Big Banks Could Be On the Hook For SVB Failure

Plus the NYPD prepare security for passover celebrations. I'm Michael Barr, Poor Ahead, I'm Dom Statch Alon Sports the next greetfiteat shoot that win for the Islanders at its opening day in Major League Baseball. That's all straight ahead on Bloomberg day Break. The business news you need disturn your day in just one fifteen minute podcast each pointing on Apples, Spotify, the Bloomberg Business Appen everywhere you get your podcasts. Good morning,

I'm Nathan Hager and I'm Cameron Moscow. Here are the stories we're following today. New developments in the banking crisis. Bloomberg News has learned the big banks may have to pay the price for recent failures. We get more from Bloomberg's Valerie Titel in the FDIC has an insurance fund, and it's estimating that the cost of bailing out the uninsurance depositors when it comes to SVB and Signature Bank

is going to be around twenty three billion. So it's going to look to top up this insurance fund in some manner, and it has full discretion on how it does that. And it's become clear in the way that the chairman has communicated that they will be looking to put less of the cost on smaller community banks and perhaps charge the bigger institutions more when they look to top up this fund. Bloomberg's Valerie Titel says representatives for the FDIC, as well as JP Morgan, Bank of America,

and Wells Fargo all declined to comment on our story. Well, Nathan, the bank failures have led to no shortage finger pointing on Capitol Hill. After two days of hearings, FED Vice Chair for Supervision Michael Barr is acknowledging that regulators could have kept better tabs on Silicon Valley bag. We got

reaction from a former US Treasury spokesman John Rizzo. As we get into this more, I think we're going to find that there are probably multiple points of failure here, both failure on the part of the financial institution, but also more that regulators of overseers could have done to intervene when signs of trouble emerge. Former Treasury spokesman John Rizzo was a guest on Bloomberg Sound On What Joe Matthew. Catch the show weekdays at one pm Eastern on Bloomberg

Radio or listen on demand wherever you get your podcasts. Well, Karen, a big name on Wall Street, says the US banking crisis is mostly solvable. In an interview in Tokyo Today, Blackstone chairman Steve Schwartzman said, quote, the banking system is not in any type of conventional crisis. Schwartzman blames the turmoil on the after effects of the pandemic and technology

rather than bad loan. Well, turning to the economy, now, Nathan, we're getting more hints that the Fed is not done raising interest rates, and we get the details live with the Bloomberg's John Tucker. John Good Morning. Karen Powell spoke to a closed door meeting of conservative lawmakers, and there wasn't much reason to have closed the door. He told them the same thing that he's told everybody else. Follow the dots. That's the dot plot or the summary of

economic projections from Fed officials. It lays out one more rate hike from the Central Bank. Then a meeting was scheduled before the collapse of Silicon Valley Bank, and according to one of the lawmakers who attended, Paw said Congress should reevaluate limits on the size of federally insured bank deposits. Live in New York, I'm John Tucker, Bloomberg Daybreak, Thank you John. In Asia today, Chinese Premier Lee Chiang is painting an upbeat picture of the economy and calling China

an anchor for world peace. Bloomberg Daybreak Asia anchor Brian Curtis has more from Hong Kong. Lee touted China's economic recovery. He told the Boao Forum in Hainan, chaos and conflict must not happen in Asia. He said China would not take the path of colonization or plunder, and he called

for the world to stick to multilateralism. The four day Gathering comes as Beijing rolls out a charm offensive for overseas business and investment, China is no longer one of the top three investment priorities for US firms, according to the American Chamber of Commerce in China. In Hong Kong,

Bryan Curtis Bloomberg Day Break A right, Brian than. So we now turn to a breaking story where following this morning, Russia has detained an American journalist on alleged spying charges, and we get the latest live with the Bloomberg Steve A. Rappaport. It's Steve, good morning, Good morning, Karen and Nathan. Russian security forces arrested Evan Gershkovitz in the city of Yakadinsberg

on espionage charges. The FSB agency says Gershkevitch tried to obtain classified information about the activities of the Russian military industrial complex. As for what those activities were, local media reports suggest he was investigating a special operation involving a network of mercenaries known as the Wagner Grew. Gershkevitch is the first American reporter charged with espionage in Russias since the Cold War. Live in New York, I'm Steve Rappaport,

