i -- svb. i am curious if you think it is harder toughening roles on those banks and if you're banks would have helped in this situation? v.c. hill: i generally think that we should, as i said in the speech, we should closely review what happened here. we should look carefully at the role of the supervisors and the role of different rules and if targeted changes will be appropriate. hopefully, to the extent that they are -- that there are holes in the pre-existing revelatory framework, i don't think this is an issue of midsize banks not been subject to rules that large ones are subject to. if anything, it is a question of, are we approaching interest risks the right way? victoria: i am curious how you see the role of supervision. this was a federal regulator bank, but, generally, there has been a lot of soul-searching about the role of supervision and how much falls on management and the supervisors. how do you think about that? v.c. hill: i think coming out of this, there will be a lot of deep

they would not have captured the risk that svb was put under.ailey: as we talk about this tailoring being undone. they would not have captured the risk that svb was put under. kailey: as we talk about this tailoring being undone. more stringentmore stringent su, liquidity requirements. how are midsize banks prepared for that? sonali: they have been prior they have been prior preparing for preparing for a c assessments. the big banks, they can stomach that but the smaller banks are under pressure. there are a few things i want to reiterate, a capital regime that will brought into a i want to reiterate, a capital regime that will brought into a broader range of banks and risk will be assessed differently. revisit the approach to stress testing. the approach to stress testing. what is the outcome of this? there is a lot of the approach s testing. what is the outcome of this? there is a lot of the banking system under pressure, does it mean more of them will try to merge? does it mean that the small banks will try to merge as they try to stomach som

given svb social and climate agenda, one must ask, if svb's investments and climate cause regulators to be a bit more permissive of its risks for. if you cannot stay on mission and enforce the laws as they already are on the books, how can you ask congress for more authority with a straight face. to that end, i hope to learn how the federal reserve could know about such risky practices for more than a year and failed to take definitive corrective action. by all accounts, our regulators appear to have been asleep at the wheel for. in addition, i also hope to learn more from the fdic about the role in the receivers ship and sale of boat svb and signature bank especially on the auction and the due process. i am very concerned that private sector offers appear to be submitted and yet were denied. if silicon valley bank has been purchased before it failed, the panic and the shock to the market and the markets confidence we have seen over the past two and a half weeks may have been avoided. if silicon valley had been purchased over the weekend of march 10th, confidence in the marketplace m

that actually sparked sooner than conversations that were kind of more general about svb, like svb and silicon valley bank. so it looked like the conversation started with investors noticing thing and spilled over into kind of a broader conversation among depositors. >> and it's interesting because just anecdotally speaking around here in the bay area, svb's clients and businesses, we are such active twitter users. what's your main takeaway, professor, with your report that you tell your students or any viewers tonight? >> so our takeaway is that maybe twitter doesn't exactly create its own risk, but it really amplifies banks that are at risk. so for banks that have a lot of exposure to uninsured deposits and a lot of losses like svb did, communication about those banks can really amplify and fuel bank runs. this is, in this day and age, a genuine risk that faces a pretty good segment of the banking sector. >> thank you for your time tonight. >>> up next, housing prices are on the rebound in the bay area despite the sky-high mortgage rates. so what's driving the increase in costs? >>>

svb dragged out for quite some time. eventually you'll be able to get that money but it could take time. there were people that showed up at svb and walked out with a check that day. there were others that had to wait weeks. so i really -- i was trying to get an answer exactly how long this takes, and there is no exact. >> svb was bought by a bigger company, a bigger bank. what happens with tures republic? what are some of the options? >> one of the options is it stays independent. it did say it was going to lay off 20 to 25% of its staff to cut costs. another thing, a big bank could try to buy it outright. a third option, that's the one we saw with svb, the government takes control, says we're going to make good on those assets, and perhaps another bank comes in like with svb. there are a few scenarios that could play out here. >> timeline, monday morning, are we going to have an answer? >> we may. these things tend for some reason to get solved on friday nights or weekends. >> like svb. >> this weekend is going to be a

