WEBVTT - Citi CEO Jane Fraser Weighs In on Banking Crisis

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<v Speaker 1>Live from the Bloomberg Interacted Berger's Studios. This is Bloomberg

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<v Speaker 1>day Break for Thursday, March twenty third. Coming up today,

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<v Speaker 1>Calm returns to markets following yesterday's FED decision. Fancier J.

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<v Speaker 1>Powell says more rate hikes are in store if inflation persists,

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<v Speaker 1>but the bond market has a different take, predicting rate

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<v Speaker 1>cuts instead. And now it's the Bank of England's turn

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<v Speaker 1>to make a policy decision. A grand jury in New

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<v Speaker 1>York City could hear from one more witness today at

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<v Speaker 1>Donald Trump's case, plus a standoff at the Manhattan High Runs.

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<v Speaker 1>I'm Michael barn More ahead, I'm John's fish awon sports.

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<v Speaker 1>That Nicks lost in Miami wide receiver moves made by

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<v Speaker 1>the Jets of the NCAA tournament resumes tonight at Big Garden.

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<v Speaker 1>Thanks all, straight ahead on Bloomberg day Break, The business

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<v Speaker 1>news you need disturn your day, and just one fifteen

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<v Speaker 1>minute podcast each pointing on Apple's Spotify. The Bloomberg Business

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<v Speaker 1>Appen everywhere you get your podcasts. Good morning, I'm Nathan

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<v Speaker 1>Hagar and I'm kieron Moscow. Here are the stories we're

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<v Speaker 1>following today. The lift in futures. This morning comes on

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<v Speaker 1>the heels of an equity sell off. Stocks sank yesterday

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<v Speaker 1>after a ninth straight rate hike from the Federal Reserve

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<v Speaker 1>and signals from Chair J Powell that more could be coming.

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<v Speaker 1>We need to raise rates higher. We will, I think

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<v Speaker 1>for now, though we as I've mentioned, we see the

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<v Speaker 1>likelihood of credit tightening. We know that that can have

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<v Speaker 1>a you know, an effect on the macroeconomy, on demand,

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<v Speaker 1>on labor market, on inflation, and we're we're going to

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<v Speaker 1>be watching to see what that is. Well. Critics are

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<v Speaker 1>weighing in on those remarks from J. Pale Farmer FED

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<v Speaker 1>Vice chair Alan Blinder says he should have taken a

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<v Speaker 1>different approach. I think very much that the right decision

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<v Speaker 1>today would have been a pause with words saying we're

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<v Speaker 1>waiting to see if the dust clears and how it clears,

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<v Speaker 1>and we may be going up higher depending if you know,

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<v Speaker 1>if this crisis doesn't look too serious. Alan blinders can

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<v Speaker 1>daring the Fed could be underestimating the extent of the

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<v Speaker 1>current banking crisis. Well, Nathan, the markets are not buying J.

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<v Speaker 1>Powell's message about more rate hikes. In fact, they're pricing

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<v Speaker 1>in rate cuts instead, and we get that storway from

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<v Speaker 1>Bloomberg's John Tucker, who joins US Live. John, Good morning,

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<v Speaker 1>my Karen. Treasury's rallied yesterday after the Fed decision, and

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<v Speaker 1>traders have ramped up best the central Bank is soon

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<v Speaker 1>going to reverse course and start cutting rates. They seem

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<v Speaker 1>convinced the Fed will make in about face, probably in September.

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<v Speaker 1>The market view contrasts with the FED guidance, which calls

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<v Speaker 1>for at least one more hike at Cher. Powell did

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<v Speaker 1>push back on that market center and saying rate cuts

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<v Speaker 1>are not our base case. Investors think tighter Fed policy

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<v Speaker 1>is leading to cracks in the economy will likely tip

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<v Speaker 1>the United States into recession. Live in New York. I'm

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<v Speaker 1>John Tucker, Bloomberg Daybreak, John. Thanks. The Swiss National Bank

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<v Speaker 1>is also on the move this morning. Turmoil at Credit

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<v Speaker 1>Suiss is not stopping that central bank from tightening policy.

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<v Speaker 1>The SNB's hiked rates by fifty basis points, taking its

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<v Speaker 1>policy rate to one and a half percent. Now, Nathan,

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<v Speaker 1>it's the Bank of England's turn. We get a rate

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<v Speaker 1>decision across the pond at eight am Eastern today and

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<v Speaker 1>Bloomberg's Lizzie Burden is at the BOE and has a preview.

