1 00:00:00,000 --> 00:00:03,560 Speaker 1: I'm Joe Matthew and Kaylee Lynes just got back. Well 2 00:00:03,600 --> 00:00:06,600 Speaker 1: it's from the Crypto Show, but also from the hearing, 3 00:00:06,760 --> 00:00:09,320 Speaker 1: the SVB hearing today. You started your morning pretty early 4 00:00:09,880 --> 00:00:11,800 Speaker 1: ahead of the hearing. You saw a lot of action 5 00:00:11,840 --> 00:00:14,160 Speaker 1: outside the hearing room, You caught up with Elizabeth Warren 6 00:00:14,200 --> 00:00:18,320 Speaker 1: among other lawmakers. Did this feel like a productive exercise 7 00:00:18,360 --> 00:00:20,720 Speaker 1: while you were there? That's a really good question. I mean, 8 00:00:20,800 --> 00:00:23,239 Speaker 1: I talked probably to eight or nine of these senators 9 00:00:23,280 --> 00:00:25,520 Speaker 1: as they were exiting the hearing room, and so many 10 00:00:25,560 --> 00:00:28,200 Speaker 1: of them reference that they still have a lot more 11 00:00:28,240 --> 00:00:30,960 Speaker 1: they need to learn and kind of more work that 12 00:00:31,040 --> 00:00:33,320 Speaker 1: needs to be done before any kind of real policy 13 00:00:33,360 --> 00:00:36,720 Speaker 1: or regulatory recommendation is made, which I do think is 14 00:00:36,760 --> 00:00:39,120 Speaker 1: interesting considering these hearings are taking place two and a 15 00:00:39,159 --> 00:00:42,159 Speaker 1: half weeks after the failure of Silicon Valley Bank. Already 16 00:00:42,360 --> 00:00:45,040 Speaker 1: a significant amount of time has passed, and yet they're 17 00:00:45,040 --> 00:00:47,479 Speaker 1: saying that they still have questions unanswered that need to 18 00:00:47,479 --> 00:00:50,240 Speaker 1: be answered before they can form any real regulatory response 19 00:00:50,240 --> 00:00:52,479 Speaker 1: because they don't want to act too quickly, other than 20 00:00:52,600 --> 00:00:55,800 Speaker 1: perhaps Elizabeth Warren. I was joined last hour by Congressman 21 00:00:55,840 --> 00:01:00,400 Speaker 1: William Timmins, who was on house financial services, and it 22 00:01:00,600 --> 00:01:04,920 Speaker 1: was a difficult conversation because he was really obsessed with 23 00:01:05,040 --> 00:01:08,039 Speaker 1: Woke Bank. And I haven't heard that we were talking 24 00:01:08,040 --> 00:01:09,560 Speaker 1: to Rick Davis about it after. I haven't heard that 25 00:01:09,560 --> 00:01:11,040 Speaker 1: for a couple of weeks, but I guess you know, 26 00:01:11,080 --> 00:01:13,920 Speaker 1: that's still very much in the air. He said it 27 00:01:13,959 --> 00:01:17,520 Speaker 1: was a value statement that this bank was bringing in 28 00:01:18,480 --> 00:01:21,600 Speaker 1: clients of similar values trying to chase ESG, and they 29 00:01:21,600 --> 00:01:24,840 Speaker 1: all kind of brought themselves down. But we've never connected 30 00:01:24,840 --> 00:01:26,320 Speaker 1: the dots on any of that. We've been talking to 31 00:01:26,400 --> 00:01:29,319 Speaker 1: lawmakers for weeks on this end, regulators. Yeah, and I'm 32 00:01:29,319 --> 00:01:32,040 Speaker 1: not sure where the body's buried if that's the case. Yeah, well, 33 00:01:32,080 --> 00:01:34,920 Speaker 1: it's on both kind of the ESG kind of investments 34 00:01:34,920 --> 00:01:37,240 Speaker 1: that were made, which, to be fair, Silicon Valley did 35 00:01:37,280 --> 00:01:40,240 Speaker 1: make some The size relative to the entire deposit base 36 00:01:40,319 --> 00:01:42,400 Speaker 1: in the number of assets that this bank actually had 37 00:01:42,520 --> 00:01:45,120 Speaker 1: wasn't super substantial, But it also was about D and 38 00:01:45,200 --> 00:01:47,440 Speaker 1: I initiatives and the makeup of its board. I would 39 00:01:47,520 --> 00:01:50,320 Speaker 1: just note that eleven of the twelve board members at 40 00:01:50,320 --> 00:01:53,960 Speaker 1: Silicon Valley Bank were indeed white. So there is a 41 00:01:54,040 --> 00:01:57,240 Speaker 1: question of how Woke quote unquote this bank really was 42 00:01:57,360 --> 00:02:00,280 Speaker 1: that too, that this was based on race and ender. 43 00:02:00,360 --> 00:02:01,960 Speaker 1: I mean, we went right down to the some of 44 00:02:02,000 --> 00:02:04,080 Speaker 1: the very early talking points that we had heard. I 45 00:02:04,080 --> 00:02:06,560 Speaker 1: don't know if that's a foreshadowing of the House hearing tomorrow, 46 00:02:07,240 --> 00:02:08,880 Speaker 1: but a lot of these lawmakers have made up their 47 00:02:08,919 --> 00:02:12,200 Speaker 1: minds clearly before they came into the room today, and 48 00:02:12,200 --> 00:02:14,760 Speaker 1: that's what I'd like to hear at least start with Nathan. 49 00:02:14,760 --> 00:02:17,920 Speaker 1: About Nathan Deane, senior government analyst at Bloomberg Intelligence, I 50 00:02:17,919 --> 00:02:20,280 Speaker 1: know you were plugged into this for the balance of 51 00:02:20,320 --> 00:02:23,320 Speaker 1: the hearing, Nathan. We're just trying to cut through the 52 00:02:23,400 --> 00:02:25,480 Speaker 1: noise here and figure out what the heck happened, and 53 00:02:25,560 --> 00:02:28,400 Speaker 1: lawmakers don't always make that very easy, no, And you know, 54 00:02:28,720 --> 00:02:30,400 Speaker 1: I think Kiley said it right. You know, today was 55 00:02:30,400 --> 00:02:33,200 Speaker 1: our working hearing. You know, this was you heard things 56 00:02:33,240 --> 00:02:37,120 Speaker 1: like MRA's, mria's, Camel's ratings. I mean, outside of me 57 00:02:37,200 --> 00:02:39,840 Speaker 1: and my Finrek nerds, there's not really many people that 58 00:02:39,880 --> 00:02:43,120 Speaker 1: actually talked about Coda ran Yeah, exactly. So tomorrow is 59 00:02:43,120 --> 00:02:44,840 Speaker 1: going to be much different. Tomorrow is going to be 60 00:02:44,880 --> 00:02:46,800 Speaker 1: more of the show in the theater and so forth 61 00:02:46,800 --> 00:02:49,120 Speaker 1: like that. And to your point about the woke bank. 62 00:02:49,200 --> 00:02:51,000 Speaker 1: You know, we've heard this from Republicans over the last 63 00:02:51,000 --> 00:02:53,680 Speaker 1: week or so that not just the bank itself, but 64 00:02:53,720 --> 00:02:57,720 Speaker 1: also the San Francisco Federal Reserve has been focused on things, 65 00:02:57,840 --> 00:03:00,000 Speaker 1: or least their view is is that the San Francis 66 00:03:00,080 --> 00:03:02,519 Speaker 1: go FED was focused on ESG and D and I 67 00:03:02,919 --> 00:03:05,560 Speaker 1: and not focused on bank capital. But ultimately, I think 68 00:03:05,600 --> 00:03:08,000 Speaker 1: what will happen here and where we're gonna end up 69 00:03:08,000 --> 00:03:10,320 Speaker 1: with is May. First, the regulator is going to release 70 00:03:10,360 --> 00:03:13,160 Speaker 1: their postpartum SVB report. You're going to see a lot 71 00:03:13,200 --> 00:03:16,320 Speaker 1: of focus on the interest rate risk of Silicon Valley 72 00:03:16,320 --> 00:03:19,200 Speaker 1: Bank and the lack of risk that was there. And 73 00:03:19,600 --> 00:03:22,000 Speaker 1: there's going to be a lot of blame associated both 74 00:03:22,000 --> 00:03:24,520 Speaker 1: between the bank and the regulators, but also in that 75 00:03:24,600 --> 00:03:27,200 Speaker 1: report you're going to have some policy recommendations that come out. 76 00:03:27,560 --> 00:03:30,280 Speaker 1: You know, Vice share Bar even said today basel free endgame. 