The Indicator from Planet Money

Episode•February 14, 2025•9 min

Bailing out the FAIR plan, broligarchs beef, and CFPB RIP?

What's going on with the FAIR plan in a post-Eaton and Palisades fires California? What's the backstory to the frozen Consumer Financial Protection Bureau? And why are the two tech bros very publicly going at it? Indicators of the Week explains! Related episodes: How a consumer watchdog's power became a liability (https://www.npr.org/2023/10/17/1197955919/the-indicator-from-planet-money-cfpb-supreme-court) For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org (http://plus.npr.org/). Fact-checking by Sierra Juarez (https://www.npr.org/people/g-s1-26724/sierra-juarez). Music by Drop Electric (https://dropelectric.bandcamp.com/). Find us: TikTok (https://www.tiktok.com/@planetmoney), Instagram (https://www.instagram.com/planetmoney/), Facebook (https://www.facebook.com/planetmoney), Newsletter (https://www.npr.org/newsletter/money). To manage podcast ad preferences, review the links below: See pcm.adswizz.com (https://pcm.adswizz.com) for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences. Learn more about sponsor message choices: podcastchoices.com/adchoices (https://podcastchoices.com/adchoices) NPR Privacy Policy (https://www.npr.org/about-npr/179878450/privacy-policy)

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Transcript

0:01

Npr.

0:11

This is the Indicator from Planet Money. I'm Darren Woods.

0:14

I'm Waylon Wong.

0:16

And stepping out of the Planet Money orbit to have a dalliance with us, the one and only Nick Fountain.

0:24

We're no longer Planet Money centric. It's the Copernican revolution of podcasts.

0:31

Whoa.

0:31

That's right. Orbits everywhere. And your arrival here could not have been better timed because it is. Indicators of the Week.

0:41

That's right. It's our weekly look at interesting numbers from the news.

0:45

On today's show, we have bailing out

0:47

the California Fair Plan.

0:49

We also have the Consumer Financial Protection Bureau deep freeze.

0:53

And of course, the biggest beef with the hottest diss tracks of this year, Elon Musk versus Sam Altman of OpenAI.

1:03

They're not like us.

1:06

Coming up in a minute.

1:09

Indicators of the Week. Whalam Wong hit us.

1:12

All right, my indicator is $1 billion. That is the amount that insurance companies in California will have to collectively contribute to the Fair Plan. That is the state's insurer of last resort when it comes to fire coverage.

1:26

Yeah, we've been hearing so much about the Fair Plan in the aftermath of the Los Angeles wildfires. When I was down there covering it, everybody was talking about the future of it. If you are a California homeowner or business owners and you cannot get covered for fire anywhere else, one thing you can do is you can get on this Fair Plan.

1:45

Yeah, that's about the only thing you can do. And because it's gotten a lot harder to get fire coverage in the last few years, the Fair Plan has really grown in its number of customers. That has led to a lot of worries about how the Fair Plan would possibly pay out all of the claims from the most recent wildfires.

2:03

And do we know how many claims it's gotten since the fires last month?

2:06

Yeah. So the latest numbers from the California Insurance regulator put the number at nearly 5,000 claims so far, with more coming in. And the Fair Plan does not have the cash on hand to pay out.

2:19

And how this works is they are asking for a billion dollars and the insurance companies just have to pay that.

2:25

Yeah. So the way the Fair Plan is set up, any insurance company that operates in California has to participate in it. That means that if the Fair Plan needs to pay out claims, it can ask its members to chip in. And that is what is happening now.

2:39

And I assume there's some kind of precedent for this.

2:41

There is. I mean, it's like, written into the laws around how the Fair Plan works. And the last time they actually had to go hat in hand to the insurance companies. Their members was in the early 90s, but at that time, it was just for about half of what the Fair Plan is asking for this time.

2:57

All right. And I know that insurers like State Farm have dropped customers for fire coverage in California, including around where I live. Do they still have to contribute to the $1 billion that the Fair Plan is asking for?

3:09

Yes, those are the rules. Each company has to chip in based on the market share they have in California. So it's proportional. But this does mean, as you point out, Nick, that State Farm will indirectly end up paying money to customers that it may have rejected in the regular insurance market. Just kind of a mind bender.

3:26

And it means that they're less likely to want to underwrite people in the future.

3:30

It also means, you know, premiums could go up because now these insurance companies are paying out collectively a billion dollars. Someone's going to have to pay for that.

3:37

All right. From California fires to freeze, Washington, D.C. and the headquarters of a certain agency,

3:44

my indicator is $81. And that's the average value of how much the Consumer Financial Protection Bureau has helped every American adult since it started.

