stuart: this is a good but unknowable question. lauren lauren you said you knew the answer. stuart: well, i saw it on the prompter. which state has the most road bridges. i know the true answer. lauren, what's your guess? lauren: florida? stuart: there's no rivers in florida. lauren: you told me to guess. stuart: it's texas. they have 53,000 bridges, almost twice as many as -- lauren: i was going to go with new york, but with i was really wrong. stuart: i don't think you could find that if you googled it. okay. time is up for me, stuart varney. that's it for varney and company. lauren: happy weekend. stuart: "coast to coast" starts now. ♪ neil: all right. some shaky news we are getting right now on silicon valley bank, of course, it never opened for trading today. we're told that the regulators have shut it down while it

entertains some potential takeover offers. it was going to sell some capital to make itself whole, even apply for selling more stock. that does not appear in the making. the latest is while the fdic is going to be there to back up asset holders, for nows the shut down by regulators. this stock had already opened down about 60 some odd percent today the on top of a 40% hit yesterday. so it barely had a chance to get off the ground. but, again, whoever does get this if it is sold is going to get it at a bargain basement price. the question is, who will scoop in and buy it, because there were a lot of banks that were affected by it. if you think of how it affected the banking sector yesterday that cumulatively are lost more than $52 billion in market value, it's a little less of a hit today, but still a hitted today. the fact of the matter is if you're first republic or

charles. >> -- charles schwab or jpmorgan chase, all have some to do with the fortunes of this. that doesn't mean it's heavily exposed or any of these entities are heavily exposed, but it's a contagion fear that at this point simply does not seem to be justified. it does follow hand in hand with the strong employment report we got out today. in case you didn't know, you might have heard it once or twice on this network, 311,000 more jobs added to the economy. so the economy is percolating just fine. now, why that could be bad news for some banks and particularly silicon valley bank is that almost half of it assets are in treasuries. normally that's a conservative investment. but if you needed cash fast to get out of them and not hold them to ma murphy, you're going -- maturity, you're going to be the underwater because you bought them, of course, at much higher prices, lower yields, and now i you've got lower prices and higher yields, and you've got a lot of people saying

you're between a rock and a hard place. i don't want to get into the weeds on this, suffice it to say that regulators are trying to say this is localized to just silicon valley bank. but there could be shoppers around. is this a significant development to follow? let's go to luke lloyd are. luke, what do you think? >> hey, neil. yeah, i think it's absolutely significant, and i don't think it just is contagion to silicon valley bank. i think this is just the start of a lot of things, problems happening in the marketplace. all you need to do is look at the dislocation in the public markets, bond yields dropping very quickly, and the equity markets are negative. the markets are positioning for higher credit risk and bankruptcy risk across all the markets. what's happening could be a bear sterns situation on a much smaller scale. this is what happens when the world, you know, was built on low-cost debt and companies get caught offsides. the problem is compared to football, you don't get a pounding when caught offsides,

you go bankrupt, right? you had a bunch of unprofitable businesses that couldn't even turn profitable or turn cash flow positive many a low rate environment. when a bank like silicon valley bank lends to these types of companies, what happens when these companies are unable to pay hair bills? bankruptcy happens -- their bills? my biggest concern and a lot of investors are concerned about what happens if this does trickling to the hour began -- mortgage markets where you see interest rates above 7%? neil: very well put. regulators have gone ahead and ordered that silicon valley bank be shut down. this is a small potatoes firm in some people's eyes, but when you look at it, it is is still the the 16th largest bank in the united states. it's the a major -- it's a major lender largely to a lot of start-ups and venture-funded, capitalized companies. it does have a wide exposure to the treasury market. doesn't have a risky balance

sheet, but it is one that is not in favor in the present environment right now. this would be, if it goes down the way we suspect it will, the biggest bank collapse in years, at least since the financial meltdown. so, luke, the fact that i've been watching closely exposure to other financials and, guys, if we can keep rifling how these other banks are doing, the fact of the matter is the fallout and the spread to them has been minimal today. nothing like yesterday. now, that could change with this collapse news, but what do you make of, again, the contagion effect? >> well, silicon valley bank is just a very, you know, aggressive in regards to their lending habits, right? they were very aggressive in regards to lending to unprofitable businesses that were very high risk. many banks are not like that. but that being said, the risks are on the smaller and mid-sized banks, not so much large banking institutions like during the great financial crisis. i mean, the great financial

