KENNEDY: O LORD, SWEET BABY
JESUS IN HEAVEN, ARE THE
BANKS ABOUT TO BREAK, SECOND
LARGEST BANK FAILURE
HAPPENING YESTERDAY, FIRST
REPUBLIC BANK SHUTTING DOWN
WITH OVER 230 BILLION IN
ASSETS AS OF LAST MONTH,
FDIC SOLD IT TO A TINY BANK,
JPMORGAN CHASE, STEMMING
FROM SILICON VALLEY BANKS
COLLAPSE IN MARCH, NOW
MASSACHUSETTS, DEMOCRAT
SENATOR LIZ WARNING WARNING
OF A CRISIS SHE FLAMES THE
FED.
>> DO YOU THINK THAT BANKING
CRISES IS OVER.
>> I DON’T SEE HOW ANYONE
CAN SAY THAT, REMEMBER THE FED REPORT THAT CAME OUT,
FED REPORT THAT CAME OUT,
CRITICIZE FED, FOR ITS
REGULATORY FAILURE.
KENNEDY: REMEMBER TOO BIG TO
FAIL?
WHAT IN THE WILD WORLD THE
SPORTS IS GOING ON, WITH ME
TO DISCUSS, FOX BUSINESS SENIOR CORRESPONDENT CHARLIE
SENIOR CORRESPONDENT CHARLIE
GAS PERGASPERINO, BREAK IT
TOWN FORDOWN FOR ME.
>> THE FED DID CREATE THIS
CRISIS, IT DIDN’T CREATE IS
THE WAY SHE SAID.
THE FED WAS PRINT MONEY LIKE
CRAZY, FEDERAL GOVERNMENT,
SPENT MONEY LIKE CRAZY, YOU
CREATE INFLATION YOU PUT
THAT LIQUIDITY IN THINK IF
THEFINANCIAL SYSTEM IT GOES
OUT AND DOES STUPID THINGS
LIKE INVEST IN COMMERCIAL
REAL ESTATE LOANS AND THE
BUILDINGS IN MANHATTAN AND
OTHER PLACES IN CHICAGO, THE
SEE THROUGH BUILDINGS SO
MANY.
THEY WENT OUT ON UNDER A
SPECTRUM NOW THE LOANS ARE
DEPRESSED THEN THEY HAD TO
BUY ASSETS, YOU HAVE TO KEEP
CAPITAL, THEY WERE BOUGHT AT
TOP OF THE MARKET, TREASURY
BONDS AT TOP OF MARKET.
KENNEDY: NOW WHEN ARE THEY WORSE.
WORSE.
>> THEY ARE WORTH LESS.
IF YOU THROW IN ON TOP OF
THAT BANKING IS A CONFIDENCE
GAME IF YOU DON’T HAVE
CONFIDENCE IF YOUR
INSTITUTION, IF YOU THINK
FIRST REPUBLIC HAS WAY TOO
MANY CRAPPY LOANS, AND
SILICON VALLEY BANK HAS TOO
MANY RESOLVING LOANS, THEN
YOU PULL YOUR MONEY OUT,
ALSO YOU CAN GET BETTER
INTEREST RATES IN MONEY
MARKET FUNDS, YOU PUT THAT
TOGETHER, YOU COULD HAVE
MANY MORE OF THESE SORTS OF
SITUATIONS.
I HEAR THE WHISPER NUMBER
THERE IS TWO DOZEN BANKS.
>> WHAT ARE BIG ONES.
>> YOU KNOW.
NOT THE BIG ONES, THE BANKS
WITH CAPITALIZATION OF ABOUT
200 BILLION, THAT IS WHERE
FIRST REPUBLIC -- I BUDGET
250.
I THINK WITH 250 AND BELOW,
A LOT OF SHORT SALES TRYING
TO CAPITALIZE ON THIS,
SAYING THEY ARE ALL IN DEEP
TROUBLE, I CONDITION OF TELL
YOU -- CAN’T TELL YOU, I
DON’T HAVE THEIR BALANCE
SHEETS, BUT IF YOU SPREAD A
LACK OF CONFIDENCE, YOU GET
SCARED AND YOU GET SCARED
AND EVERYONE PULLS THEIR
MONEY OUT OF PAC-WEST, THEY
ARE IN TROUBLE, THEIR LONE
BOOKLOAN BOOK IS DEPRESSED,
ASSET BASED IS DEPRESSED,
HAVE SO SELL ASSETS AT A
DEPRESSED PRICE.
KENNEDY: YOU TAKE A LOSS AND
THE PROBLEM WITH FIRST
REPUBLIC.
IS MAJORITY OF THE DEPOSIT
IRESORS HAD ACCOUNTS MORE
THAN FDIC WAS INSURING THEM
FOR IF THEY THINK THEIR
MONEY WILL BE GONE, THEY
WILL PUT PULL IT OUT.
>> THEY ARE MAKING IT WORSE,
SAYING, WE’LL COVER
EVERYTHING DEPOSIT,.
KENNEDY: THAT SEMIQUESTION,
THAT IS MY QUESTION.
>> NO, THAT CREATES MORAL
HAZARD YOU TAKE GREAT
GREATER RISK, THAT IS PART
OF THE GAME, BANKS ARE IN
TRUIVE EL THEY TOOK TROUBLE,
THEY TOOK A HUGE RISK.
YOU HAVE A REAL PROBLEM.
YOU TALK ABOUT TOO BIG TO
FAIL.
YOU DON’T WANT THAT.
KENNEDY: SHE CREATED THE
SYSTEM SO JPMORGAN CHASE
COULD GO IN AND BUY A
FAILING BANK.
>> NOT SAYING THAT J.P.
MORGAN IS GOING UNDER IT RUN
BY A SMART BY JAME I JAMIE
DIMON BUT THEY KNOW 13% OF
ALL U.S. DEPOSITS THAT BANK
IS THE U.S. BANK.
THEY CAN’T GO UNDER.
IF THEY GO UNDER, IT IS
LIKE, LIGHTS OUT, AND AGAIN,
EVERY MAJOR BANK, HAS AN
ISSUE.
IF YOU HAVE TO SELL ALL YOUR
OSETS RIGHT OASSETS RIGHT NOW TO MAKE DEPOSITS, YOU
NOW TO MAKE DEPOSITS, YOU
COULD BE INVOLVE ENLT.
>> I HAVE CONFIDENCE YOU