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Gone in 48 Hours: How Silicon Valley Bank Collapsed; 'Everything Everywhere All at Once' Wins 7 Oscars Including Best Picture. Aired 6-6:30a ET

Aired March 13, 2023 - 06:00   ET

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

KAITLAN COLLINS, CNN ANCHOR: Good morning, everyone. It is a busy Monday morning here. Quite a weekend. We have five things to know for this Monday, March 13.

[06:00:34]

One, the federal government is now stepping in to calm financial panic over the failure of two U.S. banks. Regulators announcing that everyone who had money with Silicon Valley Bank, and now Signature Bank will have access to all of their money, no matter how much they had.

This morning, President Biden is going to address the nation publicly about it.

POPPY HARLOW, CNN ANCHOR: Also at the Oscars, "Everything Everywhere All at Once" stealing the show, winning Best Picture, Best Director, Best Actress, Best Supporting Actor and Best Supporting Actress.

Also overnight, North Korea's saber-rattling once again, this time with a missile test launched from a submarine. The move comes as the U.S. and South Korea begin joint military exercises.

DON LEMON, CNN ANCHOR: And you know his name, of course. Michael Cohen. Set to testify today in a case that could lead to criminal charges against the former president, Donald Trump.

Cohen expected to appear before a Manhattan grand jury. The panel has been hearing evidence involving Trump's alleged role in hush-money payments made to adult film actress Stormy Daniels.

And get this: March Madness. Your March Madness bracket, well, it's officially set for the men's NCAA tournament. The one seeded, Kansas, Purdue, and some -- Alabama, something like that.

COLLINS: Never heard of them.

LEMON: Never heard of them.

CNN THIS MORNING starts right now.

COLLINS: Can I tell you, I was in Washington this weekend. The collapse of SVB was all that anyone could talk about. I mean, lawmakers there are very worried about what's going to happen. The White House was working throughout the weekend, trying to figure out what they were going to do to stem the panic that was coming.

HARLOW: Four decades to build this bank, 48 hours for it to collapse. And now followed by Signature Bank, which is not just a bank to Silicon Valley. I think the question this morning is what can be done to make sure this doesn't happen again? But it's not the same as 2008.

LEMON: I just want to -- I want to start with (TAKES A DEEP BREATH). Seriously, because they've got some assurance from the government that everything would be -- that the people would get their money out of it.

But still, there's so much that we don't know. Most people want to know is my money safe? You know, am I involved in this, even though I may not directly have, you know, some involvement with this bank?

And also, they're still trying to figure out if they're going to be taken over by someone else and so -- to avoid a domino effect.

HARLOW: Yes. Depositors will be OK. Thank goodness.

LEMON: Thank goodness.

COLLINS: So far, no one's acquired them yet.

This morning, as you all know, President Biden is going to be addressing the nation for the first time publicly since all of this happened. That comes after administration officials worked throughout the weekend, as I was noting, scrambling to stem what they feared was going to be contagion from the Silicon Valley Bank collapse.

On the line for the president this morning, potential economic and political fallout, because a second bank has now also closed its doors abruptly. That came after regulators warned that keeping it open could threaten the entire financial system's stability.

Signature Bank becoming, in part, a victim of the fallout that ensued after Friday.

All that led to an extraordinary move by the federal government yesterday to step in and guarantee that this morning customers of both Silicon Valley Bank and Signature Blank will have access to all their money, starting today.

The Feds are trying to prevent more bank runs and help companies continue to make payroll and stay afloat.

We have this covered from all angles this morning. Let's start with how we got here, though, and what to expect as the markets are going to be opening shortly.

CNN's chief business correspondent, Christine Romans, is here with us.

Christine, OK, if you weren't paying attention on Friday afternoon, you were off work or on a trip, break down exactly what happened here with SVB?

CHRISTINE ROMANS, CNN ANCHOR/CHIEF BUSINESS CORRESPONDENT: The anatomy of a collapse of a big bank. And the anatomy of a rescue from the federal government. Let's look at how we got here.

