Citi CEO Jane Fraser Weighs In on Banking Crisis

to make a policy decision. A grand jury in New York City could hear from one more witness today at Donald Trump's case, plus a standoff at the Manhattan High Runs. I'm Michael barn More ahead, I'm John's fish awon sports. That Nicks lost in Miami wide receiver moves made by the Jets of the NCAA tournament resumes tonight at Big Garden. Thanks all, straight ahead on Bloomberg day Break, The business news you need disturn your day, and just one fifteen

minute podcast each pointing on Apple's Spotify. The Bloomberg Business Appen everywhere you get your podcasts. Good morning, I'm Nathan Hagar and I'm kieron Moscow. Here are the stories we're following today. The lift in futures. This morning comes on the heels of an equity sell off. Stocks sank yesterday after a ninth straight rate hike from the Federal Reserve and signals from Chair J Powell that more could be coming.

We need to raise rates higher. We will, I think for now, though we as I've mentioned, we see the likelihood of credit tightening. We know that that can have a you know, an effect on the macroeconomy, on demand, on labor market, on inflation, and we're we're going to be watching to see what that is. Well. Critics are weighing in on those remarks from J. Pale Farmer FED Vice chair Alan Blinder says he should have taken a

different approach. I think very much that the right decision today would have been a pause with words saying we're waiting to see if the dust clears and how it clears, and we may be going up higher depending if you know, if this crisis doesn't look too serious. Alan blinders can daring the Fed could be underestimating the extent of the current banking crisis. Well, Nathan, the markets are not buying J.

Powell's message about more rate hikes. In fact, they're pricing in rate cuts instead, and we get that storway from Bloomberg's John Tucker, who joins US Live. John, Good morning, my Karen. Treasury's rallied yesterday after the Fed decision, and traders have ramped up best the central Bank is soon going to reverse course and start cutting rates. They seem convinced the Fed will make in about face, probably in September. The market view contrasts with the FED guidance, which calls

for at least one more hike at Cher. Powell did push back on that market center and saying rate cuts are not our base case. Investors think tighter Fed policy is leading to cracks in the economy will likely tip the United States into recession. Live in New York. I'm John Tucker, Bloomberg Daybreak, John. Thanks. The Swiss National Bank is also on the move this morning. Turmoil at Credit Suiss is not stopping that central bank from tightening policy.

The SNB's hiked rates by fifty basis points, taking its policy rate to one and a half percent. Now, Nathan, it's the Bank of England's turn. We get a rate decision across the pond at eight am Eastern today and Bloomberg's Lizzie Burden is at the BOE and has a preview.

There had been economists wondering at the start of the week whether all the recent banking stress meant that financial conditions have titan so much that the leg work has been done for the Bank of England, that another hike would be deflationary, or that it would undermine the already

weak economy. But now the consensus is for a quarter point hike, which would take rates to four point two five percent, to be the highest level since two thousand and eight, and Bloomberg's Lizzie Burden points out the pound is trading near a two month high ahead of the BOE decision. Now we continue Karen to follow the latest developments on the banking crisis and the response from Washington. Treasury Secretary Janet Yellen says the US is not considering

blanket deposit insurance without first working with Congress. It's important to be clear shareholders and deadholders of the field banks are not being protected by the government, and no losses from the resolution of these banks are being borne by the taxpayer. Deposit protection is provided by the Deposit Insurance Fund, which is funded by fees on insured banks. My Treasury Secretary Yellen says executives responsible for bank collapses should not

be profiting when stockholders and investors take losses. Well, Jane Fraser is weighing in on the banking turmoil. Nathan, the CEO of City Group, says the ability to move millions of dollars, which just a few clicks, is a sea change moment for the risk of bank runs. There were a couple of tweets and then this thing went down much faster than as appened in history, and greatly. I think the regulators did a good job in responding very quickly,

because normally have longer to respond to this. City Group CEO Jane Fraser made the comments in an interview at David Rubinstein. Stay tuned for more of that conversation coming up surely on Bloomberg Daybreak, and we continue to watch First Republic Bank this morning. Karen. The shares are up three point six percent, but it's not all good news for the bank, and we get more live from Bloomberg.

