This is Bloomberg Daybreak Weekend. I'm Tom Busby in New York. This week a special edition of the show after what's been in historic week in the financial markets, marked by crisis in the global banking industry. The meltdown of Silicon Valley Bank spread across the sector, touching signature bank first Republic and then to Europe and Credit Suis. It's a story that played out right here on Bloomberg in exclusive interviews that move shares of Credit Suite throughout the week.
On this show, we usually look forward, but today we're looking back, covering the timeline of events that got us where we are right now. Full disclosure, we're taking this program on Friday, so it's decidedly a look back and not a view of what's to come. But stay tuned to our news updates every thirty minutes throughout the weekend
for the latest developments. We start on Wednesday morning. The chair of Credit Suis's largest shareholder, the Saudi National Bank, spoke to Bloomberg saying he wasn't open to injecting further cash into the Swiss lender. The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory We now own nine point eight percent of the bank. If we go abuff ten percent, all kinds of new rules kick in. More on that interview later
this hour. It caused Credit Suite's share price to tumble to a new record low, sparking concern about the strength of global lenders after the swift collapse of three US banks in the last week. Now. On Thursday, the CEO of Credit Sweee told his staff to focus on facts as he pledged to rapidly move ahead with a plan to streamline operations. In a memo to staff, Ulric Corner said the bank would continue to focus on the transformation
of Credit Suites from a position of strength. That memo came after the bank said it reached an agreement with the Swiss National Bank to borrow as much as fifty four billion dollars from a liquidity facility. Flashback to Monday, that same CEO was on Bloomberg telling off Francine Laquis that the bank had seen inflows of client funds, which happened after markets and banks were pummeled by the collapse
of Silicon Valley Bank. So as we be, as you know, it's a very recent thing which happened so far, it's pretty calm even so material good inflows yesterday. Still Also, you know, I had a client meeting which was very positive on everyone. So so far it's cold, but I think it's early days to look at the calm. Are
you suggesting that you could also actually get inflows? We got them yesterday, which is a positive sign, I would say, and you know, for us, and that is maybe a little bit if I may say so, fun seeing in comparison to SVB, it's a very different situation. You know, we are GCP, as you know, we are following materially different and higher standards when it comes to capital funding, liquidity and so on. And that's why we said, you know,
we gave I think this situation is important. We gave r capital ratio of like hundred and forty forty at the at the end of Q four, which is strong ratio, which has improved as we went through this quarter to like hundred and fifty on average and being even high on that. But so outflows have not reversed, but they've actually lowered. What are they reversing? Look, they have significantly moderated.
As I put it, we gave an update on February nine in terms of where we are deposits and add ass and so only we give next update with the first quarter result. But this is also very clear. You know if and we talked about that, what has happened in like fourth quarter. You know, we are fully focused on it, turn it around, but that takes longer than like just two months. But then you do you have
this material weakness today? What happened there? There's concern that actually almost every day there's some kind of bad news and you have your share price at a record low like that can't be a comfortable position, no, But we published our report today as we have seen the financial result. I think that's a key message. The financial result is
unchanged for twenty twenty two and previous years. We delayed the reporters you have seen a couple of days to approbately deal with you know question the SEC head and we did, and that is part of an longer ongoing dialogue. And we acknowledge that we haven't metier weakness in the financial independential reporting control, which we are addressing and imediating forcefully. How are you addressing that? So is that an auditor problem had PwC on the case. Is it their fault? No,
it's absolutely not their fault. That is obviously you know that cause higher hand in hand as you work together with your auditor. But it's a collective fining and we are addressing it. We have immediation planner. We are addressing it. So you have an anchor investor that put one point five million in the bank, now their share value has gone down by one third? Will they have to inject more?