First of all, what is SVB? It is the epicenter of tech startups, venture capital. Silicon Valley Bank. It is the 16th largest bank, or it was, in the United States.

And this is really the oxygen for technology. The technology sector really goes through SVB. So a very important bank here.

By the end of 2022, it had $175 billion in total deposits. And here is the anatomy of the bank run. Right? This is how much money it had at the ne Just on Thursday, there were $42 billion in withdrawals from depositors. Right?

So something happened here where people wanted to take their money out, and this bank unraveled here.

[06:05:00]

So what happened? Why did they get there?

Well, this is a company that for years took deposits in the good times, when interest rates were very low. And it grew and grew and grew. And those deposits grew. And it put that money into long-dated treasuries, into treasuries -- safe, super-safe treasuries. Right?

So this is how much they had. At the end of 2022, $128 billion worth of treasury. That is amazing how much it gained. But then as things started to go South and interest rates were rising, those less valuable and the company actually was selling those treasuries at a loss.

When that word got out, people got nervous. The stock in the bank started to decline. Depositors started to withdraw their -- their money.

They're also withdrawing their money because technology, that sector. was in a downturn, right? And so instead of putting money into the bank, depositors were taking money out of the bank. And the bank could not sustain it.

Come to the rescue, the United States government. The FDIC is going to ensure up to $250,000 in normal times, and now you're going to have this facility so that above that level, everyone will be made whole. Not the bond holders and not the stockholders of the bank, we should be -- point out. But the people who have their deposits in that bank.

Also Signature Bank. This is the other -- the other shoe to drop this weekend. This is a bank that specializes in services for law firms. It also got into big trouble. The government will also back the depositors there.

So a really important weekend of developments. This could have been a very different morning. A very different morning if we didn't have the treasury and the Fed working all weekend to try to make sure that folks were made whole.

And I'll say, this is because interest rates rose so dramatically, something was going to break in the economy. Right? And this is what broke -- guys.

COLLINS: Yes. And that comes as the Fed chair is only warning that federal -- the interest rates are going to continue to rise. We'll wait to see what the markets say when they open. Thank you.

HARLOW: OK. let's talk about what Washington is going to do, what the president is expected to say when he speaks this morning. M.J. Lee is at the White House.

M.J., you know, it's interesting the point that was just made about something was going to break. But this is not what people were talking about. People were not talking about the rapid interest rate increases resulting, in part ,in bank collapses.

So what will the president say? Do we know?

M.J. LEE, CNN WHITE HOUSE CORRESPONDENT: Yes, well, Poppy, you know, we have seen over the weekend a furious scramble within the administration to try to contain the fallout.

And that is what culminated in the announcement last night that all depositors will have access to their funds starting today and that none of the bill would be footed by taxpayers.

And we saw the president saying in a statement last night, "I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we're not in this position again."

Poppy, when he speaks a little later this morning, we certainly expect the president to echo some of the messages that we heard from other top U.S. officials over the weekend really trying to offer a tone of reassurance.

Namely, one, that the U.S. economy is not in the same place that it was back around the 2008 financial crisis. That it is far more resilient. And that some of the reforms that were put in place around that crisis will work. And that that is part of the reason why the federal government is not going to bail out Silicon Valley Bank.

And obviously, the big message here from the president is going to be to try to contain any wider panic within the U.S. Economy and the banking sector.

HARLOW: But how did they answer the real issue here for -- at least for these smaller, banks which is that part of Dodd-Frank, right, which was the big banking reform passed after the 2008 crisis got rolled back in 2018, including with some support from Democrats.

And it largely meant that banks about the size of Silicon Valley Bank didn't have to go through stress tests, for example. Didn't have the same liquidity requirements.

LEE: Look, there is going to be a lot of soul searching and a lot of answers that's federal regulators will try to answer. We saw some of that over the weekend.

But I think it's worth stressing that, for the time being, really, the task at hand, you can tell by the federal government is to try to contain the fallout, you know, in addition to announcing that all deposits and funds will be guaranteed by the federal government, we also saw the announcement that the Federal Reserve is creating this emergency lending program so that other banks who are eligible could have access to these extra funds if they need it.

