1 00:00:00,800 --> 00:00:04,360 Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us 2 00:00:04,360 --> 00:00:07,560 Speaker 1: live weekdays at one Eastern on Bloomberg dot com, the 3 00:00:07,640 --> 00:00:10,280 Speaker 1: I Heart Radio app, and the Bloomberg Business App. We're 4 00:00:10,320 --> 00:00:13,920 Speaker 1: listening on demand wherever you get your podcast or another 5 00:00:14,040 --> 00:00:17,400 Speaker 1: very busy day with fast moving headlines on banks, clearly 6 00:00:17,520 --> 00:00:21,120 Speaker 1: from Wall Street to Washington. Treasury Secretary Janet Yellen testifying 7 00:00:21,440 --> 00:00:24,239 Speaker 1: before a Senate committee today. Regulators trying to orchestrate this 8 00:00:24,320 --> 00:00:26,960 Speaker 1: rescue of First Republic Bank. And that is where we 9 00:00:27,040 --> 00:00:29,800 Speaker 1: begin with our top gast Republican Senator Rick Scott of 10 00:00:29,840 --> 00:00:32,479 Speaker 1: Florida joins us, and Senator, it's great to see you. 11 00:00:32,520 --> 00:00:34,640 Speaker 1: I welcome you back to Bloomberg. Are you worried about 12 00:00:34,720 --> 00:00:37,839 Speaker 1: contagion at this point or have the failures in the 13 00:00:37,880 --> 00:00:42,280 Speaker 1: banking system from your view been contained? Well? Yeah, I 14 00:00:42,320 --> 00:00:44,839 Speaker 1: think we all have to understand that we've got some 15 00:00:44,960 --> 00:00:47,600 Speaker 1: risk here. Now. The risk starts with the Federal Reserve 16 00:00:47,720 --> 00:00:50,280 Speaker 1: not doing their job. I need to hear from j 17 00:00:50,440 --> 00:00:54,639 Speaker 1: Pal who's going to be held accountable for reviewing these problems. 18 00:00:54,640 --> 00:00:57,600 Speaker 1: I mean, the leadership of these banks did the wrong thing, 19 00:00:58,400 --> 00:01:00,800 Speaker 1: but the Federal Reserve is supposed to make sure that 20 00:01:00,920 --> 00:01:03,480 Speaker 1: it doesn't continue, and these depositors don't have any money 21 00:01:03,480 --> 00:01:05,640 Speaker 1: at risk. So I want to hear who's going to 22 00:01:05,680 --> 00:01:08,679 Speaker 1: get it held accountable. That's number one. Number two, we 23 00:01:08,760 --> 00:01:13,800 Speaker 1: have the problems we have because the Biden administration, Democrats 24 00:01:13,880 --> 00:01:17,080 Speaker 1: up here, and actually even some Republicans don't understand that 25 00:01:18,319 --> 00:01:21,920 Speaker 1: this excess spending, this ridiculous spending that we have up here, 26 00:01:22,360 --> 00:01:26,039 Speaker 1: is causing inflation, and inflation is causing interest rates that 27 00:01:26,120 --> 00:01:28,600 Speaker 1: go up. Now, the Federal Reserve has done the wrong thing. 28 00:01:29,120 --> 00:01:31,039 Speaker 1: They've built a balance sheet that doesn't make any sense 29 00:01:31,040 --> 00:01:34,760 Speaker 1: and cause misallocation of capital. But all these go back 30 00:01:35,319 --> 00:01:39,160 Speaker 1: to the Democrats and the Bide administration not understanding we 31 00:01:39,280 --> 00:01:41,319 Speaker 1: have to live within our means. And again this happened 32 00:01:41,319 --> 00:01:43,720 Speaker 1: because Republicans too. We've got to stop this. We've got 33 00:01:43,720 --> 00:01:45,240 Speaker 1: to live within our means or we're gonna continue to 34 00:01:45,240 --> 00:01:48,360 Speaker 1: have problems like this. To that end, Senator, if the 35 00:01:48,360 --> 00:01:51,680 Speaker 1: FED had started earlier, if we hadn't done the transitory dance, 36 00:01:52,160 --> 00:01:54,760 Speaker 1: and these rate hikes were spread out, would this still 37 00:01:54,800 --> 00:01:59,120 Speaker 1: have happened? Well, I think here's what you do know 38 00:01:59,720 --> 00:02:01,800 Speaker 1: is that if they hadn't built this balance sheet, think 39 00:02:01,840 --> 00:02:04,240 Speaker 1: about the Federal Reserve has taken the balance sheet from 40 00:02:04,280 --> 00:02:07,080 Speaker 1: eight hundred billion dollars when Barack Obama got elected to 41 00:02:07,160 --> 00:02:09,040 Speaker 1: as high as nine tray in dollars. I think it's 42 00:02:09,040 --> 00:02:11,800 Speaker 1: a less than eight point five trayon now. That caused 43 00:02:11,919 --> 00:02:15,520 Speaker 1: a significant misallocation of capital. But on top of that, 44 00:02:16,080 --> 00:02:20,520 Speaker 1: for decades, Congress and the President's not been able to 45 00:02:20,520 --> 00:02:23,520 Speaker 1: live within their means has caused old wing. Where we 46 00:02:23,520 --> 00:02:26,720 Speaker 1: are now, where we have forty years high inflation, we've 47 00:02:26,720 --> 00:02:30,400 Speaker 1: got higher interest rates, We've got banks are struggling because 48 00:02:30,400 --> 00:02:32,560 Speaker 1: the interests have gone up so much. We have a 49 00:02:32,600 --> 00:02:34,880 Speaker 1: federal government that won't do their job, and whole banks 50 00:02:34,880 --> 00:02:38,760 Speaker 1: accountable of that don't do their job. Which if the 51 00:02:38,760 --> 00:02:40,800 Speaker 1: Federal Reserve, in with all the other bad stuff, if 52 00:02:40,800 --> 00:02:43,560 Speaker 1: the Federal Reserve had just done the reviews they should 53 00:02:43,560 --> 00:02:47,600 Speaker 1: be doing that they're paid to do, this wouldn't have happened. 54 00:02:48,639 --> 00:02:51,840 Speaker 1: Some have suggested that if the changes to Dodd Frank 55 00:02:51,880 --> 00:02:55,040 Speaker 1: in twenty eighteen had not happened, Senator, that this bank 56 00:02:55,080 --> 00:02:57,320 Speaker 1: would have endured a stress test that may have in 57 00:02:57,320 --> 00:03:01,440 Speaker 1: fact found the problems in the balance sheet. Do you agree, well, 58 00:03:02,000 --> 00:03:03,760 Speaker 1: I think the first thing we have to say is 59 00:03:04,160 --> 00:03:06,959 Speaker 1: if whether that law had changed or not. I wasn't 60 00:03:07,000 --> 00:03:09,040 Speaker 1: up here at that time, but whether the law had 61 00:03:09,120 --> 00:03:11,680 Speaker 1: changed or not, the management of the bank did the 62 00:03:11,680 --> 00:03:15,920 Speaker 1: wrong thing. Step one, Step two. The Federal Reserve had 63 00:03:15,960 --> 00:03:20,079 Speaker 1: the right and the obligation to review the finances of 64 00:03:20,160 --> 00:03:24,160 Speaker 1: this bank. They made a decision to do a poor job. 65 00:03:24,880 --> 00:03:27,640 Speaker 1: So I think it's important that we actually do go 66 00:03:27,680 --> 00:03:29,920 Speaker 1: back and look at all the laws and see what 67 00:03:30,120 --> 00:03:32,120 Speaker 1: do we have to fix. The first thing we have 68 00:03:32,160 --> 00:03:36,040 Speaker 1: to say is, Okay, what happened here? Who fell you 69 00:03:36,080 --> 00:03:38,920 Speaker 1: know who? Who didn't do their job? How do we 70 00:03:39,040 --> 00:03:42,119 Speaker 1: change that? Because guess what, it's not the only bank 71 00:03:42,160 --> 00:03:44,320 Speaker 1: in the country. We got to make sure we're reviewing 72 00:03:44,400 --> 00:03:45,920 Speaker 1: all of our banks. We got to make sure we 73 00:03:45,920 --> 00:03:48,600 Speaker 1: look at how they're allocating their assets, you know, the 74 00:03:48,720 --> 00:03:52,720 Speaker 1: duration of their assets versus you know, their obligations. And 75 00:03:52,760 --> 00:03:55,000 Speaker 1: so I think I think this is an unbelievable failure 76 00:03:55,000 --> 00:03:58,480 Speaker 1: by the leadership team at SVC and signature, but also 77 00:03:58,560 --> 00:04:01,920 Speaker 1: by the Federal Reserve. Treasury Secretary Janet Yellen is telling 78 00:04:01,960 --> 00:04:06,480 Speaker 1: the Finance Committee today, Senator that Americans can have confidence 79 00:04:06,800 --> 00:04:10,240 Speaker 1: in their banking system. Would you echo that remark to 80 00:04:10,440 --> 00:04:13,280 Speaker 1: our listeners and viewers, or to your constituents, can you 81 00:04:13,320 --> 00:04:17,800 Speaker 1: tell them the same thing. I'm hopeful. I'm hopeful, but 82 00:04:17,839 --> 00:04:21,120 Speaker 1: I haven't heard from the Federal Reserve. Look, they should, 83 00:04:21,279 --> 00:04:23,880 Speaker 1: they should clearly tell us. Here's what would make me 84 00:04:23,960 --> 00:04:28,000 Speaker 1: feel more comfortable if the Treasury, if the Federal Reserve 85 00:04:28,080 --> 00:04:31,840 Speaker 1: came out and said, look, here was the problem. All right, 86 00:04:32,080 --> 00:04:34,719 Speaker 1: here's what we did wrong. Here's what we learned. We've 87 00:04:34,800 --> 00:04:36,839 Speaker 1: checked all the other banks in the country, and we 88 00:04:36,880 --> 00:04:39,320 Speaker 1: don't have that problem. They didn't say that. They just 89 00:04:39,320 --> 00:04:41,919 Speaker 1: say the nice words that we don't have a problem. 90 00:04:42,000 --> 00:04:45,440 Speaker 1: So what I want is information. As a depositor in 91 00:04:45,440 --> 00:04:48,039 Speaker 1: the bank, I like to know have you reviewed my bank? 92 00:04:48,839 --> 00:04:51,320 Speaker 1: How often do you review review my bank? Or the 93 00:04:51,360 --> 00:04:53,119 Speaker 1: standards you're going to live by to review my bank? 94 00:04:53,240 --> 00:04:55,960 Speaker 1: I'n't heard any of that. And then on top about, 95 00:04:56,360 --> 00:04:58,240 Speaker 1: you know, the texts in the country shouldn't be on 96 00:04:58,279 --> 00:05:01,200 Speaker 1: the hook here, I mean people that took bonuses that 97 00:05:01,200 --> 00:05:03,840 Speaker 1: they shouldn't be taken. People have sold stock they shouldn't 98 00:05:03,880 --> 00:05:06,159 Speaker 1: be able to sell. I mean we and and the 99 00:05:06,160 --> 00:05:08,880 Speaker 1: other thing that the feeders are in januinely to tell 100 00:05:08,960 --> 00:05:11,480 Speaker 1: us is how they say taxpayers are not going to 101 00:05:11,520 --> 00:05:13,520 Speaker 1: be on the hook. How are they not going to 102 00:05:13,560 --> 00:05:15,400 Speaker 1: be on the hook? How how are they going to 103 00:05:15,440 --> 00:05:17,680 Speaker 1: pay for this? Because what we do know is a 104 00:05:17,680 --> 00:05:21,360 Speaker 1: Federal Reserve is lending against assets, or Treasury is lending 105 00:05:21,440 --> 00:05:25,440 Speaker 1: gainst assets that have our value today at less. Okay, 106 00:05:25,720 --> 00:05:27,960 Speaker 1: then what they could sell them are in the open market. Well, 107 00:05:28,000 --> 00:05:30,080 Speaker 1: that doesn't seem to make it much sense. Somebody's taken 108 00:05:30,120 --> 00:05:33,920 Speaker 1: some risk here. There's been a good deal of risk, 109 00:05:33,960 --> 00:05:35,640 Speaker 1: it seems like all the way around. But based on 110 00:05:35,960 --> 00:05:39,200 Speaker 1: what you just said, should the Federal Reserve be taken 111 00:05:39,240 --> 00:05:42,440 Speaker 1: out of this? There's there's been a call to recuse j. Powell, 112 00:05:42,800 --> 00:05:46,160 Speaker 1: for instance, from from this review, the FED investigating the Fed, 113 00:05:46,760 --> 00:05:49,039 Speaker 1: even from Elizabeth Warren. I guess that shouldn't be a 114 00:05:49,040 --> 00:05:50,560 Speaker 1: big shock. I know that you don't agree on a 115 00:05:50,640 --> 00:05:51,920 Speaker 1: lot of things, but is she right in this case? 116 00:05:51,920 --> 00:05:55,240 Speaker 1: Should there be an outside review? Well? I think I think. Look, 117 00:05:55,279 --> 00:05:57,919 Speaker 1: I think outside of reviews are you often get a 118 00:05:57,920 --> 00:06:01,680 Speaker 1: better answer, you get a more open answer, because I'm 119 00:06:01,720 --> 00:06:04,040 Speaker 1: sure you know, it's human nature that people want to say, well, 120 00:06:04,080 --> 00:06:05,840 Speaker 1: they didn't do anything wrong. So I think I think 121 00:06:05,880 --> 00:06:09,440 Speaker 1: outside reviews are actually very helpful. So I didn't see 122 00:06:09,440 --> 00:06:12,400 Speaker 1: exactly what Senator Warren has said, but I think outside reviews. 123 00:06:12,400 --> 00:06:15,680 Speaker 1: That's why we have auditors and companies. That's how in 124 00:06:15,760 --> 00:06:18,039 Speaker 1: theory of Federserve is supposed to be doing this to 125 00:06:18,160 --> 00:06:22,280 Speaker 1: the banks around the country. So FDIC is supposed to 126 00:06:22,320 --> 00:06:24,280 Speaker 1: be doing this. State regulars are supposed to be doing this. 127 00:06:24,560 --> 00:06:28,320 Speaker 1: So there's so I wouldn't understand why it failed. Who's 128 00:06:28,320 --> 00:06:31,120 Speaker 1: going to be held accountable and what law do we 129 00:06:31,200 --> 00:06:33,640 Speaker 1: need to change, if andy or regulation that would make 130 00:06:33,680 --> 00:06:36,760 Speaker 1: sure this doesn't happen again. But in the meantime, Federal 131 00:06:36,760 --> 00:06:39,880 Speaker 1: Reserve Jenny Yellen should say this is if this is 132 00:06:39,920 --> 00:06:41,960 Speaker 1: just a one off, explain how it's a one off. 133 00:06:42,440 --> 00:06:45,160 Speaker 1: I mean, I want to make sure of the depositors 134 00:06:45,160 --> 00:06:47,400 Speaker 1: that people in my state that have a Debosston's Bank 135 00:06:47,440 --> 00:06:49,640 Speaker 1: are comfortable. But that's not what they've said so far. 136 00:06:49,680 --> 00:06:52,159 Speaker 1: They've just said they said the nice things without any 137 00:06:52,160 --> 00:06:56,600 Speaker 1: information in backing them. Should the FDIC increase the threshold, 138 00:06:57,279 --> 00:07:01,880 Speaker 1: maybe eat erase the threshold, Should all deposit it's be insured, Senator, 139 00:07:01,960 --> 00:07:04,240 Speaker 1: so you could tell voters in your state they don't 140 00:07:04,240 --> 00:07:05,600 Speaker 1: have to worry about what they have in the bank. 141 00:07:06,480 --> 00:07:08,520 Speaker 1: I think it's something we have to look at. We 142 00:07:08,560 --> 00:07:11,200 Speaker 1: have to look at, look at, you know, the impact 143 00:07:11,200 --> 00:07:14,040 Speaker 1: of that, also the cost of that. Who's going to 144 00:07:14,160 --> 00:07:17,440 Speaker 1: bear that cost? Okay, I don't think the taxpayers are 145 00:07:17,480 --> 00:07:20,400 Speaker 1: to be bearing that cost. So I'm open to we're 146 00:07:20,440 --> 00:07:22,880 Speaker 1: having all these reviews, but the steps I would go 147 00:07:22,920 --> 00:07:25,640 Speaker 1: through a step one. What went wrong? Why did it 148 00:07:25,680 --> 00:07:29,080 Speaker 1: go wrong? Who has been held accountable? What do we have, 149 00:07:29,240 --> 00:07:32,320 Speaker 1: what did we learn? What should we change? I appreciate 150 00:07:32,360 --> 00:07:34,760 Speaker 1: your candor here, Senator, because I've been talking to lawmakers 151 00:07:34,760 --> 00:07:38,080 Speaker 1: all week and there've been a lot of very definitive answers, 152 00:07:38,240 --> 00:07:40,960 Speaker 1: yet no consensus on anything. Clearly, there needs to be 153 00:07:41,000 --> 00:07:44,120 Speaker 1: an autopsy. I keep hearing about woke banking, and I'm 154 00:07:44,400 --> 00:07:46,480 Speaker 1: I'm a little bit confused on this talking point. I 155 00:07:46,480 --> 00:07:49,960 Speaker 1: wonder if you are. Because SVB apparently did not seem 156 00:07:49,960 --> 00:07:52,400 Speaker 1: to be doing anything that the thirty biggest banks were doing, 157 00:07:52,400 --> 00:07:54,800 Speaker 1: based on a fact checked by the New York Times, 158 00:07:54,880 --> 00:07:59,160 Speaker 1: yet they failed. What is your take on that? Idea? 159 00:07:59,360 --> 00:08:02,880 Speaker 1: Was ees to blame or not? Well, we don't know 160 00:08:03,000 --> 00:08:04,680 Speaker 1: enough yet. I mean, look this, if you look at 161 00:08:04,680 --> 00:08:07,120 Speaker 1: their website, sup here, this is a this was a 162 00:08:07,320 --> 00:08:11,200 Speaker 1: very company, very focused on woke things. And but look, 163 00:08:11,280 --> 00:08:14,560 Speaker 1: the bottom line is the Federals are you know, the 164 00:08:14,600 --> 00:08:17,120 Speaker 1: management team failed. The Federals are failed in doing their 165 00:08:17,240 --> 00:08:20,200 Speaker 1: job and so and whether it's you know, who knows. 166 00:08:20,240 --> 00:08:22,160 Speaker 1: If it's woke policies that you know, then we ought 167 00:08:22,200 --> 00:08:24,080 Speaker 1: to be looking at that. But here's what we know. 168 00:08:25,040 --> 00:08:28,240 Speaker 1: There's been a big failure here. We can't afford to 169 00:08:28,280 --> 00:08:30,240 Speaker 1: have this happen around the country. I don't want to 170 00:08:30,280 --> 00:08:33,679 Speaker 1: happen to anybody in my state. I don't want to contagient. 171 00:08:34,040 --> 00:08:37,160 Speaker 1: So here's what I expect this out of government. I 172 00:08:37,240 --> 00:08:40,360 Speaker 1: tell almost every federal agency I could say the same 173 00:08:40,360 --> 00:08:43,640 Speaker 1: thing about why are you a black hole of information? 174 00:08:44,640 --> 00:08:47,800 Speaker 1: Here's a problem. Give us the facts. If you made 175 00:08:47,800 --> 00:08:51,360 Speaker 1: a mistake, guess what you're human beings. Tell us for 176 00:08:51,480 --> 00:08:53,200 Speaker 1: you how you made a mistake and how you're going 177 00:08:53,280 --> 00:08:56,640 Speaker 1: to fix it. I wish you were you were one 178 00:08:56,640 --> 00:08:59,520 Speaker 1: of my teachers back in high school. With that approach, Senator, 179 00:08:59,520 --> 00:09:01,160 Speaker 1: I'd like to ask you about something maybe a little 180 00:09:01,160 --> 00:09:03,120 Speaker 1: closer to your heart. We have to talk about the 181 00:09:03,160 --> 00:09:05,679 Speaker 1: banking crisis. It's happening before our eyes, but so is 182 00:09:05,720 --> 00:09:08,960 Speaker 1: the budget process. And Senator your name keeps coming up. 183 00:09:08,960 --> 00:09:11,000 Speaker 1: President Biden likes to hold up a pamphlet of the 184 00:09:11,160 --> 00:09:14,520 Speaker 1: Rescue America proposal and says, you want to sunset social 185 00:09:14,520 --> 00:09:18,640 Speaker 1: Security and Medicare, tell us where he's wrong. So first off, 186 00:09:18,679 --> 00:09:20,439 Speaker 1: I hope he You know, he tells everybody to read 187 00:09:20,520 --> 00:09:22,400 Speaker 1: my plan, and you ought to read my plan. I 188 00:09:22,400 --> 00:09:26,400 Speaker 1: hope everybody does. It says that the Congress ought to 189 00:09:26,440 --> 00:09:30,240 Speaker 1: tell the American public how they're going to protect the 190 00:09:30,320 --> 00:09:36,079 Speaker 1: benefits of SoC Security Medicare, and we should review our 191 00:09:36,280 --> 00:09:38,959 Speaker 1: expendures up here so we can decide if we want 192 00:09:38,960 --> 00:09:41,440 Speaker 1: to continue them or not now because some people are 193 00:09:41,520 --> 00:09:45,240 Speaker 1: lying about what my attent was, so I update and says, well, clearly, 194 00:09:45,240 --> 00:09:48,160 Speaker 1: I was never talking about Social Security and Medicare, Medicaid 195 00:09:48,200 --> 00:09:50,160 Speaker 1: things like that, or the US Navy, which I'm a 196 00:09:50,200 --> 00:09:53,000 Speaker 1: Navy veteran. So but here's a lot. Here's what you 197 00:09:53,080 --> 00:09:56,600 Speaker 1: think about this. For a second, since twenty nineteen pre COVID, 198 00:09:56,840 --> 00:09:59,960 Speaker 1: we've had about six million new Americans net New America. 