Bloomberg Daybreak, Steve, thank you. Back here in the US, We're pushing pause on a controversial story in politics, and New York grand jury hearing evidence about Donald Trump's roll in an alleged hush money payment looks like it's getting a break. Bloomberg's Ed Baxter has the story. The first announcement came they would not meet again this week. Then Bloomberg News reported that the grand jury is not expected

to reconvene until April twenty fourth. We're told that Manhattan District Attorney Alvin Bragg could still bring members back to hear evidence in the Trump matter, but that it was not officially going to be put on any docket. The last testimony came from National Enquirer publisher David Pecker. Trump has denied the affair in any wrongdoing and said the

probe is a political vendetta in San Francisco. I'm at Baxter, Bloomberg day Break, All right, Ed, Thanks, So another geopolitical news this morning, The president of Taiwan made a stop over in New York and called the island's future a test for the world. The Taiwan President's it may further escalate tensions between the US and China. Beijing says the visit will have a severe impact on its relationship with Washington and staying in New York now caring. The latest

census numbers show Manhattan's population has grown. While New York City's other four boroughs lost residents in the twelve months through July first, Manhattan added more than seventeen thousand residents. It is still about ninety eight thousand residents below pre pandemic levels. Thirty two degrees right now in Manhattan, it'll be breezy this morning. Sunny and cool today with highs in the upper forties. We'll get down to the upper

thirties tonight under a Hartley cloudy sky. Time now to take a look at some of the other stories making news in New York and around the world with Bloomberg's Michael bar Good morning, Michael, Good morning, Nathan. Hundreds of people gathered at a candlelight vigil last night to mourn the three children and three adults killed in Monday schools shooting in Nashville. The Nashville Remembers vigil was hosted by

Mayor John Cooper. Picked the hand or touched the shoulder of the person right next to you, especially they are strangers and be there for one another, because we can only get through this tragedy together. First Lady Jill Biden and singer Cheryl Crowe were also at the event. Meanwhile, in Washington, there were some tense moments off the House floor about gun violence. Democratic Representative Jamal Bowman of New York, a former middle school principal, says he's upset about in

action from Republicans. At one point, while he was talking to reporters, Republican Representative Thomas Massey of Kentucky began to engage with him on the topics that allows teachers to carry. Representative Bowman told reporters to continue to press GOP lawmakers on the issue. Pope Francis will remain hospitalized to treat a lung infection. The Vatican says Francis, who is eighty six, does not have COVID but require several days of therapy.

Passover preparations are underway. The New York City Police Department held their annual pre passover security briefing. They went over resources and action plans with the city's Jewish community. In MYPD Commissioner Keeaching. Seul confirms while there are no specific threats to any celebrations in the city, police will provide extra patrols at synagogues and other sensitive sites. We are

always concerned about hate crimes in our great city. While one is too many, we have seen a drop by about fifty percent this year, but that is not enough. We will stamp it out. We can tolerate it, we will never accept it. Commissioners Sewell also says they are monitoring online activity for any red flags. Global News twenty four hours a day, powered by more than twenty seven hundred journalists analyists in over one hundred twenty countries. Michael

barn this is Bloomberg, Nathan. Thanks Michael's time for a Bloomberg sports update. Now here's John Stashower. Thanks Nathan. Big win, but possibly a big injury for the Knicks at the Garden. They beat the Heat one oh one ninety two and nine nothing to run on the fourth quarter, second straight game where their top two scorers were Emmanuel Quickly and Quentin Grimes twenty four for IQ, twenty three for Grimes.

And Knicks now lead Miami by four games, so they almost certainly will not be in that play in, but the Knicks play of the second half without Julius Randelly has started all seventy seven games, but he suffered a sprained ankle, and the Knicks now away. Test results Today at Barkley's, the Nets beat Lowly Houston one twenty three, one fourteen. The two guys the Nets got and the Kevin Durant train led the way camp Johnson thirty one

points to mckel Bridges twenty seven. Meanwhile, Durant, returned from his ankle injury, played his first home game in Phoenix. He shot just five of eighteen, but the Sons won their game. Sacramento won by forty and the Kings are in the playoffs first time since two thousand and six. It was the longest drought for any team in the four major sports. Islanders a two one win in a shootout at Washington. It's opening day. Big changes in baseball.

