Good morning. I'm Brian Curtis.
And I'm Doug Prisner. Here are the stories we're following today.
The effort to impeach Homeland Security Secretary Alejandro Majorcis has failed. At back to that story and more from San Francisco.
Yeah, busy day in the House today, Brian, A few Republicans joined with Democrats who defeat the GOP drive, arguing that discontent with Majorcas did not meet the constitutional threshold for removal from office. The vote was closed two hundred fourteen to two hundred sixteen. Not enough. Now it all needs to be sorted out because they're talking about relooking
at this possibly as early as tomorrow. And Congressman ken Buck said, at first it was tied at two fifteen and then Speaker Johnson changed his vote to know and it failed. That's not been explained as of yet. The House has failed to pass the standalone Israel funding package as well. The bill failed on a two hundred and fifty to one hundred and eighty vote and needed two
thirds to pass. So this is intertwined, of course with the border and the border bill all but doomed the failure tomorrow in the Senate, President Joe Biden is out blaming Donald Trump. Biden says it had bipartisan approval until Trump stepped in. Says the GOP should just be ashamed of itself.
Just at the moment, we're going to secure the border and fund these other programs. Trump and the MAGA Republicans said no because they're afraid of Donald Trump.
Fraid of Donald Trump.
And he says that there are provisions and the bill that make it the most comprehensive border package in US history.
One hundred cutting edge machines to detect and stop Fenton all at the southwest border.
We have that capacity plus stop the flow of immigrants.
This will would also give me as president, the emergency authority to temporarily shut down the border when it becomes overwhelmed. The numbers are talking over five thousand people trying to get in one day the bill. If the bill were a law today, who would qualified to be shut down right now?
And he says world is watching regarding aid to Ukraine and Israel and Taiwan.
Mistakes on this fight extend well beyond Ukraine. If we don't stop Putin's appetite for power and control in Ukraine, he won't limit himself to just Ukraine.
So this did nothing to well quell the pure politics the atmosphere. Bloomberg's Rick Davis, I.
Think he could have avoided.
I mean, this is almost like the bill's dead and I'm going to blame somebody. Not my last chance to try and get the bill across the goal line. And you wonder why wasn't this done the day the bill was announced and give it some cover.
And the Bloomberg's Ginny Shanzano says, though there are.
Three things Donald Trump wants to run on border, economy, and crime. The economy is getting away from Donald Trump because the numbers look very good. So now he's trying to take credit of it for it. If he loses the border, he can only run on crime. He doesn't want that to happen.
The vote still schedule for tomorrow and TSB reporting today the dramatic incident where a panel blew out of the Boeing seven thirty seven Max nine jet was missing bolts. It hadn't been properly attached. Report says four bolts that acted as a failsafe mechanism to hold the panel in
place weren't even installed. Donald Trump has been denied immunity in the DC election interference case, it can be prosecuted, and the DOJ is preparing to release a special Council report that is critical of how President Biden is age mishandled classified documents, but that there's no plan for criminal charges. Global News twenty four hours a day and whenever you want it with Bloomberg News now in San Francisco. I'm Ed Baxter, and this is Bloomberg BC.
All right, thanks very much.
Ed.
It is now six and a half minutes past the hour. Brian Curtis, Doug Krisner, and we are looking at the top business stories of the hour. Well. As mentioned by Doug a few moments ago, Moody's Investors' Service has cut New York Community Bank Court's credit raid grade to junk. NYCB shares down double digits today for the fourth time in five days, the stock now slumping sixty percent. Since last week. The route has raised roughly four and a
half billion dollars from the bank's market capitalization. Today, NYCB shares were down twenty two percent. It's the lowest level since nineteen ninety seven. Investors have dumped the shares over concerns about the bank's exposure to commercial real estate. In testimony before the House Financial Services Committee today, US Treasury Secretary Jennet Yellen said some firms may face challenges.
I do have a concern about commercial real estate. I believe it's manageable, although there may be some institutions that are quite stressed by this problem.
US Treasury Secretary Jenet Yellen. Yellen also said that US regulators are working to ensure that lone loss reserves and liquidity levels in the financial system are adequate to cope with those real estate losses.
We go to China next, where investor confidence seems to be rising. The hope is for a stronger government action to end the route that we have seen in the Chinese stock market. We have more from Bloomberg zivon men in Hong Kong.
The anticipation follows the Bloomberg report that regulators are planning to brief President's Chijing Ping on the issue. It's seen as underscoring the urgency of staving off a further route in Chinese assets. Even so, it's not clear if the President will see fit to provide additional support, but policymakers are hoping to stabilize markets before the Lunar New Year
holiday to build confidence. It's also unclear if investors will buy into the story, given them many previous false dawns, but the NASA Golden Dragon Index did gain nearly six percent in New York. One other quick point, China's Central Quaging Investment has stated it will buy more ETFs in Hong Kong. I'm yvon Mann Bloomberg.
Radio TSMC is planning to build a second chip fabrication plant in Japan that says it looks to expand output in the country. TSMC said Toyota Motor will also join as a new investor of JASM. That's TSMC's manufacturing subsidiary in Kumamoto. TSMC will also inject as much as five point twenty six billion dollars in JASM. The new plant is scheduled to begin operation by the end of twenty twenty seven. Bloomberg is also reporting that TSMC is considering
a third fabrication facility in Japan. Well. Joining US now on the program is Hermann Chan, Bloomberg Intelligence senior analyst on US regional banks. To take a closer look at Jenny Yellen's testimony and the latest on NYCB, so a new fallen angel. That's interesting. This cut by Moody's is going to make it even more costly for NYCB to raise money. And the tricky aspect herman is that even if it does raise market funding in relation to deposits,
then it will likely get cut again by Moody's. So it really needs to raise deposits and can it do so under these current conditions.
