The Push For Tougher Bank Regulation Is Underway

reports on inflation and retail sales. The State Department is condemning Rush over the downing of a US drone plus Ohio suing North Park Southern over last month's trained arailment. I'm John Tucker. More Ahead, I'm John Stash Aaron Sports. The next road trip ended with a win at Portland and nets lost at Oklahoma City, The Rangers one, the

Devils and Islanders bothe Law. That's all straight Ahead on Bloomberg day Break, The business news you need, disturn your day, and just one fifteen minute podcast each pointing on Apples, Spotify, The Bloomberg Business Appen everywhere you get your podcasts. Good morning, I'm Amy Morris and I'm kieron Moscow. Here are the stories we're following today, we begin with a continued fallout

from the collapse of Silicon Valley Bank. Bloomberg News has learned the Federal Reserve is now considering changes to its oversight of midsized banks. At the same time, former FED Vice Chair for Supervision Randall Quarrels, is downplaying the role of looser rules in svb's collapse. I think there will be an effort to push down some of the regulation that currently applies to larger banks down into the smaller banks.

I may self think that for the most part, that will probably be a mistake driven by a misunderstanding of what just happened. Randall Quarrels served as the fed's top cop on Wall Street from twenty seventeen to twenty twenty. Well over the past few days, amy we've seen the collapse of SVB and state regulators see Signature Bank. Despite all of that, Federal Reserve Governor Michelle Bowman says America's

banking system remains on steady footing. The US banking system remains resilient and on a solid foundation, with strong capital and liquidity throughout the system. FED Governor Michelle Bowman made the comments at a banking conference in Honolulu. Despite that assessment, some officials want more oversight set at Banking Chairman Shared Brown is among them. He sees little chance Congress will move to Titan regulations. He's urging the Fed to act unilaterally.

Every time the Silicon Valley bank and 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. Senate Banking Chairman Jared Brown spoke with Joe Matthew and Anne Marie Hordern on Bloomberg Sound On. Catch the program weekdays from one until three pm Eastern on Bloomberg Radio and download sound on wherever you get your podcasts. Now. A key question in the fedsprobe of Silicon Valley Bank

Amy will Be who was managing risk? And we get that part of the story from Bloomberg's Done Christner. For much of last year, SVB didn't have a chief risk officer. A twenty twenty three proxy statement shows Laura Eziureta stepped down from performing the role in April, although she didn't leave the company until December. It was in December when Kim Olsen took the job after serving as chief US

risk officer for Sumi Tomo Mutsui Banking Corporation. Olson was based in New York, across the country from most of the rest of the svb's top brass. The months along vacancy has drawn the attention of lawyers who are circling SVB with an eye on bringing shareholder lawsuits in New York. I'm Doug Prisoner Bloomberg Daybreak. Thank you, Doug. When it comes to worry's over Signature Bank, sources say federal prosecutors were already investigating the firm before its seizure by regulators.

Bloomberg's Jeff Bellinger reports the probe involved the bank's work with crypto clients. People familiar with the matter tell Bloomberg the New York bank was being investigated by Justice Department officials in Washington and Manhattan. The authorities wanted to know whether Signature was taking sufficient steps to detect possible money laundering by clients. Sources say the Securities and Exchange Commission

was also looking into the bank's operations. There's been no official comment from many of the agencies or the failed bank at this point. The bank and its staff are not accused of any wrongdoing. Jeff Bellinger, Bloomberg Day Break, Ry Jeff, thanks well, it was rebound day for regional banks after the recent carnage on Wall Street. First Republic had its biggest single day gain ever yesterday, rising twenty seven percent, PacWest gained a record thirty four percent, and

Western Alliance Bank Corps rose fourteen percent. While those regional bank shares were falling, short sellers minted more than two billion dollars in paper profits in just three days. Trading from Thursday to Monday saw the Spider SNP Regional Banking ETF fall twenty three percent, its biggest plun since twenty twenty. Well, the pain in regional banks is paying big dividends. For Bank of America, bef A mopped up more than fifteen billion dollars in new deposits in just a matter of days.

JP Morgan, Chase, City Group, and Wells Fargo also ranked in billions. So the figures have not yet been disclosed. Another major story we're following this morning involved TikTok. We're learning the Chinese company's leadership is discussing the possibility of separating from its parent company Bike dance. Let's get the latest Live with Bloomberg. Steve Rappaport. Good morning, Steve, Good

morning Amy and Karen. Divesting TikTok from its Chinese parent company would be a last resort if the platform's existing proposal with national security officials falls through. That's according to sources, who also tell Bloomberg Beijing would ultimately have final say on a split Congress. The White House and more than half of US states banned the use of TikTok on government issued devices. The Senate is taking up legislation for a total ban in the US. Live from New York,

I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, thanks well. On the economic front, where it coming off a day where consumer prices showed inflation is still an issue. Now we get another pair of key economic reports, and Bloomberg's Michael McKee has the details. Two more reports on producer prices and retail sales will help Fed policymakers decide what still needs to be done to tame inflation and how quickly.