77 00:03:30,360 --> 00:03:32,960 Speaker 1: That's for the big banks, regional bank t lack. It's 78 00:03:32,960 --> 00:03:35,760 Speaker 1: called total loss absorbing capacity. This is long term debt. 79 00:03:36,080 --> 00:03:37,520 Speaker 1: We think that if you were to take the big 80 00:03:37,560 --> 00:03:39,760 Speaker 1: bank t LAC rule and apply to the banks that 81 00:03:39,760 --> 00:03:41,920 Speaker 1: about two hundred and fifty million in assets, you've got 82 00:03:41,920 --> 00:03:44,000 Speaker 1: about seventy five billion in long term debt that they're 83 00:03:44,000 --> 00:03:46,800 Speaker 1: going to have to issue as response to this. These 84 00:03:46,840 --> 00:03:48,440 Speaker 1: things are already coming out, but then you have the 85 00:03:48,840 --> 00:03:51,800 Speaker 1: new rules that are coming up in terms of capital 86 00:03:51,800 --> 00:03:53,920 Speaker 1: and liquidity and so forth like that, there's a lot 87 00:03:53,920 --> 00:03:55,800 Speaker 1: of work that they need to do well. It was 88 00:03:55,840 --> 00:03:58,600 Speaker 1: so interesting because what I heard from Republicans and Democrats 89 00:03:58,640 --> 00:04:00,920 Speaker 1: alike today is that regulators dropped the ball. I mean 90 00:04:00,960 --> 00:04:03,440 Speaker 1: that accusation was being made on both sides of the aisle. 91 00:04:03,440 --> 00:04:05,520 Speaker 1: And there it raises the question of when we talk 92 00:04:05,560 --> 00:04:08,400 Speaker 1: about that twenty eighteen Dodd Frank rollback, it left at 93 00:04:08,440 --> 00:04:11,400 Speaker 1: the discretion of regulators what they would like to do, 94 00:04:11,480 --> 00:04:14,200 Speaker 1: what how stringent tests they would like to impose on 95 00:04:14,400 --> 00:04:16,440 Speaker 1: banks of between one hundred and two hundred and fifty 96 00:04:16,440 --> 00:04:18,800 Speaker 1: billion dollars in assets, Which is where this whole question 97 00:04:18,839 --> 00:04:22,760 Speaker 1: of is it about regulatory enforcement or that existing regulation 98 00:04:22,880 --> 00:04:25,160 Speaker 1: is needed. I tried to pose the question a few times. 99 00:04:25,480 --> 00:04:27,440 Speaker 1: It was too much left at their discretion. Should this 100 00:04:27,480 --> 00:04:29,680 Speaker 1: have been mandata? Didn't really get an answer, but could 101 00:04:29,680 --> 00:04:31,719 Speaker 1: we see something like that? Yeah? So I think there's 102 00:04:31,720 --> 00:04:35,320 Speaker 1: two things that happen here. One, I think the regulators 103 00:04:35,480 --> 00:04:37,839 Speaker 1: may have not felt confident enough to move forward with 104 00:04:37,839 --> 00:04:39,880 Speaker 1: some of the actions they should have. For example, Vice 105 00:04:39,960 --> 00:04:42,159 Speaker 1: chair Bars said that they had a Camel's rating of three. 106 00:04:42,279 --> 00:04:44,960 Speaker 1: Camel's rating is a rating that every bank gets. It's private, 107 00:04:45,040 --> 00:04:47,640 Speaker 1: nobody ever hears about it. But it's a scale one 108 00:04:47,680 --> 00:04:51,800 Speaker 1: to five. Three is bad, But is it. I mean, 109 00:04:51,839 --> 00:04:53,960 Speaker 1: we're talking about a bank that potentially brought down the 110 00:04:54,080 --> 00:04:57,360 Speaker 1: entire financial system. I'd hate to see what a four 111 00:04:57,440 --> 00:05:00,400 Speaker 1: or five actually is. So, you know, if that's one 112 00:05:00,440 --> 00:05:02,839 Speaker 1: thing is the regulators, I think felt that they couldn't act, 113 00:05:02,920 --> 00:05:05,360 Speaker 1: or maybe they didn't feel comfortable to act. The other 114 00:05:05,400 --> 00:05:06,920 Speaker 1: thing is is that we heard a little bit in 115 00:05:07,080 --> 00:05:11,280 Speaker 1: the testimony. Today's Silicon Valley grew very quickly, and when 116 00:05:11,279 --> 00:05:13,720 Speaker 1: it passed one hundred billion dollars threshold, it went into 117 00:05:13,800 --> 00:05:16,960 Speaker 1: the next layer of supervision. But it takes like a 118 00:05:17,040 --> 00:05:19,600 Speaker 1: year or two to get the FED examiners in place 119 00:05:19,640 --> 00:05:22,400 Speaker 1: and so forth like that. And at one point Vice 120 00:05:22,440 --> 00:05:25,800 Speaker 1: Chair Bar even said that to get Silicon Valley Bank 121 00:05:25,920 --> 00:05:29,240 Speaker 1: into the appropriate level stress testing, it would be twenty 122 00:05:29,279 --> 00:05:32,360 Speaker 1: twenty five until they actually go through that stress test process. 123 00:05:32,760 --> 00:05:34,480 Speaker 1: So I think when you see this report come out 124 00:05:34,600 --> 00:05:36,599 Speaker 1: May first, they're going to say, the transition of a 125 00:05:36,640 --> 00:05:39,520 Speaker 1: bank growing just let a lot of holes there, but 126 00:05:39,640 --> 00:05:41,560 Speaker 1: you know, stay tuned. We're gonna, We're gonna there may 127 00:05:41,560 --> 00:05:43,080 Speaker 1: be a lot more that we haven't seen yet, can 128 00:05:43,120 --> 00:05:46,800 Speaker 1: we for the benefit of our listeners. The Camel's rating system, 129 00:05:46,880 --> 00:05:53,240 Speaker 1: it's an acronym capital adequacy, assets management, capability, earnings, liquidity sensitivity. 130 00:05:53,480 --> 00:05:55,400 Speaker 1: How did I do? You did great? I couldn't even 131 00:05:55,400 --> 00:05:56,720 Speaker 1: pull that off the top of my head. But it 132 00:05:57,000 --> 00:05:58,839 Speaker 1: comes in a letter at the beginning of the year. Yeah, 133 00:05:58,880 --> 00:06:01,200 Speaker 1: and everybody in risk impliance at a bank is waiting 134 00:06:01,240 --> 00:06:02,880 Speaker 1: for that letter, and if you get that one or two, 135 00:06:02,960 --> 00:06:04,479 Speaker 1: then you feel that you've done a great job. I 136 00:06:04,520 --> 00:06:06,679 Speaker 1: did not pull that off the top of my head. Kayley. Yeah, 137 00:06:06,800 --> 00:06:10,839 Speaker 1: Google is a beautiful, powerful thing, isn't it. Well, as 138 00:06:10,880 --> 00:06:13,000 Speaker 1: we kind of talk about, Nathan, you talked about how 139 00:06:13,000 --> 00:06:16,039 Speaker 1: this was a bank that grew incredibly quickly in terms 140 00:06:16,040 --> 00:06:19,599 Speaker 1: of its size, but also took risks. The management of 141 00:06:19,640 --> 00:06:23,160 Speaker 1: these banks is something that was a lot of focus 142 00:06:23,160 --> 00:06:25,440 Speaker 1: in these hearings, the mismanagement of them. They all want 143 00:06:25,480 --> 00:06:28,920 Speaker 1: to speak to the executives who obviously didn't testify today. 144 00:06:29,000 --> 00:06:31,279 Speaker 1: Just from your point of view, where should the blame 145 00:06:31,520 --> 00:06:34,400 Speaker 1: be appropriately cast? Is this a bank to bank specific 146 00:06:34,400 --> 00:06:36,440 Speaker 1: issue or is there something wider we can point to? 147 00:06:36,760 --> 00:06:38,800 Speaker 1: So I think ultimately they're going to find out both. 148 00:06:38,839 --> 00:06:40,680 Speaker 1: I mean, Vice Chair bar Even said at one point 149 00:06:40,680 --> 00:06:43,360 Speaker 1: the interest rate risk at Silicon Valley Bank and I'm 150 00:06:43,360 --> 00:06:47,440 Speaker 1: paraphrasing here, wasn't grounded to reality. If the FED knew that, 151 00:06:47,520 --> 00:06:50,240 Speaker 1: then why didn't they act? And you know, but you know, 152 00:06:50,560 --> 00:06:52,800 Speaker 1: Vice Chair bar Even said that he didn't know until 153 00:06:52,880 --> 00:06:56,520 Speaker 1: February of twenty twenty three, So you know, I think 154 00:06:56,520 --> 00:06:58,760 Speaker 1: the question has to be asked. You know, where were 155 00:06:58,760 --> 00:07:00,640 Speaker 1: the regulators in this? And I don't want to be, 156 00:07:01,040 --> 00:07:03,880 Speaker 1: you know, too difficult on them, but maybe one of 157 00:07:03,920 --> 00:07:05,760 Speaker 1: the solutions here is that, you know, banks have to 158 00:07:05,760 --> 00:07:08,480 Speaker 1: go through stress tests? Why don't regulators go through stress tests? 