crisis changed a lot of the banking laws and made sure a lot of these banks couldn't take on a ton of risk. i think the current environment could be a positive for some of the bigger banks on the horizon. definitely not a positive for the small and mid-sized banks. jpmorgan, they have a ton of liquidity, much less risk because of the events hike the great financial crisis. they're also much more diversified, investment banking, wealth management, not just consumer and community banking that's very high risk as the economy's built on low cost debt. i think as we saw during the great financial crisis you'll see some consolidation. larger banks might be able to merge and buy smaller regional banks for an attractive the price. neil: all right. as you're talking here, i'm trying to e-mail all the contacts i have in the banking industry to get an update on in the, and just to let people know we're just tuning in at six minutes past the -- past noon on the east coast.

we are getting word it is a major player in that sector. but right now that's a volatile sector. in an environment of higher interest rates, it is a risky sector. >> yep. neil: the california department of financial protection innovation said it was taking over this bank to protect deposits, and the fd can ic, the federal deposit insurance corporation, is the receiver. the fdic in turn in a situation like this forms a separate entity the where all insured svb goes sents, silicon valley bank deposits, are recognized and would be transferred. so just to explain what's going on here, in the event of a collapse -- and that's what this seems to be -- the government is saying we got your back, shareholders and goes to haves -- depositors, and that they'll be protected. we should also point out that bigger banks, and you hear a lot of talk about the con ajohn. but as luke also discussed, it's

nothing like their much -- they're much better financed and capitalizedded position. and that's what i want to explore with you, luke. bigger banks, in general, are dramatically less leveraged and a lot better capitalized than they were at the time of the meltdown. you know, silicon valley bank is a different case. but what do you make of that, that they're, at least the big guys -- >> i think that's the distinction right there. -- neil: -- in much better shape? >> i think that distinction right there says a lot not about the banking sector, i think it says a lot about the technology sector. we're probably not going to have a great financial crisis in the banking sector the, but we could have a crisis, per se, in a lot of these high growth technology names. everyone is saying this is the beginning of the fed pivot talk just because of a little break in the system. this doesn't change anything in my eyes with regards to what the federal reserve is trying to do. the fed is watching these things, but it's all about the job market which you alluded to earlier, neil. as i alluded to the, many

companies couldn't urn the profitable, cash flow positive in a 0% interest rate environment. many of these companies just shouldn't exist within the technology sector, even in the venture cappal the sector -- capital sector. so that excess in the marketplace needs pulled out to tame inflation and to tame in this whole economy that was, you know, pumped so much liquidity into. and until we see the job market start the ticking upwards dramatically, i don't think you can have the fed pivot talk, and there's a lot of risk out there for the tech sector. neil: i just want to put this into perspective, you're probably saying, all right, silicon valley bank, why should i care? you know that it's the 16 largest bank here. the concern is especially when the government takes over an institution or shuts it down, they're afraid of a bank run. in other words, folks will just take their money out. that did not necessarily appear to be the happening in droves,

but there was a concern that would happen. there were many redemptions that were being sought out here. the government, for the better part of valor, said let's just shut the puppy down, protect the goes to haves -- depositors. what's interesting too on these developments is that it's very analogous to what we had seen about silvergate where it went under again in a very different situation, smaller situation, but concerns that there was this sort of a bank run that could happen. there is no evidence of that. and it would seem right now, luke, fact that the government and regulators took action they did, it was more or less trying to, you know, cut something off before it got on the a, you know, a gaping wound. will that do the trick here? >> listen, the government caused these issues. the government and the federal reserve caused these issues with 0% interest rate and pumping