this meant that supervisors did not force svb to fix its problems, even as those problems worsened svb, it turned out, it three times as many supervisory findings compared to its peers by the time it failed. there was 31 of them the fed should rethink changes to the supervision it made in 2019, going back and having a problem with the changes made under randy quarles, the trump-appointed vice chair for supervision, and then fed chair jay powell is recommending -- or saying he welcomes the report's representations. >> one question about what you just reported, you mentioned they had 31 supervisory provisions are these red flags, like speeding tickets, like, hey, guys, you're doing something wrong, there are 31 of them out there? >> yeah. they're parking tickets, kind of like parking tickets there are two kinds ofparking tickets. maybe parking tickets written on manila paper and one is written on red ticket paper. the mras and the mrias, matters requiring immediate attention and others requiring attention there were a whole boatload for svb and a lot out there in the system and the repor

joe: you brought us back for a second to svb. came clear that the fdic was on site was a matter of time before. . receivership was made official that could be the case today, we are on a friday with little time left in the day. this could be a mentor -- a matter of hours. >> you check something to be announced at the end of the week before futures open at 6 p.m., it is a busy day and banking as it comes right after fed vice chair michael bar released his report on the failure of svb. perhaps they will have to add another failure. >> what happened with first republic? >> they said when the report lands it may already be dated. joe: bloomberg's kailey leinz of the breaking news today we will discuss the two oversight reports on svb, signature bank and now this with former fbi see -- fdic. that is coming up next. on "balance of power." this is bloomberg. ♪ emerson software helps clean energy become reliable electricity. go “good night." go boldly. emerson. (jennifer) the reason why golo customers have such long term success is becau

in the case of svb depositors took other services from svb's other arms, including its venture arm throughture debt. but it is an option. when you think about the terms a founder is presented with debt and not giving up as much equity is an interesting option. alix: before we let you go, let's be honest, everybody is talking about bobly. ed: the tech community talking about bob lee. a suspect was arrested. that suspect is due to be charged, arraigned in court today. but it is a shocking turn of events and the suspect who was named, the authorities also confirmed, was somebody known to bob lee. we wait to get more facts on this case but the narrative has changed about the lawlessness in the city. the facts are much more clear about what happened. alix: unreal. dani: and the police chief said this had nothing to do with san francisco but human nature. thank you for bringing that story and more. that is bloomberg's ed ludlow. you can catch ed on bloomberg technology. it comes up in about 90 minutes at noon eastern, 5:00 p.m. in london. this is bloomberg. ♪ dani: we about an hour into the trad

>> no, and, if i remember, i was for that in january until svb and when i saw in addition the fed not getting it and raising in march and not even putting pause really in their statement, at that particular point, you know, i said that i didn't think 10, 15, i was saying 5, 10, 0, 10 and i said, listen, the one-year projection, the six-month, nine-month projection we know is all very volatile in the short run. as soon as i saw that, i became pessimistic and defensive for this year. but not for 2024 >> i know but that's a long time out. do you think the fed ends up cutting rates this year? >> yes absolutely i absolutely think the fed is going to be cutting rates, much more than even the fed funds rate indicates by the end of the year when they see the slowdown in inflation and the slowdown in economic activity. don't forget, scott, their last projection, and i made this point, they projected in march negative gdp growth for second, third, fourth quarter. they gave a year projection of 0.4 and the first quarter is already going to be 1.5 to 2.5 so it's negative that is a recession. i do

. >> svb, the 16th largest bank in the u.s. billion in deposits, is now the biggest american bank to fail since the 2008 financial crisis. its customers are primarily businesses and investors in the tech sector. >> the swift collapse of silicon valley bank is the second-largest financial failure in u.s. history. and it took only 48 hours to unfold >> seth: man, you gotta give it to silicon valley. they know how to move fast and break things 48 hours they basically amazon primed a bank collapse. [ laughter ] and knowing silicon valley, i wouldn't be surprised if some tech startup comes along promising even faster bank collapses. "it's called instagone you just download the app, press a button, and watch as all your money is instantly flushed down a digital toilet here, i'll show you. [ toilet flush ] "honey, did you just lose the kid's college money? "yes but i got an nft of a cool plunger and sunglasses, so win/win. [ laughter ] look, i don't want to be a doomer, but situations like this are exactly why i keep all the money rig

from bad behavior by financial institutions, we just heard about some bad behavior, the failure of svb bank or the second largest in u.s. history, why did that bank fail, and how much blame should be lay at the seat of regulators? there is no question that there is certain types of culture in boardrooms, and approaches to banking that were unsafe and unsound. you had in the case of silicon valley bank, a lot of fast growth. a lot of uninsured depositors, and really a different type of business model, especially when it comes to tying of the deposit note counts -- deposit accounts, and there is no question that the deregulation in recent history contributed to it. and there are clearly changes needed not only on regulations but how the regulators supervised some of these firms. this cf beauty -- this cf be -- the cfpb was created out of the ashes the last financial crisis where it was clear that financial regulations and gulators were not where they needed to be. >> you are referring of cose to don frank, which was passed duringhe -- dodd frank which was passed during the last financial

and the fed's own bank supervisor, also suggests new regulations will be needed for banks like svb svb a textbook case of mismanagement, according to michael barr he said svb failed to manage basic interest rate and liquidity risks. and the board of directors failed to oversee senior leadership on the fed missteps -- >> they were talking about a downgrade in november before the march 23 failure svb demonstrated weaknesses in regulations, and standards were too low. the vir chair of supervision saying -- >> one other interesting thing it does point out that the fed is going to have to figure out how to put liquidity in the right place to respond to a world where you get social media technology, and that concentrated depositor base, they're saying it fundamentally changed the speed of bank runs the bottom line on mid-sized banks, the report makes clear the relaxing of standards in 2019 will be looked at >> that's probably the most significant aspect of this, but it's a problem as old as time about empowering regulators. how often have we heard that i know you want to talk about the infla

they lost 30% of all deposits has svb-related panic spread. now threatened with the possibility of federal takeover as depositors and investors have been fleeing. we'll likely know the fate of first republic over the weekend. >> you mentioned social media here. we've been following both of these stories, svb and first republic, but as you said, even the feds are saying this is part of what led to the run on silicon valley bank. >> because on twitter information spreads so quickly and panic spreads so quickly. i follow venture capital twitter because -- >> that's what you do. >> and the vcs were there enforcing, oh, my gosh, this bank needs to be protected at all costs. this is where we make our living. that is cited for saying, hey, people saw those posts and freaked out and pulled their money out, leading to the disaster that was svb. >> sure. and seeing those folks lining up, like should i be in line, and maybe other people are going i'm not an svb or first republic depositor, but what about my bank? are there other banks to come? >> there v

in the banking system, the likelihood that credit gets constrained even more than was the case pre-svb where credit conditions were tightening even then. i think we have to work through that and a stabilization in financials would probably be that sign that the contagion is starting to be limited here. unique to this environment, i do think we'll need to see some stabilization in financials. >> speaks to the health or not so healthy nature of this rally. it raises the question, even with the big run we've seen in mega cap tech names, are they truly an area where investors should be putting money to work given all the uncertainty now? >> i think you have to go individual name by individual name and not make monolithic calls. the common question is always, do you like tech or do you not like tech? i always think, what within tech i don't cover individual stocks but you could have in this giant tech tore of technology, you could have unbelievably well capitalized companies that have ample cash flows and lots of earnings and pricing power and, you know, strong balance sheet then you have c

again, acknowledging that the foundational purpose here is not the fed, it is svb.hat 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

bought shares of svb and sold shares of bank of america.d shares of first republic. he is a cosponsor of legislation to tighten restrictions on financial firms. and then there's representative john curtis, a republican from utah he sold shares of first republic and bank of america on march 16th they were made under a joint fund owned by curtis and his wife cnbc has confirmed these trades but not received comments from either so, should we be outraged that lawmakers who are setting policy for, in this case, the banks, and have insight into their operations that we may not have, are trading these stocks let's dive into that kate kelly, "new york times" money and influence reporter in washington and a cnbc reporter great to have you on this topic. you know, i read this article this morning, i'm sure many americans did and just were absolutely outraged that this is -- this happened, that this is able to happen. >> yeah, melissa what's interesting here is that this is perfectly legal, as far as we know the stock act of 2012 is the main piece of

going into svb, they were thinking about raising the terminal rate further. people were talking about 6% terminal rates. now they are in a wait and see mode. they will see how much bang they will get from the svb episode and will assess to see whether or not they need to be holding, raising interest rates more or cutting. jon: all considerations for sure. going back to the turmoil that dominated the headlines within banking for the last couple of weeks, one of the takeaways from that was the belief that at least for the smaller banks they are going to be a lot more restrictive when it comes to lending in the months ahead. does that do some of what the fed may be doing anyway? alex: look, there is a wide range of estimates on how much tightening the pullback in lending at the small bank original level may be worth. i think the answer is right now, it's probably worth something. chair powell talked about an additional hike. i have seen estimates from my colleagues. the answer is that we don't know. they are not even going to see that in the data for several mon

. >> let's move quickly to the svb crisis. can we agree that the issue here in terms of risk is liquidity risk that we are facing in the system and svb had a liquidity issue? sec. yellen: there was a run on the bank it had high reliance on security deposits and there was a massive withdraw of deposits that led to liquidity problems the bank had to be close for that reason. do you agree that this was a liquidity risk? sec. yellen: there will be a careful look at what happened in the bank and what initiated this problem. clearly, the downfall of the bank, the reason it had to be closed was that it could not meet depositors withdrawal request. >> because their capital was losing value and they were not able to access or capital and i attribute that to the interest rate hikes that we are seeing in face of the inflation? am i wrong in that? sec. yellen: my understanding is that the bank to meet liquidity needs had to sell assets that they expected to hold to maturity. given the interest rate increases that have occurred since those

there have been regulatory blind spots, right, when we saw with svb. little bit of a sense of needing to do something maybe. >> i think so. i think, you know, they're using this opportunity from svb to deal with a separate part. as you know, i think you talked about it earlier in the hour, there's other proposals that deal with banks as well. and we're also, by the way, as you know, sara, we're waiting on the postmortem to come from barr, vice chair of supervision at the federal reserve we're not really sure what happened in the meltdown of svb or how to fix it it might be a little early yet to be doing proposals relative to fixing what happened at silicon valley bank. >> good point. i can't wait for that. that's going to be so juicy, that barr report steve, thank you steve liesman. >>> still to come, private equity firm kkr returning from a trip to asia, bullish on one country in particular. that's after the break municipal bonds don't usually get the media coverage the stock market does. in fact, most people don't find them all that exciting. but, if

why did the fed allow svb to be 90% uninsured deposits? there a relationship when the vc is invested through silicon valley bank or a partner that it forced the tech companies to stay so they would not move out? i do not think we focus enough on the fed's role. i point out not just svb but these other smaller bank holding companies that seem not to be regulated at all. meanwhile they are focused heavily on j.p. morgan chase -- caroline: what about a first republic or some of the other lenders that have been tainted, whether rightly or wrongly, because it felt silicon valley bank was idiosyncratic. aaron: i think there have been problems at a wide number of lenders through the holding company and the fed has not done anything. i cannot explain why a company like dickinson financial out of kansas city that runs a series of banks that do nothing other than milk people for overdraft fees has been allowed to exist. there are all these little banks , all they do is overdrafts. they are check cashers but the federal reserve keeps giving them make

morgan underperformed the s&p by about 8% since svb, and i think that's the dynamic here. i think you have a case where banks are going to be judged as -- even if the numbers are strong, there's so much more to come for banks that they're going to have trouble. >> yulia, i'm curious your take. >> everything with banks right now is going to be a function of the haves and have notes your large mega cap banks are thes have and regionals are the have notes that's important to keep in mind as we get more and more information on the regional banks who are holding much more of this problematic office, another commercial real estate that i think we all know is probably mispriced and has more credit risk. so i think next week it starts to be really important in term of understanding what they have. the large banks have done a good job of boosting their rain any day funds, but i think it's going to be much more severe on the regional bank side. >> i will just note that pnc managed to close up after being down all day, jeff. >> why did you point to jeff did you do something wrong >>

