WEBVTT - Big Banks Could Be On the Hook For SVB Failure

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<v Speaker 1>By from the Bloomberg Interacted Brokers Studios. Is Bloomberg day

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<v Speaker 1>Break for Thursday, March thirtieth. Coming up today, Big banks

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<v Speaker 1>may have to pay the price for recent bank failures.

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<v Speaker 1>A top name on Wall Street says the banking crisis

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<v Speaker 1>is mostly solvable. FED Chair J. Powell signals another rate

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<v Speaker 1>pike in the cards, and Russia detains a US journalist

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<v Speaker 1>on allegisfying charges. A heated moment in the House as

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<v Speaker 1>a New York congressman criticizes the GOP about gun blandings.

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<v Speaker 1>Plus the NYPD prepare security for passover celebrations. I'm Michael Barr,

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<v Speaker 1>Poor Ahead, I'm Dom Statch Alon Sports the next greetfiteat

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<v Speaker 1>shoot that win for the Islanders at its opening day

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<v Speaker 1>in Major League Baseball. That's all straight ahead on Bloomberg

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<v Speaker 1>day Break. The business news you need disturn your day

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<v Speaker 1>in just one fifteen minute podcast each pointing on Apples, Spotify,

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<v Speaker 1>the Bloomberg Business Appen everywhere you get your podcasts. Good morning,

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<v Speaker 1>I'm Nathan Hager and I'm Cameron Moscow. Here are the

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<v Speaker 1>stories we're following today. New developments in the banking crisis.

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<v Speaker 1>Bloomberg News has learned the big banks may have to

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<v Speaker 1>pay the price for recent failures. We get more from

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<v Speaker 1>Bloomberg's Valerie Titel in the FDIC has an insurance fund,

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<v Speaker 1>and it's estimating that the cost of bailing out the

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<v Speaker 1>uninsurance depositors when it comes to SVB and Signature Bank

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<v Speaker 1>is going to be around twenty three billion. So it's

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<v Speaker 1>going to look to top up this insurance fund in

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<v Speaker 1>some manner, and it has full discretion on how it

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<v Speaker 1>does that. And it's become clear in the way that

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<v Speaker 1>the chairman has communicated that they will be looking to

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<v Speaker 1>put less of the cost on smaller community banks and

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<v Speaker 1>perhaps charge the bigger institutions more when they look to

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<v Speaker 1>top up this fund. Bloomberg's Valerie Titel says representatives for

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<v Speaker 1>the FDIC, as well as JP Morgan, Bank of America,

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<v Speaker 1>and Wells Fargo all declined to comment on our story. Well, Nathan,

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<v Speaker 1>the bank failures have led to no shortage finger pointing

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<v Speaker 1>on Capitol Hill. After two days of hearings, FED Vice

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<v Speaker 1>Chair for Supervision Michael Barr is acknowledging that regulators could

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<v Speaker 1>have kept better tabs on Silicon Valley bag. We got

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<v Speaker 1>reaction from a former US Treasury spokesman John Rizzo. As

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<v Speaker 1>we get into this more, I think we're going to

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<v Speaker 1>find that there are probably multiple points of failure here,

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<v Speaker 1>both failure on the part of the financial institution, but

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<v Speaker 1>also more that regulators of overseers could have done to

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<v Speaker 1>intervene when signs of trouble emerge. Former Treasury spokesman John

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<v Speaker 1>Rizzo was a guest on Bloomberg Sound On What Joe Matthew.

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<v Speaker 1>Catch the show weekdays at one pm Eastern on Bloomberg

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<v Speaker 1>Radio or listen on demand wherever you get your podcasts. Well, Karen,

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<v Speaker 1>a big name on Wall Street, says the US banking

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<v Speaker 1>crisis is mostly solvable. In an interview in Tokyo Today,

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<v Speaker 1>Blackstone chairman Steve Schwartzman said, quote, the banking system is

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<v Speaker 1>not in any type of conventional crisis. Schwartzman blames the

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<v Speaker 1>turmoil on the after effects of the pandemic and technology

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<v Speaker 1>rather than bad loan. Well, turning to the economy, now, Nathan,

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<v Speaker 1>we're getting more hints that the Fed is not done

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<v Speaker 1>raising interest rates, and we get the details live with

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<v Speaker 1>the Bloomberg's John Tucker. John Good Morning. Karen Powell spoke

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<v Speaker 1>to a closed door meeting of conservative lawmakers, and there

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<v Speaker 1>wasn't much reason to have closed the door. He told

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<v Speaker 1>them the same thing that he's told everybody else. Follow

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<v Speaker 1>the dots. That's the dot plot or the summary of

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<v Speaker 1>economic projections from Fed officials. It lays out one more

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<v Speaker 1>rate hike from the Central Bank. Then a meeting was

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<v Speaker 1>scheduled before the collapse of Silicon Valley Bank, and according

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<v Speaker 1>to one of the lawmakers who attended, Paw said Congress

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<v Speaker 1>should reevaluate limits on the size of federally insured bank deposits.

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<v Speaker 1>Live in New York, I'm John Tucker, Bloomberg Daybreak, Thank

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<v Speaker 1>you John. In Asia today, Chinese Premier Lee Chiang is

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<v Speaker 1>painting an upbeat picture of the economy and calling China

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<v Speaker 1>an anchor for world peace. Bloomberg Daybreak Asia anchor Brian

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<v Speaker 1>Curtis has more from Hong Kong. Lee touted China's economic recovery.

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<v Speaker 1>He told the Boao Forum in Hainan, chaos and conflict

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<v Speaker 1>must not happen in Asia. He said China would not

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<v Speaker 1>take the path of colonization or plunder, and he called

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<v Speaker 1>for the world to stick to multilateralism. The four day

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<v Speaker 1>Gathering comes as Beijing rolls out a charm offensive for

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<v Speaker 1>overseas business and investment, China is no longer one of

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<v Speaker 1>the top three investment priorities for US firms, according to

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<v Speaker 1>the American Chamber of Commerce in China. In Hong Kong,

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<v Speaker 1>Bryan Curtis Bloomberg Day Break A right, Brian than. So

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<v Speaker 1>we now turn to a breaking story where following this morning,

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<v Speaker 1>Russia has detained an American journalist on alleged spying charges,

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<v Speaker 1>and we get the latest live with the Bloomberg Steve A. Rappaport.

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<v Speaker 1>It's Steve, good morning, Good morning, Karen and Nathan. Russian

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<v Speaker 1>security forces arrested Evan Gershkovitz in the city of Yakadinsberg

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<v Speaker 1>on espionage charges. The FSB agency says Gershkevitch tried to

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<v Speaker 1>obtain classified information about the activities of the Russian military

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<v Speaker 1>industrial complex. As for what those activities were, local media

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<v Speaker 1>reports suggest he was investigating a special operation involving a

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<v Speaker 1>network of mercenaries known as the Wagner Grew. Gershkevitch is

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<v Speaker 1>the first American reporter charged with espionage in Russias since

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<v Speaker 1>the Cold War. Live in New York, I'm Steve Rappaport,

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<v Speaker 1>Bloomberg Daybreak, Steve, thank you. Back here in the US,

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<v Speaker 1>We're pushing pause on a controversial story in politics, and

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<v Speaker 1>New York grand jury hearing evidence about Donald Trump's roll

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<v Speaker 1>in an alleged hush money payment looks like it's getting

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<v Speaker 1>a break. Bloomberg's Ed Baxter has the story. The first

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<v Speaker 1>announcement came they would not meet again this week. Then

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<v Speaker 1>Bloomberg News reported that the grand jury is not expected

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<v Speaker 1>to reconvene until April twenty fourth. We're told that Manhattan

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<v Speaker 1>District Attorney Alvin Bragg could still bring members back to

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<v Speaker 1>hear evidence in the Trump matter, but that it was

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<v Speaker 1>not officially going to be put on any docket. The