Yeah, that's going to be the question, and the Mood's down grade really underscores the predicament that way CP is in currently where they need to here. It's tougher regulatory rules now that it cleared one hundred billion dollar asset mark with the deal for signatures, assets and deposits last year that was working by the f GI. So they need their capital, They need to build up their liquidity, and the current market unease with the shares really makes
that difficult to really stabilize their funding base. Just imagine that there are some jitty that remove some of their deposits from New York community that they don't need to staunch that potential outfload.
So it's going to be the one year anniversary of the crisis within a couple of regional banks when we get to the month of March, so next month. It's hard to believe. And one of the things that I'm wondering about now is whether or not it's an isolated situation where we're talking about NYCB. I mean, when you hear the testimony from Yellen talking about a worry, the implication or the suggestion is that there is a mild systemic risk going on right now as it relates to
commercial real estate. Do I have that wrong?
No, you do have that correct. What's interesting is that overall the banking system remains sound, and there are issues with commercial real estate, specific office commercial real estate that will continue to produce losses. So one of the reasons that your community is under the microscope is they had to fairly large commercial real estate losses in the fourth quarter, which exacerbated the need to shore up the balance sheet
ahead of the stress tests later this year. That's going to be a risk for the system, but it's going to be a manageable risk. And looking at the regail banks that I cover, it's about two to three percent of the total loans, So it's going to be an issue, but it's going to be manageable. For the space that I cover, But nonetheless there will be lumping us within performance this year, and we'd expect higher loan losses for the regional banks in twenty twenty four.
Yeah, as was mentioned, to a certain degree, it's a little out of their control for NYCB what's happened in the commercial real estate market. But what is in their control is their rapid expansion. Is there any sense that they expanded too quickly.
I wouldn't characterize it that way. I would say that they were being advantageous at the time last year when they were viewed as one of the saviors and one of the winners of the banking turmoil when they stepped
in to acquire signature banks assets and deposits. I do think they were dealt a bad hand by the regulators, where the regulators really pushed them to accelerate how they managed their balance sheet and their businesses to meet some of the acquirements of one hundred billion dollar asset type financial institution, and it didn't give them a lot of time to really grow into that. And now the repercussions of that is just this market uncertainty that we've seen over the past few days.
One of the things that I'm wondering about. Also, is I'm listening to you and putting what you're saying in the context of what we heard today from a couple of FED officials. They're very cautious right now on kind of beginning the process of making credit or less expensive
visa v lower interest rates. And I'm wondering whether or not the FED sees potential stress building and they are going to leap at the first opportunity if they feel confident that inflation is under control, that they're not going to waste time in trying to trace or take some of the stress out of credit markets through a cut in interest rates. Is that fair?
Yeah, I think that's fair. I think the banks would welcome cut in interest rates for two reasons. One, it would reduce their funding costs and really shore up their edgender margins that seem and some deterioration with rates as elevated as they are. And number two, it'll just help with refinancing risk. A lower rates will, you know, shure up some of the potential hurdles with real estate refinancing, and lower rates will help them being able to deal
with lower credit. Lower interest rate costs would be would be helpful for a lot of the commercial real estate borrowers that are facing maturing loans this year in the next few years ahead.
Herman, what's your sense of who's the most vulnerable here? The regional banks, the mall operators, the reats, what corner of the marketplace is really exposed.
Yeah, that's a really good question for the banking system. Really, the smaller in size you get typically the higher exposure
to commercial real estate. So you can think, for example, the biggest regionals that I cover, like A P and C or a US bank, have much smaller commercial real estate exposure to smaller regional community banks because that's really their bread and butter business, And banks like JAPM Morgan have a much diversified operation, so any sort of charge offs and loan losses in commercial real estate could be
readily absorbed. And then it's just going to be the reads will have some exposure, commercial cnbs, We'll have some losses, so it's going to be spread out across the financial system, but it remains to be seeing who's really going to be holding the bag.
Yeah, last March you'll remember, well, I mean with the stress that we had from signature and a couple of the other characters at the time. I mean it created an opportunity, there was a bit of consolidation. Do you think that we could be looking at another phase where
stronger banks acquire weaker ones. I mean there might there be a little bit more consolidation happening within maybe just the regional bank arena, or where larger money center banks kind of take a look at some of the regional players as well.
Yeah, that's a very good question, and I think it's an app when given where we are today, it's still early to say. What's interesting, what the market is telling us is that some of the more neat niche commercial regional banks that were operating just a few years ago are not no longer and I are no longer in play anymore. Banks like SVB and First Republic and Signature Bank had very narrow business operations. For example, SVB was focused on Silk and Valley and lending the startups and
private equave venture capital. Signature was focused on commercial real estate and crypto, and First Republic was focused on high net worth and if you throw New York Community in there, it's focused on regulated apartments in New York City. That's the bread and butter business. So what the market thing is telling us is that banks in the current backjob need to be much more diversified businesses, so any sort of losses in certain areas should be absorbed.
This is Bloomberg gate Breakage, your morning brief on the stories making news from Hong Kong to Singapore and Wall Street.
Look for us on your podcast feed every day, on Apple, Spotify and anywhere else you get your podcast.
You can also listen live each day on Bloomberg eleven three to zero in New York, Bloomberg ninety nine to one in Washington, Bloomberg one oh sixty one in Boston, and Bloomberg nine sixty in San Francisco.
Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty plus.
Listen coast to coast on the Bloomberg Business app, SiriusXM, the iHeartRadio app, and on Bloomberg dot Com. I'm Brian Curtis.
And I'm Doug Krisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia