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Biden's Message After Bank Collapse: Don't Panic; U.S. Govt Steps In, Rescues Two Banks By Protecting Deposits; Biden: Taxpayers Not On Hook For Silicon Valley Bank; Former Banking Regulator To Fed: Stop Raising Interest Rates; Pence: Trump's "Reckless Words" Put Family, Capitol In Danger; Pence Sharpens His Words About Trump, Top Adviser: Pence "Free" and "Liberated" As He Preps For 2024; Jan 6; Biden To Congress: Bring Back Banking Regulations. Aired 12-12:30p ET
Aired March 13, 2023 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN KING, CNN HOST: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing your very busy news day with us. Call it a Biden rescue. The federal government swoops in to pay back depositors after two banks go under. The president tries to limit both the market and the political fallout by promising 2023 will not look anything like 2008.
(BEGIN VIDEO CLIP)
JOE BIDEN, 46TH U.S. PRESIDENT: The bottom line is this, Americans can rest assured that our banking system is safe. Your deposits are safe.
(END VIDEO CLIP)
KING: Plus, Mike Pence delivers a very harsh take on Donald Trump. The former vice president says his boss was quote, reckless and on the wrong side of history on January 6. The tough talk came into Washington media dinner. A big question now, whether Pence repeats it when he's with GOP voters in Iowa, New Hampshire and beyond.
And President Biden green lights a giant oil project in Alaska. Progressives are mad. Again, the drilling project follows Biden moves on crime and immigration that suggest an early move to the middle with an eye on 2024.
Up first for us though, a pair of bank failures and a White House emergency plan. The president says, we'll protect the economy but not at your expense. President Biden speaking this morning before U.S. financial markets open for trading and before most banks open for business. His goal makes the case to Wall Street and yes to Main Street, that he and his team are on top of things and that you should be confident your money and the overall economy are safe.
(BEGIN VIDEO CLIP)
PRES. BIDEN: Americans can have confidence that the banking system is safe. Your deposits will be there when you need them. Every American should feel confident of their deposits will be there if and when they needed them.
(END VIDEO CLIP)
KING: The speech capping a 36-hour sprint of behind-the-scenes Biden administration deliberations. Regulators now in control of both Silicon Valley Bank and Signature Bank, small businesses had accounts there can breathe easier.
The president says that after putting federal guarantees behind a promise, there'll be able to pay their workers and their bills. The president also greenlighting new emergency measures, $25 billion lending facility to bank similar banks that might be teetering near trouble.
Let's begin our coverage with our chief White House correspondent, Phil Mattingly. Phil, tell us more.
PHIL MATTINGLY, CNN CHIEF WHITE HOUSE CORRESPONDENT: Yes, John. The president's words this morning were deliberate and very intentional and effort to provide assurance to Americans who are, I think, understandably very anxious based on what they've seen over the course of the last several days. But also try and walk the political line here. The administration officials are keenly aware that they have to balance.
On the first point when you talk to officials that have been involved in this real sprint over the course of the last several days, they made clear. They move very quickly. And they move very dramatically to try and basically nip this in the bud before it started to expand. And this is interesting in the sense that this is not the type of bank that you would traditionally think. And Silicon Valley Bank would be one of the systemic banks that threatens the entire industry.
And yet, as officials watched the market and reaction play out over the course of several days, listen to what they were hearing from investors, people on the ground. The concern was both real and palpable, and they decided to move and move in a major way in terms of backstopping those insured deposits over the limit of $250,000, as well as opening that federal reserve lending facility.
However, they are cognizant of the political dynamics here and the president made clear, he is as well. Take a listen.
(BEGIN VIDEO CLIP)
PRES. BIDEN: No losses will be borne by the taxpayers. And we repeat that, no losses will be borne by the taxpayers. The management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore.
(END VIDEO CLIP)
MATTINGLY: And John, implicit in every one of those words from the president is essentially a signpost saying this is not 2008. This is very different than the TARP bailout. This is very different than what you saw for JPMorgan, for Goldman Sachs, for Citigroup, for Bank of America, and almost every single way. And he's correct in the sense that the FDIC fund is industry funded. It's by assessments to the industry, and should they end up having to pay out more on that fund than they currently have. The industry would back that.
