"Face the Nation" on March 12, 2023

Interview

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I have great respect for Secretary Yellen, but I think we need to have more clarity and greater strength in what Treasury is saying.

First, the principle needs to be that all depositors will be protected and have full access to their accounts Monday morning.

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Yes, all of them.

There's precedent for this. Chair Powell, when he was at Treasury in 1991, the Bank of New England collapsed. And Chair Powell said the Treasury, coordinated with FDIC and with the Fed, and they insured every depositor then. And why did they do it? They didn't want a regional run on the banks.

Here's what I'm hearing from people in my constituency. They are getting notes to pull out of regional banks. And all of this will be consolidated in the top four banks. We don't want that as a nation, especially if you're progressive.

The other thing is the payroll companies that are involved. Some of them have 400,000 folks. They're not going to be able to meet payroll if they don't have access to the deposits. And then -- go ahead.

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Yes, just like they did with the Bank of New England.

Now, here's the thing. It's not going to cost taxpayers money, because if you look at the financials of SVB, they have the assets. They have the assets. They don't have the liquidity. What happened is, they had these long-term Treasury bonds. And then the Fed hiked interest rates very, very fast. We can debate the wisdom of that.

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And they were -- this was the -- the cause. Those -- those assets still have value. We need the liquidity.

Now, there may have been mismanagement. And we can get into that. But, right now, the key thing is for the depositors to have access to those accounts.

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Yes. And that would be the ideal situation. And our delegation that talked to the FDIC last night, made that clear.

But to have that happen, you're...

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That's what we urged them to work on.

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They said they're working on it.

But to have that happen, you need FDIC and Treasury involved, because these assets are not liquid. And they may pay off 10 years from now. I don't think you're going to get a private seller without the Treasury Department and FDIC being actively engaged in having -- helping liquidity with these Treasury bonds.

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Whether they're engaged. I think they need to be engaged. They say they're engaged, but they need to resolve this by Monday morning.

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And I think the way to resolve it is to say, depositors will have access to their accounts.

Look, the bargain in our country from FDR has always been, investors, shareholders lose. I have no sympathy for the executives, no sympathy for people who have stock there. But the depositors are protected. And let's talk about who these depositors are. They are not just the payroll companies. These are climate start-ups. These are start-ups that are helping cure cancer.

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These are companies in the wine industry. These are companies that are dealing with A.I. and defense to keep us ahead of China...

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... 50,000 of them. And they're employing Americans across the country.

And all they're -- they didn't take risks. They just had their money in a bank. And we're saying those need to be guaranteed.

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I think they understand the gravity, but they need to take decisive action.

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Time is ticking.

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And it's by Monday morning.

And I would just urge them and Chair Powell to look at what he said in his own speech in 2013. And the question I'd ask Chair Powell is, if it was good enough for the Bank of New England, and you understood what was going to happen with a regional run -- look, I think the U.S. banking is secure. I don't think this is a systemic risk.

Here's what's going to happen. Every person in these tech companies is getting e-mails: Pull your money out of the regional banks.

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Put them in the big four.

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No, I don't think -- I think it's just that, right now, things move at the speed of Twitter, and the government doesn't move at that speed.

And I think they don't realize what the problem could be and how fast money is moving and the challenge this could be. There is no systemic risk, but there is a risk on consolidation.

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And, by the way, progressives should be the most concerned about this.

I mean, you don't want banking sector to be J.P. Morgan, Citibank, Bank of America, and Wells Fargo...

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Yes.

That's what is going to happen, if the government doesn't -- doesn't step up here. And it's not going to cost taxpayers, because the assets are there.

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No.

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Well, first of all, we need all the facts.

I do think that money should be clawed back and used for places like Silicon Valley Community Center in my district that has money that they can't get.

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Clawed back from the -- clawed back from the CEO, who I have known.

But whether there was something nefarious or not, look, you know 10b-5s, where they have to make the sale years before or monthly -- the month before.

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So I don't want people to jump to conclusions. But I do think all that money should be clawed back and given to the depositors

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Insured or otherwise.

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It means that the companies that are looking for cures to cancer, the companies that are doing the climate work, the companies that are keeping us ahead of China on A.I. and defense technology, all of them are at risk.

Some of them will go under. Some of them are going to be laying people off. It's going to mean people aren't going to be able to make their rent. It -- here's the point. All of the legislation we passed in Congress, the IRA to tackle climate, the chip sector bring semiconductors back, it relies on the innovation pipeline. It relies on the tech pipeline.

And that is why this is such an important issue. What is being -- what is hurting it is the rapid rise of interest rates, as well as now this systemic risk. And it's going to hurt the innovation pipeline, and it's going to hurt ordinary people.

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Thank you.

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