>> the bottom line is this. americans can rest assure our banking system is safe. your deposits are safe. we will not stop at this. ♪ host: this is the washington journal for march 14. president bidenaking the effort to calm markets.

many in the cent days pointing to the 2010 dodd frank law during the obama administration to protect the consumers from certain practices, and the 2018 law signed in the trump administration that will back some of those protections. now president biden looking to congress to offer more protection. we will ask in light of what you have seen and read over the crisis in the last few days if more bank regulationsre needed to protect consumers. democrats, (202) 748-8000. republican (202) 748-8001. independents, (202748-8002. if you want to text us, you can do that at (202) 748-8003. post on our social media sites facebook and twitter. you can follow the show on instagram. just before leaving for california yesterday making comments in the morning about the events of the last few days concerng the banks and making the call for regulations.

here's the president fr yesterday. [video] >> all customers can rest assure they will be protected and they will have access to the money is up-to-date. that includes smallusinesses that need to make payro, pay their lls to stay open for business. this is important. no losses will be borne by the taxpayers. instead the money will come from the fees the banks pay into the deposit surance fund. because of the actions regulators have taken every american should feel confint their deposits will be theref and when they need them. second, the management of the base will be fired. if the bank is taken over by fbi seat, the people rent -- fdic, the people running the ban should not work there anymore. investors will not be protected.

they knowingly took a risk. when the risk did not pay off, investors lose their mon. at is how capitalism works. there arimportt questions about the banks got into the circumstances in the first place. we must get the full accounting of what happened and why those responsible can be held accountable. my administration -- no one is above the law. finally, we must reduce the risk of this happing again. during the obama-biden adminiration we put in place tough requirements like silicon valley banand signature bank. includinthe dodd frank law to make sure the crisis we saw in 2008 wld not happen again. unfortunately the last administraon rolled back some of these requirements. i will ask congress and the banking relators to make it less likely this kind of bank failure would happen again and

protect american jobs in small businesses. host:he president from yesterday. when it comes to the idea of more regulation for bank protection what do you think? (202) 748-8000 free democrats. -- for democrats. (202) 748-8001 for republicans. (202) 748-8002 for independents. we wl take a few minutes to talk to kaylee lines --kley leinz of bloomberg television talking about the events of the last few days. thank you for joining us this morning. guest: thanks for having me. host: what was the president trying to accomplish? did accomplish it? guest: i think the president and the administration and regulatory officials have been trying to project a sense of calm. they don't with the contagion from the collapse of these few banks to spread further in the financial system.

you can tell from the share prices of regional banks perhaps that was not necessarily accomplished. the other message she was trying to convey was this was not a bailout. taxpayers were not going to be on the hook for this. it is coming from an insurance fund they pay into and the taxpayers don't be responsibility. we will have to judge when markets reopen this morning if there is any recovery in banking shares andhether or not the moves of the administration, the federal reserve took over the last few days is enough to stop the bleeding for now. host: you heard the president taing abt the idea of going to congress for more regulatn. do youave a sense of what avenues the president uld pursue? guest: what thpresident pointed to and her prominent democrats is ts 2018 rollbac.

that was signed 2018. it did have bipartisan pport. that acts all the rollback of some the most stringent requiremts of dodd frank for certain sized banks. it raised the threshold of the banks in terms of the number of assets required forhe most stringent stress tests from $50 billion up to $250 billion. silicon valley bank and signature bank both had assets less than $250 billion. they did not have the strongest level of regulation. he raises the question if they want to visit the issue. when you he congress with republicans controlling the house, that may be difficult to accomplish. a lot of republica have acknowledged what happened at silicon vall bank at signature bank but don't necessarily think stricter regulation is the sue. it's more about enforcing

existing regulation. host: for a historical context take his not only back to 2018 but 2010 when it comeso the protection and what happened between those yea and how i could have led us to what we heard in the last few days. guest: the dodd ank act took a long time to actually get done, ev when there was agreement that something needed to be done to shore uamerican banks and make it more resilient. in a stress test on the largest institutions, institutions across theoard, what hpened in 2018 w the small and midsize banks want to congress and said it takes thousands of hours and a level of pervision and manpower they should not be subject to. they were not diversified the same way j.p morgan or bank of america are. they should be subject to less supervision. that was a battle they won.

they happene -- that happened in 2018 a rollback of the most stringent stress test reirements for banks of a certain size. they were still subject to supervision, jt not the highest level of supervision which come sked to how much this is being enforced. the biden administration and the federal reserve itself are nducting inquiries into how the fedas supervising these banks. they are expecting the interna review to be made public by may 1. st: a lot of people looking at the siation inting to the fed self and what it has done on interest rates and how it may have contributed to what whave seen in the last several days. can you paint that into the picture? guest: the fed has aggressively raised interest rates to the tune of more than 400 basis points in the last year. th's very dramatic and create

interest rate risk for banks, especially those that have a l of money in long-duration assets. that was the case at silicon valley bank. the value of the long dated treasuries goes down as the fed hiked interest rates. when yields go up. the way the accounting works is they don't actuallyave to realize the losses until they have to sell the assets. what happened at silicon valley bank, they were heavily concentrated towards tech startups, riskier clients. in a macroeconomic environment that is no longer friendly and they wanted to withdraw all their money to pay them back. the way the banking system works they have to sell those assets at a steep loss. once news of the loss came in the share sales fell and there was a bank run. clients we worried about getting the money out.

long story short, that led to the failure of the bank. host: with the president brging up the idea of more regulation, has there been response in the banking community about the possibility of more regulation than what we saw going back to 2010? guest: it will come down to the question of enforcement. considering most people realize more stringent regulation will be difficult to get through a divided congress, but it's looking at the balance sheets. there's a lot of regulators over the last several weeks, including bloomberg's co-authors of the dodd frank bill who set a rollback changes in 2018 did make a difference. it's problem that has long plagued banks, the duration gap. the mismatch between assets and liabilities. if you look at the filings or the balance sheets, it should have been spelled out right

there if anyone was looking forward. it's a question if the supervision wasdequate by regulators or by bank management to see the problem brewing before it all came crashi. host: kailey leinz is with bloombe television. thk you for your time this morning. guest: thank you. host: we will have you in the first hour calling about the idea of more regulation needed for banks, for protections. (202) 748-8000 free democrats. -- for democrats. (202) 748-8001 for republicans. (202748-8002 for independents. rob from new york on the life or democrats. go ahead as far as the idea of

more bank regulation. caller: good morning, pedro. you are in good form as usual. my comment is, i suppose it is the republicans over the decades that have tried to convince us that the word "regulation" is like a dirty word. regulations are protections for us. they are not to hold us back. the whole notion that somehow to regulate the banking industry, the oil companies, the pharmaceutical companies, that e idea that there is something wrong with the regulation, republicans have tried to convince their own swords, their own -- sorts, their own people that there something wrong with regulating. you know the deeper picture is

the whole system of lobbyists that are working behind the scenes to change the rules, change the regulations, so we can them -- to weaken them to hurt us. to not protect the american people, the country, the tax system. so, i think republicans and democrats who areeep in the system have to come around on the whole value of regulating. not to be afraid, not to make it a dirty word but realize it is there. host: doug in ohio on if more bank regulation needed. good morni. caller: goodorning.

would like toake a comment. we need regulations. the robber barons are back ever since dumb dumbhanged it back in 2018. that ithe only comment i've got. st: 17 democratsoined into rollback those protections. what you think of that? caller: i think they were idiots. 2010, obama made law. they were the greatest regulations we had to keep the robber barons from stealing from everyone. when they did away with the regulations, they give them the rights to steal from the rest of us. that gets old. host that is doug in ohio. you can continue to call in to talk about the idea of regulations, are more needed for the banking industry? they brought up the president signing the dodd frank law back in 2010. here he is alongside then vice

president biden at the signing ceremony. [video] these protections will be enforced by a new consumer watchdog with one job, looking out for people, not big banks, not lenders. looking out for people as they interact with the financial system. that is not as good for consumers. that is good for the economy. perform will put a stop to a lot of the badoans that fuel a debt-based bubble. it will mean all companies will have to seek customers by offering better products instead of more deceptive ones. reform will also reign in the abuse and access -- excess. he will bring transparency to the kind of complex and risky transaions that helped trigger the crisis. shareholders will have a greater say on pay of ceos and other

executives. they can reward successnstead of failure. finally, because of this law, the american people will never be asked to foot the bill for wall street's mistakes. there will be no more tax funded bailouts, period. host: that goesack to 2010, thsigning of theodd frank law. if you want toalk abt more bank regulatn bein needed, call us. (202) 748-8000 for democrats. (202) 748-01 for republicans. (202) 748-8002 for independents. text us at (202) 748-83. so of yotexting usnd mmenti by soal med. this is from russ in texas. banks like svb, no revenue sources are gambling. simple. failures are many.

this is will you make an edit. bank regulations, employees and management stock sales need to delay offset insider training to allow public investors to have portunities about being disadvantaged. from twitter, jim says before you blaine trump and the dodd frank deregulation, barney frank's of the deregulation did t cause the svb failure. barney frank now sits on the bank board. bankers regulating banks, what could go wrong? if you want to post on facebook it is facebook.com/c-span. text us at (202) 748-8003. one of the people commenting in the new york times editorial, senator elizabeth warren of

massachusetts on the idea of more bank regulation and what should be done next. the op-ed available online. here's a portion. "with support from both parties president trump signed a lot of critical parts of dodd frank. regulators, including jerome powell, made aituation worse when the financial institutions load up on risk banking regulators shouldnd reverse the dangerous deregulation of the trump era, repealing the regulation must be an immediate priority for congress. similarly, tailoring of these rules has put our economy at risk and it needs to end now." the new york times website is real you can -- is where you can find that from senator elizabeth warren. the editorial looking also at the events of recent days. you can find it online as well. "the president blamed the bank

painted on the trump administration for modifying some of the 2010 dodd frank act rules. he seems to be referring to the bipartisan banking law that raised the threshold for financial institutionant classifi to $250 billion in assets. before the law, most midsize bankso comply with the same regulations as big banks, but this would have -- these would not have prevented either bank fai the 2018 lot did not absolve banks of the requirement to conduct quarterly stress test to ensure they could whether adverse market conditions and market idiosyncratic stresses such as interest rate shocks." that is some of the opinion when it comes to the last few days when it comes to more bank regulation. you can call us on the line and post on our social media sites or text us at (202) 748-8003. wanda in chattanooga, tennessee on the democratsine, g ahead.

caer: goomornin was wondering whetheyuilt the bas out in 200b- iled t banks out in 2008f e people that did thetudent loans dot baithem o. i want to say if you can bail theanks o reatedlywho has the interest on thenteres loans why can't you gohead and take the terestrom th pple wh owd theoans? host: would y call the actions the esident put inlace of bailout in this case when it mes tohe banks, noonly silicon valley bank but signature bank? caller: if they wanted to help the people, no. just go ahead and look at it,

bailing them out. you are bailing out the people who are part of t bank. i can appreciate helping the people but i don't understand how the ierest the sdent loansre notn play ho: wanda i chattanooga givi a comment this rng om the hl -- ving athis morning. from the hill, the collapse of the silicon valley bank brings ck memies of capital rescuing fincial mkets a th2008 clapse. raising concerns that taxpayers may have to pay out -- bailout risky financial bets. president bidenaid no taxpayer money would be used to support bailouts which are unpopular with voters. he said the money would come fr thedic. ere is disagreement on what constitutes a bailout in the

fund used to p depositors, including the $250,000 standard insurance from the fdic wch backeby the.s. government. someonservive republican ar making the argument tt veringeposits above the creating a future moral hazd and could embolden risky behavior heading forward. that is fm the hilif you wanto read it. yomay age withhose ntiments,speciay ncerni what nstitutes a bailou you can call on e line you can postn soci media u can xt us at 02) 748-80. onof tho critics on thshow yestday, senatbankin coittee member and north carolina - sou carolina public timcott on the past actions of the biden administration concerning silicon valley bank and signature bank. [video] >> the regulators seem to have

been asleep at the wheel without any question. i would say we heard recently they will have the greatest form of corporate cronyism we have seen in a long time. they will ensure all the deposits, even the ones over the $250,000 limit. that means the most sophisticated investors are now going have the insulation of the federa government. that is problematic. it sends a negative statement to the marketplace, and it is something we will have to wrestle within the coming days as we delve into what actually happened. we know it goes right back to where we started this conversation on the economy. the high inflation led to hi interest rates. high interest rates meant more deposits out of the bank quicker than they thought, leading to the collapse. we have failure of regulators

and failure of the management of the bank. we have a lot to uncover. the one thing we know, the american taxpayer should not be on the hook for this failure. host: sator t scott, one of the people quoted on roll call. representative brad sherman california said relators missed the mismatch between assets and liquidity needst svb because congress limited visibility for banks that size. they took medium and large institions a caused them to beeregulated like they were small. the folks at silicon valley took sks thewould not haveotten away with under any other program. congress should repeal the 2018 law. svb's assets jumped since 2018. shareholder equity rose about 210%, inclung reducing th buffer that would help the bank withstand e crisis. democrats supported th2018

change. senator mark warner, jon tester of montana introduced by senator michael crapo. let's he from rich ohio the republan line. caer: reallgreat convsation. it's really an importanissue. do have regutions how much ware alwed topend. it is a budget set up and ere's a lit. we should be gng by . it's a difficult thing but tt is the regulation. weverspe. he kw inflion would come henew thfedera reserve woulraise the intestates. when whad th housing a we got in trouble we almo blew up the banksecausee try to ha housefor people,hich was an important thing. they d not he any money. they threw their keys back t the house. everne had houseith nothinin it.

ey thr it ba to thbanks and e bank said no. wetoppedradingnd banking and almost wreckedhe whole system. host: afar as clarifying if youhink at this point it's necessary for congress for the presidento offer more regulatory oveight o bank? caller:ood an b regulations. host: what do you mean by that? caller: china has regulations russia has regulations on the good and bad side. it can be very dangerous regulations if applied politically and not for solving the problems. it is good forveryone to have a use but everyone needs money in it. the bank ss i cannot loan to hous. host:hat is rich in oo. one ofheopics one othe

focuses is crtocurrcy industry which did a lot of business with the banks in question. this is from theashingn post lookg at it. whent comes to signature bank, the bank had bn a lotime financl instution for the industry, posting tools for facilitating digal ansactns and cnting notae crypompanies and the crypcurren exchange coinse a clit. it's rt of slim group of main street banks cering the needs of cryptocurrency firms and eir clients, an ar upended after the closing of anher crypto bk silvegate s wednes silve gate capital last wednesday. crypto comnies may be forced to rethink finanal hdings. e idea more nking regulation is needed in lighof silicon valley bk and signature ba. tyronend illois, rublica

ne, you are next. caller: good morning. always nice to call in. to me, this did not happen overnight. i ink the regulators in calirnia suld be on th. i understand there were several companies out of china that were volved in this, had money with thei corporations in there. i have a problem we are paying back foreign companies. as anything you invest in, inveors should not get their money back. they took the risk. it did notay off trefore theyose thr mone host: that is tyrone from illinois weill he from nick in florida, sarasota on the independent line. caller: good moing. i think the problem is it is more government policy and

regulations. the regulators did not do their jobs. you can't have socialist policies trying to run a capitalist system. that is all the democrats want to do. biden wants to blaine trump -- blame trump. when does the administration take responsibility? trains going off the rails, banks failing. they are trying to do crazy stuff like green policy and social policy controllinhow a bank operates. host: as far as the blame is concerned, why is it the biden administration's fault in your mind? caller: he's been in office two years. p can't seep saying for years. if he gets reelected, everything from the previous admistration, it is their fault. who is filling in the four-year gap? host: but the banking policy

going back to 2010 and 2018? caller: because of buddies having them do administratively. it is not the regulations. it is this equity and all these other things they want to fund but they don't make money. that is the problem. you cannot put up money to do things. they fail because they are financially inadequate, then turn around and say we did not regulate enough. you need more regulations. host: that is nick from florida. from our twitter feed, the banks did it to themselves. pushing green woke banking. biden won't bail them out because of all the good. how can politicians regulate banks when they don't how to regulate their own spending? from another viewer off twitter, economic

irresponsibility caused this problem. the administration wants you to think they will save the date. people posting on text. you can post on facebook and call us when it comes to this idea of more bank regulation that is needed. (202) 748-00 for democrats. (202) 748-8001 for republicans. independents, (202) 748-8002. you can text us at (202) 748-8003. on cnn yesterday, california democrat john garamendi talking about the federal reserve's role and what led up to what happen at svb and signature. what that means as far as regulation in the future. here's a portion of that fm yesterday. [video] >> bond prices go down. that appreciates the assets of silicon vall bank relying on for its balance sheet. bigger picture, as the fed

raised rates so quickly to spark is bank panic her >> absolutely. the problem goes right bk to the fed rapidly raising interest rates. this bank did what at other times would have been a solid investment. they invested in american bonds. u.s. government bonds. their miscalculation was how rapidly the fed was raising the interest rates which devalued the bonds they hel that led to the run. they had to sell the bonds at a loss and suddenly we have a bank that is upside down. the d has to be very careful here. if they do another very rapid te increase, it will have two effects. those companies holding u.s. government bonds, and this is around the world, they will see a devaluation in the value of those bonds if they are not held

to maturity. host: you can join us for the next half hour talking about this. (202) 748-8000 for democrats. (202) 748-8001 for republicans. independents, (202) 748-8002. dee is next from baltimore, marylandn the democrats line. caller: hello. you notice these regulations that were taken off the table duri the last administration, everything with these regulations -- i will take this regulation to help the bank. i will help the railroad. people don't have to foow the rules when you take the regulations off the system. that is why the incident with the railroad, with those trains. now this. those regulations do have a lot to do with it. host: ok. don in salinas, california. caller: hi.

it is getting tiring that trump gets the blame for everything that falls at biden's feet. take the train wreck in ohio. they tried to blaine trump for that but he took away regulations. no more trump in paper than the washington post. they did a study and found out there wasn't y regulation that trump took away from the railroads -- host: our discussion is on the banks and the trump administration did rollback some of 2018. some democrats joining along with that. you don't think th bears responsibility in all of this? caller: i'm telling you this. name a regulation trump took away thacontributed to the failure of the banks. name it. host: i will read a story and show you a little bit. it was in 2018.

this is according to business inside the house pass a rollback of regulations ofoddrank devote of 285-159. 17 democrats joined republicans in the senate to consign it in the law. it raised the threshold for standards from 0 billn to $2 billion. 10 banks are subct to fedal oversight andscapedcrutin ituotes president trump in 2018 sangt was a great day for amera and r ameran workers and small businesses throughout the nation. let's go back to 2018, the signing of the legislation that rollback some portions of the dodd frank law. you can find that at c-span.org. here's the portion back from 2018. [video] >> the legislation rolls back the crippling dodd frank regulations that are crushing community banks and credit unions nationwide.

they were in such trouble. one-size-fits-all. those rules just don't work and community banks and credit unions should be regulated the same way. you have to really look at the -- they should be regulated the same way, with proviso for safety as in the past when they were vibrant and strong. they should not be regulated the same way as the large, complex financial institutns. that is what happened. they were being put out of business one by one. they were not lending. since its passage in 2010, dodd frank has dealt a huge blow to community banking. as a candidate i pledged we would rescue these community banks from dodd frank, the disaster of dodd frank. now we are keeping that commitment and all the people

with me are keeping that commitment. host: again, more of that available to see what took place in 28, which many have mentioned in the last few days when it comes to regulatory efforts. e president yesterday calling on congress to put in place regulations to prevent what happened at svb and signature bank to occur again. if you think more regulation is needed to protect consumers. independent line from long island new york, good morning. caller: good morning. iant a story lesson. where to dodd anco fro the fancial -- wherto dodd frank me fro thfinancl hsing csis. the docrats side wted easier lending. the republicans said no problem, asong as you givus insance for swaps. that transpired until 2008, ich caed the housing cris

d caused doddrank. 2018 was a bipartin bill to ro that back. let'set to where were today. cause the reckless spendin -- it d nothing to dwith the pandem. e prinng of money caused the ination,hichausedhe bonds to crash like that. if we di't print this money, we would not be in this tuation right now. i think it was the caller from south -- tim scott admitted they would cause inflation. that is how we are here now. thank you/ -- thank you. host: steve, a republican. caller: i have been following this problem since day one.

i'm not too intelligent but i can figure this one out basically. if the fed caused this problem by rate hikes and if the fed stops the rate hikes to ctrol inflation, we can expect continued inflation. which means we have to stop the spendi. that is the only way we can do anything. we must back the house to get biden to back off on spending. that is all i got to say. host: no other regulation is needed? caller: well, one has to look at what kind of regulation the fed will insist on. we both know -- everybody knows

that thewant to push us into a digital currency. is this a means to push us into a digital currency? host: steve in san se. ll strt jourlighligs one of the peoplin the dodd frank legislation, former senar barney frank,ow sitting the brd of bank. ying m fnk eard more than $2.4 miion in compention fm signure bank since 2015 rejected the idea regatory change l to sigture's collap. no oneas showed me fud, m frk sd. fting e threold waa good chan. it saved smaer ban a lotf paperwork. he said as earlys 23 he w talking about the ed to change , predating emoyment with signature bank.

