WEBVTT - SVB Spawns Banking Crisis As Biden Urges for Tougher Rules 0:00:01.720 --> 0:00:05.400 From Mark hard Of. We're Innovation, Money, Empower Collie in 0:00:05.519 --> 0:00:10.399 Silicon Valley, NBR. This is Bloomberg Technology with Caroline Hide 0:00:10.480 --> 0:00:27.720 and Ed Ludlow. I'm Caroline Hide a Bloomberg's World headquarters 0:00:27.720 --> 0:00:30.200 in New York, and I'm a Ludlow in San Francisco. 0:00:30.280 --> 0:00:32.880 This is Bloomberg Technology, A new time, a new era 0:00:32.960 --> 0:00:36.600 for this show. Caroline, the news continues US technology a 0:00:36.760 --> 0:00:39.960 sigh of relief as the US backstops depositors, but we 0:00:40.040 --> 0:00:43.120 are very worried about ongoing risk, the contagion risk. This 0:00:43.360 --> 0:00:45.320 is a new era for our show. It is a 0:00:45.360 --> 0:00:49.080 new era for technology, the startups, the VCS writ large 0:00:49.400 --> 0:00:53.160 as we see potentially the ongoing spiraling. Let's keep talking 0:00:53.159 --> 0:00:54.880 about what's coming up in the next hour. Ed. How 0:00:54.960 --> 0:00:58.720 Silicon Valley spawned a bank crisis, the impact on startups, investors, 0:00:58.720 --> 0:01:02.680 regulators in the lenders, all fighting for their reputations. President 0:01:02.720 --> 0:01:06.520 Biden vows to hold banks responsible, urging Congress for tougher 0:01:06.680 --> 0:01:09.240 regulation on the banking industry, and the UK arm of 0:01:09.400 --> 0:01:12.679 SVV gets bought for one pound. We bring you the 0:01:12.760 --> 0:01:16.520 sprawling global gyrations from London to Beijing to Mumbai. But 0:01:16.680 --> 0:01:18.679 first let's check in on those markets that yes ed 0:01:18.840 --> 0:01:20.880 bread the cyber relief in the United States, but not 0:01:20.920 --> 0:01:23.679 so worldwide. We are still worried about the contagium risk. 0:01:23.680 --> 0:01:25.440 When you're looking in the equity front foot see one 0:01:25.520 --> 0:01:27.680 hundred off by more than two percentage points. The eurostops 0:01:27.680 --> 0:01:29.600 off by more than two percent, and we are seeing 0:01:29.600 --> 0:01:31.880 the US though spring back as we start to think 0:01:32.000 --> 0:01:34.640 maybe the Federal Reserve will have to pause its hiking cycle. 0:01:34.800 --> 0:01:36.840 We therefore see the dollar wiping out all of its 0:01:36.920 --> 0:01:39.240 gains for the year. We see dollar indext off by 0:01:39.280 --> 0:01:41.560 eight tenths of a percent. I'm looking at sovereign bonds, 0:01:41.600 --> 0:01:44.200 the bid, the flight to safety, and the unraveling of 0:01:44.240 --> 0:01:46.000 where we thought interest rates were going to go. A 0:01:46.080 --> 0:01:49.240 two year yield on the US down thirty eight basis points, 0:01:49.320 --> 0:01:51.480 the most we've seen since the nineteen eighties in terms 0:01:51.480 --> 0:01:53.600 of a move. Let's overall have a look at what's 0:01:53.600 --> 0:01:56.040 happening in the world of crypto. We've got to look 0:01:56.040 --> 0:01:58.200 at the key asset. Then it's just absolutely having a 0:01:58.200 --> 0:02:00.280 field day, up twelve and a half percent. But remember 0:02:00.600 --> 0:02:02.520 the pain trade that we saw back on Friday. The 0:02:02.560 --> 0:02:05.160 warriors around crypto and indeed, this is a story of 0:02:05.240 --> 0:02:09.120 dollar weakness too. Yeah, individual movers, We've actually turned a 0:02:09.120 --> 0:02:11.639 big corner. These are the names most exposed to SVP 0:02:12.040 --> 0:02:14.760 in terms of the deposities in publicly traded tech companies, 0:02:14.960 --> 0:02:17.200 market Blower at the Open. We have turned a corner. 0:02:17.320 --> 0:02:19.520 There's this narrative around one and done with the FED, 0:02:19.560 --> 0:02:22.600 which is really boosting the tech sector along with dip buying. 0:02:22.720 --> 0:02:25.680 Number of these names turning the corner change the board though. 0:02:25.760 --> 0:02:28.280 Let's go straight to the banks. There is contagion concern. 