A week ago, investors were arguing over whether the Central Bank should raise interest rates by a quarter or half percentage point throw in one banking crisis, and some went so far as to predict rap cuts. The Consumer Price Report out Tuesday showed prices are still rising. However, today's PPI will offer evidence of inflation in the pipeline, and retail sales will show whether Americans still feel confident about spending money. Michael McKee, Bloomberg Daybreak, Right, Michael, thank you,

and straight ahead. We have your latest local headlines, plus a check of sports, and this is Bloomberg. Thank you, Karen. Five h seven on Wall Street, thirty six degrees in New York with partly Cloudy's guys going up to forty five degrees. Time now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's John Tucker.

Good morning John, Good morning Amy. A US unmanned aircraft collimbed with the Russian fighter jet over the Black Sea. Thirty two million dollar drone later crashed into the water. US officials claimed the Russian pilots made close passes and sprayed fuel onto the drone before the plane struck the

drone's rear propeller. State Department spokesman Ned Price We are engaging directly with the Russians again at senior levels, to convey our strong objections to this unsafe, unprofessional intercept which caused the downing of the unmanned US aircraft. The State Departments ned Price went on to call it a brazen violation of the international law. Moscow insists its warplanes didn't fire their weapons or hit the drone. The cleanup continues from a north eastern north and west of New York City.

The governors of New York, New Jersey, and Connecticut issued states of emergency yesterday. Some towns in Putnam County, New York, are digging out for more than ten inches of snow. New York lawmaker is floating a personal income tax increase for individuals earning more than five million dollars and a child tax credit expansion. Lawmakers also pitch raising the current ten point nine percent tax rate to eleven point four

percent on taxpayers earning more than twenty five million dollars. Meanwhile, State Senate and Assembly Democrats have pushed back on Governor Hoko's plan to tie the minimum wage to inflation. They say the hourly rate should first be boosted to ensure workers earn a living wage. The deadline for lawmakers and HOCO to agree on the proposed two hundred and twenty

seven billion dollars state budget is March thirty first. Ohio is taking Norfolk Southern to court over last month's trained deraimant and toxic fire in East Palestine, but State Attorney General Dave Yo says the lawsuit aims to ensure the railroad pays for the cleanup and environmental damage. This derailment was entirely avoidable, and I'm concerned that Norfolk and Southern maybe putting profits for their own company above the health and safety of cities and communities that they operate in.

Yost also plans to force the company to pay for groundwater and soil monitoring. Only years he had Global news twenty four hours a day, power by more than twenty seven hundred journalist and analysts more than one hundred twenty countries. I'm John Tucker, this is Bloomberg Aby, all right, thank you, John don now that the sports report brought to you by try State Audi. For that, we bring in Bloomberg's John's dash our all right. I mean Nicks have to be happy they get a split of the four game

road trip. Considering Jalen Brunson only played a half of one game, Emmanuel quickly has started in Brunsdon's place. At in Portland, he scored twenty eight points at ten rebounds. Nicks went from down thirteen to up nineteen. They meet the Blazers one twenty three, one oh seven. They sit fifth in the East game ahead of the Nets, who ended their trip with Oklahoma City got outscored by twenty four and the second half and OKC one one twenty

one one oh seven. Mcal Bridges led Brooklyn with thirty fourth the Garden Rangers with a three goal first period two by Meks Avantage. Add He's up to thirty four goals on the year. The new Ranger Patrick Kane score of the power play blue Shirt Street Washington five to three. Devils lost to Tampa Bay four to one. Same two teams play again in New York tomorrow. Islanders lost in La five to two, Kings with four goals in a ten minute span of the second period. NCUBAA Tournaments Underway

pit where the one point went over Mississippi State. Tonight in Dayton, Fairleigh Dickinson takes on Texas Southern. Who's got a record of ten and sixteen. FTU got into the NC double As despite losing the n EC Attorney Final to Merrimack, whose new to Division One and not yet eligible for the NC Doubaas n IT Seaton Hall lost by one of Colorado. Hofstra beat Rutgers in overtime. The Giants traded a third round draft pick to the Raiders for tight end Darren Waller. The Jets signed free agent

white out Alan Lazard. Will that lead to acquiring Lizard's teammate at Green Bay Aaron Rodgers? Perhaps, but hasn't happened yet. Better than QB Andy Dalton sign Carolina The Colts expected release quarterback Matt Robert John stash Allen. Bloomberg Sports live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on Sirius, Exam of Bloomberg Business app and Bloomberg dot Com. This is Bloomberg Daybreak.

Good morning. I'm Amy Morris, and we continue to track the fallout after the collapse at Silicon Valley Bank. Turns out we're seeing some larger banks benefit, but there's more going on here too. We're joined now by Bloomberg Finance reporter Jenny Sorain. Jenny, it's a pleasure, thanks for taking the time. What is going on with Bank of America. Yeah, that was the big news yesterday was that they've actually soaked up more than fifteen billion in deposits in the

aftermath of svb's collapse last week. So you're really seeing, you know, these bigger banks see just a huge influx of customers as they seek you more stable and more rights reliable banking partners during this time, So customers are then saying, we don't want to deal with mid size banks anymore. We want to find a bank that's too

big to fail. Um. That's one way of putting it. Um. I mean, I think this really did spook a lot of folks, and it's, you know, in a time where it's hard to know, um, you know exactly what the stability of your banking partner is, folks do tend to go with the biggest players, and so I think that is one thing that regulators and outside experts are worried about, that this will cause this kind of flight to quality in a way and just make these big banks even bigger.

Are there any other banks that are seeing an upside. I know, Bank of America's the big headline. Yeah, no, We've actually heard from a lot of other banks, you know, City Group, JP, Morgan, Chase, Wells, Fargo also seeing really really big influence right now. So I think it's it's across the board. But we do have that, you know, hard number for Bank of America fifteen billion, just to give us kind of a sense of the scale of

the increase that these guys are seeing. So what are some of the regulators doing now to make sure this doesn't happen again? Yeah. You know, it's interesting because here's an years ago. Back in twenty eighteen nineteen timeframe, we saw a big rolling back of regulation for these midsized banks, and a lot of folks in the past few days have really been pointing to that time frame and those moves by regulators as what sort of got us here today.

Back then, you know, they said, okay, for the regional banks of SVB size, they no longer need to think about these losses in the securities portfolio as part of their capital. They did a few other things to kind of lessen the load for these guys, and so a lot of folks have been wondering, you know, if that

hadn't happened, would we be where we are today? And so I think that's what regulators are really looking at and looking to try to answer for folks, and looking at ways that maybe they can undo some of what they did just a few years ago. I wondered about that, Jenny. There is a debate now over whether they need to enforce the regulations that are still are already in place, or if they do need to claw back and get more of those regulations back from the twenty eighteen twenty

nineteen timeframe. What are you hearing? There's a lot of finger pointing here. Yeah, it's definitely. I think, as you might imagine in DC especially, it's become something of a blame game. You know, you've got Democrats on one side saying, oh, this was happening under Trump when he, you know, encouraged the rollback of all these different regulations. You've got Republicans on the other side saying, no, this all happened under Biden's watch, and his regulators weren't, you know, they were

asleep at the wheels. So I think we're going to see a lot more of that. And and you know, I totally expected in some ways, but but I do think you see regulators really digging in here and looking for ways to make sure that something like this really doesn't happen again. So how does this bound a factor into the Fed's decision next week or will it? No? I think that's a really important question, and when we're

trying to track very closely. I mean, I think the one interesting aspect of all of this is, you know, with these big big banks now seeing this huge influx of deposits, it really has taken away the pressure for them to pass on some of the FED rate hikes to their customers. You know, that was something we really thought we'd start seeing this and so it's already, um, you know, you're already seeing some of the ways that this you know, transmission mechanism from d rate hikes is

already starting to break down. So UM, I think it will. There's no way it won't factor in, But hard to say exactly how this might shake out. Has the death settled? Is another shoe gonna drop? That's what we're watching. So you know, I think it's hard to say. We've had Moodies come out with a lot of more um, you know, putting a lot more banks on ratings downgrade watch. Um,

they actually downgraded the entire sector yesterday. So it feels like the rating agencies at least think there's more to come. But regulators, they really tried to bring the full force of the federal government who bear on Sunday, and so I think they're hoping this is contained for now. But um, but now you've got you've got folks on different sides of the aisle on that one. Before we let you go, Jenny, about a half a minute here, what are you watching

for in the next few days. I mean, I think we're really paying attention to some of these regional banks that had a really high rate show of uninsured deposits, because those are the folks that might start to see a real big pickup in deposit plate and that was really what prompted the failure of SCB on Friday. So I think that's what we're mostly looking for, looking for any signs that you're seeing a big outflows, and beyond that, you know, just continuing to track what goes on with SVB.

You know, there's been reports out there that the FDAC has restarted the auction for that. As for those assets, so we'll see how it all shakes out, but there's still a lot of moving pieces here. You're listening to 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 podcast.

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 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, Sirius XM Channel one nineteen, the iHeartRadio app,

and on Bloomberg dot Com. I'm Amy Morris 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