threvolvg door projectn shingt said mr. frank's sitionith signature bank s "a classic case of having your ca and eing it too." you caaddhose tthe mi when it comes regulation of banks. rickin phidelphia on the demoats line, you are next. caller: good morng. i have been stening to everyone but they forgot about the banking institutions. when they failed during t great depression, the reason why the banks started the great depression they wanted to advance people money in the market. when the market failed, the bank failed. then you have 2008 with the housing csis wn the bank was

selling houses people that can't affo to buy high-priced houses. we had to bail out the banks. we are in the situation now with silicon valley bank, they give out -- they took a lot of risks. this is what happens when you take risks. sometimes it pays off and sometimes iton't payoff. i believe all this fas on the ceo of the ban the bank president. they got greedy. with regulation, you know, all nks need to be regulated to protect our people -- the people's money. without regulation on the banks

and financl institutions we will not have a situation like this. host: ricky fm philelphia le in indna on the independentine. caller: good morng. i will be brief. they are tryinto accuse the d of ing atault f this becae they are raising interest rates. but they are neglecting to say why they are raisi interest rates. they are fighting the inflation created by the biden administration. i'm sorry. it falls back into joe's lap. i would like to see a democrat stand up sometime and take responsibility for a failed program. have a good day. host: lee in indiana calling us wi thoughts on not only somebody calling because of the cause of what occurred at silicon valley bank d gnaturank, b the ideof

re bank regulaon needed. you can call us in t 15 minutes oro if you want to give a comment. (202) 748-8000 free democrats -- for democrs. (202) 748-8001 for republicans. (2) 748-8002 for independents. text us at. --text us at (202) 748-8003. yesterday onmissivy was senator ll cassidy of losiana o serv on the finance committee and the joint economic comttee. he took a look at eituation when it cos to regulations and focuseon management the banks involved. here are some of his comments. [video] >> how do we get back to this point? we are 13 years after 2008. did theegulators missed something with silicon valley bank and how it was working?

>> the fall testily with management. management knew the investment strategy was ill-equipped. first it is management. crilly regulars have imagined that as well? absolutely. i'm told people selling stocks short, they sold the svb stock short and made $500 million. somedy out there knew e bank was bleeding to death. yes, the regulators did something wrong. i think it is the high inflation and high interest rates that will expose mismanagement not just at svb but other companies as well. host: senator cassidy on emissivity see. matt in maryland, democrats line caller: how are youoing? would ke to say a these people calling in and saying abt cutting spending, i want to hear the right talk about where ey want to cut spending.

would also like to say i think it is time the banks srted -- why these people were so termined to defend banks. consumer protection is probably the most important thing in all of this equation. yeah, i think the banks need to start taking responsibility. host: that is matt in maryland. the washington times looking at it. jeff warnock writing under the headline biden cushions moral hazard for banks, saying economists warned the preside's actions to make more than 200 billion dollars in additional government funds available for customers posits were not covered by federal insurance is the first step towards government control banking system. fdic covers up to $250,000 per account.

mr. biden appred a higher limit to cover the huge amounts of uninsured deposit. it stretches the fdic's fondant to the breaking point -- fund to the breaking point. ishe mosexpensive intervention in the banking system. he quotes a professor at johns hopkins who served on president reagan's counsel. it moves the b sector closer to a public utility over gornment-backed entity. that is the washington times's take on that. you can give your fierce active -- perspective on the phone lines, twitter, facebook and text tests at (202) 748-8003. somerville, texas, we will hear next from howard. caller: good morning, sir.

there's a lot of blame to go around for everybody on this. the president said something about a fund the banks pay into. how much is in that to cover stuff? has anybody asked that question? does anybody know? host: why do you think it's an important question? caller: if there is not money in the fundhow will they pay the banks back or the people with money in it? how much money is in that fund paying into this insurance? host: aside from that, do you think something is needed? caller: i would imagine they have enough regulations now. people were not watching this for some reason. it seems like the last two years we have been having a lot of trouble with stuff. things changed and not for the better. host: what do you mean by that? caller: when somebody got elected things changed from day one when he got elected for a lot of businesses and it was not for the better.

host: howard in taxes -- texas. jim calling from florida on the republican line. caller: good morning. a quick review here. at the time it seemed necessary. i believe it was. it is still in effect. a commentator on emissivity -- msnbc made the comment that the large banks, bank of america, wells fargo, are very much constrained and regulated by the primary element of dodd frank. what trump's revision did was

relaxed some of the standards for banking writ lar. no major bank in the country is at risk. on this particular bank, again, people who really know something about the industry who are commenting, who had skin in the game and money with the bank, svb -- host: that is jim in floda. if you look at the fdic, you can find the report online. the depot insurance fund balae, $2 billion plus and is thlargessource of income.

operating his fences and unalized losses available offset the balance. dif reserve rat was 1.6%. there's a lot of information at the fdic.gov website when it comes to the program that protects those deposits of the $250,000. queens, new york on the independent line. caller: i don't understand why trump supporters don't understand the mathematics. if you get rid of the fdic regulations which falls under dodd frank, what will happen? it is inevitable. i don't see why they don't get that. they blame everything else except for what trump did. he loosened the regulations.

that is all i got to say. host: some democrats joined him and that. what you think of that? caller: boo hoo on them. i guarantee you -- what is her name in arizona? they were probably for it also. everybody was that time trying to make peace. there is no making peace with these people. under obama, he had some of the smartest peoplrunning the show. now the opt out with friends of friends and retives of relatives. this is what you are going to get. host: let's hear from john in savannah, georgia on the demoats li. caller: one question. i was watching the news when they were talking out the banks faing.

management took bonuses. where did this money come from to take bonuses? where is that money coming from? host: sharon in pennsylvania, independent line. caller: yes. i take issue with the caller who says they have been watching this from day one. this goes back to the beginning of the banking industry. banks take your money and go and invest it. the more they get from it, the more they get to keep. they have motive to take riskier and riskier bets with your money. it is incumbent on somebody to step in and pull them back from those risks. we did that first in the great depression with the ass act. we repealed the glass act in the 1990's.

banks starting taking bigger and bigger risks. they crashed into thousand eight. we put -- 2008. we put restrictions on them with dodd frank, and then we removed those restrictions. it is not a rprise we are at this point again with the banks because of restrictions removed. i think we need more regulation. we need to put back into place the regulations we had. host: ok. rebecca in california, independent line. caller: good morning. i wanted to make a comment. is is another structure that is crumbling. the education system has crumbled. the politicasystem has crumbled another banking system. these are pillars we have had in place for years. it no longer is going toe feasible for us. it is going to force us to have to do business differently.

you can bank on it host: what do you mean by that? caller: i kind of agree with the previous calleabout the digital currency. they will have to be something changed regarding the whole banking syst. i'm not sure how that is going to work. i understand there is a block chain. there are different ways pple are trying to change how we do business. that is bacally what i mean by that. the main thing is that all the pillars are crumbling. we did not realize we were going live through something like this. host: that is rebecca. do you have something else or are you all set? caller: have a good day everyone. host: that is rebecca on th independent line. five more minutes for this conversation. you can call the lis that best

represent you. if you have not called in the last0 days, refrain from doing so. give your thoughts on social media. that continues throughout the day. our texting service is (202) 748-8003. axios looks at some of the indicators of how it was received by various sectors and you can find it online. stock market reaction was the first test of the decision to declare a systematicisk. a move that allowed unlimited backing to depitors. ock prices dropped sharply, including a 62% decle in the shares of first republic. the market is closed on mond.

the trouble appeared to be limited to stock prices largely affectinmedium-sized regional banks rather than the systematic run on the u.s. banking system. it says investor parlance damage was idiosyncratic, limid to specific asset class. says the government's move to begin on thursdawith questions about the ability of tourvive --thability of svbo surve r the weekend. you can see all that at the axios site if you wish. one more call. is is from north carolina. go ahead. caller: hello? host: go ahead. caller: i'm from massachusetts. host: go ahead, caller. caller: this all goes back to

2008. when clayton deregulated the banks ck then. the democrats decided everybody should own a he, whether they could afford it or not. the banks were giving out high-risk loans. that in reality came to pass in 2008 under bush when the banks collapsed. we had the big bailout. then we had dodd frank come in. they overregulated the community banks, so the community banks, your mom-and-pop bank, local banks. dodd got a very lucrative loan out of that deal. frank got a very lucrative job out of the deal.

trump id let's eez it up on the community banks, if you watch what he said. now biden comes in, cancels gas lines, cancels drilling, inflation goes up, everything goes up. the banks bought bonds that now collapsed. the stock market is going crazy. so, most of it is biden's fault. inflation. the fed had to raise interest rates to try to control inflation, but if we don'stop spending money it is never going to stop. host: vincent will be the last callrom oklahoma. caller: yes. i read in the tulsa world today, this is what biden says. we are ok. host: as far as more bank regulation, wh does that mean

to you? caller: we don't have a problem. he says we can handle it. host: vincent finishing up this hour of calls. thanks for participating. we will continue on to look at issues involving china. of next, a discussion of china's military capabilities. our guests will be elbridge colby and lyle goldstein joining us for that conversation. later on, we will look at issues of the federal reserve's monetary policy decisions. that's the subject of a new documentary, “the age of easy money." we will talk with the direor james jacoby later in the program. those conversations coming up on washington journal. ♪ >> be up to date in the latest

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watch our coverage of the candidates on the campaign trail. to make up your own mind, campaign 2024, on the c-span networks, c-span now, our free mobile video app or anytime onli at www.c-span.org. c-span, your unfiltered view of politics. >> "washington journal" continues. host: each day at this time, we are taking a look at aspects of china and what it means f u.s. policy. today, we are talking about the chinese military and other topics this week will look at economic issues and other issues but today, the topic of military and to guess are joining us, the cofounder and principal of the maraon initiative and serv in the trump administration is the forr defense deputy assistant secretary ande are joined by the director for asia

engagement and a visiting professor at brown university, thank you for your time this morning. what are china's military capabilities and what does that mean for the united states? guest: china is certainly moving forward on the military front very rapidly. all across the board, there is hardly an area of military development where you can say china is not moving forward. it's quite impressive as military analyst just to take one detail. we are confronted with new military innovation almost daily. i came across a i wasn't aware of. i was worried about the generation before that, the supersonic weapons. yj-21 is a hypersonic weapon

which is a ship to ship missile. e unit states navy does not have either supersonic or hypersonic weapons. it's not true in every area but this is clearly an area where china is nojust aad but substantially ahead. gues building on that, ihink you asked about the chese capabilities and the chinese had a military a long time ago that was a peasant army and heavily focused on ground warfare. they evolved one that is very focused on resolving the taiwan issue. they have moved beyond that. they are increasingly develop forces for what's calledower projection that looks like the american military. people say they are not tilting aircraft caricatures just carriers but they are and nuclear powered submarines. they are not ready to challenge

us in the south pacific but there going that way. they are speing a significant fraction in the open source of what we spend. they probably estimate didn't -- underestimate their numbers on the get more bang for their buck because their labor costs are lower. we are looking at the first peer superpower military since the soviet union it's an urecedeed peatime milita build. st: when the pentagon looks at capability, these are the numbers. do the numbers sound right? this was from the defense department and if they are right, is there more concerned the? guest: i might disagree a little. i am a little ss worried about wer prection capability as

we take the greatest sbol of our prection is aircraft carriers and we outclassed them. they may be just getting ready to fish off which may be in the range but the first two carriers are quite weak and nuclear forces are far ahead of them. i don't coider this a big worry but i somebody who has come to believe that china has a substantial nuclear deterrent already. they are finishing off the job of putting the icing on the cake for mutually assured disruption. we have to be cautious with the crisis in china because even if it's taiwan osouth china seas, it could escalate to the nuclear level. we have to play this extremely cautiously. guest: i think we should treat the chinese with the us -- utmost gvity. i think we need to have strength

to deal with that, draw air dense perimeter and that should include taiwan. th's the best way to get the stility. the u.s. strategicommand notifiedhe congress recently that the chine now exceed the number of icbm launchers and that's only one criterion, but it's significant. for a long time, people said they were never going to build a nuear triad but at's with they are doing. they may be cooperating with the russians to get the stuff you make nuclear weapons out of. i think they are not where they need to go or want to be put they are clearly on that trajectory and we can see where at is going so wcannot ignore the problem so we need to priorize this. host: if you want to ask our guest any questions, here's how

you can call us -- the chinese presidenmade a speech yesterday and of it was translated he said this -- ishis rhetoric or does it speak to inttions? guest: i looked mostly at the capabilities they are building.