0:02:28.360 --> 0:02:30.880 A number of regional banks have been halted. We are 0:02:30.880 --> 0:02:34.919 seeing record declines across First Republic for example, Western Alliance 0:02:35.000 --> 0:02:38.120 also down very big. How much of the concern around 0:02:38.200 --> 0:02:41.200 SVP and deposit of flight still applies to these names 0:02:41.320 --> 0:02:44.160 as the regulators assess the health of this industry. For 0:02:44.200 --> 0:02:46.880 the latest bringing Bloombog Shinnali Bassak, who's on top of 0:02:46.880 --> 0:02:49.320 this story for US, Shinali, what is the latest with 0:02:49.440 --> 0:02:51.560 this sector? There's a few things to think about here, 0:02:51.720 --> 0:02:53.320 Ed And if you think about it, how many people 0:02:53.520 --> 0:02:57.480 in Silicon Valley had banked with the likes of Silicon 0:02:57.639 --> 0:03:00.000 Valley Bank and then move their money to say First Republic, 0:03:00.240 --> 0:03:02.800 and then they're worried also about the other regional banks 0:03:02.800 --> 0:03:06.840 in the sector. Western Alliance based in Phoenix, Arizona, PacWest 0:03:06.919 --> 0:03:10.120 based in Los Angeles. There's a general worries about their 0:03:10.120 --> 0:03:12.799 banks close to home, especially after some money has moved 0:03:12.800 --> 0:03:15.640 there very very recently. I would also say that there 0:03:15.720 --> 0:03:18.880 are other people who see this as an opportunity to 0:03:18.919 --> 0:03:21.800 attract more clients. I would take a look at this 0:03:21.800 --> 0:03:24.560 tweet over the weekend from Anthony Nodo who had said 0:03:24.680 --> 0:03:26.320 use his link to sign up and you'll get a 0:03:26.360 --> 0:03:28.919 twenty five dollars bonus and up to two hundred fifty 0:03:29.320 --> 0:03:31.480 two hundred fifty dollars when you sign up for a 0:03:31.480 --> 0:03:33.680 direct deposit. So we're going to talk a lot more. 0:03:33.720 --> 0:03:36.320 I know about the companies here that even in the 0:03:36.320 --> 0:03:39.000 sell off, are coming to seek a position of strength 0:03:39.160 --> 0:03:41.440 versus the ones that maybe have a little further to 0:03:41.560 --> 0:03:43.880 go here when it comes to the troubles facing the 0:03:43.920 --> 0:03:46.520 banking sector, well said Shenatibaut site, you're gonna be sticking 0:03:46.560 --> 0:03:49.080 with us and piece to say this odd fintype. Ponton 0:03:49.120 --> 0:03:52.200 has found a CEO in Managing Pontus, Steve McLoughlin. He's 0:03:52.240 --> 0:03:54.040 with us. He's a full my head of Goldman's Global 0:03:54.040 --> 0:03:58.160 Financial Technology Group, joining us for the conversation. And wow, 0:03:58.240 --> 0:04:00.680 I mean Steve told to us before we get onto 0:04:00.680 --> 0:04:03.280 the silver linings of who benefits in this scenario, just 0:04:03.320 --> 0:04:05.880 talk to us about how much the earth shook for 0:04:06.240 --> 0:04:09.680 VC's tech. The overall counterparty risk was enormous, and no 0:04:09.680 --> 0:04:12.920 one seemed to realize. Yeah. I think this sudden element 0:04:12.960 --> 0:04:15.520 of this is what hit everybody so so hard. And 0:04:15.640 --> 0:04:17.680 I think I don't know how many years of life 0:04:17.680 --> 0:04:19.720 were taken off everyone over the weekend, but there were 0:04:19.800 --> 0:04:23.960 people super, super stressed out, you know, getting from not 0:04:24.040 --> 0:04:27.880 just big businesses but SMBs and clients of the firm, 0:04:28.640 --> 0:04:31.560 not our firm, but SVB. But it really, I think 0:04:31.600 --> 0:04:33.760 woke people up to the big problem you know out 0:04:33.800 --> 0:04:35.719 there that there's so much risk on a few big 0:04:35.760 --> 0:04:40.080 banks in Silicon Valley that it really, it really just 0:04:40.080 --> 0:04:42.280 shook everybody out. And at the end of the day, 0:04:42.360 --> 0:04:44.880 I think you're seeing the ripple effects happen and you're 0:04:45.160 --> 0:04:46.400 right in the middle of it. So I think the 0:04:46.560 --> 0:04:48.760 probably questions are going to be, you know, how deep 0:04:48.839 --> 0:04:50.159 is this going to go? But we're still in the 0:04:50.160 --> 0:04:51.520 middle of it. We're still in the middle of it, 0:04:51.560 --> 0:04:54.040 and the reality is you have spent so many years 0:04:54.120 --> 0:04:57.920 here helping firms become unicorns through raising money, you work 0:04:57.960 --> 0:05:00.320 with their venture capitalists. Is there a sense that the 0:05:00.360 --> 0:05:03.520 capital markets are now closing up for the people who 0:05:03.520 --> 0:05:06.800 had such easy access to money for the last ten years. Well, 0:05:06.839 --> 0:05:09.400 I wouldn't say they're closing up, but I would say 0:05:09.440 --> 0:05:11.360 this isn't helpful, and given that we're right in the 0:05:11.400 --> 0:05:13.680 middle of it, it's it's pretty painful for I think 0:05:13.720 --> 0:05:16.200 a lot of tech companies across the world. I think 0:05:16.240 --> 0:05:18.080 the fact that FED came out and did what they 0:05:18.120 --> 0:05:22.880 did was incredibly helpful and expected to some extent over 0:05:22.920 --> 0:05:26.520 the weekend. But capital was pretty hard to find before this, 0:05:26.760 --> 0:05:30.040 and so right now we're getting hundreds of calls from 0:05:30.040 --> 0:05:33.120 companies looking for whether it's credit. I saw ban On 0:05:33.120 --> 0:05:36.440 this morning of talking about credit funds and structured securities 0:05:36.440 --> 0:05:38.760 and all that. But you see some of the big 0:05:38.760 --> 0:05:40.800 guys that wrote all the checks leading up to the 0:05:40.800 --> 0:05:44.039 big boom in tech and fintech, you know, Tiger d 0:05:44.200 --> 0:05:47.560 One Code to really kind of pulling back on their 0:05:47.600 --> 0:05:50.320 private investments and looking at their portfolio companies or shifting 0:05:50.320 --> 0:05:54.080 to public markets. Steve, you run an advisory. This at 0:05:54.080 --> 0:05:56.479 the hault of all these transactions. Right when the Vene 0:05:56.600 --> 0:06:00.520 Caitlists wrote that letter of support for SVB, they pointed 0:06:00.520 --> 0:06:02.640 out that it's not just a place that holds deposits 0:06:02.640 --> 0:06:05.960 for this sector. It offers a wide range of banking 0:06:05.960 --> 0:06:08.400 sets is where no one else would. So, now where 0:06:08.400 --> 0:06:11.240 does this industry turn to? Where did the founders go 0:06:11.320 --> 0:06:15.360 when they need banking services and traditional banks don't offer them? Yeah, 0:06:15.360 --> 0:06:17.240 you're right. It was not just a place where you 0:06:17.279 --> 0:06:19.400 storage your money. It was where all the money got transferred. 0:06:19.400 --> 0:06:21.640 They were doing payments, they were doing treasury management, they 0:06:21.640 --> 0:06:24.520 were doing wealth management, investment banking, you name it. And 0:06:24.560 --> 0:06:27.800 a lot of companies were essentially running their business off 0:06:27.839 --> 0:06:31.600 of SVB, not just essentially putting their deposits there. You know, 0:06:31.640 --> 0:06:34.200 I think, you know, it's interesting to hear so far 0:06:34.360 --> 0:06:36.680 and other FinTechs who we know are are you know, 0:06:36.839 --> 0:06:39.840 have their hands out to essentially take deposits and help 0:06:39.839 --> 0:06:42.600 people out. But that's just one smallest liver. The economy 0:06:42.600 --> 0:06:45.320 in the fintech universe is extremely strong, and I think 0:06:45.320 --> 0:06:46.880 there's going to be places for people to go. We 0:06:46.920 --> 0:06:49.080 were on the phone all week on ourselves and with 0:06:49.200 --> 0:06:51.680 different clients helping them get open up accounts at Cheaping 0:06:51.720 --> 0:06:55.120 Morgan and other large banks institutions, And that was happening 0:06:55.120 --> 0:06:57.520 all weekend. And I have to say, and talking to 0:06:57.560 --> 0:06:59.560 some of the bankers that were taking those funds in 0:06:59.600 --> 0:07:02.000 that a lot of them were extremely gracious about about 0:07:02.000 --> 0:07:04.600 the situation and not trying to sort of fearmonger on it. 0:07:05.200 --> 0:07:07.520 So a lot of support around the banking system for 0:07:07.520 --> 0:07:11.360 each other, from systemically important institutions such as JP Morgan, 0:07:11.440 --> 0:07:14.240 such a Bank America. But what about Mercury bres Capital, 0:07:14.280 --> 0:07:17.000 what about some of