trillions of dollars into the economy that allowed all this excess to happen. now they're trying to come in and save the day. i'll give you an example even from a banking standpoint. they're trying to put all these regulations out there, and and there does have on the regulation to protect investors, but i was in las vegas for a conference, yeah, i sat down at a blackjack table the, and i couldn't even ache the out $500 because they were limiting my withdrawal limit. apparently it was exceeded. that's just an example of how much government tries to play a part in if our lives that causes most issues in the first place. the middle class america paid and is paying for the government spending in inflation, then they pay for that excess demand through higher costs of borrowing, then they pay it again through higher taxes once it comes time to pay for the spending and demand. when it comes to government intervention in regards to the banking system, heir trying to protect investors, but a lot of people are going to the lose money. you know, credit investors, retirees that put money into the stock market per se and some of

these higher growth names or even some of these private names that are probably going to go bankrupt, they're going to lose money. when the rooster comes home to roost and you have to pay for what the federal reserve and government because, it takes a lot of money out of the system is, and a lot of people pay for it. neil: luke, if you could stay right there and, guys, obviously, we are going to focus like a laser beam on this. we are trying to reach out to the silicon valley bank ceo greg becker. we are told and there were reports that he was asking a lot of his venture capital customers, clients to stay calm, to not get too the razzled by in the. a lot of tech founders, we are told, in the middle of all of this who are just trying to get a sense whether they still had money at the bank. the move on the part of government regulators today to shut it down and to garon toe that, yeah, you -- guarantee that, yeah, you still have money in the bank, we don't the know if it's still subject to limitations, $25 the 0,000 on fdic deposits and all of that. the government went out of its

way to say you're protected, you're protected, you're protected. you don't want people to say, well, if it's happening to this bank, could it happen to my bank? and, again, that is the kind of thing the government tries to prevent. again, that was some of the early indication that that we had back during the meltdown in 2008 and 2009 that fed on itself. we are nowhere near that, my friends. i'm only relaying this to you to put that 150-point sell that you're seeing many perspective. and -- selloff. and it was exacerbated by this strong employment report. i know that sounds a little kooky, and i think luke expressed it well, but that strong labor report where you had better than 300,000 jobs added ott economy only -- added to the economy, even though the wage component didn't come off as strong as some feared the it would, it was enough to make people think the, well, the fed's till going to be the tightening. it might not be a half point, it might be a quarter point, but they're still going to tighten,

and we're still going to see rates go up in this environment. now, why that is a problem to companies like, you know, silicon valley bank is so many of their assets are parked in treasuries, a conservative investment. it's not like buying a start-up itself. you don't get any more conservativen than that. but if you need money and you want to cash that money in, the money that you have if you don't take it out and hold it to maturity isn't worth what you put in. you're underwater on that investment. and for a good bit of the $108 billion or so that's tied up in treasuries and like agency dough, that's the conundrum for a lot of investors here, because that money is like a trap. they really can't get out of their own way. they've done nothing nefarious here. they haven't invested in something koo to -- kooky or anything like that, they've invested in the full safety of uncle sam. and safe though it might be, they're stuck with stuff that if they had to unload it right now,

as our stocks editor here pointed out, you're underwater, and you've got a problem. so they were going to try to raise money presumably to try to get it from the creditors. you you knew that was going to be a money loser. then they were going to extend an offering. you knew that would be a loser especially in this environment. who would want to buy stuff from a bank that looks like it's on the precipice? and that's exactly what happened. and then we heard there are potential buyers here, and the bank itself has indicated that it might, indeed, now look for possible buyers. we don't the know who they are, where they are. many of you might recall back during the financial meltdown that merrill lynch was in that the type of conundrum. it was the, you know, on its last legs. bank of america bought it out. and, in fact, they're still together. so i only explain this just to put what's going on in perspective. with the dow down 140 points, bank stocks are well off the badgering they were getting yesterday, so i do want to put

that out there. susan li is joining us, luke lloyd, if you could stay there, my friend. susan, what are you hearing on this? susan: yeah. so i called around to some of these venture capital the funds, those that have pulled deposits from silicon valley banks or told their start-ups to the start capping the toes kits theo svp, and these are system of the concern some of the most well-run venture capital funds around. tribe capital, i mentioned peter thiel, and white -- [inaudible] gary tan, great leadership there. and they're saying to their start-ups right now because of this unknown that we have in silicon valley bank which, by the way, they say that the bank with 50% of the venture-backed tech and health care companies in america, they're saying because of the unknowns here and their just -- they're just being conservative, take some money out of the bank. so a lot of them are talking about capping their deposits at $250,000. i also read some e-mails that