they are building a military to seize taiwan and take on the united states and thei practicing missile attacks. the intentions are pretty clear. we don't haveo speculate in this great wall ofteel that he used a couple of years ago go. it's chilling rhetoric so i think the chinese president is clear that china's going back to a more firm nationalism that is specifically linked to the gat rejuvenation of the chinese nation. the other thing i would underline is that they also feel the threat. commonly, people who take a tougher line on china tend to say don't worry, i think that china is being strangl, he said. he said they were being repressed.

that suggests that with things like the semiconductor sanctions, eccentric, they are feeling threatened so this is a dangerous situation. it's dangerous in the coming years, not necessarily a long-term problem. i think we need to combine real strength militarily. we need to be careful and how far we pushed them and provoke them. this is an important balancing act i'm not sure we e navigating well recently. guest: i have so areasf agreement. we d't want yr overstressed ideology oret into a strule ideologically. don't wa to tgger the serity demma he but feel u.s.-china relations are in a dangerous spot.

this is not merely rhetoric on the chinese side, the is a ep fear and incurity on the part of the chiseecausehe scenario before uis right in their front yard. it touches their core interes because of this,heyre considerate -- considering a war will bak out. i don't ink the u.s. should defend taiwan. i think that's outside the perimeter. it's probably the worst pce to take on cna as they have all the advantages. which you u defense to our in vantage and defend error treaty allies like the philippines. you can realistilly defend them in depth. otherwise, we will bdragge into it, like which is a kind of

family quarrel. the huge distances aregainst us and there's is an asymmetry of wl. gog back to the nuclear risk, you can certainly see it. guest: i agree with a lot of this. the way i look at the taiwan situation is very much in america's interest that it not forcibly subordinated to china. it makes sense in a vacuum but the reality is that government should be in place like coco -- tokyo and manila and these countries are looking very carefully at how the u.s. backs this up. taiwan is also very militarily valuable and the chinese would

ve access to the -- the specific -- the pacific. they are not existential interest. 70 out of a hundred is what i think of so the key thing is to laser focused on the defensive taiwan and draw out the costs and risks. the thing that we have going for us is what's kept taiwan free the past 70 years which is -- ways -- which is it's hard to launch an air assault invasi. adolf hitler dominated the european continent but he could not get across the water so we can do it we have to focus and haven't been focusing enough. they say they are focusing on this. if we end up in a situation where we are can held to redraw

taiwan because we are ill prepared, it will be more dramatic and more dangerous and more extreme the steps we will have to take to compensate for it. in many people's minds, they are thinking 1941, the japanese bombed us but we can alway churn up the industry and overpower em. in 1941, japan was 1/1the size of the american economy and now it's -- and now china is an onomy of considerable size. we could be not only in real trble but irredeemably so. host: before we take calls, how are you funded? >> we are a nonprofit funded from u.s.-based individuals and research of the u.s. government and te money from u.s.-based foundations and we are focused on preparing the united states and alliaes forartnerips

with europe. host how are you funded? >> the same except we don't take money from the u.s. government. we are privately funded but all u.s.-based funders. host: let's start with alex in california, independent line, good morning. caller: thanks for taking my call. i have two comments. the first comment is that when commentators talk about taiwan, they never talkbout whether the american people want to go to war over taiwan. they talk about whether government officials want to go to war. the second comment is whether we go to war depends on the americ people. it's quite easy for beijing to figure on american ambiguity by conducti a whole. -- conducting a poll.

y hasn't the being government or military conducted a poll to ask the american people whether they are willing to go to war over taiwan? if they are not, that basicay means beijing is free to take taiwan by force. guest: i think the caller hints at this very grave asymmetry of will. i don't think there was a poll that aed americans if they knew where taiwan was on a map. his strong majority could not find taiwan a map. there is a lot of islands out there. this one is especially close to china, about 90 miles across. it really is quite reasonable that americans generally do not want to go to war for taiwan. the more threat the china part is heightened, there is more going on. it raises the number but until

people are really getting killed , thousands of americans dying every day in a war, that could get much worse. this could have escalated to the nuclear level. could be on par with world war ii so when americans consider that they should consider various alternatives which is engaging taiwan and the philippines to draw a redline. the american people have a lot of common sense. i'm not sure about the washington elite. we should recognize this is a bridge too far. japan is defensible d they have aarge number of islands and a fine self-defense fighting machine. if they have to take on china,

they will be ready and we can help them but drawing the line over taiwan is a great mistake americans understand that. guest: the polling that high have seen -- that i have seen says there is support among the american people to defend taiwan. this is no -- by no means a positive directly to the issue it's kind of abstract. the attack on the philippines in 1941 was launched from formosa.

wusan is roughly 100 miles from taiwan. these are very tightly coupled in all the issues of distance that apply to taiwan also applied. the one area agreement -- up agree bit is that the chinese expect the united states to co to twan's defse but'm not sure we have the optiof tting off taiwan bause chese seeto be preparinfor a larger conflict and would attack u.s. and japanese bases. whether or not, this will be a larger conflict, god for bid. guest: i have to disagree. china does not want to fight the u.s., that is clr. while ey are prepari to do so, the opening moves in the

taiwan scenario woulde ting taiwan proper and doing the bes tovoid using forces. we know we don't want to go to war with chene-- with china either. i think there is a sense that taiwan is a trampoline and china will jump on the trampoline and leapt to japan and the philippines. i think this is very mistaken. there is no evidence for that. every day on chinese military media, they will teaten taiwan because that is a civil war left over from the cold war. americans don't realize that the official title of taiwan is the republic of china.

this should hint that this is a long time civil war. it's not true of the philippines orapan. there are no serious territorial disputes between japan and china in the philippines. to call taiwan trampoline on par with japanese aggression in the pacific war i think is mistaken. they speak chinese in taiwan. they don't speak chinese in the philippine we need to treat taiwan as an isolated case. i think we realize it probably not defensible but that doesn't mean we don't have a good defensible position. guest: i didn't use the word trampoline, you did.

we could live in a world in which the arguments were in -- were compelling that the military old up is limited. that's not the world in which we live. look at the military bases they ilt bend tain. so are larger th the district up lumbia the military they are building is clearly for power projection. look at where the u.s. government is looking for bases, indian ocean, south pacific and even the atlantic coast of africa. in theory, we could live in a different world that's not the world we are living in. host: up next is our democrats ne. caller: good morning to all three of you. i'm listening to you best and i would say mr. goldstein has the most reasonable take on the issue of taiwan.

i think the chinese consider taiwan as part of their country. for the united states to get involved in their internal affairs, they been able to put up with the rhetoric that i don't think they will put up with the military interference in taiwan. i understand united states will send so units to japan. the issue should be left to china, not the united states.

guest: don'think we want to exaggerate the democratic issue. mr. colby has made this argume. we cozy up with vietnam just fine. th are not close to a

democracy. hong kong waslso very mocrat. regrettably, it's n now but nobody in the right mind would suggest that the u.s. mitary would try to dend hong kong. this is not ry different, unfounately. i would like to return to the point about the power of water. i think the caller is right, that thiis rightly vied as a civil war. it came from 1941 and is a carryor from the colwar. the u.s. recognize that taiwan was part of china back in 1943. president roosevelt did that and truman validated that point. theyrag about having 700,000 chinese relics and 'true. that's partly because this was a

civil war in these rels were brout fromhe mainland. we should recognize that. u.s. has been trapped in civil warsoing back to vietnam. afghanistan, iraq, let's not get embroid in another civil war, l's draw a defensibledline. ho: two events here about china and itmilita -- the defense department yesterday talked about the budget they plan to relee to congss and particarly where she has directed towar china. this is a little bit of what she had say. [video clip] >> competition does not mean conflict. we must have the combat credibility to win if we must. first and foremost, this bget is a procurement budget. it putits thumb on the scale favor of game cnging capabilities that will deliver not just in the out years t in

the near term as well. our greatest measure of success in the one we use around your most often is to make sure the p.r.c. leadership wakes up every day, considers the risks of aggression and concludes today is not the day. for them to think that today and every day between now and027, now and 2035, now and 2049 and beyond. ho: that was fromesterd. the ll strt journal highlights where the money is going. whenou hea that talk, what does it say about china but how we are preparing against them? guest: i agree that we are not at all prepared for a war in the taiwan straits. i think there is a real possibility that we would lose such a war. unfortunately, we would hav two

quadruple our defense it and it might still not have adeqte arms because of the distances involved. china can bring more firepower against the islands than we uld possibly. this is 8000 miles away from the united states. we need to have a strong defense but instead of spending more and more, we should choose a more rational defense line and spend more wisely. i rk for the navy for 20 years and you do not need a huge number of big guns. we should move away from that. they are not viable for attack submarines and we don't have enough area we don't need to spend more money, just more wisely. guest: i thought the comments from deputy secretary hicks were excellent. it shows a rear area of bipartisanship. this is the kind of thing i was trying to push as well and i want to commend her not only for

the focus on china but they have taiwan is there scenario. she said in the long and near term. we cannot just prepare for 2040, we have to be ready for 2027. the question here is implementation. does the budget follow through? my perspective at this point, we are facing a peer superpower since we became a world power. if the first time refacing a genuine peer economy. it was noted that ina is in the lead in many areas area my view is that we need a fundamenl change. what i see so far is that artman of defense is doing a lot. -- the department of defense is doing a lot and there are good things happening to deal with a generational challenge from

china whether or not you think we will defend taiwan but we will have to have more fundamental change. last time i was here, we were talking about the industrial base. there has been talk about this and some changes but that will not do the trick. we need significantolitic instmenttop-lel signing from t presint down ying this is a natialriorit i ven't seen that yet. host: two guests joining us for this conversation. thony in pennsylvania, republican line, you're next. caller: hello, thanks for taking my call. i'm really mystified and how it could be possible that a fighter jet can fire a million-dollar

missile anmiss a balloon. number two, maybe you could comment on this, the balloon that flew over our coury, how come they could not bring it down intact before it flewll over the stes? host: did the china balon shoot down change the relations with china? guest: i don't think it changed very much. in my view, this probably was some sort of mistake and i think china should be embarrassed about this. china will do more and more surveillance and chinese surveillance has been improving. i think they have 24/7 coverage with a satellite aray and they

watch everything which is why i'm concerned. i don't think we want to be overly concerned. they do see using balloons in a conflict over taiwan but balloons flying over the united states, i don't think that is part of their plan. we have to be careful about threat inflation and balloons are actually white hard to shoot down. i think we should have gotten it earlier. host: how has this changed perspective? guest: for people who watch china closely, it was not that surprising but it has an impact on the man in the street perspective. it drove home that china does have global in -- ambitions and the ability to operate in our own skies in a way that pele said i think of it as half a world away and that's a correct inrence or take away from what happened.

sometimes the missiles are not engineered must necessarily for taking down a balloon. it's not something the air force has been practicing a lot. as the northcom commander has pointed out, this has revealed gaps gng on. host: ts is the independent line, good morning. caller: i think some people are a danger to this country. what is the basis for this false narrive we get, this hysteria about china? these are the same people who lead us into several wars that we lost, and dennis then we didn't do well, libya, we didn't do well, iraq was lost. now they are telling us they can manage china. frankly after what happened in

afghanistan, a lot of guys ould've been fired and there should have beenn rest and theyhould have gone to prison. why are we pulled into this crusader is him? there is an element of racism and have this narrative of china is painted. you want us to spend the liens of dolla on war weapons. we went for those same weapons and we could'vene in afghanistan. now we must retool and spend more in taiwan. the raise a good point. you ask americans to fight taiwan on the map and they cannot find afghanistan ther. we wake up every day, not worrying about chinese - knocking on the door. we worry about sending her kids to college. worry about who can afford housing, we worry about the job market and if we have enough

savings to last six months. i wish this country uld focus domestic issues. host: we got your int. guest: we have a pretty left-wing biden administration. look at what the natnal security advisor said. they are saying china is the biggest challenge. it's not threat inflation. take it from them. it's the simple fact is the largest military old up in a generation or more that's just the reality and you look at what the chinese have created in terms of social capital scores and what they did in hong kong and tibet. that's the reality. suggest you look at my personal record for my views.

i oppose the iraq war in the intervention in syria and libya. i agree with you that a lot of people responsible for those wars should not be listened to. that would hopefully give me more credibility because i'm not a warmonger. i want to avoid a war. the uned states did not follow your line of thinking in the cold war. we avoided war without the capitulation of western europe. your last point is very on point. this is about american prosperity. this is not about something going on in taiwan. we clearly see what china's ambitions ar they want to make theorld and economy centered around themselves. if you're worri about your economic prosperity, you need to be worried about china because if they succeed in their grander

ambitions, forget abt the things you're talking about. that will be a world dominated by beijing. guest: the caller brings up some go points. we he blundered into civil war after civil war, afghanistan, iraq and going back to vietnam. how did we get into vietnam? we were trying to can chain -- contain china and quell chinese influence in south asia. the last cold war ended in a favorable way. let's not forget that i believe we lost 60,000 young americans in vietnam war and let's not forget the hundreds of thousands of americans wounded. this is not a desirable out come. we need to realize china's gains

are limited. we need to realize this idea that china is trying to take over the world is patently false. look at africa, they have a military base in africa but they have not used for some large-scale even though they been there for a long time. they are mostly building roads and railroads and making money but africa is by and large improving. there are problems with any kind of major development around the world. china's names are limite we have to keep our powder dry and keep a strong defense and perhaps we have to draw some redlines. we have a very strong and defensible position. we shouldn't bankrupt ourselves to try to defend taiwan and getting crazy about each move that china makes in the asia-pacific let's image if china tried to defend cuba or

somewhere in the caribbe against the united states. it would be ridiculous. this defensive taiwan is quite ridiculous. at some level, is a guns and butter question. wery to defend taiwan, americans will be worse off because we need to triple our defense budget. guest: i neglected to address the point about racism. the countries we are working with, we don't want to be dominated by the chinese or east asians. countries like india in south asia. if there is racism involved, it's a dismissive attitude about the chinese. i put the chinese very serious

with the numbers and i've had long experience with them personally. i am concerned. this is an extrely important country. there is often a kind of soft ideas the chinese -- older people in washington think the chinese are still riding around on bicycles or something. that is the farthest thing from reality. i think it's the opposite of being racist. guest: i appreciate that you take chinese capabilities very seriously. i ink the is a racist component tomany in washington. there is this kindf yellow pel fear which is behind some of their issues. on japan, it seems that japan is quite inexperienced in the way geopolitics in international affairs go.

there is a lot ofad blood between the chinese and the janese. we have to look at this subjectively and realize japan is white defsible. security interests in japan an china ali white well. they want to trade and build infrtructure. we should be working to bring tokyo and beijing tether instead of stimulating more bitterness. it wl reque some kind of reconciliati but the idea at china's inkg of invading japan is detached om reality. therore, japan is defensible annot really threatened. jan is choosing spend a bit more that is reasonable and they shld share the burden of some kind of adjustment i thinkhey spent 1% of gdp which is far wer than america.

we a paying muchore andre rseff than defending someone else. host:et's hear from richarin maryland, go ahead. caller: good morning, i don't think the chinese are afraid of australian submarines or america being a thousand miles away. what they do have respect for and the guy talked about japan, historically speaking, fully equipping japan is the linchpin for the asian basin would more than get china's attention. i think would give them a little hard earned the fact that the only ally they have over there is the one they bought which is north korea. two equally arm and equip japan

under their umbrella, the philippines could him in and even taiwan. could possibly get under that on brel and it wouldn't violate our one china policy. i think we need to try to coince the japanese to step up , be the linchpin for the whole security of that area and i assure you, having done so for doing so, it would take all the fireut of the chineseragon d the ger would be distemr. st: thank you very much. there was an aouncemt sterdafrom psidentiden on the nuclear submarine sale to australia and here's part of his responserom yesterday. [video clip] >> our unprecedented trilateral cooperation i believe is the strength of the long-standing ties in our shared commitment of

ensuring the indo pacic remains free and open, prosperous and secure, to provide portunity for all come he shared commitment to a future rooted in our common values. that's the objective united states shares not only with the u.k. and australia but shared by her friends in the region, her friends in the pacific island andtherreaty and close partners. there is one orriding objective which is to eance the stability of the indo pacic among rapidly shifting global dynamics. host: you can respond to that, i lieve it'three submarines t auraliay 2032 guest: i applaudhe president for bringing attention to the dersea issue of submarines. they a the most potent part of our toolkit out there in the

pacific. i am glad for that have long advocated for larger smarine fleet. i think are something like 55 tack boats and wouldn't mind seeing like 100. i don't think the budgeteeds to increase. we need to rejigger that and end less on airpower because those airbases are so vulnerable and i think the carriers also. i applaud the president for cusing on submarines but not mystic about it. there o complex a too slow australia is a long way. from china. i don't think this deal would appreciatily change the china calculation. they mighteact anduild up in a huge way to respond to what th see as an uersea threat soe don't under estimate them.

while i don't agree with the thst of the caller, i do't think japan can te a le here. i thinjapan needs to spend more. americans haveeen bearing an unir burn and thashould be adjusted substantially. i don't tnk japan is under a grave threat it's not a huge adjustment. the u.s. is in a very favorable position in the asia-pacific and that won't change because japa is strong and will be song, australia is strg, india's strong, vinam a strong, sth korea strong. we have to fige out at we are worried about. we had powerful aies that will remain so. the more we spend on their defee, the less they will. we should be quite limed in our objections. i don't think ina wants to

invade iia, australia or any of these countries. we don't nt to exaggerate the threat generally. guest: everything you say leads to us defending taiwan. the philippines is not that far from taiwan. you said the stopping power of water is the same concept. that logic applies to china. mao cared about taiwan but he couldn't get added. the chinese have the ability to project amphibious forces but also the philippines and japan or south korea but the u.s. is in a great position but taiwan should be sensible. i agree that japan is our most

important ally here. they are moving too slowly right now. i would like to point out that japan is a fraction of the size of china economically and it has had a capable military but underdeveloped one. they have a long way to go. i agree that they need to step up in concert with our efforts. it's very encouraging and shows a connection with the australians. i think it involves a lot of moving pieces and it's not clear how much additional capability will deliver. we want more submarines but the problem is our defense industrial base, maintenance capability is below what we need

the plans for the australians to help improve that situation. there is a lot of moving pieces in the one thing we must be ear about is we cannot allow this to compromise the elder of our own u.s. submarine base. these are among the crown jewels of our military. we have to be confident about them and i think the australians are our best ally but this is high-stakes and cannot mess this up. i don't want to say through gold were -- i don't want to say it's rude goldberg. guest: you can talk about japanese defense. i brought up the historical issue because when eisenhower led air forces across the u.s. channel in 1944, he didn't have a giant force of missiles were 1000 helicopters. he didn't have google earth or

drones but there are fundamental differences between leaping 100 miles an leaping 500 or 1000 miles. to conquer japan, it would require immense effort. china would have to he five or 10 times the defse. budget it currently has the same with the philippines. the phippines is a gigantic archipelago and there defense is totallfeasible but taiwan is different. it's 100 miles from china at the small island and the geography isot favorable. thmountains would create a fortress in iwan are on the wrong side taiwan is increbly vulnerable and china can do things like you can fly and attack helicopter across the stight no problem and the cycle it back five times into the fight. it's very easy to wield those

capabilities. it becomes more difficult at 0 or 1000 miles. japan and the phippines are more defensible. that doesn't en menon the issue of will. china says it's getting rey to attack taiwan every day they have the will and the intention. there is not a shred of evidence to suggest that for japan or the philippines. guest: i don't think the chinese will annex the philippines or japan but they want to do something all along the lines of what we did in iraq and vietnam and cambodia which is a use of their military to impose a more friendly government. not only would they have access to taiwan but they have huge bases in the south china seas that undermine your point. they are specifically designed to project power. we have to look at this as a

dynamic situation. countries in asia are wondering whether it's prudent to stand up to china. they don't nt to have another vietnam. they want -- they don't want to live under chinese domination. guest: it's reasonable for countries that way back when we had problems with mexico and we learned to live with each other. that's the nature of great powers. the philippines is not in great danger and neither is japan. ultimately, the u.s. has the power to defend them extremely well. it's simply not true with taiwan. if you look at the chinese relationip with his neighbors, even countri far wker an not defenda by the u.sin

ntral asia, china has quite go relations but there is no evidence to suggest that china is seeking this regional hegemony. ey are not necessarily a threat to the essays. = >> we did nothing to stop them tout outposts in the south china seas. guest: the islands in the south china sea agree that it's more troubling. they are very extensive. there has also been a fair amount of restraint on our part.