199 00:10:00,040 --> 00:10:02,120 Speaker 1: That's about one point eight percent increase in our population. 200 00:10:02,640 --> 00:10:05,560 Speaker 1: The Biden budget has the federal budget going up fifty 201 00:10:05,600 --> 00:10:08,720 Speaker 1: five percent. Does that make sense to you if your 202 00:10:08,800 --> 00:10:11,760 Speaker 1: income doesn't go up. Do you have a fifty five 203 00:10:11,800 --> 00:10:15,160 Speaker 1: percent increase in your expenditures. That doesn't make sense. What 204 00:10:15,320 --> 00:10:17,960 Speaker 1: I was governor of Florida, what we needed, what I 205 00:10:18,000 --> 00:10:20,840 Speaker 1: wanted to do is preserve the safety net programs we had, 206 00:10:21,440 --> 00:10:23,880 Speaker 1: but don't grow government just because you want to grow government. 207 00:10:23,920 --> 00:10:27,240 Speaker 1: We grew government slower than a population growth every year 208 00:10:27,280 --> 00:10:29,920 Speaker 1: for eight years, and I was able to preserve the 209 00:10:29,960 --> 00:10:33,880 Speaker 1: safety nets. I wouldn't preserve Medicare and Social Security. The 210 00:10:33,960 --> 00:10:37,520 Speaker 1: way to do that is balance the budget. So you 211 00:10:37,600 --> 00:10:41,120 Speaker 1: can't do what's been happening of just spending money like 212 00:10:41,240 --> 00:10:43,120 Speaker 1: it's going out of style. And by the way, the 213 00:10:43,120 --> 00:10:46,640 Speaker 1: Democrats all voted to cut Medicare last September and the 214 00:10:46,720 --> 00:10:49,120 Speaker 1: past and Joe Biden signed a build a cut twenty 215 00:10:49,120 --> 00:10:51,559 Speaker 1: billion dollars out of Medicare. Sure, just to be clear, though, 216 00:10:51,600 --> 00:10:53,880 Speaker 1: you did change the length like originally you were looking 217 00:10:53,880 --> 00:10:56,439 Speaker 1: at social Security and Medicare, correct. I know that the 218 00:10:56,520 --> 00:10:59,439 Speaker 1: leadership is decided the table, but wasn't that something that 219 00:10:59,760 --> 00:11:03,360 Speaker 1: you wanted to take another look at? No, I what 220 00:11:03,480 --> 00:11:05,560 Speaker 1: I said, I think I was very clear. If you 221 00:11:05,600 --> 00:11:07,280 Speaker 1: look the language joint language in there. I said, so 222 00:11:07,360 --> 00:11:09,880 Speaker 1: Security Medicare was that we need to tell the public 223 00:11:09,920 --> 00:11:12,600 Speaker 1: how we're going to preserve them. But my point was 224 00:11:12,640 --> 00:11:16,599 Speaker 1: when I said, let's review and all of our programs. 225 00:11:16,800 --> 00:11:21,000 Speaker 1: Is is all the crazy stuff out there? Joe Biden said? 226 00:11:21,480 --> 00:11:23,640 Speaker 1: Joe Biden said he wanted to cut even Medicare, so 227 00:11:23,760 --> 00:11:26,200 Speaker 1: security and veterans benefits when he was in sentent. I 228 00:11:26,240 --> 00:11:29,000 Speaker 1: don't believe in that. I believe let's preserve these programs. 229 00:11:29,120 --> 00:11:32,800 Speaker 1: You do it through fiscal responsibility. We can balance our budget. 230 00:11:33,080 --> 00:11:35,000 Speaker 1: You do it so we all can do it. Take 231 00:11:35,040 --> 00:11:37,920 Speaker 1: the entitlements off the table. And I know defense spending, 232 00:11:37,960 --> 00:11:40,559 Speaker 1: that's that's another difficult one that might also be off 233 00:11:40,559 --> 00:11:43,200 Speaker 1: the table. Senator, Where do you cut because to balance 234 00:11:43,240 --> 00:11:45,360 Speaker 1: the budget they would have to be significant. What are 235 00:11:45,360 --> 00:11:48,559 Speaker 1: we putting on the table here today? So the way 236 00:11:48,600 --> 00:11:49,920 Speaker 1: I would do it is the way I did it 237 00:11:49,960 --> 00:11:51,840 Speaker 1: as governor of Florida. I walked in, I knew nothing 238 00:11:51,840 --> 00:11:54,200 Speaker 1: about the Florida budget. We started going to the line 239 00:11:54,200 --> 00:11:56,960 Speaker 1: by line. There's four thousand lines of the budget and 240 00:11:57,040 --> 00:11:59,000 Speaker 1: we said, well, this was a nice to have, but 241 00:11:59,080 --> 00:12:01,440 Speaker 1: actually didn't work, or we can't afford it this year. 242 00:12:01,679 --> 00:12:03,199 Speaker 1: So I think we have to look at every bit 243 00:12:03,200 --> 00:12:05,520 Speaker 1: of the budget, every every line of the budget. We 244 00:12:05,760 --> 00:12:08,319 Speaker 1: knew how hard it is to get a budget. You 245 00:12:08,360 --> 00:12:10,120 Speaker 1: can just get a copy of the budget up here. 246 00:12:10,320 --> 00:12:12,040 Speaker 1: I'm on the budget committee. You know, we don't even 247 00:12:12,040 --> 00:12:16,320 Speaker 1: have budget meetings hardly, so I've never seen seen a 248 00:12:16,400 --> 00:12:18,360 Speaker 1: budget that we've had. I've been up here for four years. 249 00:12:18,920 --> 00:12:21,719 Speaker 1: I've never been able to get a hard copy of 250 00:12:21,760 --> 00:12:25,800 Speaker 1: the budget with every line. In four years. They'll give 251 00:12:25,800 --> 00:12:28,280 Speaker 1: it to you in pieces here, pieces there. So we've 252 00:12:28,320 --> 00:12:31,479 Speaker 1: got to do what you do. You look at your 253 00:12:31,320 --> 00:12:34,280 Speaker 1: you know what, you're get an income and you say itself, well, 254 00:12:34,440 --> 00:12:36,920 Speaker 1: that new car would be nice, but I'm not going 255 00:12:36,960 --> 00:12:40,000 Speaker 1: to do it because they don't make enough money. Is 256 00:12:40,040 --> 00:12:43,520 Speaker 1: there one program that you cut today? Well, there's seventy 257 00:12:43,559 --> 00:12:46,400 Speaker 1: seven thousand federal office buildings that are empty that we 258 00:12:46,400 --> 00:12:47,960 Speaker 1: probably ought to get rid of. Why are we paying 259 00:12:48,000 --> 00:12:51,760 Speaker 1: for those? There's you know yeah, I mean, first off, 260 00:12:51,800 --> 00:12:53,559 Speaker 1: that's one thing I did as governor. I went through 261 00:12:53,600 --> 00:12:55,320 Speaker 1: all of our real estate, and we're able to save 262 00:12:55,480 --> 00:12:57,800 Speaker 1: millions and millions and millions of dollars. I think just 263 00:12:57,840 --> 00:13:00,920 Speaker 1: though seventy seven thousand buildings is one point seven billion 264 00:13:00,960 --> 00:13:04,679 Speaker 1: dollars a year and so I mean you you just 265 00:13:04,880 --> 00:13:07,160 Speaker 1: you ship away at it. But we're not even shipping 266 00:13:07,160 --> 00:13:09,520 Speaker 1: away up here. We don't even review it. We just say, well, 267 00:13:09,840 --> 00:13:11,840 Speaker 1: if you do, if you want to balance a budget, 268 00:13:11,880 --> 00:13:14,000 Speaker 1: then there's something bad is going to happen. No one doesn't. 269 00:13:14,120 --> 00:13:16,800 Speaker 1: It doesn't happen to you, It doesn't happen to companies. 270 00:13:16,960 --> 00:13:19,520 Speaker 1: It didn't happen to Florida. When I did that, my 271 00:13:19,600 --> 00:13:22,480 Speaker 1: economy grew like wildfire in Florida. We had at one 272 00:13:22,480 --> 00:13:25,960 Speaker 1: point seven million jobs in eight years. So balance your budget, 273 00:13:26,080 --> 00:13:29,480 Speaker 1: watch your money. I mean, think about this, Joe. One 274 00:13:29,520 --> 00:13:32,840 Speaker 1: point eight percent increase in population since twenty nineteen and 275 00:13:32,920 --> 00:13:37,960 Speaker 1: a fifty fifty five percent increase in the budget. That 276 00:13:38,120 --> 00:13:40,800 Speaker 1: makes no sense. Last one for year Centator, you've been 277 00:13:40,880 --> 00:13:43,840 Speaker 1: very generous with your time in lieu of a budget deal. 278 00:13:44,280 --> 00:13:46,440 Speaker 1: Would you vote to raise the debt ceiling or do 279 00:13:46,480 --> 00:13:50,600 Speaker 1: they have to come together? Well, you know, I've been 280 00:13:50,640 --> 00:13:52,800 Speaker 1: working with a lot of my friends in the House. 281 00:13:53,200 --> 00:13:55,840 Speaker 1: There is a way we should use the debt ceiling 282 00:13:56,440 --> 00:13:58,800 Speaker 1: as a way to get some structural change. To start 283 00:13:58,840 --> 00:14:01,120 Speaker 1: to think, but start start down the path that we 284 00:14:01,480 --> 00:14:04,360 Speaker 1: get a balanced budget here. I've never had I've never 285 00:14:04,480 --> 00:14:06,400 Speaker 1: voted for a desiling an increase since I've been up here, 286 00:14:06,520 --> 00:14:10,520 Speaker 1: because it's there's never been any structural changes, and so 287 00:14:10,600 --> 00:14:12,920 Speaker 1: I want to vote for one if if there's real 288 00:14:13,120 --> 00:14:15,400 Speaker 1: change that's going to get us to a balanced budget. 289 00:14:15,679 --> 00:14:18,560 Speaker 1: And so the Freedom Caucus of the House prodouce some ideas. 290 00:14:18,679 --> 00:14:20,840 Speaker 1: I think we let's look at those ideas and other 291 00:14:20,920 --> 00:14:24,440 Speaker 1: ideas to structurally fix our budget and we can, and 292 00:14:24,520 --> 00:14:29,080 Speaker 1: we'd have to. Senator Rick Scott, Republican from Florida joining 293 00:14:29,120 --> 00:14:30,760 Speaker 1: us from Capitol Hill. We thank you, sir for the 294 00:14:30,800 --> 00:14:33,640 Speaker 1: time and appreciate your being back with us here on 295 00:14:33,640 --> 00:14:36,360 Speaker 1: Bloomberg Sound On. I'm Joe Matthew and Washington, where we're 296 00:14:36,400 --> 00:14:38,920 Speaker 1: just getting started. Senator Rick Scott tips us off here. 297 00:14:38,960 --> 00:14:41,680 Speaker 1: We're going to assemble our panel coming up. Rick Davis 298 00:14:41,720 --> 00:14:44,360 Speaker 1: and Jeanie Schanzano are with us, and we're going to 299 00:14:44,440 --> 00:14:47,000 Speaker 1: tackle this TikTok issue as well. We have a couple 300 00:14:47,000 --> 00:14:49,480 Speaker 1: of stories to deal with today. It's not only the 301 00:14:49,520 --> 00:14:51,920 Speaker 1: banking crisis, and we will give that its due the 302 00:14:52,000 --> 00:14:55,000 Speaker 1: number one story today, but we have obviously testimony from 303 00:14:55,080 --> 00:14:57,200 Speaker 1: Janet Yellen happening. We're going to walk through that as 304 00:14:57,240 --> 00:14:59,400 Speaker 1: well with our panel, and then what in the world 305 00:14:59,440 --> 00:15:01,560 Speaker 1: happened over the Black Sea earlier this week? Have you 306 00:15:01,560 --> 00:15:05,160 Speaker 1: seen the Pentagon released video of this Russian hazing of 307 00:15:05,200 --> 00:15:07,520 Speaker 1: a US drone that ended up going into the drink. 308 00:15:07,560 --> 00:15:09,640 Speaker 1: We'll get to that as well. A lot ahead here 309 00:15:09,960 --> 00:15:12,760 Speaker 1: on the fastest show in politics. You pick the right 310 00:15:12,800 --> 00:15:16,640 Speaker 1: place sound on. We'll assemble the panel next and a 311 00:15:16,640 --> 00:15:18,480 Speaker 1: lot more to talk about. To stay with us, I'm 312 00:15:18,560 --> 00:15:23,040 Speaker 1: Joe Matthew. This is Bloomberg. You're listening to the Bloomberg 313 00:15:23,160 --> 00:15:26,840 Speaker 1: Sound On podcast. Catch the program live weekdays at one 314 00:15:26,880 --> 00:15:30,160 Speaker 1: Eastern on Bloomberg Radio, the Tune in a Half, Bloomberg 315 00:15:30,280 --> 00:15:33,080 Speaker 1: dot Com, and the Bloomberg Business App. You can also 316 00:15:33,120 --> 00:15:36,360 Speaker 1: listen live on Amazon Alexa from our flagship New York 317 00:15:36,360 --> 00:15:41,640 Speaker 1: station Just Say Alexa playing Bloomberg eleven thirty creating. If 318 00:15:41,680 --> 00:15:44,440 Speaker 1: we didn't already have some confidence in the banking system, 319 00:15:44,440 --> 00:15:46,960 Speaker 1: I can reassure the members of the Committee that our 320 00:15:47,000 --> 00:15:51,479 Speaker 1: banking system is sound and that Americans can feel confident 321 00:15:51,920 --> 00:15:54,840 Speaker 1: that third deposits will be there when they need them. 322 00:15:55,120 --> 00:15:57,360 Speaker 1: Although after what we just heard from Senator Rick Scott, 323 00:15:57,400 --> 00:15:59,960 Speaker 1: maybe not so fast. He made clear that he needs 324 00:16:00,120 --> 00:16:02,520 Speaker 1: to learn a lot more and hear a lot more 325 00:16:02,600 --> 00:16:05,600 Speaker 1: from the Fed before he declares any confidence in the 326 00:16:05,640 --> 00:16:08,240 Speaker 1: banking system. And of course that's not making anybody feel 327 00:16:08,320 --> 00:16:11,360 Speaker 1: terribly comfortable either. Let's assembled our panel, Rick Davis and 328 00:16:11,400 --> 00:16:15,480 Speaker 1: Jeanie Schanzano or here Bloomberg Politics contributors. Rick, what's your 329 00:16:15,480 --> 00:16:19,080 Speaker 1: take on the gentleman from Florida's view here? Because we've 330 00:16:19,120 --> 00:16:21,280 Speaker 1: heard from a lot of lawmakers this week, you've been 331 00:16:21,280 --> 00:16:26,560 Speaker 1: involved in some of these conversations with definitive answers, pointing fingers, 332 00:16:27,080 --> 00:16:30,160 Speaker 1: laying blame. The senator seems to actually want to learn 333 00:16:30,200 --> 00:16:33,160 Speaker 1: a little more. Yeah, his point of view was very open. 334 00:16:33,200 --> 00:16:35,160 Speaker 1: I was I was really surprised to hear that he 335 00:16:35,200 --> 00:16:39,800 Speaker 1: didn't sort of have a specific attack dog. He didn't 336 00:16:39,800 --> 00:16:41,800 Speaker 1: really take the bait when you asked him about whether 337 00:16:41,880 --> 00:16:43,520 Speaker 1: or not you thought this was, you know, as a 338 00:16:43,560 --> 00:16:46,760 Speaker 1: result of wokenism at the bank, and said, well, I 339 00:16:46,760 --> 00:16:48,880 Speaker 1: don't know much about that, but let's see what the 340 00:16:48,880 --> 00:16:52,000 Speaker 1: head comes up with, and and and wasn't even willing 341 00:16:52,080 --> 00:16:55,640 Speaker 1: to sort of lay blame at the feet of the bank. 342 00:16:56,840 --> 00:16:59,040 Speaker 1: Made a good point that the bank probably made mistakes 343 00:16:59,040 --> 00:17:03,160 Speaker 1: when it was his bounce sheet, but then immediately said, 344 00:17:03,200 --> 00:17:05,960 Speaker 1: what we need a full rundown is to what's happened 345 00:17:06,000 --> 00:17:08,760 Speaker 1: here to really understand, you know, what went wrong. Yeah. 346 00:17:09,160 --> 00:17:12,120 Speaker 1: I just wonder, Jeanie, if lawmakers are starting to hear 347 00:17:12,240 --> 00:17:15,600 Speaker 1: more that's causing them to back off a little bit. 348 00:17:15,680 --> 00:17:19,080 Speaker 1: We spoke earlier with Patrick McHenry, of course, who chairs 349 00:17:19,160 --> 00:17:21,719 Speaker 1: the Finance Committee, to back off a little bit on 350 00:17:21,840 --> 00:17:25,359 Speaker 1: the blame game, because this is still unfolding in real time. 351 00:17:26,119 --> 00:17:28,320 Speaker 1: It is, and I think they're smart to back off, 352 00:17:28,359 --> 00:17:30,959 Speaker 1: And I think Senator Scott is wise to say, in 353 00:17:31,000 --> 00:17:34,120 Speaker 1: your words, we need to have an autopsy what went wrong, why, 354 00:17:34,280 --> 00:17:38,439 Speaker 1: who's accountable, and then talk about blame and changes, because 355 00:17:38,480 --> 00:17:42,000 Speaker 1: of course they don't want to get caught politically blaming 356 00:17:42,520 --> 00:17:45,760 Speaker 1: X person. Come to find out, information unfolds in the 357 00:17:45,760 --> 00:17:47,840 Speaker 1: next twenty four forty eight hours because things have been 358 00:17:47,840 --> 00:17:50,720 Speaker 1: moving so quickly and they are caught flat footed. So 359 00:17:50,960 --> 00:17:53,520 Speaker 1: they are smart to do that. I have to say 360 00:17:53,760 --> 00:17:56,720 Speaker 1: I did get some sense that he does agree with 361 00:17:56,760 --> 00:18:00,399 Speaker 1: Elizabeth Warren on some things like you know well, he 362 00:18:00,520 --> 00:18:03,520 Speaker 1: talked about blaming the FED, He talked about being open 363 00:18:03,640 --> 00:18:09,000 Speaker 1: to Jay Powell recusing himself. He talked about regulatory failures 364 00:18:09,400 --> 00:18:12,399 Speaker 1: and that he obviously wants to learn more about. But 365 00:18:12,520 --> 00:18:15,600 Speaker 1: there was a sense I thought that he did sound 366 00:18:15,640 --> 00:18:18,960 Speaker 1: a little bit more like Elizabeth Warren than I thought, 367 00:18:18,960 --> 00:18:20,840 Speaker 1: And I agree with Rick. I thought maybe we'd hear 368 00:18:20,840 --> 00:18:23,480 Speaker 1: some more about the wokeism. Didn't hear about that, but 369 00:18:23,600 --> 00:18:26,760 Speaker 1: did get this sort of populist Where did the regulators 370 00:18:26,760 --> 00:18:30,240 Speaker 1: go wrong? Certainly this was mismanagement and maybe Powell needs 371 00:18:30,240 --> 00:18:33,040 Speaker 1: to step aside, maybe for a refu Of course, Elizabeth 372 00:18:33,040 --> 00:18:36,960 Speaker 1: Warren taking part in this hearing today with Janet Yellen, 373 00:18:37,040 --> 00:18:39,199 Speaker 1: and they got to the matter of regulations. This is 374 00:18:39,200 --> 00:18:42,600 Speaker 1: where I suspect, although who knows because he wasn't specific 375 00:18:42,640 --> 00:18:45,879 Speaker 1: about this, but I suspect this is where Rick's got 376 00:18:46,119 --> 00:18:50,760 Speaker 1: and Elizabeth Warren will part ways on the idea of 377 00:18:50,800 --> 00:18:55,119 Speaker 1: this twenty eighteen law that was changed that changed portions 378 00:18:55,200 --> 00:18:59,359 Speaker 1: of Dodd Frank, potentially leading to this. Warren talked about 379 00:18:59,359 --> 00:19:05,760 Speaker 1: it with the Treasury Secretary Secretary Yell and can regular, rigorous, 380 00:19:05,920 --> 00:19:11,960 Speaker 1: well designed stress tests help bank regulators spot problems lurking 381 00:19:12,000 --> 00:19:17,040 Speaker 1: in banks balance sheets and business models? Yes, And the 382 00:19:17,080 --> 00:19:19,639 Speaker 1: idea was that this