What kind of conversations are you having with them? No, Look, nobody is pleased develot the Shaperrice development, you know, but we match what we can match. And this is the execution of our plan. That's a white swag. This is a white plan. We are executing at pace and even ahead of the plan. And I think I'll shall to see that as well. That's an unpleasant situation. Chaprice for Dicom, manage Chaprice, manage the executioner. I do. So you don't
think you're getting pressure from shareholders. You're not getting pressure from you know, certain big shareholders to do more and actually to have all options on the table now as I said, they are obviously they're obviously not pleased with the development. I'm not pleased with developing the first tent obviously, but you know, we are executing, and once we are executing,
step by step, we show the marketing. This is exactly why we said it's this wee years process and we are executing, and that is you know, the market will acknowledge that and the share proce will follow. Do you think all options should be on the table? What about breaking up the bank? If you look and I understand your frustration with the share price and saying, look, you're just executing, but when you look at the share price ninety seven percent below that two thousand and seven high,
like how do you regain from that now? But that you can can compare as you know, But you know, as I said, it's a right swatgy and fully fully convinced off the swagy. We are executing at past we have the right team, and you know that's why we said in October it needs radical change. You know, the bank needs to be changed, and we said it's the three years transformation. And you can't come after two months and say, look why is not everything done? But radical
change could be splitting off the bank. Is it something that you're valuing. Oh look, the new creates vices focused on the course lengths of the bank. This is routs management, the swisspend passons asset management. What we put the market either trading and sales business that makes entirely sense, entirely different risk profile, will be very profitable and well reward shareholders. And I think the shelters understand it. When will you be able to say, like the worse is really behind us?
But we said it's three years transformation. We said we are going to make a loss unfortunately this year because you know, and this is something which you need to understand, a lot of the restructuring course you know, baked into the transformation are coming in twenty twenty three before we see a lot of benefits out of that transformation. And that is something which happens. That's why we said it takes three years. Three years is a long time work. I mean a lot of us, but a lot of
the shareholders will start asking questions. I mean, have you asked them for more money to make it faster? For years, especially in this banking world, than anything could happen. No, But you know, as I said, our LCR ratio is strong and very strong, has has has getting stronger as we speak. Our capital ratio is very strong at fourteen point one percent as we gave it to Q four, So we have everything we need to go through a transformation, Maise.
Or are you expecting, you know, the first quarter to be good enough to keep shareholders off your back? The first quarter is, as we said, and we put it very clearly, we will make a loss in the first quarter, but you will see progress in the first quarter numbers in terms of what outflows in certain business momentum. We're specifically businessman in the market business for example, which was as we all discussed for the for four reasons, clearly
understandable reasons. A week in the Q four looks better. We else management, we are making progress, certainly not yet there where we should be, but we are making progress. Or are you comfortable with the banking system as a whole? I mean, we've we've lived through a pretty incredible couple of days and if you look at the markets are all over the place. No, I think so, I mean
this is this is somewhat an isolated problem. If you want too and as I said, you know, if you are gusipit or if you look at the large banks. I think we will manage to it. Talk to me a little bit about Cratie Sweets First Boston. So first of all, what's the timeline for the IPO. The timeline's fan seen is unchanged as it discussed last time. So we have a very clear plan to put it into market,
create an liquidity event most likely in IPO. We are working against our internal plans forcefully, and I would expect such an event in like twenty twenty five. As I said earlier, Okay, any news I mean today you had news about the you know, twenty percent that would go to Critzwe's First Boston partners. What happens to the rest? Right?