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<v Speaker 1>There had been economists wondering at the start of the

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<v Speaker 1>week whether all the recent banking stress meant that financial

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<v Speaker 1>conditions have titan so much that the leg work has

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<v Speaker 1>been done for the Bank of England, that another hike

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<v Speaker 1>would be deflationary, or that it would undermine the already

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<v Speaker 1>weak economy. But now the consensus is for a quarter

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<v Speaker 1>point hike, which would take rates to four point two

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<v Speaker 1>five percent, to be the highest level since two thousand

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<v Speaker 1>and eight, and Bloomberg's Lizzie Burden points out the pound

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<v Speaker 1>is trading near a two month high ahead of the

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<v Speaker 1>BOE decision. Now we continue Karen to follow the latest

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<v Speaker 1>developments on the banking crisis and the response from Washington.

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<v Speaker 1>Treasury Secretary Janet Yellen says the US is not considering

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<v Speaker 1>blanket deposit insurance without first working with Congress. It's important

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<v Speaker 1>to be clear shareholders and deadholders of the field banks

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<v Speaker 1>are not being protected by the government, and no losses

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<v Speaker 1>from the resolution of these banks are being borne by

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<v Speaker 1>the taxpayer. Deposit protection is provided by the Deposit Insurance Fund,

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<v Speaker 1>which is funded by fees on insured banks. My Treasury

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<v Speaker 1>Secretary Yellen says executives responsible for bank collapses should not

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<v Speaker 1>be profiting when stockholders and investors take losses. Well, Jane

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<v Speaker 1>Fraser is weighing in on the banking turmoil. Nathan, the

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<v Speaker 1>CEO of City Group, says the ability to move millions

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<v Speaker 1>of dollars, which just a few clicks, is a sea

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<v Speaker 1>change moment for the risk of bank runs. There were

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<v Speaker 1>a couple of tweets and then this thing went down

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<v Speaker 1>much faster than as appened in history, and greatly. I

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<v Speaker 1>think the regulators did a good job in responding very quickly,

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<v Speaker 1>because normally have longer to respond to this. City Group

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<v Speaker 1>CEO Jane Fraser made the comments in an interview at

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<v Speaker 1>David Rubinstein. Stay tuned for more of that conversation coming

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<v Speaker 1>up surely on Bloomberg Daybreak, and we continue to watch

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<v Speaker 1>First Republic Bank this morning. Karen. The shares are up

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<v Speaker 1>three point six percent, but it's not all good news

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<v Speaker 1>for the bank, and we get more live from Bloomberg.

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<v Speaker 1>Steve Rappaport, Steve, Good morning, Nathan and Karen. The San

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<v Speaker 1>Francisco lender was hit with a ratings down grade for

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<v Speaker 1>the second time in less than a week, Fitch lowered

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<v Speaker 1>First Republic's long term issuer default rating from B to

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<v Speaker 1>double B. The bank received the cash infusion of thirty

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<v Speaker 1>billion dollars from a group of major firms. Fitch analysts

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<v Speaker 1>view the funding as the primary ratings constraint. Meanwhile, First Republic,

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<v Speaker 1>in a regulatory filing, says top Brass agreed to forego

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<v Speaker 1>bonuses and other compensation this year. Live in New York,

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<v Speaker 1>I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, Thanks, And

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<v Speaker 1>in politics today, TikTok is front and center on Capitol Hail.

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<v Speaker 1>The company CEO tries to convince the lawmakers today that

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<v Speaker 1>China has no influence over the apps data. Amy Morris

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<v Speaker 1>has details from our Bloomberg ninety nine one newsroom in

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<v Speaker 1>Washington show Two plans to tell Congress the TikTok app

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<v Speaker 1>does more to protect young users than other social media rivals.

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<v Speaker 1>Two will appear before the House Energy and Commerce Committee,

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<v Speaker 1>where he will be grilled on teen's safety and the

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<v Speaker 1>app's impact on mental health, but he'll also face questions

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<v Speaker 1>about national security. In prepared comments reviewed by Bloomberg News,

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<v Speaker 1>too will tell lawmakers they would never share information demanded

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<v Speaker 1>by the Communist Party as TikTok tries to convince lawmakers

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<v Speaker 1>the companies should be allowed to continue operating in the US.

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<v Speaker 1>In Washington, I'm may Me Maris Bloomberg. Daybreak. It's forty

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<v Speaker 1>eight degrees in New York's apatchee fog this morning, but

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<v Speaker 1>it's gonna be cloudy, breezy, with some passing showers this afternoon,

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<v Speaker 1>heading to the low sixties. Showers end this evening. We'll

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<v Speaker 1>get down to the upper forties. Second look at some

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<v Speaker 1>of the other stories making news in New York and

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<v Speaker 1>around the world with Bloomberg's Michael Bark. Good morning, Mike, Call,

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<v Speaker 1>Good morning Nathan. The grand jury in the Manhattan DA's

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<v Speaker 1>probe into Donald Trump was delayed, and we'll reconvene later today.

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<v Speaker 1>Trump is accused of paying hush money in twenty sixteen

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<v Speaker 1>to an adult film star. Jurors were informed at least

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<v Speaker 1>one additional witness may be called to testify before they

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<v Speaker 1>decide whether to indict the former president. Outside the courthouse

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<v Speaker 1>in Lower Manhattan, woman supports Trump. Look, he's not perfect

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<v Speaker 1>or any of us perfect, but he loves our country

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<v Speaker 1>and they put him through so much and He's still

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<v Speaker 1>gonna do it again and we're gonna win. Meanwhile, this

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<v Speaker 1>man says he wants to see a mug shot of him. Yes,

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<v Speaker 1>I mean, I don't know about this crime, but multiple

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<v Speaker 1>other crimes. I mean January sixth alone, he should be

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<v Speaker 1>in prison. New York is still bracing for protests. The

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<v Speaker 1>former president also lost a court battle to keep legal

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<v Speaker 1>details secret from the Justice Department about his alleged mishandling

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<v Speaker 1>of classified information after he left the White House. It

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<v Speaker 1>appears to clear the way for Special Consul Jack Smith

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<v Speaker 1>to force one of Trump's private lawyers to testify before

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<v Speaker 1>a grand jury. Approval of President Joe Biden has dipped,

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<v Speaker 1>nearing the lowest point of his presidency. According to the

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<v Speaker 1>Associated Press North Pole, the president notched an approval rating

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<v Speaker 1>of just thirty eight percent. The U asked questions China's

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<v Speaker 1>message to Russia about how to end the war in

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<v Speaker 1>Ukraine Bloomberg's ad Baxter report. The US is basing that

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<v Speaker 1>on the fact that the day after the Shee Putin's summit,

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<v Speaker 1>Russia launched a barrage of missiles. NFC spokesman John Kirby,

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<v Speaker 1>If China really wants to be helpful in that regard,

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<v Speaker 1>they should be urging President Putin to get out of Ukraine.

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<v Speaker 1>Here we are the day after, and mister Putin is

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<v Speaker 1>launching more drones and missiles into Ukraine. So I don't

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<v Speaker 1>know President she delivered that message, but if he did,

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<v Speaker 1>mister Putin ignored it. Kirby says. The other possibility as

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<v Speaker 1>if Vladimir Putin doesn't support China's peace plan. In San Francisco,

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<v Speaker 1>I'm at Baxter Bloomberg day Break, A dramatic standoff played

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<v Speaker 1>out thirty floors above a Manhattan street yesterday. It all

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<v Speaker 1>began when the FBI tried to execute an arrest warrant

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<v Speaker 1>at a luxury high rise just steps away from Carnegie Hall.

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<v Speaker 1>The man barricaded himself inside the apartment and then was

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<v Speaker 1>purged on the ledge of the window, threatening to jump.

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<v Speaker 1>An NYPD officer finally repelled down from the floor above

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<v Speaker 1>and was able to get the suspect inside. Global News

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<v Speaker 1>twenty four hours a day, powered by more than twenty

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<v Speaker 1>seven hundred journalists and analysts in over one hundred twenty countries.