But I think Christine made a really important point at the end of her live shot. That there is going to be a real question about whether the Federal Reserve can continue its aggressive rate hikes.

Nobody is disputing that Silicon Valley Bank's collapse was very much, in part, due to those aggressive rate hikes. You know that Jerome Powell, as recently as last week, suggested that more aggressive rate hikes could be coming.

There's going to be a lot of scrutiny on whether the central bank should and will continue doing that, given that we are seeing such a vivid example of the risks and the costs associated with those historic actions from the central bank.

[06:10:06]

HARLOW: It's such a good point. And the former head of the FDIC, Sheila Bair, told our colleague, Matt Egan, over the weekend, they should pause on rate hikes for now, given all of this.

M.J. Lee at the White House, thank you very, very much.

LEMON: Yes. It's a very good question. We're going to ask Senator Tammy Baldwin of Wisconsin about -- because Democrats did support that 2008 rolling back.

HARLOW: She didn't.

LEMON: She didn't. But some of them did. We'll ask her about it in just a little bit.

So with us now, CNN business correspondent Rahel Solomon and "Wall Street Journal's" senior special writer, Justin Baer. By the way, Justin's latest reporting, his headline, "How Silicon Valley Turned on Silicon Valley Bank."

So good to have both of you on. You -- I was reading your notes and what you wrote about this. You've been very strong about this and tough on what you call -- you were calling this a bailout. You said there was no other way of putting it. This is a bailout, no matter what terminology you want to use. Why are you saying that?

JUSTIN BAER, SENIOR SPECIAL WRITER, "WALL STREET JOURNAL": Yes. Well, it's -- I mean, clearly, there are some that are getting bailed out. I mean, you know, the depositors of these -- these particular banks are -- many of which are companies, right? They need to make payroll. The money was trapped in these institutions.

And so the government took extraordinary actions to allow them to access that money. Right? Even -- even as those banks were going through receivership and -- and had failed.

So whether taxpayer money was used to -- to implement those plans, the government said no. But, clearly, there was a rescue of a particular group of people and businesses.

HARLOW: So one of the -- the things that M.J. noted that's really important is what the government is doing now. And they're setting up this emergency lending facility.

So part of the reason that SVB got into a lot of trouble is that they had to sell these long-term treasuries at a loss. Then they went out to try to capital raise last Wednesday.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Spooked.

HARLOW: They tried to get $2 billion. And they saw -- and depositors, look, and investors saw the loss and pulled out money and saw you're selling these at a loss, because interest rates have gone up. Those securities aren't as attractive anymore. This -- what the government's doing now would prevent against someone else having to do a capital raise like that, right?

SOLOMON: Right. That's exactly it. Banking is all about confidence. Right? Confidence in the system. Confidence that, if you or I or anyone here at this table puts their money into a bank, if we need it tomorrow, that money will be there.

What happened here with SVB was a lack of confidence. And so you started to see all of these depositors rush to get all their money out, and that's what led to this panic.

So what the Fed is trying to do and what regulators are trying to do here is to prevent that from happening again. And sort of insulate the risk here. Insulate the contagion so that this doesn't spread beyond an SVB story. And that's why you saw officials --

LEMON: In layman's terms, this an old-fashioned -- is it an old- fashioned run on the bank, as well.

SOLOMON: Absolutely, 100 percent. And I mean, I spoke to a founder who had a lot of her money in this bank last night. And she said that, you know, the tech community is very small. The V.C. founder community is very small.

She said early last week, text messages were starting to go around. It became chatter. And as the days went on, screen shots were going around in terms of, hey, my investor said hoard your money.

And so it really did lead to a high-tech problem in terms of tech but really leading to an old-fashioned bank run.

COLLINS: I think Patrick McHenry from North Carolina said it was a Twitter-fueled bank run. Because it all -- Online people were all talking about those messages.

This $250 [SIC] cap, they're basically waiving it with the steps that we're seeing yesterday. I think over 90 percent of SVB's -- SVB's funds were uninsured.

