WHEN: Today, Thursday, March 14, 2024
WHERE: CNBC's "Squawk Box"
Following is the unofficial transcript of a CNBC interview with Liberty Strategic Capital Founder & Managing Partner and former United States Treasury Secretary Steven Mnuchin on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today, Thursday, March 14. Following are links to video on CNBC.com: https://www.cnbc.com/video/2024/03/14/former-treasury-secretary-mnuchin-im-going-to-put-together-a-group-to-buy-tiktok.html and https://www.cnbc.com/video/2024/03/14/former-treasury-secretary-mnuchin-government-spending-is-what-caused-inflation.html.
All references must be sourced to CNBC.
ANDREW ROSS SORKIN: Former Treasury Secretary Steven Mnuchin is here. He joins us now. There is so much to talk about the markets, inflation, White House's new budget plan, TikTok, you just closed the capital infusion deal for New York Community Bancorp. The former treasury secretary is the founder and managing partner of Liberty Strategic Capital. I think we should start with TikTok because I think we're all trying to understand -- what's happening here, whether it should be banned, divested or otherwise? And if it is divested, who may be a potential buyer?
FORMER TREASURY SECRETARY STEVEN MNUCHIN: Well, you know, when I was treasury secretary, I chaired CFIUS. And CFIUS approved and I had President Trump sign an order that TikTok had to be sold, and I continue to believe that. So I think the legislation should pass, and I think it should be sold. I understand the technology. It's a great business and I'm going to put together a group to buy TikTok.
SORKIN: You're trying to buy TikTok.
MNUCHIN: I am, because it should be owned by U.S., U.S. businesses. There's no way that the Chinese would ever let a U.S. company own something like this in China.
SORKIN: You said, have you already put a group together?
MNUCHIN: Yeah. Well, I'm working on it.
SORKIN: You're exploring a group?
MNUCHIN: I've spoken to a bunch of people but—
SORKIN: Who would be a part of your group?
MNUCHIN: I can't tell that to you now, but it would be --
BECKY QUICK: Can we, can we get guesses?
MNUCHIN: It would be a combination of investors. So, there would be no one investor that controlled this. And the issue is all about the technology. This needs to be controlled by U.S. business.
SORKIN: Let me ask you a very practical question. If you talked to folks inside the world of TikTok themselves, they would suggest that it is almost impossible within a six-month time period to truly divest it to another group that frankly isn't a Meta or a Google, if you will. Because the data for the, for the users is in the U.S., but the algorithm and so much of the other operations are outside of the U.S. What do you know about, now that you've studied this business several years ago, and I imagine you continue to, how you would actually operationally do it?
MNUCHIN: Well, let me first say, I don't think they should be controlled by any of the big U.S. tech companies. I think there could be antitrust issues on that, and they should be something that's independent, so we have a real competitor. And users love it. So, it shouldn't be shut down. The technology, I won't go into all the details, but the app needs to be rebuilt in the U.S. it needs to be U.S. technology. I think there's a lot that can be done in six months, but I would work closely with the U.S. and with China.
SORKIN: Do you think that the bill would need get rewritten by the Senate effectively to give you more than six months? Is it a timing issue, do you think?
MNUCHIN: I think a lot can be done in six months. It may take a little bit longer, but I think the bigger issue is, they shouldn't be controlled by the Chinese. It is an issue for this to be on everybody's phone.
QUICK: Why? Explain why. What are the reasons?
MNUCHIN: You know, there's certain things I can talk about that are obvious and there's certain things that I can't talk about that I had access to. But let's just say when you have this app on everybody's phone, it has the ability to collect an awful lot of data.
SORKIN: Can I ask a question about that, though? And this is the thing I think nobody under -- nobody knows, and you may be one of the few people who does. Do you believe that the data that it is collecting today, both the data that's been collected and potentially certain things that are being pushed to the users, is being influenced and directed by the Chinese government today, or do you look at this as a prospective national security threat? Meaning, it has not been putt into practice in any meaningful way right now, but the worry is that one day it could? Which is it?
MNUCHIN: Well, I'm not going to comment on what's today, but I will comment. There's no question that on a forward basis, they have both the ability to influence the data and they have the ability to collect data, which is probably the bigger concern.
