>> i think it's amazing to talk to creators about how they're using the current tools. people talk about it as the most important creative tool they have ever used [ inaudible >> there's so much happening what's one thing i don't know it's really remarkable to watch this happening >> can you give us an example -- [ inaudible >> an ai that could help design biological pathogens, these systems can become quite powerful, which is why i happen to be here and why it's so important. i can probably do hike two more minutes. >> what about the eu law >> i'll wrap it up the eu law is still going to evolve a lot, right? i would rather wait to comment on it until we see something [ inaudible >> i'm sorry nice to talk to all of you

>> thank you very much >> that was sam altman, creator of chatgbt addressing those concerns about ai, whether there will be regulation and what that might look like. so glad we had an opportunity to hear from him as he leaves that hearing. that does it for us. i'll see you on "closing bell. "the exchange" begins now. ♪ ♪ thank you, scott hi, everybody, welcome to "the exchange." i'm kelly evans. here is what is ahead this hour. a doubleheader in washington, as you just saw we've got banks and ai under congressional scrutiny you just heard from sam altman we'll get to him in a moment but first, on -- would better bank management -- [ inaudible

♪ ♪ -- and a lot of bearish analyst calls the last few days. our guest says the bears are wrong and the stock is a buy what he's seeing that others maybe respect. he's here to make his case first to the markets and dom chu has the numbers. >> it's consolidation and it's been like this for a couple of weeks now. the markets are not doing much in terms of anything with drastic movement still around between 4100 and 4140, in that range this it's been like that for about maybe five or ten trading days now, going into this area where there's just a little bit of movement overall but the dow industrials down about one half of 1%, 196 points, the s&p, like i pointed out, 4127, off about one quarter of 1%. at the highs of the session, we are down one point, the low is

down 22. generally, negative day, but tilting towards the upper end of that trading range the nasdaq outperforming, up 1/3 of 1%. one place to keep a close eye on is what's happening with retail today. because we have economic data in the form of retail sales also, an earnings report that seen is a bellwether for many parts of the u.s. economy. home depot shares off the session lows so far. home depot comes out with earnings that beat expectations. revenues fall shy, the worst miss on a relative basis in 20 years in terms of home depot they cut their four-year revenue guidance, citing slower spending on big-ticket items hike patio sets and outdoor grills. lowe's is down 1%. et etsy is the biggest decliner, and some of the etfs are mixed in the session

so retail a big theme. and then the stocks to watch right now, a big plunge in shares of verizon therapeutics that biotech is down 15% you may recall it was being -- it agreed to be bought by amgen. now the federal trade commission has sued to block this transaction, citing competitive concerns shares down 15%. amgen down 1%. big deal with biotech that could be facing some severe hurdles. i'll send it back to you >> dom, thank you. our top story for the morning, dual hearings on capitol hill the first one, sam altman testifying on the dangers of ai before the senate judiciary committee. the second one, the senate banking committee, xwgrilling te

ceos of the banks that col collapsed. joining me now are my guests welcome to everybody leslie, what are the headlines so far >> so we're supposed to be five events in 72 hours really drilling down into the cause of these bank collapses. one got post poped, but the headline here is really trying to figure out who to blame if you take a step back and look at the conversation that ensued for the last 2 1/2 hours or so, that's how long the hearings last, basically the executives were like, no one could have seen this coming if we had to do it over again, given all the information we had at the time, we wouldn't have changed a thing. then you have the lawmakers on the other side of the table who said, where were your interest rate hedges? what about this incentive compensation you have that drove you to take riskier measures and

pursue growth at all costs basically, they just said we are not to blame here. they blamed the fed. they blamed their board. they blamed employees. this is all according to senator shared brown, who summed it up they blamed social media >> svb blames goldman sachs and the financial times, as well and svb did imply goldman gave them that advice how they should have sold that portfolio, triggering the cascade that led to its collapse. >> there were many variables at play at the end of the week, can we say this was, you know, who we should put the blame on. you know, it is interesting to drill down and get their perspective. >> erin, i'll turn to you. what would you response be to the explanations that we are being given about these bank failures >> yeah, look, the blame wise on bank management, it's not a black swan event to know that interest rates were going to raise.