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<v Speaker 1>I'm Michael bar This is Bloomberg, Nathan. Thanks Michael of

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<v Speaker 1>the Bloomberg Sports Update brought you by Trice State. Out

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<v Speaker 1>of you, here's John Stashower all right. Nathan Nicks had

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<v Speaker 1>beaten the Heat twice this season, both nail biting games

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<v Speaker 1>not decided until the end. This time in Miami, Knicks

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<v Speaker 1>fell short at one twenty seven to one twenty. Jimmy

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<v Speaker 1>Butler thirty seven points for the Heat. RJ. Barrett had

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<v Speaker 1>twenty six for the Knicks. Jalen Brunson twenty five, but

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<v Speaker 1>Julius Randall went from fifty seven points the other night

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<v Speaker 1>down to fifteen. Same two teams will play next week

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<v Speaker 1>at the Garden. Nicks are trying to hold on to

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<v Speaker 1>fifth place in the East. They lead Miami and Brooklyn

0:09:41.120 --> 0:09:43.920
<v Speaker 1>by two games. The Nets play tonight at Cleveland at

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<v Speaker 1>the Garden. It's the start of the NCAA Tournament Sweet

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<v Speaker 1>sixteen and up first it's Kansas State against Michigan State,

0:09:49.880 --> 0:09:52.920
<v Speaker 1>and both teams have top scorers who are New York natives.

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<v Speaker 1>Case States Marquisnoles from Harlem. The Spartans Tyson Walker is

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<v Speaker 1>from Long Island. As coach is tom Izzo. He does

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<v Speaker 1>have that that swagger about him, you know, his is

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<v Speaker 1>a little more I think sometimes the New York swagger

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<v Speaker 1>is a very cocky swagger, and sometimes that's good. You

0:10:11.679 --> 0:10:14.640
<v Speaker 1>got to be He's kind of had the happy medium,

0:10:14.640 --> 0:10:17.800
<v Speaker 1>you know, he's got enough cockiness to be confident, and

0:10:18.080 --> 0:10:21.240
<v Speaker 1>yet he's an unbelievable Kidizzo in his twenty eight season

0:10:21.280 --> 0:10:23.719
<v Speaker 1>in Michigan State the Kansas State coach Jerome Tanks in

0:10:23.760 --> 0:10:28.120
<v Speaker 1>his first season. Later, it's Tennessee versus Florida Atlantic. Also

0:10:28.160 --> 0:10:32.640
<v Speaker 1>a doubleheader in Vegas, Yukon against Arkansas, UCLA meets Gonzaga.

0:10:33.080 --> 0:10:35.640
<v Speaker 1>That Jets drafted wide receiver Elijah More in the second

0:10:35.720 --> 0:10:38.000
<v Speaker 1>round two years ago. Good rookie season, not as good

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<v Speaker 1>this past year. Midway through, he demanded the trade. The

0:10:41.160 --> 0:10:43.640
<v Speaker 1>Jets traded More to Cleveland. They got a second round

0:10:43.720 --> 0:10:46.240
<v Speaker 1>draft pick back, and the Jets signed a free agent

0:10:46.280 --> 0:10:49.160
<v Speaker 1>white out Mcole Hardman spent the last four seasons of

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<v Speaker 1>Kansas City, went two Super Bowls. John stash Allard Bloomberg

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<v Speaker 1>Sports Live from coast to coast, from New York to

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<v Speaker 1>San Francisco, Boston to Washington, DC, nationwide on Sirius Exam,

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<v Speaker 1>the Bloomberg Business app, and Bloomberg dot Com. This is

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<v Speaker 1>Bloomberg Daybreak. Good morning. I'm Nathan Hagard in Jay the

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<v Speaker 1>Markets Trust. Those are the words from City Group CEO

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<v Speaker 1>Jane Frasier, who says she supports Chairman Powell's efforts to

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<v Speaker 1>fight inflation and appreciates how clearly he has stated that

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<v Speaker 1>crushing inflation is the Fed's number one goal. Jane Fraser

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<v Speaker 1>sat down with Bloomberg's David Rubinstein and an event at

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<v Speaker 1>the Economic Club in Washington. They discussed the FED and

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<v Speaker 1>the recent string of bank failures and what it all

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<v Speaker 1>means for the US economy. Here is part of that conversation. Now,

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<v Speaker 1>the feds job number one is fighting inflation, and we

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<v Speaker 1>want the FED to be very dependable in fighting inflation,

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<v Speaker 1>and that should be their most important priority. There are

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<v Speaker 1>ramifications of it, but there are certain banks which say

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<v Speaker 1>are an isolated few that have really been impacted very negatively,