So are they going to permanently raise it now? Is it just completely ineffective? What is the point of the -- the $250,000 cap?

BAER: I mean, that's the open question. Right? Because I think some of the -- some of the added steps, including that fund that was established is there to support other banks if they find themselves in a similar situation, that they can borrow from the government. They can post collateral at par, essentially making it a lot less expensive in order to borrow, in the event that there is some kind of run.

But yes, but in this case, they decided to waive, you know, blow right through that deposit insurance cap in allowing what are essentially, in most cases, companies. Right? That they have allowed money at these institutions.

COLLINS: Are you surprised that they didn't get acquired over the weekend?

BAER: I think that was -- that was certainly part of the process. Right? So the FDIC had initiated an auction for SVB. It didn't -- obviously, there was no -- there was no winning bid for that auction.

I think it's possible that we could see other assets that get sold in the coming days. We saw overnight, rather this morning, HSBC step in and buy the U.K. arm of Silicon Valley Bank. So you know, there are sort of interesting businesses in both of these -- these banks that could warrant an interest. It could be some more deals that we see.

LEMON: Yes, I think they said that JPMorgan and PNC are among the suitors of SVB holding company, which would exclude the SVB bank part of it.

[06:15:06]

But I think you raise a very good question about what this -- what you said about the question about the feds. Whether the feds will listen to what has been said to stop raising rates because this -- this contributed to it.

Every day folks are concerned about this. This isn't just tech people. This isn't just people who have private equity. This affects all aspects of the economy.

So people are at home now, and they're sitting there wondering, am I affected by this, what do you say to them?

SOLOMON: Look, it's a great question. I think we are all so connected in terms of banking. I think the big difference here is that this was largely a very sort of insulated bank. Right? A big bank, nonetheless. But sort of focusing on a specific sector of the economy.

LEMON: So Signature and Republic.

SOLOMON: Yes, a very important part of the economy. But a secular sort of insulated part of the economy.

I think the reason why the Fed stepped up as quickly as they did is to prevent the risk to people like everyone watching at home. Right? To protect other regional banks. So that we have confidence in the banking system, and that's why we saw the type of rapid response that we did.

HARLOW: I don't know, Justin. I mean, you point First Republic was down 30 percent. That we have images of these long lines of people going to First Republic over the weekend, trying to take money out. They're -- they're standing. You know, Signature is not.

And these are not just banks that cater to Silicon Valley. You wrote in your piece about how this exposes some of the vulnerabilities that we still have.

BAER: Sure. As you said earlier, I mean, this is all based on confidence, right? And the whole financial system. Any financial institution is dependent on that -- on that ongoing confidence. So once that's lost or once it becomes lost, it can lead to what we saw this past week. Right? And that can -- that can flair up elsewhere very quickly.

Which again, that's why you saw the government go beyond just looking at these two institutions over the weekend and saying, How do we avoid seeing other lenders, particularly those that, again, the regulations have changed over the past decade with respect to smaller and medium- size banks. How can we protect and insulate not only those banks but more importantly, their customers?

HARLOW: Is it because they're small and medium-size banks, or is it because there are holders of a lot of mortgages, for example?

BAER: I mean, all of the above. So, you know, every bank's balance sheet is going to look a little bit differently. Right? I mean, everyone has had to deal with the -- the impact of rising interest rates. Some did so, obviously, a lot more prudently than others. Right?

And so there are others that will resemble in some ways the way Silicon Valley Bank looked. Right? You know, you see some of the other names that got very quickly attached to them last week. But again, we'll have to see. It's all based on confidence.

LEMON: Well, it's going to be interesting to see what happens as we get closer to the markets and the day the banks start opening up, to see exactly what's --

SOLOMON: And some of them have actually opened up higher. I mean, some of them have actually been higher on this event.

LEMON: We're going to be watching that. The president's going to speak. There's going to be a lot to deal with with this.

Thank you, Rahel.

Thank you, Justin. We appreciate that.

And we're going to be covering this throughout the show as we wait for President Biden to speak in the coming hours.

COLLINS: Also over the weekend, history was made at last night's Academy Awards. We're going to break down the big winners, the big moments, the big performances.

(COMMERCIAL BREAK)

[06:22:04]

COLLINS: What a night. The 95th Annual Academy Awards filled with emotion and excitement, even without all the slap drama. "Everything Everywhere All at Once" sweeping the Oscars with seven awards, including a history-making win for actress Michelle Yeoh.

CNN also clinching its first -- our first gold statue last night. Stephanie Elam is live in Los Angeles with more. What a great night.

(BEGIN VIDEOTAPE)

HARRISON FORD, ACTOR: "Everything Everywhere All at Once."

STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): The Best Picture, living up to its name. "Everything" was everywhere at the Oscars.

MICHELLE YEOH, BEST ACTRESS WINNER: Never give up.

ELAM (voice-over): Michelle Yeoh winning Best Actress, making history as the first woman of Asian descent to win.

YEOH: For all the little boys and girls who look like me watching tonight, this is the beacon of hope.

ELAM (voice-over): Her co-star, Ke Huy Quan, won Best Supporting Actor.

KE HUY QUAN, BEST SUPPORTING ACTOR WINNER: Mom, I just won an Oscar!

ELAM (voice-over): Nearly four decades after becoming a child star in Indiana Jones, played, of course, by Harrison Ford. The two with an emotional embrace on the Oscars stage.

QUAN: My journey started on a boat. I spent a year in a refugee camp. And somehow, I ended up here on Hollywood's biggest stage.

ELAM (voice-over): Races that were too close to call before the show included Best Actor. HALLE BERRY, ACTRESS: Brendan Fraser.

ELAM (voice-over): Brendan Fraser winning Best Actor for "The Whale" after trading wins all awards season with Elvis' Austin Butler. For Fraser, it's a return to Hollywood's A-list.

BRENDAN FRASER, BEST ACTOR WINNER: There was a facility that I didn't -- I didn't appreciate at the time until it stopped. And I just want to say thank you for this acknowledgement.

ARIANA DE BOSE, ACTRESS: Jamie Lee Curtis!

ELAM (voice-over): Jamie Lee Curtis edged out Angela Bassett for Best Supporting Actress. The one-time scream queen, who got her start in the horror film "Halloween," thanked the genre fans for their decades of support.

JAMIE LEE CURTIS, BEST SUPPORTING ACTRESS WINNER: The thousands and hundreds of thousands of people, we just won an Oscar together!

ELAM (voice-over): CNN Films' "Navalny" won Best Documentary Feature.

DANIEL ROHER, DIRECTOR, CNN FILM "NAVALNY": I would like to dedicate this award to Navalny, to all political prisoners around the world.

ELAM (voice-over): The wife of Russian oppositionist Alexey Navalny speaking directly to her imprisoned husband.

YULIA NAVALNYA, ALEXEY NAVALNY'S WIFE: Alexey, I'm dreaming of the day when you will be free, and our country will be free. Stay strong, my love.

ELAM (voice-over): Last year's Will Smith slap was not ignored by host Jimmy Kimmel.

JIMMY KIMMEL, 2023 OSCARS HOST: If anyone in this theater commits an act of violence at any point during the show, you will be awarded the Oscar for Best Actor.

[06:25:10]

ELAM (voice-over): Kimmel joked, but the Academy did have a crisis team in place, a result of last year's slow response to the slap.

KIMMEL: If anything unpredictable or violent happens during the ceremony, just do what you did last year, nothing.

(END VIDEOTAPE)

ELAM: And another big question we had was who was going to present the Best Actress award, since that should have been Will Smith, since he won the Best Actor last year?

Well, Jessica Chastain did also win Best Actress last year for "Eyes of Tammy Faye." So that was a given. But they paired her with Halle Berry, who you remember won for "Monster's Ball," and until last night, was the only woman of color to ever win Best Actress. So obviously, very meaningful to have her up there to present the award to Michelle Yeoh -- Poppy.