QUICK: But you're not going to comment on today, because you can't do that without giving away things that you might know that others wouldn't?
MNUCHIN: That's true and also I think kind of the issue today, again, I think the focus should be, it should be sold. It should be controlled by a U.S. business. It's a great company. It would be terrible if it would shut down. Lots of users use this—
SORKIN: What do you think it will do—
MNUCHIN: And we need competitor to Facebook and Instagram and YouTube.
SORKIN: To the extent we care, what do you think it will do to the relationship in China, between the U.S. and China? To the extent that there, you know, I try to put myself in shoes of others to try to think through implications.
MNUCHIN: I think—
SORKIN: You know, you think about a Chinese entrepreneur, who builds something, builds something pretty great. If you don't think the Chinese government has already used it, which is an interesting question, and it could be used prospectively, what does that say about how -- about how we as a country should operate? And we are different than China, hopefully.
MNUCHIN: There's a CFIUS order that's in effect that -- to sell this. So, it's in effect. Biden put a pause on it. I think there's a general bipartisan agreement this shouldn't be controlled by the Chinese. I think the Chinese will be fine selling it so long as there's not a technology transfer along the way. And that's the art of the possible.
QUICK: Why, why do you think President Trump is now saying -- he signed that CFIUS bill -- the CFIUS ruling beforehand?
SORKIN: With you.
QUICK: Why do you think he's now saying that he doesn't think TikTok should be sold or shut down
MNUCHIN: I think he doesn't want it shut down, because he's concerned about the power that that would create for Facebook. I believe he would support a sale. He did support a sale. You know, I'll call him up later and ask him. But I think the answer is—
SORKIN: Wait. Have you talked to him about it?
MNUCHIN: I have spoken to him, but I haven't spoken to him about this, this week. But I believe he would support a sale.
SORKIN: What I found interesting about this comments about the Facebook pieces and I appreciate his perspective on that, meaning he doesn't want one more powerful than the other. But I would have thought that the national security risk, if it really is a risk, and that's why --
MNUCHIN: Right.
SORKIN: I keep asking the question, if that -- that would be a red line, a hard line. It wouldn't matter whether you care about whether Facebook or somebody else was going to get more power or not, if you actually believe that this was a true and present national security threat.
JOE KERNEN: There have been times you have seen, you know, Jeff Bezos, or there are times where it almost looks personal sometimes with the former president and everybody's got their own, he might—
SORKIN: That's a rationalization defense of the president's thinking.
KERNEN: No, it's not. I'm saying you would normally just write it off to, oh, he's got it out for Zuckerberg. That may be true.
SORKIN: Well, he might.
KERNEN: That may be true. So, just saying it.
SORKIN: But isn't, isn't it, well, if he has it out for Zuckerberg, do you find that problematic?
KERNEN: National security takes, maybe. Takes a back seat to a personal grudge.
MNUCHIN: I think the bigger issue is getting back to I do believe it's a natural security threat. I wouldn't have taken it to the president when I did with the CFIUS order and I continue to believe it is today. So, hopefully, we get to a good outcome, that we don't shut it down. Lots of people love this business. It's a great business. And hopefully we can find a solution where China will allow it to be sold without a technology transfer.
QUICK: What -- do you think the president, former President Trump would say that he would rather see it -- if the Chinese say we're not going to sell it, how would he come down on this? If he doesn't want it shut down but would like to see it potentially bought maybe by a group of American investors, where would he come down?
MNUCHIN: I'm not going to speculate on that. I'll call him later and ask him.But I think the first choice for everybody should be that it's sold. And I think the Chinese will agree to do that as long as there's not a transfer of their critical technology which I don't think we need in the U.S.
SORKIN: Let me ask you a different question. We keep talking about who might join a former President Trump, in office, if in fact he were to win. If you were going to be teaming up with others to invest in this and just teamed up to buy a big stake in a bank, do you have any expectation, ambition, plan or otherwise? And what are you telling investors, if the president were to call you and say, hey, I'd love to have you back in my administration in some capacity?
MNUCHIN: Well, I'm telling my investors that I'm focused on my business and I'm very busy.