0:11:54.480 --> 0:11:57.640
<v Speaker 1>that didn't necessarily manage their balance sheets that well, and

0:11:57.960 --> 0:12:00.320
<v Speaker 1>think that was the right decision to protect only the

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<v Speaker 1>depositors and say goodbye to the shareholders and goodbye to

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<v Speaker 1>the creditors. I think it's very important to protect the

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<v Speaker 1>depositors right now. The banking system everywhere around the world

0:12:10.960 --> 0:12:14.120
<v Speaker 1>depends on confidence and that confidence has to be in

0:12:14.160 --> 0:12:17.559
<v Speaker 1>the safety and security of deposits. So in terms of

0:12:17.600 --> 0:12:21.280
<v Speaker 1>the most important job here they did the most important job,

0:12:21.520 --> 0:12:24.360
<v Speaker 1>which is making sure the depositors will whole. So in

0:12:24.400 --> 0:12:26.920
<v Speaker 1>the old days and there were bank runs, used to

0:12:26.920 --> 0:12:29.640
<v Speaker 1>see people lined up outside the street and get their

0:12:29.640 --> 0:12:32.760
<v Speaker 1>money out. Now you're just on your iPhone or whatever

0:12:32.800 --> 0:12:34.719
<v Speaker 1>phone you have, you can take your money out. So

0:12:35.120 --> 0:12:37.880
<v Speaker 1>money moves so quickly was at a factor as well.

0:12:37.880 --> 0:12:39.880
<v Speaker 1>And having the money get out of a bank so

0:12:39.960 --> 0:12:41.400
<v Speaker 1>quickly on the weight line, you can just do it

0:12:41.440 --> 0:12:44.360
<v Speaker 1>over it. It's a complete game changer from what we've

0:12:44.360 --> 0:12:47.800
<v Speaker 1>seen before. David, you're absolutely right. There were a couple

0:12:47.800 --> 0:12:52.400
<v Speaker 1>of tweets and then this thing went down much faster

0:12:52.559 --> 0:12:56.240
<v Speaker 1>than as a and in history, and greatly. I think

0:12:56.240 --> 0:12:59.800
<v Speaker 1>the regulators did a good job in responding very quickly,

0:13:00.480 --> 0:13:03.440
<v Speaker 1>because normally you have longer to respond to this, so

0:13:03.480 --> 0:13:06.679
<v Speaker 1>they acted with quite a lot of speak even how

0:13:06.760 --> 0:13:09.440
<v Speaker 1>quickly this happened. So some people say you have a

0:13:09.480 --> 0:13:13.440
<v Speaker 1>moral hazard when you protect people. So by protecting all

0:13:13.440 --> 0:13:17.360
<v Speaker 1>the depositors in Silicon Valley Bank, the implication was that

0:13:17.520 --> 0:13:19.880
<v Speaker 1>if somebody else has a problem, will protect them, and

0:13:19.920 --> 0:13:22.120
<v Speaker 1>so forth, and so the two hundred and fifty thousand

0:13:22.120 --> 0:13:24.920
<v Speaker 1>dollars limit is meaningless more or less? Or do you

0:13:24.960 --> 0:13:28.960
<v Speaker 1>think the federals are and the Secondary Treasurer saying we're

0:13:28.960 --> 0:13:31.240
<v Speaker 1>not going to protect every depositor, or we're going to

0:13:31.320 --> 0:13:34.560
<v Speaker 1>protect certain depositors. I don't think they need to go

0:13:34.679 --> 0:13:37.680
<v Speaker 1>out right now, because the banking system is pretty sound,

0:13:37.880 --> 0:13:40.880
<v Speaker 1>and we're talking about a few banks. We had it

0:13:40.960 --> 0:13:44.400
<v Speaker 1>from the gym and pal. This is not something that

0:13:44.520 --> 0:13:48.120
<v Speaker 1>is spread across the entire banking system. Isn't like it

0:13:48.240 --> 0:13:51.880
<v Speaker 1>was last time. This is not a credit crisis. This

0:13:51.960 --> 0:13:54.920
<v Speaker 1>is a situation where it's a few banks that have

0:13:54.960 --> 0:13:57.600
<v Speaker 1>some problems and it's better to make sure that we

0:13:57.720 --> 0:14:01.280
<v Speaker 1>nip that in the bud. As we talk today, the

0:14:01.320 --> 0:14:05.160
<v Speaker 1>Federal Reserve has announced that it's going to increase the

0:14:05.200 --> 0:14:08.240
<v Speaker 1>federal discount rate by another twenty five basis points, which

0:14:08.320 --> 0:14:11.040
<v Speaker 1>was probably not a surprise in the market. Do you

0:14:11.080 --> 0:14:14.360
<v Speaker 1>think that was the right decision now? I think it

0:14:14.440 --> 0:14:16.640
<v Speaker 1>was a tough decision. Was Jake and a pause? Was

0:14:16.640 --> 0:14:19.240
<v Speaker 1>he going to increase it by the twenty five bits

0:14:19.320 --> 0:14:23.440
<v Speaker 1>or more? I think what he said was apparently jolly sensible.

0:14:23.520 --> 0:14:28.000
<v Speaker 1>If you'll pardon the British expression, I do that occasionally.

0:14:29.200 --> 0:14:31.800
<v Speaker 1>He said, we don't know how much credit tightening is

0:14:31.840 --> 0:14:33.800
<v Speaker 1>going to come from what's gone on in the last

0:14:33.800 --> 0:14:35.840
<v Speaker 1>couple of weeks. We don't quite know what's going to

0:14:35.880 --> 0:14:39.640
<v Speaker 1>happen there. So we do know that inflation is a

0:14:39.680 --> 0:14:43.000
<v Speaker 1>real problem. It's persistent, it's starting to come off. But

0:14:43.160 --> 0:14:47.680
<v Speaker 1>he has to tackle this and in Jay the market's

0:14:47.720 --> 0:14:50.520
<v Speaker 1>trust and many of us do that they're going to

0:14:50.520 --> 0:14:54.200
<v Speaker 1>tackle inflation hard. But let's also see where the data is.

0:14:54.360 --> 0:14:57.600
<v Speaker 1>Do you see any evidence in the information data that

0:14:57.680 --> 0:15:01.400
<v Speaker 1>city has that we are heading for a recession? If so,

0:15:01.880 --> 0:15:05.080
<v Speaker 1>when might you think we would see the evidence of that? Yeah,

0:15:05.120 --> 0:15:08.880
<v Speaker 1>I mean, we've certainly been expecting that a recession could

0:15:08.920 --> 0:15:11.680
<v Speaker 1>well be could well be happening in the second half

0:15:11.680 --> 0:15:14.960
<v Speaker 1>of the year. If one does occur, we don't think

0:15:14.960 --> 0:15:17.960
<v Speaker 1>it will be that heavy because normally, when you're heading

0:15:18.000 --> 0:15:21.760
<v Speaker 1>into some tougher times, you know, the consumers not in

0:15:21.840 --> 0:15:25.560
<v Speaker 1>such good health, the companies aren't, the banks aren't, whereas

0:15:25.600 --> 0:15:28.120
<v Speaker 1>that's not the case right now. The consumer is in

0:15:28.200 --> 0:15:31.400
<v Speaker 1>good health, the corporate balance sheets are strong, and the

0:15:31.440 --> 0:15:36.000
<v Speaker 1>banks are strong. So the factors that typically amplify a

0:15:36.120 --> 0:15:39.400
<v Speaker 1>recession and not in these not in play at the moment,

0:15:40.000 --> 0:15:43.720
<v Speaker 1>So we have to make sure there's nothing crazy happens

0:15:43.760 --> 0:15:46.160
<v Speaker 1>in the duo political world that would change it. But

0:15:46.520 --> 0:15:49.000
<v Speaker 1>we could well have a mild recession. The last couple

0:15:49.040 --> 0:15:52.200
<v Speaker 1>of weeks could make that a bit more likely. It

0:15:52.240 --> 0:15:53.960
<v Speaker 1>doesn't feel like it's going to be a tough one,

0:15:54.400 --> 0:15:56.680
<v Speaker 1>and the US economy is likely to pull out a

0:15:56.720 --> 0:16:02.160
<v Speaker 1>bit pretty quickly. This is Bloomberg Daybreak Today, your morning

0:16:02.200 --> 0:16:04.800
<v Speaker 1>brief on the stories making news from Wall Street to

0:16:04.920 --> 0:16:08.400
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<v Speaker 1>And I'm Karen Moscow. Join us again tomorrow morning for

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0:16:49.880 --> 0:16:51.480
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