HARLOW: Yes. So meaningful. So many meaningful moments. I know you haven't slept, so we will let you. And a little bit --

ELAM: Not yet.

HARLOW: You were great on the red carpet, Steph. And later on the program, we're going to have the director of "Navalny" join us. A huge, huge win for so many reasons.

All right. So let's move on.

COLLINS: All right. Let's talk more about what happened last night. Nischelle Turner is here. She's a CNN contributor and host of "Entertainment Tonight."

I mean, it was such an amazing moment as Stephanie just laid out. The biggest parts of the Oscars. But for "Everything Everywhere All at Once," it was, I mean, an incredible evening for them.

NISCHELLE TURNER, CNN CONTRIBUTOR: Yes, it was. I mean, they were up for 11 awards last night, Kaitlan. And they took home seven of the Oscars in the categories -- "Everything Everywhere All at Once," for the most part.

It was interesting that Stephanie was talking about the Halle Berry replacement for Will Smith. She told me, Halle Berry did on the red carpet last night, that she was going to be a mess if it was Michelle Yeoh's name that was called last night, because she understood the significance of that moment.

She understood how special it was, because she lived it. And you saw her, when she was giving Michelle Yeoh the Oscar last night, that she was in tears, as well. You know, it speaks to, you know, what some people call progress but also to think in 2023, there's only been two women of color in 95 years of the Academy to win Best Actress. It does show you there's till a long way to go.

LEMON: Isn't that amazing? We've been covering, you know, Nischelle, even when you were here at this network, Oscars So White. Right? And then this is a huge night for Asians and Asian-Americans.

And especially the moment that I related to the most, that moved me the most was when -- I hope I say his name -- Ke Huy Quan, when he said my 80-year-old mother is at home watching. He said, Look, Mom, I won an Oscar. '

I mean, you can't help but tear up at that moment and relate to it.

TURNER: Yes, I don't think there was a dry eye anywhere watching him. And we've been on this ride with him through award season and just seeing how emotional and grateful and honored he's been to be at the table, finally. I mean, it was, you know, it's been 30-something years. He said he's

been fighting, you know, to exist and to be an actor in Hollywood and to be seen. And now to finally have this moment means everything to him.

But so many of the actors and especially actors of color that I spoke with last night on the carpet were saying, Listen, we need this to be sustained. We don't want this moment and then to go back to what, you know, we've had in existence here.

We need this -- this commitment to diversity and inclusion and -- and fairness to be sustained all year through and to make sure that projects that are diverse and, you know, are wide-reaching are green- lit.

So that's really what everybody is thinking about. I think it was -- I thought it was a really nice night. I mean, I know some people said that this -- they thought the show was a little boring.

I thought Jimmy Kimmel was a standout. I thought he was a fantastic host. He kept it moving, had the right jokes at the right time. Did a few digs that, you know, had everyone laughing. So I thought -- I thought overall it was a good show.

LEMON: I thought it was particularly reaffirming, especially for Asian-American actors or just Asian=Americans in the country, considering I was in California covering the shootings there and the killings. And every -- all of the anti-Asian hate that has been going on in the country, especially since COVID, I thought it was a really important and reaffirming moment for Asian-Americans. And I hope that, you know, they feel it in this country and that everyone does.

TURNER: Yes. Absolutely. And I hope it's not a moment.

LEMON: Yes.

TURNER: That can't be (UNINTELLIGIBLE)

LEMON: Right on.

COLLINS: All right. Nischelle, thank you so much.

LEMON: Nischelle, looks like you got some sleep. Even --

COLLINS: Nischelle, I just --

HARLOW: She always glows.

TURNER Spackle after spackle after spackle.

COLLINS: We know that -- we know that trick very well. Thank you.

TURNER: Thank you, guys. Have a good one.

COLLINS: Also over the weekend, Mike Pence delivered his most blistering remarks yet about his former boss and the role that he played in January 6th.

LEMON: And new reporting. House Republicans making a big move as they ramp up their investigation of Hunter Biden. Democrats say they were kept in the dark.

(COMMERCIAL BREAK)

[06:30:00]