you took out your hedge in 2019 to maximize profits and boost short-term stock trprice. i was struck by how grilling the bipartisan grilling of the svb ceo was, and he had zero interest of returning any of the bonuses he's gotten over the years. but the regaulators are also to blame, because they were asleep at the switch as several republican senators pointed out. >> how unique do you think svb's problems were? and this hearing is taking place, because we're not sure if there will be more shoes to drop in the banking industry. >> so yeah first of all, great to be on your show, as always i would say that if -- if to say that there is to blame the executives of these banks is to say that if you were in that

situation, you would not have made the same mistake. i think that is, like a misunderstanding of what happened at these two different banks. i'm not necessarily an apologist for these banks at all, but i think you just have to be realistic that if you go into 2020 with $60 billion in deposits on your books, and you get two years later, you have $190 billion in deposits on your books, that was caused by fiscal monetary stimulus, what you would do in that situation, you don't know what you would do so like do you put nit the safest thing, do you reject the deposits, i mean, it's just so unusual what happened in this situation. in fact, i go back through history and banking, and identified the one other time where we had a situation like this, and what happened in that situation. and then you have to go all the way back to the 1830s. in 1834, andrew jackson trying

to get rid of the second bank of the united states and he said, we're going to take the deposits out and distribute those deposits to state banks, they called them pet banks. so they put all of these deposits into the banks, and what happened to the banks if you look at the three banks in new york city that got the deposits, bank of america, mechanics bank and what was the third one -- manhattan bank. two out of those three basically came within a hair of failure. it's the same situation. so you have a situation where all that money is dumped on sneez these banks. so i think we have to be more understanding before assessing blame. >> i think you're saying you would have done something different, aaron >> you don't have to go back to 1830 to see explosive growth, huge leverage at the home loan banks. the idea that these bank ceos

were passive people with deposits being dumped on them belies logic interest rate risks, he bought a bunch of safe securities on the credit risk side in terms of the 3%, 4% mortgages that people used to be getting everybody knew there was risk. that's why they had hedges but they took the hedges off they didn't have a chief risk officer for nine months. america has 9,000 banks and credit unions. low interest rates are a common interest rates across the industry these banks didn't know what they were doing and they failed. and the regulators were asleep at the switch in that process. so implausible concept that you have to go back to 1830 to find a scenario where interest rates rose sharply and banks didn't hedge their risks. >> but the point, is when is the last time you seen a bank grow its deposit baby 3.5 x in 18

months john, your response to that, quick last word. >> well, i mean, i appreciate his point, but you do have to go back to 1830 to find a precedent in this situation. and just the fact of the matter is, look, if these banks were going out and growing intentionally just going gang busters, what would you see? massive new customer acquisition. we didn't see that here. we saw existing customers, a ton of liquidity flooding into their accounts that had to go somewhere so yeah, any bank -- i talk and this, kelly. the rule in banking is failure that's the general rule. the exception is survival. so any bank that fails, in a sense, it is the fault of the management but the situation here was so unusual that i'm not sure that anybody in that situation could have avoided failure given how all that stuff works >> leslie, one of the points that becker made in his

testimony he had five times exposure to svb shares that he was required to. he's been under a lot of criticism and they are working on a bill to claw back comp from failed banks his point is that he had larger exposure >> the lawmakers pointed to that as almost a negative, that was driving the decision making to grow the bank too quickly, and take more risk as a result of that >> but if you had take an bigger salary, is there any -- what did they want to happen here >> well, that's going to be the interesting thing that comes out of the potential legislation that results from this as we look ahead, thursday's hearing will be much more about the regulatory side of things. jamie dimon spoke at the jpmorgan shareholder meeting he talked about regulation, something that he's been talking about a lot as we look to prevent potential failures of these large institutions in the

future he said simply satisfying regulatory requirements is not sufficient and managing those risks requires constant scrutiny as the world evolves >> aaron, the regulators failed in this case so what do you think the response needs to be, real quick? >> look, i think the response is going to be greater debt holding capital for banks over $100 billion so that they can be wound down in a better way and ultimately, there will be a question of whether or not regulators will letbacks fail without bailouts this generation of regulators hit the bailout button that is a judgment call, but we see repeatedly, and that does change market expectations in the future >> depositor bailout for sure. to be continued. thank you all.

