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Yahoo
7 hours ago
- Business
- Yahoo
Giving to charity isn't just for the rich anymore
In this episode of Financial Freestyle, host Ross Mac is joined by Adam Nash, co-founder and CEO of the charitable donation app Daffy. Adam breaks down his incredible career in Silicon Valley, what a donor-advised fund is, and his mission to democratize personal finance. To learn more about how a gifting plan can help support important causes and give you a valuable tax write-off, check out this week's episode of Financial Freestyle. Listen and subscribe to Financial Freestyle on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Financial Freestyle with Ross Mac on Yahoo Finance is dedicated to promoting economic prosperity for all. Through expert insights, practical advice, and inspiring success stories, we empower you to build and grow wealth. Join us on this transformative journey toward financial freedom and inclusive economic growth. This post was written by Dennis Golin. Welcome to Financial Freestyle. I'm Ross Mack, and this is sponsored by to Financial Freestyle here on Yahoo Finance. I'm your host, Ross Mack. No matter where you are on your financial journey, you could always learn more and that's why I'm always talking to some of the most informative people, inspirational people in the world of finance, helping you get to a bag. In today's no different, I'm talking to Adam Nash, CEO and co-founder of Daffy. Adam, how are you doing today? Good, good. It's great to be here. Thanks so much for coming, man. I know you're coming from the West Coast, so thanks. Thanks for that. But also write to the people, who is Adam Nash? Oh, as you said, I'm the CEO co-founder of Daffy. Um, I've had a long career in technology, I actually started at Apple early on as an engineer, and I've worked for a large number of startups, um, and, and famous companies along the way, but very passionate about building products that actually make a difference for a real passion for personal finance and I just feel like it's been an amazing run the last 10 to 15 years where we've been able to use technology to create better products to help people spend better, save better, invest better and and you know, with Daffy now give better. I love it. So let's kind of go back, right? You're you're venture guy from Silicon Valley type vibes, right? And something that you talked about was, and obviously we talked about this offline, but you're not just a tech guy, right? You're also a person that is adamant about helping people understand personal finance. In fact, you lecture at Stanford. So when you start thinking about Fintech and the democratization of access to information, right?How are you seeing Sofi actually change people's access to information when it comes to personal finance? Yeah, well, I think, you know, it starts with the basics of recognizing that it's, it's a problem. I mean, the reason I teach the class at Stanford on personal finance is because I wish that class existed when I was in school. I mean, if you don't teach personal finance to people, you can't expect, it's not an IQ thing. You can't just expect people to learn it. Mostly what they're going to learn and internalize is from their parents and their friends and the friends of their parents and the parents of their friends. And the truth is that's a really bad set of information to be learning so I think that the great thing about the web, of course, and, and all these technologies, they brought a lot of information to people. Originally it was just basic content, now it's it's shows like yours and and other things people can subscribe to and learn from. Um, but the great thing about FinTech is we actually can build better products and services now, right? We don't have to just tell people what they should be doing with their money or how they should treat their money. We can actually build tools to help do it for them or help them learn along the way as they make these decisions and you're passionate about helping people with these problems around money and and personal finance, I I I think it's, it's a wonderful time to be building and it's a wonderful time um to be learning about personal finance. I love it, man. I,I'm clear as day, right? Very adamant and passionate about personal finance and actually helping people, you know, become better with their finances and their money. And so if you were, you know, just one lesson that you can leave us with that you are, you know, speaking, if this was a Stanford class, what's one personal finance lesson everybody needs to know? You know,Believe it or not, I mean, in the Stanford class, right, you know, the students are fairly smart, like there's not a problem with IQ in the room, etc. but a lot of the students in the class, um, some of them are the first in their family to go to college, um, others are are majoring in in computer science or engineering degrees, they, they know they're going to make some money when they graduate and they don't want to mess it often I just have to convince them to start slow. The basics are really important. I, I can't tell you how important it is to just spend less than you make, right? Everyone wants to jump to how to make money in the market or do this or it's like, slow down, you spend less than you make, um, I'm a big advocate for emergency funds and having a little bit of a cushion, and if you don't have one building that you get to the basics of, you know, investing and, and, and aiming for financial goals in the future, you know, keeping expenses low and, you know, having some humility about your ability to kind of magically pick the winners. Um, and then we talk a little bit about taxes and the other realities. We even talk about, you know, what it means to manage money as a, as a couple versus an individual, which is another problem that most people ignore. And yet it turns out it's a very hard problem and money breaks up a lot of relationships, uh, both married and otherwise. And so, um.I think if you look at the content, I put it online for free. If you look at the content, there's no rocket science there. These are not, you know, this is not difficult math. Um, the hard part is to get people into a a zone in my experience where they have enough humility to say, like, just because I'm an expert in something else doesn't mean I'm an expert in handling money, and having kind of that mind to just learn the basics of how do you lead a healthy financial life and what does that even mean? That's,honestly, that's, that's very interesting. You don't hear that too often when you start thinking about managing money as a couple, right? There was a statistic that came out where it was saying like, which states and cities are, you know, the most expensive to live in and when you actually take in like the average income of those states, like,You know, the average person can't even live in like half of the states, right? And then you actually take into account if you are in a relationship or not. And now it's like, OK, you can actually afford to live in here, but if it's a two-parent household, right, or a two income household. And so the idea of managing money as a couple is, it's no right answer, but there's obviously a few ways to hopefully end in success. So I love that you brought that up. But let's actually get kind of to where you are now, right? Obviously, CEO of Daffy andHow do we get there, right? Because you got a very extensive resume when it comes into the tech world. Oh, well, um, I mean, that's, that's flattering, and I, I have had the chance to work at some amazing companies, you know, when you, you know, each generation of technology, it's funny looking back on my career, you know, from Apple to a company like eBay, um, LinkedIn, of course, for Web 20 and, and, and, um, and then Wealthfront, um, it's just been an embarrassment of riches and sort of in some ways in terms of the people I've gotten to work with and the problems, etc. Um, Daffy comes out of, you know, both a personal I have around um building these products that can help people with important problems, and a feeling thatWell, there's a little bit of hubris with founders, you're gonna have to forgive me, you know, I, I wasn't convinced it was gonna happen otherwise, right? It, it turns out we've had 15 years of fintech of, of these amazing apps and services to help people spend better, save better, invest where are the apps and services to help us give better? I mean, actually giving is huge in the US it's over half a trillion a year. I think last year was 557 billion, and over 370 billion of that's from individuals. So this is a big problem. I mean, that's like 2% of GDP. It's, it's bigger than yet, um, I don't think a lot of people embrace the reality of this is a financial goal that means something to people. I mean, we teach our kids to give. This is not just, you know, budgeting, um, I don't, I don't want to be a little anything that is saving, investing, etc all important, but, um, and so Daffy was really born on this idea of like, hey, those 60 million households in the US who give to charity every year. Um, what if we build a great product for them? They can put aside money for charity proactively when it makes sense for get that tax receipt, right, for the charitable deduction, the money is invested tax free, and then anytime they're inspired to give just a few taps on their phone, and the money can go to any legal charity in the US. So when I really, when that really crystallized, my co-founder and I really felt like that that's a product worth building, that's a that's a platform worth building, um, and that's how Daffy was born. Daffy actually literally stands for the the donor advised fund for you. I love it. I love it. And you know, one thing you might hear, right, is that it's a luxury to give, right? And so if the average person thinks you need to be rich to be generous, rich to give, how is Daffy not only you know dispelling that, but also making it a lot more accessible for someone that is trying to be interested ingiving. You know, it's funny. I think this has to do with the fascination our culture has right now around billionaires andAnd beyond and what they're doing, we, we talk so much about what they do with money. We sometimes miss the forest for the trees about what most people's lives look like. Um, it's a complete myth that only the wealthy give. I mean, in fact, a lot of studies actually show that the, the average person proportionally is is more generous, right? It it's, um, and I wasn't kidding, it's about 60 million households in the US every year that give to um those, um, and that's meaningful to them, right? So it's not about dollars, it's about people. And so I was inspired, I have to say I am inspired by their founders and other companies I've worked with in the past. I was on the board of this company, uh, Acorns, wonderful service, now helps millions of lead a better financial life, um, just by having this simple app and service that makes it easy to save, you know, easy to spend better, etc. And so some of the inspiration for Daffu is we can do that for giving, you know, the, the research shows that if you set a goal, if you're intentional about it, right, if you give 32% more to charity. I mean, think of what that would mean, out of those hundreds of billions of dollars, as big as that number is, we actually want to give more. Um, the question is how to do it smart and, and, and, and in a financially prudent the reality is most of giving that is done today when someone asks you, right? But, but how many of us would save for retirement, well, if uh we only put money aside for retirement when someone not how it works. What you want is to say, oh, I have a goal for my retirement. I'm gonna have this much come out of my paycheck every couple of weeks, and over time it'll build up. Um, it turns out some of those lessons apply to giving too. Uh, you set a goal in Daffy, you can set a goal for your giving. You can put aside money every week or or every month. Some of our members actually, you know, they have income is not standard for people. More and more people have good years and not so good years. So putting money aside in the good your taxes are higher, right? And you actually have the money to give, ensures that in the not so good years, you still have some money put aside for the organizations and causes you care about. And the truth is if you talk to the organizations, that's what they really want. They want people who are gonna support them for long periods of time. They don't just want one check, you know, one donation, um, they want to build a community around the cause and and and the organization that that they're passionate about. That's very interesting. So let's actually kind of walk us through it, right? Say I'm a, you know, a person that's making, I don't know, $80,000 a year, right? And I'm making a point that I want to give 10% a year to charity. How exactly would I utilize Daffy? Oh, that's, well, first of all, you're describing a very generous person, which is fantastic though. Um but no, no, no, no, not, not unusual actually, you know, it turns out, um, so there's a couple options there, right? Like, so you, you said this they always make $80,000 a year? Is it the kind of job where there's some years where better or worse? Um, I would probably say putting a little more money aside in the years that you make more money is, it's smart for your taxes and and an easier way to do it. But it's amazing you can treat it just like retirement or any other financial goal, right? You could decide to put aside, like you mentioned, if it was $8000 a year, you can do that simple math if, if you get paid, you know, that turns into what, you know, sorry, I'm doing this math on the fly, you know, $600 to $700 or something like that every month. Just have it come out of your paycheck and and go to Daffy. You pick a portfolio, it's kind of like a 401k for charity. It could be that simple. And the only advantage is, of course, besides being tax free, is that you're not limited, you don't have to wait to use the money until you're, you know, at retirement age, 59.5 or or something like that. You can actually, um, anytime you're inspired to give, tap tap tap on your the money go to the charity of your choice. That's awesome. We're going to take a quick break, but when we come back, we're gonna have more with Adam Nash of right, welcome back to Financial Freestyle. I'm Ross Mack and I'm talking to Adam Nash. So Adam, quick question, right? What exactly is a donoradvised fund? Oh, no, this is a great question. I mean, obviously we named the company Daffy, the donor advised fund for you, but a lot of people haven't heard of a donor advised fund before, which is kind of amazing because they've been around for a very long time, you know, more than 50 a donor advised fund is just a tax advantage account for charity. You can think of it as like an IRA or 401k for charity, right? Um, and it's designed for that. You can put money aside in this account, um, you immediately get the charitable deduction for your then that money can be invested tax-free in any number of portfolios, and then anytime you want that money to go to a charity, tap tap tap, you tell the donor advise fund where that money should go, and they send it off. So it's really a fantastic product. I honestly believe that Daffy aside, everyone who gives to charity regularly should have a donor advised fund. Um, and a lot of what Daffy does is just makes it simple and easy for you to get started with a little account for money put aside for charity. I mean,It is one of the oldest ideas, right? The idea of putting money aside every year for those less fortunate than yourself is is a pretty old idea. Um, Daffy just puts a modern tech rapper over what is a fantastic financial product that most people haven't heard of. No, no, no, no, that I, I think you just truly broke it down and so correct me if I'm wrong, you don't just have to invest money though, right?You have the ability to invest maybe stocks, etc. other investments. Yeah, yeah. Our, our mission at Daffy is actually to help people be more generous more often and so anything that people want to give, we're, we're super excited to help them do that. So you can just use cash, you could use a card, a debit card, credit card, you, um, you can even use Apple Pay, but there's immense tax benefits, you know, so many people now work for companies where they get some compensation in stock. We have a lot of people who are investing in when you donate stock or crypto to charity, you get a double tax win, because if you've held the investment more than a year, first of all, you get to deduct the full market value of that investment today, not what you invested in it, you know, years ago, but what it's worth second, you'll never pay the capital gains taxes on that gain. So you get this double win and so the problem is most charities are not that big. Most charities can't take stock donations, they can't take your ETF or your mutual fund, and they certainly can't take crypto in most cases. But if you use a service like Daffy, we take everything, right? So, you know, we support every crypto that Coinbase supports, right? You know, any ETF, right, any if you happen to be fortunate enough to be sitting on an investment that has a large capital gain on it, it is an incredibly smart financial move to use that instead of cash to give to charity, because you get those extra tax benefits and using an app like Daffy makes it trivial to do, literally can take seconds. Wow. That's that's fascinating. That's fascinating. So I definitely kind of want to pick your brain, uh, from the lens of like an actual founder as well, right? So like you know I speak with a decent amount of founders, tech founders, and you know I always am curious when it comes to starting a company, right? What is the mindset? Right? Are you solving a problem? Are you adding new technology to things that are existing? Like what was the reason you started Daffy? And let's kind of talk aboutYou know how you went from idea to true business. Yeah, well, it's interesting, and this has been a lot of my career is like when you think about building a great product, it's easy to talk about the technology. Um, it's less easy but important to talk about the design, right, and the real product you're building. But the truth is, if you don't wrap a product in a great organization in a great business, um, it won't go forever. You won't have the people on the platform to really solve the problem you're going after. So I think what I tell founders, you know, the, the basic things to think about in the beginning is,You know, what is the product, you know, what's the market for this product? I I spent a lot of time talking to founders, not about the technology, but, but who is this designed for? Where do you really create value? And then building a business around that, you have to have some eye for, wait, why hasn't this happened already? Why now? Right? What what are you seeing that all the incumbents aren't seeing, right? They have money, they have resources, they have smart people, they have customers. Why aren't they building this?And I just happen to be a student, you know, if you go back to Clay Christensen, you know, the innovator's dilemma, um, I always believe that there has to be a reason, what has to be happening for it to be a great opportunity is that the best customers for the existing companies don't want there's a huge base of other people who want something simpler, easier, maybe with a different business model, and the existing companies can't see it because their best customers aren't asking for it. And to me, when you find one of those opportunities, you really have an opportunity to be transformational. I mean, so for know, it turns out most donor advised funds charge fees that they borrowed from the investment industry. They charge you a percentage of assets, even Vanguard, which I love, I love Vanguard as an organization, I love their products, they charge 60 basis points, 0.6% on their donor advised fund, um, and they have a minimum of $25, if you're one of the existing institutions and you have a business model based on making a percentage of assets, you're gonna chase the biggest accounts. You want to acquire the most so at Daffy, we actually were very purposeful. It wasn't just the product and the technology, we said no, let's align our business model with giving with those 60 million households who don't have millions of dollars, but give a few $100 or a few $1000 to charity every year. And so we make it free to get started under $100. Um, most of our members pay $3 a month, it's flat, and we have a family plan in a higher tier that costs a little bit we really tried to align ourselves on what we thought was the best business to support a product like this, which is a a revenue model that's aligned around people staying with us for very long periods of time and making giving something they do not just once but every year, possibly for decades. That's amazing, right? You're in a very interesting place because you're at the fintech and philanthropy. Where do you see that?Growing in thefuture. Oh, there's there's so much to do. I am so excited about the potential in this area, and part of that self-serving, right? I care about giving, I care about, um, philanthropy, and, you know, I'm very serious as a parent, I have, I have 4 children, um, it's not like other financial goals. It's, it's, it's even more important. It's not just a budget item, although it should be. Um, we, we teach our kids about giving, right? You know, most of us grew up knowing that it's not all for that actually there's other people out there and so I am very passionate about the topic, but I think we're at an exciting time. I mean, the truth is, after 15 years in FinTech, the platforms that are available, I mean, I can't tell you 15 years ago how hard it was to build one of these applications and services. We've learned so much. The fact that I can leverage platforms from companies like Plaid, these might be companies that most people haven't heard of, but you know, what it means is to build a new financial service that has great security, um, that has great features, right? Think about how hard it was to imagine 15 years ago, a computer managing a portfolio for you. But now Daffy can have, you know, 1617 different portfolios, everything from cash to bonds to index funds. We even have crypto for people who want we can do that all automatically in software, not because we're so amazing, although, you know, Alejandro's team really is very impressive, um, but we can build those features and capabilities in in weeks and months because of all these other companies and platforms out there. And so I think we're gonna see an immense amount of innovation in the space, um, at Daffy, you know, this might sound simple. um before Daffy, there wasn't a donor advice fund with a family so many people, you know, we, we see people with their siblings, with their parents, grandparents want to teach their grandkids about giving, um, what, what tech product doesn't have a family plan? I mean, I'm I'm inundated this as a parent, like the, the request from, you know, Apple or Xbox, I get a lot of Xbox requests, that sort of thing, um, but why not forgiving, so I just think the innovation we're gonna see in this category is just phenomenal andI think it's meaningful because the truth is, people always think about the donation, about the benefit to the organization, cause they're going to use that money to have impact and do something good. I think people underestimate the value that people find on feeling like they as a donor has have an impact, that they didn't just talk about something, they did something. It the the the amount of dollars actually doesn't matter, whatever is meaningful to you is what really but I think technology is going to have a huge role to play, and, and we just rolled out some new features that are based on some of the new AI platforms, etc. Um, a lot of the advantages that the ultra wealthy had, you know, teams of people to advise them on giving or kind of make something happen when they're inspired to give, we can now put these innovations in an app that that's available to everyone. That's it for this episode. I just want to give a warm, warm thank you to Mr. Adam Nash for a phenomenal conversation, right, being at the intersection of philanthropy and tech. But that's it for this episode. Make sure you like, subscribe. If you see this QR code, just hit it so you can watch other podcasts on this exact network. And so then, guys, we'll see you next week. I'm Ross Mack and this is Financial Freestyle. This content was not intended to be financial advice and should not be used as a substitute for professional financial services. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-06-2025
- Business
- Yahoo
Listen again: Why pro athletes keep going broke
Listen and subscribe to Financial Freestyle on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. In this episode of Financial Freestyle, host Ross Mac sits down with NBA champion and three-time All-Star Antoine Walker for a wide-ranging conversation about his financial journey. From signing an NBA contract worth millions of dollars at just 19 years old to his eventual bankruptcy in 2011, Walker has rebounded to bring a message of financial literacy to the masses, especially to young athletes. Tune in to learn more about his inspiring story and what's next on the horizon for him. Financial Freestyle with Ross Mac on Yahoo Finance is dedicated to promoting economic prosperity for all. Through expert insights, practical advice, and inspiring success stories, we empower you to build and grow wealth. Join us on this transformative journey toward financial freedom and inclusive economic growth. This post was written by Dennis Golin. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Tariffs will hurt the US 'in the long run,' former Export-Import Bank chair says