svb didn't need to do many of the things to make sure that they are safe and sound. they have to digest all the losses on the lending. liquidity, risk management. i do think it makes sense for regulators to make sure that banks of smaller sizes, $100 billion in assets do need to go through the more rigorous kind of examinations and testing and hold more capital just like the big guys. they could cause problems as well. host: questions from viewers when we have you one. let me give the numbers. (202) 748-8001 for republicans to call in. (202) 748-8000 free democrats. independents, (202) 748-8002. a question we always ask when you are on as well is your thoughts on a recession on the horizon? do you see that happening in 2023? guest: when i was on three months ago i probably said recession risks are very high, uncomfortably high because we are in a world of client ration and rising interest rates. but some really good policymaking by the fed and a little bit of luck, we should be able to navigate through without much economic downturn over the next 12 to 18 months. i s

when svb collapsed. but it turns out this bank, first republic, also based in the bay area, also deals a lot with venture capitalists and with start up money. they have a lot of deposits above the fdic at 250,000 range and so they are in trouble as well. we are waiting minute by minute for exactly what happens to these guys. >> svb collapsed over the weekend. could we say the same time line for first republic. >> a lot of analysts are saying the same thing might happen, over weekend, that's how the fdic likes to do it. they may take first republic over. they have a couple of weekend days to try to find out is there another bank interested in buying them and what to do with those deposits. come monday morning, once again, we could see a big scramble surrounding that bank. >> if i'm not at wells fargo or b of a or big banks, and smaller regional banks, am i getting nervous here because it could be my bank next. >> nervous in terms of we may need to move our money. don't worry about losing our money if each

the collapse of svb. we are still seeing that inverted yield curve that spread has narrowed just a bit in the month of april. we are watching the energy complex. always looking to oil. wti is $80 a barrel. up pounds 50%. brent crude at $84.50. up .50%. >>> in crypto, bitcoin crossing back above $30,000 right now, we are seeing bitcoin at $30,100 ethereum is up 1.5%. moving back toward the $2,000 mark we will dive in to that rebound coming up later in the show. >>> let's check on the action in asia and trade in london with julianna tatelbaum julianna, hope you had a great day off yesterday. >> frank, good morning certainly did. yo european markets getting going the markets were closed friday and yiesterday in japan, a couple of things to factor in here nikkei 225 traded 1% higher in the overnight trade. the new governor of japan took center stage in the last 24 hours and suggested he sees no reason to abandon the central bank easing policy the second issue is warren buffett, frank, considering investing mo

a couple things, guy, tonight, and this is on a day when the fed released its report reviewing why svb went under what they found basically just bureaucratic supervision there was some supervision at the fed level, some at the regional level they got 31 supervisory notices, but nothing got done about any of them. just a mess here what it was telegraphing is regulation is coming regulation is coming, and ultimately the cost of all this is going to be born out by the customer and by the banks. so, in this environment, guy, everything's changed how they're doing business is going to change. so, can you get on board even though tim says, i like pnc, i get that. i understand that sentiment especially with superregionals, but the game is changing, isn't it >> 100%. tim is right, the u.s. bank corps, if you look where it traded down to, 2019 low, you'll see it's interesting per trade quite frankly it's some of the most, i would say, secured or smartest group of, i guess the word is overseers at that bank for lack of a better hrase with that said, your point is spot on. i think by definition,

guest: yes, svb for short.ler: i understand these people moved their money in large quantities and billions of dollars from this bank to other banks. via the internet or whatever. i bank with a regional bank here. whenever i call them, click on calling you know, i get a menu of services i can access moving my money from savings to checking or whatever,. canceling checks or whatever is to take all of my money from that bank and put it into another bank like you hear the silicon valley stuff going on. how do these people move their money? i cant do it. guest: thank you so it. . in a regional bank and they played an important role in the u.s. economy and with companies and entities. you do have options of all thanks of all sizes from our nation's most banks to our nation's largest banks to move money in and out of those accounts. you do have those options as a general observation. what happened in regard to silicon valley bank roughly a month or so ago is a lot of the companies that had their money there decided t

i want to return to svb issue. ask you -- i haven't heard you say today, when were you first notified that there were problems with svb? when did you alert members of congress? what was that timeline? >>. ank i believe that i first find out about the troubles in silicon valley bank i guess last thursday. >> last thursday? you notification to congress came when? we, the bank -- lana just put that in writing for me so i don't waste my time. i know senator langford asked me about the positive insurance fund and how that would affect our local banks. there is a lot of concern over this. i know you were uncertain about that. if you would run the numbers on that and let us know, ballpark, what you think what this would cost if you ended ensuring everybody's deposit? i have to ask you, being from tennessee, we have a long storied history of opposing national i think the banking system. do you see this as a step to nationalize the banking system? >> absolutely not. >> okay. >> i see this as a step towards stemming contagio

