In this short clip, Patrick Bet-David, Sam Seder, Adam Sosnick and Vincent Oshana react to the aftermath of the SVB collapse.
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Let's go into uh uh the the Silicon Valley Bank story what do you think is Uh going on there and do you think it's The end of it obviously yesterday Powell Came out a lot of people didn't think if He's going to increase interest rates or Not right is this guy going to do it is He not gonna do it you know it's not a Good time to do it maybe take a break For a month or two you know we're seeing What happened with uh Silicon Valley Body I don't know 10-year bond for a Hundred billion dollars at 1.7 percent Thinking they're going to make it and Then bam they have to sell that for some 20 billion dollars and and you know the Depositors are afraid those below Quarter million which is a small Percentage whatever the number was three Percent they're covered but the ones Above everybody's coming and saying we Got to build the depositors out what are Your thoughts about what's going on with Silicone Um well there's a couple of different Issues I mean and and you can sort of go Down the line the the biggest issue is Is that in 2017 uh the Trump Administration the Republicans and with Some corporate Democrats as well Basically rolled back the regulations That were required for banks like sbv it Used to be if you had 50 billion dollars Worth of Holdings as a bank you were
Subject to the Dodd-Frank requirements About Capital to keep the bank safe uh And that would have also come along with Like sort of subsidiary uh uh Regulations and and Regulators being There to make sure that you can't make Stupid decisions like that I mean they Made some very stupid decisions uh that Were uh that you know people involved in Banking could take issue with assuming That interest rates were always going to Stay low whatever the point of Regulations like that where you take More or less a meat cleaver and you say Is that people can make stupid decisions But we're going to be here to protect The system and the depositors the other Thing that was going on there with with All the depositors had all this other Money this is a kickback situation There's no doubt about it right because You you know anybody with 251 thousand Dollars Cash knows that there is a 250 000 FDIC Limit and if you're putting half a Million dollars in there or billions of Dollars in there you're getting Something from the bank in return which Is low-cost business loans or like zero Percent mortgages I'm sure you run into This you put your money into some big uh You know uh Investment Bank you're Getting Kickback you're getting a zero Percent mortgage so you go out buy a 13
Million dollar house you don't have to Pay anything for that money you keep Your money in a CD and you're still You're making money off of that 13 Million dollar house essentially that You bought because you've just got that Money borrowed cheap and if they're Gonna do that I mean look Teach their own if they're going to do That they need to pay the consequences They took a risk I'm gonna put my money In an uninsured bank because I'm getting Back all this like you know and Sometimes I think it was like they did This with their businesses and then they Get the personal mortgages which is also It's just a kickback so I say we don't Bail those people out because we have The rules and these are the rules now a Lot of these people are big names they Have the ability to go on to every show That exists on TV and whatnot and claim That this is going to be a systemic risk But I don't believe that frankly Um And so you know I I think what we need To do and nobody's talking about it is Put the regulations back we have now Proved that it's dangerous Um uh to have rolled back the Regulations on these mid-sized Banks and So uh you know the the deafening Silence About it is amazing to me so Sam let me Ask you based on what you just said so
Your uh so obviously we know the guys Below quarter million they're covered But it's a small percentage with Silicon Valley Bank it's not like it's a big Number the people above quarter million Uh with these guys that are coming out Saying hey we gotta you got we gotta Take care of these depositors because if We don't you know all these other Smaller communities and regionals are Going to get hit these 27 regionals we Have one is gone now it's 26 they're Going to remove their money and they're Going to put it in the big Banks this is One of the ways to nationalize it and We're going to go through only five Banks and all this stuff so the people Above the quarter you're straight up Saying if you had more than a quarter a Million anything you had let's not back Them up let's not protect them they lost The money I think there is that danger That you talk about that there could be A run on these other I think it's Overstated but Um I I think there is a danger and I Think the way that you deal with that is You come out and you say We're going to make sure that we're Going to subject these 23 other Mid-sized Banks to the kind of Regulation that we uh that we um impose Upon the bigger Banks so that the Security you feel with those bigger