SORKIN: But how unhappy would they be then if you're buying up stuff and then you say, actually, I got to go, I'm going to do this other thing?
MNUCHIN: Again, my plan right now is to stay in the business. I'm focused on things. I'm excited about New York Community Bank and what we did there. I'm now going to try to put together a group to put together a TikTok. So, I have a lot to do.
KERNEN: Can we talk about entitlements? We just --
MNUCHIN: Absolutely.
KERNEN: We just had, I'm not getting into it but neither candidate wants, will even touch the third rail, President Biden or former President Trump. Do you think that President Trump could get elected if he said he was going to -- what we accused him of saying a couple minutes ago, if he actually did say, I will look at means testing, I will look at ways of reforming Medicare, Medicaid, Social Security so that we can somehow bring it into 20 years from now, so it will be solvent. I'll make the hard choices we have to do. Have you told him to do that?
MNUCHIN: I haven't spoken to him about it recently. But let me tell you what I think. And you know, again, when I was Treasury Secretary, I had a big title. I was the managing trustee of the Social Security Trust Fund and I had to put out the report. And I believe the current report says that it's going to run out of money in about 10 years. So I think there needs to be a bipartisan commission in Congress. This needs to be led by Congress. And we need to make sure that the current recipients of Social Security are protected. But we also need to look at a scenario that Social Security doesn't go broke and that's going to be dealing with the future participants. So there has to be a bipartisan solution. I think it's probably not led by either one of the presidents. But there's no reason Congress can't start working on this now. So after the election, this this can be dealt with.
KERNEN: So neither, so you acknowledge that neither President, they actually were both president, you really get to say that, so neither candidate will say that prior to the election because they can't.
MNUCHIN: I'm not gonna, you know, whether they do or they don't that's up to them.
KERNEN: But do you think that they should but don't hold our breath.
MNUCHIN: I, I think there needs to be a bipartisan commission because this is going to run out of money. So this is not something that's a theoretical discussion.
KERNEN: Well, we can't get either side to say, does someone have to say it first. Does someone—
MNUCHIN: We just got a big group together on TikTok, I mean, passing this in the House overwhelmingly. I hope Schumer brings this up right away because, you know, there are issues that are totally—
KERNEN: You've been totally—
SORKIN: Separate because I think you looked at the business, by the way, back to, I want to go back to TikTok for a second.
KERNEN: Sure.
SORKIN: How much do you think the company is worth? And also, given the fact that one of the things I think we have learned is the company doesn't make money right now, still a money losing enterprise?
MNUCHIN: Well, first of all, it wouldn't be a great strategy if I said on TV what I thought the business was worth if I was trying to buy it.
SORKIN: They have been valuations that have been speculated let's say $50 billion if it gets, you know, over under is probably the game.
MNUCHIN: It's worth a lot of money. Let me just say. You know, I think the number one issue that needs to be solved is the technology transfer and if we can figure out a way to solve that, which I think we can, then you know I think the price is some large amount of money up front and probably a big earn out because you're right the business my understanding does not make money today.
SORKIN: And does that require the rollover of the current investing group into your group and would they be a part of that?
MNUCHIN: I have spoken to some of the existing investors I would propose that they would rollover the U.S. investors. And my guess is they would.
QUICK: Like Yass? Your guess is that they would be on board with this and would support it so—
SORKIN: And this would be Bill Ford at General Atlantic perhaps?
MNUCHIN: Perhaps.
SORKIN: Okay, what about Jeffrey Yass? More—
MNUCHIN: Again, I'm not gonna—
SORKIN: About him.
MNUCHIN: I'm not going to go through investor by investor but I would give the existing investors an option to rollover. I assume that they would want that and we bring in other investors, but no one would own more than 10% of it so it wouldn't be control—
SORKIN: How much competition do you think you're gonna have for this asset? We've heard that folks like Bobby Kotick and others might also want to put together or perhaps working with you.
MNUCHIN: Well, let me just say the issue right now is really who can figure out a way to solve the concerns of the U.S. and China to transfer this without taking what they believe is critical technology. That's really what needs to be solved.