we'll get to the ai hearing in a moment. but first, elsewhere in d.c., the debt ceiling drama continues. congressional leaders returning to the white house today to meet with joe biden, and while wall street is so bullish about a deal, optimism is fading the majority of investors still think the debt limit will be raised by the x date, but that dropped from 80% last month to 71% in the latest results. are they right to be concerned let's get the latest >> we're waiting for the latest coming up at 3:00 p.m. remember, there is a live shot position outside of the west wing, so if any of these leaders want to say anything to the press, they will have the opportunity right after the meeting breaks up. so we'll watch for that. a democratic source familiar with the process tells nbc news democrats will decide right after that meeting whether or not to move forward with a plan b option of sorts on the debt

ceiling. that would be a legislative process to force a vote on the floor, but it would require some republicans to go along. so it's not seen as the best option just yet. they'll decide that after the meeting breaks up. speaker mccarthy, he's been sounding a pessimistic note, telling reporters that the talks are not going well at all, saying there's no progress that i see. so we'll see if any of that changes after 3:00 p.m., kelly >> you've been following the jeffrey epstein island closely now a subpoena to elon musk. what do we know? >> we learned monday that u.s. virgin islands have issued a subpoena to elon musk for information related to sexual predator jeffrey epstein and jpmorgan a key allegation has been that the bank kept up a relationship with epstein because he was referring powerful and wealthy men to the bank as clients now, the u.s. virgin islands say they believe that musk may have been one of those men.

but they say their private investigator has been unable to track musk down and physically serve him with a subpoena. so they want the court to authorize alternative delivery methods, and musk saying he has never forgiven jpmorgan for what he says was letting tesla down ten years ago. so what musk's tweet didn't say is whether or not he knew epstein or whether epstein tried at least to sell him on the idea of moving some funds to jpmorgan so there's still a lot to learn in all of this >> thank you for now quick programming note don't miss david faber's live interview with elon musk it is live tonight, 6:00 p.m. eastern right here on cnbc coming up, the other high stakes hearing happening on capitol hill today, as the race to regulate ai heats up. plus, the opportunities in oversight. we'll look at the semi stocks

that could benefit the most from regulation as we head to break, here is a quick look at the markets. dow still down almost 200 points the s&p under water, as well while the nasdaq holds a small gain as you can see there. the small caps down 1 p%. we're back after this. - double check that. eh, pretty good! (whistles) yeek. not cryin', are ya? let's tighten that. (fabric ripping) ooh. - wait, wh- wh- what was that? - huh? what, that? no, don't worry about that. here we go. - asking the right question can greatly impact your future. - are, are you qualified to do this? - what? - especially when it comes to your finances. - yeehaw! - do you have a question? - are you a certified financial planner™? - yes. i'm a cfp® professional. - cfp® professionals are committed to acting in your best interest. that's why it's gotta be a cfp®.

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welcome back open ai ceo sam altman taking questions from the senate judiciary committee on the potential dangers of ai today after the launch of his chat bot chatgbt kicked off an arms race with big tech companies. let's bring in steve with the latest on us and julia is right here in studio also joi also, you have the sweater do you know how many questions i got about the sweater last time? >> it was so funny, i have left it back in london. >> that shirt goes a long way. let me start with you. what did you not want to hear today? >> you know, i think what we didn't want to hear was not full conclusions, that you have just

reached a blanket decision that all ai is bad. what we didn't want to hear is we don't want to regulate. and i think the other piece we probably didn't want to hear is, we're going to figure this out as policymakers and not really bring in experts and sort of civil society back into it >> well, then, steve, they probably addressed all three of those by what sounds like a collaborative hearing today, would you say? >> yeah, that's the message that came out of here, kelly. it was more like an educational session for these senators to learn how this technology works from the guy who is the figure head, sam altman, and learning what they can do as they think about crafting regulation around this there was even an admission from a couple senators saying we got it wrong with social media and web 2.0. we didn't move fast enough and look what happened they don't want that to happen again. so they're trying to talk to people like sam altman to craft

legislation around this technology, which is they don't know how it will develop so what can we do today to make sure we have a grasp on it later? >> julia, i'm surprised to hear that what do they think they should have don -- social media >> there was bipartisan support with the regulation that makes these social platforms from being responsible for the content shared reforming this would make facebook or twitter libel if content shared is dangerous or manipulative now they're not responsible. >> my understanding was there was never enough support that's a big step to take, and people realize, if we do this, we could shut down the vie abilt of these platforms >> i think talking about section

