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Lauren Hirsch is Interviewed about Banking System; California Braces for More Rain; Three American Women Missing in Mexico; March Madness Bracket Picks Begin. Aired 9:30-10a ET

Aired March 13, 2023 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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[09:33:20]

JIM SCIUTTO, CNN ANCHOR: Opening bell on Wall Street there, just moments ago, as financial regulators moved quickly to reassure depositors in the wake of the Silicon Valley Bank and Signature Bank failures. The market down just about a half percent now. Just moments ago, and you saw them live on this broadcast, the president told the American people, the American banking system is safe. Crucially, that all depositors will be able to get their money.

ERICA HILL, CNN ANCHOR: Also saying that those responsible will be held accountable. The Federal Reserve, meantime, making additional funding available to other banks. "New York Times" reporter Lauren Hirsch joining us now.

Lauren, good to see you this morning.

So, the president really trying to allay fears, as we know, for the American public, more than anything, saying that your money is safe. Those will be held accountable. We're going to talk about this going forward. There are also questions about the broader impact here. Even Goldman Sachs telling its clients this morning that they don't actually believe that the Fed's going to raise rates at their next meeting because of all the stress in the banking system. How could this impact that decision?

LAUREN HIRSCH, REPORTER, "NEW YORK TIMES": A lot of people think that this is going to either completely eliminate at least for now or strongly slow down the Federal Reserve's move to raise interest rates. A lot of people blame that in part for what happened to Silicon Valley Bank. They had a lot of bonds held to maturity that have lost significant value as the Fed has raised rates. Now, arguably, it was management's responsibility to mitigate that risk and hedge against it. So that's not necessarily fair to put the blame on the Fed, but it did kind of indirectly cause these problems. So, people are pretty confident that this is either going to slow or halt the Fed's move to raise rates.

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SCIUTTO: OK, then the next question is, is that enough to stop the, fall, one, in bank stocks, in the market more broadly, but also prevent a broader contagion.

HIRSCH: Right. So -

SCIUTTO: Have the moves to date been sufficient? What are you hearing?

HIRSCH: Listen, the market is opening down. You see shares of First Republic down roughly 60 percent last I checked. Other regional banks are down a lot. People are really worried that any bank that shares the same kind of profile -- pardon me, shares the same kind of profile as First Republic, that means a large amount of those held to maturity bonds that I discussed and a large amount of unsecured customer deposits could be vulnerable. And I think investors are really grappling with that.

One thing I heard a ton of over the weekend, and I have been making calls, you know, over the past couple of days furiously, expect more consolidation in the banking industry, particularly among these regional banks, which I just don't think people understood quite how vulnerable they are. And I think you're going to see a lot of banks kind of race to find a partner and bulk up and just have a little bit more padding, that they hadn't really realized put them on a point of risk that they're now in.

HILL: Does some of that come with its own aches? Because there's also -- you look at that through a certain lens, and people understandably get concerned when things get too big.

HIRSCH: That's the irony of it all, right? So, a number of people that I was talking to yesterday were questioning, well, how is the government going to handle this? Because on the one hand, the lesson we learned the last time around is, you don't want to have too big to fail. On the other hand, now we're realizing, can you be too small to not fail? You know, that was the challenge with this. And so the question - you know, Elizabeth -- Senator Elizabeth Warren has been really opposed - or not opposed, she has put a tough eye on bank mergers, which there have been a lot of. But the question is, the Biden administration, which has, you know, really taken a hard line on consolidation, are they going to shift that right now when it comes to bank mergers because maybe the size of these banks simply aren't, you know, able to withstand this kind of pressure.

And one more point on that, again, it's whose fault is what. Possibly if they had had the same regulations that were applied to the big bank or to the small banks, they would be better protected because they don't have the same liquidity requirements and I am sure in Capitol Hill we're going to start seeing that. President Biden alluded to that this morning in his speech. We're going to see a push for that. But there is going to be a big push to kind of restructure what it means to be a regional or smaller bank.

HILL: Yes, we'll be watching to see how that plays out, but certainly important to raise.

Lauren, really appreciate it. Thank you.

HIRSCH: Thanks for having me. SCIUTTO: All right, right now, a different kind of storm. A powerful

storm set to batter parts of California, threatening more dangerous flooding in areas already deluged. This includes San Francisco, Oakland, Sacramento, and Fresno.

HILL: CNN national correspondent Mike Valerio is in Pajaro, California. High wind warnings in effect right now. I see a lot of water behind you. What are you expecting? What are folks there anticipating is to come?

MIKE VALERIO, CNN NATIONAL CORRESPONDENT: Well, Erica, Monday evening is really the next event. This is sort of the extermetso (ph), the intermission of two atmospheric rivers.

But we do have good news to report, Erica and Jim. You know, we've been in our waders all weekend long, walking up and down the streets of Pajaro. And yesterday the water was up to here, and now it's down to the bottom of this bumper. So much more of this wheel to my right is visible. But there is still more rain on the way.

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VALERIO (voice over): Warnings of intense, sustained flooding in the days ahead after California's latest atmospheric river compromised part of the critical levee, sending this rushing river into homes, farms, and trapping families in the small community of Pajaro.

HANNAH NORTHROP, MONTEREY COUNTY, CA, RESIDENT: We really didn't expect it to happen, but here we are now.

JOSE PEREZ, PAJARO, CA, RESIDENT: They started evacuating I think at 12:00 in the morning or 1:00 in the morning. And they just started - the National Guards are just taking people out as they go.

VALERIO: Officials say an 11th atmospheric river system, forecast from Monday, could send more water rushing through the still breeched levy.

CAPT. CURTIS RHODES, PIO, CAL FIRE: There could be more water in our backdrop, but there will also be more water throughout the county.

UNIDENTIFIED MALE: All right, coming down. There you go. Just keep this line.

VALERIO: The raging floodwaters leading to a dramatic aerial rescue, captured above the Salinas River. California Highway Patrol saving a man stranded on an island after floodwaters swept him and his car into the river. The man, brought to dry land unharmed.

SHERIFF TINA NIETO, MONTEREY COUNTY, CA: Folks, we are not done yet. We are dealing with rain and wind events that I can only describe as a super soaker saturation event.

VALERIO: But an undeniable sense of flood fatigue creeping in, even as officials issued new evacuation orders for more communities near the Salinas River.

[09:40:08]

And back in hard Pajaro, community supervisor Luis Alejo told us there's a sense of vulnerability, both about the future of Pajaro and its mostly migrant families.

LUIS ALEJO, CHAIR, MONTEREY COUNTY BOARD OF SUPERVISORS: This community is resilient. It's strong. When these waters recede, Pajaro is going to rise. This is such a great hardship on this community, but we know that we will get through this.

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VALERIO: So, Jim and Erica, let's show you the rest of the neighborhood to my right when we talk about the main objective for today. So levee crews, construction crews from the state of California are going to try to plug up that levee as much as possible by dumping boulders, rock, ballas, into the hole. And you can see what's at stake here. All of these neighborhoods and people's American dreams in these mostly migrant communities. You have panatarias (ph), you have auto body shops, small motels, bed and breakfasts. People have been working so hard to build their lives here. So much is at stake if that levee isn't fixed by tonight.

Jim and Erica.

SCIUTTO: Yes, well, you're right to note that in the wake of these storms there's a lot of loss.

Mike Valerio, thanks so much.

HILL: Just ahead here, the latest from Mexican authorities on three women who disappeared after crossing the border from Texas more than two weeks ago.

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[09:45:41]

SCIUTTO: Authorities in Mexico are now looking for three women from Texas who disappeared after crossing into the country two weeks ago. Their families say they were going to sell clothes at a free market in northern Mexico.

HILL: So, they crossed the border near Mission, Texas. They were heading to Montemorelos, Mexico. It's about a three-hour drive. The women, however, never made it.

CNN's Rosa Flores joins us now from Houston.

So, the disappearance actually happened a week before those four American tourists were kidnapped. What are we hearing in terms of where things stand? What are Mexican officials saying?

ROSA FLORES, CNN CORRESPONDENT: Well, the latest is from the AG of the state of Nuevo Leon. I obtained some photos of the search for these women. And you can look at these photos while I tell you about this. The AG there says that the investigation and the search is ongoing. You can see there, there are dozens of vehicles, personnel, and drones that are being used to search for these women.

Now, here's the latest timeline that we have. According to the Penitas, Texas, police chief, now this is in the Rio Grande Valley of south Texas, these three women crossed into Mexico on February 24th. According to various Mexican authorities, these women were going from China, Nuevo Leon, which is a state in Mexico, and they were going to Montemorelos, Nuevo Leon, another town in the state of Nuevo Leon, and that's when they disappeared. And that they were driving a 1996 Chevrolet Silverado, and that the color of that truck was green.

Now, according to Mexican authorities, their families reported them missing on the 25th. They have been seen ever since. But that these search efforts are ongoing.

Now, authorities there also say that the FBI is not participating in an official capacity. They say that they believe this is because these three women, while they are U.S. residents, they are not U.S. citizens.

Now, Jim and Erica, you mentioned the tourists that were kidnapped in Mexico. And the reason why I mention this, too, is because these three women would have had to travel through the state of Tamaulipas, where the tourists were kidnapped, to get to the state of Nuevo Leon. Now, the state of Nuevo Leon, according to the Department of State, is not considered a do not travel state like the state of Tamaulipas is, but it's still considered extremely dangerous because of crime and kidnapping.

Jim. Erica.

SCIUTTO: Goodness, we do hope they're safe, those three women.

Rosa Flores, thanks so much for covering.

