>> the nasdaq 100 further into bloomberg territory. vonnie: this is bloomberg markets. ♪ vonnie: let's take a quick look at the markets. we have a modest rally with the s&p 500 up a quarter of 1% but the nasdaq is up most 22% from its december 28 lows so it's firmly into bull market territory. jd.com is up almost 9% after

going to ipo and splitting. other things going on this market -- the two year yield is off its highs but still at 409. a massive repricing and treasuries. fx is a little weight on the dollar index. the kbw banking index is up but the rest are all lower. we will keep an eye on the regional banks. we earlier spoke with vince reinhardt on whether it was appropriate for the federal reserve to err on the side of over tightening were under tightening. >> i wouldn't characterizing it work -- as under or over. i think it's appropriate now, they move gradually and be willing to stop if some of that

incremental evidence suggests the economy is turning. that's what they seem to be willing to do. vonnie: we are hearing from boston fed president susan collins who is giving a speech at the national association for business in washington. michael mckee is at the event and joins us now. what are the headlines from susan collins? michael: susan collins and tom barkan from richmond are speaking at the same hour and they've both are delivering the same message as vince reinhardt suggested that they are going to do more but they are going to be cautious in seeing what happens to the economy. here at the conference, there is a lot of talk among become us about some signs the economy is slowing down. in susan collins'remarks so she currently anticipates modest additional policy tightening and holding it through the end of the year. that is what the fed's been saying all along.

they noted last week that they anticipated the fed funds rate going up at least once more by another 25 basis points. the richmond fed president said i'm heavily influenced by the experience of the 70's. if you back off on inflation too soon, inflation comes back stronger, requiring the fed to do even more with more debt. even though we are seeing some signs of consumer spending starting to fall, you still have strength the labor market. the jobless claims were 198 today so fed presidents are suggesting they are not done yet. vonnie: we will get the inflation data tomorrow. how much is this incremental data helping the fed with its thinking right now? do we have to wait for the next jobs report? michael: i think it will go beyond the next jobs report. part of the problem is we only get one jobs report between now and the next fed meeting may 3.

you will have about four weeks before the fed meets after that. it will be data that comes closer to that time and it may be more private sector data, things like the credit card companies and what they see in terms of consumer spending. also some of the price measures the commerce department gets from private industries that would give the fed an idea of what's going on. they will also have data from their senior loan officer survey which will tell them if banks are tightening credit significantly and that will help them make their decision on may 3. vonnie: thank you, and tune into the exclusive interview with the boston fed president that will air tomorrow at 8:45 a.m. eastern. for her reaction to these headlines in the data out this morning, joining us now is luran a arrucci. talk to us about the data this morning. we got initial jobless claims

and more gdp data, it's incremental but it helps give us picture of the economy which continues to seem to be robust. >> that's right, the claims data this morning was pretty strong and continuing claims tell us people claiming on an ongoing basis also stayed around historical lows. i think the dilemma we have now is we have all this data that comes from the pre-svb world which are backward looking and they are looking like the economy is starting the year on a good footing but we don't yet know the extent to which bank failures and the potential credit crunch will affect the economic indicators over the coming weeks. vonnie: the kbw index is down again today but it's relatively modest. we are not seeing any great panic out there. is the bank world in turmoil? >> the panic phase i think is over.

i think we've done a good job at reassuring depositors that their deposits are safe. the second phase of this will be what happens with the landing conditions and the willingness to give out loans from banks in the coming months and to some extent, what we seen in recent weeks should lead to deterioration in credit availability for the broader economy. how big that will be depends on what regulators will do and you think about the bank balance sheet that we may not fully understand yet. vonnie: if we see more regulations, it will be some time out. it will influence banks and whether their tendency to lend will be greater or lesser so how do you forecast that? >> we have different legs right now, all this data is coming in strong we know there is a shock in the economy that's going ahead but with a longer lag. over the near term, what we see

with credit conditions and the potential credit crunch is not going to be near term disinflationary. the fed will still have to fight inflation to bring down wage pressures and consumer price pressures. over the medium brown, if we look at recession probabilities for the u.s. economy at the tail end of this year and next year, what just happened in march increases those probabilities. vonnie: fed chair powell commented on this as last news conference talking about tightening and maybe that doing some of the work for the fed. do we want conditions to tighten jacket --? or do we not want conditions to tighten and let the fed do its thing and continue to hold? >> this is very interesting because i think tightening matters but how that happens and how abrupt it is also matters. if we can have a gradual tightening of financial conditions and continued gradual

increases in interest rates, that's different than the shocks we have been experiencing this month. broadly speaking, we want financial conditions and the economy to remain tight because inflation is still more than twice as high as the fed target. that's something i think we should all keep at the back of our mind. vonnie: is there a point at which it drops off a cliff? will we see this marginal move lower every time we get in incremental data points? >> i think it's not going to for off a cliff. the dynamics we are seeing in the economy over the last few months tends to be quite sticky. the more volatile components of inflation like core goods prices have been decelerating significantly. i think that's the component that can fall off a cliff but when it comes to services inflation, that remains sticky. it is closely tied to the u.s. labor market which remains in a strong position. i think we have a few more

months in dealing with this elevated inflation number. vonnie: what happens to the front end of the curve in the meantime. we've seen volatility with a range of 50 basis points in the last week alone. it will be a difficult time for rate predictors. >> the front end of the curve has been difficult to navigate and so many things go into it. a lot of that is the fed reaction function and can medication and some as the data and some of it is market positioning as well. you don't want to be cut in the short position when the economy deteriorates abruptly and you need to liquidate positions so that's the volatility we have seen over the last three weeks and that's what it reflects. going from here, we need to clear more of the near term uncertainty about what happens to the economy and what the fed does beyond may before the two year can have a clear trend. vonnie: where are the vulnerabilities as you see them

if we got something extra like the banking turmoil that we were expecting. is there something else we are not quite prepared for? is the system ready for it? >> what we are watching now is the ongoing trouble in the tech sector where we have seen a lot of layoffs and where we have a sector that was thriving with zero interest rates and that we are at 5%. i think it will be a bellwether of what happens to the broader economy, not because it's a huge part of the economy but because it's so interconnected with private capital and private credit and the regional banking sector. those interactions is what we are watching over the coming weeks. vonnie: thank you so much for joining us. time now for first word news. john: in russia, a wall street reporter has pleaded not guilty

to allegations he was a spy. he appeared at a top-secret hearing. the u.s. citizen, he was detained in the city and vladimir putin spokesperson said he was caught red-handed and the wall street journal denies those allegations. in kentucky, to u.s. army helicopters collided during training exercise. all soldiers on board were killed in the helicopters were blackhawks from the 101st airborne division. spokeswoman says the collision is under investigation. the ntsb is launching a safety investigation into the train the roman in minnesota today. it was a freight train hauling ethanol and corn syrup about 100 miles west of minneapolis. there were no reported casualties and nearby residents were ordered to evacuate in the nation has been increasingly focused on railroad safety following the southern to rick desk derailment in east palestine, ohio. the special counsel investor getting what -- if president biden mishandled classified

documents is expanding its team. they have hired two former trump administration officials to help with the probe. it's about sensitive government records after governments with classified documents were found in office he used in washington. global news, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ go. go scientist. go software. go cure. go production. go faster and safer. emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson.

vonnie: this is bloomberg markets. the fed's susan collins is not the only one speaking today. treasury secretary janet yellen will make marks later. she will say that recent financial deregulation efforts might have gone too far as a contributor to the recent banking crisis.

the former president of the kansas city fed and former vice chair of the fbi see also recently pointed out regulation flaws saying in a recent interview -- he joins us now. thank you so much for joining us. there's been a lot of discussion about what should be done in order to rectify certain situations. are you hearing anything that satisfies you? >> at the moment, it seems everyone is looking to see what went wrong and trying to figure out what to do next. i don't think there is much in the proposal side just yet but i do think they recognize that there was an issue with understanding with the capital level of that bank really was.