230, and the fact that there was not reform, the fact that there has not been a comprehensive private legislation here in the u.s., and that legislation has come out of europe, and you have had the eu effectively regulate the way all of these companies deal with privacy. they say this time around, we want the u.s. to be on the forefront of regulation. when it comes to ai, we need to have the u.s. leading the charge one thing i heard over and over today was this focus on transparency they talked about a nutrition level for understanding the different ingredients that are going into these different ai algorithms, and what's coming out of this. i think that was first and foremost transparnency is key >> that's interesting, a nutrition label, how would that affect your company? how would that affect the adoption and sort of development taking place on top of these language models? >> you know, it really comes down to a risk profile so you have to ask yourself, we touched on this the last time we had the chat, which is, is this

touching civil liberties or sit on the other hand, increasing productivity? is it empowering people to be able to do something they weren't able to do before because they didn't have the technical, musical or artistic back ground to do whatever that activity is. i think if it's in the former two, then, you know, the label is important, but it's not critical i think if it's in the first two, the warning or the label is quite important, because it's subject to bias, it's subject to elements of losing autonomy. you imagine facial detech ton that is rampant, or imagine the ability that you have a system that has the risk to hallucinate but able to make critical infrastructure decisions so it's very nuanced >> steve, i still think about

lina said when she said all of the existing rules we have apply to ai. how many of those rules from copyright or whatever would cover the areas we are most concerned about here >> yeah, that was discussed in the hearing, kelly, where they're talking about things like copyright senator blackburn from tennessee highlighted musicians who are concerned that this ai is going to scrape that content and repackage it without compensating so that was another issue that was brought up there but overall, that is what the tech industry in large is asking for. they're asking for this prescriptive regulation. ai can't be used for weaponry, for example. that's what the industry is asking for on top of this international agency now, i got to pull sam altman aside and i said, what happens if we're in the same position again, what happen it is the people you just spoke to in that room are not able to crack

legislation or regulation? he said, i hope they can so we know what happens with web 2.0 in social media world when there is no regulation and no guard rails. the good side, is at least they're thinking about it ahead of time, whereas you can argue they weren't before. >> it's novel, julia i wonder if they just have to wait a little. >> they can't really wait. >> what are they trying to do? >> for instance, i would raise the point when it comes to the upcoming election, and the fact that there is so much concern about manipulation think about the deep fakes >> what would the law be what is the policy >> tyou saw the "top gun" movie, they re-created val kilmer's voice. so in some respects, the problem we're trying to solve with

regulations are the problems we did not solve with social media around distribution and verification of content going through that >> anyone could make a deep fake now. one of the bills that's being proposed is saying any time you use ai in the creation or deployment of a political ad, you're going to need to disclose that >> we've already seen those ads, imagining a world with joe biden in charge. >> this election, there is a concern how much more advanced all of these different ai tool also be by the next election, and the potential for misleading the public >> so disclosure is they would have to say this was created with ai. anything beyond that >> there was a conversation today about what happens if something goes on to chatgbt, what happens if chatgbt doesn't give an accurate response, is that voter suppression it's a very complex thing. and real world implications when it comes to politics >> right i guess a quick final -- steve,

any comment about microsoft before we go >> yeah, they didn't come up too much, other than saying, i think it was cory booker who brought this up, senator booker saying something to the effect of, look, i'm really worried about this concentration of power. by the way, open ai, you were funded by microsoft, what do you think of that, and also the idea that web 2.0 is in the hands of some giants. you know, altman answered that in a wishy washy way he does have a financial tie to microsoft, but he still believes open ai was founded with this kind of idea that ai was done respo responsibly. anybody can tap into their programming to build off of chatgbt. so he think there is's room for anyone to win. >> i think they're going to become like any other consumer tech company but what would you say about that >> look, i think this notion of

concentration of power is little overused. we've had this in web 3, in social media before the cloud, we had this in news the only difference was, you didn't have concentration on a global level, because most news that was sort of more sovereign based, based within the country. i think this idea that now it's a sudden issue, when it's running on cloud, it's something we should have gotten used to by now. the bigger concern is more of a bias issue, to make sure that as we use this technology more and more, we're able to augment the data with the relevant regions, whether it's cities, states, countries, and sort of diversity inclusion. and that's probably the big change between something that is inanimate like the cloud or social media to where we are

