Sebastian Gorka America First with Sebastian Gorka
Call the Show
LIVE: Mon-Fri, 3-6PM, ET
America First with Sebastian Gorka
Call the Show
LIVE: Mon-Fri, 3-6PM, ET

Trish Regan on SBV Collapse: “The handwriting was on the wall”

Sebastian Gorka talks with financial expert and Salem colleague Trish Regan about the failure of Silicon Valley Bank and what to do next

Date of Audio: Mar 16, 2023

Dr. Sebastian Gorka: Are we on the brink of an economic collapse? Is a new Biden depression around the corner? No monologue to open the show. Don’t cry. I’ll give you one later. We’re going to check in instead with my former Fox colleague who is now my new Salem colleague. She’s the host of the Trish Regan podcast. And strangely, her name is Trish Regan. Trish, welcome back to America First.

Trish Regan: Hey, great to see you as always, Seb.

Dr. Sebastian Gorka: Alright, so lots of contradictory reports. The White House, the President, has said it was Trump-era regulations that caused this. Barney Frank said he had nothing to do with it despite being on the board of the Signature Bank that went down. And then we’ve had others. We played Mr. Wonderful, Kevin O’Leary, yesterday saying this is the poster child for stupid business practices. Is it the printing of money? Is it dumb board members? What happened with SVB, with Signature? And what does it mean for the broader market dynamic?

Trish Regan: What happened was government created a situation where it was free, easy money for way too long — way too long. And those in government seemed to think everything would be okay. So they kept communicating to the markets and to their friends, many of whom were at SVB. In fact, one of the executives used to be at the San Francisco Fed. They kept saying, oh, it’s all under control. Nothing to see here, nothing to worry about. It’s transitory, remember?

And so consequently, the bankers at SVB that were in charge of managing risk, well, they went out and they did what they thought would be a normal thing to do. They bought a bunch of treasury bonds. Here’s the problem with that, Seb. Treasury Bonds, when they were buying them, they were paying like 1% for 10 years. And we all kind of knew — or at least I knew, and I kept telling you, and thus you knew, so your viewers knew, my listeners knew — interest rates are going to have to go up at some point. That was just the reality. The handwriting was on the wall.

Dr. Sebastian Gorka: But Trish, I’m not an economist, I’m not a market expert like you. But even I knew that. I knew that the Fed would have to raise rates again and again and again, which makes the face value of those bonds practically negatory. So how does the board think, oh, free money, free money, and not realize something like me, an economic novice, knew?

Trish Regan: You knew that, and I knew that. And I think I remember complaining to you, I was tearing my hair out because I knew that, you knew that. I think most average people knew that. But the Feds sat there with a straight face and told us they thought they could manage a soft landing and that inflation was only transitory and it wouldn’t stick. And I’m like, are you people insane? I mean, everything went through my head. I wondered if Jerome Powell was just trying to keep his job and Janet Yellen, she’s trying to keep her job and now suddenly she’s the world’s biggest politician because she’s over at Treasury doing Biden’s bidding. And all Biden wanted was for the money spigot to stay open and for the sugar high to continue. And I’m looking at this going, it can’t. It can’t!

“And I’m like, are you people insane?”

But you know what? We’ve had a sugar high for 15 years or 20 years. I mean, the Fed has been doing this forever. So there were a group of people out there, shall we say, the deep state people or just the super lefties that actually thought there would be no problem. I mean, they actually thought that. So they went and bought these bonds, right? Well, okay, bonds are usually a really safe investment. Even if you’re only getting 1% in 10 years, you ought to be able to trade them in. But what happens if all of a sudden your entire client base, which is all tech companies — it’s not like they had manufacturing companies or car companies or the local nail salon — all these tech companies suddenly need their money back because there’s this crunch, right? Tech plummeted in recent months.

So they come in and they try to get their money, Seb. Well, you’ve got all these bonds that aren’t good for 10 years. You have to liquidate. You have to sell them at a discount. And before you know it, you’re selling them at such a discount that the whole thing’s going to go belly up. And that’s why you had the Federal Reserve step in.

Now, I’ve been watching the hearings today. One very, very disturbing thing I heard was when Senator Lankford asked Janet Yellen, well, would you have done this if it was a small bank in Oklahoma? And she basically said, no, not necessarily.

Excuse me, but I did hear the president of the United States, did he not say on Monday that everyone’s money is secure? And the Fed did open this window saying to any bank, including the little one in Oklahoma, hey, if you have a problem, just come to us, we’ll give you a loan?

So it’s very unclear if they’re picking and winners and losers here. Granted, it was the 15th largest bank, they were worried about more bank runs. But what I heard on Monday was that they were backstopping the entire system and what I heard in hearings today was something quite different from Janet Yellen.

“We’ve had a sugar high for 15 years or 20 years.”

Dr. Sebastian Gorka: So what does this mean? If you have the chief executive unilaterally rewriting legislation saying, we don’t care about the FDIC quarter of a million cap, we’ll cover everybody. And then you have these musings or these rumblings that it’s the mom-and-pop banks that are going to bear the brunt of this. Are you concerned that this is more than just three banks? What is the long-range prognosis?

Trish Regan: Yes. I was not concerned until literally 30 minutes ago when I watched the exchange there between Senator Lankford and Janet Yellen. And he pushed her and said, would you be willing to do the same for an Oklahoma bank? And she’s like, well, and she hemmed and hawed and there’s all these various conditions. And I’m like, wait a second. You did say on Monday, you did say on Sunday night, you were opening this window, this lending window, any bank that’s in trouble can come to you and get a loan.

Well, if you’re not entirely willing to do that for everyone, and again, this is happening in real time. So keep that in mind. I just didn’t like what I heard. I wanted to hear emphatically that they were backstopping the system, but I did not hear that.

And so I think the upshot is going to be more regional banks have problems. They were naturally going to have problems anyway because they’re held to a different standard. It was well-intended at the time to kind of free up some capital so that they could have a shot at doing more diverse things. And yet nobody thought a bank run would really happen.

So a lot of these smaller regionals are effectively like a tier two. You get the tier one that are subject to all kinds of regulation, and then you get tier two over here, the smaller ones that don’t have the same regulatory requirements. And as such, when the you-know-what hits the fan, they might be more in jeopardy. And if Janet Yellen and the rest of them aren’t willing to help the smaller guys out too, we got a big problem.

Dr. Sebastian Gorka: So your advice in 30 seconds to the 3 million listeners right now?

Trish Regan: Move your money to a big bank! I’m sorry. This is going to be the reality. And you know what, Seb? It’s going to really stink for small business owners and for individuals because there’s something kind of special. I mean, when I was a kid, I got my little passbook savings from Portsmouth Savings Bank in New Hampshire. I know you know New Hampshire well. And they knew my name. And you have a relationship with your bank and there’s something incredible about that. And we’re going to lose this as a result of what’s happening now. That’s my fear.

The post Trish Regan on SBV Collapse: “The handwriting was on the wall” appeared first on The Daybreak Daily.

Transcribed and modified for publication from the original audio program.

Don't Miss Out
Sign up for Gorka's newsletters to get all of his latest videos, news, and special offers delivered to your inbox.
Sign Up