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Speaker 1: Live from the Bloomberg Interact a Broker Studios. This is

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Speaker 1: Bloomberg day Break for Friday, March seventeenth. Coming up today,

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Speaker 1: eleven banks give a lifeline to First Republic. We're live

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Speaker 1: with the latest ubs and credit Suite Suppose a forced combination.

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Speaker 1: Bion's pull eight billion dollars out of Charles Schwab, an

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Speaker 1: NBA legend, Michael Jordan I selling his stake in the

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Speaker 1: Charlotte Hornets. Chinese President Chi Ching Ping will visit Russia

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Speaker 1: next week. Plus New York Governor Hockel addresses mental health

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Speaker 1: issues facing young people. I'm John Tucker Moray Head, I'm

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Speaker 1: John Stashward. Sports a win for the Rangers, losses for

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Speaker 1: the Devils, and that's two big upsets to start the

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Speaker 1: NCAA tournament. That's all straight ahead on Bloomberg day Break,

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Speaker 1: the business news you need to start your day, and

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Speaker 1: just one fifteen minute podcast each pointing on Apples, Spotify,

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Speaker 1: the Bloomberg Business Appen everywhere you get your podcasts. Good morning,

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Speaker 1: I'm Amy Morris and I'm kieron Moscow. Here are the

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Speaker 1: stories we're following today. We end this tumultuous week the

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Speaker 1: way it began focusing on the banking industry. After two

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Speaker 1: days of frantic phone calls, meetings, and some arm twisting,

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Speaker 1: CEOs of eleven banks agreed to chip in a total

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Speaker 1: of thirty billion dollars to show up First Republic. Treasury

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Speaker 1: Secretary Janet Yellen, one of the architects of the deal,

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Speaker 1: tells the US Senate the banking sector is secure. I

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Speaker 1: can reassure the members of the committee that our banking

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Speaker 1: system is sound and that Americans can feel confident that

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Speaker 1: third deposits will be there when they need them. This

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Speaker 1: week's actions demonstrate our resolute commitment to ensure that our

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Speaker 1: financial system remains strong and the depositors savings remained safe.

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Speaker 1: Treasury Secretary Yellen proposed the idea of a group bank

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Speaker 1: effort on Tuesday and a call with FED chair J Powel.

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Speaker 1: It was a volatile day for First Republic shares. They

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Speaker 1: plunge thirty five percent but closed up ten percent. Right now,

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Speaker 1: shares are down about five percent in early trading. Well, Ami,

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Speaker 1: you can count Bill Ackman among those not happy about

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Speaker 1: the lifeline to First Republic and a tweet, the Pershing

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Speaker 1: Square founder said, quote spreading the risk of financial contagion

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Speaker 1: to achieve a false sense of confidence in first Republic

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Speaker 1: is bad policy. He adds that half measures don't work

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Speaker 1: when there's a crisis of confidence. The downfall of Silicon

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Speaker 1: Valley Bank is also in focus this morning. Republican Chairman

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Speaker 1: of the House Financial Services Committee, Patrick McHenry tells us

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Speaker 1: his committee will look closely at what caused the bank

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Speaker 1: to fail. One of the factors that we have to

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Speaker 1: look into to understand are the core causes of inflation.

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Speaker 1: Then the FED response to us the rapid rate increases

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Speaker 1: are as a direct result of inflationary pressures, and the

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Speaker 1: FED has enormous stress and attention placed on them in

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Speaker 1: a moment like this. But I know and I have

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Speaker 1: confidence and their ability to make strong and right decisions.

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Speaker 1: House Financial Services Committee chair Patrick mcchanry spoke with Joe

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Speaker 1: Matthew on Bloomberg Sound On. Catch the program weekdays from

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Speaker 1: one to three pm Eastern on Bloomberg Radio and hear

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Speaker 1: that full interview on the sound on podcast available on Apple,

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Speaker 1: Spotify or anywhere else you get your podcasts. Well now, Amy,

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Speaker 1: the FED has to contend with both high inflation and

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Speaker 1: a shaky banking sector, and that could post problems. According

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Speaker 1: to former Federal Reserve economists Claudia Sam, there is a

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Speaker 1: lesson about how going hard and fast created an environment

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Speaker 1: that was fragile to stupid. It's not like the FED

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Speaker 1: caused what happened with the Silicon Valley Bank, but they

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Speaker 1: did set up a situation in which we were more

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Speaker 1: prone to this kind of volatility with these big grade increases.

