Rep. Ro Khanna talks crypto amid FTX collapse, Twitter under Musk, economic trust
California Rep. Ro Khanna joins Yahoo Finance Live to weigh in on the crypto sell-off and FTX fallout, the direction of Twitter under new CEO Elon Musk, and the overall U.S. economy.
Video Transcript
- Sam Bankman-Fried, SBF, hunkering down in the Bahamas, furiously trying to broker a bailout for FTX, which declared bankruptcy on chapter 11 fittingly on 11/11. Meanwhile in the nation's capital, Congress considering its role and avoiding another similar collapse. Let's talk about that, layoffs and big tech, and Democrats' economic messaging with Congressman Ro Khanna.
Congressman, great to have you back. We appreciate it. We understand the House Financial Services Committee plans to hold a hearing on FTX in December. You're a member of the House Oversight Committee. Could Congress have prevented this? Can they prevent the next one?
RO KHANNA: Well, we need to see all of the facts. My understanding just from public reporting is that, here, people's money was used in a way that they did not consent to, at least that seems to be the case, where some of the FTX money was used for a hedge fund. That seems to me that we already have rules on the books that make that not legal, or at least raise serious questions around that. But if the rules need to be further strengthened, that's the purpose of the hearing, to see exactly what happened.
- Indeed. You've been a believer in crypto, at least in Bitcoin, once tweeting that Bitcoin as its related, decentralization provides a check against economic mismanagement. And, again, I know that was a while ago last year that you tweeted that. Do you still have the same faith in crypto, in Bitcoin? And, lastly, do you see anything being done in this lame duck session that would see some legislation?
RO KHANNA: Well, I still think that Bitcoin and blockchain have use cases, at the very least in places with high inflation where you don't have responsible Fed institutions and treasury department's like our country. It can be a check. At the same point, it allows for the transfer of funding, blockchain does, from one person to another, especially international remittances. And you can have self-executing contracts.
So I don't think that you can dismiss all of the use cases of blockchain or of Bitcoin. That said, we need far more regulation. Most importantly, things like Terra that took place, where you had an algorithmic stablecoin without US backing. There need to be reserve requirements. There need to be clear disclosure requirements on cryptocurrencies of what is taking place.
And if the SEC is relevant, if something actually is a security, then they need to have those rules apply, or at the very least, the CFTC if it is a commodity. And we need far better regulation.
- Congressman, it's Seana. It's great to see you. You represent Silicon Valley. So I need to bring up tech and what we have certainly seen played out there over the last several weeks. And that is a number of layoffs. We had Meta laying off 11,000 workers, Twitter slashing half of its workforce, Snap laying off 20% of its workers. I guess, what's your view on this? And what do you think? Does this signal what we could potentially see across many other industries over the coming months?
RO KHANNA: Well, first of all, on a personal level, it's been a challenge. I know people at these companies who have lost jobs. It's not just the economics. Many of the people's identity is caught in these companies. And it's a big blow to be laid off from a job that you enjoy, that you love, that you identify with.
I think one of the challenges is the higher interest rates. I mean, look, my district's had almost $10 trillion of market cap. And with the higher interest rates, that makes it more expensive for growth industries because you're taking a bet on the future. And that has hurt tech. But we will recover. These things have gone up and down. But my sense of what's really hurting the tech industry is the higher interest rates.
- And sticking with tech and Twitter, the changes that we have certainly seen there, Elon Musk now officially taking over, announcing a number of changes. Donald Trump is back on the platform. Your reaction to that and what that really tells us what Twitter is going to look like under Musk.
RO KHANNA: Well, what I said to him, and publicly, is why would he want to run Twitter? That seems to be a thankless job. Go focus on building more electric vehicles, sending more satellites to space, about figuring out Neuralink, all of the things that he's capable of doing. One of the successful entrepreneurs of our time.
I think there should be an independent management group at Twitter, just like the "Washington Post" isn't run day to day by Jeff Bezos. And we need regulation at the social media companies that doesn't concentrate power in the capital owners, but has some independent governance and transparency, given that they are really media companies.
- And Congressman, I want to ask you about your op ed in "The Boston Globe," really talking about winning trust back on the economy. Talk about how you plan on doing that and why you think Democrats fell so short.
RO KHANNA: Well, first of all, we had a great midterm talking about standing up for democracy, talking about reproductive rights. But we can do better on the economy. I called for a vision of new economic patriotism, saying we're the party for bringing manufacturing back.
We're going to combine new digital technology, cloud technology, 3D printing to help make the new industries in the United States across America-- steel, aluminum, masks, baby formula, revitalize this country's economic growth and job creation. And the president is doing that, bringing manufacturing home with the CHIPS Act that I helped co-lead and he signed. We need a CHIPS Act every year in every industry across this country.
- And so for people who want to make sure that they understand the difference between make America great again and some of this economic patriotism, what would you tell them? And also, in terms of the digital divide which can sometimes come with some of these new technologies, how do you plan to address that?
RO KHANNA: Well, economic patriotism says we need everyone on the playing field. We need immigrants. We need blue collar workers. We need the white working class, Black working class, Latino working class. So it is a far more inclusive vision. And it has a vision of government working with the private sector and educational institutions.
You can't do it, as the previous president, Donald Trump, promised by just giving corporate tax cuts to companies that offshored jobs and by failing to invest in our workforce. You have to look at Hamilton or FDR's model if you really want production in the 21st century. And the CHIPS Act, which I helped write, to bring semiconductor manufacturing I think is the model for economic patriotism.
- You talk about this economic patriotism. I know you want to tax big oil. You've talked about stronger antitrust legislation with regard to Ticketmaster and Live Nation. That's an ambitious agenda. Is there any one of those things you can get done in the lame duck or any one of those things you can get done with divided government now that the House belongs to Republicans?
RO KHANNA: Well, in the lame duck, my focus is to get more funding for the National Labor Relations Board. It has been woefully underfunded. We see a inspiring labor movement across the country at Starbucks, Chipotle, Maximus. And I think that we need to really get that funding.
More broadly, I have worked across the aisle with folks on bringing production back to America, making sure China doesn't lead in these industries of the future, and in some places on making sure that we have immigration to be able to do that with leading industries. I'm hopeful in both of those areas we may find some bipartisan compromise. It's not going to be easy. I'm not going to sugarcoat it. But I will continue to look for ways to do that.
- Well, Congressman Ro Khanna, thank you for joining us for this wide-ranging interview here on Yahoo Finance. Have a great afternoon.
