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First Move with Julia Chatterley
Soon: European Central Bank to Announce Rate Decision; Chinese Billionaire Charged in Alleged $1B Fraud Scheme; Hooper: Hike Shows Inflation is ECB's Main Concern; Tusk: Social Media Platforms should Inform Regulators of Spike in Online Bank Chatter; Fighting to end the Business of Human Trafficking; European Stocks Hold onto Gains after ECB Hike. Aired 9- 10a ET
Aired March 16, 2023 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
JULIA CHATTERLEY, CNNI HOST: A warm welcome to "First Move", this hour where it's all about the ECB wait and see the European Central Bank in the
unfortunate. Let's call it that position of being the first to make a rate decision since the collapse of U.S. Bank, Silicon Valley Bank. That
announcement is expected in around 15-minutes time.
Just remember a week ago we expected them to hike half a percentage point today. Well, it's anyone's guess though Lagarde --, aka not moving at all.
Also risks sending a message those policymakers perhaps fear worse is to come. So that's the balance.
Christine Lagarde's choice of language with them become incredibly key and other measures too perhaps remember they have all sorts of tools that they
can use to address financial instability. So it's a high stakes decision that could give at least a hint to how the U.S. Federal Reserve will act
next week too.
I'm sure there have been plenty of transatlantic phone calls already. Now as we wait U.S. futures I'd call them choppy the DOW and the S&P losing a
little bit of ground here you can see the S&P futures right now down some four tenths of 1 percent key regional banks in the United States once
again, under fresh pressure.
Bucking that trend, though Europe solidly higher driven by improvements in some of the major banks following news that the Swiss National Bank is
lending Credit Suisse some $54 billion in emergency funds. Now shares of Credit Suisse are currently higher by more than 20 percent.
That's a fresh look at that bouncing from Wednesday's all-time lows. The company's debt securities are also on the rise too. The cost of buying
insurance against a Credit Suisse default hit record levels in the previous session too, a sense of the alarm that was out there.
Now after a session of wild moves to across global government bonds, yields on Wednesday, and things are calmer certainly in Europe in the United
States. 10 year yields still easing too, you can see that level there 3.4 percent or 3.4 and a quarter. Now we've seen a dramatic drop in bond yields
this week that overshadowed actually the volatility that we've seen in stock markets too.
Bond market investors, and now predicting that the Federal Reserve cuts rates towards the end of this year with the Fed forced to unwind some of
its recent hikes destabilize the banking sector. We're going to discuss whether or not they can do that in the face of inflation wants to get to
this hour.
But let's bring you up to speed with the latest on Credit Suisse. And Clare Sebastian joins us now. The silence from the Swiss National Bank yesterday
was deafening. And we saw the ripple effect across the European banking sector.
The message saying look, you can take a lot of money on loan from us seems to have stabilized things. And it also says that the Swiss National Bank
believes that Credit Suisse is still solvent. It's still viable and its important message.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, I mean, similar to what we got in the States, they came out and said like the system we think is stable.
Credit Suisse has the right capital ratios, sort of soothing words, but we're here if they need us. And of course, they did come in and take out
that almost $54 billion credit line.
They were quick to point out a that they were doing this "Preemptively strengthening liquidity" is the phrase they use trying to make it clear
that things are OK, they're just doing this. Just in case they also took pains to distance themselves from what was happening in the United States
with Silicon Valley Banks and Credit Suisse is conservatively positioned against interest rate risk, but there are lingering fears both in the
banking sector as a whole, Julia.
I think we can show you those European bank stocks. The rally that we saw first thing this morning has cooled off a little bit today. As you can see
some of them even dropping a little bit lower perhaps also ahead of the ECB meeting their fears that after three banks, essentially going under than
the United States.
One big bank in Europe needing Central Bank intervention that there might be more to come more vulnerabilities to emerge in the banking sector so
that's one thing as to the future of Credit Suisse. There are significant concerns there.
This is a bank that, of course, had major problems, even before the very unfortunate timing of both its comments on its financial report on the
material weaknesses in its reporting, followed up by the comments from its biggest shareholder that they're not going to put him any more money and
all of that coming off the back of what happened in the U.S.
But there were problems before and there are people raising big concerns about this. Now JP Morgan Analysts think that now the most likely scenario
for Credit Suisse is that they actually get taken over.
[09:05:00]
Most likely they say by their big Swiss rival UBS in their report they say, we see SNB liquidity support as indicated last night as not enough and
believe CSG, Credit Suisse Group situation is about ongoing market confidence issues with its IB, Investment Banking strategy, and ongoing
franchise erosion.
They continue in our view, status quo is no longer an option. So the given that drop in market confidence, they believe that there will essentially
isn't much chance that Credit Suisse can complete its turnaround on its own, Julia.