The rest is owned by us and obviously also portioned by Michael as we as we announce it in like February, and the rest is own past So this is this is our Our part of the bank remains all part of the bank. We are going into liquidity and again most likely IPO. You will be probably a majority and let me make decision. You know how our holding develops over the next following in So you're still looking for an anchor investor? Are you closer to finding well? I
don't know. We are close to but I'm not sure if it's anchor investor. We have a lot of interest from sir parties to be invested into that. It tells you something about the surge, I would say, and we are evaluating that Middle Eastern investors, different kinds of investors, different parts of the world. A couple of weeks it will come before the first quarter. I will tell the market if we are there. What do you find most
difficult about your job is to make it understandable. I would say, you know that we are absolutely doing the right things that we need some time to get through. And and this is what all my colleagues and I try to do, you know, to regain the trust of the bank over the next couple of months. But is it more important to regain the trust of shareholders or or clients? It is look client, I told you last time. Clients is I would say, one of the best experience,
even in this very difficult months last year. I mean, they are so supportive of us, they are listening to us, they're doing active things to support They like to bank with credit. Switz is a fantastic experience. But you know, the convincing of this is the right thing to do. The executing at pace and the head of plan is with all different stakeholders, all different months. That's Credit Suite CEO all recorders speaking with Bloomberg's Francine Laqui on Monday. Now,
as we all know, things got worse from there. Up next, we'll hear more from the chair of the Saudi National Bank and its concerns about the financial health of Credit Suites. You're listening to a special edition of Bloomberg Daybreak Weekend. I'll look back at an historic week in the markets and crisis in the banking sector. This program was recorded
on Friday. If you're looking for the latest developments on this story, make sure to stay tuned to our news updates twice an hour all weekend long on Bloomberg Radio. This is Bloomberg Daybreak Weekend. I'm Tom Busby. This week a special edition of the show. It's been in historic week in financial markets, marked by crisis in the banking industry. The meltdown of Silicon Valley Bank spread across the sector,
touching Signature Bank, First Republic and eventually Credit Suis. It's a story they've played out right here on Bloomberg in exclusive interviews that moved shares of Credit Suits throughout the week. On this show, we usually look forward, but today we're looking back, covering the timeline of events that got us to where we are right now. Full disclosure, we're taping this program on Friday, so it's decidedly a look back,
not a view of what's to come. But stay tuned to our news updates every thirty minutes throughout the weekend for the latest developments. On Wednesday, at top shareholder ruled out adding to its stake in Credit Suite, deepening the crisis at the Swiss bank and leaving its leaders uggling to shore up confidence in mid market chaos that spread
from Europe to the US. The chairman of Saudi National Bank, which became Credit Sweet's biggest shareholder late last year, said that the bank would not boost its share in the lender past the current level of just under ten percent. Amar El Kudari spoke exclusively to Bloomberg's use of Kamal l Dean in terms of your expectations for the FED, You've seen what happened with SVB and the sort of the fallout from that. You think the FED is done
for the year. Or you think they're going to continue to high altitly, that's gonna channel back into the Saudi obsolute obsolute. It's a little bit top off my pay grade. But if my personal opinion is they're not dumb, the the inflation situation is proving to be more sticky than than they had originally hoped for, and they're gonna have to you know, um, they might delay it a little bit so that they make sure the ecosystem does not create another SVB, but but they will have to continue
the journey to make sure to suppress inflation. We're coming off the bank of a strong set of earnings that beat expectations from animists. You kind of take that momentum into the remainder of the year. What are your expectations for credit growth? How are you going to manage the difficult rates environment globally? You know, it's unfortunate that the globe has to move to some degree in unison when it comes to interest rates, because it's money is fungible
and it is an open economy. US has an inflation problem to deal with, and these increases in interest rates for sure causes a drag on your ability to grow faster. So this is a you know, high speed, high growth economy. Would we have grown faster had interest rates been two percent instead of five percent? The answer is, of course. But I think even with five or six percent intertit environment that we now see or predict will still continue
to grow. There are pockets where affordability it becomes an issue. We see a decline in some of the mortgage business for obvious reasons, but in general, I think, yeah, we could. We could have done probably one or two percent more growth in the economy, saying, you know, because of higher interest rates, that drags you down, but we're still going to be seeing some great economic growth. I'm very excited
about this year. I want to get to some of your big bets abroad, and let's start off with credit suites, because that went the other direction quite a bit negative over the last few weeks. A lot of questions being asked. I'm wondering whether you would be open to assisting further if there was another call for additional liquidity from credit suites. The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory. We now own
um nine point eight percent of the bank. If we go above ten percent, all kinds of new rules kick in, whether it be by our regulator or the European regulator or this was regulator. And we're not inclined to get into a new regulatory regime. So I can cite five six other reasons, but one reason, which is, you know, there is a glass ceiling and we do not intend to entertain going beyond it. And we're there now. I'm wondering whether any conversations have taken place about other turnaround options.