the neo banks? How much should 0:07:17.000 --> 0:07:19.800 we go to see these companies supported with inrow, in 0:07:19.880 --> 0:07:22.880 flux of cash, or more warries around them. I think 0:07:22.880 --> 0:07:25.200 the good news is the bigger and better of those 0:07:25.240 --> 0:07:28.480 firms raised so much capital over the last couple of years, 0:07:28.520 --> 0:07:31.800 companies like Revolute in Europe raised a billion to fifty 0:07:31.840 --> 0:07:34.120 from US for example, and are growing like a weed 0:07:34.160 --> 0:07:35.960 and making lots of money. So some of these banks 0:07:35.960 --> 0:07:39.040 are very well healed and don't actually have risky assets 0:07:39.080 --> 0:07:40.840 on our balance sheet like some of the larger banks. 0:07:40.840 --> 0:07:43.520 So in a weird way, some of the largest banks 0:07:43.520 --> 0:07:45.200 of the country more risky than some of the neo 0:07:45.200 --> 0:07:48.440 bank So we're very bullish on all things or most 0:07:48.440 --> 0:07:50.840 things fintech, I would say, but I think this is 0:07:50.840 --> 0:07:53.320 a great opportunity for fintech to shine. I'm so interested 0:07:53.320 --> 0:07:55.560 though you mentioned kind of helping your clients move money 0:07:55.600 --> 0:07:57.640 into places like JP Morgan. There was a lot of 0:07:57.720 --> 0:08:00.720 chatter online, especially with the VC community, about this idea 0:08:00.800 --> 0:08:03.720 that you're systemically important and then you're everybody else, And 0:08:03.760 --> 0:08:07.000 I'm wondering has the psychology change now that the FED 0:08:07.040 --> 0:08:09.160 has stepped in, that the FDIC has stepped in the 0:08:09.160 --> 0:08:11.240 way they did and said you're safe no matter what 0:08:11.840 --> 0:08:15.040 it Does that mean that there will still be an 0:08:15.080 --> 0:08:18.680 embracing of these regional banking partners or is there still 0:08:18.720 --> 0:08:20.320 that fear given what we've seen it to a con 0:08:20.360 --> 0:08:22.520 valley bank. I mean, there's been a twenty year trend 0:08:22.520 --> 0:08:25.840 towards bank mergers and lesser and lesser banks in the country, 0:08:25.840 --> 0:08:27.200 and that's how I sort of built my career up 0:08:27.200 --> 0:08:29.120 of Coleman Sacks doing a lot of bank mergers. But 0:08:29.840 --> 0:08:31.760 I would say, I don't think we're going to move 0:08:31.760 --> 0:08:33.880 to a system like Canada where there's like six major 0:08:33.920 --> 0:08:35.640 banks and then nothing else. I think it could be 0:08:35.679 --> 0:08:37.520 a slow movement towards that, because I don't think you 0:08:37.559 --> 0:08:40.880 really necessarily need as many banks as we have. But 0:08:40.960 --> 0:08:42.960 I also think there's a huge place for the fintech 0:08:43.000 --> 0:08:45.640 institutions that are coming onto the scene and solving some 0:08:45.679 --> 0:08:48.160 of these problems and using some of the very largest banks. 0:08:48.160 --> 0:08:50.600 So they got a layer on top of the largest banks. 0:08:50.640 --> 0:08:54.240 You can have the best of both worlds. Steve Owner 0:08:54.280 --> 0:08:56.960 brings some breaking news just crossing the Bloomberg terminal. Bloomberg 0:08:57.000 --> 0:09:00.480 is reporting, citing officials familiar of the matter, the European 0:09:00.480 --> 0:09:04.080 Central banks plans for big interest rate hikes in the 0:09:04.080 --> 0:09:07.240 weeks succume are going to meet more opposition now right 0:09:07.280 --> 0:09:09.880 Dubbish policymakers are likely to make the point that because 0:09:09.920 --> 0:09:13.360 of what's happened with Silicon Valley Bank, the economic picture 0:09:13.400 --> 0:09:16.080 has shifted, not just here in North America but in 0:09:16.120 --> 0:09:19.080 Europe as well, similar to what we're seeing in the 0:09:19.120 --> 0:09:22.080 market reflecting in terms of their bets on the FED. 0:09:22.480 --> 0:09:26.240 How much has the economic picture shifted into your mind 0:09:26.280 --> 0:09:28.760 as a result of what's happened in the past five days. 0:09:29.320 --> 0:09:31.440 I think the biggest thing is people are realizing that 0:09:31.520 --> 0:09:34.800 the blunt instrument of just increasing interest rates isn't always 0:09:34.800 --> 0:09:39.760 good for for the overall macro economy, right, So it's 0:09:39.920 --> 0:09:42.400 it's great for certain elements of the world, and it's 0:09:42.480 --> 0:09:45.079 helpful for inflation, but it also has its ripple effects. 