the regional banks, first republic, svb, they were both were the lifebloods, right of giving lending those folks say okay, i don't feel comfortable banking at a place like this. the person that i knew maybe wasn't there anymore. so i will go to bank of america. they might not get that same type of loan they need for their business. it might be more restrictive standards. it might be higher interest rates. what happens then when main street goes down? david: carlton, i know this is looking in the rear view mirror, that is what financial reports are all about, many thought we passed the danger point with regional banks, but this is rehashing all of those old fears again and do you think of what first republic is going through right now, you see the stock drop as much as it has, it might spread out to regionals from here? >> i think we'll see what we saw with regional banks that reported so far. many of them met or exceeded expectations. certainly some exceptions. western alliance was actually one that exceeded expectations. so you kind of had your so-called kitchen sink quarter. the te

they had big exposure to svb and a number of other banks in the u.s.ss billing is to step down as the ceo. they lost 2% of their capital in exposure to svb and a number of american banks at the time of implosion. dani: you have to remember this pension fund is so big and equates to about $2 billion in retirement savings. there has been outrage among swedes, lots of social media comments that advocated -- aggravated the bets they made. alecta was the fifth biggest shareholder at svb, hence why it hurts so much. manus: everybody is queuing up to tell us why they have idiosyncratic risk. even the fed's williams says there are these risks and they are not going to get in the way of the u.s. economy at the moment. dani: coming up, we will discuss 25 years on from the good friday agreement. we will take a look at the impact of the treaty and discuss president biden's agenda when he visits the region this week. this is bloomberg. ♪ go. go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe

svb blows up startup "a" is wondering what it will do. they have to layoff people how hard is it to find another job in startup world in silicon valley >> it's not that hard. it's a healthy ecosystem people are hiring. the people getting laid off from snap or meta are able to find a job. we were so far behind the hiring curve two years ago it's being reabsorbed people are being more thoughtful about not quitting their job without another job to go to you know, that's starting to work again you're also seeing wage compression for the first time in probably ten years. >> all right appreciate it as always. we'll talk to you soon rick heitzmann joining us. >>> pioneer popping on talks of a potential merger we have a shareholder standing by for her take and what it acadt mean for the broer spe. "closing bell" right back. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy

so why couldn't they prevent svb's demise?the report says that supervisors delayed action to gather more evidence even as weaknesses were clear and growing. and this meant that supervisors did not force svb to fix its problems even as those problems worsened. the report also acknowledging that it's time for the fed to reconsider how it evaluates some banks, saying, quote, we need to evaluate how to ensure that supervision intensifies at the right pace as a firm grows in size or complexity. so what now? well, the ceo and co-founder of monetary policy analytics tells me, i think they're going to be a little bit more holistic as to looking at broadening the scope of what they look at from financial metrics such as cash levels and the composition of their deposits to more qualitative metrics about the character of the banks. as for the larger banking system, barr wrote that svb was an outlier and, quote, our banking system is sound and resilient. ra held solomon, cnn, new york. >>> u.s. republican house lawmakers vote to raise the

svb gets into trouble, it drops into the 3.5% and i would bounce back to about 4.20%.hat changes the conversation in the fx arc it's. euro-dollar, 1.0970. in the immediate instability in the last month and get indications in the last week that we are seeing more stability, this conversation is slowly that maybe the fed needs to go further. i think it is tremendously early days but that's where the conversation has shifted. tom: can you see an apollo credit card? can you see apollo getting into this? jonathan: i am not sure that's what they want to do. tom: jamie shelter is with us. he joins us now with decades of experience. let's bring in a gentleman with this overview of this crisis or noncrisis were in right now? jonathan: can we start after the days of svb? this is your moment to make things happen? how difficult was it to deploy it? jim: you have to differentiate between a crisis and you were talking to a lot of borrowers and institutions that needed help. that week we did a large transaction and helped out pack west but i think what you're talking about this morn

the study says that the tweets led to a run on the bank before svb collapsed and other banks could faceilar risks. >> twitter doesn't create its own risk but amplifies banks that are at risk. banks with a lot of exposure to uninsured deposits, communication about the banks can amplify and fuel bank runs. >> like a snowball effect for svb. the federal government swooped in, took over and sold it to first citizens bank. >>> after a cold and wet winter, the warm-up is raising concern about potential flooding in parts of the state. not rain but the near record snow pack in the sierra could trigger flooding if it melts too quickly. the bay area likely won't see flooding but waterways could become increasingly dangerous. >> there's never the perfect season. either too much snow and potential for flooding or not enough and potential for fire and drought. given the alternative, i would rather have the extra water in the mountains to replenish what we've been using. >> the potential flooding likely won't happen until may but with so much snow the threat could continue into july. >>> i'm chief me

and it mostly dates back to the collapse of svb back in march. if you take a look at the s&p 500 against the russell 2000, that's really when the performance split there started to really take hold. the russell 2000 often trading in line with financial stress, financial conditions, bank stocks that was right about there, that svb occurred now, the s&p 500 itself, yeah, the calm was broken yesterday. we had this very gentle sideways action we got more than a 1% drop still, the peak-to-trough so far this year, 2 to 3% off the highs. no big deal. we're right near a support level for the s&p 500, but it really does mask what's happening underneath here's tech versus banks within the s&p 500. even a more stark divergence from guess when, right there that's the beginning of march. that's when we started to have trouble with svb now, to me, this is an issue for the market longer term you can't have it be very narrow for very long and make upside progress on the other hand, it is an answer to those folks who say, why is the market holding up so well the

i think this is too early because svb happened right towards the end of q1, but that tightening of the regional banks really doesn't matter to the stock market, but it definitely matters to the u.s. economy. so i think this narrative that everyone thought at the beginning of the year the fed is going to declare victory somehow for some reason that's not negative we're going to cut rates and then we're off to the races. i just think if you had that base case you have to think again because, to josh's point about resiliency, the market has been so resilient, really looked past svb and saying that was just idiosyncratic to that bank. deposit outflows have stopped. to me what i think ultimately will happen, my base case, is the fed will overtighten because this elusive soft landing after this much of an aggressive tightening, i think, is a probability less than 10%. i think as the year progresses, this environment where we have strong labor still, strong wage growth, the economy is doing okay, the fed seems to be when you have the two presidents come out today and say we're still going to

we begin with democratic congressman ro khanna whose district was home to svb.d morning to you. >> good morning. >> last time you were here, there were urgent efforts under way to save a bank. today, again, urgent efforts, this time first republic. we are hearing it could be seized by the fdic, but there are efforts also to find a buyer to absorb it. what are you hearing? >> this is what a modern bank run looks like. let me tell you what companies in my district are saying. they're saying that payroll companies are telling them move your deposits out of first republic, you will not have access accounts. that's why i think it's important we guarantee all bank deposters. i said this last time i was on. there's $8 trillion in uninsured deposits in these banks. 10 trillion is insured. until we guarantee them -- >> we is congress? >> congress. i've been working with senator rubio on this, on a proposal to say look, pay a fee, and have some guarantee on these deposits. otherwise what's going to happen? regional banks will be insecure and people will be concerned and s

it's a hard pill to swallow, it's really friendly fire from what happened with svb, but for them, it is what it is, it's the one company that really has been singled out. the rest of the industry, i think, has side-stepped this issue, and i think this is the one that we need to get clarity on, so, now we know how bad it is, to the point made earlier, and now they have to do the heavy lifting of shinrinking th balance sheet. >> kurt -- chris, i'm sorry. >> i see what you did there. >> the question i have, though, where do fed funds need to settle in? where do they need to settle in and can we read this through other regional banks because we are talking about an element of, where can they be profitable i'm just curious say we have fed funds at 12% for five months, where does the deposit rate have to top out at? >> for them, their total funding was a little bit less than 3%. i think they need to get 3.25%, 3.5% and stop there. i'm sure incrementally, they're paying 5% today, so, they're in low water. the whole industry, we generally see about 220 to 240 point spread that's a way to thi