Listen and subscribe to Financial Freestyle on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Though extreme trade tensions eased somewhat after the US and China agreed to a temporary reduction in tariffs, Fred Hochberg, former chair of the Export-Import Bank, said the Trump administration's tariff policies are set up to hurt US consumers. "I think the tariffs are going to hurt us in the long run," Hochberg said on Yahoo Finance's Financial Freestyle (see video above or listen below). This embedded content is not available in your region. Hochberg was the longest-serving chairman in the history of the Export-Import Bank, which was established in 1934 to help provide financing to foreign buyers purchasing US goods. He also served under the Clinton and Obama administrations. According to Hochberg, tariffs are a tax paid by American consumers and companies, and they are "raising the cost for everyday Americans." In April, the first month that many of Trump's tariffs were in effect, consumer prices rose less than expected overall, though some areas, such as furniture, appliances, and toys, saw prices creep up at a faster pace. Read more: What Trump's tariffs mean for the economy and your wallet Some economists, however, likened the report to the calm before the storm, explaining that it takes time for tariff effects to filter through the economy. "We really haven't seen the full impact of tariffs come through yet," RBC Capital Markets economist Carrie Freestone told Yahoo Finance after the report. "It's going to be a while for firms to change their behavior and for us to start to see an impact on core goods prices." President Trump has stated that one goal of his tariff policies is to bring more manufacturing jobs back to the US, even if it brings about some pain in the form of price increases. But even with tariffs applied, achieving that could be difficult, Hochberg said. Though the US is the world's second-largest exporter of goods and services, Hochberg estimates that less than 10% of the country's workforce works in manufacturing, and only half of that labor force is directly involved in production. Hochberg argued that there are other ways to encourage US manufacturing in select sectors that wouldn't be as harmful to Americans, like offering tax incentives or reasons to move manufacturing back to the US. "A lot of things we import, we don't make here anymore, nor do we want to make here anymore," he said. "We're not making sneakers and sweatshirts and T-shirts like that, so it's not clear why we would want to go that route. It makes us less competitive." Hochberg also said tariffs are a major problem for intermediate goods like aluminum and steel, even if they are made in the US. The 25% tariff on foreign steel not only makes it more expensive to import those products, he said, but it may also enable US manufacturers to raise their prices alongside the tariffs. "So there's no bargain by buying US-made steel," he said. "They just simply got an opportunity to raise their prices 25% because they don't need to undercut foreign competition." Though Hochberg doesn't see tariffs returning to levels over 100%, he does expect them to remain at a higher level than before Trump took office. He stated that US consumers are estimated to spend "$1,000 to $1,500 per year" more on goods as a result of the tariffs. "We've benefited by the trade going back and forth," Hochberg said. "It shouldn't be open and free, but we have benefited by that. And I think that's at risk now." Every Monday, Financial Freestyle host Ross Mac talks with key guests to discuss their wealth-building journeys and what it takes to build a lasting financial footprint. You can find more episodes on our video hub or watch on your preferred streaming service. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Tariffs are just taxes – and you're paying them
Listen and subscribe to Financial Freestyle on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. In this episode of Financial Freestyle, host Ross Mac is joined by Fred Hochberg, chairman of Meridian International Center and former chairman of the Export-Import Bank of the United States. Fred sheds some light on the risks to the economy caused by the newly announced tariffs, what trade negotiations might look like, and his new book "Trade Is Not a Four-Letter Word." For actionable insights from an esteemed economist, check out this week's episode of Financial Freestyle. Financial Freestyle with Ross Mac on Yahoo Finance is dedicated to promoting economic prosperity for all. Through expert insights, practical advice, and inspiring success stories, we empower you to build and grow wealth. Join us on this transformative journey toward financial freedom and inclusive economic growth. This post was written by Dennis Golin. Welcome to Financial Freestyle. I'm Ross Mack, and this is sponsored by to Financial Freestyle here on Yahoo Finance, and I'm your host, Ross Mack. Now look, no matter where you are on your journey to obtaining wealth, you always got to start somewhere and that's why you're at the right place because I'm talking to some of the most influential people and uncovering their world to success, and today's no different, as I'm talking to Fred Hochberg, former chairman of the Export Import Bank. Fred, how you doing, man? Thanks so much for joining us. Good to be here. Good to be here with you today. So listen, obviously your resume is extremely thick, but I think to my guests, to our audience, please explain who is Fred Hochberg. Wow, sometimes people think I'm thick, not just my resume. Uh. You and I both, I, I, I need to go to the gym rightnow. So, um, well, I'm a New Yorker originally. I actually now live in Florida and um I'm a very lucky guy in many ways. Uh, I have a partner of 32 years, uh who we actually met at a political fundraiser for David Dinkins back in '93, um and I'm fortunate I served in the both Clinton and Obama administrations and actually nine days in the Bush administration, but we'll get back to that if you want, and uhUm, I was in business for 20 years. I started a what was a small family business, and, uh, worked there for just under 20 years and became the president and took it public, uh, in 1987, company called Lillian and um and also I I wrote a book a few years ago about trade, which is pretty relevant today. It's called Trade is not a Full Letter Word, and we all talk about tariffs and trade, you would think that trade is one of the worst things we could do, but uh I beg to I think this is going to really help shape our conversation today. But before we even dive into kind of trading tariffs, right, let's actually talk about what the Export and Import Bank is, right? Like what exactly is it and kind of let's talk about your tenure there, because clearly you were the longest tenured chairman in the history, so I would love to know, hopefully talk about what you did in that role and also what the uh the Export Import Bank is. So the Export-Import Bank was started by Franklin Delano Roosevelt, FDR in the in the depths of the depression, and FDR realized that one of the things that wouldHelp our country grow is get more people working, and how do we get more people working? Well, exports are one way to do that. Why aren't companies and people exporting? Well, sometime there's either a a perceived fear or real fear of the risk and the financing. So that's how the Export Import Bank got started, was about 1 or 2 others, United Kingdom had one as well. And um the first transaction the Export-Import Bank ever did, first of all, it was actually chartered to do business with Russia, believe it or not, and that did not go forward. Then the real first transaction was to Cuba, also a country that we do not trade with what we did for Cuba, interestingly, we took American silver mined in America, and minted coins for the Cuban government to use as currency, and we did that in Philadelphia. So the actual first export was American silver coinage that we actually minted in Philadelphia. But today, the Export Import Bank supports American companies to be competitive when they're selling products overseas, and 90% of the customers were small businesses, small but even food companies, you name it, um, or large companies like Boeing or GE, but their customer overseas may not be able to get financing. Um, 2/3 of the customers lost were in developing countries which have a harder, less banking, less of a of origination support. So the export input bank stands ready for a fee. We will guarantee a loan to a foreign buyer so they could buy American goods. We rather than buy American goods like American Boeing planes than buy Airbus planes, for example. So we would provide the financing, we would essentially insure the loans, so the bank would feel more comfortable making a loan knowing it's insured by the US government. And in the end,We made a under my term there in the eight years, as you mentioned, we made $3.8 billion in profit in cash, we sent to the American taxpayers. So we actually did it at a profit and also supported something like 200 1.4 million jobs through that period of time. That's extremely impressive. So one, congrats, obviously, right? You had the longest standing tenure there. So in your eight years, what would you say, I mean, you might have already said it, right, actually having a, uh, you know, to the tune of a little over 3 billion, but what would you say your best memory is, and you call it your proudest accomplishment in those eight years? I think my proudest to come first of all was meeting American entrepreneurs, going into company after company factory, you know, there's a company in Ohio that makes uh basketball courts, and we would actually they would uh take the American lumber, mill it, create it in basketball court, pack it into a pallet, and we'd ship it overseas. So the idea that we were courts is not something you would normally think about as a US export. Um, so one meeting all these small businesses and entrepreneurs were making innovative products that we were able to sell overseas. That was, that was exciting. And the other thing that I tried to do and I felt successful at Ross, I will tell you is that is making sure we acted like a business. When I got to Export-Import Bank, we had some transactions, someThat were sitting in-house, I'm not exaggerating, for 2 or 3 years, and I said that is not providing good customer service. So we put in a program that we wanted and we got 99% of all transactions out within 3 months, and something like 98% out in 30 days to make sure that we did fast turnaround, so that if you're trying to sell goods overseas and create jobs in America, we were there to support you. Right? You've in your 8 years, right? Excuse me, running XM, right? You obviously seeing kind of a deficit when it might be, you know, more imports and exports. And now, in our current administration, there's a huge focus and crackdown on effectively trying to curb certain uh imports and actually kind of spur, you know, more, you know, I don't know if you want to call it, you know, US jobs and US exports, butIf you were currently running XM right would your view be on tariffs and how would you effectively try to keep uh American businesses competitive? Well, the big problem with the tariffs right now is what people call, and it's not always understood so well, intermediate goods, and what do I mean by that?If we're taxing steel and aluminum and things like that coming into our country, it makes the exports we make more expensive because all of a sudden the steel you're buying is 25% more expensive. And it's not just foreign steel. What happens is, of course, is the US steel manufacturers, they raise their prices to meet the tariffs. So there's no bargain by buying US made steel. They just simply got an opportunity to raise their prices 25%, andBecause why they don't need to undercut foreign competition. But what's that doing is, it will make when we want to export cars or airplanes, or many, many products that you steal and aluminum just to name two products, more expensive and makes US exports less competitive and actually hurts job growth. So, from anExport Import Bank, I would, I was opposed to the tariffs. They don't really help us, and they also hurt consumers. They're raising the cost of buying groceries, uh, putting food on the table, uh, and ultimately raising the cost of buying a car, it's going to raise the cost of air travel because those airplanes are gonna cost more So, right, and I would clearly you've seen this at the highest level, right, to get a sense of kind of what all of our uh trade deficits would be kind of respective to all different countries and trade partners, but kind of putting it in layman's terms, right? AndWhen this came out, I think the average person was like, oh my, oh my God, we're tariffing 150 countries all at once, you know, in countries some people may not have even heard, like, wait, why are we tariffing them this much? But there are a lot of people that are in favor of the tariffs and their argument would be, well, hey, you guys don't even realize it, but