Meet the Press - March 19, 2023
Interview
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Hey, thank you very much. Appreciate the opportunity.
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Yeah, my, my personal take on it is that it may take a couple of months to work its way through the system. I think we're going to be moving in the right direction. I did agree with what the Fed did and the Treasury did over the weekend to stop the bleeding, so to speak, on the immediate aftermath. But longer-term I think a lot of our regional banks and the smaller banks in particular are going to want some reassurances that they're going be able to compete with the big ones, the big five. And so I think it's going to take a couple of months for consumers outside to recognize that all of these banks are stable.
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You know, let's think about this for just a second. When we talk about allowing a bank to fail, if -- it's one thing to say, "it's okay to allow the owners of a bank to lose their resources." It's another thing to say that, "the depositors should necessarily be allowed to lose their deposits." That's the reason why we begin with a quarter of a million dollars in protection. Perhaps that's not enough. You know, we started at $200,000 a few years ago. We bumped it to $250,000 per deposit. Then the question is, is whether or not that's still appropriate as things rise, as we have inflation, and so forth. Should we bump that up? The other piece is, is whether or not within the commercial marketplace, and among the banks themselves, can they arrange for things such as interest rates swaps and so forth? Can they use those to actually protect themselves a little bit better? Kind of like buying reinsurance on those accounts. So I think among them there are some tools out there. The real question is, is whether or not all of the banks are taking advantage of the tools available to them right now --
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No. Look, and that's a really good question, but you have to remember that because of Dodd-Frank to begin with we've identified that there are a group of banks, the very largest, that we've identified as being too big to fail. And they are significant to the entire financial services of the United States, and therefore it is, it is suggested very strongly that we won't let them fail. Now the question is, is does that mean that they should have a competitive advantage over small and medium-size banks when it comes to trying to lure depositors in? We want to make sure that the tools are available for those smaller banks to be able to spread the risk and so that if a depositor comes in, and a lot of businesses will have more than a quarter of a million dollars in their accounts, when they do, should they be able to be assured that there are commercial products available that the banks are availing themselves to so that they can actually spread that risk out And those depositors then know that they're safe in the smaller regional banks and that they don't have to move their deposits to a bank that may very well have challenges because they're so large, but that they have the backing of the federal government behind them. They're a SIFI. And I want to make sure that we don't skewer the competition between the very largest banks and those very, very needed medium and small banks that really do the vast majority of the commercial lending in the small communities across the entire United States.
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Well, let's go back in and just make it clear that this was a liquidity problem with regard to the failure at -- with SVB right now. It was not a capital problem. And when we talk about the liquidity problems on it, even if you would've had the liquidity requirements that would have been there before 2155, the -- what we did in 2018, this bank would have qualified already. There would not have been a change in terms of what happened. And even if, even if they would have failed the test, which they would not have, but even if they would have failed the test at that time under Dodd-Frank, they still would have simply purchased more of those long-term treasuries and been solid again. So, no, it's very, very clear that the portions of 2155 that was done in 2018 did not impact this particular issue. The real question is why didn't the managers at SVB take advantage of a lot of the tools that were available to spread the risk out? Why, why did they use interest rate swaps for a period of time and then basically for the year previous to their failure they quit using them? And why did they not have a chief risk officer in place from April until December? Why didn't they have a CFO that was operational during the previous year? Those are the types of things that the investigations should focus on. And then, whether or not the actual auditing organizations, the folks responsible, the California Banking Commission and the San Francisco Fed, did they do the audits appropriately? Were they providing adequate oversight?
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Look, I don't think it's a territorial dispute. While he may be taking territory, and it's technically accurate to say that there's territory being taken, this is bigger than that for us. I focus on what our major issues are. And number one, China is our near-peer competitor. They are our focus right now. Russia is right behind them. But in this particular case you have a couple of items that bring it all together in the big picture. Number one, when we pulled out of Afghanistan the way that we did that sent a message to both Xi Jinping and to Putin that we were withdrawing from the international scene and that maybe they could test the waters about whether or not we would actually exercise our capabilities internationally in the future. So taking out the issue of Afghanistan, and then moving into the fact that Putin now tests the waters by walking in or attempting to take over a sovereign state right next to them that we had back in 1995 agreed that they would have sovereignty over that specific part of the land. Well, Xi Jinping looks at that and says, "I'm going to watch this very carefully' because Xi Jinping would like Taiwan. And he's already committed that one way or another he's going to get it back. He wants to see how we respond and whether or not we can keep our allies together, whether or not NATO stays together, or whether or not it strengthens NATO. So this is a bigger picture than just territory.
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And this is --
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-- something that I think we have to stand strong on.
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I'm not sure --
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Well, I think primary politics may very well have something to do with it. But I think it's also a matter of looking at the big picture. And I'm not exactly sure yet, because I haven't seen the entire interview, if perhaps part of it was taken out of context in terms of how does that measure compared to other issues. And do you look at the border as a big issue? Do you look at the economy as a big issue? Do you look at China as a big issue? And do you try to separate those out? I just think that what's going on in Ukraine can't be separated out from the major issues surrounding the United States' relationship with China.
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To begin with, let me make it clear there's a difference between the former president and what he did on January 6th as the president of the United States and his call for support at the Capitol, versus an individual person, today, asking people to show up to protest if he is indicted. And recognizing that I'm assuming that you're talking about the possibility of an indictment, which has not yet --
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-- happened.
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And second of all, we don't know what the indictments would be. So we're kind of getting into some grounds in which we're making some assumptions that we don't have a whole lot of --
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-- the facts on yet --
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It might be better to ask those same questions --
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-- later on.
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Yeah. Look, I don't know if he's fomenting distrust or not, but clearly we don't know whether or not this is actually going to happen. We don't know whether or not there's actually going to be an indictment. Clearly, he's following some leaks, apparently that are coming out of a DA's office that should not happen. But most certainly you don't want to have any threats towards the implementation or the attempt to implement justice. And that's something that you always have to take seriously, whether it's from an individual person or a former president of the United States.
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It's very clear in the Constitution, in the way that the Founding Fathers had laid that out that you were looking at whether or not an individual was the president of the United States or was just an individual. At the time of that trial, Mr. Trump at that time was an individual. He was not the president of the United States. Founding Fathers clearly did not want indictments to start on former presidents. They didn't want that to happen. They saw it going on in England at the time. And most certainly they don't want, and they didn't feel that it was appropriate to go back in and find former officers of the United States and impeach them.
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Actually, the idea behind an impeachment is to take away the shield of office. That's all it does. After that other things can occur. But, but -- and right now the shield of office is gone, and now it's up to the courts.
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Thank you.
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