Steve Rappaport, Steve, Good morning, Nathan and Karen. The San Francisco lender was hit with a ratings down grade for the second time in less than a week, Fitch lowered First Republic's long term issuer default rating from B to double B. The bank received the cash infusion of thirty billion dollars from a group of major firms. Fitch analysts view the funding as the primary ratings constraint. Meanwhile, First Republic, in a regulatory filing, says top Brass agreed to forego

bonuses and other compensation this year. Live in New York, I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, Thanks, And in politics today, TikTok is front and center on Capitol Hail. The company CEO tries to convince the lawmakers today that China has no influence over the apps data. Amy Morris has details from our Bloomberg ninety nine one newsroom in Washington show Two plans to tell Congress the TikTok app does more to protect young users than other social media rivals.

Two will appear before the House Energy and Commerce Committee, where he will be grilled on teen's safety and the app's impact on mental health, but he'll also face questions about national security. In prepared comments reviewed by Bloomberg News, too will tell lawmakers they would never share information demanded by the Communist Party as TikTok tries to convince lawmakers the companies should be allowed to continue operating in the US.

In Washington, I'm may Me Maris Bloomberg. Daybreak. It's forty eight degrees in New York's apatchee fog this morning, but it's gonna be cloudy, breezy, with some passing showers this afternoon, heading to the low sixties. Showers end this evening. We'll get down to the upper forties. Second look at some of the other stories making news in New York and around the world with Bloomberg's Michael Bark. Good morning, Mike, Call,

Good morning Nathan. The grand jury in the Manhattan DA's probe into Donald Trump was delayed, and we'll reconvene later today. Trump is accused of paying hush money in twenty sixteen to an adult film star. Jurors were informed at least one additional witness may be called to testify before they decide whether to indict the former president. Outside the courthouse

in Lower Manhattan, woman supports Trump. Look, he's not perfect or any of us perfect, but he loves our country and they put him through so much and He's still gonna do it again and we're gonna win. Meanwhile, this man says he wants to see a mug shot of him. Yes, I mean, I don't know about this crime, but multiple other crimes. I mean January sixth alone, he should be

in prison. New York is still bracing for protests. The former president also lost a court battle to keep legal details secret from the Justice Department about his alleged mishandling of classified information after he left the White House. It appears to clear the way for Special Consul Jack Smith to force one of Trump's private lawyers to testify before a grand jury. Approval of President Joe Biden has dipped,

nearing the lowest point of his presidency. According to the Associated Press North Pole, the president notched an approval rating of just thirty eight percent. The U asked questions China's message to Russia about how to end the war in Ukraine Bloomberg's ad Baxter report. The US is basing that on the fact that the day after the Shee Putin's summit,

Russia launched a barrage of missiles. NFC spokesman John Kirby, If China really wants to be helpful in that regard, they should be urging President Putin to get out of Ukraine. Here we are the day after, and mister Putin is launching more drones and missiles into Ukraine. So I don't know President she delivered that message, but if he did, mister Putin ignored it. Kirby says. The other possibility as

if Vladimir Putin doesn't support China's peace plan. In San Francisco, I'm at Baxter Bloomberg day Break, A dramatic standoff played out thirty floors above a Manhattan street yesterday. It all began when the FBI tried to execute an arrest warrant at a luxury high rise just steps away from Carnegie Hall. The man barricaded himself inside the apartment and then was purged on the ledge of the window, threatening to jump. An NYPD officer finally repelled down from the floor above

and was able to get the suspect inside. Global News twenty four hours a day, powered by more than twenty seven hundred journalists and analysts in over one hundred twenty countries. I'm Michael bar This is Bloomberg, Nathan. Thanks Michael of the Bloomberg Sports Update brought you by Trice State. Out of you, here's John Stashower all right. Nathan Nicks had beaten the Heat twice this season, both nail biting games not decided until the end. This time in Miami, Knicks

fell short at one twenty seven to one twenty. Jimmy Butler thirty seven points for the Heat. RJ. Barrett had twenty six for the Knicks. Jalen Brunson twenty five, but Julius Randall went from fifty seven points the other night down to fifteen. Same two teams will play next week at the Garden. Nicks are trying to hold on to fifth place in the East. They lead Miami and Brooklyn by two games. The Nets play tonight at Cleveland at

the Garden. It's the start of the NCAA Tournament Sweet sixteen and up first it's Kansas State against Michigan State, and both teams have top scorers who are New York natives. Case States Marquisnoles from Harlem. The Spartans Tyson Walker is from Long Island. As coach is tom Izzo. He does have that that swagger about him, you know, his is a little more I think sometimes the New York swagger

is a very cocky swagger, and sometimes that's good. You got to be He's kind of had the happy medium, you know, he's got enough cockiness to be confident, and yet he's an unbelievable Kidizzo in his twenty eight season in Michigan State the Kansas State coach Jerome Tanks in his first season. Later, it's Tennessee versus Florida Atlantic. Also a doubleheader in Vegas, Yukon against Arkansas, UCLA meets Gonzaga. That Jets drafted wide receiver Elijah More in the second

round two years ago. Good rookie season, not as good this past year. Midway through, he demanded the trade. The Jets traded More to Cleveland. They got a second round draft pick back, and the Jets signed a free agent white out Mcole Hardman spent the last four seasons of Kansas City, went two Super Bowls. John stash Allard Bloomberg Sports Live from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Sirius Exam,

the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hagard in Jay the Markets Trust. Those are the words from City Group CEO Jane Frasier, who says she supports Chairman Powell's efforts to fight inflation and appreciates how clearly he has stated that crushing inflation is the Fed's number one goal. Jane Fraser sat down with Bloomberg's David Rubinstein and an event at

the Economic Club in Washington. They discussed the FED and the recent string of bank failures and what it all means for the US economy. Here is part of that conversation. Now, the feds job number one is fighting inflation, and we want the FED to be very dependable in fighting inflation,

and that should be their most important priority. There are ramifications of it, but there are certain banks which say are an isolated few that have really been impacted very negatively, that didn't necessarily manage their balance sheets that well, and think that was the right decision to protect only the depositors and say goodbye to the shareholders and goodbye to the creditors. I think it's very important to protect the

depositors right now. The banking system everywhere around the world depends on confidence and that confidence has to be in the safety and security of deposits. So in terms of the most important job here they did the most important job, which is making sure the depositors will whole. So in the old days and there were bank runs, used to see people lined up outside the street and get their money out. Now you're just on your iPhone or whatever

phone you have, you can take your money out. So money moves so quickly was at a factor as well. And having the money get out of a bank so quickly on the weight line, you can just do it over it. It's a complete game changer from what we've seen before. David, you're absolutely right. There were a couple of tweets and then this thing went down much faster

than as a and in history, and greatly. I think the regulators did a good job in responding very quickly, because normally you have longer to respond to this, so they acted with quite a lot of speak even how quickly this happened. So some people say you have a moral hazard when you protect people. So by protecting all the depositors in Silicon Valley Bank, the implication was that if somebody else has a problem, will protect them, and so forth, and so the two hundred and fifty thousand

dollars limit is meaningless more or less? Or do you think the federals are and the Secondary Treasurer saying we're not going to protect every depositor, or we're going to protect certain depositors. I don't think they need to go out right now, because the banking system is pretty sound, and we're talking about a few banks. We had it from the gym and pal. This is not something that is spread across the entire banking system. Isn't like it

was last time. This is not a credit crisis. This is a situation where it's a few banks that have some problems and it's better to make sure that we nip that in the bud. As we talk today, the Federal Reserve has announced that it's going to increase the federal discount rate by another twenty five basis points, which was probably not a surprise in the market. Do you think that was the right decision now? I think it

was a tough decision. Was Jake and a pause? Was he going to increase it by the twenty five bits or more? I think what he said was apparently jolly sensible. If you'll pardon the British expression, I do that occasionally. He said, we don't know how much credit tightening is going to come from what's gone on in the last couple of weeks. We don't quite know what's going to happen there. So we do know that inflation is a

real problem. It's persistent, it's starting to come off. But he has to tackle this and in Jay the market's trust and many of us do that they're going to tackle inflation hard. But let's also see where the data is. Do you see any evidence in the information data that city has that we are heading for a recession? If so, when might you think we would see the evidence of that? Yeah, I mean, we've certainly been expecting that a recession could well be could well be happening in the second half

of the year. If one does occur, we don't think it will be that heavy because normally, when you're heading into some tougher times, you know, the consumers not in such good health, the companies aren't, the banks aren't, whereas that's not the case right now. The consumer is in good health, the corporate balance sheets are strong, and the

banks are strong. So the factors that typically amplify a recession and not in these not in play at the moment, So we have to make sure there's nothing crazy happens in the duo political world that would change it. But we could well have a mild recession. The last couple of weeks could make that a bit more likely. It doesn't feel like it's going to be a tough one, and the US economy is likely to pull out a

bit pretty quickly. This is Bloomberg Daybreak Today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street time, on Bloomberg eleven three zero in New York, Bloomberg ninety nine one in Washington, Bloomberg one oh six one in Boston,

and Bloomberg nine to sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty Blast listen coast to coast on the Bloomberg Business app. Serious XM Channel one nineteen, the iHeartRadio app and on Bloomberg dot com. And I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak