick Scott is talking about. How do you feel about the role of the SEC being used in the way that Rick Scott is effectively asking for?

First, it's great to be back with you, Andrew and Joe. I miss Becky, but good to see you, Kelly, and all of your viewers. Look, it's a privilege to be in the U.S. markets. We have the deepest, most liquid markets. They've been very choppy recently, as you know, because of all the policy uncertainty. But China for 20 years was not really following our rules. But we were successful.

in a bipartisan way with Senator Rick Scott. He and I used to talk on occasion about this with a lot of success with other senators as well, negotiating with China that they behaved and they followed the rules. And we treated China with respect but with firmness. And as long as I was there, they entered into a 50-page agreement and they have been abiding by those agreements. So, Gary, you've negotiated with the Chinese before.

to the extent that you can try to put your head in their head. How do you see all of this playing out as it relates to tariffs? I spent a lot of time with their Ministry of Finance and their senior financial regulators, and

I think it's not going to end well, Andrew. I think it's going to be a bit of a quagmire. My experience is that they're tough negotiators, don't get me wrong, and they're looking out for their advantage. But the best way to handle their situation is to be consistent, to be honorable and treat them with dignity, and to take the toughest messages private and one-on-one

And I will tell you this, when they see inconsistency in policy, they tend to veer back. They lean back and they don't like to engage.

and they sort of think that time is on their side. I'm not saying it always is, but that's how they think is time's on their side and they can outweigh the volatility of the policy on the other side. So that's why consistency, respect, but yes, firmness is important. - In terms of leverage to the extent we have any,

How important is it to go to them with allies? Trump, Scott Besant, Howard Ludnick, they're meeting with the Japanese today.

to the extent that the u.s can can form some kind of deals with a handful of of countries does that change the dynamic and do you think i mean as it relates to our other allies that if you're canada right now or you're the eu that you're going to say sure i'll make a deal with you um and i'll i'll pay your tariff as it relates to then going and working against the chinese

Look, I get on some level that, of course, elections have consequences and this president wants to adjust our trade relations around the globe, that it's been non-reciprocal trade and wants to balance it up. But doing an all of the above strategy, trying to do it with 150 or 200 countries and doing it so aggressively and so jarringly at one time is like a

a home field goal, a self-inflicted injury. I do think allies are deeply important, as you said, but I don't think it's going to be that easy. I think 90 days to kind of negotiate with dozens of countries, big consequential agreements,

And then China's watching all this. And don't forget the real instability for businesses and thinking about their investments. They're pulling back. They have to be much more careful about their investments. And then don't forget about the deep instability in the stock market and the U.S. Treasury markets. And those are some of our considerations, of course, as our economy weakens and our markets are far more uncertain.

Let me ask you a different question. There has been lots of not just speculation, but we'll call it speculation for now about potentially folks in Washington, government officials, maybe people in the administration, maybe others. I don't know. And whether they have been trading, uh,

on or have been aware of things that this administration might be trying to do as it relates to tariffs. You're somebody who ran the SEC. You and I have talked about this topic at great length. I always thought that it would be great for the SEC to look at these things because I thought there's a way to create credibility for the government. I think you've always felt that it was harder for the SEC to do it because effectively your budget is set by Congress.

Well, Andrew, I think our capital markets work best when the public, the investors think that nobody else has an edge. I mean, they might do better research, but they don't have an insider information edge. And that's critical. And I think trusting governments similarly. And I think it's really critical that

that folks don't trade on insider information, particularly those, whether it be in Congress or be in the executive branch or the judiciary. That's a really critical thing. Yes, the Securities and Exchange Commission from time to time investigates government officials, whether it be in the judiciary, Congress or executive, about insider trading. They're hard investigations, but I do think it's really critical to our

our confidence in our government and our confidence in the markets. So when you see news that somebody like Representative Marjorie Taylor Greene disclosed that she ended up purchasing tens and hundreds of thousands of dollars of stock on April 8th and 9th, this is the day before President Trump made the announcement pausing the global tariffs and then also bought, it looks like, I'm sorry, dumped some Treasury bonds

During this period, what what do you think? And do you think that the SEC should be investigating what government officials are doing? Does that does knowing what the president may or may not do constitute inside information? Well, I'm not going to comment on any one member of Congress and anyone. You're not in the SEC. You can say whatever you want.

But I'm going to say what I want here. I think it would be best for the American public, and Congress has considered this over the years, to actually take a real look, Congress take a real look, and self-impose some restrictions. We at the Securities and Exchange Commission self-imposed. We went beyond the

the government ethics rules and self-imposed on ourselves restrictions on people like myself or Paul Atkins, who is going to take the honor and the oath of office shortly to trade on individual securities. We weren't able to do that. I think that's a way to

better instill confidence in your government and in the markets, and then you wouldn't have these questions about individual members of Congress. What is your confidence or lack of confidence that right now insider trading or other laws that the SEC would effectively oversee corporations are going to be enforced during this administration?

I think it's a challenge. The Securities and Exchange Commission, a great agency, when I got there, had shrunk a little bit from four years earlier, about 5%. And we just grew it back to where it was in 2016. They have now shrunk it

Considerably, it's about 20% smaller. I think that's hard. I think that's hard. It's a cop on the beat and markets work best when you have that cop on the beat, just like the highways. We do need traffic lights and we do need cops. So to your question, I think the market just inevitably when the agency is 20, 25% smaller,

is gonna be less policed, less overseen for fraud manipulation, insider trading and things like that. And I think corporate issuers will get their questions answered a lot slower. It's a really, listen, it's part of the secret sauce of American success in our markets. And I think your viewers benefit by a fully staffed Securities and Exchange Commission. - Have you weighed in on prediction markets?

You know, when Robinhood, so they've, prediction markets, super popular, obviously. We all like to look at them, you know, who's going to win president and what's going to happen, whatever the case may be. Now they're on Robinhood. You can bet on sports outcomes. It's kind of getting you close to the sports betting piece of it. But prediction markets would be kind of a fun to look, be fun if CNBC could host prediction markets, you know, should we be able to? Should they be broadly legal in this country?

Well, Kelly, I used to be honored to chair another agency, the Commodity Futures Trading Commission. And we took a lot of look at that 10, 15 years ago, and I know more recently. And I think that it does help people hedge certain risks.

If you're hedging a risk of weather events and you're hedging a risk with regard to non-traditional financial risks and so forth. Can it just be fun? Do you have to even hedge a risk? Could I just spend a dollar saying this is what I think is going to happen with

i don't know march madness dictator risk it's we had in the last election no no i no i understand that i think that it can be fun i get it and it can be fun and and and following sports is is a wonderful pastime but i think you also have to be careful against manipulation in those markets people being taken advantage of and then of course the integrity of the game itself now

An important thing is the integrity of politics. The integrity of politics. The integrity of sports is unclear in the era of sports betting. So it seems that regulators have had no problem kind of letting these ships sail and trying to clean it up in the aftermath. But again, you can on the Robin Hood app. I mean, there you can go do this now.

No, no, I understand. And these have been debates for many decades. I think that it's a balancing for the sports leagues, the balancing of bringing fan enthusiasm, fan interest in to the game and versus the integrity of the game to ensure that it's still, you know, fairly competed on a field of their choice.

I worry about it more as it relates to politics and the integrity of politics, the integrity of picking our national leaders. And whether you're Republican or Democrat, whether you're conservative or liberal, just the importance of the integrity of our democracy. Hey, Gary, final question for you. As you probably watched, so many CEOs were doing almost victory laps in the crypto world.

as these enforcement cases were dropped by this current administration of cases, of course, cases that you had brought. As you watched that, what did you think? Look, I'm going to step back a little bit from any individual cases and just say this again to your viewing public. This is a very small part of the financial markets. But if you were interested in this, think about every financial asset sort of trades on a bit of fundamentals and sentiment.

But this field is almost

99 or maybe one might say 100% sentiment and very little on fundamentals. And while something like Bitcoin may persist for a long time because there's 7 billion people around the globe, a real keen interest in it, there's 10 or 15,000 others of these tokens. And to think through your own risk, your own personal risk about where are the fundamentals, and if this is just about sentiment,

then generally those don't end up well and most then go down. Are you talking, you're contrasting Bitcoin with the other ones or you're just, they're all the same?

Joe, I'm glad that you spoke up because I know you're a bit of a Bitcoin enthusiast and think less well of the rest of those. It's how you and I have always connected in the green rooms. But think of these 10 or 15,000 other tokens.

And just on the economics, just on the fundamentals, what are the fundamentals? No, I know. But that was my question. You throw Bitcoin in with the rest of them or you think Bitcoin is qualitatively different than the others? I think the distinction is similar to...

in metals, there's only two or three precious metals. We humans have a certain fascination with two or three precious metals like gold. I don't think we humans will have a fascination with 10 or 15,000 meme or sentiment tokens trading over the years. Gary, I wanted to actually ask you something different, which is you're teaching AI now. And one of the things that's

seems to be happening in the marketplace is there's a lot of trading taking place as a function of AI, meaning literally AI programs are operating on the exchange. Do you look and think to yourself that a year or two years from now, I don't know what, that people, that literally human beings are not going to be making real decisions and that AI is going to be able to be a better investor than us?

I think artificial intelligence is the most transformative technology of our times, and it's changing so much with finance, investment management, underwriting, and trading, as you say. And I think over the next 5, 12 years, it will change and transform, as you say, a lot. Humans will still have a role.

But as we put more of this in the algorithm, it will shift. One thing about trading, though, is there's also about latency and the proprietary trading shops need to be very quick. And generally, the AI is not that quick. It's quick, but not that quick. But three, six years from now, I think you're right.

And I think even this program is being analyzed by artificial intelligence. And I'm no longer a federal regulator, but you can bet that AI is analyzing every word of Jay Powell for his sentiment, every word of the president of the United States and all the CEOs that you have on this TV. It's the algorithms through sentiment analysis that

That's not a bad thing. It's pattern recognition. We're going to benefit as a society, but there's also big risks involved.

in the markets as we become more computer algorithm and less human. Hey, Gary, we're going to be up against a hard break. So just one final plumbing question actually about the credit markets, but as it relates maybe to the equity markets and as it relates to banks. I'm curious, when you look at the private credit business, the shadow banking system, how interrelated do you think it is today to the regular banking system or at least the rest of the markets and whether we need to be concerned about it?

I think it's a feature, not a bug, that we have significant non-bank finance in this country and that we're less focused on banks than any other country around the globe. I think that's generally been a good thing of that competition. But it's not without risk. There is definitely risk in the private credit business. And if we are going into a recession, and many people think that that's 60 or so percent chance and so forth, and I don't need to re-quote Jamie Dimon and others,

But but if we're moving into that recession, private credit will be tested in a way it hasn't been tested recently. Gary, we got to go. And thank you very, very much.

And that's the pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the very best of our TV show right into your ears when you follow Squawk Pod wherever you get your podcasts. And if you're on Apple Podcasts, would you be so kind to rate or review this podcast? You can do it right on your phone. A couple of stars, a couple of words. We love to hear from you. That's it. We'll meet you right back here tomorrow.

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