warned some of their start-up founders that even if silicon valley bank kangings a 5% -- bank dangles a 5% interest rate in front of you, don't consider putting more capital in the right now. 4-5% interest rates which, by the way, if we were to compare 2023, i would say it's less of a 2008 and more of a 1980 type of scenario where interest rates are going up rapidly, almost 400 pay -- basis points in the span of 12 months. so silicon valley is being, i would say, more conservative. and if you look at the bank with runs in the last few months, these are two the stressed indices, tech and crypto. i wouldn't say this is a more expansive contagion type of effect that we're seeing here, neil. this is probably more i'd say concentrated in those industries that have been laying off a lot of individuals, that have taken a big hit in the stock markets. and as i pointed to jpmorgan in this morning with their note

saying this might be a buying opportunity, the selloff may be overcone, and morgan stanley also came out with a note saying this is not a contagion effect, not 2008, might be just more regionally focused and concentrated right now. neil: well, i would imagine if those institutions would be talking their own book, because their own book and hineys are on the line here. it is interesting too as we look at this right now, susan, east one of those -- either one of those institutions could be among the bidders or potential buyers of ill con valley. they could certainly concern silicon valley. they could certainly get it at a bargain basement price especially with the government shoring up and putting those 1 # 75 billion in customer deposits with a guarantee that doesn't protect -- not all of them, i'm sure there's going to be a limit to that. what is spillover there, do you think? >> if you look at the actual filing, i looked at $180 billion in actual deposits, and they said they the had about $20 billion more than that to cover any possible bank runs. so the fact that we're looking

at possibly, i think this was confirmed by the fdic, the largest bank to go under since 2008, they couldn't raise that type of capital in this type of environment. when you have rates are set to go even higher later on this month and, again, if you're in silicon valley, you've already had such a bad with time over the 12 months whether it's in the stock markets or having thousands of layoffs. i didn't think there was a buyer to step in, to put up the type of cash in this type of slowing economic environment. neil: okay. i coreally quick want to go to luke lloyd on this. you know, luke, i was thinking silicon valley bank certainly, again, the largest bank just now to go belly up since the 2008 financial crisis. but it also is a huge lender to the technology world. >> yep. neil: some of its biggest customers are in the technology world. could that have any, any warning signs for technology? >> yeah, i think it is an

absolute warning sign like i alluded to. [laughter] i think the technology sector got way ahead of itself borrowing as much money as possible, hiring as many people as possible, trying to revolutionize and innovate. the problem was they were incentivized by low interest rates and the government, right? the and the other thing that's not talked about too in regards to the whole economy including technology is much of our national debt when we're talking about rates and the federal reserve, much of our national debt comes due over the next few years, i think around 50%. as long as kepts -- rates are remain high, that debt's going to be refinanced. that's an impact that's not talked about much. we're going to pay higher taxes. that's what the government's trying to do right now, raise taxes on corporation, which means less growth, raise taxes on people even though they say it's above $400,000 a year. everything impacts mid middle class america. that means less money out there. technology needs money, needs to have that cash flow to operate. neil: and we're going to focus on that.

guys, we're going to stay on this story and only this story and the ramifications of in this, a myriad of other developments and try to get washington reaction, major bank analysts ' reaction. i should posit as well that the concern over the bank's future has, ironically, prompt add lot of buying in treasury notes and bonds, the very data -- if you think about it, right now a 10-year can be had for 7.concern or 3.73%, a little more than a few trading days ago this thing was flirting with and over 4%. so when things get skittish, this is what happens. this is far from a meltdown, but we are just looking and connecting the crumbs and the cash. you are watching fox business. stay with us. ♪ ♪ doors can take us to new adventures and long-term goals.