now. so this question about voter suppression and chatgbt, its data is two years old. so one of the things we have to sort of stay honest with ourselves, there's so much hyperbole and hype that it's scaring people and making the system feel like it's so much more evolved than it is. we are still in the aol days of broad band >> maybe if nothing else it needs to stay on the landing page this is up to date as of 2021 or whatever the number is you have to be careful when you do it, so you don't do it too soon guys, thank you all. we'll leave it there still ahead, the eye in the sky. we'll follow it with one disrupter revolutionizing the weather forecasting industry

welcome book "the exchange." keeping our familiar pattern here of late with nasdaq in the green while the s&p and dow are red. s&p down 13 points to 4123, dow down to 33,117 speaking of this number, down 230 points we are watching the break even level, 33, 33,143. this is the level at which we will go negative year-to-date. we are below that right now by about 30 points. by the way, the 50-day moving average, which we haven't closed by since march 30th, we are looking to break below that.

so even though it's been kind of quiet, it's consequential. now over to tyler mathisen for our news update. >> thank you very much russia is responding to a video posted on the cia's youtube page, aimed at recruiting russian spies. the video offered russians a secure way to communicate with the cia, and promised protection if they share secrets about the ukraine war and other information. the kremlin says special services were monitoring it, and it's not surprised by western intelligence activity in their country. european union states approved the world's first comprehensive set of rules to regulate crypto assets, rules that require firms that want to issue trade and safeguard crypto assets in the block to attain a license. those rules are expected to roll out in 2024, putting the eu ahead of the u.s. in regulating crypto and the philadelphia 76ers have fired head coach doc ric -- doc rivers today after the

team lost to the postceltics in the nba playoffs on sunday rivers has not gotten past the second round of playoffs in three seasons with the sixers and he had a 3-2 lead in that series >> brutal. i think every coach who has won a championship in the last 15 years has been fired tyler, see you soon. coming up, the nasdaq outperforming the major indices. we'll talk about what that is all about. that's next.

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welcome back the nasdaq is avoiding log ing s far. the chip names are some of the best performers. nvidia, lam research seeing decent gains my next guest has been bullish on semis for some time, high highing micron and amd joining me now is kim forest good to see you, kim welcome. >> thanks. >> are we getting to a point in which the specialist goes, okay, these people are getting too crazy with these valuations yet for nvidia >> well, nvidia is tough,

because it's always crazy high, in my opinion. but they tend to come through, right? at first, it was bitcoin mining, and everybody has to have nvidia chips for bitcoin mining now it's ai. are they lucky or good i would say both >> right, it helps obviously, they've been on a tear micron is not a name i hear in the same breath. why do you think this is a horse to bet on in the ai race >> sure. they're a maker of commodity products the one i'm more interested in namd and that is a way to store zeros and ones, and it's getting cheaper all the time, opposed to old, spinning disks. so here's the thing. if we're really going to have ai take off and make the world a better place, ai eats data, and that's what makes it smart so you have to store it somewhere. so that's why i like storage companies and namd in

particular >> so let's hope all of these are recession proof. i do think there's two reasons people are piling in one, because the story with nvidia is amazing. also, because we want growth in what could be a challenge growth environment. have we already priced in a lot of the hope and expectation for how well these company also do over the next 6, 12, 18 months time >> for the next six months, probably we started off with a very low base, and i think that was caused largely by the selloff in november and december, and that to me was just -- smacks of paxlovid sales you have a higher priced asset trading lower and you can offset it by kcreating a loss the companies weren't broken, they were just using it for a tax matter but looking forward, i would rather go three to five years out to tell you the truth than