CHATTERLEY: Yes, ultimately some kind of resolution to this business and perhaps breaking it up into pieces and see what happens then watch this
space. So we either ring fences or doesn't. And it obviously ties to the next part of this conversation with which is in the face of higher
inflation than the United States.
So far recession resistance in the Eurozone, in particular relative to the United States, but also having done less work on rising rates. And what
does the ECB do today?
SEBASTIAN: Well, the ECB finds itself in a very unfortunate position, Julia, is having to trail blaze of the back of this, you know, essentially,
perceived banking crisis on both sides of the Atlantic. One analyst I spoke to this morning said it would have been much better if the first out of the
gate was either the Bank of England or the Fed because they're much further along in their tightening cycles.
So it would have been less sort of jarring if they were to suddenly pause, the ECB still playing catch up, and of course, facing 8.5 percent inflation
in the euro area. I think, you know, there was a well telegraphed half point rate rise for this meeting.
I think many believes that will now be moderated to a quarter point, of course, doing nothing might also raise concerns about what does the ECB
know about the financial system that we perhaps don't.
So quarter point would be seeming to be acknowledging the situation in the banking sector, while also you know, tackling continuing to tackle
inflation? And of course, we will also hear from Christine Lagarde who will be needed to put across some soothing words about how the ECB will provide
a backstop to the banking system.
If things go wrong, the Chief Economist of capital economics this morning, saying that it would be best if there was no mention, he said, of
conditionality or moral hazard, please. So definitely looking out for her language and the way she presents this in that Press Conference.
CHATTERLEY: Yes, it's interesting, isn't it? It would be wow, if they went half a percentage point, what are they doing? And if they went, no, it's
wow, what do they know that we don't? So perhaps the middle ground here is the safest option. Let's hope for trailblazing to use your word rather than
going down in flames.
Clare Sebastian, we should wait and see that decision momentarily. Thank you very much for that. In the meantime, U.S. Treasury Secretary Janet
Yellen, reassuring Americans that their bank deposits are safe she's set to tell the Senate Finance Committee the U.S. banking system remains down
after decisive action by Officials.
Matt Egan joins us now. Matt, sort of tell that to some of the regional banks that are seeing market pressure, certainly pre market today. Do we
believe her? Do individuals believe her? And does that conditional, at least at this stage on the size of deposit that you have in U.S. banks
because that matters?
MATT EGAN, CNN REPORTER: Yes, you know, Julia, all good questions. And the fact that we're seeing regional banks in the United States come under
renewed pressure this morning does signal that this anxiety continues. I mean, first Republic Bank, that's a large regional bank based in San
Francisco down double digit percentages.
Western alliance, also down pack west, all of these stocks coming under a lot of pressure and that's despite the fact that the Treasury Secretary is
out there this morning again, trying to reassure people that the American banking system is sound.
The key line from Janet Yellen has prepared remarks she says, "Americans can feel confident that their deposits will be here when they need them".
And she pointed out that the deposits even at Silicon Valley Bank, the California lender that collapsed on Friday, even those deposits were
available on Monday morning when business opened.
But we know that the FDIC, only insured up to $250,000 per borrower per bank but the fact that the federal government came in and rescued above
that limit, right? They rescued the uninsured depositors, not just at Silicon Valley Bank, but also at Signature Bank, the New York Company that
went under this weekend.
You know it does imply, Julia, that they're willing to help depositors above an insurance limit, if that's what it takes to restore confidence in
this banking system.
CHATTERLEY: Yes, not explicit, but implicit as a result, and what you're effectively saying is, every single bank therefore in the United States is
now considered systemic and able to shake the system.
[09:10:00]
Well, good luck doing stress tests on every single bank in the United States, Matt. It's very complicated but confidence is the most important
thing at this point and certainly the point you're making too. Great to have you with us thank you.
All right, echoes of Top Gun next, watch this newly released video, she was part of what happened at least between a U.S. drone and a Russian fighter
jets over the Black Sea on Tuesday. It shows a Russian fighter dumping fuel as it approaches the drone, which later crashed into the sea.
Just keep watching this. Now, Russia denies its pilots acted recklessly. The Pentagon says the whole incident lasted 30 to 40 minutes. Natasha
Bertrand is at the Pentagon for us. Watching that whole thing you sort of see the screen pixelate and disappear?
So I think despite the differences of opinion, let's call it that on what happened earlier this week. We know some kind of collusion took place. I
guess what we don't know at this stage, Natasha, is whether it was deliberate or not.
NATASHA BERTRAND, CNN NATIONAL SECURITY REPORTER: Exactly right, Julia. So what we are hearing from the Chairman of the Joint Chiefs of Staff, Mark
Milley is that it is still unclear to the United States whether that direct impact on the jet was actually on the drone, I should say was deliberate.
They do know, however, that the reckless behavior that they saw the pilot take in that instance, getting really close to the drone dumping fuel on
it, that was deliberate.
And that was extremely dangerous, the U.S. has said and it could have caused injury or damage to the Russians and then the Pilots of the Russian
jet as well. And so the U.S. now releasing this new video, to kind of directly contradict what the Russians have been saying, because the
Russians have been saying in recent days, that their jet did not act recklessly that it did not make direct contact with the drone.
Well, now we are seeing in this video that in fact, it did. And of course when we look at the video, we can see that moment of impact kind of where
the video cuts out and you see it all pixelated that is the moment of collision when the video reemerge is you can see that the propeller on the
back of the drone has actually been damaged.
And that is the key proof that U.S. Officials are pointing to noting that the fighter jet made direct contact with that drone. Now this is all very
significant, because it is the first time that a Russian jet and an American drone have made direct physical contact with each other over the
course of the Russian invasion of Ukraine.
And it is important because the Russians and the Americans are operating in this space very closely in this region on a regular basis. And so while the
Russian jets have tried to intercept American systems like these drones in the past kind of flying alongside them, never before have we actually seen
this level of aggression by a Russian pilot.
And I should note that we are told that the Russian Defense Ministry Officials in the Russian Defense Ministry actually did explicitly task.
These pilots with harassing this drone, making it clear that this was not just the behavior of a rogue pilot here. This was a deliberate tasking by
the Russian Ministry of Defense, Julia.
CHATTERLEY: Natasha Bertrand, thank you for that report. Now on to an important milestone that's how the South Korean President's office
described a meeting with his Japanese counterpart in Tokyo.
It was the first such visit in 12 years and comes as the two countries face mutual growing security threats from nations like China and North Korea.
The latter on Stark display just hours before the trip when North Korea fired a long range ballistic missile into the sea to the east of the Korean
Peninsula.
And the Chinese billionaire has been arrested in New York and charged with swindling more than a billion dollars from his followers. Guo Wengui is
critic of the Chinese government who is exiled in Manhattan. He's an Associate of Former President Donald Trump's Adviser Steve Bannon. Selina
Wang reports.
SELINA WANG, CNN CORRESPONDENT: Exiled Chinese billionaire and proclaimed dissident Guo Wengui was arrested on Wednesday. U.S. federal prosecutors
allege he defrauded thousands of online followers out of more than a billion dollars through complex investment schemes.
He's charged with taking advantage of them by promising them outsized returns, if they invested in its Cryptocurrency media and other companies.
He's also known as Haoyun, Kwok and Miles Guo. The U.S. Attorney Damian Williams said "Kwok is charged with lining his pockets with the money he
stole, including buying himself and his close relatives, a 50,000 square foot mansion, a $3.5 million Ferrari, and even two $36,000 mattresses, and
financing a $37 million luxury yacht."
Now he's also known for being close to Former Donald Trump Adviser Steve Bannon. In fact, Bannon was arrested in 2020 on Guo's yacht on unrelated
fraud charges.
[09:15:00]
In China, Guo reportedly oversaw a property empire and while facing charges from the Chinese government fled the country and has been living in the
U.S. since around 2015. He's been a staunch critic of the Chinese government for years. Guo, founded two nonprofit organizations called the
Rule of Law Foundation and Rule of Law Society, which Prosecutors allege, he used to mass followers who aligned with his self-proclaimed policy goals
when it comes to China.
And a bizarre twist, a person familiar with the matter told CNN that a fire broke out in his apartment when the FBI was on site executing a search
warrant earlier Wednesday. A spokesperson for the U.S. Attorney's Office said the cause of the fire is under investigation. CNN has also reached out
to Guo's lawyer for comment. Selina Wang, CNN, Beijing.
CHATTERLEY: And breaking news the European Central Bank deciding to raise interest rates by half a percentage point. Anna Stewart joins me now. Anna,
wow, is all I can say the European Central Bank deciding to send the boldest message that they can and perhaps also that, hey, we've got other
tools, if there's challenges in the banking sector, inflation matters more right now.
ANNA STEWART, CNN REPORTER: Which is really interesting, I have to say the bets this morning was that this 50 basis point increase was probably off
the cards. And let's be fair, this was actually very much signposted in February at the last meeting. It's probably the most baked in forward
guidance we've ever got, is that the Governing Council was planning to raise rates by half a percentage point.
But given the turmoil we saw in the markets over the last couple of days, particularly Credit Suisse, there was a feeling that they wouldn't go whole
hog. And perhaps they would consider the mood music and consider the pressure and the vulnerabilities that high interest rates are having on
bank balance sheets, and at least the concern of investors maybe pull that back.
I was reading bets for 40 basis points or even having it to just 25. So I asked, I'm quite surprised that they've continued with half a percentage
point, but it does go to show inflation is what they care about right now and why it's fallen since October high, but it's still pretty sticky, isn't
it?
CHATTERLEY: Yes, it's going to be fascinating. I'm just going to have a quick look, when we can pull them up at how markets are reacting, how the
Euro is reacting, even how the banks are reacting, because as we were saying, and I mentioned earlier, it's sort of wow, we're on that wow, on
the top side, what are they doing here?
It does send a stop message, but I also do think we have to sort of pause here as well, and reiterate the fact that look at what we've seen in the
United States where they provided that facility for banks that are holding government bonds that have lost value as a result of the rate decisions to
get access to liquidity from the Federal Reserve.
The ECB has all sorts of policy tools like this, and it's going to be fascinating to hear what Christine Lagarde says in what around 30-minutes
time because the choice that she was going to have to make if she decided to go or this the European Central Bank members decided to do.
Less here was that they were going to have to be verbally incredibly stringent about their plans to tackle inflation going forward, because it
remains such a huge challenge. Yes, there you go, you see. So we've lost some ground across these European markets, but still managing to hold into
positive territory. Bold is what I - that, Anna.
STEWART: I have to say I think going ahead with this rate hike as planned has just raised the stakes as to what Christine Lagarde is going to say in
half an hour. What is he going to say to reassure investors, reassure the sector? I think we're going to have to have an almost, you know, we'll do
whatever it takes moment for the ECB just to draw a line under all of this.
CHATTERLEY: Yes, I think she's going to say that we're well capitalized. This is not 2008. We're in a very different situation. We're prepared for
trouble; we will provide support that we need to, but right now, I on the ball here and that is we have an inflation problem. Our interest rates are
lower than what we see in the United States and we will proceed fascinating.
Anna, thank you for that! We'll have more on the European Central Bank's decision after the break with Kristina Hooper, the Chief Global Market
Strategist at Invesco, just to reiterate the European Central Bank deciding to promise fulfill what they promised which was a half a percentage point
hike. More to come, stay with us!
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[09:20:00]
CHATTERLEY: Welcome back to "First Move", as we've been reporting the European Central Bank has spoken loudly. The European Central Bank
announcing what it signaled, let's be clear an interest rate hike of half a percentage point. However, investors and many analysts expected them just
to raise rates by around a quarter of a percent.
Given the backdrop the ongoing bank uncertainties some even suggesting that the ECB might pause this month and let some of the dust settle perhaps
here's the market reaction. U.S. stocks still on track for lower open European stocks now tilted to the downside.
Yes, a while moment perhaps expected here too. Once again we're closely watching the action in U.S. regional banks whose shares have suffered
extreme volatility after the Silicon Valley Bank collapsed last week. As you can see they are losing ground once again today.
Kristina Hooper joins us now. She is the Chief Global Market Strategist at Invesco. Kristina, what do you make of that because you're one of those
that was expecting them to ease back a bit here and just hike by a quarter?
KRISTINA HOOPER, CHIEF GLOBAL MARKET STRATEGIST AT INVESCO: Well, I think it is certainly a bold statement and it really underscores that the ECBs
focus remains inflation, but that's a bigger concern for them than financial stability. And I think the argument is that there are other tools
to manage financial stability, and I think the ECB was likely emboldened by the securing of the loan from Swiss National Bank for Credit Suisse.
Having said all that, I think it would have been better if the ECB had taken a softer touch, a softer approach today and hiked rates 25 basis
points. I think it probably would have been more dangerous, though to not hike rates at all, because that would have suggested that the ECB thinks
this is a real crisis. And that could have caused a lot of nervousness and fear in markets.
CHATTERLEY: So we've got a long memory for these things. Perhaps what's the danger that we look back on this rate hike at this moment in time and think
it's got odes of 2007? Where rate hikes were taking place at the wrong time?
HOOPER: Well, I think that Central Banks, in general have a history of making policy errors, right, and not cutting at the right times. Although I
wouldn't draw a lot of parallels between now and 2007 I think what we're seeing is still fairly individual idiosyncratic situations, some difficult
business models for this environment.
However, that doesn't mean that there isn't stress on the system created by a massive amount of rate hikes in a short period of time. So I think we're
getting to the point where Central Banks need to tread carefully, and I certainly hope that the Fed is not going to follow suit and hike rates 50
basis points next week.
CHATTERLEY: --my next question. I was just reading from some of the statement and to your point about the differences between now and what
we've seen in the past. The Euro era banking sector is resilient with strong capital and liquidity positions, and they have a policy tool kit to
help which goes exactly to your point.
[09:25:00]
But does it argue when we jump to the United States that perhaps the Federal Reserve looks at the situation and says, we can do quarter of a
percentage point too?
HOOPER: Well, I would be comfortable with the Fed hiking rates 25 basis points. I don't think that's a bad thing. I would prefer a pause, but I
think it's when we get into these jumbo rate hikes where we press our luck, where we increase the chances of a financial accident, because it's
happening so hard and so fast.
I mean, if you think about it, the Fed hiked rates back before the global financial crisis between 2004 and 2006, about 400 basis points over the
course of 24 months. What we've seen in the most recent year is the Fed hiking rates about 475 basis points of course of 10 or so months.
That's a lot for an economy to take thus far, it's been quite resilient. But I think as we move forward, the Fed is pressing, it's luck. And I would
era on the side of caution. I'm hoping we're close to a pause. It can be a conditional pause and the Fed certainly wants to be data dependent.
But I do think that there is it's appropriate to come to the end of this rate hike cycle and see how much, how well the economy digest what has been
just a rapid increase in rates over a very short period of time.
CHATTERLEY: Yes and the economy has been resilient. But what we're clearly seeing is that indigestion issues in in the financial plumbing, and that's
the situation and part of what they have to weigh up at this moment.
Kristina, on that point, do you think they've done enough because we are still seeing pressure on some of these regional banks, has enough been done
to underpin the system in your mind, because that's also what the Federal Reserve has to be obfuscating itself at this moment?
HOOPER: Well, I think enough has been done thus far. What I'm really encouraged by is that we are 3 for 3, when it comes to policy responses to
many crises, right? We had the Bank of England stepped in very quickly after the U.K. gilt yield crisis in September in October of last year.
We had the U.S. government step in quickly over the weekend, to address the issues in that mini crisis. And now we've had the Swiss National Bank step
in. So I think that the environment is one in which there's a level of confidence that has been created, that policymakers are far more proactive.
They're much more sensitive to the likelihood of a financial accident, and are going to step in quickly.
And I think that's all we need is to have that assumption that will continue to see that as problems arise, because this is unlikely to be the
last problem created where we're probably going to see other shoes drop other financial accidents. But I think there will be a comfort that markets
and investors find in knowing that policy makers are very sensitive to this and are willing to be proactive.
CHATTERLEY: Yes, makes perfect sense to me. Kristina, great to have you on! Kristina Hooper, Chief Global Market Strategist at Invesco just a reminder
to our viewers, the European Central Bank throwing caution to the wind at this moment and hiking by half a percentage point plenty more analysis to
come, stay with us.
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[09:30:00]
CHATTERLEY: Welcome back to "First Move"! Now our next guest argues that Silicon Valley Bank's sudden collapse shows that financial regulators are
unprepared for bank runs in the age of social media. And he suggests platforms like Twitter and Instagram should be required to flag major
spikes in activity concerning banks and financial institutions allowing regulators to get ahead of possible problems faster.
It's an interesting concept. Joining us now is Bradley Tusk. He's the Founder and CEO of Tusk Ventures. Bradley always fantastic to have you on
the show! You actually wrote an Op-Ed in Fortune Magazine, which I read and loved. And you just pointed out the sheer volume from different sources of
social media mentions of Silicon Valley Bank. Let's just start there because some of these numbers are astonishing.
BRADLEY TUSK, THE FOUNDER AND CEO OF TUSK VENTURES: Yes, so Silicon Valley Bank my guess is most people watching this right now had never heard of
Silicon Valley Bank and that's with good reason. It was a very specific bank, aimed at one very specific industry.
And then all of a sudden, everyone heard about Silicon Valley Bank. One measure show that mentions on social Silicon Valley Bank went up by over
86,000 percent or if you use the Google Analytics Scale, Silicon Valley Bank normally averages about zero at the peak, they were at hundred.
So they were the most talked about issue on social media. So clearly, what we've seen is in the age of social media, a bank panic takes on a different
pace and a different approach than it did in the past. We've got to be ready for that.
CHATTERLEY: Yes, I mean, its two things here it is the use of social media, clearly prolific in the sector that we're talking about, too, with the tech
sector, which is where high exposure was. But also, I think over the past 10 years, the change in digitization.
The fact that we can pull deposits or send wires or do what we want at the touch of a button, the combination of those two things crazy. What you're
saying is you want social media to alert the authorities if they see a spike, and I'm talking in a far smaller spike in activity, then what was it
86,000 percent even just a 15 percent spike Bradley it could make all the difference?
TUSK: Absolutely. I mean, look, this is a proposal to me is a no brainer, right? All I'm asking is that when your mill to make a list of a couple of
hundred financial institutions that we think you know, if they were to fail or be a huge problem for the economy, and say it social media activity
about these platforms, spikes by like 10 to 15 percent.
All that has to happen is Twitter, YouTube AND TikTok call this person at the FDIC and let them know. From there on it's on the FDIC, but perhaps by
finding out a little sooner, they can act faster and that may help stave a bank run. I'm going to help save layoffs. It helps to save all kinds of
problems. So why not do this?
CHATTERLEY: Yes, hours never mind one day could make a huge difference in this kind of situation. And on a practical basis as well, it would surely
be very easy to separate positive mentions on something from negative mentions on something to isolate that too. How often do you think the
social media companies would be to this?
[09:35:00]
TUSK: Look, they seem to resist any attempts of any kind of regulation at all. But I think given that they are so widely hated in Washington and in
state capitals, and quite frankly, by parents, including me, and I have two teenage kids, this would be an easy gift to say, you're absolutely right.
We could help a bunch of people here maybe stop some problems as it cost us anything. So they should embrace it. But embracing it would imply that
Google or Meta, or TikTok are actually good at politics and we get to see any evidence of that so far.
CHATTERLEY: You're super well connected, have you spoken to anybody about this and had positive feedback?
TUSK: Yes. I've been talking to legislators and regulators, both at the state and federal level about this idea. And I think no one thinks that
it's sort of the most important thing to do in the immediate aftermath of SVB.
And I get that, but when the smoke clears in a couple of weeks, this is an easy thing to move forward. So I think we'll see support from it on the
government side. And my hope is that the platforms are smart enough to recognize that this is a no brainer and they should be in support too.
CHATTERLEY: Yes, and in the cold light of day, perhaps far easier than broadening out stress tests and legislating for that and which banks were
and how? So I have to say I'm with you on this. I want to talk to Bradley Tusk, the venture capitalist and someone who in intrinsically understands
the sector that we're talking about, and the implications of what's just happened.
We had one startup CEO talking to us earlier this week. And he said, look, a week ago, Silicon Valley Bank was the gold standard and actually, if you
didn't bank with them, investors would sort of look at you and say why aren't you investing with them, sort of what they know? And why did they
turn you down? What are the implications? And how did you behave as an individual as well when you saw what was happening?
TUSK: Yes. So look, to be clear, we had our money at Silicon Valley Bank as a venture capital fund, but most portfolio companies did as well. And it
look, it did make sense, because Silicon Valley Bank was very good at providing specific services needed by venture capital funds, and by tech
stocks.
And so it really all made perfect sense until all of a sudden, it didn't. And so there are a few questions here. One is, you know, should our
industry have been more aware of the overall financial conditions of the bank that we all use? So we could have seen this coming sooner, perhaps by
the time that people in D.C. started talking about it, the panic had already begun.
And two the banks that are now picking up all these accounts and by the way, this is a great opportunity for Chase for Citibank, for Bank of
America, Wells Fargo, will they step up and provide the kinds of services that VCs need the tech startups need that they hadn't done before? But now
there's a whole new ecosystem that they will hopefully fill.
CHATTERLEY: Yes, the danger it is a hollowing out of the midsize banks, that people who've got deposits less than $250,000 stick with the smaller
banks. Everybody else, to your point goes to some of the bigger ones. And that means less competition.
And that means perhaps tighter financial conditions. Are there going to be innovation consequences do you think for this, Bradley? If this is what we
see growth consequences for these businesses?
TUSK: Absolutely, a couple of things. So first, I thinking we ought to consider raising the limit from $250,000 for an individual, of course, that
makes total sense. But most businesses can't run their business with less than $250,000 in their checking account, every time I have to make payroll
any more money, right?
So by definition, the rule we have is in no way, you know, correlated with what businesses actually need right now. Second, you know, had the Fed let
Silicon Valley Bank go down, have to start from the country might have gone out of business, you talked about a hit to the innovation economy.
These were all the new ideas come from these were all of the new technologies come from. And while most of those companies won't succeed, a
few of them will be the next Amazon, the next Apple and employ hundreds and thousands of people.
And thank God, we didn't lose all of them. But even now, look, we have not written a check to a startup since all this happened, quite frankly, we've
barely even thought about it, because we've just been dealing with this.
So even the pace of funding new startups in the last week, or so has plummeted simply because everyone's been dealing with a crisis and, so if
we want to keep the innovation economy going, we need to have stability in the venture capital sector.
CHATTERLEY: You know critics very quickly if the sector would say that, perhaps are knocked out some of the irrational exuberance in the sector,
Bradley what would be your response to that?
TUSK: Look, first of all, it's already been knocked down, right? You know, venture funding has been plummeting over the last year and a half
valuations have fallen. Venture backed the veteran Crypto have absolutely plummeted. So that's already happened. They're just not paying attention.
The second is there seems to be a real lack of understanding among the critics of this decision between depositors and investors. If you're an
investor when I invest in something which I do for a living and if it goes bad I took the risk and I live with the consequences of it and that's my
job.
[09:40:00]
You deposit your money in a bank, that's all the money that circulates that powers the entire economy. You know, I can't keep it under my mattress. And
if I did, and everyone else did, the entire economy would collapse. So calling it a moral hazard to not make depositors whole just shows a
fundamental lack of understanding of how economics work.
CHATTERLEY: Yes. Putting your cash in a bank should not be considered an investment decision.
TUSK: Yes, right.
CHATTERLEY: I'm going to get yelled out for keeping talking to you. Bradley Tusk, great to chat to you, as always!
TUSK: Great. Thank you.
CHATTERLEY: The Founder and CEO of Tusk Ventures. We'll speak soon. Thank you. All right coming up, after the break spelling out what freedom means
to them children in Lagos, Nigeria, getting into the spirit of "My Freedom Day" we'll hear one charities fight against human trafficking, that's next.
(COMMERCIAL BREAK)
CHATTERLEY: Today is "My Freedom Day". CNN is uniting young people all around the world, and the day of action against human trafficking and
modern day slavery. Just take a listen to the views of these students in West Africa.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I think it's important to raise awareness about human trafficking because by raising awareness, people will be able to understand
what exactly it is and how to recognize it. And this can stop human trafficking in general.
UNIDENTIFIED MALE: My Freedom Day is important because it raises awareness about modern day slavery resulting in governments being persuaded to pass
meaningful legislation.
UNIDENTIFIED FEMALE: People should protest for the people who work without pay.
UNIDENTIFIED MALE: I think child labor should be eradicated in all countries.
(END VIDEO CLIP)
CHATTERLEY: Now while human trafficking is illegal in every country, it still happens all around the world. According to estimates from the Charity
United Way around 50 million people are locked into forced labor, commercial sexual exploitation and forced marriages. And one in four of
those victims are under the age of 18.
But why is this so difficult to break? Well, because the sad fact is human trafficking generates an estimated $150 billion of profit per year for
criminal gangs. Mara Vanderslice Kelly is the Executive Director of United Way's Worldwide Center to combat human trafficking.
[09:45:00]
Mara, thank you so much for joining us! They're extraordinary numbers. I think one of the things that leapt out at me from just looking at your
website and the work that you do is something that you said it's a crisis around the world, but it's also around the corner. It's close to all of us.
And it begins in vulnerable communities. Just talk us through that?
MARA VANDERSLICE KELLY, EXECUTIVE DIRECTOR OF UNITED WAY WORLDWIDE CENTERS TO COMBAT HUMAN TRAFFICKING: Thank you so much. Good morning, and thanks
for having us. Yes, exactly as you've said, human trafficking is a human rights crisis that happens all around the world, in every country in the
world, but it's also an every state and city in the United States, across Europe, across every country.
And it can look like many different things. You can have women and girls who are trafficked for commercial sex, you have men and boys trafficked for
labor. And this happens all, in many places, it can look like a man trapped on a fishing boat in Thailand not allowed leaving for two years, not paid
for that time, it can look like children in cobalt mines.
Working endlessly with no pay, it can look like entire families trapped into generational debt bondage in brick homes in India, and Nepal. And even
right here, just down the street from our offices in Washington D.C. it can look like a homeless youth who may be approached looking for a warm place
to stay and someone waiting there to manipulate them into commercial sex or acts that they're not willing to do for the benefit of those traffickers.
CHATTERLEY: As you say, it comes in all forms that we have to be aware of. I think one of the other crucial things you say is one of the best ways of
tackling this is to empower survivors of human trafficking and help them to help others because they've got experiences understanding knowledge that
that many of us simply don't.
And you're launching a scholarship, or fellowship, for a survivor to help bring them into the system and help them to help others. Just talk us
through what that involves the kinds of people that you're looking for, and what it will help achieve?
KELLY: Yes, thank you so much for bringing that up. We have learned so much about how to combat this problem around the world. And even though
trafficking is growing, we've learned more than ever about what is needed to stop this horrific crime.
And the most important thing is to follow the leadership and the expertise of those with lived experience of human trafficking. Traditionally, in this
field, survivors of trafficking have not always been the leaders of the movement. And we're really seeking to change that because we cannot help
this crime if we don't understand what's happening.
And people with lived experience of trafficking bring us that expertise to help us win this fight. So we know that survivors are looking for ways to
become leaders in this movement. And the Pembroke fellowship, where applications are opening today is an opportunity that we developed with our
colleagues at Survivor Alliance, and here at United Way Worldwide.
It will offer an opportunity to survivors of trafficking in the United States, to be placed in anti-trafficking organizations and to become the
leaders of the next generation of this work. So we're opening the applications today, we're looking for survivors, to join us in this fight.
And that's been core to our work here at United Way as we work with impacted communities all around the world.
One of the key tenants of our work has been to elevate and center the knowledge and expertise of survivors. That's how we're going to win this
fight is when we bring everyone together, but particularly to empower and lift up survivors of trafficking. That's exactly what we need in order to
see this horrific human rights abuse ended.
So people can learn more if they visit our website at unitedway.org. I just want to mention the Pembroke fellowship is named after a dear colleague of
righteous fighter in the fight against human trafficking. Her name is Deborah Pembroke, is a dear colleague and friend of ours who passed away
last year.
So the fellowship is named in her honor. And we've had an amazing time working with our colleagues at Survivor Alliance, who has been leading the
fight, really pioneering this around the world, to help make sure that survivors of trafficking are the leaders and the voices we need for this
field.
CHATTERLEY: And I'm sorry for your loss. Mara, very quickly there may be survivors watching this and they're thinking I'd love to do more. I'd love
to help but I'm not sure I'm the right person. Tell us what you need and why they are?
KELLY: We need everyone involved in this fight. And I think that's exactly what United Way does. We bring together diverse stakeholders and
communities around the world. But we need everyone at the table. This problem is just getting bigger.
In fact, trafficking numbers of trafficking victims have grown by more than 20 percent just in the last five years. So we need everyone to step up to
the table. We need government leaders, global leaders to make transformational commitments to fund the work that's happening to bring it
to scale.
[09:50:00]
We need businesses to get engaged, like our incredible partner UPS has been funding and supporting this work, but also training their drivers to spot
the signs of trafficking on the ground. Businesses have an important role to play in this. And so to individuals and young people, especially, I
would encourage people to learn more about the issue.
And to find survivor led organizations in your community. You can get in touch with them to support their work and learn more how to be involved,
raise your voice, and this I believe in my heart is an issue that we can end in our generation if we all come together to be united against human
trafficking.
CHATTERLEY: Yes, raise your voice Mara, great to have you on! Thank you so much. Mara Vanderslice Kelly from United Way!
KELLY: Thank you.
CHATTERLEY: Thank you. We're back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move"! You're looking at live pictures of European Central Bank President Christine Lagarde's press conference,
after the bank's latest interest rate decision, the bank decided to raise interest rates amid concerns about the strength of the banking sector
saying "Its policy toolkit is fully equipped to provide liquidity support to the Euro area financial system, if needed".
Let me just give you a quick look at the market reaction U.S. stocks opening lower as anticipated, though Europe look at that back up there and
managing to hold on to gains. Anna Stewart is back with more on this decision.
We're yet to get to the Q&A and oh, that's going to be lively. Something tells me what more did the statement say? Because it goes back to what you
and I were saying earlier. There are other options here than using interest rates to handle financial stability and inflation remains the key it seems.
STEWART: Yes, inflation is too high and it's going to be too high for too long. That's the key element of what Christine Lagarde is saying right now.
I think what's also interesting Julia and I actually forgot about this is what's not in the statement.
That's always an interesting little nugget and I can tell you that for the last four meetings. The ECB has said it expects to raise rates further once
they announced what decision they've made. That is not in this report.
So that makes you question whether or not despite this slightly sort of bullish confidence we're going to carry on with a half a percent interest
rate rise, whether or not they continue any further is now very much up for debate I think.
Inflation was at 8.5 percent in February, obviously really overshooting the 2 percent target. It has come down from its high and October but it remains
sticky and ECB staff says they're now seeing inflation averaging 5.3 percent this year 2.9 next and finally hitting 2.1 percent in 2025.
This is their issue that they want to tackle first inflation. And I think you're right with what you said earlier. This is the tool they're using for
inflation. There are other tools I am sure that we'll get onto when we get to the Q&A with Christine Lagarde that could be used if the banking sector
needs that if those balance sheets are too loaded with long dated government bonds.
[09:55:00]
I'm sure the ECB will say that they're ready to step in and help but we do await that lively Q&A. Interestingly Julia, I mean, do you remember Mario
Draghi as ECB President a lot of interest in what kind of tie he wore over the years? Christine Lagarde wearing red, maybe that says something?
CHATTERLEY: How, I think. But yes, it was, I remember, but then he was there a while was it, she's got time to build up a collection of ties and
facial expressions and things. We should watch for the Q&A and see what she says.
And I think to your point, underscoring the system has the tools required, but sending a very strong message too I think about their confidence in one
the ability to handle any problems but also, as banks stand today that they're in a far better position than we've seen in the past.
It's going to be lively, Anna, thank you very much for that! Anna Stewart there! And that's it for the show. If you've missed any of our interviews,
today, there will be on my Twitter, and Instagram pages, you can search for @jchatterleycnn. "Connect the World" with Becky Anderson is up next.
(COMMERCIAL BREAK)
[10:00:00]
END