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♪ neil: all right, want to bring you up-to-date on the silicon valley bank. i bet a little more than a few hours ago, if not 24 hours ago, you hardly knew what this institution was. it's actually not one of the big money center banks you hear like bank of america or citigroup or jpmorgan chase. it is still the 16th largest bank in the united states, and it is in a world of hurt. it has collapsed, and the government has come to the

rescue saying through the fdic it's going to back up goes to haves there. we -- depositors there. they could be mom and pops all the way up to technology companies and the like. but all of this occurs at a time that people are saying, you know, that reminds me of prior instances like the meltdown and should we be worried about that. the treasury is indicating right now that that is not a worry and shouldn't be a worry. we're getting word right now market watch reporting that the treasury is monitoring a few banks and quoting here, very carefully, amid the silicon valley bank problem. janet yellen personally saying that she has looked at this and is following this. there's a lot of effort right now to see who, if anyone, would scoop up this bank as rates go downturned fears that this couls that that this could spread. there's no indication of bank runs anywhere else.

what we are seeing in the bank stocks, though down, they are well off their lows and nothing like the big hits we were seeing yesterday. for example, in the case of silicon valley, big problem was just finding a floor, and they couldn't find a floor. opening up and looking to open up more than 60% down on top of 40% plus losses yesterday. never got the chance. it was forced to shut down, and now it's going to be recognized as the first financial collapse since the meltdown. other banks are well off their lows even though those look like some eye-popping dethe kleins here, but a lot of concern declines here, but a lot of this was sort ofage anticipate thed, if i can use the right word there, but the employment report. it was very strong. and it once again raised the likelihood even with the wage part of it coming in a little weaker than expected, that the federal reserve is still going to be on track to raise interest rates. maybe not a half point at the

next meeting in a couple weeks, certainly a quarter point. let's go to tom gimble on that, good read of all things financial. tom, that's a curse in a way, you get a good employment report that shows an underlying strong economy. but for a bank like this with about half of its money tied up in treasuries, you know, bought at a much higher price, you're between a rock and a hard place, aren't you? >> yeah. the real challenge with the bank is the portfolio i don't think is that desirable, right? as luke was saying before, your earlier guest, they lend to a lot of pre-revenue and pre-profitable start-ups. they're very big on both coasts in the lending community, and they've been great. svb has been a really, really solid bank, and it's really helped fuel a lot of that start-up economy. however, you have a situation where the executive team put too much into treasuries, and now they have to pay the consequences.

you're right, they didn't do anything nefarious, they didn't do the anything bad or illegal. neil: right. >> they made a bad decision on where to park their assets, and now they have to pay the price. and i don't think that that is across all banks. i don't think we have to worry about a runup. and as you said, the bank stocks are well above their lows, and we're in a situation now where the dow and the markets are looking at the employment numbers, and they're saying we're going to see another 25-50 basis point increase. neil: you know, that employment report was strong, and we talk about the 300,000 new jobs, the big one for the prior month was only revised a few thousand lower, so if you think about it, over the last two months, you know, 800,000 the jobs, over the last three, more than a million or close to it. so that's not the issue. but do you think the economy will avoid a recession, that that's just not likely in the cards? >> i think it is not likely in the cards, neil. i believe that the economy -- what we're showing is that

interest rates did the not have to be at zero for so long. this economy is resilient. and now in the second and third quarter we're going to start seeing that infrastructure package, and we're going to see those blue collar jobs come in, and we're going to have a real jolts problem where the number of jobs are going to the outpace the number of people which i know you don't want to talk -- i don't think you want to talk about today, but it really is an immigration problem that we don't have people to throw hammers and to do a lot of that work on the low level side. we don't have a lot of the technology the- -- technology-focused individuals on the high level side because of those immigration problems. and simultaneously, where interest rates are at. i think the economy's in a very, very solid place. we've added almost a million jobs in two months. neil: yeah, no, you articulate are it far better than i. you know, the one thing i was looking at here, tom, and you can help me with this, and this is what contrasted as well with the financial meltdown, because i know people seize on that.