Maybe some new radical ideas are needed to help revive confidence in credit suites. What are you what is your thinking there? That's uh, you're better off asking credit suite. We're you know, we don't have a board seat. We're an investor, um, and so we don't engage with them and discussions that um, you know that kind of cross fences us. UM. So the franchise credit Suites First Boston, that's also not an option, not not something you would invest We're looking at it Forday, Yeah, no, we're not
looking at that. Saudi National Bank chairman Amar El Kaderi, speaking exclusively to Bloomberg on Wednesday, those remarks helping spark the biggest ever slump in Credit Sueices stock on Wednesday, prompting the Swiss authorities to issue a show of support and a credit line of up to fifty four billion dollars.
After becoming engulfed in the turbulence set off by Silicon Valley banks collapse, Credit Sueices stock embarked on its initial plunge just as the European Central Banks Governing Council convened for its two day gathering, raising concerns about the health of the wider banking industry. Asked whether the latest uproar could bring a repeat of the last global financial crisis, ECB president Christine Lagarde said, I was a run in two thousand and eight, so I'll have clear recollection of
what happened and what we had to do. We did reform the framework, we did agree on Buzzle three. We did increase the capital ratio, we did increase the financial coverage ratio as well, and I think that the banking sector is currently in a much much stronger position than where it was back in two thousand and eight. Despite the market turmoil, the ECB went ahead with a planned half point increase in interest rates, but offered few clues on what may follow a mid market turmoil that royaled
credit suites. For more on the ECB's decision and the challenges it's facing. Former ECB Chief economist Peter Prett joined Bloomberg's Guy Johnson and Alex Steele. But so difficult is that you have the liquidity issue of solving the issue, and then the confidence issue. And in many ways it feels like what's happening in the financial system that they're here in the US or in Europe is very much
a confidence issue. Hadn't the ECB deal with that? Well, that's that's a little bit their job, ECB and also as a supervisor. I think what we have today is big concerns about the in the markets belt you know, who took positions you know, in interest rate risk. So they look at the portfolio of bonds you know, in banks or is it funding funded in all the From what we know from from European banks is that the risk of you know, interest rate positions is relatively small.
And this was repeated by the Ghindows, the vice president today And I'm not so much concerned, you know about interest rate risk in the banking book of the banks, you know. I also think you know that most banks are hedged, and the counterparties of the hedges are basically pension funds and insurance companies. So I think this risk is relatively under control. You never know, of course, but
I think it's not the main issue. The main issue is a credit book for the tending that credit book looks good, but banks get into trouble when the credit book, you know, start to deteriorate, and I think this is the risk we have to monitor in the future. It's not so much the interest rate risk, but it's really what happens in the credit book, and for that the economy is absolutely key. For a central bank to provide liquidity when you have good collateral is not an issue.
And basically that's the signal that the Swiss Central Bank is is giving, basically saying, okay, I'm ready to provide a lot of collaptional of liquidity because you have good collapsual So I think that's not the main issue for the time being. I know that the markets are concerned. Markets have still the trauma of two thousand and eight,
but we live in a very different world today. I was in two thousand in the eleven in the ECB when we had, you know, the sovereign debt crisis, and the information we got, you know, from the banking system was absolutely scattered, you know, because supervision was still at the national level. Now we have concentrated information, and so that's a very big, very big difference, you know, compared to two thousand and eight. They knew what's going on.