Banks we're going to provide that Security for you by by regulating and Making sure that they have the capital Requirements that they need to protect Your money Okay so then go to if I give you like a Cause of uh to say it's this person's Fault let's go through rankings of it Okay below a quarter million they Obviously didn't do anything you know Wrong there the guy's above a quarter Million dollars in savings then you have The people that own shares in the Company they're shareholders of the Company then you have employees that Work for Silicon Valley bank then you Have the employees where the companies Who banked with Silicon Valley Bank Where the payroll is stuck and they Can't pay the payroll then you have the Politicians coming up with the Guidelines the regulations if you were To put the blame on those folks and who To take care of who not to take care of Who would you put at the top who would You put at the bottom well I I don't I Mean I don't know how to apportion blame Amongst those things but I can tell you This the the but for uh in that Situation is clearly uh the lack of Regulation right I mean I don't know who Screwed up in in in in all of those Different levels but I know that if the Regulation if they were subject to those
Same Capital requirements none of that Stuff would have happened in the first Place Yeah you know it's it's it's kind of Tough to debate that because I've been In Insurance business for 20 some years Right you don't see a lot of insurance Companies going out of business because Insurance companies Capital requirements Are a lot higher than Banks requirements Banks can be a little bit more we saw What happened in 08 with the whole no Income no assets hey Sam how much money Made last year 72 Grand Sam one more time how much Money did you make last year 72 Grand Sam one more time how much money did you Make last year right 158 okay great I'm Driving a bank Sam hey I got 28 000 on a Bank one more time how much you having To make 380 perfect no income no assets The ninja loan ninja loans right Everybody takes it so there's a part of That that Um I agree with the whole Ninja along You know it was never supposed to before Uh low and middle income families the Ninja loan if I recall came from Australian Bank it was something they Were using and we brought it to the States and it was supposed to be more For like the you know clients at the Goldman and the higher and then they Said let's launch this to everybody out
There in the streets yeah You're a bank loan officer right like I Mean there was a fiduciary Responsibility by the person in in that Scenario there who kept saying like you Know put the number up because I you Know I I come in for a mortgage I don't Know I don't I mean I'm not I'm not a Financial whiz you know who we had here On the podcast uh four months ago very Uncomfortable podcast uh it was with the Former CEO of WAMU I don't know if you Remember WAMU Washington oh yeah yeah Yeah yeah oh yeah and that that thing Was a behemoth of a bank right 330 Billion I think as far as I well we we Have the Kerry Killinger by the way he Was kind enough to come in I didn't know What he thought we were going to talk About I banked with WAMU for years and I Loved one more I thought it was a Phenomenal experience you'd go there you Know uh the customer service the way you Would feel like you're not at a bank There's not a window where you feel like Hey you can't shoot us everybody was Open there was a relationship thing that Was going on I said what caused this you Know why get so reckless about it why What made you think some of these things You were doing with the amount of money That you had were you ended up selling It for Chase so I guess and I don't know How much you follow uh the stories
Obviously you're a guy that's been Following every story every day because This is what you do for a living What have we learned from oh wait That we're not repeating today maybe Even the way Janet Yellen and the FED is Handling the bailout model their carnal Different thing what's different about It today than it was in oh wait in your Eyes well I mean the situation is very Different too I mean I think you know The the the amount of Leverage that We're talking about in the system is Just not nearly the same and a lot of Those a lot you know Dodd-Frank uh Eliminated a lot of the more risky uh Stuff but you know again I can tell you more importantly what we Didn't learn is when we rolled back Those regulations You know like uh you and I we could we Could go through that whole thing we Could spend six months examining every Aspect of what what happened there and We might come up with a different uh you Know who was really responsible or there Could be shared responsibility but the Bottom line This is why you need Regulation just like you said in the Insurance industry you have the tighter Regulation on this stuff you don't allow For people to come in and play fast and Loose with all this stuff to gamble like They're at the the race track and and
Then come for a bailout from us because Look the bottom line is I know it comes From FDIC fees but who's going to get Those fees It's going to be it's and actually the Fees that are going to be imposed upon People to bail out guys like David sacks And all these other like uh uh you know Uh right-wing so-called libertarian They're suddenly Libertarians looking For the government handout but the People are going to be paying off these Fees more than anybody else are lower Income people because they are stickier With banks they don't have the Opportunity to go around they don't have The time they don't have the inclination The Savvy to go around and shop around Banks where they're going to get lower Fees maybe they don't have the same Amount of deposits in there so they're Not going to be so that's who's going to Get stuck with this bill let's go back To this on what we can find default with We can say you know we need more Regulation is what we need we can say You know it's it's the greedy Banker's Fault you know we can say hey why are You being so reckless you're putting all Your money in the bank you should never Put all your money in the bank right you Got to kind of diversify and put a Little bit more money there's also Something called sweeps and everybody