i probably have agitate thed folks all the more, but back then banks were not, you know, capitalized to the extent they are. they were i way overleveraged. as were a lot of average customers and then mortgage holders and people who had bought homes sight unseen. there's nothing like that. so i like to think, ironically, the thing that has silicon valley between a rock and a hard place is the thing that's not going to make it a hard place. the economy -- >> yeah. neil: -- that is the foundation the here. >> i don't think this is the actually going to be as bad as the s&l crisis was in the '80s, right? i think -- this isn't industry-wide. this is one bank that made a bad bet, and i think the problem -- again, i'm not an analyst, an equities analyst. but what i do think is that the portfolio isn't with companies that probably have a strong balance sheet as you would have at a bank of america, at a j for morgan and a citi, right? that's really the challenge of

another bank coming in to take svb and put it under their umbrella. i don't know, but, to me, that would be the outlier that i would think would be hard to make happen in that. the real issue, and i think you're right about this, is there it trickle down to the tech companies that don't have strong balance sheets, and if they want to leave svb, what bank wants 'em? neil: that's a very good point right there. tom, great job just speaking english. i appreciate that. you know what's interesting too, folks, what we're learning, there was a run on goesers or -- goeser thes and a good many of them given the fact that the audience in question here were venture capitalists. they were the ones trying to get out. here we go. ♪ ♪ wealth plan, a new tool in the chase mobile® app. use it to set and track your goals, big and small...

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while, but it has happened again the first time since the financial meltdown. u.s. regulators have shut down a major u.s. bank, the 16th largest. it's called silicon valley bank. they've taken control of customer goes deposits, the largest such failure going back to the meltdown of that year. this comes as venture capital-funded firms, i should say, was trying to raise money to plug a loss from sales due to higher interest rates. it has a lot of treasury notes and bonds on its books, more than half of its better than $200 billion are treasury notes and bonds. the irony there is those are conservative investments and as safe as you can be. but for a company like this, leveraged to the point that the it needed cash past to cash out of those, it would be underwater and, obviously, you know what cascaded since. federal regulators have said and janet yellen, the treasury secretary the, has emphasized that this is not widespread, they're monitoring the

situation, and the fdic will back depositors there. we have gary kaltbaum on the significance of what's going down. and what from what we -- from what we hear, gary, we also have with us douglas are holtz-eakin and susan li. so, gary, on that notion this is isolated to this bank, what do you think? >> well, they tell us it's isolated, but just remember they've also told us everything's fine and there are no problems out there, yet the 16th large bank is now being taken over. and i always worry about the word termites, is there anything else out there? just remember, banks are as good as deposits that are with them. when there's a loss of confidence in those deposits, you end up like this. so cautionary tale. the worry is, and i've stated this to you before, neil, every asset price, every economic statistic rain data point and

decision big and small has been based off of that 0% interest rate and the printing of $9 trillion, and now we've gone pretty much to another extreme, and and now we've got to get used to the that. i think the good news coming out of this, every bank big or small is going to be meeting the weekend to make sure capital is shored up and they've got things in order. and that's about the only good news, because nothing but bad news with silicon valley bank. neil: all right. doug, i do want to go to the you, but just to give you an update, the former cbo director, by the way, the flag deposit insurance corporation -- federal deposit insurance corporation, fdic, protects people's deposits up to $250,000, they've taken charge of these deposits and promised that protection. clients with these insured deposits will have access to the funds, we're told, by monday morning, doug. so they're obviously sending a signal -- >> right. neil: -- no bank run is necessary, you don't have to rush to the bank. good luck trying to withdraw

funds anyway at this particular juncture. but that is very different the than the environment we had back around 2008 when service the, like, you know -- when service the, like, you know, a freefall and people were losing their heads, right in very different. >> yes, this is very different. if you'll recall, i did spend some time on the financial crisis inquiry commission, and this doesn't look like 2008 at all. in 2008 we had global problems. some of the first failures were overseas, in fact, and we had this problem of having this mortgage risk on every balance sheet in a not particularly transparent way, heavy reliance on derivatives, hugely leveredded financial system and borrowers. this looks like a business model failure. silicon valley bank had poor management of its tier one cappal the, heavily concentrated in one asset, and it had a narrow client base, it's all tech companies. it's literally just silicon valley. i think of this as a real management failure, but i don't think it's a financial system