That's former ECB Chief Economist Peter Prett coming up from Europe to Washington. We hear from top lawmakers on congressional banking committees. You're listening to a special edition of Bloomberg day Break Weekend. It's a look back at the historic week in the markets and crisis in the banking sector. This program was recorded on Friday. If you're looking for the latest developments on this story, make sure to stay tuned to our news updates twice an hour all weekend
long on Bloomberg Radio. This is Bloomberg Daybreak Weekend. I'm Tom Busby. This week a special edition of the show. It's been an historic week in financial markets, marked by crisis in the banking industry. The meltdown of Silicon Valley Bank spread across the sector, touching signature bank, First Republic and eventually credit suis It's a story that played out right here on Bloomberg in exclusive interviews that move shares
of credit suits throughout the week. On this show, we usually look forward, but today we're looking back, covering the timeline of events that got us to where we are right now. Full disclosure, we're taping this program on Friday, so it's decidedly a look back, not a view of what's to come. But stay tuned to our news updates every thirty minutes throughout the weekend for the latest developments. On Monday, President Biden came out before the markets opened
to try to calm a worried nation. All customers who had deposits in these banks can rest assured. I want to rest assured they'll be protected and they'll have access to their money as of today, that includes small businesses across the country that bank there and need to make payroll, pay their bills, and stay open for business. The President adding that he's going to ask Congress and regulators to
strengthen the rules for banks. On Thursday, Treasury Secretary Janet Yellen said that her department is monitoring for a potential contraction in credit in the US following the collapse of Silicon Valley Bank would spark the danger of contagion across the banking system. I can reassure the members of the Committee that our banking system is sound and that Americans can feel confident that their deposits will be there when
they need them. Speaking at a Senate Finance Committee hearing, Yellen told lawmakers that she had first heard of problems with SVB just one day before it was put into Federal Deposit Insurance Corps receivership last Friday. Noting the bank's high reliance on uninsured deposits for funding, she said, we worked with the Federal Reserve and FDIC to protect all
depositors of the two field banks. On Monday morning, customers were able to access all of the money in their deposit accounts so they could make payroll and pay the bills. The hearing comes amid market worries over financial stability and the rapid fire collapse of three regional US banks and troubles at credit suites. The Treasury backing a new Federal Reserve facility to offer troubled banks liquidity in return for high quality assets, aiming to halt any further runs on deposits.
As to what US regulators can and can't do when it comes to banks, Bloomberg spoke with lawmakers on both sides of the aisle to get their take first up, Democratic Senator Shared Brown of Ohio. He's the chairman of the Senate Banking Committee, and he spoke with Bloomberg's Joe Matthew and Anne Marie Hordern on Tuesday. Brown wants regulators to conduct a comprehensive review of the failures, urging them to identify and act on any broader vulnerabilities in the
banking system. Well, I think we look at everything and we're going to investigate through the Banking Housing Committee that I share, we're following what the regulators are doing with oversight to make sure they investigate. I don't think we know yet, but what we do know is every time the Silicon Valley bank and the bankers so often come to Congress to weaken rules, too often, Congress goes along. And whatever we do here, we're going to strengthen oversight rules.
We're going to make sure that the banks can't can't play with risk the way they do and always make working families in Ohio pay when when I first when the story broke with what had happened in California, and I knew that the CEO in California and lobbied Congress and lobbied as friends and the regulators for weaker rules. First thing I thought about was what happened in East Palestine, Ohio with the railroads. The railroads had lobbied Congress, had
lobby the Trump administration. I'd used their pr campaign to weaken safety rules and to hurt the communities. And who always pays, whether it's customers at banks pay, or whether it's customer or whether it's people in places like Ke's Ballastine. So I think it's all about corporate power in the end, and as we look at deposit insurance and so many
other things, we have to keep that in mind. I thought you're going to say that it brought you back to twenty eighteen when portions of Dodd Frank were rolled back. I know you didn't love that idea then. And as the President asks to strengthen regulations now, Senator, I wonder what it is specifically that your committee can do to
prevent another SVB. Well, I hope my committee can do it because we have so many people in this committee that are at the beck and call of the banking lobby, the financial services in particularly Wall Street, and particularly the most powerful banks. But I know what this committee did wrong a few years ago in passing this, and then President Trump made it worse by weakening the standards even further. But we clearly need stronger capital standards, We clearly need
stronger liquidity standards. We clearly need to do the strengthen the stress tests. I am pushing the Federal Reserve to do that. Now I'm going to push Congress to do that. I'm less hopeful that Congress will do that because I've seen the influence of the bank lobby in Wall Street and in the end, again, Ohio workers always pay for this when they get their way. That Senator Shared Brown, Democrat from Ohio, for a view from the other side.