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<v Speaker 1>last testimony came from National Enquirer publisher David Pecker. Trump

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<v Speaker 1>has denied the affair in any wrongdoing and said the

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<v Speaker 1>probe is a political vendetta in San Francisco. I'm at Baxter,

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<v Speaker 1>Bloomberg day Break, All right, Ed, Thanks, So another geopolitical

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<v Speaker 1>news this morning, The president of Taiwan made a stop

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<v Speaker 1>over in New York and called the island's future a

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<v Speaker 1>test for the world. The Taiwan President's it may further

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<v Speaker 1>escalate tensions between the US and China. Beijing says the

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<v Speaker 1>visit will have a severe impact on its relationship with

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<v Speaker 1>Washington and staying in New York now caring. The latest

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<v Speaker 1>census numbers show Manhattan's population has grown. While New York

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<v Speaker 1>City's other four boroughs lost residents in the twelve months

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<v Speaker 1>through July first, Manhattan added more than seventeen thousand residents.

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<v Speaker 1>It is still about ninety eight thousand residents below pre

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<v Speaker 1>pandemic levels. Thirty two degrees right now in Manhattan, it'll

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<v Speaker 1>be breezy this morning. Sunny and cool today with highs

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<v Speaker 1>in the upper forties. We'll get down to the upper

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<v Speaker 1>thirties tonight under a Hartley cloudy sky. Time now to

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<v Speaker 1>take a look at some of the other stories making

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<v Speaker 1>news in New York and around the world with Bloomberg's

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<v Speaker 1>Michael bar Good morning, Michael, Good morning, Nathan. Hundreds of

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<v Speaker 1>people gathered at a candlelight vigil last night to mourn

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<v Speaker 1>the three children and three adults killed in Monday schools

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<v Speaker 1>shooting in Nashville. The Nashville Remembers vigil was hosted by

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<v Speaker 1>Mayor John Cooper. Picked the hand or touched the shoulder

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<v Speaker 1>of the person right next to you, especially they are

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<v Speaker 1>strangers and be there for one another, because we can

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<v Speaker 1>only get through this tragedy together. First Lady Jill Biden

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<v Speaker 1>and singer Cheryl Crowe were also at the event. Meanwhile,

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<v Speaker 1>in Washington, there were some tense moments off the House

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<v Speaker 1>floor about gun violence. Democratic Representative Jamal Bowman of New York,

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<v Speaker 1>a former middle school principal, says he's upset about in

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<v Speaker 1>action from Republicans. At one point, while he was talking

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<v Speaker 1>to reporters, Republican Representative Thomas Massey of Kentucky began to

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<v Speaker 1>engage with him on the topics that allows teachers to carry.

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<v Speaker 1>Representative Bowman told reporters to continue to press GOP lawmakers

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<v Speaker 1>on the issue. Pope Francis will remain hospitalized to treat

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<v Speaker 1>a lung infection. The Vatican says Francis, who is eighty six,

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<v Speaker 1>does not have COVID but require several days of therapy.

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<v Speaker 1>Passover preparations are underway. The New York City Police Department

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<v Speaker 1>held their annual pre passover security briefing. They went over

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<v Speaker 1>resources and action plans with the city's Jewish community. In

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<v Speaker 1>MYPD Commissioner Keeaching. Seul confirms while there are no specific

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<v Speaker 1>threats to any celebrations in the city, police will provide

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<v Speaker 1>extra patrols at synagogues and other sensitive sites. We are

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<v Speaker 1>always concerned about hate crimes in our great city. While

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<v Speaker 1>one is too many, we have seen a drop by

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<v Speaker 1>about fifty percent this year, but that is not enough.

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<v Speaker 1>We will stamp it out. We can tolerate it, we

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<v Speaker 1>will never accept it. Commissioners Sewell also says they are

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<v Speaker 1>monitoring online activity for any red flags. Global News twenty

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

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<v Speaker 1>hundred journalists analyists in over one hundred twenty countries. Michael

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<v Speaker 1>barn this is Bloomberg, Nathan. Thanks Michael's time for a

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<v Speaker 1>Bloomberg sports update. Now here's John Stashower. Thanks Nathan. Big win,

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<v Speaker 1>but possibly a big injury for the Knicks at the Garden.

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<v Speaker 1>They beat the Heat one oh one ninety two and

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<v Speaker 1>nine nothing to run on the fourth quarter, second straight

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<v Speaker 1>game where their top two scorers were Emmanuel Quickly and

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<v Speaker 1>Quentin Grimes twenty four for IQ, twenty three for Grimes.

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<v Speaker 1>And Knicks now lead Miami by four games, so they

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<v Speaker 1>almost certainly will not be in that play in, but

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<v Speaker 1>the Knicks play of the second half without Julius Randelly

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<v Speaker 1>has started all seventy seven games, but he suffered a

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<v Speaker 1>sprained ankle, and the Knicks now away. Test results Today

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<v Speaker 1>at Barkley's, the Nets beat Lowly Houston one twenty three,

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<v Speaker 1>one fourteen. The two guys the Nets got and the

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<v Speaker 1>Kevin Durant train led the way camp Johnson thirty one

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<v Speaker 1>points to mckel Bridges twenty seven. Meanwhile, Durant, returned from

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<v Speaker 1>his ankle injury, played his first home game in Phoenix.

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<v Speaker 1>He shot just five of eighteen, but the Sons won

0:09:48.400 --> 0:09:51.760
<v Speaker 1>their game. Sacramento won by forty and the Kings are

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<v Speaker 1>in the playoffs first time since two thousand and six.

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<v Speaker 1>It was the longest drought for any team in the

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<v Speaker 1>four major sports. Islanders a two one win in a

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<v Speaker 1>shootout at Washington. It's opening day. Big changes in baseball.

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<v Speaker 1>Shifting is out, the pitchclock is in, and they've also

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<v Speaker 1>tweaked the schedule, fewer games within the division, more in

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<v Speaker 1>through the game. So the Yankees open up against the

0:10:13.120 --> 0:10:16.320
<v Speaker 1>San Francisco Giants at the Stadium. Garrett Cole on the

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<v Speaker 1>mound for the Yanks. I believe there's a book called

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<v Speaker 1>Time Starts on Opening Day. I think it's Thomas Boswell.

0:10:22.000 --> 0:10:25.600
<v Speaker 1>I've read most of it, and it's just like Cats,

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<v Speaker 1>the beginning of every baseball fan and every baseball player's calendars.

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<v Speaker 1>Opening Day Cole is on the Yes Network. Mets open

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<v Speaker 1>up in Miami with Max Scherzer facing Sandy contra heat.

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<v Speaker 1>Last season was the unanimous winner the NLCI Young Award

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<v Speaker 1>John Stashaller. Bloomberg splots live from coast to coast, from

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<v Speaker 1>New York to San Francisco, Boston to Washington, d C.

0:10:48.760 --> 0:10:52.560
<v Speaker 1>Nationwide on Sirius XAM, the Bloomberg Business app, and Bloomberg

0:10:52.679 --> 0:10:57.960
<v Speaker 1>dot Com. This is Bloomberg Daybreak. Good morning, I'm Nathan Hagar.

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<v Speaker 1>The collapse of Silicon Valley and Signature Banks has left

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<v Speaker 1>the agency that ensures the nation's bank deposits in line

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<v Speaker 1>for a nearly twenty three billion dollar hit, and now

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<v Speaker 1>the Federal Deposit Insurance Corporation the FDIC, maybe looking to

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<v Speaker 1>claud those losses back by taking aim at the nation's

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<v Speaker 1>biggest banks. And for more on this, we're joined by

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<v Speaker 1>Bloomberg's Valerie Titel So, Valerie, what's the plan. That's under

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<v Speaker 1>consideration here. Well, what we know at the moment is

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<v Speaker 1>they are going to put together this special assessment and

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<v Speaker 1>will hear more in May. But there are some reports

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<v Speaker 1>that they intend to limit the strain on the smaller

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<v Speaker 1>community banks and instead put the strain on the bigger

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<v Speaker 1>banks who have benefited the most from deposit inflows surrounding

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<v Speaker 1>this to three weeks of banking crisis that we've had.