there was a time u.s. leaders were asked what they are going to do about it but they said they don't want to go to war. china at some reasonable and important interests. all their oil comeacross the south china seas and they have submarines operating in the area and they want to protect those. china has acted with summer straight. they could have put defenses into these islands but they have not done that they have acted with a little bit of restraint. we need to keep a lid on tensions there and avoid escalation. u.s. ships and aircraft continue circulate through the south china seas but there is no imminent danger. this is mostly about a contest in the south china seas about oil and gas resources and fisheries.

shouldhe u.s. get involved in world war iii over fisheries? i don't think so. we have fishery conflict with canada. guest: there is a good article in the wall street journal over the weekend. it shows a massive failure of u.s. policy. they say china has effective operational control of the south china sea during peace tim japan and the philippines and australia identify china as a big red. it's about how a great power behaves. china is a rising superpower is just human nature and structural to expect them to expand it's not exactly nine under the marxist leadership.

this is not franklin roosevelt this is a much different complexion. asia is going to be the future of the world. when we talk about our economic prosperity, the future of everyone's economic prosperity is going to be about asia because that's the world's largest market and at the chinese control that market area which they want to do, they will ha a dominant position here because american companies will be put out of business and everything will circle around china. they got social capital and they will use data and . it's happening in china were peaceful have social credit scores. our best course is to be strong and forceful and car and don't mess with us. it's clear what our perimeters army understand the chinese an respect them. we are not racist and from that

position, i thk we can find most anything thate have to strength our pition first. guest: i thi our position out there is very strong. we continue to have the strongest armeforces on the planet we ha stronallies. we want to maintain stability in the taiwantraits. ife adhere closely to the one china policy that is an essential compromise th nixon and kissinger orchestrated in the 70's, that's e bedrock of u.s.-china relatio and we's should seek to maintain it. we should not try to enter into anher civil war nor should we think about world war iii over some kind of fishery dispute or dispute about drilling. i agree that we canvoid bankru ourselves and wonder

into a catasophic war which has the danger of nuclear escalation host: the director for asia in gauge meant. -- for asia engagement. thank you foralking about these issues regarding china. coming up in about 15 minutes, we will take a look at the federal reserve monetary policy, a new pbs frontline documentary looking at that. the age of easing money and james jacoby will join us for that conversation. until then, a set of open forum if you want to call in. we will take those calls when "washington journal" continues.

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continues. host: our next guest joins us in about 15 minutes. up until then,pen forum. you can texts. the latest inflation numbe are out. usa today reporting on them saying, inflation eased for an eighth straight montin bruary athe slowing ri in foodost upts a bump in gasoli price a study pullback innflation at the end of last year has installed. used car prices declined for the eighth month in a row. consumer prices increased down from 6.4% in january. a 40 year high of 9.1% in june. that marked the smallest annual gains in september 2021. "the lington herald" has a story looking at the

recovery of mitch mcconnell repoing this morning the senatowas diharged fm a washinon hostal moay wil nohead tinpatit physal erapy. he ao fracred a rib. "lea mcconll's recovy -- isecoverg wl. the ne phaseill beecover an intient -- physical thapy atn inpaent fality beforeeturni home. prident biden traveling to california expected to address issues of gun safety later on today. earlier this morning, the administration releasing an executive order claiming e president signed a gun-control executive order that the governnt say-- administtion ss will get the country as ose to universal background checks as possible.

it buildsn the partisan legislation signed into lathat requires the attorney neral to ge invold through a process of redefining which firearms dealers are required to run background checks. the order relies on recery -- encouraging safer practiceby gunowners and dealers to public information campaigns. wanted ministration saying, we need universalackground checks to finish the job. the president will that it -- will visit monterey park and talk with people there. look for tt on the c-span networks. let's hear fromjose in wisconsin -- from jose in wisconsin. you e first up. go ahead. caller: good morning. i was trying to say that i think -- lontime ltener,irst time caller. i justanted say tt that elidge guy soued kinof

racist. that is all. call: ianswer to the two prevus guys, our w in etnam preveed -- whilsone is indefensible,f taiwan is tan by the chinese, certainly, the panese will th go nuear, and ty have t technologynd capacity toar t to cna in nuear cacity and would be a terrible threat to cna. i don't think anytng is ing to movone way or anoer. i justhink that we he to keep thehinese knowi that we are committed and this ishat we are doing n. ani'very satisfied with that. host the new york times reporting that patricia schroeder, a trailblazer who helped redefine the role of women in american politics and used her wit to combat egregious

sexism in congress died on monday. she died at a hospital in florida from complications from a stroke. she was a pilot and lawyer and have a long and this sting which career in the house of representatives. she also helped pass the 1978 pregnancy discrimination act which barred employers from dismissing women because they were pregnant and from denying them maternity benefits. from kathy in wisconsin, independent line. ller: good morning. i would like to speak for second on the issue of the svb bank and other banks. i'm just thinking everyby ould take aook. our reserve money is bailing out people who have the option to ensure over 50,000

these accounts uld have been insured but they chose not tdo it because of expens i am guessing juslike ihose t dr life surancor take a lower plan on hlth insurance. body igoing to me in d pay my bills when i have a probm. think ople nd to look at this a reallthink abouthat is goi on. nks -- host: ok. willie is in louisia. democrats line. you are next. caller: thank you for taking my call. i'm a 20 year militaryeteran. two tours. i want to tell you what is wrong with this country. when we went over to vietnam, we were like brothers over there. we shared the same canteen. we had a common enemy.

when we cameack to po-town kentucky, some of those same guys put rebel flags on their vehicles and rode around. the attitude was there all the me, we just we not aware of it. that is what happened and why we cannot come togeth. st: theear times reporting that michael coh testified in ont of a grandury on monday. osecuts near likely indictment of the former esiden anher snal ca when . bragg's office said the president cld appear before the grand jury. otr reporters sang the president planning not to participate in the grand jury but that is the latest when it

comes to the grandury investation. president trumwas in davenpt, iowa as part of a tour talking about education issues. you can see the full speech from the president last night, former president trump. here's a portion from yesterday. [video clip] >> he also fought against social security. he voted against it three times. that is about one, a lot of people don't know that one but i think they have been finding out over the last four weeks. one of the reasons we are zooming in the polls perhaps. it is really based on what we have done, i think. and on social security, he wanted the minimum retirement age to be lifted to people that are 70 years old, a substantial increase over what it is right now. that is a big increase and he also voted to severely cut medicare. i will not be cutting medicare and i will not be cutting social security. [applause]

>> but you have to remember, ron was a disciple of paul ryan, who was a loser who is currently destroying fox and would constantly vote against entitlements. remember that? the wheelchair over the cliff commercial, very effective. that was about him. paul ryan is a big reason mitt romney -- i'm not a big fan of mitt romney -- lost his election. and to be honest with you, ron reminds me a lot of mitt romney. i don't think you are going to be doing so well here but we are going to find out. host: that is former president trump in davenport, iowa referring to ron desantis who was also in iowa last week. thomas in new hampshire, republican line. you are next. caller: hello. i'm thomas from new hampshire. i don't think the american

people really care about what trump's lawyer did with paying off his sleazy girl. i think the american people care about the banking system and the strength of it and it does not look too strong right now. i think there are more banks that will fail in the coming months. just listen to jim cramer an see if you will give you any stock advice on which banks to buy because those are the ones that are going to fail first. host:ominic is ontario, canada. caller: hello. calling and for all of my veterans down in america that served for their country and have done their duty butave been disnored in america for trying to challenge a war. war. every time it is war against another country. not responding to their problems in their own country. that is where the oblemsre in your own nation.

it is not in china, not in russ, not in afgnistannot in iraq. it is in america. that is whe probms are. and if you can fix the problems in america, then you can go outside and say, i couldo tside and fix their problems. you cann fix tir problems if you cannot fix your own. that i the pblem is that you think your problems are not everybody else's problems and not ur ownhat you have made in your n natn, and yourwn conglomerate of capitism. host: ok. one more call. charlie in massachusetts. caller: hello there. i echo the last two callers. i have to tell you, they had a aring last thursday, a twitter hearing at the house of representatives. i constantly watch c-span

because i am retired now. you have not showed one second of it. when are you going to show it? another thing, you don't show the white house daily press briefings. you show repeats on your c-span3. you have repeats all day long. everybody in america, you have to show that so the people in america see how corrupt and pitiful and stupid this administration is. host: those white house briefings, when i happened in washington, we do attend them anwe do tape them and we put them on our website and c-span now app. in cases like today when the briefings are usually done on the plane over, we don't have the ability to show that. usually there is a press read out somewhere of what happened during that time. regarding to the other thing, it is still online if you want to go see the hearing with twitter. it is still available to you at

c-an.orgalso our c-spanow app. the pbs frontline documentary company has a new film out. we are going to be joined by their director james jacoby to talk about the documentary and what he learned about the fed. james jacoby from pbs frontline up next on "washington journal." ♪ >> c-span now is free mobile app featuring your unfiltered view of what is happening in washington. live and on-demand. keep up with the day's biggest events with live streams and hearings from the u.s. congress, white house events, courts, campaigns and more from the world of politics all at your fingertips. also stay current with the latest episodes of "washington jonal" and find scheduling information plus a variety of

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>> since 1979, c-spa has offered views into the halls of congress, party briefings and commite meetings. c-span gives you a fro row seat to how ises are debated and decided with no commentary, no interruptions and completely unfiltered. c-span, your unfiltered view of government. ♪ >> "washington journal" continues. host: joing us now fro massachuses is james jacoby. he is a pbs frontline producer and director of their latest documentary "the age of easy money." thank you for joining us. what gets you interested inhat you will focus on inhe documenty and why the deral resee? guest: i is weird timing. i beenorkingn thisilm fo about two years.

we did a film and this is kind a follow-up. for it to be coming out today is bizarre considering what has happened in the past few days. the fed having to come to the rescue once agaiof financial players that took on risks like the bank in silicon valley. and this is exactly what got us interested in the fed in the first place. it is probably the most powerful institution in some ways. it seemed worthwhile to look into it for a while. host: the title is intriguing. how does that relate to fed practices? guest: basically, we have been living for the past 14 years or so since the financial crisis, living in a rld of extremely low-interest rates, extraordinary monetary policies and all of these sorts of tools the fedas used to keep the cost of borrowing very l in our economy for the past 14 years or so. as we all know, that is because

of higher inflation that has co about post-pandic. the fed has been forced t pull back on s easy money experiments and it is causing all sorts of disruption because our companies, our government, individuals this country got used to ry low andheaper borrowingosts. "thege of easy mon" is really a way that we are looking at the past 14 years or so, decade plus, through this prism of easy money and all of the unintended consequences that came about as a result of that. host: when you go into one of these projects, do you go when with a series of alrdy established perceptions of how the fed works and learn something new from the process? if that is the case, what did you learn? guest: it was a massive learning curve. i have de some financial reporting, but this was a big learning curve. we are talking about some pretty opaque stuff like quantitative

easing which is their bond buying program. it is when the federal reserve creates money to put into the banking system by buying bonds from the banks. it is something i had to delve into learning abo and spe to a lot of experts about. we hopefully explain it well in the film, the good, the bad and the ugly of it. host: our guest with us until 10:00. if you want to ask questions about the film, it airs tonight. we are going to show our folks at home the portion from the film particularly the discussion or topic of inflion and then he you questions on the others. [video cli >> this is the epicenter of this

rise in inflation. >> the highest inflation rate of any major city in the country. >> no city had it worse than phoenix which had the highest inflation rate in the nation. when i visited st. mary's fo bank, the cars were lined up first thing in the morning. >> every day, we get an email with the number of people that come through. yesterday was 1007 households. that is households coming through. feeding four or five people. and it is like wow. and that is five days a week. they just don't have any other choice. we are hearing their budget is being eaten up by all of the impacts of inflation. it is either that or they don't have food for their children. >> i'm a single mom. sometimes at the end of the month, need the assistance. life has gotten a lot more expensive. being a single parent, i can feel it. it is like choosing between your rent and food. >> yesterday, i spent $100 just

to get cereal, milk my bread and eggs. that was $100 and that was a week's worth of food and that is not going to feed six kids. >> when did you start seeing an increase in people coming? >> it was the end of february this year, 2022. we saw a slight uptick. did not know if it was real but it kept climbing and h climbed all through summer. we thought that was a plateau and at the end of the summer, it has continued to climb. here we are with 1000 households coming through. we have seen a 26% increase year-over-year in the number of people coming for help. of that, 18% of the people are first-time people coming to the food bank. host: phoenix is the destination. how did you end up there? guest: it is interesting.

that was just at the time when i was there that inflation was the highest in the country in phoenix. that was for a lot of reasons. they saw a huge influx of people especiallyrom california that came to live in phoenix and that jacked up housing prices. limited supply, a lot of demand. weeally wanted to go ere at the time because it was where you could see how palpable inflion was. it has been all across the country. we just chose phoenix as a place go. inflation since we were there has come down but it is still well above the numbers or well above the 2% target the fed wants. it is still a very real problem in a very big problem. host: that share the federal

reserve has said at the same time he is trying to reduce the amount of inflation he has to unwind from the quantitative easing. how does he accomplish that or at least, what do you think faces him as he tries to accomplish that? guest: we are seeing what faces him in that this is related to the bank failures that we have seen in the past few days in that the higher interest rates go, the low the value o various financial assets like bonds. these banks had a lot of bonds inheir books that a lost value. that they had not hedged against that risk anthey do help now. the big question is how systemic is that, how widpread, is that isolated to these bas that may haveade poor decisns about how to hedge their risk. financial stabily is a concern. when the fed essentially pulls back on an eeriment it has been running with easy money

policy,t ran the economy for very hot and now, basically, ha done some of the most dramatic rate hikes in 40 years. we are only starting to see what the efcts of that are. i think the fed is in a very difficult position right now in terms of where to go with rate hike whether they should pause and see wheer there is economicragili, finaial fragity's that they are in part causing or whether they have to go higher for longer in order to get the inflation numbers down. host: did you have a chance to talk with any fed chair during this process? guest: not fed chair powell, unfortunately. it was not for lack of asking. to get anyone from the federal reserve board in d.c. there are regional banks, 12 regional banks across the country that are part of the federal reserve system.

one sitting president o minneapolis did speak to us. he is a big part of this film. essentially telling us from the inside of what they are grappling with at theed and answering some tough questions. host: remind people who hes, what role he played and what kind of information did he give you. guest: neil kashkari is the president of the minneapolis federal reserve bank. there is voting members, they sometimes vote on policy but they are all very actively involved in poly and setting interest rates and emergency measures and things of this nature. president kashkari, to his credit, has been very willing to sit down with me to answer questions, to sit for an hour or hour and a half interviews to answer questions that i think the public has about what the fed has been doing. host:ould you say that he

agrees with chair powell's decision not only an interest rates but also pulling back on the balance sheet? guest: yes, i think what is interesting about kashkari's he was what was called a dog for a long time. basically saying he was all in favor easy money policies, low interest rates, quantitative easing, in order to try and stimulate economic growth and fulfill the fed mandate. the fed has two mandates that it has been given by congress. one is to basically keep inflation under control. two, it is to try and create full employment in this country. that the full employment mandate was added later on i think in the 70's. the fact is that kashkari has always been in favor of really trying to get to full employment and if that meant keepg rates very low, quantitative easing, he was in favor of that.

initially, when inflation started to creep up, he thought that it was transitory was the word they ud which is to say it was basically temporary. that there were supply chain problems from the pandemic and all sorts of other problems they thought would go away. despite the fact that they were funneling into the economy trillions and trillions of dollars along with the federal government trying to stimulate economic growth and dema and make up for the shortfall from the pandemic, those two things collided and proved not to just be transitory inflation, but much higher for longer than expected. he has basically turned from age of to a hawk now and basically saying we need to keep up the rate hikes in order to get inflation down because inflation is indeed so painful for everyone. yet, the bind right now is whether they can continue to raise rates to get inflation under control given the fact

that there seem to be now some concerns about financial stability and economic stability. host: james jacoby, our guest. producer and director of "the age of easy money." it premieres tonight at 8:00. johnn ohio, independent line. you are first up for our guest. caller: thank you. most people think the federal reserve is on by the federal governnt. a buncof bankers run the show. the shell game going oin every major city. i am 87 years old. over the years, no tax cut has paid for itself in the history of human being. third, the way they are going about it, the snap program is being cut, they are burning e candle at both ends. they write the laws and not one

man has been to jail since 2008. what happens now? another one opened up. host: you put a lot out there for the guests. we will let him respond. guest: it is important to understand that while it is a quasi-independent entity, the federal reserve, the caller was right that the main stakeholders of the fed, the fed is ultimately accountable to congress. i think that there is one thing that is important to know about the federal reserve is that the independence of a monetary authority, we don't necessarily want our money supply the hands of congress. there is a lot of short-term interest in congress and the fed is really designed to have longer term financial stability concerns in mind. i will say the caller also

brought up dodd frank and the fact that no one did go to jail after the financial crisis. the film talks about the fact the financial crisis and its aftermath cannot be overstated how important that was both in this country's economic and political history. i think it gave rise to a lot of understandable anger on the right and left about how the system works. i would agree with the caller on that front. it is going to be interesting to see if there is more disruption in the banking syste now, how people feel about that because i think already, there is concerns about moral hazard and the idea that uninsured depositors are getting made whole and these

banks that may have managed themselves poorly are going to get in some ways a bailout and what is going to happen. many good points. host: let's hear from brent in michigan. democrats line. caller: first, let put in a plug for frontline. i love frontline. i am old enough to remember paul volker and his fight against inflation. i want to echo therevious call andiscussed nobod went to jaiafter lehman bthers collapsed i2008. but move on to the present day, correct me ii' wrong, but in august of 2020 in jackson hole, wyoming, jerome powell said that -- camout with a pivot and said that ination too low and that you need higher inflation. in order to achieve that, he started buying $120 billion, was

a month or a week, in bonds, in order to cause ilation. whenever we he everybody pounding the table about inflation, you never hear that actually jerome powell said he was going to cause inflation and did. i don't understand why he is chairman of the fedel reserve. he is a lawyer, not an economist. anyway, th is myuestion. host:hank you. est: i would be happy to talk out that. what i say about it is this, we did live in a world for the paemic, osome msures. i wi expla that clarification, of w-inflation. from central bankers arod the world, we basically have been seeing low-inflation, too low-inflation. they think a little bit of

inflation is a good thing because it speaks to economic growth and demand. so what happed is that inflation around the 2008 crisis and up through 2020 or so was very low and thereas a school of thought that the federal reserve actually wanted to raise inflation but n raise it too much. to raise ito a 2% target which they figure is a good indicator. not too painful, 2% target. we can all handle that. it is not too regressive. there was an attemptell before jerome powell to try to raise inflation a little bit in this country because it would be a sign of economic demand and growth. however, the fed did almost make that and cody that as the thing it was going to do no matter what.

so they kept the pedal to the metal. $100 billion a month or so bond buying. they did it at a time supply chain was all gummed up. you have this combination of all of this monetary stimulus, supply issues, they created inflation but it went too f and that is what we are dealing with today. host: rick joins us from nebrka. republican line. caller: good morning. i think there is gog to a domino effect on all of these banks. we cannot continue to keep paying all of these bailing these banks out. host: to that end, because the

story broke so late and had the federal reserve involved, did you have a chance to accommodate that into the documentary that we are going to see tonit? guest: i did interview sheila bair yesterday, the former head of thebi see. -- fdic. it is mpletely relevt and real important. i don't know what is going to happen. i think what the fed has done which is open this kind of emerncy fality f banks that are strugglg with similar sues to licon valley bank. basically, those are ptty short and there he measures to try to stem a cascadg crisis as mentioned. sheila bair, former head ofhe fbi see raising alarms. i want to make that clear.

i think what s said me is that essentially, the regulators and authorities need to be very clear about wh we are dealing with. they need to be very clear there are these emergency facilities that are mnt to stem the pic . can all asseswith the moral hazard is of helping these banks thatot into trouble and wh to be done about the people that run them and other tngs like that. i think it is too early to tell what the fallout will be but wh i gan from sheila bair who really ds knowhis stuff very well is that for now, the right facility is inlace, there is a game plan i pla for places like the f see --fdic in case this does become cascadin host: this is james jacoby of

pbs frontline. 9:00 tonight iwhen the documentary airs. guest: you can find it on youtube so you can watch that or at pbs.org/frontline or the pbs app. it streams there. we put them out for free on youtube. host: from alabama. caller: first of all, i want to encourage all c-span watchers to watch frontline. i want to say thank you for producing it. about the svb bankruptcy, to me, it is upsetting that they considered it a systemic risk and went ahead and ensured all desits over $250,000 are we to

think that the fbi see is going to increase the iurance for everybody? host: thank you. guest: first of all, thank you for your appreciation of frontline. we don't know the answer to that question. i certainly don't know it. what i say is what i do know a little bit more about his the federal reserve's lending window which is going to enable banks that are in similar situations to svb to basically sell their assets, their stress assets to the fed or not sell them, but it is a lending program. i think that in some ways, a lot remains unclear about this and i wish i had a better answer for

you but it is unclear wheer ey will go above $250,000. st: one of the things you talk about in your documentary is topic of ierest rates. were going to show people a short clip regarng that. [video clip] >> while higher interest rates, slower growth and softer labor markets will bring down inflation, they will also bring some pain to households and businesses. >> how do you explain to someone who is seeing their gas bills go up, their food bills go up, groceries, rent, how is at the higher interest rates and what you are doing with this very blunt instrument, how do you say that is going to help them with those issues in particular? >> one of the reasons prices are highest because there is too much demand in the economy. by raising interest rates, we are going to slow down demand for housing. people going out and buying up homes which should prevent house

prices from climbing. gas prices are being driven by the war. big geopolitical forces. so there are some pieces of this that we can directly affect. some pieces are out of our control. >> some people have said interest rates are almost like a sledgehammer. it is not like a scalpel. can these problems be solved with a scalpel or do you really believe you need to bring the hammer down to some extent? >> here the thing. i would love to be able to bring it with a scalpel. a year ago i argued that i thought many of these factors were transitory. meaning you had these one-time events that were going to pass and inflation would come down so let's not bring out the hammer. that was my view and that did not happen. now, we have to bring the hammer because if we don't, ts thing can get out of control. host: one of the criticisms of

the federal reserve is that taking a look at inflaon, maybe reacted too late. guest: i asked him all about that. he did admit that had we known what we know now they uld have acted sooner but then the caveat was that he did not think that would have me that they get the difference. i think plenty of people would disagree with that assessment but that was his assessment of it. and yes, i think the exchange you just heard really does speak to a very serious dilemma for the fed which is that the raising interest rates, again, its a very blunt instrument. it affects everything and has ripp effects. we don't know those ripple effects for a very long time. but it is disruptive and especialhen you go so

quickl in such a short amount of time. i was asking him about what essentially is an argument both on the right and the left is raising interest rates actually going to affect the price of food or gas in the sorts of things that really affect us all. the answer to that is no. whatnflation will do is bring down demanin theconomy and that may have an effectn the price of food oras but it affects everythings opposed to alpel that you could maybe addres food prices or gas prices in another way. i'm not advocating for that but i am saying that is what the fed says about its use of those tools. host: mike, good morning. caller: good morning.

thank you so much. you do a great job every day. earlier ithe week, i saw stephen moorand now you have mr. jacy doing an excellent job with economic issues. the conservative ecomists seem to think lowering taxes and puing money back in people's pockets add to spending and help the economy but the same time, the fed seems to preach that when unemployment becomes low and there is more money in e economy because more people are working obviously, and the te of pay goes up meaning more money in the economy and that adds to inflation. which side is right if either of them are right or are both wrong? i always question why it is good to raise taxes or to lower taxes on one side to put more money in the economy but the fed loo to

get more money out of the economy so like the guy just said, so people can buy houses and things likthat? thanks for taking my call. have a good day. guest:here is a lot to unpack. they are related, but they are a little bit apples and oranges. tax cuts is one thing. the efficacy of them and i do think they create economic demand. i am no expert in that subject in terms of what the effects are. it is kind of separate from what the fed is doing and i want to stress that. tax cuts are on the fiscal side and with the federal government does, the federal reserve's motary policy so setting interest rates, for instance. to yr question about that end things, i tnk the thing to understand there is that what is

odd about right now is that the fed has been wking so hard funneling trillions of dollars into the system to try to get unemployment down since e pandic and it was doing the same thi after the great financial cris when unemployment was up near 10% or so. amazing measures to try to get unemploymentown. unemployment is hovering arod historic lows. what is odd about that is inflation is high at the same time. so for the fed, they are in the spines because even though their goal was to get unemployment down, which it is, now, inflation is up. you kind of have to choose between which part of their mandate they want to emphasize. right now, the emphasis is on getting inflation down which does mean that they have to

raise rates, slow down the economy, unemployment will have to come up according to the fed and in order to get inflation down because they see that as e bigger threat. i hope that answers your question. host:hen it comes to the easy money policy, who benefited more indivials or big and small companies? guest: it is hard to say in relative terms. i would say the biggest beneficiaries by far -- let me restate that. i say basically the effects on indiduals and mai street, it is difficult to tell whathe effect was. we know that zero interest rates and cheaper borrowing costs helps people. as we all know, t price of houses went through the roof so

a lot of peopl especially younger people or people just starting to make some money and wanted to afford a house, prices went way up so they became unaffordability crisisnd it was inflation in the housing market. think -- i'm sorry, i'm forgetting the question at this point. host: i guess the winners and losers for easy money. guest: sorry abouthat. the winners have undoubtedly been people that own the vast majority o the assets, financial assets. stocks, bonds, obviously, those things have been falling since the fed has been raising rates but er the course of this age of easy money, most stocks are owned even if you may be invested in a 401(k) plan or pension plan but most of the stocks in this country are owned by the very topnd those, we

have seen huge asset price inflation in this country and thbiggest beneficiaries have been the rich and some of the biggest beneficiaries have been things like private equity companies, also venture capital companies like those in silicon valley who are able to money from banks at extremely low rates and build huge debts and buy up huge swaths of th economy. when it comes to silicon valley, we saw ts huge boom in silicon valley in partecause all of this money was out looking for somewhere to mak money because intest rates were so low. host: let's hear from lupe in california. call: i just found ou yesterdayhathe company

maki ads on tv to invest your moy into gd, your 401(k) and so on, then a commercial came on with bnon and he says put your money and be safe or whatever because you know what is haening to the economy. i was told by the person i was talking to on the phone to invest my money in here because fargo who screwed a lot of people up with their homes and real estate -- they were not en told about it. i was one of them so i went to a different bank. they put in or they bought $40 billion in gold. wellfargo did. how could they get away with something like that? i should not be telling you this

because the guy said don't mention it why can't you get in if they can get in with your money that they sle from people. host: i hate to interrupt, but at would you like our guest to address spifically? caller: in layman's terms, sometimes just sak to the people that know, that can understand what is going on. th is all being de up. host: thanks. guest: ok. i'm not sure 'm qualified to answer what she is bringing up. i'm going to pass on that one. host: let's hear from april in illinois, independent line. caller: good morning and thank you for liening to me. i'm just concerned. it is a very big bank with a lot of investments. we all know how much insurance

we carry when we buy our car. i know you can only put $250 in because that is all fdic insures so i'm confused why we have to come in and the feds do and reimburse these people their funds when they took the risk. the united states is in a mess right now. so i don't understand why we are responsible to repay these people for a mistake they de. host: thanks. guest: you raise a great point. i think we all want an answer to that question. i think that from the point of view of our financial regulators and the federal reserve, it is the same logic we heard in the

2008 crisis when we bailed out the big banks that had taken on too much risk and you get moral hazard. basically you are bailing out risktakers. just to be more precise, because it is important we are i this conversation. what they are trying to is stem a panic. they don't want a panic in the largerystem. the are going to be suppodly more accountabity measures put in place wn it ces to this partular circumstance wh silicon valley bk and signure ba. i think the devil is a little bit in the details with thi but i think whent comes to the larger issue which is the idea at risktakers don't have to suffer the consequens of taking those risks, that is a

big iue in this country a i ink this administration, t federal reserve, i think everybody really needs to give an x nation. i think president biden the other day, yesterday and is such was trying to say that ere are going to be so accountable of the mechanms but we need to know morabout it. host: from your interviews, if the age of easy money is ending or at least decreasing, what does that mean for everybody involved and who suffers most? guest: it is hard to tell. again, he to keep answering questions like that but that is just the nature of the beast. en interest rates go up especially rapidly like they have, it is hard to tell what the consequences will be. things like financial stability like what we are seeing in the

banking system, is that indicative of greater stress that is yet to come with these rapid interest rate hikes? we don't know. we certainly hope that our institutions are thinking about the and eparing to deal with it. that is for individuals, small businesses. of course it affects everything. it affects the rate of borrowing, the housing market, home prices. it is intended to. it is intended to slow down the economy at a time when inflation is too high. host: this is from nevada. we are running a little short on time so go ahead with your comment or question. caller: good morning. i just wanted to say that i am really curious about 97% of the svb funds. they are getting bailed out immediately.

the student loan bailout for 20 million people will help a lot of people. totally policized and we immediately bail out billionaires. there is a real crisis in this country and i would like you to just speak to that. i wonder if you would do what you do if you coulnot live on a ranch and if you are being rolled over, just steamrolled. thank you very much. guest: i think you are raising just a very important question that is maybe one of the most important questions we have right now. if we as a people and a society have a lot of debt, those debts are building up a lot. personal debt, corporate debt, government debt. it is always a question as to who is the priority here. as you have sent, whether it is student debt or the fact that a

bank had all sorts of government securities on its books that were really high in price atne point but when the fed starts raising rates, the prices plummet and they have a bunch of deposirs that want to pull their money because they are in trouble and the bank does not have money to be able to pay it out because they have to sell the assets to raise cash, think you are raising such an important question. i wish i had an answer to that question but it is the question that we really need to post to our political leaders. if anything, i think that one of the lessons of t financial crisis is that our financial sector is still probably too big to fail. and even the dodd frank was passed, i think the reforms to the financial system are yet to be robust enough to prevent this type of thing. host: you can see the documentary "the age of easy money"onight, 9:00 on

frontline. james jacob director and producer of e documentary. congralations and thanks for joing us. guest: thank you so ch. host: before we l you go, a couple of things to watch out for. later on this morning, the head of the centers for medicare and medicaid servicewill speak at a health care sponsored by the american health insurance plans that will be live starting at 10:30 on c-span2. similar fronts where you can watch the commandant of the u.s. marine corps. we will talk about military readiness following the withdrawal of troops from afghanistan. he will speak at the national press club at 1:00 this afternoon. you can catch the on our main network, c-span,he app and the .org as well. later on this afternoon, the chief of operaons for the u.s. space force will talk about the

2024 budget request and th work of the space force. that iit for our program day. anher edion of "whington journal" comes your way at 7:00 morrow morning. see you then. [captioncopyright national cable satellite rp. 20] [captioning performed by the national captioning stitute, which is responsible for its caption content and accuracy. visit ncicap.org] >> live today on the c-span network, 1:00 p.m. eastern, a discussion about military readness with general david berger, commandant of the marine corps. and then the chief of e u.s. space force testifies on the military branch's budget and priorities. at 10:30 a.m. on c-span

2, the head of the centers for medice d medicaid svis, shes at a health care conference hosted by insuranccompanies. 12:30 p.m., jessica rosen worse el -- jessica rosenworcel speaks. you can also wah these events live on t free c-span nowideo app or online at c-span.org. ♪ c-span now is a free mobile app featuring an unfiltered view what's happening in washington live and on demand. keep up with the day's biggest even with live streams on hearings of the u.s. congress, white house ents, the court, campaigns and more from the world of polics all at your fingertips

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