on the flip side, it comes to deposits before svb and the turmoil, you had deposit flight because peopleere putting it in money market funds. with goldman sachs this week, they will be one of the big beneficiaries of that latter trend of people taking money out of deposits and into money markets because they have the biggest money market business. >> that is a very, very interesting point to pick up on. i think people were surprised of the extent of jpmorgan chase beat on net interest income. they would have thought they would, perhaps, not be able to lift margins as they did because so many deposits have come in and they have been a beneficiary, they managed to do well overall, deposits have been leaving the system and going to money market funds when it comes to the health of the consumer, interesting comments with citi ceo saying that the bank softening in consumer spending this year. jamie dimon warning about the potential for things to slow down also jamie dimon saying higher interest rates expose vulnerabilities in the system. you have to see what is happening with the regional ban

with the svb collapse, everything shifted to the balance sheet.els and liquidity >> i want to get into the picks right now. you are recommending a pair of trades global investment bank and regional bank. we will show the chart since the collapse of silicon valley bank. why are you pairing these stocks together in the trade? >> our large cap analyst likes bank corp. repr pnc last week with the premium last week has blown out. that is the reason for the pair. >> we are looking at regional bank earnings this week. one thing we are looking at is regulation from the white house. why is that concerning for investors and how will that potentially change the tier 1 capital these banks have to hold >> the banking industry is heavily regulated. we saw increased regulation post global financial crisis 15 years ago and the dodd-frank bill introduced that tightened the screws. for the most part, the regulations worked the svb collapse means we need to refine regulation we will see regulation float to the smaller banks. not only are all of the banks regulated,

this meant supervisors did not force svb to fix its problems, even as those problems worsened.s to change culturally for fed super vision but also in terms of regulation. >> very important report. rahel solomon, thank you very. much let's discuss this more with key has democrat, congressman ro conduct, congressman, thanks for joining us. pretty brutal report on -- how much can congress do to address some of these major failures? >> we should never have repealed the 2018 dodd-frank restriction from applying to smaller banks like silicon valley bank. that santa signal to the fed that the supervision didn't have to be as tight. what we first need to do in congress is say, there needs to be strict oversight over banks like silicon valley bank. there needs to be expanded risk and liquidity test to prevent this kind of situation. >> is where the appetite among lawmakers in this very divided congress to act potentially to strengthen regulations on these mid sized banks? >> i hope there will be, but there is something that is even more immediate, and that is guaranteeing the deposits,

lizzy: in the aftermath of the sale of svb u.k.o a space -- hsbc for one pound the question is who pays winds go down. the bank of england and treasury are looking at ways to shore up the system, build confidence to reduce the risk of bank runs in the future. they could increase the ceiling for deposit guarantees but the risk is infuriating bank reducing lending, slowing down economic growth all when the u.k. is trying to be competitive as a financial hub in the aftermath of brexit. i asked andrew griffith how to get the balance right? he said it is about striking the balance between the ability for firms to grow, giving consumers confidence, and not putting unimpeded galatians on the sector. take a listen to what he said. >> it is right for my officials and i working with the bank to constantly look at whether you've got the right rush holt and a scope on these. what was important is when we saw things like svb u.k. we were able to step in and decisively deliver a really good outcome. i have been hearing that from the founders and

the federal reserve says poor management is part of the reason why svb collapsed. >> the report also management shortcomings and issues with fed evaluations. here's cnn's rehel solomon. >> reporter: good morning to you. the report was thorough. more than 100 pages. its findings? damning. a textbook case of bank mismanagement, it reads. the federal reserve releasing its highly-anticipated self assessment, a postmortem if you will on the collapse of silicon valley bank march 10th. michael bar, the supervision, br writing in a report, failing basic liquidity risk and the board of directors failed to oversee senior leadership and hold them accountable and federal reserve supervisors failed to take them into action. and in other words, this was a failure at every level. but we already knew that the fed was aware of some of svb's programs, according to recent testimony from bar, more than a year before the bank fall, the fed began raising reds flags and why could they not prevent the demise? the report says that supervisors delayed action to gather more evidence, and even as business was c