they're, they've been, they have been tariffing US goods coming into their country, soObviously you stated that you aren't a favor, in favor of terrorists, but could you make an argument that this current administration is doing can be helpful, however, maybe the way they're going about it isn't helpful. Well, we could consider a couple some industries where we say we need more capacity here. Chips is a good example. It's one of the things President President Biden did was the Chips Act. How do we encourage more chip manufacturing in America? So there are many ways of encouraging manufacturing in America without tariffs, for we probably have a deficit right now or not enough sort of military industrial capacity. Um, we've, you know, so we would need to have more, we probably need more of that for national security here in the United States. I'm not sure that tariffs are the way to get there. I think we may have to find other incentives, whether they be tax incentives or others to encourage more that kind of manufacturing. But let's remember one thing about8 or 9%, maybe 10% of the American workforce is involved in manufacturing. So first of all, that's it. And let's remember, half of those people are not in factories. They're the people, they're the lawyers, human resources, uh, marketing, sales, uh, accounting, uh, finance, so maybe 5% of people are actually in factories. So we have to think about what are we really trying to I'm sorry to say if you ask parents, would you like your son or daughter to work in manufacturing in a factory, it's like 80% say, no, I don't want my kid doing that. I want them doing other things, so it's not clear that that's really gonna do what we're looking to do. I love that response. We're going to take a quick break, but when we come back, we're gonna have more from Fred Hochberg, former chairman of Export Import back to Financial Freestyle. I'm your host, Ross Smack. And listen, we are in the midst of a very nice debate. I won't even call it a debate, right, because it's very informational for me, informative because one,I'm an investor and I think in the 1st 100 days of this new administration, we have one of the worst stock market starts to the year. And so you ask why, well, it's based on our trade policy. It's based on tariffs, etc. So, you know, Fred, obviously you just wrote an article that was in a Fortune magazine, right? And it's pretty much your view on tariffs. Can you please elaborate on it? Well, I think tariffs, let's be tariffs begin with the word tea, it's a tax. It's nothing more than a tax. It's a tax on goods coming into America, and by and large, American consumers and American companies pay that tax. It's not paid by foreigners, it's paid by it's true, some companies, maybe a Walmart can go to their supplier overseas and say, hey, can you make this a little cheaper, so the tariff will have less of an impact on the retail, but basically it's a tax on American consumers and gonna cost are $1000 to $1500 per year as those tariffs go you know, we, a lot of things we import, we don't make here anymore, nor do we want to make here anymore. We're not making sneakers and sweatshirts and t-shirts like that. We don't make that anymore, and I'm not sure we're gonna want to be making that again, so it's not clear why we would wanna go that route. and I think it does, it makes us less competitive. We talked a little bit before, on exporting, because if you, if it costs more to produce the goods, you're gonna have to sell it at a higher price, and we are the 2nd largest exporter in the entire world, second only to China. So, and in many ways, we may be a bigger exporter than China because we export a lot of this TV show, movies, uh, entertainment, financial services, and those are a little harder to calculate, so we're the second largest, and I believe we've undercounted our services a little bit. So, it hurts us competitively, and lastly, we are really angering a lot of our regular customers, and the last thing you want to do in business is make your customer angry with you. Uh, I live in Florida, uh, Canadian are not coming to Florida. They've cut back is a major export. It's a service export. People come to our country from overseas, they eat in our restaurants, they go to McDonald's, they stay in hotels, they fly in American Airlines, they ride in taxis. So if that pulls back a little bit, that actually hurts everyday workers. Um, give you another example, Chinese tourists spent more in our country per visitor per capita than from any other country, like $5000 per we have been the last few years giving it a bad idea for Chinese tourists to come here. They don't feel as welcome. And I think that's bad for our economy. And you know what? It's also bad because the more we get to know Chinese people, the more Chinese people would get to know everyday Americans would actually be better about finding ways to build bridges versus greater and greater divides. Great perspective, right? I, I don't disagree with anything you said, right? And obviously, you know, I don't want to date this episode because it had come out, you know, in a week or two. But just yesterday, there was a report that, uh, as you bring up China, there was a report that, you know, China is willing to effectively come to the negotiating table, right? And obviously, there have been reports that other countries are close to a deal. And so kind of using your umKind of your experience, obviously at the helm of Export-Import Bank and understanding, you know, effectively the leverage when it comes to negotiating and maybe game theory. Where do you see kind of, and obviously this was extremely abrupt and it took a lot of people by storm with the exception of Warren started to liquidate a lot of his portfolio pretty early on. I think I need to call him and actually understand why he didn't tell me that. But right, understanding of what you know, where do you think us as America ends up when it comes to negotiating? Because obviously you talked about the trickle down effect, which effectively, like you said,We are angering our trade partners and more importantly, that might impact tourism, right? But do you think America comes out on top, uh, or does this actually hurt us in the long run? The tariffs, I think the tariffs are gonna hurt us in the long run. It's gonna hurt us in a couple, one, it is raising the cost for everyday Americans, and I, my hunch is, at the end of the day, I don't know how this will end, but tariffs will be basically higher than they were last year, because