159 00:07:08,560 --> 00:07:10,880 Speaker 1: So almost like a war game scenario of here's a 160 00:07:10,880 --> 00:07:12,680 Speaker 1: regional bank, it's going to fail. What do you do 161 00:07:12,720 --> 00:07:15,680 Speaker 1: in this type of situation? Because when a bank fails, 162 00:07:16,080 --> 00:07:18,600 Speaker 1: you only have minutes to act because people, I mean, 163 00:07:18,680 --> 00:07:21,160 Speaker 1: as we heard, one hundred billion dollars and deposits could 164 00:07:21,160 --> 00:07:23,640 Speaker 1: have escaped in one day. I mean, it's just a 165 00:07:23,680 --> 00:07:26,560 Speaker 1: difficult exercise. But I think Ultimately there's going to be 166 00:07:26,560 --> 00:07:29,360 Speaker 1: blamed both on the bank and also maybe some next 167 00:07:29,360 --> 00:07:31,400 Speaker 1: steps of what the regulators could have done better. So 168 00:07:31,480 --> 00:07:34,680 Speaker 1: you've got a recent event reaction here on your piece 169 00:07:34,680 --> 00:07:38,240 Speaker 1: and Bloomberg intelligence, higher capital rules loom for small regional banks. 170 00:07:38,280 --> 00:07:41,280 Speaker 1: How much can regulators do on their own without the 171 00:07:41,280 --> 00:07:43,440 Speaker 1: involvement of Congress. Yeah, so this goes back to this 172 00:07:43,480 --> 00:07:46,920 Speaker 1: twenty eighteen law. That's bipartisan law. You know, the short 173 00:07:46,960 --> 00:07:50,320 Speaker 1: it's twenty one fifty five. It's nobody tattooed on our brains. Now, 174 00:07:50,400 --> 00:07:52,480 Speaker 1: nobody wants to call it igerpa. That's the other you know. 175 00:07:53,920 --> 00:07:56,440 Speaker 1: But you know, And as twenty one fifty five raised 176 00:07:56,440 --> 00:08:00,000 Speaker 1: what was known as the systemically important financial institution threshold 177 00:08:00,120 --> 00:08:02,120 Speaker 1: from fifty billion to two hundred and fifty billion, and 178 00:08:02,120 --> 00:08:04,400 Speaker 1: that's where Silicon Valley Bank was loosened up in some 179 00:08:04,440 --> 00:08:08,320 Speaker 1: of the regulatory requirements. Now, folks like Senator Elizabeth Warren 180 00:08:08,320 --> 00:08:10,720 Speaker 1: and Representative Katie Porter, they wanted that sifty threshold to 181 00:08:10,720 --> 00:08:12,240 Speaker 1: go back to fifty billion. I don't think it's going 182 00:08:12,280 --> 00:08:14,520 Speaker 1: to happen this year. But what the Fed can do 183 00:08:14,640 --> 00:08:18,000 Speaker 1: is they can retroactively go back and reapply enhance prudential 184 00:08:18,040 --> 00:08:20,600 Speaker 1: standards to banks one hundred billion in assets and up. 185 00:08:20,880 --> 00:08:22,640 Speaker 1: Vice chair Barer even said that they were going to 186 00:08:22,680 --> 00:08:25,440 Speaker 1: do this. But what is exactly enhanced prudential standards. It's 187 00:08:25,480 --> 00:08:29,960 Speaker 1: higher capital requirements, tougher liquidity coverage ratios, stress tests, and 188 00:08:29,960 --> 00:08:32,120 Speaker 1: so forth like that. So if you are a bank 189 00:08:32,120 --> 00:08:34,240 Speaker 1: between one hundred billion and two hundred fifty billion, like 190 00:08:34,320 --> 00:08:37,480 Speaker 1: Huntington Bank, Corp, Key Corps, Regions, etc. You're going to 191 00:08:37,559 --> 00:08:40,200 Speaker 1: follow your find yourself in a similar regulatory regime that 192 00:08:40,280 --> 00:08:44,040 Speaker 1: P and CUS trust In Sorry, US Bank and Truest 193 00:08:44,080 --> 00:08:46,920 Speaker 1: are facing at the moment. And as we've alluded to, 194 00:08:47,160 --> 00:08:50,320 Speaker 1: this is within existing law. They have the ability to 195 00:08:50,360 --> 00:08:53,040 Speaker 1: do this. Are we likely to see pushback though from 196 00:08:53,080 --> 00:08:56,280 Speaker 1: the Republican side? Yeah, not a trust from the Republican side, 197 00:08:56,320 --> 00:08:57,520 Speaker 1: but we even saw it from a little bit on 198 00:08:57,600 --> 00:09:00,480 Speaker 1: the Democratic side because Senator John Tester even said today 199 00:09:00,520 --> 00:09:02,880 Speaker 1: that you know, you know this, you know, to your 200 00:09:02,880 --> 00:09:05,160 Speaker 1: point earlier, a lot of this was a regulatory not 201 00:09:05,720 --> 00:09:08,760 Speaker 1: regulatory issue, but a regulator issue, and so I think 202 00:09:08,760 --> 00:09:10,960 Speaker 1: you'll see some pushback, but you know, this has to 203 00:09:11,000 --> 00:09:13,720 Speaker 1: come via a notice of proposed rulemaking from the FETE. 204 00:09:14,120 --> 00:09:16,320 Speaker 1: The bigger concern I see at the moment is the 205 00:09:16,320 --> 00:09:18,280 Speaker 1: FETA said they want to do the Basle three end game, 206 00:09:18,360 --> 00:09:20,360 Speaker 1: they want to do the Regional Bank TILAC, they want 207 00:09:20,400 --> 00:09:22,960 Speaker 1: to do stress testing. They have, you know, a climate 208 00:09:23,000 --> 00:09:25,680 Speaker 1: change scenario analysis going on over there. Add to it 209 00:09:25,800 --> 00:09:30,120 Speaker 1: this new postpartum capital requirement rule. That's four or five 210 00:09:30,200 --> 00:09:32,200 Speaker 1: major initiatives that they got to get done before the 211 00:09:32,200 --> 00:09:36,320 Speaker 1: twenty twenty four presidential elections because if they don't, then, 212 00:09:36,559 --> 00:09:38,360 Speaker 1: you know, in the Republican wins, well then you're gonna 213 00:09:38,360 --> 00:09:40,400 Speaker 1: have a changing of the guards. So they have a 214 00:09:40,400 --> 00:09:42,320 Speaker 1: lot of work to do, and I'm just you know, 215 00:09:42,320 --> 00:09:43,840 Speaker 1: they're gonna have to jump out of the gate like 216 00:09:43,960 --> 00:09:45,400 Speaker 1: right now if they want to get it done in time. 217 00:09:45,480 --> 00:09:48,520 Speaker 1: You mentioned John Tester his exchange here with Michael Barr 218 00:09:48,559 --> 00:09:50,800 Speaker 1: from that hearing on SVB. It looks to me like 219 00:09:50,800 --> 00:09:54,520 Speaker 1: the regulators knew the problem, but nobody dropped the hammer. 220 00:09:56,200 --> 00:09:58,920 Speaker 1: Thank you, Senator test Right as I said, our review 221 00:09:59,040 --> 00:10:01,520 Speaker 1: is going to be thorough, it's going to be open, 222 00:10:01,920 --> 00:10:03,920 Speaker 1: and if we find problems like the ones that you 223 00:10:04,000 --> 00:10:06,880 Speaker 1: just describe, we're going to say it clearly and describe 224 00:10:06,920 --> 00:10:08,280 Speaker 1: what we think should be done. When do you think 225 00:10:08,280 --> 00:10:10,400 Speaker 1: that report will be done? And I'm a way over time, sorry, 226 00:10:10,400 --> 00:10:13,080 Speaker 1: when do you think that report may first? So may first? 227 00:10:13,240 --> 00:10:15,240 Speaker 1: Kaylee is going to be like the day of days 228 00:10:15,280 --> 00:10:18,319 Speaker 1: here in Washington. I just wonder how let down these 229 00:10:18,400 --> 00:10:21,280 Speaker 1: lawmakers are going to be by what they read. Well, 230 00:10:21,320 --> 00:10:23,120 Speaker 1: that's that's a very good question. And we know that 231 00:10:23,160 --> 00:10:24,800 Speaker 1: a lot can happen in the span of a week, 232 00:10:24,840 --> 00:10:26,560 Speaker 1: so a lot also can happen in the span of 233 00:10:26,600 --> 00:10:28,679 Speaker 1: four weeks. I mean, another question I have here is 234 00:10:28,679 --> 00:10:31,800 Speaker 1: about the speed of the policy response, given that we 235 00:10:32,200 --> 00:10:34,360 Speaker 1: don't have the you know, all clear, all good in 236 00:10:34,400 --> 00:10:36,960 Speaker 1: the banking system just yet, there is still a massive 237 00:10:37,040 --> 00:10:39,560 Speaker 1: question about what the future of First Republic, for example, 238 00:10:40,280 --> 00:10:43,120 Speaker 1: looks like. Do the pace is just not match here, 239 00:10:43,360 --> 00:10:46,120 Speaker 1: Nathan No. I mean, there are just so many different 240 00:10:46,160 --> 00:10:48,880 Speaker 1: points of views and people thinking they have different problems 241 00:10:48,880 --> 00:10:51,839 Speaker 1: with me to your point about earlier about the congressman 242 00:10:51,920 --> 00:10:54,720 Speaker 1: representing the Woke Bank, but even things like you know, 243 00:10:54,800 --> 00:10:57,920 Speaker 1: there were there was very little discussion about Signature Bank. Today. 244 00:10:58,000 --> 00:11:00,640 Speaker 1: Tomorrow you'll probably see more about Signature Bank because there 245 00:11:00,679 --> 00:11:02,840 Speaker 1: are a lot of folks in the crypto community that 246 00:11:02,880 --> 00:11:05,640 Speaker 1: are convinced that the closure of Signature Bank, and when 247 00:11:05,640 --> 00:11:08,360 Speaker 1: we heard statements from former Representative Barney Frank on this 248 00:11:08,960 --> 00:11:11,199 Speaker 1: that the closure of Signature Bank was a way of 249 00:11:11,240 --> 00:11:13,480 Speaker 1: the FEDS essentially saying get out of the crypto business. 250 00:11:13,640 --> 00:11:16,400 Speaker 1: Choke point again exactly, Operation choke point two point z 251 00:11:16,520 --> 00:11:19,400 Speaker 1: is what they say on Twitter. So, you know, so 252 00:11:19,679 --> 00:11:21,680 Speaker 1: I think tomorrow you're going to see a lot more 253 00:11:21,720 --> 00:11:24,880 Speaker 1: in terms of the Signature Bank side some repeat questions 254 00:11:24,880 --> 00:11:27,720 Speaker 1: of today. But you know, key Ley, to your point earlier, 255 00:11:28,000 --> 00:11:30,240 Speaker 1: there are between the Senate Banking Committee and the House 256 00:11:30,240 --> 00:11:33,600 Speaker 1: Financial Services Committee about seventy five eighty policymakers, and they 257 00:11:33,600 --> 00:11:36,320 Speaker 1: have seventy five and eighty different points of view, things 258 00:11:36,360 --> 00:11:39,319 Speaker 1: that they're focused on and so forth. So you know, congressionally, 259 00:11:39,360 --> 00:11:41,640 Speaker 1: I'm not sure there's actually anywhere that they can play 260 00:11:41,679 --> 00:11:43,240 Speaker 1: it at the moment. It is the House just more 261 00:11:43,280 --> 00:11:45,560 Speaker 1: friendly to crypto? Is that why? No, No, no no, not 262 00:11:45,600 --> 00:11:47,600 Speaker 1: at all. It's just that, I mean, the House has 263 00:11:47,720 --> 00:11:52,480 Speaker 1: more crypto advocates in it. Yeah, that's basically what we're saying, 264 00:11:52,600 --> 00:11:57,480 Speaker 1: but it would also have more stringent opponents as well. 265 00:11:57,720 --> 00:11:59,520 Speaker 1: You know, Crypto for what we believe is not so 266 00:11:59,559 --> 00:12:01,880 Speaker 1: much a part an issue, but more of a generational issue. 267 00:12:02,280 --> 00:12:03,839 Speaker 1: But I think that there are members on the House 268 00:12:03,880 --> 00:12:06,760 Speaker 1: Financial Services Committee on the Republican side, that are more 269 00:12:06,800 --> 00:12:10,240 Speaker 1: willing to use their five minutes to talk about crypto 270 00:12:10,400 --> 00:12:14,160 Speaker 1: than you know what we saw today on the note 271 00:12:14,160 --> 00:12:16,480 Speaker 1: of crypto, I spoke with Senator Cynthia Alemas, who of 272 00:12:16,559 --> 00:12:21,120 Speaker 1: course is planning on reintroducing bipartisan legislation with Senator Jella 273 00:12:21,160 --> 00:12:23,600 Speaker 1: Brand as well in regard to crypto, and just asked her, 274 00:12:23,640 --> 00:12:25,680 Speaker 1: you know, about access to the banking system and the 275 00:12:25,720 --> 00:12:29,880 Speaker 1: safety and she basically said that there should be you 276 00:12:29,920 --> 00:12:33,040 Speaker 1: should feel safer in regard to these crypto assets if 277 00:12:33,080 --> 00:12:36,240 Speaker 1: regulation was actually put into place. And I just wonder 278 00:12:36,280 --> 00:12:38,880 Speaker 1: how these bank failures sets back that wider effort to 279 00:12:39,000 --> 00:12:42,280 Speaker 1: set some rules of the road for this industry. Here. Oh, 280 00:12:42,559 --> 00:12:45,440 Speaker 1: it absolutely does, because as you know, I mean at 281 00:12:45,440 --> 00:12:47,360 Speaker 1: the end of last year with FTX, there was a 282 00:12:47,400 --> 00:12:49,720 Speaker 1: lot of focus on crypto. I mean, we saw this 283 00:12:49,920 --> 00:12:52,840 Speaker 1: the Senate Act Bill, the Digital Commodity Consumers Protection Act 284 00:12:53,040 --> 00:12:56,360 Speaker 1: have some momentum FTX sort of the FTX failure sort 285 00:12:56,360 --> 00:12:59,680 Speaker 1: of took away someone the momentum and coming into twenty 286 00:12:59,760 --> 00:13:02,320 Speaker 1: twenty three, that momentum somewhat came back. But now there's 287 00:13:02,360 --> 00:13:05,440 Speaker 1: this shiny object up in the sky called Silicon Valley Bank, 288 00:13:05,840 --> 00:13:09,280 Speaker 1: and every policymaker is looking at that object and that 289 00:13:09,400 --> 00:13:11,880 Speaker 1: are not looking at crypto. And what I was actually 290 00:13:11,920 --> 00:13:13,880 Speaker 1: talking to a senior Republican this week about it, and 291 00:13:13,920 --> 00:13:16,080 Speaker 1: the problem for crypto at the moment is there's two 292 00:13:16,120 --> 00:13:19,120 Speaker 1: major roadblocks. One you have Silicon Valley Bank, and this 293 00:13:19,200 --> 00:13:21,720 Speaker 1: is in the Banking and the House Financial Services committees. 294 00:13:22,000 --> 00:13:24,040 Speaker 1: And then over in the Agricultural committees you have the 295 00:13:24,040 --> 00:13:26,680 Speaker 1: Farm bill. And it's going to take the ad commutees 296 00:13:26,679 --> 00:13:28,920 Speaker 1: a year to get through the farm bill. And those 297 00:13:28,960 --> 00:13:31,680 Speaker 1: two major roadblocks are going to mean the policymakers spend 298 00:13:31,720 --> 00:13:33,800 Speaker 1: less time on crypto, and that's not good for them. 299 00:13:33,920 --> 00:13:36,800 Speaker 1: May have anyone started talking about the farm bill? Are 300 00:13:36,800 --> 00:13:38,560 Speaker 1: you guys digging in on that later this year? That 301 00:13:38,640 --> 00:13:41,760 Speaker 1: is a massive story that no one's talking about, but 302 00:13:41,840 --> 00:13:44,480 Speaker 1: they will. No absolutely comes to food stamps and the 303 00:13:44,760 --> 00:13:46,680 Speaker 1: amount of money involved. And we have a lot of 304 00:13:46,960 --> 00:13:50,520 Speaker 1: we are our restaurants analysts and our general grocery stores 305 00:13:50,520 --> 00:13:52,000 Speaker 1: and so forth like that. I mean, there's a lot 306 00:13:52,040 --> 00:13:54,319 Speaker 1: of exposure there to the markets and we're gonna be 307 00:13:54,360 --> 00:13:56,440 Speaker 1: digging deeper into that this year. Great, I'm glad you 308 00:13:56,440 --> 00:13:58,319 Speaker 1: can buy. As always we always learned from Nathan Dean, 309 00:13:58,360 --> 00:14:00,640 Speaker 1: senior government analysts Bloomberg and telling find him on the 310 00:14:00,720 --> 00:14:03,000 Speaker 1: terminal as good to see you, sir. You're watching tomorrow, 311 00:14:03,080 --> 00:14:04,800 Speaker 1: so we don't have to absolutely all right, thank you 312 00:14:04,840 --> 00:14:08,360 Speaker 1: for this always, Kaylee, you're going to go back down tomorrow. 