SORKIN: So part of this and I wonder whether you will end up being sort of a diplomat in all of this is convincing the Chinese that this is acceptable to them too because there's also the prospect that the Chinese could say we're just not doing this. We'll just shut the whole thing down.
MNUCHIN: Well, that's what they've said, that's what they've said in the past. Previous proposals they've blocked because they were not happy about the technology transfer. And I would have to convince them and the U.S. government that there was a way to do this.
SORKIN: How important would it be to bring in other tech companies or other companies? The last time that you went about even working with the private sector when you were in the public sector was Walmart that was going to Walmart was going to be involved, Microsoft was going to be involved at one point as well. Well, Oracle is clearly involved.
MNUCHIN: I mean, I clearly would approach some tech companies. I wouldn't approach tech companies that have competitive products because I think it's important this is independent and I wouldn't let any tech company control this so nobody would have more than 10% control.
SORKIN: How do you compare that opportunity, the TikTok opportunity, with the opportunity at New York Community Bancorp.?
MNUCHIN: New York Community Bank is a lot easier. It's a lot easier to get done. I was there yesterday, I'm going to see the private bank today. You know, it's a top 20 bank. We put up a lot of capital which will stabilize the business, brought in Joseph Otting as CEO and I think there's going to be a great turnaround.
SORKIN: Let me ask you a very different question to, put your treasury secretary hat on for a second, which is how do you think the economy is actually going?
MNUCHIN: I'm worried about the economy. So we're in a situation where obviously the Fed is on hold. You know, I agree that the Fed needs to see continued data. The last thing we want them to do is lower interest rates and not control inflation. But even if the Fed lowers rates to three and a half percent, I think we're gonna see 10-year treasuries in the four to four and a half percent range for a long time.
KERNEN: Andrew did you read this?
SORKIN: No, I did. I did.
KERNEN: 7.99 deodorant, it used to be four, but it's not. That's an example of where it is. Things seem like they are 40 or 50%, higher than they were three years. As good as the economy seems to people that follow it.
SORKIN: So my question, though, and this is why I wanted to ask the former Secretary about this. If you had been the Secretary of the Treasury for this administration, current administration, is there something you think you could have done and done better that would have changed the outcome in a material way? Meaning, I think there's a lot of economists—
MNUCHIN: Absolutely.
SORKIN: Think, actually, things are pretty on a relative basis compared to where we were, they started the ball game, and where we are today, they go actually that's a pretty great outcome, again, looking relative to the rest of the world, and recognizing that the Federal Reserve plays a huge role in all of these things.
MNUCHIN: But let me just say I agree with your comment that even if inflation comes down, prices will stop at much higher levels, which is a real affordability issue. But I mean I think the simple answer is there was just too much government spending. I mean I think when you look back in Covid, we needed to do the first two bills, or there would have been a worldwide depression. We shouldn't have done the last trillion dollars in hindsight, and there shouldn't have been the continued multi trillion dollar spending afterwards. The deficit is out of control. The debt is too high. We had a debt pre-Covid that we were beginning to pay down.
SORKIN: But do you think that attacking those issues would have had an impact on inflation?
MNUCHIN: Absolutely. The government spending is what caused inflation. It started in Covid and it continued on with multi-trillion dollar packages.
KERNEN: Still up 50% higher than it was and if your paycheck is still below in real terms where it was three years ago, you're if you're buying and it is. Average weekly earnings are still below before buying came in.
QUICK: Mr. Secretary, if you're worried about the economy, are you also worried about stagflation? A stagflation situation?
MNUCHIN: I am. And I think Jamie talked about that scenario. So I mean I think we're not out of the woods yet. So we're in a period of high interest rates. I think the economy is going to slow down and it's something we got to carefully watch.
SORKIN: Mr. Secretary, I want to thank you—
KERNEN: You're like a sec – you're still speaking in guarded terms like a treasury secretary. It's amazing. You can't, you can't get rid of it.
MNUCHIN: Can't break it.
KERNEN: Do you support a strong dollar?
MNUCHIN: I support a stable dollar.
SORKIN: Thank you for joining us. Thank you for breaking the news that you're looking at this and you got to come on back and keep us informed as to what this bid might look like.