'This Week' Transcript 3-12-23: Sen. Mark Warner, Rep. Mike Turner, and Jennifer Homendy

Interview

BREAK IN TRANSCRIPT

Well, Martha, let's remember how we got here. First of all, banking 101 is about taking care of interest rate risks. This bank bought long-term treasuries. Interest rates went up. And they got -- they got caught in a bind.

But what was different, and your report made clear, $42 billion came out of this bank on one day, on Thursday. And, frankly, some actors, I think, were accelerating that run. To put it in comparison, Washington Mutual, during the crisis, when it went under, it lost $16 billion over ten days. So, this happened so, so quickly.

Why is it important to most Americans? One is because this bank did fund startup companies all over the country. I know it's called Silicon Valley Bank, but the startups literally are all across the country, and they've got to pay their bills this week. And, secondly, if other regional banks, midsized banks, if people get nervous, they may start taking their money out of those banks and putting it into the large money center banks. We don't want further consolidation.

So, I know, I've in conversations with the regulators, the administration, the Fed, the best outcome will be, can we -- can they find a buyer for this SVB bank today before the markets open in Asia later in the day? That would be the best, making sure that depositors -- remember that shareholders in the bank are going to lose their money. Let's be clear about that. But the depositors can be taken care of, and the best outcome will be an acquisition of SVB.

BREAK IN TRANSCRIPT

Let's see what happens today first. I would point out, during the last financial crisis, we did insure deposits up until about -- between 2008 and 2012. There's generally been a feeling that, you know, the people responsible, the shareholders of the bank ought to lose their money. Depositors have been a different circumstance, but there are questions around moral hazard. I've got a lot of faith that the overall system is quite strong. We do want to make sure that the Fed is going to move as aggressively -- I'm sorry, the FDIC, which has got control, will move as aggressively as possible. Let's see what happens later today.

BREAK IN TRANSCRIPT

I'm optimistic. And I do think the --

BREAK IN TRANSCRIPT

Well, that -- that is the concern again. Do you end up seeing a lot of small and midsized banks, which are the heart of the banking system all across the country, people suddenly saying, well, gosh, I've got more than $250,000 in this bank. I want to take my money out and just put it in a JP Morgan or a Citi Bank. What we don't want to see is further consolidation.

So, let's see what the regulators -- I know that people are working around the clock on this. And I'm a lot more opti -- let me just say this, I'm more optimistic this morning than I was yesterday afternoon at this time. But, again, we will see how this plays out during the rest of the day.

BREAK IN TRANSCRIPT

Martha, I still think -- we put in place Dodd-Frank. I was proud to be one of the key authors of that bill. It strengthened the banking system. I do think these midsized banks needed some regulatory relief.

End of the day, Martha, no matter what the capital had been in this bank, if you don't get banking 101 straight, if you don't manage your interest rate risks, if you've then got to run at $42 billion in a single day unprecedented.

A lot of time to look back on what the regulators did and didn't do, and why the bank management didn't get this right, banking 101, managing interest rates risks. And what we've got to focus on right now is how do we make sure there's not contagion, and at the same time, you know, believe that the SVB can be acquired.

Remember, this has got a good book of business. This got startup companies all over the country, and that --

BREAK IN TRANSCRIPT

Listen, I think -- that was called the 2155 bill. I think it put in place an appropriate level of regulation on midsized banks.

BREAK IN TRANSCRIPT

We should be concerned. We're in enormous competition with China. National security, we had all the intelligence leaders before our committee this week.

National security is not simply about guns and ships and tanks anymore. It is about technology competition. It's about who's going to win the struggle around artificial intelligence, quantum computing, synthetic biology.

It's one of the reasons why I put together a bipartisan piece of legislation, seven Democrats, seven Republicans, the president supports and I've got interest from the speaker on making sure Chinese and other technology companies that pose national security risks like TikTok, that we give the secretary of commerce the tools to either require a divesture or frankly even ban them.

We've seen, for example, TikTok already banned in India. We've seen the Canadian government, the EU urge taking that off phones in their systems.

We've got this technology competition which China, and they have been stealing our intellectual property at the rate of $500 billion a year. We have to be worried.

China's a great country. Our beef is with the communist party. It's not with the Chinese people. But Xi Jinping, we should not underestimate both his aggressiveness and his authoritarian regime.

BREAK IN TRANSCRIPT

Absolutely. I, you know, this is a -- literally 100 million Americans are on TikTok an average of 90 minutes a day. That data is residing in China no matter what TikTok says, and the truth is TikTok can be used as a propaganda mechanism for the Communist Party of China. That I believe is a national security concern.

What we don't -- what we don't -- what we need though is a rules-based approach that doesn't simply single out a single application because it was Huawei, the Chinese telecom company earlier, TikTok today. There will be other technology applications.

We need a rules-based approach that will look at this foreign-based technology from China, Russia, Iran, North Korea, and say --

BREAK IN TRANSCRIPT

Okay, thanks, Senator.

BREAK IN TRANSCRIPT

-- we've got to have the tools to make sure that we can take them down.

BREAK IN TRANSCRIPT

Thank you.

BREAK IN TRANSCRIPT

Source