failure. neil: that's a very interesting realize. susan li, i'm reading a report from the bbc reporting on in that while the bank is a crucial lender to early stage technology businesses, those that sometimes can have difficulty finding financial backing, you know, except through venture capitalists and those, you know, billionaires who want to ache the a risk on an investment -- to take a risk on an investment, that there does not appear to be any widespread venture cappal the fallout here. what do you make of that? >> yeah. so i've been trying to call around silicon valley and venture capital firms. some of the blowback has another the with communication and especially from the ceo, greg becker, yesterday on that call with investors and staff saying, stay calm, you know? staying calm when your stock is down 60%, some said that that wasn't enough, you know? you should have gotten out there, been more forceful with some of these start-ups and also some of these venture capital

funds because a lot of people said this is the fdic stepping in here. the fact that yesterday we were talking about $200 billion in assets to cover $175 billion in deposits, the money should have been there to cover some of those liabilities. and the fact that right now you have the regulator step stepping in is a failure of management, risk management possibly, greg becker, but obviously a breakdown in communication in how he was talking to some of those vc funds out there. neil: you know, gary kaltbaum, it's interesting speaking of washington that janet yellen had said she was monitoring and continues to monitor these developments, that they're localized here. she said looking at a couple of other banks, i don't know what couple of other banks that meant or what she was implying, but again and again saying we are monitoring things very carefully. quoting here, when banks experience financial losses, it is and it should be a matter president of concern. it's just interesting that someone of her, you know,

influential -- heck, she is the treasury secretary of the united states -- it is a concern. so i guess that's my way of saying i don't want to minimize this either -- [laughter] when you have an institution of this caliber going down. and by the way, not going down with shaky products or derivatives products. i mean, the bane of its existence was investing many something conservative, treasury bonds. but it is a matter of concern. what do you make of that? >> well, look, you just got -- the banks are the pipes of the financial system, you know? money flows in and out. and janet yellennen has to make sure there isn't anything else out there. and i can tell you the best way to know if there's something else out there, just watch stock prices. silicon valley bank's stock price determined what was going to happen. they tried to do an offering,

and as the stock cratered, they could not get the offering cone. that was the market yelling and screaming something was really wrong. so i think i saw a couple other stocks cratering today, and they came out with news, wait a minute, hold on, we're nothing like in the. i think there's probably going to be a few more of these before we get away from this. and, look, you've just got to keep fingers crossed, you know? back in '08 it started with one and then the next and the next. you just don't the want to see that. just remember we have a lot more had back then, and you just don't know what's underneath the surface. we can't know about the alphabet soup back in '08, so we really don't know how much derivatives there are, and that's what i think they're going to be addressing and really looking over bigtime over the next week or so. neil: yeah, certainly going into this weekend. i will sort of ask you, doug, about -- and you've all touched

on it in different ways, the so-called confidence people have in the system. it's interesting that all the major regulators came out to say your money is protected up to 250,000, fdic -- don't withdraw money, don't run to an a atm machine. again, quick assurances to prevent anything crazy from happening. and looking at the cow and some of the other averages concern the dow -- even the nasdaq, just the opposite as rates are are coming down. this has a lot to do with it. so i'm just wondering, hearkening back to, you know, your memories of the financial meltdown, douglas, that's a big different here. and i'm just wonder -- difference here. and i'm just wondering whether rallying people to get their confidence back so they don't freak out, is it working? as far as you can see? >> the regulators are running the playbook which is to the remind people of the guarantees, to point to strength elsewhere in the financial system, to

remind people it is better capitalized, to point out this has been extremely localized in nature. and so that doesn't happen overnight, but i think they're doing what you would expect them to do. i want to go back to something gary said, because i think it's spot on. what gives you financial crisis-like conditions is to have some systemic, common weakness. and, you know, in the credit bubble that was leading up to the 2008 crisis, all the banks shared that, and then they layered on in a highly leveraged and derivative-driven do fashion. what's common here is people used zero interest rates and easy money, and it's gone concern the. neil: that is a brilliant point. that is the seed of everything. you just -- >> that's it. neil: -- mentioned the most basic point of all. we got spoiled, you know, a decade the of at or near 0% rates and, susan li, the reality of that is hitting people.