18 months. but i think that tech really is going to grow. ai is intriguing, and a lot of companies are going to put their toe in the water, and they are going to soak up semi conductors, because you need a lot of compute power and to collect data and it all says everything -- >> is there anything in the market that don't excite you >> i guess maybe the older technologies but even they may have a place like ti does a lot of analog, we'll say that they are the interface between the real world and the digital world, and they may even have a place at gathering data. >> are you preserving capital if we get lower valuations in a macro downturn or do you have have to say i'll just take what i can get at these levels and not be over hi cautious? >> i'm not really somebody that

tries to avoid a recession, because we've had, i don't know, something like several hundred recessions forecast -- i'm kidding. we haven't had that many, but there's been over the past ten years, a lot of recessions that have never come. and i would rather plan for the future, have my cash flow, have my cash needs met. but invest now, and invest into the future >> all right i appreciate it. kim, thanks for checking in with us today >> thanks. coming up, somewhat do the air force, uber and the nfl have in common? they're using new private weather satellite technology details next o"t ehan hexcnge. dow is down 244. bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network.

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microsoft. >> tomorrow, dot io just confirmed it launched the first commercially built weather radar satellite ever last month, and it's about to launch a second, changing weather forecasting capabilities globally. >> we're going to create a significant revolution when it comes to weather forecasting and climate modeling and be able to help the national hurricane center hopefully have better hurricane forecasting, and help insurance companies and help airlines fly from jfk to london in a much safer route yougsing less fuel >> three, two, one >> before the spacex launch of tomorrow dot io's satellite, the u.s. just had one atmospheric satellite operated by nasa the lag time could be three days or more for its information. alphabet intends to launch two

dozen over the next two years, in combination with microwave technology, creating a constellation he claims will sample every point on earther inially every hour they started as a software company to show clients specifically how future weather would impact operations, supply chains, and employees. major clients now include delta, united, jetblue, fox sports, uber, google cloud, amazon web services, microsoft, and the u.s. air force, among many others that list will likely grow >> because if you don't have radar data, easter from the ground or space, then the initial conditions of the model are just wrong and you cannot train them to be more accurate. >> tomorrow dot io has more than $200 million in funding, combining its existing software with new data could be a game

changer for global resilience and even global economies in the face of climate change kelly? >> might it be used in my iphone for instance and become ubiquitous >> it can be everywhere. it's just upping the ante, even from land based satellites which can be limited due to terrain. >> there have been so many satellite companies. what makes them stand out from the pack >> because this is the only commercially built weather radar satellite up there right now we have the one from nasa for the u.s. and a couple of other governments that have them but some parts of the world are not covered at all by weather radar. so this is really kind of putting the private sector up in space in the weather sector, which they haven't been yet. >> diana, thank you very much. still ahead, it's been a rough month for sofi, shares down about 25% despite stronger than expected q 1 results.

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welcome back to "the exchange." sofi has become a major battleground stock lately since reporting earnings at the beginning of may the online bank has been hit with major skepticism on wall street. credit suisse forecasting a growth deceleration in the back half morgan stanley worried about personal loan risk and just yesterday wedbush downgraded the bank saying it might be at a tipping point when it comes to loan originations and sales. sofi is down over 25% in this month. but could all the negative buzz be misplaced my next guest says the bears are weighing down the stock and investors should start paying attention to the yield on the loan sofi already holding. joining me is dan dallof, managing director at mizuho securities good to see you again. why do you feel you need to come out and defend sofi or put differently what's the real opportunity you see? >> that's a great question i think the bears are mathematically and intellectually completely wrong on this one. let me explain to you the three things they're saying and why they're rong wrong the first thing they're saying is they can't sell the loans and that's why they didn't sell the

loans. it's not that they can't sell the loans. we did some work that shows you that they're earning a better yield by keeping the loans on the balance sheet. about 6.4% versus selling them for 5% so if i told you hey, you can keep it here, right? >> right >> why buy the cow if you can get the milk for free? >> and that is also a function of high interest rates when you go back a decade go or not quite the opposite might have been true but today the situation has changed. >> exactly and they're very high quality loans. they've got a book of 9 to 10 billion dollars personal loans >> well, quality can be in the eye of the consumer when it comes to a macro downturn that we appear to be heading into >> i totally agree but if you think about it though the average fico on sofi is like 740 or 750 i think it's even higher than my fico don't tell anyone. but it's a very high quality -- it's as good as it gets. this is not sort of the low-quality subprime loans these are very high-quality loans. so if they can keep them for 6.4 rather than selling them for 5 that's a huge trade, and that's why they didn't sell them. >> so that was the first point there were two others.