Shifting is out, the pitchclock is in, and they've also tweaked the schedule, fewer games within the division, more in through the game. So the Yankees open up against the San Francisco Giants at the Stadium. Garrett Cole on the mound for the Yanks. I believe there's a book called Time Starts on Opening Day. I think it's Thomas Boswell. I've read most of it, and it's just like Cats, the beginning of every baseball fan and every baseball player's calendars.

Opening Day Cole is on the Yes Network. Mets open up in Miami with Max Scherzer facing Sandy contra heat. Last season was the unanimous winner the NLCI Young Award John Stashaller. Bloomberg splots live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on Sirius XAM, the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning, I'm Nathan Hagar.

The collapse of Silicon Valley and Signature Banks has left the agency that ensures the nation's bank deposits in line for a nearly twenty three billion dollar hit, and now the Federal Deposit Insurance Corporation the FDIC, maybe looking to claud those losses back by taking aim at the nation's biggest banks. And for more on this, we're joined by Bloomberg's Valerie Titel So, Valerie, what's the plan. That's under

consideration here. Well, what we know at the moment is they are going to put together this special assessment and will hear more in May. But there are some reports that they intend to limit the strain on the smaller community banks and instead put the strain on the bigger banks who have benefited the most from deposit inflows surrounding this to three weeks of banking crisis that we've had.

This is something they have done in the past. The FDIC does have full discretion on these special assessments and how they raise money for their insurance fund. Now, it has to be said as well that the FDIC is under a lot of political pressure to avoid straining the community banks even further. I mean, that has to be a big part of the reason why it's considering it

in this way. Oh, definitely, definitely. I mean, the amount of heat that the FDIC has gotten this week on Capitol Hill is notable, and it is the politically palatable option to be charging the bigger US banks a bit

more when they look to top up this insurance fund. Essentially, in some way they might try to right the wrong that they did in almost making it blatantly obvious to the public that there is a two tier banking system in the US, the implicitly backed too big to fail banks and those community banks, which aren't systemically important and

as Yellen told us, are likely unlikely to get special treatment. Oh, it's interesting to point out that there is a two tiered banking system, that idea that there are these big banks and the smaller banks. If the FDIC does consider a plan like this, wouldn't that's to reinforce that idea. Well, Look, they have had full discretion in the past on how

they do top up their investment fund. Back in two thousand and nine, they went out on a special assessment very much so like they've declared they're going to in May to raise five and a half billion, and a lot of that money was raised from the bigger institutions. But the different thing back then is that the bigger

institutions back then were the risky ones. So right now they're aiming to almost charge the larger banks more in the fact because they aren't risky, and leave the you know, shall we say a bit more risky smaller community banks to have less of that burden in an attempt to

try to even the playing field. What's the risk that that could put more of a burden on the banks though, if they're the ones that bear more of this burden, how much strain could have potentially put on these banks if their task with given the FDIC back close to any three billion dollars I mean, is that something that

they can shoulder? Yes, I think so. And because these banks who have seen these large deposit inflows, they have the ability to park that at the FED for a five percent five percent yield, right, So in some ways you can argue that the benefit to the bigger banks because they have access to the FED overnight facilities, because they get this decent return on deposits, they have benefited way too much from from this deposit flight from the

small regional bank. So and I think that that is something the FDIC, the Treasury, and the FED are aware of and will essentially try to right that wrong when we do hear about this special assessment that the FDIC it tends to put forward in May. Now, as you mentioned, as the FDIC has mentioned during these hearings, it does

have the discretion to target where the burden lies. But how unusual is it or would it be for the FDIC to target bigger banks specifically, how would this compare to what the banks went through the last time we had an even bigger financial crisis in two thousand and eight. Well, the last time that they did go to top up this insurance fund in two thousand and nine, they attempted to raise five and a half billion, So it wasn't nearly as much as the twenty three billion hit that

they've taken recently. And the reason why is because back in two thousand and eight, two thousand and nine, ensuring depositors wasn't really the issue back then, right, it was the toxic assets on banks balance sheet. So in some way, the FDIC has really taken more of a dents to this insurance fund in this you know, twenty twenty three example of a banking crisis, rather than back in two

thousand and eight. But back in two thousand and nine, when they did do that fundraising JP Morgan, the FDIC charged them six hundred billion, which did impact their bottom line back then. This is Bloomberg day Break Today, your morning brief on the stories making news from Walls to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning on Apple, Spotify, and

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