i i mean, i found "the wall street journal" take on this interesting. quoting here, once a darling of the banking business, silicon valley bank collapsed at warp speed after it announced a big loss on its bond an interesting addition, and its plans to shore up its balance sheet tank thing its stock and sparking widespread customer withdrawals on the notion that rates that were so low were no longer low and aren't going to be for a while. what do you think? >> i also find find it astronomical that you had a bank that had $200 billion in assets, they couldn't raise $2 billion. what does that tell you about this type of funding environment when rates are close to 4-5% and you're so used to 0 forth for the last 15 -- 0% for the last 15 years. bloomberg just came out with this write-up that a bank in memphis, tennessee, is down about 6% because of their

concerns, and is we know about the concerns of first republic. so maybe the major lenders there might not be a contagion effect, but the smaller layer,ing how insulated they might be from silicon valley bank or even from silvergate. neil: yeah. you're right about that. guys, thank you. please stick around. we're going to have a little bit more. etf ifs all under pressure right now particularly and most acutely those tied to regional, smaller banks, the so-called medium-sized banks that were doing all the right things. they weren't going crazy and investing in derivatives from some third world country. they were investing in u.s. treasuries. we all know what's happened to the u.s. treasuries, and we all know starting last year, almost a year ago on march 17th, we went from a 0% interest rate country to one right now on the precipice of 5%.

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neil: all right, america's 16th largest bank has collapsed, that's the big news right now. the damage and the fallout relatively containedded, i

should point out. this after silicon valley bank slid, the stock at least, more than 60% in just the last 24 hours or so. it was forced to sell roughly 21, $22 billion bond portfolio and recognized a nearly $2 billion loss, i believe $is 1 -- $1.8 billion, the ceo, greg becker, indicating that the financial institution will still be well positioned, it is the well capitalized, but that did not stop government regulators from saying we're shutting you down. depositors are going to be the protected through the fdic. seems to be localized. back with gary kaltbaum, susan li. gary, everyone is saying the right thing, and then looking at stock prices right now, they are relatively contained. nothing like we saw with the first hints of problems, certainly, during the lehman brothers situation and so much more, aig back all those years ago. so they say very different world now. do to you agree with that?

>> i think so. the leverage back then was gargantuan. i'm pretty sure we don't have that. hopefully, they learned lessons. and, look, i'm very happy that the regulators came out and are yapping loudly about this because there is that wore word, the intangible, confidence. the loss of confidence will send things lower, so good move on their part. but we'll have to deal with reality going forward, what else is out there. and, again, i expect a lot of banks to make announcements in the next couple of weeks saying, hey, we're in good shape. no problems here. and that'll be a smart move. but i want to just touch one thing because we're talking about those 0% interest rates and the easy money and the printing? that was not the real world. that was the decision of a select few people at the central bank to take rates down, screwing every saver and causing a lot of in this trouble.

it creates distortions for when the real markets come around, and that's what we're seeing now, the real market, interest rates higher where they should be, that's where you're seeing the trouble, where losses are attained. and i can tell you just on a small scale, bond funds over the last year and a half, there are some down between 25-50% because of the leverage they had, ask that's something that probably is going to need to be addressed going forward especially if we start to see yields in the 4.5-5%. i'm talking about the real market now, not fed funds -- neil: yeah. you want to, you're right, you want to retreat from that. susan, real quickly, we're learning about the tick tock on all of this that the bank's customers, silicon valley bank's customers, you know, they're funded like start-ups and investors that fund the start-ups, and they were getting about city. "the wall street journal" -- antsy. "the wall street journal" is reporting that because a lot of these investors had taken a big

hit since the fed began raising interest rates, they just wanted to sort of get out of dodge, take their money and run, to gary's point, and it fed on itself. obviously, the devil's in the details. your thoughts. >> yeah, just quickly, i think the everything bubble has burst. and especially with the second california bank in just a matter of weeks to go under. and so those zero rates, and you're seeing this in the realtime the, the fact that you're seeing these stress points, i think that's being played out in the markets right now. neil: well put. i want to thank you both very much. rising interest rates, that means the prices of the underlying bonds and the notes and the treasuries are going down. you're underwater on those investments, and a lot of those investors were saying i've got to get out because now i'm seeing especially with the fed's latest signals that it's going to keep raising interest rates. why wait around to see my investments fall further, so they all left through the same door at the same time. the government intervened to close the door and try to

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