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<v Speaker 1>This is something they have done in the past. The

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<v Speaker 1>FDIC does have full discretion on these special assessments and

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<v Speaker 1>how they raise money for their insurance fund. Now, it

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<v Speaker 1>has to be said as well that the FDIC is

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<v Speaker 1>under a lot of political pressure to avoid straining the

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<v Speaker 1>community banks even further. I mean, that has to be

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<v Speaker 1>a big part of the reason why it's considering it

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<v Speaker 1>in this way. Oh, definitely, definitely. I mean, the amount

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<v Speaker 1>of heat that the FDIC has gotten this week on

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<v Speaker 1>Capitol Hill is notable, and it is the politically palatable

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<v Speaker 1>option to be charging the bigger US banks a bit

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<v Speaker 1>more when they look to top up this insurance fund. Essentially,

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<v Speaker 1>in some way they might try to right the wrong

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<v Speaker 1>that they did in almost making it blatantly obvious to

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<v Speaker 1>the public that there is a two tier banking system

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<v Speaker 1>in the US, the implicitly backed too big to fail

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<v Speaker 1>banks and those community banks, which aren't systemically important and

0:12:44.880 --> 0:12:48.760
<v Speaker 1>as Yellen told us, are likely unlikely to get special treatment. Oh,

0:12:48.800 --> 0:12:51.480
<v Speaker 1>it's interesting to point out that there is a two

0:12:51.520 --> 0:12:55.079
<v Speaker 1>tiered banking system, that idea that there are these big

0:12:55.080 --> 0:12:58.400
<v Speaker 1>banks and the smaller banks. If the FDIC does consider

0:12:58.440 --> 0:13:02.920
<v Speaker 1>a plan like this, wouldn't that's to reinforce that idea. Well, Look,

0:13:02.960 --> 0:13:05.480
<v Speaker 1>they have had full discretion in the past on how

0:13:05.559 --> 0:13:08.400
<v Speaker 1>they do top up their investment fund. Back in two

0:13:08.440 --> 0:13:11.359
<v Speaker 1>thousand and nine, they went out on a special assessment

0:13:11.760 --> 0:13:14.040
<v Speaker 1>very much so like they've declared they're going to in

0:13:14.080 --> 0:13:16.640
<v Speaker 1>May to raise five and a half billion, and a

0:13:16.640 --> 0:13:20.479
<v Speaker 1>lot of that money was raised from the bigger institutions.

0:13:20.520 --> 0:13:23.520
<v Speaker 1>But the different thing back then is that the bigger

0:13:23.559 --> 0:13:27.480
<v Speaker 1>institutions back then were the risky ones. So right now

0:13:27.640 --> 0:13:31.680
<v Speaker 1>they're aiming to almost charge the larger banks more in

0:13:31.720 --> 0:13:36.200
<v Speaker 1>the fact because they aren't risky, and leave the you know,

0:13:36.280 --> 0:13:40.240
<v Speaker 1>shall we say a bit more risky smaller community banks

0:13:40.280 --> 0:13:42.640
<v Speaker 1>to have less of that burden in an attempt to

0:13:42.720 --> 0:13:45.959
<v Speaker 1>try to even the playing field. What's the risk that

0:13:45.960 --> 0:13:48.839
<v Speaker 1>that could put more of a burden on the banks though,

0:13:48.880 --> 0:13:52.400
<v Speaker 1>if they're the ones that bear more of this burden,

0:13:52.480 --> 0:13:55.440
<v Speaker 1>how much strain could have potentially put on these banks

0:13:55.559 --> 0:13:59.679
<v Speaker 1>if their task with given the FDIC back close to

0:14:00.000 --> 0:14:02.240
<v Speaker 1>any three billion dollars I mean, is that something that

0:14:02.240 --> 0:14:05.560
<v Speaker 1>they can shoulder? Yes, I think so. And because these

0:14:05.559 --> 0:14:09.600
<v Speaker 1>banks who have seen these large deposit inflows, they have

0:14:09.720 --> 0:14:12.040
<v Speaker 1>the ability to park that at the FED for a

0:14:12.120 --> 0:14:16.199
<v Speaker 1>five percent five percent yield, right, So in some ways

0:14:16.280 --> 0:14:19.520
<v Speaker 1>you can argue that the benefit to the bigger banks

0:14:20.120 --> 0:14:23.720
<v Speaker 1>because they have access to the FED overnight facilities, because

0:14:23.760 --> 0:14:28.280
<v Speaker 1>they get this decent return on deposits, they have benefited

0:14:28.320 --> 0:14:31.480
<v Speaker 1>way too much from from this deposit flight from the

0:14:31.520 --> 0:14:34.080
<v Speaker 1>small regional bank. So and I think that that is

0:14:34.120 --> 0:14:37.200
<v Speaker 1>something the FDIC, the Treasury, and the FED are aware

0:14:37.240 --> 0:14:40.280
<v Speaker 1>of and will essentially try to right that wrong when

0:14:40.280 --> 0:14:43.560
<v Speaker 1>we do hear about this special assessment that the FDIC

0:14:43.680 --> 0:14:46.240
<v Speaker 1>it tends to put forward in May. Now, as you mentioned,

0:14:46.240 --> 0:14:48.640
<v Speaker 1>as the FDIC has mentioned during these hearings, it does

0:14:48.680 --> 0:14:52.840
<v Speaker 1>have the discretion to target where the burden lies. But

0:14:53.080 --> 0:14:56.000
<v Speaker 1>how unusual is it or would it be for the

0:14:56.040 --> 0:15:00.800
<v Speaker 1>FDIC to target bigger banks specifically, how would this compare

0:15:01.280 --> 0:15:03.480
<v Speaker 1>to what the banks went through the last time we

0:15:03.560 --> 0:15:07.360
<v Speaker 1>had an even bigger financial crisis in two thousand and eight. Well,

0:15:07.400 --> 0:15:09.800
<v Speaker 1>the last time that they did go to top up

0:15:09.800 --> 0:15:13.840
<v Speaker 1>this insurance fund in two thousand and nine, they attempted

0:15:13.880 --> 0:15:16.440
<v Speaker 1>to raise five and a half billion, So it wasn't

0:15:16.440 --> 0:15:19.800
<v Speaker 1>nearly as much as the twenty three billion hit that

0:15:19.840 --> 0:15:22.880
<v Speaker 1>they've taken recently. And the reason why is because back

0:15:22.880 --> 0:15:26.120
<v Speaker 1>in two thousand and eight, two thousand and nine, ensuring

0:15:26.160 --> 0:15:29.080
<v Speaker 1>depositors wasn't really the issue back then, right, it was

0:15:29.360 --> 0:15:33.040
<v Speaker 1>the toxic assets on banks balance sheet. So in some way,

0:15:33.120 --> 0:15:36.880
<v Speaker 1>the FDIC has really taken more of a dents to

0:15:36.960 --> 0:15:40.080
<v Speaker 1>this insurance fund in this you know, twenty twenty three

0:15:40.120 --> 0:15:43.000
<v Speaker 1>example of a banking crisis, rather than back in two

0:15:43.040 --> 0:15:45.040
<v Speaker 1>thousand and eight. But back in two thousand and nine,

0:15:45.080 --> 0:15:48.200
<v Speaker 1>when they did do that fundraising JP Morgan, the FDIC

0:15:48.480 --> 0:15:52.320
<v Speaker 1>charged them six hundred billion, which did impact their bottom

0:15:52.320 --> 0:15:57.240
<v Speaker 1>line back then. This is Bloomberg day Break Today, your

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