The Federal Reserve well, it's funded by $25 billion from the Treasury Department. They don't expect to have to tap into taxpayer dollars, and if so, they'd be able to recoup it. However, they recognize here that there's a risk and there's a political reality that Republicans very quickly will be calling this a bailout. John?
KING: They will be. So, Phil, what's the test into administration officials behind the scenes at least as of now noon on Monday? I think what the president said today and what his team did over the weekend will be enough to stop. I used to work in tagine, easier word to that might be panic.
MATTINGLY: And look, perception is critical here. And if you look at the broader banking sector particularly in comparison to 2008, if you look at the underlying assets at Silicon Valley Bank, at Signature Bank, it is just dramatically different in terms of what they're dealing with. And yet, perception drove what we saw on Friday, perception threatened many more banks beyond just Signature and Silicon Valley.
Administration officials are clear, what they triggered over the course of the weekend was big, and it was important. And it was not just symbolic, but it certainly was a dramatic backstop here, both for lenders who are in trouble to some degree, or who are on the verge of being in trouble, as well as those depositors who were very concerned about their ability to make payroll over the course of the next two days.
That said, they're watching the market very closely. They recognize. It's going to be a bumpy couple of days here, perhaps longer. They're hoping they did enough, but they know perception is just as important as reality sometimes, John?
KING: We know you'll keep an eye up from the White House. Phil Mattingly, thanks for getting us started. With me in studio to share their reporting and their insights, Bloomberg's Peggy Collins, and Jeanna Smialek of The New York Times. Grateful that you're both here on this day.
You hear Phil using terms like facility. The president saying this is not a bailout, taxpayers won't pay any money here. So, how is it different from 2008, even though some of the language is familiar?
JEANNA SMIALEK, FEDERAL RESERVE AND ECONOMY REPORTER, THE NEW YORK TIMES: I think it's different in a couple of really important ways. One of those ways is that banks as a whole are in much better shape. And so, in 2008, we saw a situation where banks had really overextended themselves. They were doing some creative things that I don't think were particularly well policed within the system. What we have now is a lot more visibility and what banks are doing.
The Fed pays a lot more attention to this stuff. These banks are mostly regularly stress tested. I think the similarity though, is that we watched a lot of sort of known risks grow in plain sight, you know, this bank, in particular wasn't part of the regular stress testing cycle. You know, some of these midsize banks that we sort of looked at as not particularly problematic are turning out to be actually, you know, pretty problematic, pretty system wide threats as they crashed down.
KING: So, Phil mentioned, perception and reality, because perception can cause behavior, especially among big investors or banks, CEOs of companies invested in banks, that, you know, that might not make sense, but seems to make sense to them. If you look, some of these companies, Silicon Valley Bank, a lot of startups out in California.
So, you see the names of these companies, a lot of tech companies, a lot of new companies, internet companies in the like. This is the CEO of one of them CAMP, which is the toy company essentially saying that, look, you start a business, there's some risks, but you never think at least, he never thought I kind of worried about my bank.
(BEGIN VIDEO CLIP)
BEN KAUFMAN, CAMP CEO: We did not know how long it was going to take for us to get our cash out. And to be honest, we still kind of don't, we never had to think about like the safety of our bank. That's an added layer. And we knew we were going to be able to make payroll this week. But we said like the future is uncertain, we don't know what the next step is going to be.
(END VIDEO CLIP)
KING: Has what the Biden team done, alleviated those questions this - that CEO, and others need to worry about their bank. And specifically, the idea that the guarantee is depositors $250,000 or less are protected. The administration has now protected those above that limit. Is that wise? Or does that create the perception now that OK, we can gamble in the future, because even though it doesn't say so on paper, they'll step in and protect us?
PEGGY COLLINS, WASHINGTON BUREAU CHIEF, BLOOMBERG: Well, I think, John, that's what the regulators tried to do last night by moving in a very big way, which was to say to the American public, don't worry about the assets that you have in banks across the country. But we can see from the market reaction this morning, that not everyone is feeling very calm about this.