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Speaker 1: And former FED economists Claudia Sam thinks the Central Bank

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Speaker 1: should probably pause at next week's meeting. And we're learning

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Speaker 1: more details around the rescue of on Ballet Bank. Turns

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Speaker 1: out the FED reportedly blocked the mention of regulatory flaws

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Speaker 1: in a statement on the rescue plan. The New York

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Speaker 1: Times is saying that the White House wanted to spotlight

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Speaker 1: shortcomings in financial regulation for the collapse of SVB. The

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Speaker 1: paper says Fed Jared J. Powell blocked that effort well.

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Speaker 1: Josh Schwab is also in focus this morning, and we're

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Speaker 1: getting word that clients pulled billions of dollars out of

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Speaker 1: Schwab's prime funds this week. Bloomberg's Denis Pellegrini is tracking

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Speaker 1: those developments. Schwab saw eight point eight billion dollars in

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Speaker 1: net outflows from its prime money market funds. In just

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Speaker 1: the first three days of this week. Two Schwab value

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Speaker 1: advantage money funds saw the largest redemptions in at least

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Speaker 1: six months. The funds with outflows held a concentration of

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Speaker 1: CDs and commercial paper from other financial institutions. Schwab says

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Speaker 1: the funds have liquidity levels above what's required, and it

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Speaker 1: did see inflows into its government and treasury funds this week.

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Speaker 1: Denise PELLAGRENI Bloomberg Daybreak, Thank you, Denise. The banking turmoil

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Speaker 1: continues in Europe as well as we track shares of

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Speaker 1: credit suits. Bloomberg News has learned that Credit suisend UBS

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Speaker 1: are opposed to a forced combination. We get the very

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Speaker 1: latest from Bloomberg's Oliver Crook in Zurich. Neither of these

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Speaker 1: two banks I apparently want to be forced into that situation.

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Speaker 1: You ask about the sort of the logic for it.

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Speaker 1: For UBS, what does Credit Sweete bring UBS right now?

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Speaker 1: UBS is focus right now is expanding in the US.

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Speaker 1: They're not getting much from Credit Sweete as a takeover.

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Speaker 1: They do not have huge operations there and the sorts

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Speaker 1: of things that they want there's a lot of client

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Speaker 1: overlap as well. And then there's also this other part

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Speaker 1: of it that UBS is said to not want. Does

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Speaker 1: not have the same risk appetitis credit sweee, so they

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Speaker 1: may not want many of the wealth management clients peaks

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Speaker 1: that are a little bit riskier on the scale. Bloomberg's

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Speaker 1: Oliver Crook says both banks see a takeover as a

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Speaker 1: measure of last resort, and right now shares of Credit

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Speaker 1: Suiee are down three and a half percent. Well, Amy,

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Speaker 1: we change gears just a little bit. Now we have

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Speaker 1: some news on the business of sports this morning. Michael

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Speaker 1: Jordan has certainly banked plenty of dough during his career

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Speaker 1: on and off the court, and now the Hall of

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Speaker 1: Famer may rank in million. So let's get the details.

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Speaker 1: Lie from Bloomberg's Dan Schwartzman. Dan, Good morning, Amy, and

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Speaker 1: Karen Espn is reporting that the Charlotte Hornet's majority owner

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Speaker 1: is looking to sell his controlling stake in the NBA franchise.

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Speaker 1: The five time MVP is in discussions with a group

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Speaker 1: led by minority owner Gabe Plotkin, who's the founder of

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Speaker 1: Melvin Capital Management. Jordan bought a controlling steak in the

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Speaker 1: team back in twenty and ten, but has had limited

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Speaker 1: success as an owner, with the Hornets making the playoffs

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Speaker 1: just two times in thirteen seasons. Forms magazine valuing the

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Speaker 1: franchise at one point seven billion dollars, which ranks twenty

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Speaker 1: seventh out of thirty teams. A New York on Dan Schwartzman,

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Speaker 1: Bloomberg Daybreak, Thank you, Karen, five h seven on Wall Street.

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Speaker 1: Forty eight degrees in New York with increasing cloudiness today

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Speaker 1: as we go up to sixty degrees. Time now for

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Speaker 1: a look at some of the other stories making news

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Speaker 1: in New York and around the world. For that, we're

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Speaker 1: joined by Bloomberg's John Tucker. Good morning John, Good morning Amy.

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Speaker 1: Chinese President Shi ching Peng is going to visit Russia

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Speaker 1: next week. It's an apparent show support for Blindermer. The

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Speaker 1: Chinese Foreign Ministries says. The meeting is going to take

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Speaker 1: place from Monday to Wednesday. China has declared a no

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Speaker 1: limits friendship with Russia and refused to contend Moscow's invasion

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Speaker 1: into Ukraine, even while declaring that the sovereignty and territory

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Speaker 1: integrity of all countries must be respected. Another three people

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Speaker 1: have been charged in the death of a black man

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Speaker 1: out of Virginia's psychiatric hospital last week. Seven deputies have

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Speaker 1: already been charged with second degree murder in the death

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Speaker 1: of twenty eight year old Ivotino, who was taken into

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Speaker 1: custody March third while in mental health distress, and family

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Speaker 1: members saw video of the Enrico County deputies holding him

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Speaker 1: on the ground for about twelve minutes. Attorney Ben Crump,

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Speaker 1: as representing a Tino's family, the weight of seven individuals

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Speaker 1: on his body. Why he's faced down, handcuffed with leg irons,

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Speaker 1: and you say, my god. Why it's believed Otino died

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Speaker 1: from fixiation. New York Governorcafe Hokol address mental health issues

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Speaker 1: facing young people in the state, especially during the pandemic.

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Speaker 1: The governor says she put mental health front and center

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Speaker 1: in the budget. Never before has a state lean this hard,

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Speaker 1: this publicly into the issue of helping people deal with

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Speaker 1: mental health challenges. So I've said the era of ignoring

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Speaker 1: mental health is over, declared it so, and we're going

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Speaker 1: to lean hard into this. Well. The governor is calling

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Speaker 1: for a billion dollars to strengthen mental healthcare programs in

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Speaker 1: New York City, Preparing for Today is Saint Patrick's Day Parade.

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Speaker 1: It steps off at eleven o'clock on Fifth Avenue from

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Speaker 1: forty fourth to seventy ninth streets. While people will be

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Speaker 1: on celebrating, some barn restaurant owners want to change the

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Speaker 1: mindset about drinking during the holiday. Aby Amens owns heck

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Speaker 1: At Cafe and Elixird Lounge in the East Village. Even

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Speaker 1: people who drink, there are people who just don't leave

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Speaker 1: the house because they don't want to deal with the

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Speaker 1: barthing people on the subways, says Henckett is a sober

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Speaker 1: bar and only serves non alcoholic beverages. Global News twenty

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Speaker 1: four hours a day, power by more than twenty seven

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Speaker 1: hundred journalist and analysts more than one hundred twenty countries.

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Speaker 1: I'm John Tucker. This is Bloomberg Gamy. All right, thank

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Speaker 1: you John, time now of the Sports Report, brought to

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Speaker 1: you by try Stay Dowdy. For that, we bring in

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Speaker 1: Bloomberg's John stash Haard. Thanks Amy. If you needed a

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Speaker 1: reminder of why they call it March madness. Virginia is

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Speaker 1: the only school that had lost the first round in

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Speaker 1: NCWA tournament game as a one seed that was five

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Speaker 1: years ago, seated fourth this year playing Furman, a school

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Speaker 1: that had not been in the tourney since nineteen eighty.

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Speaker 1: Virginia at twelve point Lean still led by two and

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Speaker 1: had the ball checks passing the Beakman bounces back to

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Speaker 1: Clark ten seconds he is double. He slapped at Prayer,

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Speaker 1: pass picked on party four seconds. Good case right back

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Speaker 1: to the one two part two John Westwood one NCUBAA

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Speaker 1: Furman over Virginia sixty eight sixty seven and not the

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Speaker 1: biggest surprise the day because later Princeton down ten with

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Speaker 1: eight minutes left, storn back to knock off Arizona fifty

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Speaker 1: nine fifty five. Third year in a row. Fifteen Seed

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Speaker 1: has beaten A two Saint Peters did it last year,

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Speaker 1: Oral Roberts the year before. Three one Seeds prevailed Alabama,

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Speaker 1: Kansas and Houston, easy wins for Duke Texas UCLA Iona

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Speaker 1: takes on Yukon today at fort thirty and Fairleigh Dickinson

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Speaker 1: beats Perdue tonight at Barkley's Nets lost to much improved

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Speaker 1: Sacramento one on one ninety six kings at the second

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Speaker 1: best record in the West. At the Garden, Rangers beat

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Speaker 1: Pittsburgh four to two and Newark, Tampa may beat the Devils,

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Speaker 1: just as they did on Tuesday, this time four to three.

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Speaker 1: The mets worst fears were realized that knee injury suffered

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Speaker 1: by Edwin Diaz as Puerto Rico celebrated its World Baseball

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Speaker 1: Classic victory, Torn Fotell attended, and Diaz unlikely to pitch

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Speaker 1: for the Mets at all. In twenty twenty three, John

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Speaker 1: Stash Howard with Bloomberg spall live from coast to coast,

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Speaker 1: from New York to San Francisco, Boston to Washington, d C.

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Speaker 1: Nationwide on Sirius xamp, the Bloomberg Business app, and Bloomberg

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Speaker 1: dot Com. This is Bloomberg Daybreak. Good Friday morning, I

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Speaker 1: Amy Morris. Eleven banks have chipped in to deposit thirty

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Speaker 1: million dollars in the First Republic Bank, a move sparked

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Speaker 1: by JP Morgan, CEO Jamie Diamond and Treasury Secretary Janet Gillen.

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Speaker 1: So we get to tales now from Bloomberg Shanelli bassek Shinelli,

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Speaker 1: Good morning. Why did these larger banks agree to do this?

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Speaker 1: How much arm twisting was there? There was actually not

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Speaker 1: a lot of arm twisting, per Se. I mean potentially

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Speaker 1: a lot of the banks that were involved, of course,

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Speaker 1: would have their hesitations at the beginning, But this is

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Speaker 1: something that you know, you think back to some of

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Speaker 1: the most significant rescues of some significant financial institutions. Think

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Speaker 1: back to the Panic of nineteen oh seven, or think

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Speaker 1: even back to the rescue of long term capital management,

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Speaker 1: or at least attempts to stave off the market. There

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Speaker 1: have been times in history where executives and the government

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Speaker 1: coordinated a rescue, if you will, to pump money into

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Speaker 1: the system to support financial markets. Now, this is one

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Speaker 1: bank being saved by the rest of the industry. What

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Speaker 1: were to happen if more banks of scale get into

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Speaker 1: more trouble? Is this something that can be tapped on again? Remember,

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Speaker 1: these are uninsured deposits that these banks are making to

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Speaker 1: the tune of thirty billion dollars. The largest financial institutions

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Speaker 1: in the country. The smaller firms P and C, B

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Speaker 1: and YML and truest Us Bancorp State Street are each

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Speaker 1: making a commitment of one billion, and the investment banks

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Speaker 1: Goldman and Morgan Stanley are making a deposit of two

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Speaker 1: point five billion dollars. These are not in the form

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Speaker 1: of equity or debt. Again, they're straight deposits, and like

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Speaker 1: I was saying, these are uninsured deposits. So certainly a

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Speaker 1: move that you have not seen much before. It's pretty

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Speaker 1: unprecedented move here. It did support the market yesterday. You

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Speaker 1: are seeing the shares of even First Republic really fluctuate

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Speaker 1: postmarket yesterday and before the market open today. You made

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Speaker 1: a point there that I don't think we should let

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Speaker 1: just pass one bank being saved by the rest of

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Speaker 1: the industry. Why is that so special? So First Republic

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Speaker 1: is an interesting one because remember it tends to have

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Speaker 1: higher net worth individuals. These folks might have money, and

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Speaker 1: not just First Republic but the other banks as well.