313 00:14:08,480 --> 00:14:10,680 Speaker 1: Is it worth it? Is it a similar conversation or 314 00:14:10,720 --> 00:14:13,120 Speaker 1: what's your expectation when this goes to the House other 315 00:14:13,160 --> 00:14:15,200 Speaker 1: than well, I think it crazy. I think it could 316 00:14:15,200 --> 00:14:20,000 Speaker 1: get spicier, frankly, especially because we already have heard the testimony, right, 317 00:14:20,040 --> 00:14:22,600 Speaker 1: we know what the regulators have said they would like 318 00:14:22,640 --> 00:14:25,400 Speaker 1: to do going forward. We now have about a twenty 319 00:14:25,400 --> 00:14:28,360 Speaker 1: four hour period where these lawmakers can formulate a response 320 00:14:28,360 --> 00:14:31,160 Speaker 1: and really push those buttons, should they so choose. Yeah, 321 00:14:31,200 --> 00:14:32,960 Speaker 1: this is going to be interesting. We're gonna keep watching, 322 00:14:33,000 --> 00:14:35,880 Speaker 1: of course with Kaylee Lines. I'm Joe Matthew in Washington. 323 00:14:35,960 --> 00:14:39,560 Speaker 1: As we turn from banking to politics. Not here but Israel, 324 00:14:39,600 --> 00:14:42,360 Speaker 1: although it all ties back to the White House, stay 325 00:14:42,360 --> 00:14:44,840 Speaker 1: with us. Next a conversation with Aaron David Miller. This 326 00:14:45,000 --> 00:14:51,640 Speaker 1: is Bloomberg you're listening to Bloomberg. You sound on with 327 00:14:51,760 --> 00:14:57,240 Speaker 1: Joe Matthew on Bloomberg Radio. It's not getting any easier 328 00:14:57,560 --> 00:15:01,680 Speaker 1: in Israel, where despite Benjamin Nett and Yah who has 329 00:15:01,720 --> 00:15:06,239 Speaker 1: moved yesterday to delay his overhaul of the judiciary, very controversial, 330 00:15:06,320 --> 00:15:09,640 Speaker 1: leading to weeks of protests. Let're back on on the 331 00:15:09,680 --> 00:15:18,280 Speaker 1: streets today. A little sound from Israel this morning as 332 00:15:18,440 --> 00:15:22,760 Speaker 1: protesters throw fireworks at the police and a few skirmishes 333 00:15:22,800 --> 00:15:26,080 Speaker 1: break out here. I'm Joe Matthew in Washington, joined by 334 00:15:26,280 --> 00:15:28,880 Speaker 1: Kaylee Lines. Just a day after if this story broke. 335 00:15:28,920 --> 00:15:32,080 Speaker 1: It was during our broadcast actually yesterday that we learned 336 00:15:32,080 --> 00:15:35,160 Speaker 1: of the Prime Minister's decision here to delay the judicial plan. 337 00:15:35,240 --> 00:15:37,560 Speaker 1: But Kaylee, there are a lot of questions about is 338 00:15:37,560 --> 00:15:40,080 Speaker 1: he going to come back, for instance, as Joel Rubin 339 00:15:40,160 --> 00:15:42,800 Speaker 1: suggested yesterday after passover, to try to do the very 340 00:15:42,840 --> 00:15:45,680 Speaker 1: same thing, and what it will mean for relations with 341 00:15:45,720 --> 00:15:48,960 Speaker 1: the US. Yeah, I mean the operative word here is delay. 342 00:15:49,120 --> 00:15:51,880 Speaker 1: This is not an abandonment of these plans entirely. It 343 00:15:52,000 --> 00:15:54,480 Speaker 1: is a delay for how long? What that means, how 344 00:15:54,520 --> 00:15:57,840 Speaker 1: this conversation shifts over the course of that delay still 345 00:15:57,880 --> 00:16:01,720 Speaker 1: remain open. Questions So there is a level of intensity 346 00:16:02,160 --> 00:16:04,720 Speaker 1: in Israel, certainly, but something that policymakers here in the 347 00:16:04,800 --> 00:16:07,800 Speaker 1: US have to consider as it is this very difficult 348 00:16:07,840 --> 00:16:11,280 Speaker 1: to navigate at times relationship between the US and Israel, 349 00:16:11,400 --> 00:16:13,720 Speaker 1: and where it sits, it's got a lot more difficult. 350 00:16:13,760 --> 00:16:16,520 Speaker 1: Didn't that Aaron David Miller joins this Global Fellow at 351 00:16:16,520 --> 00:16:19,800 Speaker 1: the Wilson Center for his take on this. Aaron, it's 352 00:16:19,800 --> 00:16:22,320 Speaker 1: great to have you and I appreciate the time. What 353 00:16:22,400 --> 00:16:25,920 Speaker 1: are your thoughts on the timeline here for Benjamin Netnyah 354 00:16:25,920 --> 00:16:30,360 Speaker 1: who to come back around with this plan? I think, frankly, 355 00:16:30,960 --> 00:16:34,200 Speaker 1: and you know, the oracle at Delphi reading the best 356 00:16:34,200 --> 00:16:37,720 Speaker 1: of golden trails probably couldn't answer that question, but I'll 357 00:16:37,760 --> 00:16:41,360 Speaker 1: take a run at it. I think it's highly unlikely 358 00:16:42,240 --> 00:16:44,600 Speaker 1: at the Prime Minister, even though he has the votes, 359 00:16:45,480 --> 00:16:47,440 Speaker 1: is going to revisit this thing and the way he 360 00:16:47,560 --> 00:16:49,840 Speaker 1: tried to do it the first time. Okay, You've got 361 00:16:49,920 --> 00:16:52,680 Speaker 1: hundreds of thousands of Israelis for thirteen weeks out in 362 00:16:52,720 --> 00:16:56,680 Speaker 1: the streets, which now constitute a new element, frankly in 363 00:16:56,760 --> 00:16:59,960 Speaker 1: Israeli politics, and you have a very divided Israeli government 364 00:17:00,040 --> 00:17:02,640 Speaker 1: with members of his own party is Lea Coud for 365 00:17:02,760 --> 00:17:06,200 Speaker 1: it's in real doubts about whether or not judicial reform 366 00:17:06,200 --> 00:17:10,919 Speaker 1: and the way he envisions it can pass. So I 367 00:17:10,960 --> 00:17:13,960 Speaker 1: would bet it's going to be quite a while before 368 00:17:14,000 --> 00:17:16,720 Speaker 1: he tries us again. Well, and I wonder if it 369 00:17:16,800 --> 00:17:19,480 Speaker 1: is about the judicial reform itself as much as it 370 00:17:19,600 --> 00:17:23,360 Speaker 1: is about just Netanyahu's now stance. I just wonder how 371 00:17:23,480 --> 00:17:27,480 Speaker 1: much how much credibility and sway he may have lost 372 00:17:27,520 --> 00:17:30,439 Speaker 1: over the course of this episode. You know, it's a 373 00:17:30,480 --> 00:17:34,639 Speaker 1: really good point. He clearly is still the most influential 374 00:17:34,640 --> 00:17:38,080 Speaker 1: political actor, and he still heads up Lee Coud, which 375 00:17:38,119 --> 00:17:41,320 Speaker 1: is the most coherent, cohesive Israeli political party. But his 376 00:17:41,520 --> 00:17:44,159 Speaker 1: image as the magician, as somebody who astutely reads the 377 00:17:44,200 --> 00:17:47,800 Speaker 1: real estate correctly political real estate, I think, has taken 378 00:17:48,520 --> 00:17:51,720 Speaker 1: a really bad hit. And I suspect he's going to 379 00:17:51,800 --> 00:17:55,000 Speaker 1: spend the next several weeks before the Knesset comes back 380 00:17:55,000 --> 00:17:59,359 Speaker 1: into session after the passover recess on May one, trying 381 00:17:59,359 --> 00:18:01,919 Speaker 1: to figure out how to hold his coalition together and 382 00:18:02,040 --> 00:18:07,120 Speaker 1: pay off those extremist ministers who agreed to stay with 383 00:18:07,240 --> 00:18:10,159 Speaker 1: him even though they really were determined to get this 384 00:18:10,240 --> 00:18:14,800 Speaker 1: judicial reform passed. Yeah, Bloomberg is reporting that Israel's opposition 385 00:18:14,840 --> 00:18:17,679 Speaker 1: leaders are preparing for talks will take place this evening 386 00:18:18,080 --> 00:18:20,800 Speaker 1: on the paused plans here the first meaning to be 387 00:18:20,840 --> 00:18:24,840 Speaker 1: held in Jerusalem. What will come from it? You know, 388 00:18:25,240 --> 00:18:27,640 Speaker 1: I know, I've been around a lot of failed negotiations 389 00:18:27,640 --> 00:18:31,160 Speaker 1: in my time, largely in the airb Israeli question. It's 390 00:18:31,200 --> 00:18:34,720 Speaker 1: going to be really hard to broker a deal that 391 00:18:34,880 --> 00:18:40,560 Speaker 1: somehow satisfies the needs of Nintennelle's coalition members and the protesters. 392 00:18:41,080 --> 00:18:43,159 Speaker 1: And I think we have to pay attention to the 393 00:18:43,200 --> 00:18:46,760 Speaker 1: fact that you have politicians like Bennigans and Yayra Lapide, 394 00:18:48,280 --> 00:18:50,840 Speaker 1: but you also have a new voice, and that new 395 00:18:50,920 --> 00:18:54,840 Speaker 1: voice is hundreds of thousands of Israelis. Basically you saw 396 00:18:54,880 --> 00:18:58,240 Speaker 1: the future of their country and their identity as a pluralistic, 397 00:18:58,320 --> 00:19:03,000 Speaker 1: humanistic democracy on the chopping block, and I think that 398 00:19:03,080 --> 00:19:05,080 Speaker 1: the politicians are going to have to take that into 399 00:19:05,119 --> 00:19:09,720 Speaker 1: account before they make any compromises on this issue of 400 00:19:09,840 --> 00:19:14,720 Speaker 1: judicial review. A lot of those protesters frankly wanted Nataniale 401 00:19:14,760 --> 00:19:19,200 Speaker 1: out and they're gonna want guarantees that this won't happen again. 402 00:19:19,240 --> 00:19:22,080 Speaker 1: So I think you're entering a pre fraud period here 403 00:19:22,960 --> 00:19:24,960 Speaker 1: where it's going to be really hard in the next 404 00:19:24,960 --> 00:19:27,760 Speaker 1: several weeks to pull off anything that you and I 405 00:19:27,800 --> 00:19:31,159 Speaker 1: would agree was a sustainable compromise. Well, you make an 406 00:19:31,200 --> 00:19:33,920 Speaker 1: excellent point about the domestic voices here, but there also 407 00:19:34,000 --> 00:19:37,600 Speaker 1: is the question of international voices of Israel's allies and 408 00:19:37,720 --> 00:19:40,359 Speaker 1: the way that they are looking this. How complicated is 409 00:19:40,359 --> 00:19:44,200 Speaker 1: this to navigate for the United States, for example, Well, 410 00:19:44,240 --> 00:19:48,520 Speaker 1: I think the Biden administration basically if you ask the President, 411 00:19:48,560 --> 00:19:50,199 Speaker 1: he probably would say, you know, I don't want to 412 00:19:50,200 --> 00:19:53,560 Speaker 1: hear from Benjamin Ninteniale until after I'm re elected. And 413 00:19:53,640 --> 00:19:57,760 Speaker 1: while Biden has a deep sense of like President Clinton 414 00:19:59,000 --> 00:20:04,880 Speaker 1: deeply pro is really embedded in his political and personal DNA, 415 00:20:05,160 --> 00:20:07,399 Speaker 1: there's an enormous amount of frustration on the part of 416 00:20:07,400 --> 00:20:10,160 Speaker 1: the administration toward Nintennille. They do not want to fight. 417 00:20:11,119 --> 00:20:13,600 Speaker 1: And the fact that you had this TikTok even today 418 00:20:13,640 --> 00:20:15,600 Speaker 1: over whether or not the Prime Minister is going to 419 00:20:15,640 --> 00:20:19,200 Speaker 1: be becoming New Washington. Was he actually invited? The White 420 00:20:19,200 --> 00:20:22,199 Speaker 1: House made clear that no official invitation has yet been issued. 421 00:20:22,840 --> 00:20:26,280 Speaker 1: So I think that they describe the administration's approach a 422 00:20:26,359 --> 00:20:28,960 Speaker 1: sort of passive aggressive. They really don't want to fight 423 00:20:29,600 --> 00:20:33,479 Speaker 1: either on the Palestinian issue or on this judicial reform, 424 00:20:33,520 --> 00:20:35,520 Speaker 1: because they know the big issue out there, the only 425 00:20:35,560 --> 00:20:39,640 Speaker 1: issue that could cause plunging financial markets and rising oil prices, 426 00:20:39,760 --> 00:20:43,560 Speaker 1: the only issue that could actually create a regional confrontation 427 00:20:44,040 --> 00:20:48,639 Speaker 1: is what to do about Iron's putitive nuclear weapons presumably program. 428 00:20:49,680 --> 00:20:52,280 Speaker 1: And it's in wichurnt of Uranian. That's the key issue 429 00:20:52,320 --> 00:20:55,240 Speaker 1: for American interests in the region. And the administration knows 430 00:20:55,320 --> 00:20:59,240 Speaker 1: that the Israelis Benjamin Natannille as long as he's Prime Minister, 431 00:20:59,440 --> 00:21:02,040 Speaker 1: is a key ingredient. And how that's going to play out. 432 00:21:02,760 --> 00:21:04,840 Speaker 1: We heard from John Kirby today at the White House, 433 00:21:04,840 --> 00:21:07,800 Speaker 1: the spokesman for the National Security Council. He says, what 434 00:21:07,840 --> 00:21:10,000 Speaker 1: we want to see now and what we have said 435 00:21:10,000 --> 00:21:12,760 Speaker 1: all along, is for Israeli leaders to come to a 436 00:21:12,800 --> 00:21:16,280 Speaker 1: compromise here that still supports the idea of checks and 437 00:21:16,320 --> 00:21:19,639 Speaker 1: balances and that is sustainable as it comports with the 438 00:21:19,680 --> 00:21:24,120 Speaker 1: consensus of the government. If that is not reached, and 439 00:21:24,240 --> 00:21:27,879 Speaker 1: there's every reason to believe that it may not be reached, Aaron, 440 00:21:27,920 --> 00:21:30,919 Speaker 1: what does that leave the White House to do with 441 00:21:30,960 --> 00:21:34,399 Speaker 1: this government? Well, as I said, I think there are 442 00:21:34,440 --> 00:21:36,680 Speaker 1: a lot of right now, there's a lot of equities here. 443 00:21:36,800 --> 00:21:40,760 Speaker 1: I mean several weeks presumably presidents can announce his reelection campaign. 444 00:21:41,400 --> 00:21:45,240 Speaker 1: You've got intentions second term. You got a Republican party 445 00:21:45,920 --> 00:21:48,880 Speaker 1: that literally has become I've worked for Holmes and Democrats, 446 00:21:48,880 --> 00:21:51,280 Speaker 1: have voted for a plant Democrats. If you have a 447 00:21:51,359 --> 00:21:54,119 Speaker 1: Polgan party, it essentially is the Israel right or wrong party. 448 00:21:54,520 --> 00:21:57,600 Speaker 1: I doubt if there was one expression since this judicial 449 00:21:57,640 --> 00:22:01,200 Speaker 1: reform bill was introduced in January, if any House or 450 00:22:01,280 --> 00:22:05,479 Speaker 1: Senate Memory and Development side criticizing this reform effort. So 451 00:22:05,520 --> 00:22:08,440 Speaker 1: the president does not want to get cross wise on 452 00:22:08,480 --> 00:22:13,000 Speaker 1: this issue, you also have taken the consideration this really is, 453 00:22:13,400 --> 00:22:16,200 Speaker 1: even though the US has an equity here, an Israeli 454 00:22:16,240 --> 00:22:18,439 Speaker 1: internal political matter, and then you have to factor in 455 00:22:18,480 --> 00:22:21,879 Speaker 1: our own democratic backsliding. We're hardly a perfect democracy either. 456 00:22:22,480 --> 00:22:25,320 Speaker 1: So I think the administration will push from the outside, 457 00:22:25,520 --> 00:22:31,520 Speaker 1: encourage cokes, push the common and shared values that they 458 00:22:31,560 --> 00:22:34,159 Speaker 1: hope will continue to buy in the US and Israel. 459 00:22:34,480 --> 00:22:36,640 Speaker 1: But it's hard for me to believe that the White 460 00:22:36,640 --> 00:22:39,800 Speaker 1: House on this issue, or even on the Palestinian issue. 461 00:22:40,280 --> 00:22:43,520 Speaker 1: On it's a major fight with the Israelis right now, 462 00:22:43,600 --> 00:22:48,480 Speaker 1: you know, presidents don't do this ordinarily, fighting with the Israelis. 463 00:22:48,560 --> 00:22:51,720 Speaker 1: It's messy, it's awkward, it could be politically costly. And 464 00:22:51,760 --> 00:22:53,840 Speaker 1: in this case, I'm not sure the White House is 465 00:22:53,880 --> 00:22:58,720 Speaker 1: convinced presidents convinced that pushing really is going to change 466 00:22:58,720 --> 00:23:02,200 Speaker 1: the internal dynamic Israel. You asked me, why did Benjamin 467 00:23:02,240 --> 00:23:07,520 Speaker 1: na seek this pause? The Israelis did this, and the 468 00:23:07,520 --> 00:23:10,159 Speaker 1: White House has allowed these railies to do the walking, 469 00:23:10,920 --> 00:23:13,359 Speaker 1: and it has allowed these railies to do the talking, 470 00:23:13,800 --> 00:23:18,040 Speaker 1: and frankly, that's why things played out the way they 471 00:23:18,080 --> 00:23:21,320 Speaker 1: did over the last forty eight hours. Great insights from 472 00:23:21,320 --> 00:23:23,560 Speaker 1: Aaron David Miller. Aaron, thank you, Global fellow at the 473 00:23:23,560 --> 00:23:27,919 Speaker 1: Wilson Center with us on Bloomberg sound On. Indeed, Kayley, 474 00:23:28,000 --> 00:23:30,040 Speaker 1: that was the idea here, that it was not the 475 00:23:30,520 --> 00:23:34,720 Speaker 1: pushing from the White House, that it was the strike. 