0:09:45.120 --> 0:09:48.360 So and it's hitting it's hitting Europe just as much 0:09:48.360 --> 0:09:50.200 as it is here. You know, at least they got 0:09:50.200 --> 0:09:52.439 sold for a dollar. We can't even get SVB sold 0:09:52.440 --> 0:09:55.559 in the US for anything, So that's which is a shame. 0:09:55.880 --> 0:09:59.240 So I think the ripple effects are are are happening, 0:09:59.280 --> 0:10:00.959 and they're I think, like I said, we're right in 0:10:00.960 --> 0:10:03.280 the middle of it. There could be more issues. I 0:10:03.320 --> 0:10:05.959 want to switch gears a little bit because to folks 0:10:05.960 --> 0:10:07.600 that are trading every day in the market, maybe they're 0:10:07.640 --> 0:10:10.040 not always focused on crypto. But for the crypto community, 0:10:10.080 --> 0:10:12.640 they had three banks that were friendly to them just 0:10:12.760 --> 0:10:16.559 evaporate within five days essentially, So I'm wondering what that means. 0:10:16.600 --> 0:10:19.800 There's this concern that the access to the financial system 0:10:19.800 --> 0:10:22.120 has been cut off for the crypto community. If you're 0:10:22.120 --> 0:10:25.760 seeing Bitcoin up quite meaningfully, what's going on? Yeah, I 0:10:25.800 --> 0:10:28.920 find it, you know, quite interesting to see that. You know, 0:10:28.960 --> 0:10:31.760 most of the tech IPOs are down fifty to sixty percent, 0:10:31.840 --> 0:10:34.079 and bitcoin was down way less than that. Now it's 0:10:34.120 --> 0:10:36.440 back up. Whereas these stocks continue to fall, crypto and 0:10:36.480 --> 0:10:38.640 bitcoin are going up, so you know, a long lived 0:10:38.679 --> 0:10:41.559 crypto and at the end of the day, blockchain's here 0:10:41.600 --> 0:10:45.080 to stay. I do think that the SEC and the 0:10:45.120 --> 0:10:48.120 government does appear to be having a very very negative 0:10:48.120 --> 0:10:52.280 crackdown on crypto in the US and globally, and so 0:10:53.559 --> 0:10:55.439 you know, the knockdown of some of these institutions curlely 0:10:55.520 --> 0:10:57.320 is not helpful, and so they're really forcing a lot 0:10:57.360 --> 0:10:59.080 of this activity to go offshore. We have a lot 0:10:59.080 --> 0:11:01.280 of clients in blockchain crypto and a lot of them 0:11:01.280 --> 0:11:04.960 are offshore from day one, and they're seeking banking partners offshore. 0:11:05.000 --> 0:11:08.200 We're looking at interest in Swiss banks, in Middle Eastern 0:11:08.200 --> 0:11:10.800 banks at the moment, because there are the silver gates, 0:11:10.880 --> 0:11:14.920 the signatures, the svbs. Anymore. In the US, ultimately, was 0:11:14.960 --> 0:11:18.240 there a question really about stable coins here too? We 0:11:18.280 --> 0:11:22.720 saw the tumult surrounding USDC, a DeFi that had to 0:11:22.720 --> 0:11:26.360 rely on trad fi ultimately, because that's why Circle had 0:11:26.360 --> 0:11:29.000 parked a lot of its money it's collateral. Yeah. I 0:11:29.000 --> 0:11:32.319 think there's tremendous value in Circle and USCC and in 0:11:32.440 --> 0:11:34.800 some of the stable coin you know operations, which is 0:11:34.800 --> 0:11:36.400 why we're such a big fan of it. But I 0:11:36.400 --> 0:11:38.880 think at the end of the day, these institutions should 0:11:38.880 --> 0:11:42.200 be diversifying that risk dramatically. Right to put you know, 0:11:42.240 --> 0:11:44.440 so much of it in one place here, may i'd 0:11:44.480 --> 0:11:46.160 be the best idea. I think, thank god it got 0:11:46.280 --> 0:11:48.560 it got rescued by the government, but it definitely put 0:11:48.600 --> 0:11:51.400 it scare into people and broke the USDC buck, if 0:11:51.400 --> 0:11:56.160 you will. But yeah, all right, fin Take Partners found 0:11:56.160 --> 0:11:59.880 a CEO and managing partner Steve mccaughlin and Bloomberg Snary Basset. 