Still ahead, a lighter story. This time to pick your March Madness strategy. Will you do it by school, rank, jersey color, dumb luck? We've got the bracketology science to help you out. And, by the way, it's going to be a grudge match between me and Erica. So, we're going to watch this very closely.

HILL: I'm counting on -- I'm counting on that dumb luck to help me prevail.

SCIUTTO: Me too.

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[09:52:28]

HILL: This is going to be a super productive Monday at work for a lot of people because it's time to fill out your March Madness bracket.

SCIUTTO: Yes. HILL: And where else would you do that but at the office.

You have the number one seeds here. So we're looking at the men. Alabama, Houston, Kansas, and one that will make my mother-in-law very happy, Purdue, unveiled as the top teams for the men's NCAA tournament.

SCIUTTO: Sorry, I was just in my app here filling out my bracket.

HILL: Uh-huh.

SCIUTTO: For the women, reigning national champion South Carolina Gamecocks went a perfect 32-0 this season. They, of course, named the overall top seed in their division.

We're joined now by CNN's Andy Scholes to give us a cheat sheet.

And, Andy, just because I really want to beat Erica this year, can you just whisper the advice to me and try - try not to let her hear this.

ANDY SCHOLES, CNN SPORTS ANCHOR: Well, you know -

HILL: Sciutto, I already reached out to Andy before the show. Come on. Pull it together.

SCIUTTO: Exactly.

SCHOLES: Well, you know, there's lots of way to fill it out. You can always go with your heart, you can go with your mind, you can go with the stats, you can pick your favorite mascot. There's so many ways to do this. It's always a lot of fun, you know, competing with your friends and coworkers. And it's always - it's always cool, you know, if you can pick an upset in the first or second round, or if you can find that Cinderella and then, you know, brag to your friends that you were able to do that.

But, guys, you know, the most important thing in winning your bracket pool, it's - it's, you've got to be concentrating on the end. You know, you've got to be concentrating on this final game right here.

SCIUTTO: Yes.

SCHOLES: And if you want to win, and you want to beat your friends or co-workers, you've got to pick the champion. More often than not the person who wins your bracket pool is going to be the person who picks the eventual champion.

Now, there are some stats that can help you pick that champion. And one of the popular one is Kenpom. So Kenpom measures a team's offensive and defensive efficiency. And every single champion, since 2002, has been in the top 40 in offense and the top 22 in defense. And right now these are the seven teams that already qualify for that. These seven teams, they are - they are good picks to win the national championship in your bracket. These four right here, they could get there by the end of the tournament, so they're not bad picks either. Now, you might notice the teams - a couple teams you don't see that

are favorites. They're not on here. Gonzaga and Arizona. That's because Gonzaga and Kenpom, it's in the 70s in defense. Arizona's in the 40s. So, according to Kenpom, those two teams can't win.

And then take a look at this map. Since 1997, every single champion in the NCAA tournament has come from east of this line.

HILL: Wow.

SCHOLES: Every single one of them. So, Gonzaga, UCLA, Arizona, Texas is also on the wrong side of that line. It's been a long time since a west coast team was able to win the NCAA tournament.

So, who should you pick to win your bracket? Well, if you want the highest probability of winning, you're going to want to pick a one seed to be the eventual national champion. They've won way more than anyone else, 26 times since 1979. So, who are the one seeds this year.

[09:55:01]

You've got Kansas, you got Alabama, you got Houston, you got Purdue. Kansas won last year. And if you look at this, since 1974, only two teams have been able to repeat as champion.

SCIUTTO: Yes.

SCHOLES: It is very hard to win back-to-back national champions. Now, where is the final four this year? It's in Houston. Houston is the favorite right now. Since - you have to go back to 1988, guys, for a team to win the final four, the national championship, close to campus. So, who knows what that means.

SCIUTTO: Yes.

SCHOLES: You know, I actually went to the University of Houston, guys. So this is the rare year that I can pick not only with my mind but with my heart.

HILL: Awe.

SCIUTTO: Well, I've got to say, just a corollary, right, you want to pick the top one, but you also want to go for like a couple others that are off the beaten path because everybody's going to pick, it seems to me, the same like top ones.

SCHOLES: Yes. Yes.

SCIUTTO: And if you like want to differentiate yourself -

SCHOLES: That's true, Jim.

HILL: Yes.

SCIUTTO: That's hard. That's hard to do. SCHOLES: That is. And if you want an upset, if you want an upset, you

want to pick the 11s over the sixes. Since 2010, 11s actually have a winning record against six seeds. So, there's one to look at.

HILL: Eleven over six. Noted. We'll continue our conversation off the air, Andy Scholes.

SCIUTTO: I'm coming after you, Erica. FYI.

HILL: Thank you.

Still to come here, President Biden's message to banking executives after back to back bank failures spark worries of a larger crisis. And what all of this means for your money. That's next.

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