there was an issue with how vigorous the supervision was for the implementation when they knew management was weak and the fact that they were surprised by the problem means they should be scrubbing many bank portfolios to make sure they are not surprised again. there is a lot of work on their plate even though we are not sure where it will end up. vonnie: the special assessment the supposed to short up finances at the fbi see to help with deposits, will that help? is that any kind of solution? >> it's a necessary step because they just reduced their deposit insurance fund by over 20 million dollars. now it's closer to $100 billion. this is on to bank failures. they know they have to shore it up in the industry knows it has to be shored up and it will be expensive they will have to do it. vonnie: you say people didn't

know this was coming but certain people did. there was a report suggesting in 2019 that there might be problems with how banks are counting for mature securities. if it was out there, why wasn't it taken care of? >> yes, they should have been aware of this and i think they were. i saw the report as early as last fall were unrealized losses were in the neighborhood of 600 dollars so that's a surprise number. the issue with the banking industry now is that you had these in norma's increases with a factor of 20 in a policy rate. this has an effect on the banking industry which borrows short and lends long so they are aware of that. now you have to anticipate or try and anticipate where other witnesses might be.

that could be in the real estate area, commercial real estate loans, the leveraged loans, it could come anywhere on that balance sheet and that's when looking at the capital levels now, the real capital and amount of equity has become so important. bank analyst are focusing on that as they should in social the supervisory agencies. they need to know how much is there to absorb any unexpected shock which is probably inevitable given the phase the fed is putting the economy through. vonnie: oxford economics calculated banks are facing potentially large losses of as much as 15% or more in areas like commercial property and leverage loans. does that sound about right to you and will the system be able to handle $15 billion in losses? >> i don't know if that's right. it doesn't sound unreasonable given the amount of increases in the rates we've had and the effect it will have on asset

values. i don't know the answer but i hope that the industry is capitalized sufficiently to do that and that's what bank analysts are focusing on. i think the supervisors are focusing on that as well. if it isn't, what they should be thinking about is should we retain more of our earnings or lower capital because of the uncertainty ahead? if they do that, i think they will be better prepared for any unexpected turbulence that comes with asset problems should interest rates rise going forward. there is work to be gone and i think -- to be done and i think there is the ability to observe the shocks but they have to do it systematically. they need to begin to think about retaining earnings on a capital races to can absorb those shocks and upper 10 everything is fine, maybe it is but let's not pretend it is and make sure we are prepared for the unexpected. vonnie: the country needs of regional banks, needs the nich

banks and banks that are serving certain industries and certain sectors more than others perhaps. because of all this, do we end up with a country that is backed by the bigger banks which may not be the right answer? >> i think it's imperative we continue to have regional banks. the regional banks are better capitalize than the largest banks in this country as far as their se they need to make sure the world knows that that they can infect observe any turbulence that comes their way or have a chance of absorbing it. i think they can withstand the shock because they are the principal lenders to small business, real estate, things that make the economy grow. even in the last great recession, the regional banks were better capitalize community banks and were able to work with the borrowers well and to provide funding to them in the recovery part of the cycle.

they are there, they are better capitalized and they are the ones i think can infect support the economy growing. we need them and i think we need to remain aware of that. especially the regulators, if they want to put more regulation on these banks rather than understand the capital matters and their management matters, they will harm the industry. we don't need more regulation, we need good management, good capitalized banks and banks able to lend and that's i think the regional bank advantage. vonnie: thank you very much for joining us today. that's the former federal reserve of kansas city president and former fdic vice chair. bankers might be feeling the pain after the bonuses got a big sdlash from last year, we will have that story and next -- and more next. this is bloomberg. ♪