0:11:59.880 --> 0:12:11.719 Of course, thank you. Americans can rest assured that our 0:12:11.720 --> 0:12:16.079 banking system is saved, your depositors saying, let me also 0:12:16.120 --> 0:12:19.160 assure you we will not stop at this, will do 0:12:19.200 --> 0:12:21.760 whatever is needed. I'm going to ask Congress and the 0:12:21.800 --> 0:12:25.439 banking regulators to strengthen the rules for banks to make 0:12:25.480 --> 0:12:28.240 it less likely this kind of bank failure would happen again, 0:12:28.760 --> 0:12:33.280 and to protect American jobs and small businesses. Some of 0:12:33.360 --> 0:12:36.320 President Biden earlier this morning. For more on the government response, 0:12:36.360 --> 0:12:40.360 Bloomberg's Jordan Fabian joins us from the DC ber Jordan Howard. 0:12:40.400 --> 0:12:43.280 The White House framing this one well, and they're framing 0:12:43.320 --> 0:12:47.760 this as an opportunity for President Biden to push for 0:12:48.520 --> 0:12:52.240 new new regulations on banks, basically framing it as you know, 0:12:52.320 --> 0:12:57.400 management mismanagement at those at those banks, sub and signature 0:12:57.400 --> 0:13:01.160 and what's needed is new regulation act. He pointed to 0:13:01.200 --> 0:13:04.520 a Republican efforts that were successful to roll back some 0:13:04.600 --> 0:13:07.560 requirements under the Dad Frank Law that he wants to 0:13:07.600 --> 0:13:12.360 see basically return and reimplemented. That's going to be difficult 0:13:12.360 --> 0:13:14.800 for him to accomplish, but that's a challenge he set 0:13:14.840 --> 0:13:18.720 for himself and his administration. Right Laer today and Caro, 0:13:18.840 --> 0:13:21.760 I've been seeing this word on Twitter, bailout or no bailout? 0:13:21.800 --> 0:13:23.199 How do you frame it? You know, that's really a 0:13:23.280 --> 0:13:24.960 question in the market this morning. And I don't know 0:13:24.960 --> 0:13:27.400 about you, Ed, but I was listening to countless podcasts 0:13:27.400 --> 0:13:29.280 on the phone with many of people, and there was 0:13:29.320 --> 0:13:31.079 this worry that how are you going to frame a 0:13:31.120 --> 0:13:34.400 bailout of what seems to be billionaires Silicon Valley in 0:13:34.440 --> 0:13:36.839 the world of Silicon Valley Bank. Jordan to that end. 0:13:36.880 --> 0:13:40.680 How much has we seen from the administration, from regulators, 0:13:40.720 --> 0:13:43.800 this desire to not frame it of a bailout of investors, 0:13:43.880 --> 0:13:46.760 but of course just of depositors. That was a huge desire. 0:13:46.840 --> 0:13:49.320 That was a central part of the President's message in 0:13:49.320 --> 0:13:53.600 his speech this morning. He said taxpayers aren't paying for this. 0:13:53.760 --> 0:13:55.680 I mean, we could debate the semantics of that, but 0:13:55.720 --> 0:13:58.679 he was sure to stress that and that the management 0:13:58.679 --> 0:14:01.400 of these banks are going to be hired. So really 0:14:01.720 --> 0:14:04.560 it's sort of a populous message, if you will, saying, look, 0:14:04.559 --> 0:14:07.240 the little guy is not going to pay for this. 0:14:07.360 --> 0:14:10.600 Management is going to be held accountable. And with these 0:14:11.440 --> 0:14:14.800 emergency steps that regulators took over the weekend, that small 0:14:14.840 --> 0:14:17.720 businesses and depositors are going to be able to access 0:14:17.760 --> 0:14:22.160 their money. The President going into Congress on big banking regulation, 0:14:22.720 --> 0:14:24.920 how do you package that up? It's going to be 0:14:24.920 --> 0:14:28.520 a tough challenge ed. There are houses, of course controlled 0:14:28.560 --> 0:14:31.640 by Republicans, many of the same Republicans who voted in 0:14:31.680 --> 0:14:35.800 twenty eighteen to exempt small and mid sized banks from 0:14:36.040 --> 0:14:39.960 things like capital requirements, lending restrictions that were in that 0:14:40.120 --> 0:14:43.560 Dodd Frank law. So asking them to again to basically 0:14:43.560 --> 0:14:45.520 go back on what they just did five years ago. 0:14:45.760 --> 0:14:48.280 It's going to be a tough challenge. Now he