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association established in 1875 represent all the banks in the united states. there are 4700 banks the majority of which are small community size banks. we represent the entire sector of the entire industry. people are going to be very familiar with seleka and valley bank as well as signature bank. what happened? guest: the first bank failure in roughly three years ago, we take this very, very seriously. what is important to point out is that the overall sector, with regard to your question about what happened. monitoring and investigating to see exactly what happened.

first it was a failing of the management team diminished interest rate risk. there was also a concentration risk. they were just heavily focused on the community. they had a large amount of unrealized losses in a huge amount of unsafe -- uninsured deposits. so there is a whole set of management, risk management failures. their unique and particular to this bank. there were supervisory failures as well. and third, this is new, the first time in the history of our public, social media is a contributor, not the foundational cause, but social media for the first time is a participant in the bank rise of the united states. host: who is doing this and what was the reaction? guest: less than a month or so

ago -- host: on twitter? guest: one venture capitalist sent out a note saying we may want to consider pulling money out. started tweeting about it. the day before the fdic the california bank, $42 billion is taken at the institution in less than a day. the fact that social media the rapid integration is certainly a factor here they want to look at this.

host: are you saying people would not have access to their money digitally as fast as they did in this situation? guest: the fact that banking has become so art by $42 billion was taken out of banks in less than one business day. host: let's talk about the rule of the federal government in oversight here. you talked about red and yellow lights flashing. first of all, who receives these? who is responsible on a regular depart? guest: this bank is overseen by the federal reserve. specifically, the supervisory

san francisco fed. that was the primary regulator of the silicon valley bank. the totality of the banking regulators, the federal reserve, the fbi see. the regular -- regular agencies were in harmony with this particular svb overseen by the federal reserve. host: they testified about what happened there. what did you hear from them? guest: what i think was really important is that they are going to do a study the itself looking internally to see if we missed some things, if we had sufficient tools to manage risk, so they are going to look internally to see if we missed something, what happened here? were there supervisory failures? do we need a whole new set of banking rules?

we don't think that is the case. we think this is idiosyncratic. we think the fed didn't have the necessary tools to control what is happening. again, acknowledging that the foundational purpose here is not the fed, it is svb. that acknowledgment on the part of chair powell and others that they should look at the thoughtful and reflective around what happened here, that was incredibly important. guest: they sure were. we saw the first round of hearings that share brown and chair mchenry hosted, that we looked at what happened that weekend. as they resolve those institutions and they took the steps to help stabilize the banking sector, that was kind of the first round of hearings. next round of hearings will focus on actual management of the banks themselves, so those questions will be posed. then i think we will have a firmer sense of what happens.

it is understandable that people want to do that. host:host: let's talk about the bank itself, it is the first thing that you talk about, three things that were happening. were the lawsuits related to venture capitalist money? guest: this is their bond portfolio. basically, interest rates have been a growing for a long time and as the fed announced that they would be going up, the banks would hedge those interest rate risk. i also have what is very traditionally called -- risk. that is another issue as well.

and those help create come along with social media and other factors, this bank run that occurred about a month or so ago. host: a diversified depositor portfolio, wouldn't that have been a red flag for regulators? guest: those are the questions being asked, but exactly. regulators are going to do this review of what happened on their part, and holistic congressional things. risk management in the part of the banking sector, and then the fed is also doing it, a study on where the exam for misses as well. host: is silicon valley bank the outlier here? what happened with signature bank? guest: again, i think they were rather idiosyncratic.

signature bank cratered in recent months, that was a very different set of circumstances. they had a heavy concentration risk to one industry sector. there were some similarities there. but i think that the key message really important for the american people, the viewer this morning is that we look at the entire sector the 4700 banks doing business across the united states, the sector is resilient, well-capitalized. solid liquidity. that's been conveyed by president biden, secretary yellen, chairman powell, chairman mchenry, chairman brown .i think that's a really important message that what happened at these institutions is not symbolic suggestive of a