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tv   Washington Week  PBS  March 18, 2023 1:30am-2:01am PDT

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wim: bank failures expose economic concerns and ukraine exposes gop divisions. [bellringing] a week of whiplash on wall street after two u.s. banks collapse and the government takes extraordinary efforts to prevent further financial turmoil. >> americans can rest assured our banking system is safe. your deposits are safe. william: the administration tries to calm concerns with all eyes on a key federal reserve meeting next week. plus -- >> was it intentional or not? we don't know, we know the aggressive behavior was intentional. william: tensions between the u.s. and russia at a new high after russian jets take down the u.s. drone, the first direct conflict between the nations
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since russia invaded ukraine a year ago. >> the war in ukraine is not a territorial dispute. william: prominent republicans criticize a contender from their party for downplaying russia's invasion, next. ♪ >> this is "washington week." corporate funding is provided by -- >> for 25 years, consumer cellular's goal has been to provide wireless service that helps people communicate and connect. we offer a variety of no-contract plans, and our u.s.-based customer service team can find one the fits you. to learn more, visit consumercellular.tv. >> additional funding is provided by -- koo and patricia yuen through the yuen foundation -- committed to bridging cultural differences in our communities. sandra and carl delay-magnuson. rose hirschel and andy shreeves. robert and susan rosenbaum. the corporation for public broadcasting, and by contributions to your pbs station from viewers like you.
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thank you. william: good evening and welcome to washingtonweek. i am william brangham. financial talk -- shock waves rippled across the country this week following two of the biggest failures in u.s. history. silicon valley bank and signature bank were shut down by regulators last weekend. on monday, president biden, trying to prevent more failures, took the unusual step of promising that all depositors at those collapsed banks would be made whole. treasury secretary janet yellen also addressed the banking concerns this week when she testified before congress. >> our banking system is sound. americans can feel confident their deposits will be there when they need them. william: but fears remain. on thursday, some of the nation's biggest lenders gave $30 billion to a small arrival, first republic bank, trying to
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assure its survival. in washington, lawmakers on both sides of the want to know what went wrong and why bank management and regulators were caught so flat-footed, especially following the 2008 financial crisis. >> we need to learn from what has just happened with these banks and go forward by tightening the regulations. >> i think it would be premature to start talking about solutions before we fully define the problem and ultimately get answers from the regulators about why they were asleep at the job. william: this economic unease coupled with ongoing concerns about inflation raise the stakes for a highly anticipated federal reserve meeting next week, where chairman powell is expected to announce the fed's next move on interest rates. joining me to discuss all of this and more is neil irwin from axios. and in the studio, fin gómez from cbs news. zolan kanno-youngs covers the
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white house for the new york times. and kayla tausche is a correspondent for cnbc. welcome to all of you. i'm feeling that i did not wear green like everybody. this week he s two banks collapse, a very aggressive move by the federal government. we saw this injection of billions of dollars into another lender. all of this to calm the jitters but the jitters do not seem to be combed. -- be calmed. kayla: there is more to be learned. we know what the government and private sector have disclosed but we got an important data point from the federal reserve on tuesday, what the balance sheet looks like good how much money has the fed had to give out to other banks? 150 $3 billion the highest on record, higher even then in the financial crisis.
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there are a lot of banks we don't know about who have run to the arms of the fed for low-cost capital because they're worried about their own companies. we will know who those banks are for another two years, and even for the deal that 11 major u.s. banks did for first republic where they essentially handed over $30 billion in depits, they only -- william: $30 billion in checking accounts. kayla: some might say that they transferred back the $30 billion of deposits worried customers had moved to their banks, so it was a return to gift, but that only last 120 days. can first republic find a buyer? is the operation worse after that time? or is this over? there's a lot more waiting to learn. william: neil, there has been some second-guessing about this aggressive move the administration and the fed took to try to stop the bleeding. what do youhink?