can 0:14:48.480 --> 0:14:51.880 see what he can do through executive order executive action, 0:14:52.320 --> 0:14:55.120 but he might be limited there, and that also leaves 0:14:55.160 --> 0:14:58.640 him vulnerable to legal challenges to anything he does on 0:14:58.680 --> 0:15:01.600 his own. What I think to add to the sort 0:15:01.600 --> 0:15:06.120 of extraordinary nature of all of this the seizing of 0:15:06.240 --> 0:15:08.440 Signature Bank over the course of the weekend and the 0:15:09.160 --> 0:15:11.840 sort of support there that many would say took the 0:15:11.880 --> 0:15:15.360 management itself the board by surprise. Notably, on the board 0:15:15.360 --> 0:15:17.840 of that very bank is none other than one of 0:15:17.840 --> 0:15:21.240 the people who helped co write Dodd Frank Barney Frank 0:15:21.360 --> 0:15:25.000 himself speaking to Bloomberg a little bit earlier, Jordan, I think, ultimately, 0:15:25.400 --> 0:15:28.200 when we're thinking about new regulation, are we really thinking 0:15:28.240 --> 0:15:31.360 about the counterparty risk as well? Where was the administration 0:15:31.440 --> 0:15:35.160 taken off, god by how much one particular sector depended 0:15:35.280 --> 0:15:39.240 on one particular set of banks. I think that's something 0:15:39.280 --> 0:15:42.440 that was surprising to a lot of people. I don't 0:15:42.480 --> 0:15:46.400 know that the administration really saw this coming, given the 0:15:46.440 --> 0:15:48.880 fact that they had to scramble over the weekend to 0:15:50.280 --> 0:15:54.360 have muster or response here. Their administration has talked about 0:15:54.840 --> 0:15:57.880 a lot about the economy's resilience overall. So I don't 0:15:57.920 --> 0:16:02.200 think I don't think they anticipated that this particular problem 0:16:02.320 --> 0:16:06.760 would become such a major problem, facing or prompting questions 0:16:06.800 --> 0:16:10.040 about your contasian risks, etc. And so that's something they're 0:16:10.040 --> 0:16:12.400 now going to have to look at, especially to your 0:16:12.440 --> 0:16:17.000 policymakers thinking about rad hikes as well. Well, said Jordan 0:16:17.040 --> 0:16:19.440 Fabian from Limburgh. We thank you so much and ed 0:16:20.080 --> 0:16:23.480 so many people saying, look, when you raise rates, things break. 0:16:23.600 --> 0:16:26.120 We think about the UK pension situation but a few 0:16:26.160 --> 0:16:28.920 months ago and the impact there. But of course this 0:16:29.000 --> 0:16:35.400 whole scenario around Silicon Valley Bank swooped up the UK, China, India, others, 0:16:35.600 --> 0:16:38.200 the global startups in the concern because this was a 0:16:38.280 --> 0:16:40.200 bank that bank too many And we're going to talk 0:16:40.240 --> 0:16:42.040 about that just next hey, because we will talk about 0:16:42.040 --> 0:16:45.200 how this affects not just DC but London, the regulators 0:16:45.520 --> 0:16:48.080 far and wide. And I think ultimately I don't want 0:16:48.120 --> 0:16:50.160 to get your point of view when you're contributing, when 0:16:50.160 --> 0:16:53.000 you're bringing us your analysis and you're reporting, you're out 0:16:53.040 --> 0:16:55.920 there on our Tea live blog yourself helping push this 0:16:55.920 --> 0:16:58.000 conversation forward. I'm looking at the Tea Live blog. Now, 0:16:58.000 --> 0:16:59.760 if you're lucky enough to have a terminal talking about 0:17:00.000 --> 0:17:04.119 what the implications to the ECB, I think that the 0:17:04.240 --> 0:17:08.120 narrative is now the conversation. The economic economic picture is shifted, 0:17:08.320 --> 0:17:10.840 not just here in the United States but in Europe. 0:17:10.880 --> 0:17:13.159 India is a name that I keep hearing about on 0:17:13.200 --> 0:17:16.600 all of the text messages I'm getting. Startups face a 0:17:16.600 --> 0:17:18.600 lot of hardship right now. We've got to get into it. 0:17:18.800 --> 0:17:35.199 This is bloom bog. There is a serious risk to 0:17:35.520 --> 0:17:40.000 some of our most promising companies and technology, life sciences. 0:17:40.520 --> 0:17:42.719 You're going to have to wait and hear what the 0:17:42.760 --> 0:17:46.680 solution is. But that risk is precisely why the Prime 0:17:46.680 --> 0:17:48.919 Minister and I have been working at pace over the 0:17:48.960 --> 0:17:51.680 weekend to make sure that we have a solution. These 0:17:51.720 --> 0:17:54.720 are very very important companies to the UK, have very 0:17:54.840 --> 0:17:59.000 very important part of our future. The UK Chancellor, they're 0:17:59.040 --> 0:18:02.040 Jeremy Hunt on the SVB situation across the pond, after 0:18:02.160 --> 0:18:05.520 HSBC of course plans to buy the UK arm of 0:18:05.600 --> 0:18:09.080 Silicon Valley Bank for one pound Blue merged. Jenny sin 0:18:09.280 --> 0:18:11.800 Is in London with more and many would say this 0:18:11.880 --> 0:18:13.919 is what a drop in the bucket for HSBC, What 0:18:14.000 --> 0:18:16.040 do they win out of this? Yeah, I mean I 0:18:16.080 --> 0:18:19.520 think the big thing is just greater exposure to tech 0:18:19.560 --> 0:18:23.720 companies and having a bigger scale with that industry. And 0:18:23.800 --> 0:18:26.160 of course, as you pointed out, the price wasn't bad. 0:18:26.160 --> 0:18:29.160 They really did get its first deal. I think it's 0:18:29.160 --> 0:18:34.560 really important to remember with this collapse of SVB that 0:18:34.640 --> 0:18:38.119 it really was on the asset liability management front. It 0:18:38.200 --> 0:18:40.639 was not a credit crisis, so they weren't seeing some 0:18:40.720 --> 0:18:43.320 huge uptick and customers going bad. It was really just 0:18:43.359 --> 0:18:46.280 a you know, a failure and risk management on the 0:18:46.280 --> 0:18:49.920 asset liability side. Size and scale is kind of important here, right, Jenny, 0:18:49.960 --> 0:18:52.320 I was reading over the weekend. You know, by the 0:18:52.400 --> 0:18:55.120 end of the financial year, Silicon Valley Bank UK had 0:18:55.119 --> 0:18:58.640 eleven billion dollars of deposits on its balance sheet. Lloyd's, 0:18:58.640 --> 0:19:01.560 by comparison, has four hundred and fifty billion dollars. But 0:19:01.600 --> 0:19:04.720 what were the problems experience in UK specifically? We know 0:19:04.800 --> 0:19:07.520 all about depositors here in the US, all about the 0:19:07.560 --> 0:19:10.440 pain for founders and vcs. How did things play out 0:19:10.440 --> 0:19:12.639 over in London. I mean, I think there were a 0:19:12.680 --> 0:19:15.960 lot of fears here as well. It's hard to kind 0:19:16.000 --> 0:19:17.960 of separate if you're a customer of one of these banks, 0:19:18.160 --> 0:19:20.040 you know, it's it's I think a lot of the 0:19:20.320 --> 0:19:22.920 past few days has been just characterized by a lot 0:19:22.920 --> 0:19:25.720 of panic and fear and worries by both investors and 0:19:25.760 --> 0:19:28.400 customers alike. And so I think you experienced a lot 0:19:28.400 --> 0:19:30.560 of the same things. And it'll be interesting now as 0:19:30.880 --> 0:19:34.240 you know, HSBC acquires this this unit of the bank, 0:19:34.320 --> 0:19:37.280 and then you know, obviously FDIC continues with its work 0:19:37.320 --> 0:19:40.000 in the US, how those things kind of shake out 0:19:40.160 --> 0:19:42.720 and how things turn out today and proceed from here. 0:19:42.720 --> 0:19:46.359 I think we're hearing very vastly different experiences among different customers. 0:19:46.359 --> 0:19:49.160 You know, some are proceeding apace and having no problems. 0:19:49.359 --> 0:19:52.040 Others can't seem to log in. So I think it's 0:19:52.080 --> 0:19:54.040 just a mixed bag at this point, and we're still 0:19:54.040 --> 0:19:57.800 really waiting to see where things shake out to that end. 0:19:57.960 --> 0:19:59.920 You of course based in London at the moment, Jenny, 0:20:00.119 --> 0:20:03.400 but you are our fintech reporter extraordinaire and someone who 0:20:03.400 --> 0:20:06.320 can lay climb across the entire banking sector a little 0:20:06.320 --> 0:20:08.199 bit for us. Just talk to us about what happens 0:20:08.280 --> 0:20:10.520 ultimately with some of the we wait for people to 0:20:10.520 --> 0:20:13.600 be able to log into Silicon Valley Bank. But SVB 0:20:13.720 --> 0:20:15.600