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vonnie: this is bloomberg markets. time for the wall street beat. investment banking fees across the biggest wall street banks fell 49% in 2022 causing bonuses to fall 26%. this comes as a slump in dealmaking and rank and efforts to contain costs weight on compensation. the bloomberg finance reporter joins us now. i thought there was a war for talent on wall street so white slash bonuses 26% if you are trying to retain talents? >> this is one of the first real signs we have that the war we've been reporting on for years now is coming to an end? it's pretty abrupt. a year ago, we were talking about the similar data set from new york state comptroller showing wall street bonuses were at a record high and now just 12

months later, a complete reversal. vonnie: as you mentioned, the new york state comptroller said hiring on wall street is at a record. explain the difference between the two. how can it be at a record and people are getting laid off and bonuses are going down? >> it's an interesting point. the state comptroller's office doesn't provide us an exact breakdown but what we hear anecdotally is that these banks are still having to staff up on software engineers in different technologist and compliance workers. they are having to spend more on that side and as they see this huge dry up and deals, that means they really have to wield that hammer and go harder and make deeper cuts on the wall street side. that's why we've seen these investment banking bonuses dropped so precipitously even

with employment across the industry rising. vonnie: what about attrition? are you hearing more talk of leaving the industry or leaving a particular part of the industry where deals have dried up? >> it is the season for bankers and traders to make their moves. most of these folks got there bonuses just last month and this is the time of year where we see a lot of moves. i think we are definitely seeing that this year especially if you were at a big bank and you had a good trading year which most of these banks did, you are still getting punished because you are being bundled with the investment bankers which may not have had as good a year. it's going to be an interesting conundrum for banks in the coming months want to keep that talent but also still are wanting to keep a lid on compensation cost. it's an interesting dynamic they

are dealing with. vonnie: you have to believe once the fed started raising rates, people in the industry were anticipating this. much appreciated, coming up, we will talk about the credit crunch. that's next. this is bloomberg. ♪

john: welcome to first word news. a wall street reporter has pleaded not guilty to allegations of spying and russia. he appeared to the top-secret hearing. he was detained in the city and vladimir putin's spokesman said the reporter was caught red-handed and the wall street journal denies the allegations. in brazil, small crowd of supporters welcome the former president as he returned to the country after a three month vacation in order. security was tight in the capital and police were hoping to prevent a repeat of the january trouble when backers destroyed major government buildings in the capital one

week after the election. pope francis'health is gradually improving and the 86-year-old received therapy today and read newspapers and did some work and pray. he was hospitalized wednesday with a pulmonary infection. the vatican said is likely to remain in the hospital for several days and he had part of one lung removed in his youth. spring break is here and summer vacations around the corner but while stressed-out u.s. workers have paid time, many don't take it. a new research center survey finds only 48% of workers use their vacation time in the biggest factor is fear. they seem to be at risk of being replaced. others say they don't need the time and they worry about falling behind or worry about the workers picking up the slack. global news, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

jon: welcome to bloomberg markets. vonnie: let's get a quick check on the markets. we are more than halfway trip -- through the trading session and i'm looking at the nasdaq 100 further into old market territory up about 22% since its december 28 low. we have most of the indices up in the s&p 500 is slightly higher. plenty of stories like jd.com and things like discretionary names are higher and trucking names are lower and the banks. kbw bank index is down another 1.5%. not much love for the banks

right now and sentiment has been turning. the two year yield is not changed for a change, it's at 4.09 and it got to 3.55 last week and a little bit of weight to the u.s. dollar, no love for the dollar either with recession concerns. jon: we are also seeing some interesting trends underneath some of the broader indices. let's talk about financials and technology. within the financial sector, there are still concerns about where deposits are flowing. morgan stanley is worry about them flowing away from schwab. we will talk about that story later but stock is down about 5.5%. within technology, you had a good move story this week with micron results. semtec is taking a hit, down about 20% on concerns about the market. shares of blackberry basically not changed and we are watching that in canada.

the company will report its quarterly results and they told us they missed out on some key deals during the quarter. we will watch for more details on a portfolio sale. restoration hardware's parent company rh 3% and this is a reminder of the sensitivity out there, it's a company that caters to people in the housing market and with the uncertainty we are seeing emma that's being reflected in their business as well. vonnie: the contraction in bank lending is sending some ripples through the credit markets. here is amandalyn on bloomberg this morning. am >> we are already seeing some signs under the surface of levels of distress picking up in the credit market. if you leave the default rate aside which is fairly backward looking but instead look at real-time valuations, we see the share of bonds in the u.s. and european high yield fixed income market trading at distressed levels or above 1000 basis points has picked up two levels we haven't seen in the u.s. since the summer of 2020.