476 00:23:34,800 --> 00:23:36,680 Speaker 1: It was the shutting down of the economy that moved 477 00:23:36,680 --> 00:23:39,679 Speaker 1: Benjamin Yaho and the hundreds of thousands of Israelis that 478 00:23:39,800 --> 00:23:44,240 Speaker 1: moved jointly to protest this action, a real show of 479 00:23:44,320 --> 00:23:47,119 Speaker 1: force on the part of the domestic populace that clearly 480 00:23:47,240 --> 00:23:49,920 Speaker 1: net and Yahu and his coalition had had to heed 481 00:23:50,280 --> 00:23:54,960 Speaker 1: again delaying this planned judicial overhaul. Proven when they lifted 482 00:23:54,960 --> 00:23:57,639 Speaker 1: the strike moments after his announcement, he was delaying this right. 483 00:23:57,640 --> 00:24:00,320 Speaker 1: I mean, it's not really too confusing as to how 484 00:24:00,359 --> 00:24:02,480 Speaker 1: this all worked out. Interesting to hear a day after 485 00:24:02,480 --> 00:24:04,399 Speaker 1: from Aaron David Miller, because this broke while we were 486 00:24:04,440 --> 00:24:06,399 Speaker 1: on the air, and we wanted to finish that conversation. 487 00:24:06,440 --> 00:24:10,880 Speaker 1: Today you're listening to Bloomberg. You sound on with Joe 488 00:24:10,920 --> 00:24:16,520 Speaker 1: Matthew on Bloomberg Radio. There's been no progress on the 489 00:24:16,560 --> 00:24:18,520 Speaker 1: debt ceiling here, and now the Speaker of the House 490 00:24:18,880 --> 00:24:21,680 Speaker 1: is sending a new letter to President Biden. Kevin McCarthy 491 00:24:21,720 --> 00:24:24,359 Speaker 1: remembering they sat down the first of February, and that 492 00:24:24,440 --> 00:24:26,080 Speaker 1: was a big day. That was a big story the 493 00:24:26,160 --> 00:24:30,760 Speaker 1: day that happened, McCarthy emerging from the West Wing to 494 00:24:31,040 --> 00:24:34,600 Speaker 1: speak with reporters at the Sticks about how optimistic he 495 00:24:34,720 --> 00:24:37,080 Speaker 1: was something could be done. And well there hasn't been 496 00:24:37,119 --> 00:24:40,480 Speaker 1: anything since then, just a lot of salvos from one 497 00:24:40,520 --> 00:24:43,320 Speaker 1: side of Pennsylvania Avenue to the other. Republicans are being 498 00:24:43,480 --> 00:24:48,800 Speaker 1: very rational, sensible, and if I look at everyone across 499 00:24:48,800 --> 00:24:51,359 Speaker 1: this country, they think we should get into room and 500 00:24:51,440 --> 00:24:54,560 Speaker 1: work this out, especially because the banking issue. That's the 501 00:24:54,600 --> 00:24:57,560 Speaker 1: speaker at the Republican House retreat a couple weeks ago 502 00:24:57,600 --> 00:25:00,480 Speaker 1: in Orlando with us right now is Jack. It's Patrick, 503 00:25:00,520 --> 00:25:03,879 Speaker 1: congressional reporter with Bloomberg Government, who's got the beat on 504 00:25:03,920 --> 00:25:06,320 Speaker 1: all of this year. Jacket. Has been a long time 505 00:25:06,400 --> 00:25:08,520 Speaker 1: since these two sat down, and I think I know 506 00:25:08,560 --> 00:25:10,359 Speaker 1: what you're going to tell me. It won't happen until 507 00:25:10,600 --> 00:25:13,240 Speaker 1: Republicans put up their budget for this year, as Joe 508 00:25:13,280 --> 00:25:16,639 Speaker 1: Biden has done. Is that the Gamer plan something along 509 00:25:16,680 --> 00:25:19,399 Speaker 1: those lines. You know, it's only gotten more confusing in 510 00:25:19,480 --> 00:25:23,639 Speaker 1: the past week or so. Last week we were told 511 00:25:23,640 --> 00:25:26,280 Speaker 1: by the budget Chairman in the House, Jody Arrington, that 512 00:25:26,320 --> 00:25:30,600 Speaker 1: they were actually going to do an offer sheet on 513 00:25:30,640 --> 00:25:34,480 Speaker 1: the debt limit, something a little bit narrower, little less 514 00:25:34,520 --> 00:25:38,359 Speaker 1: detailed than a full budget resolution, and send that to 515 00:25:38,400 --> 00:25:41,720 Speaker 1: the President first and then work on that budget resolution 516 00:25:41,760 --> 00:25:43,879 Speaker 1: with you know, they have ten year estimates on the 517 00:25:44,240 --> 00:25:47,159 Speaker 1: budgetary effects of all these policies. They'd get to that 518 00:25:47,240 --> 00:25:50,879 Speaker 1: a little later. I don't think that was vetted by 519 00:25:50,960 --> 00:25:54,200 Speaker 1: Republican leadership. Arrington told us that than another one of 520 00:25:54,200 --> 00:25:56,719 Speaker 1: our colleagues asked Kevin McCarthy about it, and all he 521 00:25:56,760 --> 00:25:58,800 Speaker 1: had to say was I don't know what he's talking about. 522 00:25:59,040 --> 00:26:02,960 Speaker 1: So it's unclear if there is a debt limit offer coming. 523 00:26:04,080 --> 00:26:06,359 Speaker 1: Clearly they are not about to put out a budget 524 00:26:06,400 --> 00:26:08,119 Speaker 1: resolution for a while, they said they were going to 525 00:26:08,200 --> 00:26:10,880 Speaker 1: move quickly on it. The Republicans did, they don't seem 526 00:26:10,960 --> 00:26:14,119 Speaker 1: to be close on it now, And there's still this 527 00:26:14,200 --> 00:26:19,199 Speaker 1: attempt to get the president into negotiations before having to 528 00:26:19,240 --> 00:26:22,120 Speaker 1: put out your own detailed plan their bullet points. There 529 00:26:22,000 --> 00:26:26,560 Speaker 1: are suggestions McCarthy had four bullet points in this letter 530 00:26:26,600 --> 00:26:29,199 Speaker 1: he released today. But there's still just this attempt to 531 00:26:29,240 --> 00:26:33,080 Speaker 1: get the conversation going without holding Republicans to a very 532 00:26:33,200 --> 00:26:36,760 Speaker 1: specific series of measures that they would support. We spoke 533 00:26:36,760 --> 00:26:40,000 Speaker 1: with Elizabeth Warren a little bit earlier today. Bloomberg News 534 00:26:40,040 --> 00:26:42,439 Speaker 1: caught up with her a little gaggle she had in 535 00:26:42,440 --> 00:26:44,920 Speaker 1: the hallway outside the banking hearing. Here's what she said 536 00:26:44,920 --> 00:26:48,200 Speaker 1: about the debt limit. It's not about authorizing any news spending. 537 00:26:48,760 --> 00:26:52,520 Speaker 1: This is about paying for the spending when the bill arrives. 538 00:26:53,160 --> 00:26:57,080 Speaker 1: That's what the United States does. And failure to do that, 539 00:26:57,240 --> 00:27:01,520 Speaker 1: an independent analysis has shown, is going to cost us 540 00:27:02,359 --> 00:27:06,639 Speaker 1: jobs in this economy, will lose a million jobs in 541 00:27:06,680 --> 00:27:10,720 Speaker 1: this economy and tipot into a recession if the Republicans 542 00:27:10,760 --> 00:27:15,800 Speaker 1: follow through on their irresponsible threats to default on the debt, 543 00:27:15,800 --> 00:27:18,320 Speaker 1: even for a short period of time. Okay, she said 544 00:27:18,359 --> 00:27:20,320 Speaker 1: a lot there is it Is it fair to say 545 00:27:20,320 --> 00:27:24,520 Speaker 1: that Republicans are threatening to go to defaults because I'm 546 00:27:24,560 --> 00:27:27,960 Speaker 1: not hearing that, at least not in those words from lawmakers. Jack. 547 00:27:28,000 --> 00:27:30,200 Speaker 1: I realized that they want a budget agreement, but nobody's 548 00:27:30,200 --> 00:27:34,520 Speaker 1: threatening to shut down the government. Well, this is where 549 00:27:34,520 --> 00:27:37,840 Speaker 1: you get into some semantics, and it's a very political disagreement. 