On Thursday, Bloomberg, Joe Matthew, and Anne Marie Horder and spoke with Representative Patrick McHenry of North Carolina. He's the chairman of the House Financial Services Committee. Mckenry said people should hold off on a signing blame while Congress and watch dogs investigate the cause of the bank's failure. Everybody's preaching their book and so, but that's not my responsibility.
My responsibilities to get to the bottom of what happened and why, and that's my obligation as a committee chair and to look into this matter and understand what we know at this point is you have a couple of theories of the case. One mismanagement. Obviously the firm failed to supervision right, whether or not those that were tasked with overseeing the bank in the regulatory sphere did the
right thing. Third regulation, fourth law, and then fifth is this macro question about the economy, the fiscal house that inflamed inflation, and then the FED response to it in the rapid rising rates. So you have five buckets of theories at this point, and everyone has jumped to their natural conclusion to give the answer. Here, we have to first figure out why this happened and determine in a
really quantitative and qualitative way what happened. So you can't tell us now if the bill paston twenty eighteen in fact was partly to blame, or maybe a better way to say is the original Dodd Frank would not have prevented this from happening. Well, the original Dodd Frank, and then the updates twenty one fifty five, the pie Parson
Bill that passed in twenty eighteen. The theory is among some is that that changed in such a substantial way Dodd Frank that they could have seen it under the original law but didn't see it because of the the regulatory change. The first studies of this, and the indication from bank
analysts is that that's not the case. The liquidity cover ratio this bank would have passed if it had been applied to them, and so the key provisions that change would not have affected the supervision of this bank nor their performance in this moment of stress in this bank run. So,
but that's the initial review of it. We want to understand that that's in fact true in the case when you look at the supervision, does this fall into the her view of the FED in Washington or is this the supervisors in San Francisco who was potentially asleep at
the wheel. To get to the bottom of that as well, the way the FED is organized those through regional banks, and the regional banks have their regional bank supervision and examination process, we want to understand what happened in the San Francisco Field Office and those that were in the bank. So I have to get to the bottom of that as well. Is this a Washington FED problem? Is that San Francisco FED problem? Is that a failure of a regulator or not? And at this stage of the game,
when you want to cast blame, it is natural. The first order of business in any business failure is to blame the management, because obviously the business failed. The second is those that oversee the bank. But when people jump to these conclusions at this stage of the game, a week end on this really stressed moment for our banking system, I think it's unhelpful and quite politically hackish to jump to this political conclusion when we don't actually have the
full set of facts yet. But should the FED be investigating themselves? This is almost the third scandal under the FED. There's a trading, there's a Kansas City the rare master's account for the fintech firm, and now there's this and the Vice Chair Supervision, Michael Barr, will be investigating his own FED. Why not have an outside probe? Well, Congress will look into this as we should. We created the Federal Reserve, we created you be in favor of that,
Like what Elizabeth Warren says, like an outside investigator. Everyone in Washington wants to look around for an unbiased source of information. Right, good luck. Everybody has a perspective. We will certainly investigate this on Capitol Hill, and my committee will look into this. That's Republican Congressman Patrick mckenry of North Carolina. You're listening to a special edition of Bloomberg Daybreak Weekend. It's a look back at the historic week
in the markets and crisis in the banking sector. Up next, we look back by looking ahead, and get a preview into what we can expect from the FED meeting this week. This program was recorded on Friday. If you're looking for the latest developments on this story, make sure to stay tuned to our news updates twice an hour all weekend long on Bloomberg Radio. This is Bloomberg Daybreak Weekend. I'm Tom Busby. This week a special edition of the show.
