>> i'm john hyland with the first word news. police say the former student who shot through the doors of a national christian school and drawn -- and killed three children and three adults -- audrey hale reportedly conducted surveillance before carrying out the massacre. the victims included 39 you -- nine-year-old children, the school administrator. at least 39 migrants have died at a fire at an immigration center in el paso, texas. the city is a major crossing point for those wanting to enter the u.s. in israel, another night with

allison's of protesters on the streets. benjamin netanyahu said he would delay a controversial plan to weaken the judiciary system. he said he's ready to talk with opponents over how much power the high court can have over the legislature. in france, unions are urging the president to hit the brakes on his unpopular pension reform. unions insist opposition remains strong even as turnout dropped. the strikes are an effort to force him to raise the minimum retirement raise -- age from 64 to 62. i'm john hyland. this is bloomberg. >> here's where we sit when it

comes to the overall indices. a lot of news flow today. looking at the s&p off by .3%. but the good performers in the s&p are the energy stocks. occidental is the third best performing stock in the s&p. it got an upgrade. first republic is the weakest stock on the s&p, down almost 7%. so much for that regional banks debility we saw. the two year yield up another five basis points. we have had some chunky moves here. we need to rate the front end of that curve as we look forward to the pce data friday. let's get to the banking story. when it comes to the banks, the focus was on the u.s. senate banking committee questioning regulators out the failures of svb and signature bank. here are some of the many highlights. >> this is a textbook case of bank mismanagement.

>> we were seeing serious stress at other institutions. >> we used important tools to prevent contagion. >> we will continue to monitor conditions in the banking system. prepared to use all of our tools -- >> to ensure americans deposits are safe. >> depositors will continue to have access to their savings. >> regional banks in the united states remain a source of strength for the system. alix: for more on the hearing, we want to bring in megan scully from d.c. that is what the witnesses were talking about. it was pre-feisty when it came to some of the senators. as we go forward, what are we going to be looking at when it comes to the banking sector now? megan: what you saw today was federal officials coming out and laying out the biggest rules overhaul in years for the banking industry. they addressed some of the

things democrats and republicans have talked about on capitol hill. tools was the word of the day. you had officials talking about everything from improving stress tests to enhancing liquidity rules and the big thing, particular for those on capitol hill is taking a look at the fbi see cap that has been in play for republicans and democrats. they have been watching closely to see what the fbi see and administration was planning to do on that. alix: to that point, it is becoming where is the risk in the financial system. on systemically important banks, we know there is a risk. but size is not a proxy of risk and it looks like we are going to be looking at tighter rules for banks. is that a correct assessment? megan: i think across the board,

we are going to be seeing tighter rules. there was a lot of talk about mismanagement at the banks and that has been where the blame has landed during the hearing, particularly from the u.s. officials. they want to ensure this doesn't happen again. alix: 100%. a lot of talk about how taxpayers won't be paying for it. it was difficult to offload svb. megan scully joining us. we want to bring in a professor at duke university and former chief innovation officer at the fbi see. chief innovation officer at -- you are kind of the right person to talk to. what would be the ftse when it comes to fixing the current banking problem? >> the fbi see has three fund -- the fbi see has three challenges.

the workforce is older, it has been in place for a lot longer. they don't have a lot of digitally native staff. the second is the processes by which they run the organization, very human, manual processes like emailing pdfs. they don't have modern technologies we use in the private sector and other parts of the public sector to look for real-time analytics, especially on the predictive side. using data modeling technologies i use with my grad students to run them through classwork. you have a series of challenges that all show a static organization. alix: if we were to fix something like that, do members have to pay more into the fdic? it seems like a big hill to climb. sultan: the fdic is not funded by the government or taxpayers directly.

the fdic spent hundreds of billions of dollars. it's a reallocation of existing resources that would make more sense. fund for the future, don't fund for the past. alix: in terms of things like deposit insurance, in terms of lowering the ceiling for regulation for banks to $100 billion or guaranteeing deposit insurance, is this something the fdic should do? sultan: it's really not up to the fdic to make that determination. these structures are put into place by congress. if congress wants to increase the base deposit insurance from 200 $50,000 or change the structure from where real-time examination would kick in and you have 50 billion or whatever number they are throwing around, those are congressional options. it's a matter of getting congress to come together on something. alix: let's pretend that they

did. would the fdic be a body that can actually execute something like that? sultan: i think it would be a challenge. most federal regulators operate to a degree as if they did 15, 20, 30, 50 years ago in some cases. a significant digital transformation program would have to occur. alix: that seems like a big hill to climb. tomorrow, we get the house -- no doubt many of the questions will be the same. if you are talking to the chairman of the fdic and the under secretary of treasury, what would be your number one question? sultan: given that you had all the data and saw these processes happening and saw the imbalance in the bond side of the book, why weren't more people from your organization on the ground earlier actually trying to get in front of some of these issues

and stop them from happening instead of being in the cleanup process? again. alix: it's a great question. the fed had the warnings. they started warning the bank in 2019. one of my takeaways was it's up to management. is there an enforcement mechanism missing? sultan: no. the fact is the authorities are well-established. for some banks it's clear. if i was an examiner, seeing what's happening at silicon valley bank, i would say given all of this, i know a run on your bank would have significant balance sheet impact. so you, chairman of the bank, need to call me uc greater than 1% of your deposits leave in one day. that is something i'm sure the chairman new and just did not say. it's also something the examiner could have required them to do. putting the blame simply on management is a lopsided view of where the issues actually were. alix: a lopsided view is putting the blame on policies, political

agenda, social policies, etc. that management might have been too distracted to effectively look at their interest rate ricks and deposit flight risk. is there any credence to that in your view? sultan: you cannot blame one side without blaming the other here. i won't get into the nuance of what some people are saying but if you are on the board of the bank, you have a fundamental governing responsibility and accountability to the banking regulators and the taxpayers of the united states just like if you take in oath of office at a federal regulatory body, you have an oath to the american citizenry. those things are highly compatible and i would be cautious to blame one group without looking hard at the other. alix: i feel like that is going to be a hard task for congress to pull off at the end of the day. it was great to get your perspective. you have to blame all sides to get something done. the professor at duke university and former chief innovation officer at the fdic.

shares of lyft have turned into the red. the newly appointed ceo discusses whether the company is or is not for sale. this is bloomberg. ♪

alix: this is bloomberg markets. i'm joined by amber kanwar. i'm glad we got you. we had some technical issues. amber: we are going to focus on lyft right now. it has been a volatile session, initially the stock rallying on the ceo change but it is under pressure. part of that came during an interview by our very own ed ludlow. ed asked the incoming ceo about

whether the company is for sale. here's what he had to say. >> not for sale? you see why people think you coming in might open the door to that? or doesn't not make sense to you? >> people can make these sorts of arguments but my argument is i'm focused. by making sure for our customers that our drivers are doing a great job. amber: let's bring in jackie dallas to talk about this. it seems like more and more the ceo is speaking, it is a company that wants to be focused on its basics, not go out into the wild to compete uber. >> that's right. and investors did not like the sound of that. we've seen lyft shares come under pressure, whether it was after earnings or off the news

it was falling behind uber, lowering fares in an attempt to stay competitive. they were looking for some kind of assurance the turnaround was coming and the hope was that an acquisition would inject some kind of uncertainty. the comments this morning really took that away. but so much still hangs in the balance and they game plan he outlined is to stay competitive on the price front, that eliminates any other options investors were hoping for, whether it is the acquisition. he ruled out in the short term going international, said there is no plans for expanding into food delivery, so at this point, i think a lot hangs in the balance. alix: at one point -- i'm rounding up -- how do they get that up? are they going to have to sell? jackie: one of the biggest

inflection points it had was in 2021. both companies, uber and lyft got battered during the pandemic. lyft didn't have that food delivery business to rely on. once you saw the driver shortage start to erode profits, companies started to go in different directions. it came to the prices they were able to offer customers. if you look at the history of those price increases or decreases, uber has been decreasing more. when it comes to the share price, investors don't like the sound of prices being eroded by further price reductions. but they also don't know where else there is left to pick from. lyft has already cut a significant amount of jobs. it says it is going for additional cost-cutting measures. at this point, there's not much left to pick off.

alix: it seems like that is what investors are reacting to. when we come back, we will talk to the global chief economist at the pro institute about what the banking crisis means for the feds path forward. this is bloomberg. ♪

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alix: this is bloomberg markets. today's senate hearing so i push for regulatory policies in the wake of recent banking turmoil. james bullard echoed that sentiment saying continued appropriate macro quality can contain financial stress and the current environment while appropriate monetary policy can continue to put downward pressure on inflation. joining us now is making green. can the fed walk and chew gum at the same time?

megan: i think for now they can. the fed and every other central bank would like to think they have tools for price stability and other tools for financial's debility. the priced ability tools include rate moves, so the fed hopes they can continue to hike rate while supporting the financial system through financial stability which includes supervision. that thing is the to get blurred at a certain point because financial ability ways on macro stability. i don't think we are quite there yet. there's no doubt the recent bank instability we have seen will weigh on growth but it's too hard to figure out this early on how big the impact will be. how much credit will slow and how much confidence will be hit by what we have seen over the past couple of weeks. i suspect the confidence channel might be temporary but we know credit will slow and that should

on the margin be a drag on growth. i just don't think it will be a massive one. amber: -- alix: expectation was really strong, that encapsulates the tail end of the banking crisis over the last couple of weeks. megan: i would not read too much into one figure but it was strong for march after pretty weak figures for january and february. it suggests consumers did not go hide under a blanket in the face of this bank instability. there was not that knee-jerk reaction. and we don't know how long this bank instability will last or how long it will spread. we are just at the beginning of this and it will be a process that's going to play out over months, not days or weeks. consumer confidence might continue to be hit, but it seems to be holding up pretty well. amber: when you talk about we don't know, i think a lot of people went to the bond market

for those signals. they are supposed to be the smartest people in the room and we are not getting clear signals from the bond market. if you look at fed pricing, it's all over the place. have you ever seen such confusion about what the path forward might look like? megan: i have not seen so much confusion in terms of market pricing for the fed path but i haven't seen such contradictory data coming out of the economy either. there's data to tell whatever story you want to tell in terms of the u.s. economy. monetary policy is not feeding through as we expect it to. it's working through financial channels just fine. it's working through the banking sector but not through the real economy and the labor market as we are use to it. the labor market has held up freakishly well given the aggressive rate hikes we have seen. part of that might be because of the pandemic, part of it might be labor hoarding that we are not used to.

we don't know how to measure any of those things, so it is difficult to anticipate how the economy will respond and how the fed is going to move. i think the fed is going to continue to use rate moves to lean against inflation even if we have further bank instability and it's going to use regulation and supervision to support financial services. alix: investors seem to be on high alert as what does that mean and when is the fed going to break. if they -- i've seen a lot of people get increasingly concerned about areas like commercial real estate and that's where we are going to see more cracked start to emerge. have you thought about that as an area to keep a key focus on? megan: i do think there are some concerns about commercial real estate, particularly given the work from home trend. although that's mostly hitting big cities like new york and san

francisco. most commercial real estate loans could be originated from the bigger banks in those two cities in particular. most commercial real estate loans are coming from smaller lenders. where it will be hit hardest is bigger banks are playing a bigger role. that suggests we don't need to worry quite as much about commercial real estate smr arguing, but it is a concern if we assume there's going to be more regulation for smaller banks. what we know from the global financial crisis is banks wanted to show how responsible they were, so anticipating regulation coming down the pike, they implemented it upfront. smaller banks are going to do that this time around as well, so that will slow credit growth and cause banks to shrink their balance sheets even before we get regulatory changes. we will see an impact on how smaller banks are operating. alix: a hard landing or soft

landing is more or less likely? megan: i've been arguing we will go into recession before this financial instability and now i feel more strongly about it. i think there is a chance it will be a short and shallow recession but if we get a financial crisis on top of it, that the central bank cannot paper over. that could happen if asset classes the fed is not willing to buy get in trouble and i would say corporate credit is a concern. about one third of our corporate credit is triple b rated. if that gets downgraded into junk, the fed can't step in to buy that. there are some asset classes were the fed cannot step into paper over it like it was able to with the financial instability we have seen in recent weeks. the bank of england last autumn is a good example. central banks cannot do that for all asset classes. as regulation increases, more activity is going to move out of

banking into shadow banking. there could be surprises lurking for us there. alix: that does it for amber kanwar and myself come alix steel. this is bloomberg. ♪ so... i know you and george were struggling with the possibility of having to move. how's that going? we found a way to make bathing safer

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>> this is bloomberg markets, the close. what started out as a mixed trading day has moved decidedly lower. treasuries falling in a much less dramatic fashion then yesterday. katie: this is so interesting. look at the 10 year treasury and its lower by less than a basis point. for months, it is the equity market that is little active. scarlet: this comes as the action moves from trading floors to cal