Sen. Richard Blumenthal (D-CT) joins Yahoo Finance Live to weigh in on Congress passing a bill to avert a rail strike, the collapse of FTX and ensuing crypto fallout, Twitter's latest controversies, and Ticketmaster.
- President Biden signing a bill into law today avoiding a national rail strike, and what he says would have been an economic catastrophe. One of 15 no votes came from Republican Senator Pat Toomey, who said this morning the more Congress gets involved in settling these issues, the more ridiculous the outcome. Joining us now to discuss this, Senator Richard Blumenthal from the great state of Connecticut. I'm not biased. I live there.
Senator, nice to see you. Your reaction to how this played out? Congress-- and is Senator Toomey right, that Congress should not be involved in settling issues like rail strikes?
RICHARD BLUMENTHAL: My strong preference was to avoid any involvement in this rail situation. And I think my view was shared by the vast majority of my colleagues. But obviously, the looming catastrophe, and it really was a catastrophe, prompted us to take this action. And going forward, I think we need to make sure that railroad workers have paid sick leave.
I think that working conditions there need to be improved. We're not letting this issue go. And I would have been very much more reluctant to intervene had we not faced $2 billion a day-- literally $2 billion a day-- in losses and potentially even longer range impacts to the American economy and issues as simple as purifying our water, delivering chlorine so that water systems could function.
The supply chain issues that were raised, the longer term impact I think were the reason that we became involved.
- Certainly a happy ending there at least for this economy, maybe not for four of those labor unions. The other story consuming "The Business World" this week. Sam Bankman-Fried and the show he's put on attempting to explain the collapse of FTX. Are you buying his explanation that he didn't try to commit fraud nor knowingly commingled funds?
RICHARD BLUMENTHAL: You know, David, I'm really a prosecutor by career. I served as US attorney in Connecticut for four and a half years, the chief federal prosecutor. And then I was attorney general of our state for 20 years. And I can tell you all the evidence, all the signs are there of real fraud, just plain, dishonest dealings.
And whatever he may say he intended, the circumstantial evidence points to his knowing what he was doing when he moved funds, when he took advantage of his position of control. And so I think the Department of Justice ought to come down on him like a ton of bricks if the evidence is what we think it is now. Obviously, we have to say at this point there are allegations.
But there is a lot of evidence there of real fraud. I'm tempted to say garden variety fraud. You can call it crypto. You can say it's novel in that the magnitude of the losses in cryptocurrency are unprecedented. But essentially, it seems like real garden variety fraud at a massive level in a new setting.
And I think the Department of Justice and other regulatory agencies should be enforcing the law. And I think Congress has to look at stronger oversight and scrutiny, as well as regulation when it comes to cryptocurrency.
- Do you believe he'll do jail time?
RICHARD BLUMENTHAL: If he is convicted from everything we know now-- I'm not pre-judging what a judge may do-- I think that kind of punishment, some kind of prison time would be perfectly appropriate.
- You are also among a group of senators calling for the FTC to investigate Twitter over the safety and security of consumers. Why?
RICHARD BLUMENTHAL: There is clear need for greater transparency and disclosure here about how Twitter is operating as a matter of public impact and the kind of information and misinformation, as well as outright distortion of potentially what's happening internally, but also the way content modification is being done. I think consumers and the public deserve to know more.
- And the public is outraged still about another story. And that of course, the Ticketmaster debacle and Taylor Swift tickets, the unraveling of that entire system. What needs to happen?
RICHARD BLUMENTHAL: Well, as you know, David, Live Nation Twitter merged a little more than 10 years ago. When they did so, there were agreements, called a consent decree, as to conditions that would be established about preserving competition, even enhancing it. Why is that important?
Well, essentially the artists, the consumers, the venues all have an interest in choices. They should have choices rather than one seller and being at the mercy of one seller, Ticketmaster or any other single monopolist. And that's what we have right now in this industry for artists, venues, consumers-- one seller. And competition is really important, but is undermined by the fact that Ticketmaster has in effect acquired control or outright bought the sponsorships, promoters, the booking agents, the venues.
It is in effect in control of this industry to the detriment of all involved. And so I think if the investigation shows what I've just outlined as a lack of competition, the company needs to be broken up. And in fact, the merger unwound. And that's what I've called on the Department of Justice to do as a result of its investigation. It has an ongoing investigation.
Remember, that a number of us have called for investigations repeatedly in the past. And so there was another-- a second consent decree, which again Ticketmaster violated. I think that we need real action here, not just another consent decree or agreement, which Ticketmaster seems to have no way to respect.
- Have you been at all satisfied with the response from Ticketmaster Live Nation?
RICHARD BLUMENTHAL: Well, essentially, there's been no response in terms of real action to meet my concerns. As a matter of fact, almost just the opposite. You know Ticketmaster, or Live Nation's principal owner, said, well, it's really Taylor Swift's fault. Why? Because she hasn't done enough tours. It's her fault because the demand was so great that our system went down.
Well, that's not the problem. The real problem is that they have a monopoly on those tickets. And they decided to hold a number of them back. They decided to cancel the sale. They have been the ones responsible. And that's why we need either really strong enforcement of the terms and conditions of those consent agreements, or, as I've advocated, unwinding and breaking up of this merger.
- Yeah, her promoter AEG said they had no choice but to use Ticketmaster Live Nation. Senator Richard Blumenthal, always good to see you, sir. Enjoy the weekend.
RICHARD BLUMENTHAL: Thank you, David. Take care.