It's been a historic week in financial markets, marked by crisis in the banking industry. The meltdown of Silicon Valley Bank spread across the sector, touching Signature Bank, First Republic, and eventually credit suits. It's a story that played out right here on Bloomberg in exclusive interviews that move shares of credit suites throughout the week. We've been looking back on the week all hour, but now it's time to look forward. Full disclosure, we're taping this program on Friday
for the latest on the bank crisis. Stay tuned to our news updates every thirty minute. It's throughout the weekend for the latest developments. And most economists surveyed by Bloomberg News narrowly expect the Federal Reserve to hike rates next week and nudge its peak interest rate up slightly in a continuing response to high inflation, despite concerns that a
banking crisis could have broader economic impact. Speaking with Bloomberg's David Weston, former Treasury Secretary Larry Summers said the Fed shouldn't be spooked into easing its campaign to contain inflation out of excessive concern about a credit crunch in the
wake of the recent banking turmoil. I think we can use policy directed at standing behind depositors, separately from monetary policy, and I think it's appropriate at least on current facts, and they're changing very quickly these days, but on current facts to raise rates by twenty five basis points, so that's where I would be coming down. I do think that the FED should not allow financial dominance, but does of course need to recognize that slower credit is going
to be the result of that. For what we can expect next week, we turned out of Bloomberg's Michael McKee, Bloomberg News International Economics and Policy correspondent, Michael, thanks for being here. I wish I could give you an idea of what's going to happen next week, but on a day to day basis, I don't know what's happening by the end of the day. We do know that on the calendar there's a FED meeting on Wednesday and that
they have to make an interest rate decision. They'll also put out new summary of their economic forecasts, and we get the infamous dot plot update. So there is a lot of news coming. We just don't know what it's going to be. The general consensus on Wall Street after everything that has happened is, if we get to Wednesday and the banking sector has stabilized a little bit and we're not going hour by hour, will somebody survive or not? That the FED will raise interest rates by twenty five
basis points. Japal had suggested two weeks ago that we might see them do fifty if the data were strong. Data weren't all that strong. They were still good, but they weren't all that strong, and with what's happened in the banking system, probably a precautionary kind of move from the FED, a risk management move of only twenty five basis points is the most likely thing. Now, let's go back to some of those data points that we saw,
because some very encouraging. The jobs numbers surprising to the upside. Also, housing and housing very closely tied to the banking industry. Everybody's kind of wondering about that, and it is an unusual situation. Obviously, housing very influenced by mortgage rates, which are influenced by the fed's rates. And mortgage rates have gone way up, and we've seen housing sales drop a lot. What we haven't seen is a drop in new home construction.
Some sales have fallen off, but we saw a big rise in new home construction new home starts this past month, and also building permits we're up thirteen point eight percent, suggesting there's confidence among builders. We know there's a short fall of housing. And we also have seen interest rates for mortgages come down a little bit in recent weeks because they're not just tied to the FED funds rate,
they're tied to what's happening in the markets. And we've seen obviously interest rates fall across the Yeel curve over the past couple of weeks as people worry about what's going on in the world, and so that is maybe in scenting the builders to think that people might come back out and start buying again. Michael, thank you so much. Be sure to tune into Bloomberg on Wednesday at one thirty Wall Street time for our simulcast special The Fed Decides.
And that's been a special edition of Bloomberg Daybreak. Weekend, our looked back at an historic week in the markets and crisis in the banking sector. I'm Tom Busby. This program was recorded on If you're looking for the latest developments on this story, make sure to stay tuned to our top stories and global headlines starting right now.