Who's involved in a business knows was This I'm sure you know this that there Are third parties out there who will Distribute those 250 000 they have that They have those money there for a reason And that I think it was Kickbacks I Think it's probably going to come out in A couple of months after more Investigation but again we don't have to Do we don't have to spend our time Worrying about who's to blame of those Individuals maybe they all know this is Where I was going how old were you when You bought your first house do you Remember I was let's see it was in 98 Okay so you got 20 20 26 35 yeah perfect So 25 years old what was the interest Rate when you got in 90 if you remember I was an actor I didn't I just you know I had a business manager at the time I Was making a lot of money I was just Like just dreams exactly but don't worry About that can you go to 1998 average 30-year mortgage I don't know let's just Google it and see what the number was I Imagine it was probably around probably Similar to what it is what I'm thinking Yeah I'm trying to see what it was okay 6.91 yeah very soon there you go okay Six one by the way I think that's where It needs to be for about a decade Think the number needs to be there and If you ask me quite if you ask me I Think we need to go a little bit more
Old school in the way we buy stuff right Meaning how much down payment you got I Got this much down payment great you Know and now you may disagree with that And say that's not going to be fair to Loan middle-income families but I think There's part of it also the guidelines To buy stuff has degree decrease the Guidelines to lend out money has Decreased you know money became so cheap For such a long time where people were Going out to getting money left and Right what are your thoughts on that I Know on mortgages no it's a lot stricter Than it was let's say uh 15 20 years ago I mean it's much harder you need to Provide much more documentation and and The the loan companies are far more Stricter I mean they're not quite where They were in the wake of the financial Crisis but they're still pretty tight I Mean the the problem I have with the With the raising of the interest rates Is basically what Jerome Powell says Every time he does it which is we need To get more people unemployed and that's I mean in in look We can argue as to whether uh the the FED has the tools it needs to fight Inflation in this instance I happen to Think I happen to you know uh I I don't Even know if I I agree so much or or Just like the FED itself Says that uh the inflation that we went
Through Only about 30 percent of it was a Function of Demand right the other uh You had a significant portion of it was A function of logistics and like Mismatch uh products and and this and That with because of covid right it Wasn't a question that we didn't have The productivity uh or the capacity uh To meet uh demand it was just that it Was mismatched for a long time you're Sending shipping containers to places You had never sent it before to get them Back is a lot more expensive these Things are starting to work through the System wages contribute a little bit Because there has been some wage growth For the first time in decades Essentially A lot of it is also uh uh maybe the Plurality of it this is based upon the FED numbers is basically just the Corporation seeing the opportunity to Raise these rates and so the FED comes In they have one tool to deal with Inflation and that is you know they're a Hammer except for I'm arguing that it's Not a it's not a nail that they're Hitting it's a screw and they're doing This in my estimation as a way of Weakening labor they are going to kick a Million how would you do it how would I Do it well I would deal with it fiscally Or I would just wait
I would wait because you're starting to See the trends all moving the right Direction in terms of inflation and I Would wait Um and and so you wouldn't have raised The the I would have probably done maybe Half of what they'd done maybe two and a Half whatever the number is yeah you Mean the most recent no no no no Whatever's happened look at it today Right like they're worried about the Banks at the same time they're like Desperate to like we need to we need to Kick a million two million three million People out of work that I mean they're Explicitly saying this and so uh you Know I That does not make sense to me Sam a guy Here Scott Rodriguez just said sorry but Eighty percent of the loans given the Last three years only required five Percent down payment it was much harder To get a loan in the 90s in in in terms Of mortgages yeah it's conceivable that It was harder to get a loan in the 90s I'm comparing it to like the odds Um but I can tell you I mean like I I Have some very close we think it's Better do you think it's a better Guideline to put a minimum 25 for Anybody to buy a loan or no five percent Down payment is fine I mean I think I I I don't know if the the number is 10 Percent or twenty percent I'd have to
Like read in to see you know where we're Talking about foreclosures but we're not Having a foreclosure problem right now Now not yet because if he keeps raising The interest rates and decreasing the Value of homes uh at this type of Rapidity you know uh rapid rate we might But you know the way you avoid that is Don't do that so if you like this clip And you want to watch another one click Right here and if you want to watch the Entire podcast click right here Thank you [Music]