the market is signaling there is some concern. jon: within the last hour, we have heard from three fed officials, susan collins sang the banking system is strong and resilient. tom arkin saying it inflation process, the fed can raise rates further and neel kashkari singh inflation is very high but wages not keeping up. we will see the market continued to digest those fed speakers. for more insight in how the fed moves are affecting the credit markets, let's bring in the global head of credit strategy at credit sites and someone who sees some opportunity at a time of uncertainty. it's always great to have you with us. let's address the potential cracks in the credit market in the system now given this lingering uncertainty, what's your best assessment? >> thank you so much for having me this afternoon. my best assessment of the cracks in the credit market go to what amanda was speaking to.

the lower rated, highly leveraged parts of the credit market absolutely are showing cracks. we saw that last july when saw a spike in the distressed ratio. it came down but it never fully recovered which i think is interesting. we saw a pretty strong rally across the board and credit in december of last year into january and early february of this year. during that time, the ccc's the more distressed companies never got the full momentum the broader credit market got. i think that's got investors saying we realize there either bad companies out there that are probably not going to make it through these the -- these different economic headwinds or good companies that have unsustainable capital structures and it will result in some sort of restructuring. jon: we referenced some of the fresh fed official comments and a lot of people have been concerned about cracks in the system because of this rapid clip of interest rate hikes. in terms of the fed addressing

some of these growing concerns out there, has the central bank efforts on that front perhaps to a certain degree calm things down? >> to an extent, they have. the fed has done a tremendous job of trying to message both continued policy tightening related to price stability, trying to maintain credibility on that front, while also putting in place programs that are directly intended to support the banking system. we think the balance of those two things should help the fed navigate this inflection point. we think there has been a tremendous tightening in monetary policy, we have seen that in money supply coming down significantly. that should help the inflation front but the timing is what gets tricky. there is a lag effect between actual policy tightening and the increase in inflation and that's for the banks come into it. often times, banks are conduits of financial policy into the real economy through tightening

of credit conditions. vonnie: we've seen real pain being expensed by investors and banks from the second week of march until now. also investors in europe and regional investors in the united states but your team thinks there's opportunity and banks, regionals and elsewhere. >> absolutely, with that volatility comes opportunity. this is where you want to step in and understand what you are buying. you want to have very specific credit selections, very specific allocation across the capital structure, especially for banks and financials which tend to have complicated capital structures as a lot ofat1 one holders are finding. in the investment-grade corporate market are approaching levels we have not seen pretty much since the great financial crisis. that offers a tremendous opportunity for investors to put pencil to paper and figure out

where the opportunities are. vonnie: the difference in yields between financials and corporate's are only about 40 basis points. that's a lot depending how much you invest. is it enough for a risk premium? >> we think so. one of the things we like about the banking sector it tends to be shorter duration and that's been important for credit market performance over the past 12 months since the fed started tightening policy. we had a pretty severe downdraft in long and the treasury yields moving back to the lower end or the anticipated range of this year and we think we could see upward pressure there which would be a headwind for the longer duration sectors, things like transportation or even energy. the front and yield pickup you are getting the banking sector combined with fundamentals we still think are quiteg in aggregate, leave us very highly convicted with a strip -- with a

constructive view. jon: i also wonder about what we are seeing in terms of the appetite from foreign investors towards u.s. debt. there are plenty of them. any observations there? >> this is a great question. non-us investors actually make up the largest share of the u.s. corporate credit market which is kind of a surprising thing when we talk to clients. over the past year, it's been a tough play for non-us investors to buy investment-grade or high yield in the u.s. market and still get a lot of yield pickup because of the fx markets. there's been a lot of headwinds and as an investor outside the u.s., they have to hedge their dollar exposure and the currency risk. they are eating away a lot of that pickup by moving into the u.s. we have seen a big shift of sticking to home countries and picking up yield that way rather than having to hedge that risk.

we think there could be the potential for some conversions or at least some mitigation of this had went on the fx side if the fed slows its policy tightening cycle as we expect and if other regions catch up to the u.s. in terms of policy tightening. vonnie: we have to leave it there but such interesting comments, we appreciate it, elsewhere in bond markets, netflix is the latest to shake off junk status after it upgraded. we have the details. it's getting more and more treacherous out there in the credit markets and yet netflix has managed to pull off this feat, how did it do it? >> this is really a story that has been a long time coming for netflix. a colleague of mine and i wrote a story around last year that highlighted netflix and some other companies as companies that really grew up in the high-yield bond market.

they used access to really low cost of capital in order to help build their business. now that is paying off with them moving up to investment grade. jon: to your point, all that content netflix has been buying or originals they have been making was a reality in part because of their ability to tap into the fixed income market. i think last year, moody's was waiting to see more clarity on the revenue picture and maybe the cash flow picture. is there anything specific that has happened with netflix over the last few months that maybe change the story line on the status of the rating agencies perspective? >> if you look at their last quarter financials, subscriber growth beat wall street analyst expectations. they had strong revenue into those type of metrics that the credit graders are looking at when they consider whether or not to move someone up to investment grade. the market is rocky now and it's not an environment where

companies are getting upgraded very quickly. you are seeing more downgrades than upgrades. credit graders will be looking at those individual fundamentals in each company to decide whether they are ready to move into the investment-grade market. vonnie: we've seen may be surprising companies get upgraded like tesla, uber and ford which may be surprising to some but there are more downgrades right now. how are the interest rate increases going to play into this? will this change the picture? >> the most important way to think about downgrades and the broader macro economic environment is that we are in one of the fastest downgrade cycles right now since 2020. before that, we hadn't seen a downgrade cycle that fast before 2008. there has only been a few times in the past 20 years where we have seen this many companies being downgraded compared to upgrade and that's likely to

continue or that's with the experts say because of deteriorating economic growth and concerns about a recession. it will not be as easy for companies to get upgraded is maybe it was a year ago when money was much cheaper and there was more access to capital. companies will have problems accessing the debt market, especially junk rated firms. moving up to investment grade gives you more liquidity, more access to a lot more investors and more money who will have demand for your debt. vonnie: thank you, fantastic story. coming up, an analyst call leads to a dip in schwab shares, it's our stock of the hour next. this is bloomberg. ♪

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vonnie: this is bloomberg markets. a little bit of breaking news -- the white house out with a statement saying that resident biden is asking regulators to reverse some of the trump euro bank rules which you write remember help with deregulating some of the previously regulated banks. right now, the white house is going to ask for rules to be reinstated for banks with assets between wonder billion dollars and $250 billion. it will include liquidity requirements, enhanced stress testing and so-called living wills. the stress test will have to take place every year instead of every two years in the living wills show how banks of that size could be wound down. the white house also calling for shortening the time to apply stress tests once they reach $100 billion in assets and strengthening supervisory tools which are banks can withstand

rising interest rates. a lot of this was anticipated and it will fall under a category that will not have to meet three armen's for congressional approval, according to the white house. we will see what happens next. jon: the connective tissue here is the fact that ultimately, it's up to the regulators to enact those changes but the administration has been in contact with them about all of this. vonnie: exactly, and we will see how much staffing up will have to be done and how fast the regulators will be able to get into some of these banks. we are looking at another firm in the sector, charles schwab, after they were downgraded to equal weight. we want to get into the details with our bloomberg news equity reporter because this is not the

same sort of situation as some of the other banks. this bank and brokerage is on this downgrade for another reason so explain to us why. >> today, morgan stanley analyst downgraded charles schwab for the first time since 2016 because clients are pulling money out of the bank and moving them into money market accounts. it's twice as fast as the analysts had anticipated. they are pulling them out at a rate of $20 billion per month. jon: we are also watching this in canada. td bank has that sizable stake in charles schwab and many people are watching it here as well. we should point out that schwab has taken pains to talk about what they view as the wrong perception on those long bonds they have held which people got concerned about whether they would have to sell those at a loss. what do the analysts see that