bank may not have endured the 383 00:19:19,680 --> 00:19:21,960 Speaker 1: same stress test that it would have under the original 384 00:19:22,040 --> 00:19:25,120 Speaker 1: Dodd Frank Rick. Are we going to find more if 385 00:19:25,160 --> 00:19:27,960 Speaker 1: we continue down this path? You know, you might. I mean, 386 00:19:28,720 --> 00:19:31,480 Speaker 1: there's a lot of questions is whether the original built 387 00:19:31,480 --> 00:19:34,600 Speaker 1: you know, the modification of Dodd Frank twenty one fifty five, 388 00:19:34,680 --> 00:19:37,080 Speaker 1: had any real impact in what we're seeing today. There 389 00:19:37,160 --> 00:19:39,639 Speaker 1: are and and and I would say there are a 390 00:19:39,680 --> 00:19:42,360 Speaker 1: lot of Democrats, like you know Senator Tester and Warner 391 00:19:42,400 --> 00:19:48,200 Speaker 1: and Kane who actually disagree with whereat is coming from 392 00:19:48,240 --> 00:19:52,280 Speaker 1: and has come out very strongly this week and said 393 00:19:52,680 --> 00:19:55,080 Speaker 1: this has nothing to do with those reforms. Those reforms 394 00:19:55,119 --> 00:19:57,760 Speaker 1: allowed community banking to flourish. In our stage, Barney Franks 395 00:19:57,920 --> 00:20:00,399 Speaker 1: was important and well Barney Frank it was also on 396 00:20:00,480 --> 00:20:02,080 Speaker 1: the board of one of the banks that got taken down, 397 00:20:02,240 --> 00:20:05,320 Speaker 1: so he's not exactly the guy i'd turned to today 398 00:20:05,359 --> 00:20:08,080 Speaker 1: for that response. But at the end of the day, 399 00:20:08,640 --> 00:20:10,359 Speaker 1: I do think there's a cloud over all of this. 400 00:20:10,840 --> 00:20:12,960 Speaker 1: I think there will be a lot of, as you 401 00:20:13,119 --> 00:20:15,879 Speaker 1: and Genie have said, autopsies. I think there'll be a 402 00:20:15,920 --> 00:20:19,360 Speaker 1: lot more hearings, so we'll see where everybody is sort 403 00:20:19,359 --> 00:20:21,640 Speaker 1: of staked out on this. But I think there's plenty 404 00:20:21,680 --> 00:20:24,440 Speaker 1: of blame to go all around, right, That probably is, 405 00:20:24,920 --> 00:20:26,680 Speaker 1: you know, issues with the FED and the way they've 406 00:20:27,000 --> 00:20:30,560 Speaker 1: handled the interest rate management. I think there's probably issues 407 00:20:30,560 --> 00:20:33,360 Speaker 1: with Treasury on oversight and whether or not these were 408 00:20:33,359 --> 00:20:35,600 Speaker 1: stress tests. I think they're probably issues with the Bank 409 00:20:36,040 --> 00:20:37,920 Speaker 1: whether or not they manage their balance sheet. I mean 410 00:20:37,960 --> 00:20:40,359 Speaker 1: like there's going to be a lot of things that 411 00:20:40,440 --> 00:20:42,520 Speaker 1: all added up to the crisis we're in today. Yeah. 412 00:20:42,640 --> 00:20:45,760 Speaker 1: Talking about the budget as well with Senator Rick Scott, 413 00:20:46,000 --> 00:20:48,600 Speaker 1: I suspect this will inform some opinions when it comes 414 00:20:48,640 --> 00:20:50,960 Speaker 1: to that debate here, Genie, And I'm not even sure 415 00:20:50,960 --> 00:20:53,600 Speaker 1: exactly how, but if it moves the X date up 416 00:20:53,600 --> 00:20:56,680 Speaker 1: on the debt ceiling, it does create an additional urgency 417 00:20:56,800 --> 00:20:59,440 Speaker 1: to figure this out. And he's not prepared to raise 418 00:20:59,480 --> 00:21:01,199 Speaker 1: the debt seal And though I suppose that would be 419 00:21:01,240 --> 00:21:05,280 Speaker 1: nothing new for Rick Scott here, But how will the 420 00:21:05,320 --> 00:21:08,840 Speaker 1: budget debate be informed by the banking crisis? Well, you know, 421 00:21:08,880 --> 00:21:11,360 Speaker 1: I think it puts a lot more pressure on members 422 00:21:11,359 --> 00:21:14,560 Speaker 1: of Congress to come together to ensure the stability of 423 00:21:14,560 --> 00:21:18,400 Speaker 1: our financial market. Certainly if they allow if they don't 424 00:21:18,480 --> 00:21:21,880 Speaker 1: raise the debt ceiling rather, that would be the height 425 00:21:21,920 --> 00:21:25,160 Speaker 1: of a catastrophe in crisis in this country financially, so 426 00:21:25,200 --> 00:21:28,080 Speaker 1: this I think puts more pressure under them. I think 427 00:21:28,080 --> 00:21:30,879 Speaker 1: it was very interesting to hear your discussion with Rick Scott. 428 00:21:30,920 --> 00:21:33,840 Speaker 1: He didn't seem to want to acknowledge that he in 429 00:21:33,960 --> 00:21:37,440 Speaker 1: fact did change and amend his six point plan point 430 00:21:37,480 --> 00:21:41,040 Speaker 1: six rather of his plan to sunset. When he talked about, 431 00:21:41,080 --> 00:21:43,720 Speaker 1: you know, first he wasn't going to accept social security, 432 00:21:43,760 --> 00:21:46,680 Speaker 1: Medicare and national security. He didn't want to seem to 433 00:21:46,720 --> 00:21:49,919 Speaker 1: address that. And I think it was really really telling 434 00:21:49,960 --> 00:21:51,920 Speaker 1: to have him say when you pushed him and said, well, 435 00:21:51,920 --> 00:21:55,640 Speaker 1: what would you cut? He's talking about real estate seventy 436 00:21:55,640 --> 00:22:00,000 Speaker 1: seven thousand office buildings. That's interesting, but it doesn't get unique. 437 00:22:00,000 --> 00:22:03,800 Speaker 1: You're being able to balance. And I'm not an economist, 438 00:22:03,840 --> 00:22:06,920 Speaker 1: and I know that you've been through this drill enough times. Rick. 439 00:22:06,920 --> 00:22:10,560 Speaker 1: Getting a lawmaker to actually name a program that's not 440 00:22:10,640 --> 00:22:14,040 Speaker 1: called you know, PBS or big Bird or something, it's 441 00:22:14,080 --> 00:22:16,879 Speaker 1: pretty difficult to do, isn't it. Uh? Yes, and no. 442 00:22:17,040 --> 00:22:19,639 Speaker 1: I mean when John McCain was still around, he issued 443 00:22:19,640 --> 00:22:22,640 Speaker 1: a pork book every year. Well that's running a little pig, 444 00:22:22,680 --> 00:22:25,520 Speaker 1: push a wheelback. Yeah, we could use him once again, 445 00:22:25,680 --> 00:22:27,680 Speaker 1: and there were there were hundreds of billions of dollars 446 00:22:27,760 --> 00:22:30,520 Speaker 1: worth of programs that he identified. Uh. Not everybody has 447 00:22:30,560 --> 00:22:34,480 Speaker 1: that level of bravery in the budget process. And uh 448 00:22:34,520 --> 00:22:37,359 Speaker 1: and and I think ultimately that's part of what's going 449 00:22:37,440 --> 00:22:40,160 Speaker 1: to play out here, right And the Democrats are in 450 00:22:40,160 --> 00:22:42,280 Speaker 1: a position they put their budget out, they're waiting for 451 00:22:42,359 --> 00:22:45,040 Speaker 1: House Republicans to do the same and and and to 452 00:22:45,119 --> 00:22:49,400 Speaker 1: give them the president a pathway to getting this UH 453 00:22:49,480 --> 00:22:52,440 Speaker 1: debt ceiling raised through budget cuts. And nobody can come 454 00:22:52,520 --> 00:22:54,159 Speaker 1: up with what those budget cuts are going to be, 455 00:22:54,560 --> 00:22:56,520 Speaker 1: so be careful what you asked for. It always sounds 456 00:22:56,560 --> 00:22:59,760 Speaker 1: like a good political attack message until you actually have 457 00:22:59,800 --> 00:23:01,960 Speaker 1: to make good on it. And every one of those 458 00:23:02,040 --> 00:23:05,879 Speaker 1: budget cuts have constituencies. Every one of those constituencies are 459 00:23:05,920 --> 00:23:08,680 Speaker 1: in various members districts. And that's when you really get 460 00:23:08,680 --> 00:23:12,080 Speaker 1: the fun part when Republicans finally do emerge with a 461 00:23:12,119 --> 00:23:15,440 Speaker 1: plan here, Geanie, you wonder what it is that triggers 462 00:23:15,480 --> 00:23:20,280 Speaker 1: an actual debate. Do they need to pass a budget 463 00:23:21,000 --> 00:23:24,080 Speaker 1: before the White House says all right, let's engage. You know, 464 00:23:24,359 --> 00:23:26,639 Speaker 1: I hope that they are engaging right now, and we 465 00:23:26,720 --> 00:23:29,119 Speaker 1: just don't know about it all off, I suspect that 466 00:23:29,160 --> 00:23:31,919 Speaker 1: they are not, because you know, time is closing in 467 00:23:32,000 --> 00:23:35,119 Speaker 1: on them, and the real challenge is going to be 468 00:23:35,160 --> 00:23:39,120 Speaker 1: for Kevin McCarthy to try to get to eighteen and again, 469 00:23:39,200 --> 00:23:42,560 Speaker 1: if they've taken defense, social Security, Medicare, veterans benefits, other 470 00:23:42,600 --> 00:23:46,160 Speaker 1: essential services off the table, as they have publicly said 471 00:23:46,200 --> 00:23:49,720 Speaker 1: they have done, how do they address the concerns of 472 00:23:49,800 --> 00:23:52,919 Speaker 1: the more conservatives and Freedom Caucus members and tying it 473 00:23:53,040 --> 00:23:56,480 Speaker 1: that ceiling to balancing the budget. It's very hard to 474 00:23:56,480 --> 00:23:58,680 Speaker 1: wrap your head around to how they get there. So 475 00:23:58,840 --> 00:24:01,360 Speaker 1: maybe Kevin McCarthy it's magic, you know, rabbit to pull 476 00:24:01,359 --> 00:24:03,399 Speaker 1: out of his hat or wherever you pull those out of. 477 00:24:03,680 --> 00:24:06,360 Speaker 1: But it's hard to imagine they get there at this point, 478 00:24:06,440 --> 00:24:09,520 Speaker 1: and that is a very very troubling reality. Maybe this 479 00:24:09,680 --> 00:24:12,920 Speaker 1: crisis has a silver lining and that it pushes members 480 00:24:12,920 --> 00:24:15,000 Speaker 1: of Congress to come together and do the right thing 481 00:24:15,000 --> 00:24:17,000 Speaker 1: on this. You know what, you can't regulate at least 482 00:24:17,000 --> 00:24:20,840 Speaker 1: I can't imagine how Rick is social media And if 483 00:24:20,840 --> 00:24:23,479 Speaker 1: Patrick McHenry is correct, and this was the first Twitter 484 00:24:23,560 --> 00:24:25,840 Speaker 1: run on a bank, you think about the way they 485 00:24:25,840 --> 00:24:28,320 Speaker 1: moved meme stocks like game Stop a couple of years ago, 486 00:24:28,840 --> 00:24:31,359 Speaker 1: is this not part of the problem. Oh yeah, I 487 00:24:31,359 --> 00:24:35,119 Speaker 1: mean this trend, this happens so quickly, literally over a 488 00:24:35,200 --> 00:24:38,479 Speaker 1: twenty four hour period, And when we were seeing this 489 00:24:38,600 --> 00:24:43,240 Speaker 1: unfold in the twenty eight you did it over months, 490 00:24:43,280 --> 00:24:47,879 Speaker 1: not hours. And so absolutely the social media and the 491 00:24:47,920 --> 00:24:50,440 Speaker 1: internet have a lot to bring to the table here, 492 00:24:50,680 --> 00:24:54,800 Speaker 1: not just though on creating the crisis, but I think 493 00:24:54,840 --> 00:24:57,159 Speaker 1: the administration actually did a pretty good job of jumping 494 00:24:57,160 --> 00:25:00,040 Speaker 1: into that cycle, moving a lot of information out on 495 00:25:00,080 --> 00:25:02,880 Speaker 1: social media around the weekend, so that so that people 496 00:25:02,960 --> 00:25:05,080 Speaker 1: knew they had and they didn't have the luxury to 497 00:25:05,080 --> 00:25:07,760 Speaker 1: actually wait till Monday when Marcus open to actually make 498 00:25:07,800 --> 00:25:09,920 Speaker 1: a statement. They had to make sure people knew that's 499 00:25:10,000 --> 00:25:12,399 Speaker 1: what was happening before the weekend was over. So I 500 00:25:12,440 --> 00:25:14,320 Speaker 1: think it works both ways. There's a reason why he 501 00:25:14,440 --> 00:25:16,359 Speaker 1: was out there at nine am and not ten am 502 00:25:16,600 --> 00:25:19,240 Speaker 1: on Monday, And it's a great point that you make. 503 00:25:20,160 --> 00:25:23,560 Speaker 1: You're listening to The Bloomberg Sound on podcast. Catch the 504 00:25:23,600 --> 00:25:27,399 Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the 505 00:25:27,520 --> 00:25:30,879 Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App. 506 00:25:31,000 --> 00:25:33,840 Speaker 1: You can also listen live on Amazon Alexa from our 507 00:25:33,880 --> 00:25:39,159 Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty, 508 00:25:40,040 --> 00:25:42,400 Speaker 1: trying to figure out what's happening in real time here 509 00:25:42,480 --> 00:25:45,040 Speaker 1: forget another day. Welcome to Bloomberg Sound On. I'm Joe, 510 00:25:45,080 --> 00:25:48,200 Speaker 1: Matthew and Washington, joined by Kaylee Lines, who's been at 511 00:25:48,240 --> 00:25:52,480 Speaker 1: this since very early this morning. Kayley, the big development here, 512 00:25:52,480 --> 00:25:55,480 Speaker 1: I guess credit Sweets is off the front burner. That's 513 00:25:55,480 --> 00:25:57,560 Speaker 1: where we were this time yesterday, as the Swiss come 514 00:25:57,600 --> 00:26:00,199 Speaker 1: in at least to make an attempt to say if 515 00:26:00,240 --> 00:26:01,800 Speaker 1: the bank you can tell me if that's real? And 516 00:26:01,880 --> 00:26:06,080 Speaker 1: First Republic now on our side of the ocean, is 517 00:26:06,280 --> 00:26:10,240 Speaker 1: in the cross here as the US tries to orchestrate 518 00:26:10,280 --> 00:26:12,520 Speaker 1: a rescue involving some of the big money centers, right 519 00:26:12,600 --> 00:26:14,960 Speaker 1: JP City and so on, Do they want any part 520 00:26:14,960 --> 00:26:17,520 Speaker 1: of this? Those two big to fail banks are the 521 00:26:17,520 --> 00:26:20,800 Speaker 1: ones that are coming in to help potentially another smaller 522 00:26:20,840 --> 00:26:23,399 Speaker 1: bank not fail. From our understanding here at Bloomberg, it's 523 00:26:23,440 --> 00:26:26,600 Speaker 1: the likes of JP Morgan and Bank of America City, Wells, Fargo, 524 00:26:26,720 --> 00:26:28,760 Speaker 1: Morgan Stanley. Some of the smaller ones as well, like 525 00:26:29,359 --> 00:26:33,480 Speaker 1: US Bank Corp and Trust and PNC basically giving some 526 00:26:33,560 --> 00:26:36,560 Speaker 1: of their deposits to First Republic. We understand for those 527 00:26:36,600 --> 00:26:38,080 Speaker 1: big guys it could be to the tune of five 528 00:26:38,119 --> 00:26:43,119 Speaker 1: billion dollars each. Ultimately thirty billion, thirty billion dollars of 529 00:26:43,200 --> 00:26:45,719 Speaker 1: deposits could go to this bank, which has been struggling 530 00:26:46,240 --> 00:26:49,160 Speaker 1: for about a week now, since we saw the initial 531 00:26:49,160 --> 00:26:51,400 Speaker 1: bank failures of last week. Remember we got the news 532 00:26:51,440 --> 00:26:53,840 Speaker 1: here at Bloomberg yesterday that they were considering maybe having 533 00:26:53,840 --> 00:26:56,080 Speaker 1: to sell themselves in order to get out of the 534 00:26:56,080 --> 00:26:59,000 Speaker 1: situation there. And now big banks are coming in orchestrated 535 00:26:59,000 --> 00:27:01,399 Speaker 1: by the US government. Mind you possibly to say that 536 00:27:01,480 --> 00:27:04,520 Speaker 1: who's pull on those strings? Is it the FED, the FDIC, everybody? 537 00:27:04,600 --> 00:27:07,080 Speaker 1: I mean, how we when you say the government, that 538 00:27:07,080 --> 00:27:09,520 Speaker 1: could be a lot of entities. Right, this is a 539 00:27:09,560 --> 00:27:13,400 Speaker 1: whole of government, whole of administration. Maybe we should say approach. Yeah, Well, 540 00:27:13,400 --> 00:27:16,040 Speaker 1: like we saw with the actions from last weekend as well, Right, 541 00:27:16,119 --> 00:27:19,520 Speaker 1: it was the Treasury in conjunction with the FDIC, in 542 00:27:19,560 --> 00:27:21,600 Speaker 1: conjunction with the Federal Reserve. There are a lot of 543 00:27:21,640 --> 00:27:24,880 Speaker 1: different supervisors and regulatory authorities that have to sign off 544 00:27:24,880 --> 00:27:27,639 Speaker 1: on these things. Ultimately, it's quite a process. And of 545 00:27:27,640 --> 00:27:31,360 Speaker 1: course we heard Treasury Secretary Jenny Ellens shining some light 546 00:27:31,400 --> 00:27:34,159 Speaker 1: on that in her testimony in the Senate today. But 547 00:27:34,200 --> 00:27:35,960 Speaker 1: there are a lot of different banks and a lot 548 00:27:36,000 --> 00:27:38,679 Speaker 1: of different government agencies and regulators that have to be 549 00:27:38,720 --> 00:27:41,840 Speaker 1: involved in this because this involves potentially repel effects across 550 00:27:41,840 --> 00:27:44,199 Speaker 1: the entire financial system, so that are taking it very seriously. 551 00:27:44,240 --> 00:27:46,719 Speaker 1: We spoke earlier with congress from Patrick McHenry, the Republican 552 00:27:46,720 --> 00:27:49,600 Speaker 1: from North Carolina, is chair of the House Financial Services Committee, 553 00:27:50,119 --> 00:27:52,199 Speaker 1: my colleague and co anchor on Balance of Power and 554 00:27:52,320 --> 00:27:55,160 Speaker 1: Marie Hordern join me for a little back and forth 555 00:27:55,280 --> 00:27:57,720 Speaker 1: year with this is one of the real players tasked 556 00:27:58,119 --> 00:28:01,399 Speaker 1: with figuring this out and figuring out the budget based 557 00:28:01,400 --> 00:28:05,520 Speaker 1: on his position here on House Financial Services and started 558 00:28:05,520 --> 00:28:09,440 Speaker 1: by asking him about the failure of SVB and what 559 00:28:09,960 --> 00:28:13,879 Speaker 1: the actual cause was interesting since we don't really know. 560 00:28:14,040 --> 00:28:18,720 Speaker 1: He reflects that, listen, everybody's preaching their book and so 561 00:28:20,000 --> 00:28:23,520 Speaker 1: but that's not my responsibility. My responsibilities to get to 562 00:28:23,560 --> 00:28:27,600 Speaker 1: the bottom of what happened and why, and that's my 563 00:28:27,600 --> 00:28:30,679 Speaker 1: obligation as a committee chair and to look into this 564 00:28:30,720 --> 00:28:35,080 Speaker 1: matter and understand what we know at this point is 565 00:28:35,080 --> 00:28:37,480 Speaker 1: you have a couple of theories of the case. One 566 00:28:37,920 --> 00:28:44,120 Speaker 1: mismanagement obviously the firm failed. Two supervision right, whether or 567 00:28:44,160 --> 00:28:47,520 Speaker 1: not those that were tasked with overseeing the bank and 568 00:28:47,600 --> 00:28:53,440 Speaker 1: the regulatory sphere did the right thing. Third regulation, fourth law, 569 00:28:53,840 --> 00:28:57,120 Speaker 1: and then fifth is this macro question about the economy, 570 00:28:57,480 --> 00:29:02,440 Speaker 1: the fiscal house that inflamed inflation, and then the FED 571 00:29:02,520 --> 00:29:04,960 Speaker 1: response to it in the rapid rising rate. So you 572 00:29:05,000 --> 00:29:08,120 Speaker 1: have five buckets of theories at this point, and everyone 573 00:29:08,160 --> 00:29:11,440 Speaker 1: has jumped to their natural conclusion. To give the answer here, 574 00:29:11,920 --> 00:29:15,040 Speaker 1: we have to first figure out why this happened and 575 00:29:15,400 --> 00:29:21,560 Speaker 1: determine in a really quantitative and qualitative way what happened. 576 00:29:21,760 --> 00:29:23,600 Speaker 1: So you can't tell us now if the bill passed 577 00:29:23,600 --> 00:29:27,280 Speaker 1: in twenty eighteen in fact was partly to blame, or 578 00:29:27,320 --> 00:29:29,240 Speaker 1: maybe a better way to say is the original Dodd 579 00:29:29,280 --> 00:29:31,920 Speaker 1: Frank would not have prevented this from happening. Well, the 580 00:29:32,000 --> 00:29:36,480 Speaker 1: original Dodd Frank and then the updates twenty one fifty five, 581 00:29:36,520 --> 00:29:41,760 Speaker 1: the bipartisan bill that passed in twenty eighteen. The theory 582 00:29:41,960 --> 00:29:46,600 Speaker 1: is among some is that that changed in such a 583 00:29:46,760 --> 00:29:50,120 Speaker 1: substantial way Dodd Frank that they could have seen it 584 00:29:50,200 --> 00:29:52,440 Speaker 1: under the original law, but didn't see it because the 585 00:29:52,480 --> 00:29:56,240 Speaker 1: regulatory change. The first studies of this and the indication 586 00:29:56,320 --> 00:29:58,920 Speaker 1: from bank analysts is that that's not the case. The 587 00:29:59,040 --> 00:30:03,360 Speaker 1: liquidity cover y show this bank would have passed if 588 00:30:03,400 --> 00:30:07,640 Speaker 1: it had been applied to them, and so the key 589 00:30:07,680 --> 00:30:13,040 Speaker 1: provisions that change would not have affected the supervision of 590 00:30:13,040 --> 00:30:17,240 Speaker 1: this bank nor their performance in this moment of stress, 591 00:30:17,280 --> 00:30:19,800 Speaker 1: and this bank run. So, but that's the initial review 592 00:30:19,880 --> 00:30:22,160 Speaker 1: of it. We want to understand that that's in fact 593 00:30:22,200 --> 00:30:24,200 Speaker 1: true in the case when you look at the supervision, 594 00:30:24,360 --> 00:30:27,200 Speaker 1: does this fall into the purview of the FED in 595 00:30:27,280 --> 00:30:31,280 Speaker 1: Washington or is this the supervisors in San Francisco who 596 00:30:31,480 --> 00:30:35,680 Speaker 1: was potentially asleep at the wheel. To get to the 597 00:30:35,680 --> 00:30:38,840 Speaker 1: bottom of that as well. The way the FED is 598 00:30:38,960 --> 00:30:41,680 Speaker 1: organized those through regional banks, and the regional banks have 599 00:30:41,760 --> 00:30:46,560 Speaker 1: their regional bank supervision and examination process. We want to 600 00:30:46,600 --> 00:30:49,520 Speaker 1: understand what happened in the San Francisco field office and 601 00:30:49,640 --> 00:30:51,680 Speaker 1: those that were in the bank, So I have to 602 00:30:51,680 --> 00:30:53,920 Speaker 1: get to the bottom of that as well. Is this 603 00:30:54,000 --> 00:30:57,160 Speaker 1: a Washington FED problem? Is that San Francisco FED problem? 604 00:30:57,440 --> 00:31:00,600 Speaker 1: Is that a failure of a regulator or not? And 605 00:31:00,640 --> 00:31:02,280 Speaker 1: at this stage of the game, when you want to 606 00:31:02,320 --> 00:31:05,280 Speaker 1: cast blame, it is natural. The first order of business 607 00:31:05,280 --> 00:31:07,800 Speaker 1: in any business failure is to blame the management because 608 00:31:07,840 --> 00:31:10,920 Speaker 1: obviously the business failed. The second is those that oversee 609 00:31:10,960 --> 00:31:15,080 Speaker 1: the bank. But when people jump to these conclusions at 610 00:31:15,080 --> 00:31:19,080 Speaker 1: this stage of the game, a week end on this 611 00:31:19,520 --> 00:31:24,200 Speaker 1: really stressed moment for our banking system, I think it's 612 00:31:24,520 --> 00:31:29,200 Speaker 1: unhelpful and quite politically hackish to jump to this political 613 00:31:29,280 --> 00:31:31,520 Speaker 1: conclusion when we don't actually have the full set of 614 00:31:31,520 --> 00:31:34,480 Speaker 1: facts yet. But should the FED be investigating themselves? This 615 00:31:34,600 --> 00:31:37,520 Speaker 1: is almost the third scandal under the FED. There's a trading, 616 00:31:37,640 --> 00:31:40,080 Speaker 1: there's a Kansas City the rare master's account for the 617 00:31:40,680 --> 00:31:44,400 Speaker 1: fintech firm, and now there's this, and the Vice Chair Supervision, 618 00:31:44,480 --> 00:31:47,960 Speaker 1: Michael Barr, will be investigating his own FED. Why not 619 00:31:48,040 --> 00:31:51,280 Speaker 1: have an outside probe? Well, Congress will look into this 620 00:31:51,720 --> 00:31:55,000 Speaker 1: as we should. We created the Federal Reserve. We created 621 00:31:55,040 --> 00:31:57,440 Speaker 1: to be in favor of that. Like what Elizabeth Warren says, 622 00:31:57,560 --> 00:32:01,760 Speaker 1: like an outside investigator. Everyone in Washington wants to look 623 00:32:01,800 --> 00:32:05,480 Speaker 1: around for an unbiased source of information, right, good luck. 624 00:32:05,640 --> 00:32:10,080 Speaker 1: Everybody has a perspective. We will certainly investigate this on 625 00:32:10,160 --> 00:32:13,080 Speaker 1: Capitol Hill and my committee will look into this. We 626 00:32:13,160 --> 00:32:17,040 Speaker 1: have regional we have regional FED challenges that we've seen 627 00:32:17,440 --> 00:32:20,200 Speaker 1: and you've marked three. This is a third example of it. 628 00:32:20,400 --> 00:32:22,400 Speaker 1: We need to get to the bottom of how regional 629 00:32:22,440 --> 00:32:26,200 Speaker 1: feds are operating, whether or not we have to update 630 00:32:26,240 --> 00:32:31,680 Speaker 1: the laws and constraints around those regional fill reserve boards 631 00:32:31,800 --> 00:32:35,320 Speaker 1: and in their leadership. Mister Chairman, should Congress pass a 632 00:32:35,440 --> 00:32:39,960 Speaker 1: law that guarantees that ensures all deposits because we seem 633 00:32:39,960 --> 00:32:41,800 Speaker 1: to be in this de facto world where that is 634 00:32:41,840 --> 00:32:44,400 Speaker 1: the case. Well, there's a lot of debate about that. Now, 635 00:32:44,440 --> 00:32:46,600 Speaker 1: what I want to understand or the knock on effects 636 00:32:46,640 --> 00:32:48,400 Speaker 1: if you do that? What does that do to the 637 00:32:48,440 --> 00:32:51,680 Speaker 1: banking system long term? How does it change the allocation 638 00:32:51,720 --> 00:32:55,120 Speaker 1: of capital. We have a vibrant economy in many respects 639 00:32:55,160 --> 00:32:57,640 Speaker 1: because we have a diversity of lending options in the 640 00:32:57,720 --> 00:33:01,000 Speaker 1: United States. I want to keep those diversity of lending 641 00:33:01,040 --> 00:33:05,200 Speaker 1: operations of options. I also want to keep the ability 642 00:33:05,240 --> 00:33:08,880 Speaker 1: to fail in America because in a capitalist system, the 643 00:33:08,920 --> 00:33:11,800 Speaker 1: inability to fail means that you don't actually prove out 644 00:33:11,840 --> 00:33:15,240 Speaker 1: what is a bad idea bad structure, bad performance. We 645 00:33:15,320 --> 00:33:19,680 Speaker 1: have to ensure that you can fail without systemic consequences. 646 00:33:20,040 --> 00:33:22,480 Speaker 1: So we have to make sure we understand the effects 647 00:33:22,520 --> 00:33:27,920 Speaker 1: if we make depositing turns permanent for every deposit, or 648 00:33:27,960 --> 00:33:29,840 Speaker 1: if there are other structures in place where we can 649 00:33:29,920 --> 00:33:35,120 Speaker 1: actually have a better understanding and better liquidity provision for 650 00:33:35,200 --> 00:33:38,200 Speaker 1: institutions following the rate hike we saw today from the ECB. 651 00:33:38,800 --> 00:33:40,920 Speaker 1: Are you worried about what happens at the FED meeting 652 00:33:40,960 --> 00:33:45,760 Speaker 1: next week? What should the FOEMC do right now? Well, 653 00:33:47,000 --> 00:33:49,880 Speaker 1: I'm a member of Congress, I'm not a member of understood, 654 00:33:50,880 --> 00:33:52,720 Speaker 1: I'm not a FED. Got folks are pointing to this 655 00:33:52,920 --> 00:33:55,239 Speaker 1: rapid increase in rates though, as being part is one 656 00:33:55,240 --> 00:33:57,240 Speaker 1: of the factors and one of the factors that we 657 00:33:57,280 --> 00:34:01,120 Speaker 1: have to look into to understand are the the the 658 00:34:01,600 --> 00:34:05,360 Speaker 1: core causes of inflation. Then the FED response to this. 659 00:34:05,960 --> 00:34:09,279 Speaker 1: We've had long term monetary policy that was at this 660 00:34:09,320 --> 00:34:11,480 Speaker 1: point we know it is too low for too long. 661 00:34:12,200 --> 00:34:17,520 Speaker 1: That is now axiomatic. But the rapid rate increases are 662 00:34:17,560 --> 00:34:21,799 Speaker 1: as a direct result of inflationary pressures, and so the 663 00:34:21,840 --> 00:34:27,160 Speaker 1: FED has enormous, enormous stress and attention placed on them 664 00:34:27,480 --> 00:34:30,800 Speaker 1: in a moment like this. But I know and I 665 00:34:30,840 --> 00:34:35,800 Speaker 1: have confidence and their ability to make strong and right decisions, 666 00:34:35,840 --> 00:34:38,560 Speaker 1: and I think that that should give the American people 667 00:34:38,560 --> 00:34:40,800 Speaker 1: confidence as well. So you think there should be a 668 00:34:40,920 --> 00:34:43,680 Speaker 1: rate rise or not. I believe they have the tools 669 00:34:43,719 --> 00:34:47,279 Speaker 1: necessary to make these determinations. And you think inflation is 670 00:34:47,280 --> 00:34:51,839 Speaker 1: still too high. Inflation is obviously too high. My constituents 671 00:34:51,880 --> 00:34:54,680 Speaker 1: tell me about this is the most common topic that 672 00:34:54,760 --> 00:34:57,520 Speaker 1: my constituents talk about, and this is the most pressing 673 00:34:57,719 --> 00:35:02,080 Speaker 1: economic issue for families. When you have have interest rates rising, 674 00:35:02,120 --> 00:35:06,280 Speaker 1: people talk about that is a problem. The underlying problem 675 00:35:06,480 --> 00:35:09,160 Speaker 1: is price instability and when you go to the grocery store, 676 00:35:09,239 --> 00:35:12,239 Speaker 1: the cost of things going up dramatically and outstripping your 677 00:35:12,239 --> 00:35:14,640 Speaker 1: ability to pay for it. That's what the average family 678 00:35:14,760 --> 00:35:18,440 Speaker 1: is experiencing and the challenges they're they're facing, and price 679 00:35:18,520 --> 00:35:24,880 Speaker 1: instability is a very powerful negative economic problem that we 680 00:35:24,920 --> 00:35:30,160 Speaker 1: have to address. Systemic risk is obviously a hot second, 681 00:35:30,560 --> 00:35:34,680 Speaker 1: and especially right now, is most in frame. But for 682 00:35:34,719 --> 00:35:37,799 Speaker 1: the average family, they weren't banking with Silicon Valley Bank, 683 00:35:38,320 --> 00:35:40,240 Speaker 1: they don't have deposits there were two hundred and fifty 684 00:35:40,239 --> 00:35:44,520 Speaker 1: thousand dollars, but they do shop, they do buy things, 685 00:35:44,520 --> 00:35:47,319 Speaker 1: and the cost of what they are experiencing a life 686 00:35:47,360 --> 00:35:49,720 Speaker 1: is going up way too. So I'm getting the sense 687 00:35:49,760 --> 00:35:51,719 Speaker 1: from you because you think inflations to how you do 688 00:35:51,800 --> 00:35:53,719 Speaker 1: think the fetch should hike next week. But you don't 689 00:35:53,760 --> 00:35:56,879 Speaker 1: have to outright say it. I want to. I want 690 00:35:56,880 --> 00:36:00,000 Speaker 1: to ask you about the debt ceiling. President Biden has 691 00:36:00,040 --> 00:36:02,160 Speaker 1: proposal with a budget. We don't have the Republican budget 692 00:36:02,239 --> 00:36:05,120 Speaker 1: just yet, but we are getting closer to the x state. 693 00:36:05,160 --> 00:36:09,360 Speaker 1: You know this. Where's the response and where are the 694 00:36:09,400 --> 00:36:14,440 Speaker 1: negotiations right now? Well, the negotiations started with the President 695 00:36:14,440 --> 00:36:16,000 Speaker 1: meeting with the Speaker of the House for the first 696 00:36:16,000 --> 00:36:18,719 Speaker 1: time a month and a half ago. There have been 697 00:36:18,760 --> 00:36:24,160 Speaker 1: no additional meetings scheduled, no additional talks. The President released 698 00:36:24,200 --> 00:36:30,760 Speaker 1: his budget last Thursday. Events have overtaken obviously and since 699 00:36:30,840 --> 00:36:33,560 Speaker 1: then and the focus has been a little different here 700 00:36:33,560 --> 00:36:37,720 Speaker 1: in Washington. But we have to engage in serious negotiations 701 00:36:37,760 --> 00:36:41,520 Speaker 1: between House Republicans and the White House. That's how it 702 00:36:41,560 --> 00:36:44,480 Speaker 1: has to happen. I think we should get through this 703 00:36:44,520 --> 00:36:48,200 Speaker 1: without drama. In light of the economic situation, in light 704 00:36:48,360 --> 00:36:53,480 Speaker 1: of the constraints in our financial system, we have to 705 00:36:53,480 --> 00:36:55,640 Speaker 1: get through this with as little drama as possible, and 706 00:36:55,680 --> 00:36:58,600 Speaker 1: that's my motivation. We also have to address the physical 707 00:36:58,640 --> 00:37:03,279 Speaker 1: house spinning is up dramatically from pre COVID, and we 708 00:37:03,360 --> 00:37:05,880 Speaker 1: have conservatives that run the House representatives. We want to 709 00:37:05,920 --> 00:37:10,120 Speaker 1: address that fiscal question, and I think we should, but 710 00:37:10,200 --> 00:37:12,440 Speaker 1: we also have to ensure the balance between what we 711 00:37:12,440 --> 00:37:15,000 Speaker 1: can pass and the House with what the White House 712 00:37:15,080 --> 00:37:18,080 Speaker 1: is willing to accept as well. It's a tricky negotiation, 713 00:37:18,320 --> 00:37:21,320 Speaker 1: and frankly, until the present release it's budget last Thursday, 714 00:37:21,520 --> 00:37:23,440 Speaker 1: they were not serious talks. My hope as we get 715 00:37:23,480 --> 00:37:25,680 Speaker 1: into those serious talks, can I ask you, mister Chairman, 716 00:37:25,719 --> 00:37:28,279 Speaker 1: about safe banking. We're talking about banks here. This is 717 00:37:28,280 --> 00:37:31,360 Speaker 1: another issue. A bill that's passed I think fifteen times 718 00:37:31,400 --> 00:37:34,840 Speaker 1: in the House that would give cannabis companies, many of 719 00:37:34,880 --> 00:37:38,480 Speaker 1: which we cover here on the Bloomberg Terminal, access to banking, 720 00:37:38,840 --> 00:37:43,440 Speaker 1: access to stock exchanges potentially as well. Should Congress allow 721 00:37:43,440 --> 00:37:46,359 Speaker 1: that to happen or is the Republican majority opposed to it? Well, 722 00:37:46,400 --> 00:37:49,799 Speaker 1: I'm opposed to it, but half my Republicans on my 723 00:37:49,800 --> 00:37:54,160 Speaker 1: committee voted for the bill. Yeah, because they recognize a 724 00:37:54,200 --> 00:37:56,160 Speaker 1: problem in their state and they're trying to fix it. 725 00:37:57,160 --> 00:38:00,160 Speaker 1: What I firmly believe is it's not the financial system 726 00:38:00,160 --> 00:38:04,840 Speaker 1: that needs to fix this question about the legality of marijuana. 727 00:38:05,360 --> 00:38:09,480 Speaker 1: It is the overall power of the government. What I've seen, 728 00:38:10,000 --> 00:38:13,439 Speaker 1: especially in the last couple of years is a real 729 00:38:13,719 --> 00:38:17,600 Speaker 1: focus and push for the financial system to cure societal ills. 730 00:38:18,080 --> 00:38:21,240 Speaker 1: We should cure societal ills and make sure the banking 731 00:38:21,280 --> 00:38:24,440 Speaker 1: system of the financial system remains neutral. So if you 732 00:38:24,440 --> 00:38:27,200 Speaker 1: want to address marijuana and the legality of marijuana at 733 00:38:27,200 --> 00:38:31,080 Speaker 1: the federal level, let's address that. Let's actually have studies 734 00:38:31,080 --> 00:38:35,560 Speaker 1: about the impact of marijuan and society, but address it 735 00:38:35,560 --> 00:38:39,600 Speaker 1: in a serious way. Congressman Patrick McHenry, the Republican from 736 00:38:39,640 --> 00:38:42,600 Speaker 1: North Carolina with us here on Bloomberg. You can watch 737 00:38:42,600 --> 00:38:44,320 Speaker 1: the full interview with the Chairman of the House Financial 738 00:38:44,320 --> 00:38:47,280 Speaker 1: Services Committee coming up on Balance of Power on Bloomberg 739 00:38:47,400 --> 00:38:52,000 Speaker 1: TV five pm Washington Time. I'm Joe Matthew in Washington 740 00:38:52,080 --> 00:38:54,879 Speaker 1: with Kaylee Lines. A little bit of a clinic there 741 00:38:55,040 --> 00:38:59,440 Speaker 1: on at least his mindset and the mindset of center 742 00:38:59,480 --> 00:39:04,879 Speaker 1: Republicans right now. While yeah, lawmakers from both wings kind 743 00:39:04,880 --> 00:39:07,440 Speaker 1: of take aim at each other and play the blame game. Yeah, Well, 744 00:39:07,440 --> 00:39:10,400 Speaker 1: we've seen the failure of Silicon Valley Bank and Signature 745 00:39:10,400 --> 00:39:13,439 Speaker 1: Bank become a partisan issue, and depending on what side 746 00:39:13,480 --> 00:39:16,480 Speaker 1: of the aisle you are on, it frames your view 747 00:39:16,520 --> 00:39:19,800 Speaker 1: on regulation and whether or not what was to blame 748 00:39:19,920 --> 00:39:24,080 Speaker 1: was a lack of regulation or just inadequate enforcement of regulation. 749 00:39:24,160 --> 00:39:27,360 Speaker 1: And this is something that has continually come up in 750 00:39:27,880 --> 00:39:30,239 Speaker 1: over the last several days. I would imagine Joe that 751 00:39:30,239 --> 00:39:32,640 Speaker 1: there are going to be more hearings and inquiries into this, 752 00:39:32,680 --> 00:39:34,600 Speaker 1: and we're going to be talking about this for a 753 00:39:34,680 --> 00:39:36,640 Speaker 1: long time, for months. That's the way we do it 754 00:39:36,680 --> 00:39:39,000 Speaker 1: in Washington. Thanks for listening to the Sound On podcast. 755 00:39:39,120 --> 00:39:41,680 Speaker 1: Make sure to subscribe if you haven't already, at Apples, 756 00:39:41,680 --> 00:39:44,560 Speaker 1: Spotify or else. You get the fund guys, and you 757 00:39:44,600 --> 00:39:47,560 Speaker 1: can find us live every weekday from Washington, DC at 758 00:39:47,600 --> 00:39:50,120 Speaker 1: one at Easter to time, Bloberg got fa