Trump believes in tariffs. They may not be as high as the kind of over 100% he has in China, but it's not gonna be, it's not going down to 0%.So one, that's gonna cost us more money in the end, andI think it will impede some trade. I mean, one of the things that's really made us distinct from China and many other countries, we have also welcomed in the innovation that uh foreign goods and imported goods bring, whether it be the foods we eat, whether it's the iPhone that we rely on, whether it's cars, American cars are better today, and I think part of the reason they're better today is we've had, they had foreign competition that they had to know, but nowadays, you know, Honda, Mercedes, BMW, Toyota, they all manufacture in America, but they've also improved the quality and the reliability of American cars. So we've benefited by the trade going back and forth. That shouldn't be open and free, but we have benefited by that, and I think that's at risk now. And we've also benefited, you know, the whole idea of originally NAFTA, the North America Free Trade Agreement, and then as President Trump renegotiated the agreement, USMCA was to make the United States, Mexico, and Canada a competitive force globally. Believe it or not, it was started by Ronald Reagan. He's the one who was afraid of Europe getting together and said, we better band together with Canada and Mexico, so we can meet the competition and take advantage of the resources in 3 countries. I think that was the right way to go. Well,as we talk about trade, I think it's only right, kind of on this latter half of our episode, right, to segue and talk about your book, right? Trade, it's not a four letter word. Tell us about the book and what can our viewers get by actually buying yourbook. So, by the way, Father's Day is coming up, Mother's Day is coming up, a perfect time to buy trade is not a full letter word. I wrote the book, um, I had never planned on writing a book. I was actually uh at the University of Chicago. I was a fellow and uh I was there for eight weeks, and you run a seminar and uh I wasn't sure the Export-Import Bank would get a lot of college students super I came up with the idea of, let me call my seminar, trade is not a full letter word, and we'll talk about trade. Uh, I didn't want to call it resetting America's trade agenda in the 21st century, that would put you and me and everybody else to sleep. So I came up with trade is not a full letter word, and the students and a couple of the guest speakers said,So you're gonna make this a book, aren't you? And I go, no. And after 3 or 4 weeks ago, all right, I guess I should really think about this. I mean, people keep saying, why don't you write a book about it? So that's why I wrote the book, and I tried to do it to explain in everyday language, how does trade work, what are tariffs about, and I talk about different products, whether it's American cars, I talk about the most popular American fruit, we consume 27 pounds per capita of bananas a year per person. That's a lot of bananas. Um, I talk about a college education and things like Disney World, those are exports, uh, TV shows are exports. I wanted people to know, trade is not just a a foreign car on the streets of America, it is goods we buy and sell. And if we want to sell goods, we also need to buy goods cause that creates relationships with these different countries. So that was the idea behind the book, got a lot of great notices, um, it was featured in The Wall Street Journal, The Washington Post, The New York Post, was on a couple of TV shows, so, uh, and we're talking about it today. I love it. Well, one, congrats. I look forward to checking it out. And then if I was to say our last question, right?Fred, if you could go back in time and have a conversation with your 18 year old self, what advice would yougive yourself? Well, two thoughts I have. One, and I really wish I did this, I wish I kept the journal, you know, it sounds like an old fashioned idea, but, you know, right, keeping a journal of what your impressions are, what your feelings are, what you learned on a different day, and keeping that is really would have been really valuable, um, as I got older in life to sort of think back, you know, nowadays with email it's a little easier because it's all in your email and you can keep it, you know, we we're used to writing a lot. So that's one other thing I would tell you, I was very fortunate, Ross, to um work for both President Clinton and President Obama, and as I told you, 9 days for President Bush, but I'll get it, but working in government was a great experience, and whether you get a job at a high school or college and work for a city council person, or a member of Congress, or someone who's on the board of education, I think it that kind of exposure about how our country was invaluable, and I wish I had done that before I got to the age of 40. Well, one,You have, uh, lived a remarkable life and uh I just want to thank you for being a guest here. But that's it for this episode of Financial Freestyle. I'm your host, Ross Mack. If you're watching this on YouTube, make sure that you click that or put your phone out and actually hit that QR code. Make sure you share this with a friend, a family member, a cousin, a former teacher, the class clown, whatever it is, but make sure you're here every I'll see you next week. This content was not intended to be financial advice and should not be used as a substitute for professional financial services. Sign in to access your portfolio
Yahoo
19-05-2025
- Business
- Yahoo
Tariffs are just taxes – and you're paying them
Listen and subscribe to Financial Freestyle on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. In this episode of Financial Freestyle, host Ross Mac is joined by Fred Hochberg, chairman of Meridian International Center and former chairman of the Export-Import Bank of the United States. Fred sheds some light on the risks to the economy caused by the newly announced tariffs, what trade negotiations might look like, and his new book "Trade Is Not a Four-Letter Word." For actionable insights from an esteemed economist, check out this week's episode of Financial Freestyle. Financial Freestyle with Ross Mac on Yahoo Finance is dedicated to promoting economic prosperity for all. Through expert insights, practical advice, and inspiring success stories, we empower you to build and grow wealth. Join us on this transformative journey toward financial freedom and inclusive economic growth. This post was written by Dennis Golin.