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Speaker 1: So even the client base itself, you know, the Morgan

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Speaker 1: Sailey's own clients might be exposed to First Republic. They

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Speaker 1: might have a loan from First Republic. JP Morgan had

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Speaker 1: already been advising First Republic and had supported it with

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Speaker 1: additional liquidity after the failure of Signature Bank. That was

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Speaker 1: something that First Republic had come out to the market

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Speaker 1: and say they tapped the Fed as well as JP

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Speaker 1: Morgan at that point in time. So you have to

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Speaker 1: remember the banking system is quite interconnected, and it's not

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Speaker 1: that as fierce and as competitive the industry might be,

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Speaker 1: there are reasons that everyone will come in and support

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Speaker 1: each other at the very end, because if you start

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Speaker 1: seeing banks go south, that creates a lot of issues

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Speaker 1: for the system itself. So then what is the risk here?

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Speaker 1: Is there a greater risk for the larger banks? Is

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Speaker 1: there more risk for other smaller banks? The smaller banks

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Speaker 1: are the ones that people are very concerned about, and

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Speaker 1: you see it in the trading of their stocks as

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Speaker 1: well as their bonds. Again, you saw it with SVB,

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Speaker 1: and there's Silicon Valley Bank and Signature Bank that think

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Speaker 1: about it. There was no buyer when it came to

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Speaker 1: Silicon Valley Bank at the end of the day, not

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Speaker 1: one that was able to make it through the process.

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Speaker 1: One of the big issues in that process was not

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Speaker 1: just the government's concerns. One of the big issues is

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Speaker 1: by the time they had to look for a sale,

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Speaker 1: a rescue sale, a fire sale, if you will, they

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Speaker 1: had lost too many deposits. There was not as many

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Speaker 1: reasons for the banks to come in and buy it.

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Speaker 1: One way somebody had put it to me was if

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Speaker 1: we're not going to create the next JP Morgan Chase.

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Speaker 1: What's the point, because it's very difficult to get these

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Speaker 1: bank mergers done. So we were watching in real time

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Speaker 1: How to Save a Bank, and you said yourself that

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Speaker 1: this is a scenario that is quite unusual. I'm wondering

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Speaker 1: if it would lead to a new plan of action,

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Speaker 1: a new sort of model for how to bail out

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Speaker 1: a bank. Well, I was saying, we've seen some examples

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Speaker 1: of this sort of in the past. And the big

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Speaker 1: thing here that for First Republic in particular, remember this

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Speaker 1: is still a prize asset. It's not like Silicon Valley

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Speaker 1: Bank where people would not want to buy it at all.

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Speaker 1: There's a potential that you could buy it on the

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Speaker 1: cheap at frankly, for if you're a big banker right

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Speaker 1: now and looking to expand your deposit base, you're looking

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Speaker 1: to expand your lending, looking to expand your exposure to

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Speaker 1: high noteworth clients. So it's not that nobody would want it,

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Speaker 1: it's that it's hard to buy it, particularly because some

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Speaker 1: of these big banks have deposit caps that prohibit them.

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Speaker 1: And then the Fed would have to wave some rules

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Speaker 1: to get it done. And guess what, the big get

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Speaker 1: bigger that's kind of the big sense of this, whether

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Speaker 1: it's through potential acquisitions in the future, because the door

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Speaker 1: is still open to an acquisition of First Republic potentially

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Speaker 1: in the future. But what happens to the rest of

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Speaker 1: them then is a bit question, Sinali. We'll only get

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Speaker 1: thirty seconds here in this very volatile week. Is this

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Speaker 1: gonna help settle things down thirty seconds? Unclear? Even if

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Speaker 1: it settled things down for this week, it doesn't keep

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Speaker 1: the market out of the clear for the next couple

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Speaker 1: weeks to months. You're listening to Bloomberg Daybreak Today, your

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