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the wall street reforms passed a decade ago following the financial crisis, and senator elizabeth warren joins me now. why is -- how does this get 67 votes? you haven't actually voted on it so far, but -- >> i'm sorry, let me just stop you right there. how does this get any votes, any votes? we are now -- next week will be the tenth year anniversary of when layman brothers crashed and signaled to the entire world that the collapse of 2008 had started. and how it could be that after we got some dodd/frank protections in place, after we got ten years nearly of trying to rebuild, after the banks are more profitable than they have ever been in history, how could it be that this congress is saying i know what let's do, let's make it easier for big
obliged with less regulation because the bank argued that it was still too small to require those regulations. now when we're talking too small, we are talking about the 16th largest bank in the united states, so were talking about hundreds of billions of dollars. hour hundreds of billions of dollars. how did it manage _ hundreds of billions of dollars. how did it manage to _ hundreds of billions of dollars. how did it manage to persuade regulators to go easy on it give it one happened in 2008 when the financial system came close to collapse? it’s system came close to collapse? it's a treat system came close to collapse? it�*s a great question and it shows the power of the banking lobby in the united states and in politics and in congress. the banking lobby spent a lot of money on campaign contributions to pressure lawmakers to weaken the so—called dodd frank rules that had passed right after. the financial crisis. that's were talking about here. in 2015, 2016, that lobbying effort began where the banking industry was pushing to roll back some of the dodd frank regulations. in specific, they were trying to say that the original $50 billion threshold by which banks
unintended victims like depositors and the rest of the economy. so i think that very rapid action over the weekend has calmed the water. we saw a little dip in wall street with respect to mid-size banks. now they're recovering slowly. their confidence level is being restored, and that is the only meaningful systemic risk to our economy, is that people lose confidence in our banking system. if that happens we're in trouble, but the president and janet yellen reacted very quickly, and thank they addressed that problem. >> doug, as you know there's already a debate going as to who was responsible for this. is it the investors and bad management decisions as seth just laid out, or is there something more deeper here in terms what some lawmakers are suggesting and that is regulation had been rolled back in 2018 in particular the dodd/frank act and the regulations that specifically followed what these small regional banks should be doing and that perhaps led to where we are right now.
i don't think we were ever looking at a full-blown banking catastrophe. there's always the potential of a mega disaster, if you will, in the banking system because something goes wrong. but the reality here is that these banks that are being hit were the victims of their own stupidity, misfortune, incompetence, whatever word you want to use. the big, major banks are rock solid, and what they are basically doing, the authorities, is refencing those that should have known better. there's no mega banking crisis on the horizon, according to everything i hear. >> richard quest, thank you so much. joining us is the vice president of ibm. he served as the director of economic council during the trump administration. gary, good to see you. in 2018, about a month after you resigned from the white house, president trump signed a bill that rolled back parts of the dodd-flank bill that'sed restrictions on some banks.
cetera. >> that doesn't mean they're -- you should not assume just because they're big they can't fail. managers make mistakes -- >> no, but they are held to higher -- wait, wait, they are held to stress test requirements, higher capital and liquidity requirements because of dodd/frank. that didn't get diminished for those big ones. >> and you should assume that stage is going to be lifted even higher on them, so they're going to be even more regulated as they become more concentrated and far less profitable. that's my point. this really does make you think about owning bank stocks long-term. i think they'll be underperforming index for decades to come, that's my personal opinion. but it's the behavior of you as an investor and the actual accounts. if you're a business, you can't put it all in one financial institution. certainly everybody learned that lesson over the weekend. so diversification is going to matter. but this has fundamentally changed the way you should look
i would probably call him for advice and i actually think he covered it very well, and my sense of it, chuck, my sense is that it is a fairly localized issue. the problem is that we live in a very emotional time where markets are emotional and the reference to -- to social media as being an accelerator, if you will, of some of that emotion. i think can be problematic, but i hope that with the weekend came some calm and certainly some strategy, as well. >> yeah. >> but there are so many unique things about silicon valley that aren't necessarily applicable systemically so my hope is that it is very localized and we can address it that way is that it is very >> in 2018 you remember the house. you were the co-sponsor and part of the repeal of dodd/frank that loosened regulations on some small banks, and there are some who are pointing to those to help banks from putting themselves in this position.
have two effects. those companies' banks and others that are holding u.s. government bonds and this is also around the world, they're going to see a devaluation in the value of those bonds, if they're not held to maturity. secondly, in his recent testimony, the chairman of the federal reserve basically discounted the fact that he is in the process of throwing 2 million americans out of work. his solution is to throw americans out of work to put them on the bread lines. i'm sorry, that is not the right solution. look at the corporate earnings. take a look at the corporate earnings for the petroleum industry. never been higher. take a look at the corporate earnings for the rail industry. never been higher. therein lies a lot of the problem. the price of gasoline, for sure. >> let me just very quickly ask you this. the president raised an issue here. you had dodd/frank passed in the wake of the 2008 financial crisis. there was a rollback of some of
accountable. and my administration, no one is above the law. and finally, we must reduce the risks of this happening again. during the obama/biden administration, we put in place tough requirements on banks like silicon valley bank and signature bank. including the dodd/frank law to make sure that the crisis we saw in 2008 would not happen again. unfortunately, the last administration rolled back some of these requirements. i'm going to ask congress and the banking regulators to strength the rules for banks, to make it less likely this kind of bank failure would happen again. and to protect merp jobs and small businesses. look, the bottom line is this. americans can rest assured that our banking system is safe. your deposits are safe. let me also assure you, we will not stop at this. we'll do whatever is needed. on top of all of this, let's also take a moment to put the situation in a broader context.
those became less valuable and at the same time, when people started taking their deposits out because the tech sector had turned, then suddenly there was this mismatch for this bank. and as they tried to raise money, they raised actually alarms that they were in trouble. and then you had a run on the bank. so that management is out. >> christine, i have to ask you, this is the first step, and i heard from a lot of folks this week saying the administration has to step in now to guarantee all uninsured deposits, because the fdic limits to $250,000 for many banks, big cv firms, but also small businesses have far more money in their accounts. biden says, we will not stop at this, we will do whatever is needed. notable, as well. what additional steps was he opening to, if necessary? >> he talked about more regulation to make sure this doesn't happen again. and i think that's really important. we have dodd/frank banking reforms after the last financial crisis and there had been lobbying, and in 2018, a
money out of first republic or this regional bank or that one, and i'll put it with the big guys we also don't want that. we don't want complete concentration, that every american has all of their money, which is one of three large banks. you want to figure out what you can do to support the small and regional banks while, at the same time, joe, you have to make sure there's smart regulation. 2018, we saw part of dodd/frank get rolled back. part of that made sense. if you were a small, regional bank, you were strangled with regulation while the big banks can afford it. it's a balancing act it's tough to hear from lawmakers who, on one hand, are saying, we need no big government we need no regulation. let these banks do their thing let them be bankers. as soon as the i coyou-know-wha hits the fan, the same lawmakers said, we have to rescue people we obviously need to protect the american people, but what we need in all of this, joe, is smart, thoughtful, consistent regulation the best quote i heard this