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CNN This Morning
Ex-GOP Governor Larry Hogan on the State of the 2024 Presidential Race; Collapse of Silicon Valley Bank Largest Bank Failure in U.S. Since 2008 Financial Crisis; Third U.S. Bank Fails in Less than One Week; President Biden to Give Speech Detailing Government Response to Bank Failures; Startup Business Owner Says He Used Personal Funds to Meet Payroll when Unable to Access Funds Deposited with Silicon Valley Bank. Aired 8-8:30a ET
Aired March 13, 2023 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
POPPY HARLOW, CNN ANCHOR: Good morning, everyone. Top of the hour. We're glad you're with us this Monday. Wow, what a weekend it was. Two different banks failing back-to-back. The Biden administration trying to ease panic and prevent an all-out financial crisis. The president will speak a little bit later this morning at the White House as the federal government steps in to protect and shore up America's banking system.
DON LEMON, CNN ANCHOR: We're watching that very closely as we look at live pictures of the White House. And we're going to talk to the CEO of a tech start-up after his company's primary bank suddenly collapsed. We're also going to speak with "Shark Tank" star and investment mogul Kevin O'Leary. How concerned should we be about the economy? Plus this.
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UNIDENTIFIED MALE: And the Oscar goes to -- "Navalny."
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KAITLAN COLLINS, CNN ANCHOR: That is well deserved as it gets. CNN's documentary on Alexey Navalny who is in prison in Russia took home an Oscar last night. The director is going to join us live to talk about this moment, what it means for Alexey Navalny, Putin's jailed critic.
HARLOW: We do begin, though, with the Biden administration trying to prevent financial contagion after two banks failed back-to-back in the last three days. A live look now at the White House where the president will speak this morning as the federal government takes emergency action.
Silicon Valley Bank collapsed on Friday. It became the largest U.S. bank failure since the 2008 financial crisis. Regulators also shut down Signature Bank based here in New York. We learned about that late last night. They said Signature Bank was on the brink of collapse and threatened the broader banking system. So at the direction of the president and the treasury secretary, the FDIC is now stepping in. They are guaranteeing that customers, depositors of both Signature and SVB will be able to get their money back starting today. The government is also insuring emergency loans to other banks in case they need a liquidity bridge.
Wall Street is very concerned. Regional bank stocks are tumbling. Take a look at shares of First Republic, off more than 60 percent in pre- market trading. There are big questions about other banks right now. Let's bring in senior White House correspondent M.J. Lee who joins us. So the president will speak in a little less than an hour. Do we know what he's going to say? Is this about just reassuring the American people this Monday morning, or are we going to hear new announcements?
M.J. LEE, CNN WHITE HOUSE CORRESPONDENT: Well, Poppy, that is certainly going to be the overarching goal, is to try to reassure the American public that there is no need for a panic, that there is not going to be some broader domino effect after we saw Silicon Valley Bank's collapse. We saw this all hands on deck effort over the weekend try to contain the fallout, and that's why we saw this dramatic announcement last night that said that all depositors will have access to their funds starting today, and that there's going to be a new emergency lending program created by the Federal Reserve so that other banks that are eligible can have access to these extra funds.
In his remarks this morning, which is expected within the next hour or so, we will probably hear the president echoing some of what we heard from top U.S. officials over the weekend as they try to be reassuring to the American public, saying that the U.S. economy is a lot more resilient now than back around the 2008 financial crisis, that the reforms that were put in place after that financial crisis will work, and just the reassurance that the federal government is committed to protecting in particular small businesses, because, remember, small businesses really made up a huge bulk of the depositors with Silicon Valley Bank.
The president said in a statement last night that he's going to hold everyone responsible for what happened accountable. So we'll see whether he guess into this in his speech in terms of who he finds responsible and what accountability looks like. But Poppy, I think it is very clear that in the coming days and weeks, there are going to be some very serious conversations about some of these financial regulations that were loosened and relaxed over the course of the last few years, and whether they need to be strengthened and brought back, clearly, given the fact that we've now seen three serious bank failures over the course of just one week, Poppy.
HARLOW: Yes, and that all fell within the size that was given more lax regulation after that vote. M.J. Lee, thanks very much.
COLLINS: Also this morning, we're getting new insight from actually inside Silicon Valley Bank. CNN's Matt Egan was speaking with employees who worked there, one who worked in asset management, and told him, quote, it was absolutely idiotic that the CEO publicly acknowledged the extent of the financial troubles before lining up support to ride out the storm. CNN's Christine Romans has been covering this all weekend, ever since this happened on Friday. M.J. is right, there will be a lot of focus on the rollback of regulations, but also the scrutiny on the Federal Reserve, and what are they going to do a week-and-a-half from now when they're meeting, because the interest rates is a major factor in all of this.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: So there'll be scrutiny on management of the company. And I think that's what Matt Egan was getting to there, that management of the company should have been able to raise $2 billion without sending the whole thing down the tubes, right?
So that's what the complaints are inside the company. This management should have been able to manage interest rate risk, which is how you run a bank, you manage interest rate risk, and they did not do that properly. And then what kind of pressure, to your point, does this put on the Federal Reserve? Goldman Sachs this weekend in a note to clients said they don't think the Fed will raise interest rates at all because of this, because there's stress in the banking system right now, and we know that this bank broke and other banks have broken because of the rapid pace of interest rate increases.
LEMON: Is that good, though, for consumers that they're not going to do that, that it doesn't look like it?
ROMANS: It is, unless inflation is a real bad problem and this delays their ability to get inflation under control. So it's a bunch of tough choices over at the Fed.
HARLOW: The reality is, Gary Becker, the CEO was also, until a few days ago, on the board of San Francisco federal reserve. Banks have to know how to manage interest rate risk. You have to know that if you're holding on to a lot of long-term bonds and securities, and the rates are lower when you're holding them, people are going to want ones with higher rates and your assets are going to be less attractive. You have to know that. And still, the question is, it could have such broad implications that it could dictate Fed policy because of what appears to be mismanagement.
ROMANS: One bank's management fatal flaw, fatal flaw of judgment could have implications for the entire banking system, and you're right, and the Federal Reserve. That's remarkable, isn't it?
HARLOW: That's a huge -- the only tool the Fed has to fight inflation may now be curved because of what this bank chose to do and not do.
ROMANS: Or the fed could choose to go ahead and raise interest rates and this could be all just a tempest in a teapot right here, and then they've solved the problem with SVB. But look, we've got stress in the banking sector today, no question. You've got major banks are down, pre-market trading. Some of these mid-sized regional banks are down a lot. First Republic is down a lot. First Republic, it's interesting, because it actually got some Fed banking this weekend and also backing from JPMorgan Chase. And I bank at First Republic and I got an email yesterday from the CEO who said, by the way, we have plenty of capital, everything is fine here, but people get nervous. The contagion is hard to measure. Contagion is really hard to measure in the banking sector. And I think that's why the White House was so careful to go with a muscular approach here this weekend, to try to prevent any contagion.
LEMON: Before we let you go, can I ask you about the potential acquisition of SVB, because they were asking people -- they were taking bids. Do we know where we are with that?
ROMANS: There was an auction yesterday. They did not get a match, I guess, the terms were not attractive enough for a bank to take it, but they did sell HSBC is buying the U.K. component of this company. So there is a deal that is on the table for that. We'll watch and see. The cleanest thing would be for another bank to buy this bank. But right now, the government is -- the government is running it. People, if you bank at SVB, your money is going to be available when it opens this morning, later this morning. So we'll watch all of that.
COLLINS: And also this morning, President Biden is going to come out and say the U.S. banking system is safe and secure, trying to reassure people for that panic and that contagion. Christine Romans, you've been on all morning. I feel like you're just here with us at the desk permanently. You're going to move in.
ROMANS: Lucky me.
COLLINS: Thank you, Christine.
LEMON: Thanks, Christine, and we'll be carrying the president live for you.
Meanwhile, start-ups and small businesses are barely hanging on as they wait to get more information on how they actually access or assess the funds from Silicon Valley Bank. The Biden administration promised that customers they will have access to their money starting today. Again, we're going to hear from the president in just moments, and again, we'll carry it for you live.
But I want to bring in now Jack Singh. He is the founder of the startup tech Avahi Incorporated. The company's primary bank was SVB, and Jack has already had to pay employees with his personal funds. Thank you for joining this. Sorry that you had to deal with this. I have to ask you, first off, have you checked? Do you have access to your funds yet?
JACK SINGH, FOUNDER, AVAHI INC: We don't. We're still waiting to hear back on how to access them, whether it's through Silicon Valley Bank account or the new entity that the government has created. We understand that they should be available today, but we don't know how to access them just yet. We don't have any instructions around it.
LEMON: At the moment, what are your concerns?
SINGH: I think the concerns are how soon we would be able to actually access and then move the funds to the accounts of our choosing. The other one is obviously, with this happening, what's the next bank, what's the right bank to pick so that we are not in a similar situation again as well. And then we have been in damage control internally, just talking to employees, keeping them aware of the situation with customers and vendors. And that's just the over the weekend stuff that we've been able to focus on. We haven't thought about the long-term repercussions of this just yet.
LEMON: Let's talk a little bit more about that, because I'm sure you're concerned about the seriousness, how serious this could be for your company. Will you potentially need to continue to dip into personal funds? Are you going to furlough or lay off employees?
SINGH: I think those are all the things that are top of mind right now. We have been fortunate enough right now to sustain the first payroll. But if we don't have access to the funds, that is a very real conversation that we will be having between that management team over the course of the next month or so. I think with what happened, it's just, we feel like it wasn't our responsibility as depositors to maintain faith in the bank, but it should be the bank's responsibility through sound judgment to take care of the funds that we deposited with them, in which Silicon Valley Bank failed to do so.
LEMON: So what do you say to SVB, if you had the opportunity to speak with them, someone who could hear what you had to say and make a difference in what's happening to you?
SINGH: I think -- I mean, we are here now. For us, it was really looking at more communication from them, once this happened, but also ensuring that whenever these employees going in the future, they learn from this and they don't let this happen again at different banks that they work at.
LEMON: This is a personal question, and I'm not sure if you can ask, generally, how much did you at SVB?
SINGH: We had substantially over the $250,000 limit, and that is where the concern was. But again, that fund -- those funds were there for us to do our day-to-days operations. And we are a profitable start-up, but again, at the same time, majority of those funds were sitting there for expenses. Being the nature of the startup is sometimes you have to sell your lunch to buy dinner. And we are in similar shape right now.
LEMON: Sometimes you have to sell your lunch to buy dinner, yes. What do you say to people who say that this is -- this is a bailout. Do you think it's a bailout?
SINGH: I've been having those discussions and defending that this isn't a bailout. It isn't bailing out the bank, it is bailing out the depositors, the hardworking depositors, the employees of those who are banking with Silicon Valley Bank. There are many people who are living paycheck-to-paycheck, and if this was delayed any further, I can't imagine what the ramifications for a lot of those focus folks would be.
LEMON: I understand that your son, who's six years old, offered to help you. Can you tell our viewers how he offered to help?
SINGH: Yes. We were, as the day happened on Thursday, I was stressing out, having a couple of conversations on the phone and my wife, and he was there at home -- he wasn't feeling well, so he had a day off from school, and he overheard me, he saw me stressed out. And I was about to head out of the house. He sort of ran inside his room and he has a small little wallet. He brought that over to me, the entire wallet, and he's like, hey, dad, this is a little bit of money for you, hopefully it will help you. And it was just touching, and I felt bad that I had to rush out of the house without acknowledging him properly, but when I came back, I did let him know that the money helped.
LEMON: Jack, thank you for that and thanks for bringing this home to our viewers just how personal it is for you and for many people around the country. Appreciate it. Good luck.
SINGH: Thank you.
LEMON: Thank you very much.
I think, Poppy and Kaitlan, what he said, sometimes you have to sell your lunch to pay for your dinner, and then the gentlemen you interviewed earlier who said, I'm just a toy store owner, I'm not an economist, that's real. That's the real stuff.
HARLOW: Yes. The kid, the six-year-old, my gosh, that ran to him to try to help him. This is what a lot of these companies are going through. But they're going to be OK thanks to this morning, the government stepping in.
Meantime, former Vice President Mike Pence made his strongest comments yet at this dinner in D.C. over the weekend about former President Donald Trump's role in the January 6th attack. How the former running mates back and forth could affect 2024. Former Maryland Governor Larry Hogan just announced that he'll be watching the race from the sidelines. And he's here in studio to talk about that and a lot more.
COLLINS: All right, this morning, former Vice President Mike Pence making some of the most blistering comments he has made so far about his former boss.
This was at a dinner in Washington, DC over the weekend. No cameras were in the room we should note. But Pence said about January 6 this, "President Trump was wrong. I had no right to overturn the election and his reckless words endangered my family and everyone at the Capitol that day. I know that history will hold Donald Trump accountable."
Just to give you a sense of how remarkable those comments are coming from Pence. This is what he said about January 6th back in 2021.
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MIKE PENCE, FORMER VICE PRESIDENT OF THE UNITED STATES: I know the media wants to distract from the Biden administration's failed agenda by focusing on one day in January. They want to use that one day to try and demean the character and intentions of 74 million Americans who believed we could be strong again and prosperous again and supported our administration in 2016 and in 2020.
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COLLINS: This several Republican candidates or potential candidates for the 2024 Republican nomination, including Pence and Trump are traveling around the country. They're speaking with primary voters.
Joining us now is someone who will not be in that pool, former Republican Governor of Maryland, Larry Hogan. He has said he is not running for the reelection.
I want to talk about that decision and what went into that, but on what Pence said. Do you think he is right that history is going to hold Trump accountable for January 6?
LARRY HOGAN (R), FORMER MARYLAND GOVERNOR: He is absolutely right. I've been saying this since January 6th, and I'm really glad that he came out and said.
I mean, I have a lot of respect for Mike Pence. I think he did the right thing on January 6th, and I'm glad he is now speaking out more strongly than he did before.
COLLINS: Some of the criticism is well, you know, he's not testifying -- he didn't testify for January 6th. He is far trying to not fully testify, give a complete testimony to Jack Smith, the Special Counsel.
HOGAN: I think it's really important that we have as much transparency as possible, and that we get to the bottom of it. But look, a lot of people have been afraid to say anything about it.
And I think the fact that Mike Pence is getting stronger and speaking out more is a good thing. And you know, I worked very closely with him the whole time he was Vice President, all during COVID as I led the nation's governors.
I think he's doing the right thing, and I'm going to be with Mike Pence in Iowa this weekend.
DON LEMON, CNN ANCHOR: But why the change -- sorry.
COLLINS: It sounds like you think he should testify.
HOGAN: I don't know whether he should testify or not. I'm not his lawyer and I don't know what the details of the request are, but I think it's good that he is very pretty strongly saying that Donald Trump should be held accountable.
LEMON: But why the change for him? I mean, Kaitlan was at the Gridiron Dinner and she heard the comments and she said the room usually it's ha-ha-ha laugh, laugh, laugh, and then everyone sort of -- were you at the dinner?
HOGAN: No, I've been there before, but I missed this one.
LEMON: So then, why the change for him considering what he said -- he fought the Special Counsel. He didn't speak to the January 6th Committee, and he also praised the media is my understanding from Kaitlan.
Why the change for Mike Pence, all of a sudden? You said he is getting stronger, but what does that mean?
HOGAN: Look, I think Pence has been one of the few that have been, you know, on -- he stood up pretty strongly on January 6th. His life was being threatened. He was in the garage of the Capitol, and then he came back and did his job, which, as people were chanting, "Hang Mike Pence," so not the first time he stood up, in my opinion.
But I don't -- why the morphine? But I think, it is now more and more people are starting to -- I have been saying this for two years, but more and more people are starting to say, this was wrong, we need to move in a different direction away from Trump and Mike Pence is one of those people.
POPPY HARLOW, CNN ANCHOR: Can we talk a bit about the direction you think the party should go. And Kaitlan anchored "State of the Union" yesterday and did a really fascinating interview with the name maybe not as familiar to many in the party as you, but Vivek Ramaswamy, who is an entrepreneur, who is well known in conservative circles, who just said that your party has just got it wrong on the vision. Here's what he told Kaitlan.
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VIVEK RAMASWAMY (R), 2024 PRESIDENTIAL CANDIDATE: And I think the opportunity for the GOP now is not just to complain about wokeness, or gender ideology, or climate ideology, but actually to go upstream and fill that black hole with the vision of American national identity that runs so deep that it dilutes these agendas to irrelevance and actually unifies us as a country.
And I'm running because I believe genuinely that I'm the candidate best position to actually deliver national unity by reawakening that shared American identity.
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HARLOW: I should note, he has written even books on wokeness, but that's the argument he makes that we -- some of the loudest voices, like Trump, DeSantis are focusing on the wrong things if we want to win.
HOGAN: Well, I agree with that completely. It's what I've been saying for eight years and it's what I spoke about at the Reagan Institute a week after the 2020 election. It is what I spoke about at the Reagan Library this summer.
We've got to focus on a hopeful, more positive vision for America. We've got to -- you know, successful politics is about addition and multiplication, it is not about subtraction and division. And our party has been doing a lot of dividing and subtracting.
And we haven't focused on the things that the average American cares about, and it is what, you know, my entire efforts have been about.
LEMON: But that's what is so confounding for people that you're not running.
HOGAN: Well, you know, there's a whole lot of people I think, that are moving into that lane that are starting to say those kinds of things that maybe they weren't speaking out as loudly as I was, but I'm glad they are now.
I said a couple of years ago, I said, I felt like it was in a lifeboat by myself. And it was the SS Titanic Trump was going by. More and more people are jumping off the boat. We now need a bigger boat.
HARLOW: You've ruled out running for the GOP nomination? You haven't totally ruled out an independent bid. It's very hard. I don't have to tell you that.
HOGAN: Yes. No --
HARLOW: But --
HOGAN: It's nearly impossible, and it wasn't something that I'm thinking about or really considering. But you know, there was a hypothetical, would you rule that out? It was like, well, you never know.
COLLINS: So what is your role in 2024? Are you a foe to Trump? Or are you just --
HOGAN: I'd like to make sure that the party does not nominate Donald Trump, because I think that's really bad for the Republican Party and bad for the country, and probably bad for Donald Trump.
So I'm going to try to see if we can't find the best possible candidate that can appeal to a broader group of people, and that not only can win a primary, which everybody seems to be focused on, but that can have a message that appeals to a broader group of people and could actually, you know, win a General Election in November.
LEMON: It seems that more people who are in the party who are trying to sink, what did you call it, the SS Trump, right, who are trying to sink the SS Trump, right, rather than keep it afloat as had been previously in recent history.
So then, who do you think among the group now or potentially who would be the best? Who has the best chance?
HOGAN: That's a great question, nobody's really risen up in my opinion. I can't point to one person and say, I'm really excited. This is the one, but we have a long time to play out.
First of all, we don't even know who's going to run. There's only a couple of candidates in the race and we've got a long time until the first primary takes place.
HARLOW: How do you feel about the Ron DeSantis approach vis-a-vis private corporations? I'm just fascinated by the fact that is the GOP now, you know, the company of big government and let's get entangled with how corporations operate or is that just a one off with we want to punish Disney for their stand on --
COLLINS: Which Vivek criticized.
HARLOW: Yes, yes. I mean --
HOGAN: Well, I mean, I spoke out against a couple of those steps that Ron DeSantis took. I mean look, he has got every right to have its opinions. I think he's out there making a case. He is capturing a lot of attention.
But I don't -- it didn't seem like, you know, small government conservatism to have a governor ordering businesses to agree with him, or he's going to put them out of business.
COLLINS: Can I ask you one thing before you go about Nikki Haley? She is on the campaign trail. She is in the race. She suggested raising the retirement age for beneficiaries, people who are in their 20s now says that they should raise it. You agree with her?
HOGAN: I didn't hear her say that. But obviously, entitlements are an issue that they're going to have to debate over the next year because it is something we've got to figure it out, but no, I'm not sure I agree with that.
COLLINS: You don't agree with that?
COLLINS: Why not?
HOGAN: I just don't think it's the right thing to do.
COLLINS: All right, well, that was a fascinating conversation. I mean --
LEMON: That answers that.
COLLINS: When you said enough, we've leave it there.
HOGAN: All right.
LEMON: I think, Governor, it's interesting that you know, people like you who are considered to be sort of traditional conservatives outside of the MAGA wing of the party, it is disappointing to you know, moderates, people who are in the center that you're not running.
HOGAN: Well, thank you very much. I say, I come from the Republican wing of the Republican Party. We're going to hopefully get back on track.
COLLINS: We'll find out
LEMON: Yes, thank you, Governor.
HARLOW: Thank you, Governor Hogan.
All right, well, this is a very exciting night for all of us here at CNN.
If you were watching the Oscars, you saw a CNN first. The film, "Navalny" has won an Academy Award for Best Feature Documentary. Fresh off the win, we will speak with the director, Daniel Roher. Look at him.
LEMON: That's not even a humble brag.