perhaps schwab is saying differently? >> what the bank said is that shouldn't be an issue. they had more than enough liquidity to meet withdrawals. however, what morgan stanley is seeing is that profitability will ultimately be hit. downgraded his expectations for 2020 three and next year by 30%. jon: we appreciate that break down on the schwab analyst commentary today. we will continue to watch that story. let's get back to the story -- we are learning that the biden administration is calling on regulators to tighten the rules for midsize banks, the latest step in the response to the banking crisis that led to the failure of several regional banks. josh when growth covers the white house and he joins us on the story he put out on this issue. walk us through what the white house is sort of laying out here.

>> thanks for having me. they are trying to target the window where svb and signature fell into where a lot of the rules were loosened after the 2018 bill or came under the trump euro but had bipartisan support and loosened some of what the proponents of the bill would call red tape and others would call rules. they want to put humpty dumpty back together a little bit and tighten the screws in that category which would have included svb. that includes capital requirements, stress tests and more frequent reviews and other things. the big question is we don't know what the regulators will actually do. the white house is taking pains to say we are calling on them to do this and we've spoken to them and we will see where it goes. if they do it, it's also up at the are how quickly it will proceed. they have telegraphed this and biden has been calling for for

some time and he plucked the former vice chair of the federal reserve back in 2019 when the fed enacted certain changes said the regulators were going further than the bill back then actually required. as such, you can presume she is of the mind they can walk back without congress as well. right now, it's unclear what appetite there is in congress for increased regulation in this space so biden is going through the executive toolkit or the bully pulpit to make these changes. vonnie: none of these measures require congressional approval and it's a question whether the regulators are able to implement any of these. at the same time, it doesn't hurt if you have congress on your side for something like this. it's not clear that either chamber of congress in either political party will be on side. will there be any high-profile

backers? >> i think it remains to be seen. i think it's fair to presume that some if not all of these changes will be looked at seriously by regulators over the course of time. we just don't know how quickly that will be. one thing they said on this call that is interesting and notable is they continue to think the current situation is stabilized. these are not things they expect or hope could kick in immediately. they don't think necessarily that they need it now. they think they are out of the woods. they think the moves taken by regulators and the administration at large, sort of settle things down. the white house has been bending over backwards to avoid any suggestion that they think things are continuing to deteriorate or could continue. time will tell but they are pumping the brakes on the notion

that these are needed immediately or that the contagion is still spreading the stopping short of saying we are in this altogether. they think things are stable and they don't want to touch it too much but if we get back to these scenarios, that's why we need changes, implicitly saying if you had these things in place, we would have seen something sooner or more clearly than we did with svb and signature bank. jon: tying it back to the story of where interest rates go from here, calling on getting ready for what happens in a rising rate environment coupled with the stress test calls, we are already getting this feeling that many of these regional banks are becoming very cautious , in essence, tightening lending standards in the way the fed rate hikes may have done regardless. >> doing the fed's work for them

, time will tell if that really happens. biden is really walking a fine line. he knows if there is a systemic bank run that of course the u.s. government will be left holding the bag proverbially and in many cases financially. the other thing that has come from this, when they stepped into guaranteed the deposits for the signature valley -- for the signature bank and the silicon valley bank, these are signature funds. he said when you are replacing that, we don't want you could do go to community banks to refill the pot once we settle what happened with the two that failed. we want to prioritize other lenders when it comes to sticking them. that's more meat on the bone and the interest is biden wanted to say taxpayers are not on the hook. they are saying is bigger banks, not small banks. vonnie: we will see what emanates from this, great

reporting and thank you. the administration is calling on regulators to tighten the rules for banks. this is bloomberg. ♪

>> this is embark markets the close, we have two hours left in the trading day. we started the day risk on, and steadily lost some