We're expecting a lot more volatility in the markets, because people are wondering a couple of things. What are some of the other a hidden risks that are out there that emerged like Silicon Valley Bank unexpectedly, because of the pressure of the Fed raising interest rates over the past year. And the other really is whether or not there will just be some human reaction where people and business owners say, I'd rather move my money to a bigger bank. KING: Right. And so, I didn't mention this at the beginning. But you're out with a very timely new book. Obviously, we were talking about last week, during just the uncertainty, the volatility in the economy right now. And the Fed being central to it.
What tools limitless is the title of the book, the Fed can print money on a limitless basis? What are the tools are you watching right now? As they're implemented that tell you, OK, they seem to think they're in control of this, whether it's the Fed or the FDIC. Or what if you saw happening would make you think, whoa, they see a bigger problem?
SMIALEK: Yes. Well, so actually, I think, you know, the contention of my book, sort of the central theme of it, is that the Fed has these emergency powers that can just do very broad, very crazy things that really have very few limits when you talk - kind of come to think about it and they can do pretty extreme things with them.
And I think we actually saw the realization of that last night. This facility that the Fed has unrolled in order to sort of backstop the banking system is really sweeping, really broad. I think something that we haven't ever seen before.
They've basically agreed to take a lot of interest rate risk out of the banking system to allow banks that were looking, sitting at sort of what we call unrealized losses that had securities that had really plunged in value but which they might have to sell to raise money, they can now take those to the Fed and get short term loans in exchange for them.
And so, that is just really something we haven't seen the Fed do before. And I think it's a real signal that the Fed saw this as a very big, very sweeping risk and wanted to get out ahead of it in a decisive way.
KING: And so, one of the things you heard from the president tells you, he learned a lesson. In 2008, remember, Barack Obama, Joe Biden running for the presidency against John McCain and Sarah Palin, when you have the financial collapse. The Obama administration inherits the fallout from that. But when the president says, you know, the taxpayers will not pay for this, and the people at these banks will be fired.
The people out on Main Street, if you think back to 2008. If you asked 20 Americans on the street, it's not quite this simple. But most Main Street Americans would say, the bankers played with monopoly money, and I got the bill. Has the president learned those lessons? Is that what you heard there?
COLLINS: Well, I think he's trying to project that definitely, John. He's trying to say, we're not bailing this bank out, Silicon Valley Bank is not being saved. But if your deposits are there, you're safe. But as Jeanna was saying, there's certainly a risk here that people are identifying that it could have grown faster than they wanted to if they hadn't gone in last night. And to your point about FDIC insurance, I think that's another thing that's going to come up quickly on Capitol Hill, which is whether or not that limit of 250,000 is too low. We should raise it even though as Jeanna was saying, the Fed has come in and basically said, we're backstopping fully everyone's insured and uninsured deposits.
KING: Right. And before we wrap this part of the conversation, just you look at the markets right now. The Dow is up a little bit. That was one of the things the president was trying to stop, like a panic in financial markets. But when do you feel is it this week? We'll take longer this to see, OK, no more banks in trouble or at least not teetering. When will we know this is limited not like it was in 2008? Something that spreads across the industry.
COLLINS: Well, I was going to say first, I think tomorrow is another big day for potential volatility in the markets. We had the CPI figures coming out. So, while the Fed is saying, listen, we've got a huge risk in the banking system right now. We could have those numbers come out tomorrow and inflation could still be a very big issue for the Fed to potentially get under control. So that push and pull is going to be something that the markets are going to have to react to.
SMIALEK: I think that that's actually the critical thing. I don't think we're going to know the full answer to this for months. You know, Mike Karolyi at JPMorgan this morning told me that there's this old saying, when Fred hits the brakes, someone goes through the windshield, and I don't think we know who that is yet.
KING: OK. We'll keep in touch. We'll bring you both back as we consider. Watch this play out. Up next for us though, the strongest remarks today from Mike Pence about his former boss. And January 6, we look at where it happened and why?
KING: Mike Pence this weekend delivering a harsh take on how his former boss Donald Trump handled the January 6 attack on the Capitol. The former vice president also praised media coverage of the insurrection. His comments came at the annual Gridiron Dinner here in Washington, a big white tie media gathering.
Here's part of Mr. Pence's take on President Trump. "Make no mistake about it. What happened that day was a disgrace, and it mocks decency to portray it in any other way. His reckless words endangered my family and everyone at the Capitol that day."
With me to share their reporting and their insights, CNN's MJ Lee, Michael Shear of The Washington Post, and Ayesha Rascoe of NPR. He has said tough things before, he says them in his book. But at this big dinner in Washington, he not only reckless endangered my life, it mocks decency to suggest otherwise. So, he's saying Donald Trump is mocking decency. But he's not just saying Donald Trump is mocking decency. He's saying a giant swath of the Republican Party is mocking decency.
AYESHA RASCOE, NPR HOST, " WEEKEND EDITION SUNDAY" AND "UP FIRST": It seems like he decided that this was a moment where I think he probably wanted to get some headlines because he was talking to the media. He's not talking to the base. He's talking to the media. He's talking to the people that will be listening. And he wanted to. And I think Mike Pence would appreciate this.
I'll take you to Sunday school a little bit. You know, he wasn't at - he was given these statements, but he wasn't hot or cold. He was lukewarm. And he needed to get off the fence, right? Like he needed to either be strongly, and just say, OK, January 6 was OK. Or he needed to say, this was absolutely wrong. And he couldn't play the middle anymore. And I think that's what we saw.
KING: And so, here's a little bit more of it, because this is not just about Donald Trump. This is a man he has not announced his candidacy. But Mike Pence is thinking about running for president. You run for president by going to Iowa, New Hampshire, South Carolina. But if you're a Republican, you also run for president, hoping that you get favorable coverage on Fox.
This is what he said. Tourists don't injure 140 police officers by sightseeing. Tourists don't break down doors to get to the Speaker of the House or voice threats against public officials. That's at Tucker Carlson. Right there, which is, you know, whatever your opinion to Mike Pence, if you're thinking about running for the Republican presidential nomination, that's risky.
MICHAEL SHEAR, NATIONAL POLITICAL REPORTER, THE WASHINGTON POST: So, Pence's play here, he's going to try and reclaim an old idea of what Republicans were about. And that includes caring about the constitution, caring about the rules, and old sort of conservatives and pre-Trump, which is sort of ironic for Mike Pence to be doing it because he was the guy in 2016, who sort of heralded the embrace of Trump from that same group of people.
The challenge he has is that there is an opening now in the Republican primary among Republican voters for non-Trump. The problem is that a lot of those voters are still very tied to their own votes for Trump. So, it's difficult to criticize Trump directly because the voters and I've been in focus groups where this comes up, you know, I'm interesting DeSantis, but Trump was a great guy. Trump did everything right.
I'm so proud of what Trump did. Don't say anything bad about Trump, but yes, maybe DeSantis. And so, that's the dividing line. If he gets caught in this, I'm just the anti-Trump candidate. There's not a lot of upside, you know, from 4 percent or wherever he is right now. So, he's got to be a little more delicate.
KING: And you mentioned, you know, essentially deciding, you know, too hot too cold, what like little - there's three little bears. Three little bears theory there. Let's listen to the evolution of his words because what he said at the Gridiron Dinner was the harshest, but he has kind of moved there slowly.
(BEGIN VIDEO CLIP)
MIKE PENCE, FORMER UNITED STATES VICE PRESIDENT: I don't know if we'll ever see eye to eye on that day. But I will always be proud of what we accomplished for the American people.
JESSE WATTERS, FOX NEWS HOST, JESSE WATTERS PRIMETIME: We talked last summer?
PENCE: And, you know, I've said many times. You know that it was difficult. January 6 was difficult. It was a tragic day in the life of the nation.
President Trump was wrong. I had no right to overturn the election. And his words that day were reckless. And they endanger my family and others at the Capitol.
(END VIDEO CLIP)
KING: Michael makes a key point about sort of pre-Trump Pence, right, where he was the Christian conservative, Chamber of Commerce conservative, smaller government, less regulation, anti-abortion, you know, the chip are sort of a pre-Trump Republican. What is the lane now though? Because if you're a Trump voter, you have Trump. And if you're an anti-Trump voter, well Pence even if he's trying to distance itself from Trump, he worked for Trump.
MJ LEE, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes. You know, so often in the past, when Republicans have made critical comments about Donald Trump, they've often left some wiggle room right, to be able to say, later on, you know, I was just kidding, or this is actually what I meant.
It is really impossible to imagine Mike Pence walking those comments back, particularly when he is talking about his family and the lives of his family having been endangered. Talking about how history is going to hold Donald Trump accountable, you know, so often after 2020, and particularly after January 6.
Now, we had a lot of questions about whether Republicans whose loyalty and sort of deference to Donald Trump seems so unbreakable, whether that would actually ever break. And I do think we are seeing some signs here and there, small and big of that sort of eroding whether it is, you know, Nikki Haley jumping into the 2024 raised, even despite having said before, that she was going to support Donald Trump if he were to run again.
And then this moment from Mike Pence, basically saying that he is going to be held accountable by history. And again, just invoking his own family, just very hard to see him walking.
KING: He lived all four years of the Trump presidency. So, he would be a credible witness, if you will, if he wanted to talk critically about it, right? What talk critically about what he saw? Whether it's the president's character? How we manage things, or whatever? This isn't political. It's interesting. This is his former chief of staff, a very close aide to Mike Pence, Marc Short.
Mike is in a different place where he can be sort of free and liberated in ways that I don't think others in the field are. I believe he's got a good pathway forward. Well, you prove the second part in Iowa, New Hampshire and beyond, but liberated and free. The question, again, Pence - and if you listen to that, the sound we played here, a disagree about that day, but I love what we did. Is he going to move away? How liberated? How free?
RASCOE: Well, I don't know how free is, but I think he is getting at this thing that every single candidate is going to have to deal with. Like you can try to like be kind of cool with Trump, but the road to the nomination goes through Trump, it does not go through the left.
So, if you're Ron DeSantis, you're very good at beating the woke left, but that's not who's going to get you the nomination, you got to go through Trump. So, at some point, everybody's going to have to make a decision on how they're going to deal with them.
KING: OK. We hit the fast forward button, get them all in the race and get to August for the first debate and see them like this. I say it laughing, but at the same time to get through Trump. That's the way you have to do it on a debate stage, and we have 2016 memories. It's tough to do.
Up next for us. The politics of the Silicon Valley Bank collapse. Some Republicans say, woke policies during the California bank. Democrats say, that's a smokescreen, and suggest looking at regulatory rollbacks passed during the Trump presidency.
KING: There's already fierce finger pointing here in Washington over the Silicon Valley Bank collapse. President Biden this morning adding his take, asking Congress to revive regulations on smaller and medium sized banks that were rolled back during the Trump presidency.
(BEGIN VIDEO CLIP)
PRES. BIDEN: We must reduce the risk of this happening again, in the last administration rollback some of these requirements. I'm going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again.
(END VIDEO CLIP)
KING: Let's take a look at exactly what happened. This is 2018. Dodd- Frank was passed early in the Obama administration after the 2008 financial collapse. In 2018, they came back and revised it a bit. It raised the too big to fail threshold from $50 billion to $250 billion, essentially a lot of smaller and up to $250 billion. So, you're talking medium sized banks got exempted from the most stringent regulations.
It exempted certain banks from stress test. Again, the smaller medium banks eliminated so-called living wills for some banks and ease some of the mortgage reporting requirements on these smaller and medium sized banks. Again, this is a legacy. This is a reboot if you will after the 2008 financial crisis.
It passed largely with Republican support. Republicans were pushing this, but 67 votes in the Senate, including 17 Democrats. 258 votes in the House, including 33 Democrats, so mostly Republicans, but a sizable number of Democrats.
Now, the CEO of Silicon Valley Bank specifically lobbied for these reforms. This is Greg Becker. He says that bank, the one that just collapsed, didn't pose a systemic risk. And that imposing the requirements, the Dodd-Frank requirements it put an outsized burden on us. That was his argument.