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did it appropriate to the moment? neil: this time a week ago, they saw a profound risk of systemic crisis, a run on deposits at nks around the nation. they decided it was better to do too much rather than too little. it was worth it to take the risk off the table that your deposits even over the federal limit of 250,000 dollars, might be at risk. there will be a lot of picking over it was the right thing to do in the long-term costs, how the long-term regulatory structure ought to change, but the judgment i think is reasonable, that if we get into real financial crisis that every bank is seeing mass withdrawals, that's about situation to be in and would be devastating for the u.s. economy. william: indeed. zolan, what just the white house think about this? the president is saying we've
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got you covered and we will make sure this doesn't get worse. do they think secretly behind closed doors that the worst is over? zolan: the president is saying that but also emphasizing accountability for banking executives. i think they feel the actions this week were necessary but to say there's no anxiety politically and for the actual issue we are talking about with the financial sector, i don't think we could say that. politically we have to understand the concern. i think we have to take a step back and realize how this president, what image he has projected the past two years. the champion of the middle class. how many events have we seen recently where he is talking in front of unions? talking about bolstering the manufacturing industry. he talks about the sanctity of labor as well. you have that same president that was in his west wing office watching what happened in 2008 when a bailout happened and it
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was met with backlash. that still haunts washington today. absolutely there is concerned. i think you can still say -- two things can be true -- they are comfortable with the actions taken this week but politically going forward there is concern in the of ministration. william: fin, zolansed the b word, which the administration has not been willing to say, that this is a bailout. can you remind us why this is a sensitive issue for this white house and president? fin: you used the word jitters and i think the concern that word would cause in the american public, within the administration if they used that word. it harkens back to the 2000 a global crisis that happened that still has that impact and has permeated through the political landscape. you are seeing it used by
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republicans, and also republican candidates who are saying this is in fact a bailout. it also could be a prelude to what is to come as we continue into the presidential cycle. neil: remember what onef the clinical vulnerabilities was for the president. before this, it was inflation. how will the fed's actions going forward impact how they are trying to tame a red-hot economy? tame inflation as well. how will this impact the decision around raising interest rates? all of that factors into the concern and anxiety about the actions. kayla: there's a real risk that the fed is sending mixed messages. last weekend when they came to the rescue of silicon valley bank and took control of signature bank, they did so under the rationale that there was a systemic risk to the economy. at the same time they are trying to shore up confidence, they are
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saying this could spill over. it's a double edged sword and they run the risk of doing the same next week with their interest rate decision because they've said inflation is persistent, it runs the risk of getting entrenched, we cannot stop now. if they stopped, they are signaling to the markets and economy and public that they are worried. that's like your parents getting worried. i wasn't scared until i saw you get scared. william: exactly. neil, several democrats including senator elizabeth warren, have argued that the rollbacks of some of the dodd-frank reforms put in place after the 2008 crisis, that they were complicit in what went down this week. once the evidence for that? neil: i thi the evidence is ambiguous that those changes to the regulatory structure in a 2018, that if they hadn't happened we might have avoided this. that said, the tone in washington the last few years
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overbank regulation, it was in the direction of these midsize banks do not deserve the kind of scrutiny giant banks get. the law you are referencing said banks that have 240 billion dollars in assets don't need to be treated the way j.p. morgan and citibank is paired he will lower the level of scrutiny. apart from the specific question of whether that law hadn't been passed, whether silicon valley bank would still be operating, i think the open question is was there a broader situation where regulators felt they could not push hard and not really scrutinize and drop the hammer on banks taking inappropriate risks? william: fin, we heard from thune and warren at the top of the show, competing ideas of what congress should do about this. does congress have a mandate? is there enough of a majority of people in the house and senate to say we need to act, and if
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so, what might they do? fin: it depends on how much worse this crisis gets. there is a sort of collective feeling of populism right now and i think this plays into that. it affects both parties politically. if this crisis gets bigger and has more of an impact aoss the country, you could see some maneuvering on both sides to do something more, maybe with the president -- what the president called for today, more punitive measures for senior executives who have run these banks and led these banks into the crisis we are seeing now. william: zolan, the point we've been making, the president doesn't want to seem like a middle-class champion. this concern over calling this a bailout, yet wanting to keep the economy moving in the right direction. it is an incredible complicated
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circumstance for him. it seems like in some ways he could be caught between a real rock and a hard place. zolan: i think that's true. talking about some of the progressive backlash on the hill, one thing at that was interesting, and i saw a couple of members connected also immediately saying, these executives may have traded stocks or made a profit, but at the same time, republicans continue to block a student loan plan i'm sure the president would love to be galvanizing his base off right now. you also have that happening right now. that pressure on the white house. it is an incredibly complicated balance he has good i think it will probably factor into more of the ents we've seen touting the infra structure package and chips package as well. if we see in the weeks or months ahead what many expect will be a potential reelection announceme, i think you probably will see the
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administration double down on some of those events. last summer we did see a series of legislative achievements happening. you would think they would point to that to counter some of the criticism that might come from the past two weeks. william: i'm sure they wish the banking crisis would go away and they could talk about the record. zolan: a lot of those benefits, it takes time for voters to feel. william: it's not instant. zolan: that's right. this people can feel immediately. kayla: i think you're also going to see the administration try to lean on the private sector heavily. earlier this week the treasury and fed brokered a deal with the four largest banks in the country. they had the ceos with them in person and the message that sends is we build you up 15 years ago, you are a lot stronger, you bailout your peers. they want to wash their hands of this, they've done what they can do and they want to lean on someone else. william: as kayla was mentioning, the federal reserve is meeting next week.
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a lot of prre on them, they want to keep moving forward against inflation but what they do next week could be a signal as to what they really think about the severity of the crisis we are in now. what do you expect from that meeting? neil: the fed likes to emphasize the idea of different tools for different tasks, meaning they raise interest rates to fight inflation, and meanwhile they do emergency lending to prevent a financial crisis and prevent banks from collapsing. in truth, those things are more intertwined than they like to admit. if they raise rates next week, it will make things harder on banks and they bank -- act off, it might make inflation harder. it is a no-win situation. i think they will probably go forward with the rate hike but signal openness and flexibility and they might not do it again if things go south. the truth is, if this banking problem that happened last week spreads to the entire banking system and results in a quick contraction, banks making less
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loans, it will cause a slowdown in way the fed interest rate increases up to this point haven't. there is a possibility we will see the disinflation, the economic slowdown they've been trying to engineer for a year come about because of the banking slowdown. but the range of uncertainty is enormous. william: neil, thank you for joining us. turning overseas, tensions between u.s. and russia on the rise aer a russian fighter jet intentionally engage with the u.s. drone over the black sea tuesday. it was the most direct confrontation between the powers since russia's invasion of ukraine. it comes days after florida's governor and likely 2024 republican presidential contender ron desantis drew sharp criticism from several of his fellow republicans for minimizing the significance of that invasion. he told fox news, "while the u.s. has many vital national interests, becoming further entangled in a territorial dispute between ukraine and russia is not e of them."
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so, a remarkable set of events we've been seeing. zolan on this issue of the drone we've seen, this is the kind of event the white house has been trying all along to not happen, direct kinetic conflict between russia and the united states. how has the white has been responding? zolan: you are right. how often have we heard the president emphasize to the american public, to the world, i'm not sending american troops into this war zone? we are supporting ukraine with foreign aid, i'm trying to unite the west against russia to have economic pressure, but we are trying to avoid a connecticut war. it has been an absolute focus for this administration and this kind of direct -- the public
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might be thinking wait, this is a drone, is that the same? it's not the same obviously as troops, but it is the type of escalation they've been trying to avoid. also, there are some other concerns. that video only shows, according to u.s. officials, just a little bit of what actually happened. the administration's account is there were two russian fighter jets that made 19 passovers the drone. that just captures one. they've said that the dumping of the jet fuel was likely deliberate. also what happens going forward in terms of the drone they say may deep in the sea. it's not clear whether russia is going to recover it. they say it is unlikely but also there is concern about whether that could be used for propaganda purposes. u.s. officials are saying that is unlikely. william: kayla, that we saw the
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video seems striking, how quickly was declassified. kayla: i think the admin astray should has realized that the strategy of radical declassification has been successful since the start of the invasion. they hoped it would deter invasion and even when it didn't, it would show that u.s. intelligence was right after the chaotic thrall from afghanistan when intelligence there -- withdrawal from afghanistan when intelligence there was wrong. to show the public this is what happened and let the viewers take it for themselves. i think what is so important about this is it becomes just before president xi is set to meet with president putin in moscow. that axis has been strengthening and latimer putin is emboldened by having an ally like that. this is pure saber rattling before that meeting when he's going to get to put his own pictures out there, these massive superpowers in the east, and show the u.s. he has this friend on his side.
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certainly he is operating as if he is above the law, that's how he's been operating since the beginning of this conflict. i don't think the administration is surprised, even though it was its goal, to not have this happen in the first place. william: fin, i want to turn to you about what desantis said about ukraine. referring to the illegal invasion of ukraine as a "territorial dispute" got him a barrage of criticism. you've been on the campaign ail, you've been at a trump rally, talking with republican voters recently. we all think ron desantis will get into this race. the question is, does the position he's staking out on ukraine, that it is not for us, let's not waste american blood over there, is that a resident point with republican voters? fin: absolutely. especially with the maga base that he and donald trump are trying to apal to.
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when i spoke to voters in iowa, to them, the position he and donald trump are aligned on is when they firmly support. when donald trump was speaking about this issue and saying he would end this war on day one, it was the loudest applause, one of the largest -- loudest reactions from the crowd. he's playing to that maga base. even though he's not jumped into the race, he doesn't seem like a candidate and he seems like someone preparing to jump into the presidential race and that issue is leading and connecting to that base. william: there are a lot of other republicans who jumped to this to criticize santos and say that's not what america's position ought to be. but kevin mccarthy before he became speaker, hinted at this as a possibility, that there will not be an open checkbook. where you see this coming down? do you think the republican will
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embrace that idea? zolan: i think part of the trump effect and one of the lasting effects of the trump administration is a sort of realization that the maga base, there is interest in moving away from the intervention approach to a more isolationist "america first" approach. but there were will republicans -- were republicans on the hill criticizing desantis. calling it a territorial dispute. conversations i was having, is if you are likely to run for higher office and put in a position where the war is still ongoing, maybe you aren't advocating for as much aid, but you are in a different position where you will probably be in a position where you are rallying for some. that comment lives on. if there are members of congress on the hill the don't want to send foreign aid at that point,
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think about how much harder it has become. you have belittled this invasion to something like a territorial dispute. that will make it harder going forward. not just for a potential candidate that wants higher office, but also -- the president right now is in a position where he's made clear he wants to maintain support for ukraine. that is absolutely true. he also has the challenge of european allies dealing with an energy crisis and an american public that continues to deal with economic pressure. comments like this in the public add to that challenge of maintaining the support of the country for this aid as well as allies. kayla: there were a few republicans i spoke with that said i didn't see those comment so i could not respond, which was a relic from the trump era, plausible deniability. i think we will see a lot of that. william: do you think this moves into becoming a legitimate issue in the 2024 presidential race? kayla: a legitimate talking
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point. kevin mccarthy assured allies privately that he would continue the support. >> it might help with crating factions on the campaign trail as well. nikki haley's campaign launch focusing more on foreign policy. mike pence immediately react as well. meanwhile you have desantis and trump sort of playing for the same base. you're starting to see -- and again, desantis has not announced a campaign yet but you're starting to see some factions. >> and you are seeing that space in the lane opposing that position by both trump and desantis. mike pence spoke in new hampshire yesterday and spoke specifically, addressing that, this is not a territorial dispute. that to me shows there is a wide lane on that side and that could
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politically help as we continue forward in the cycle. nikki haley is also there, mike pompeo, who is considering a run as well, could also be on that side of the ball. it's interesting how quickly mike pence jumped on it and how he's utilizing it as a potential framework for a campaign. william: it's difficult to predict especially what foreign policy issues will end up in a presidential race. we have to leave it for their now. -- it there for now. thank you to the panel for reporting and things to all of you. on pbs news week and, john yang looks at how michigan might passed three new gun safety laws in the wake of the michigan state mass shooting. i am william brangham. good night from washington. >> corporate funding for "washington week" is provided by -- >> for 25 years, consumer cellular has been offering no
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contract wireless plans designed to help people do more of what they like. our u.s.-based customer service team can find one the fits you. to learn more, visit consumercellular.tv. >> additional funding is provided by -- koo and patricia yuen through the yuen foundation -- committed to bridging cultural differences in our communities. sandra and carl delay-magnuson. rose hirschel and andy shreeves. robert and susan rosenbaum. the corporation for public broadcasting, and by contributions to your pbs station from viewers like you. thank you. ♪ [captioning performed by the national captionininstitute, which is responsible for its caption content and accuracy.]
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