3:53

Yeah, the Consumer Financial Protection Bureau, you might know, is an agency that's kind of like a policeman for banks and payday lenders and debt collectors, other financial companies. It came to being after the great financial crisis.

4:06

And so that $81 I mentioned, that's for things like when the CFPB has found a company that's broken the law and its consumers have gotten compensation.

4:16

But those days of receiving dozens of dollars from this agency are over. Right. Because at least according to Elon Musk, this thing is done. He wrote CFPB RIP on X, formerly Twitter, last week.

4:31

Yeah. And to be clear, the rumors of the death of the cfbp, while they're not greatly exaggerated, the, you know, the agency is still alive right now. It's just very frozen. Last week, the acting director of this financial watchdog demanded staff cease all supervision and examination activity. He sent an email saying that the headquarters would be closed all this week.

4:54

Darian, what is behind all this? Wouldn't you think that protection from scams and unfair lending would enjoy broad support? Isn't it a populist thing?

5:05

Well, the banking industry has been against the CFPB for a long time. In general, one of their chief complaints is that it introduces a lot of uncertainty because the agency relies on enforcement rather than writing regulations or helping write new laws. It's also quite an independent Agency, meaning it's not as accountable to Congress as many other ones. It's been a particular bugbear for a lot of Republican lawmakers, basically since its creation in 2010.

5:33

I think I got at least one kind of jovial press release in my inbox this week from a banking group. Yeah. So I. I think there's a lot of banking executives that are pleased with this.

5:44

Yeah. Banks and also parts of Silicon Valley. You know, there's been many efforts from tech companies trying to take a bite of the financial services. Apple. Elon Musk himself struck a deal with Visa last month with the hopes to turn X into a digital wallet.

5:58

Well, what could go wrong in dismantling the thing that we did to fix the problems of the great financial crisis? What could go wrong?

6:07

What's a bit of financial innovation between friends? You know, advocates for the freeze do say that the CFPB is stifling that innovation.

6:16

I guess that brings us to my indicator, which is, can I make that transition?

6:21

Is it about friendship?

6:22

Kind of. It's about frenenimyship.

6:25

Let's hear it.

6:27

Frenemyship. My indicator is $97 billion. That is the size of the hostile takeover bid that Elon Musk launched against OpenAI, the organization behind such hits as ChatGPT, Dall? E. You've heard of them?

6:42

Yes, I've heard of them. I use them. My main question is, isn't that way less than OpenAI is valued at? It is.

6:50

If you were talking about the whole of OpenAI, yes, that is a small bid. But Musk is going after the nonprofit behind OpenAI, also confusingly called OpenAI. There's a whole lot of backstory here. Musk helped co found the nonprofit back in 2015, but there was a falling out when Musk tried to wrest control from co founder Sam Altman in 2018 and fold OpenAI into Tesla. And then after that, of course, OpenAI became probably the dominant player in the AI space. And Musk has been using many tactics to try to get control over the company and sometimes to try to sabotage it.

7:27

Sabotage? Big claim.

7:29

It's not me making the claim. It's actually the Beastie Boys. Yes, Sabotage. It's all. He was at a conference in Europe earlier this week when he got asked about this. I don't know. I'm curious. I think it's to slow down a competitor and try to catch up with his thing, but I don't really know. And then he tweeted a dig at Musk, which I thought was pretty funny. Musk, of course, owns Twitter now. X. And Altman tweeted a response to Musk's offer of OpenAI, saying, no, thank you, but we will buy Twitter if you want.

8:08

The girls are fighting.

8:10

Yeah, I've seen this compared to the Kendrick Drake beef. But there is something interesting about it. I'm not gonna go into the details here. There's a lot of math. But the Musk hostile takeover bid will make it much harder for Altman to do this big maneuver he's been trying. Trying to for a while now, which is to convert OpenAI, which, remember, was started as a nonprofit to protect the world from the worst of AI to a for profit company that can compete with the biggest tech companies. We'll see if Musk's bid goes anywhere, but it's certainly not something that OpenAI's board can just categorically reject. And it makes the math of that maneuver much more difficult. That's the point. Musk's lawyer said in a court filing a couple days ago that he withdraw his bid if OpenAI decides to remain a nonprofit.

8:56

Okay, Nick, I guess the real question is, who are you beefing with in 2025, huh?

9:01

I can tell you who I'm not beefing with. Producer Angel Carreras, editor Kate Kincannon, fact checker Sierra Juarez, and engineer Sina Lofredo. They put together this episode of the Indicator, which is a production of npr, and they're the best. Ah, I can't stand it. The Indicators. Da, da, da, da. Sorry.

Bailing out the FAIR plan, broligarchs beef, and CFPB RIP?

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