>> the two others is their accounting might change. that's actually very false because regulators do not allow you to change the accounting once you choose an accounting methodology which for them is the fair value accounting they cannot change it to the ookting. so that's not going to happen. those loans are not going to be valued at par. and the third one is there was a disclosure that if they needed liquidity they might have to raise capital. that same disclosure was around when the s-1 or the original 10k came out there's nothing new there. so i can refute all three of those bear points and i think they're completely wrong both mathematically and intellectually >> do you say that even being somewhat cautious about prospects for fintech broadly speaking right now >> i think this is actually a super interesting question i think they're at the juncture of fintech and sort of small bank and i think they kind of fall in that bucket, right and they're saying hey, we're a small bang, look at us, and it just makes -- it puts like more fire on them but it's completely wrong. they're getting $10 billion of deposits, $2.7 billion of deposits every quarter people in my industry use them

as their primary bank. >> really? >> yes and every dinner that i go to people say i've just started using sofi as my primary bank. >> what attracts them? >> i think the high interest rates. it's very simple the high yields. they're offering close to 5% very, very simple. very intuitive and you don't need the branches. >> so i would be -- and probably in the past was very bullish on fintech because of the elegance of the model but some of the offerings from chase, all the big banks are now extremely good and the yield that they're using to attract people to me is the red flag here. right? like if all of fintech is competing on yield that's not a great game to be playing, is it? >> but they're also giving you something else they're giving you $2 million of fdic insurance which a lot of other banks don't give you so the security and the safety is attracting a lot of people to them >> it's interesting that that worked because it's a kind of move, in other words, helping on the back end, move that money into different accounts that others could offer many others have been offering in the traditional banking space for a long, long time. >> exactly you can put everything in one basket because you can feel secure that your money is safe

and that's what sofi's doing and i think that's a huge move for them and i expect them to get even more deposits over time >> right even though others could presumably do something very similar. maybe they're the first with the idea or the sophistication to pull it off. why are you then more cautious about fintech generally speaking right now? >> yeah, it's a great question i think there's a lot of headwinds coming to fintech, right? for example, we downgraded visa last year. and that was because of -- part of it was because of the cash to card which is driving about a third -- 45% of the growth is coming from cash to card migration. we're hitting the ceiling of that the more important one, july 1st, the federal reserve is coming up with a real-time payment scheme >> fed now >> exactly it's called fed now. and everyone's dismissive of it. but if you go back to the doj indictment of visa when they tried to buy plaid, the visa executives actually like said that if they can't buy plaid this is in the doj, they can't buy plaid, it's a 3 to $5 million headwind to their -- >> that fed now will be. because it's coming into the

picture and disintermediating some of that by allowing these easier direct payments it's a clever thing to do to read their defense of why they want a merger to proceed and that merger was ultimately blocked? >> it was blocked. they didn't buy plaid. what should we -- should we not believe them i actually believe them. i believe they were really worried about visa direct and that's why they wanted to buy plaid and it didn't work out >> in other words, are you saying that the fed is casting a shadow across fintech because of fed now? >> it's just changing. i think that the last mile is a huge winner. so companies like toast, companies like square that have that consumer relationship are better off than the companies that are once removed and are just either doing the processing or the networks. so it's the last mile. it's the bank, the neo bank like sofi, those are the winners. those things are changing. >> and what's your price target on sofi? because the downgrade yesterday i think wedbush put a 250 price target on the stock. >> $9. >> $9. so almost a double from here >> correct >> all right, dan, you're on the record thank you for coming in. we really appreciate it today. dan dolev with mizuho. that does it for us for "the

exchange." but coming up next on "power lunch" it's going to be a very busy afternoon bentley's coming off a record year for profit and deliveries we've got the ceo. we will be outside looking at one of their sleekest models tyler's getting ready. he's got his driving moccasins on and i will join him on the other side of this break (swords clashing) -had enough? -no... arthritis. here. aspercreme arthritis. full prescription-strength? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme.

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alongside kelly evans i'm tyler mathisen coming up the intersection of washington and wall street senate hearings today on what went wrong at silicon valley bank and what could go wrong with artificial intelligence plus the ftc flexing its muscles again suing to block a major pharma merger. plus a big interview coming up on cnbc later today. david faber sitting down with elon musk after the company's shareholder meeting. we'll get you ready for that