550 00:27:38,640 --> 00:27:43,640 Speaker 1: One on the debt limit. The repercussions of failure would 551 00:27:43,640 --> 00:27:46,200 Speaker 1: be much worse than a shutdown. Keep in mind, yes, 552 00:27:46,240 --> 00:27:49,920 Speaker 1: of a failure to pay the bills that have already 553 00:27:50,000 --> 00:27:56,080 Speaker 1: been incurred, would economists say that's essentially a default. Now 554 00:27:56,080 --> 00:27:59,080 Speaker 1: there's a Republican bill that would say, well, if we 555 00:27:59,200 --> 00:28:02,400 Speaker 1: go past the debt limit, we would prioritize the payments 556 00:28:02,680 --> 00:28:05,639 Speaker 1: so that bond holders, those kinds of people what you 557 00:28:05,640 --> 00:28:08,280 Speaker 1: would call a quote unquote default, they would get paid. 558 00:28:08,560 --> 00:28:11,679 Speaker 1: But then the government's own payments that are not for 559 00:28:11,880 --> 00:28:15,679 Speaker 1: treasury securities would be they would be the first to 560 00:28:15,720 --> 00:28:18,320 Speaker 1: be cut. Now, Democrats have said one, they don't support 561 00:28:18,359 --> 00:28:23,119 Speaker 1: that because essentially what you're doing is paying even foreign bondholders, 562 00:28:23,160 --> 00:28:28,919 Speaker 1: you'd be paying China while disproportionately cutting say you know, 563 00:28:29,040 --> 00:28:33,000 Speaker 1: funding for the EPA for environmental cleanup in your own agency. 564 00:28:33,880 --> 00:28:37,760 Speaker 1: So the administration has said absolutely not, don't do that. 565 00:28:37,840 --> 00:28:41,600 Speaker 1: And even if you did, prioritize your own failure on 566 00:28:41,640 --> 00:28:44,400 Speaker 1: the debt limit, once you go past the debt limit, 567 00:28:44,440 --> 00:28:46,920 Speaker 1: it would shake the markets, it would shake confidence in 568 00:28:46,960 --> 00:28:50,120 Speaker 1: the government's ability to pay for this. So there's a 569 00:28:50,160 --> 00:28:54,520 Speaker 1: disagreement as to whether a quote unquote default would necessarily occur. 570 00:28:55,160 --> 00:28:58,040 Speaker 1: But really it is true that the stakes here are 571 00:28:58,120 --> 00:29:02,000 Speaker 1: very high because it is functionally a default, and that's 572 00:29:02,040 --> 00:29:04,239 Speaker 1: basically what we're talking about with the dead limit. Well, 573 00:29:04,240 --> 00:29:05,800 Speaker 1: and of course, those of us you know, who live 574 00:29:05,880 --> 00:29:09,760 Speaker 1: through the fiscal cliff in eleven Jack, remember that downgrade 575 00:29:10,400 --> 00:29:14,960 Speaker 1: preceded a default that never happened. And this thing is 576 00:29:15,000 --> 00:29:16,840 Speaker 1: coming up a couple of months out. I don't I mean, 577 00:29:16,880 --> 00:29:18,280 Speaker 1: at some point it's going to punch us in the 578 00:29:18,320 --> 00:29:20,000 Speaker 1: face as we get into the summer here that the 579 00:29:20,600 --> 00:29:23,080 Speaker 1: down grade is still a very real possibility even if 580 00:29:23,080 --> 00:29:27,760 Speaker 1: we do not stop paying our bills. Yes, the concerns 581 00:29:27,760 --> 00:29:31,000 Speaker 1: about you know, looking back to twenty eleven, looking at 582 00:29:31,000 --> 00:29:34,320 Speaker 1: the credit downgrade, credit rating down grade, or even just 583 00:29:34,520 --> 00:29:37,600 Speaker 1: instilling a panic in the markets if you can get 584 00:29:37,600 --> 00:29:41,680 Speaker 1: too close. There's so much uncertainty in the rate of 585 00:29:41,960 --> 00:29:46,360 Speaker 1: spending and revenues, so that you know, God forbid, you 586 00:29:46,400 --> 00:29:48,680 Speaker 1: get sort of close to what you think the deadline 587 00:29:48,800 --> 00:29:52,120 Speaker 1: is and then some sort of catastrophe happens that cuts 588 00:29:52,160 --> 00:29:55,320 Speaker 1: revenues or increases the need to spend, and you can't 589 00:29:55,360 --> 00:29:58,840 Speaker 1: do it before raising or suspending the debt limit. There's 590 00:29:58,840 --> 00:30:02,400 Speaker 1: a lot of concern. All the Democrats I talked to say, 591 00:30:02,600 --> 00:30:06,560 Speaker 1: we really, especially considering sort of the nerves around banking 592 00:30:06,640 --> 00:30:10,200 Speaker 1: right now, we need to do something quickly. Republicans also 593 00:30:10,240 --> 00:30:11,920 Speaker 1: say we need to do something quickly. It's really just 594 00:30:11,960 --> 00:30:14,520 Speaker 1: that both sides are blaming the other for not coming 595 00:30:14,520 --> 00:30:16,840 Speaker 1: to the table, because the Democrats want to see a 596 00:30:16,840 --> 00:30:19,920 Speaker 1: more specific plan from the Republicans, and the Republicans say 597 00:30:19,920 --> 00:30:21,840 Speaker 1: that should not be necessary. They can have the conversation 598 00:30:21,920 --> 00:30:25,840 Speaker 1: without a full budget. Reading Kevin McCarthy's letter, it of 599 00:30:25,920 --> 00:30:29,120 Speaker 1: course we have it here, he writes, With each passing day, 600 00:30:29,160 --> 00:30:31,719 Speaker 1: I am incredibly concerned that you're putting an already fragile 601 00:30:31,720 --> 00:30:35,320 Speaker 1: economy in jeopardy by insisting upon your extreme position of 602 00:30:35,360 --> 00:30:38,120 Speaker 1: refusing to negotiate any meaningful changes to out of control 603 00:30:38,200 --> 00:30:41,480 Speaker 1: spending alongside an increase in the debt limit. Isn't it 604 00:30:41,520 --> 00:30:44,520 Speaker 1: an obvious response for the President, as we've been hearing, 605 00:30:44,560 --> 00:30:47,240 Speaker 1: to say, well, then what's your plan? What do you 606 00:30:47,320 --> 00:30:50,440 Speaker 1: want to cut? Where's your budget? Yeah, that is the 607 00:30:50,480 --> 00:30:52,880 Speaker 1: obvious response. You're going to continue to hear that. And 608 00:30:52,920 --> 00:30:55,320 Speaker 1: I point out, look, there have been proposals, and there 609 00:30:55,320 --> 00:30:58,240 Speaker 1: are four bullet points. It's not the most detailed proposal, 610 00:30:58,720 --> 00:31:01,760 Speaker 1: but we can basically describe what the Republicans want. They 611 00:31:01,760 --> 00:31:05,000 Speaker 1: want discretionary spending caps to limit to first cut and 612 00:31:05,000 --> 00:31:08,000 Speaker 1: then limit the future growth of agency budgets. They want 613 00:31:08,000 --> 00:31:11,520 Speaker 1: to pull back any unspent COVID funds. They want stricter 614 00:31:11,560 --> 00:31:15,280 Speaker 1: work requirements for things like snap benefits. And then there's 615 00:31:15,280 --> 00:31:17,360 Speaker 1: some other stuff like the energy bill that they want 616 00:31:17,360 --> 00:31:21,320 Speaker 1: to do border stuff. Those are the Basti parameters. I 617 00:31:21,360 --> 00:31:23,720 Speaker 1: think the key point when you hear the President and 618 00:31:23,800 --> 00:31:26,680 Speaker 1: other Democrats say show me your plan, really they want 619 00:31:26,840 --> 00:31:28,920 Speaker 1: to they want to see a vote, They want to 620 00:31:29,000 --> 00:31:31,720 Speaker 1: dare the House Republicans to prove that they can actually 621 00:31:31,800 --> 00:31:35,400 Speaker 1: they have a functional majority. You can only lose four votes. 622 00:31:35,480 --> 00:31:37,160 Speaker 1: If you lose five in the House, you don't have 623 00:31:37,200 --> 00:31:40,080 Speaker 1: a first startup conversation. Jack. Thank you, I wish we 624 00:31:40,080 --> 00:31:43,120 Speaker 1: had more time. As always with Jack Fitzpatrick, Bloomberg Government. 625 00:31:43,120 --> 00:31:45,080 Speaker 1: I'm Joe Matthew. This is Bloomberg