| | | | |  | | By Ryan Lizza, Rachael Bade and Eugene Daniels | Presented by TikTok | With help from Eli Okun and Garrett Ross
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While bank regulators have not yet found a buyer for Silicon Valley Bank's U.S. operations, the Treasury Department, the Federal Reserve, and the FDIC announced several extraordinary steps last night. | Justin Sullivan/Getty Images | | | | |  | DRIVING THE DAY | | THE WEEK AHEAD — Today: President JOE BIDEN announces AUKUS submarine deal in San Diego; DONALD TRUMP makes a campaign stop in Davenport, Iowa; MICHAEL COHEN testifies before a Manhattan grand jury investigating Trump. … Tuesday: February consumer inflation numbers released. … Wednesday: OMB Director SHALANDA YOUNG appears before the Senate Budget Committee; the Senate takes an initial vote on ERIC GARCETTI’s nomination as ambassador to India. … Thursday: Treasury Secretary JANET YELLEN appears before the Senate Finance Committee. … Saturday: NIKKI HALEY, ASA HUTCHINSON and TIM SCOTT appear at a Palmetto Family Council forum in Charleston, S.C. … Sunday: House Republican Issues Conference kicks off in Orlando, Fla. BACKSTORY — “Inside Pence world’s decision to go hard at Trump at the Gridiron,” by Adam Wren CRISIS AVERTED? — If you work at Compass Coffee, Roblox, Vox Media, Etsy, Roku, Vimeo, LendingClub or any of the other companies with deposits at Silicon Valley Bank, you are waking up this morning with welcome news. After a white-knuckle weekend you can be confident that payroll will be met, checks will clear and your company will have access to every cent of its SVB deposits, not just the FDIC-insured limit of $250,000, after federal agencies stepped in Sunday evening to backstop the failed bank and attempt to stem a burgeoning crisis among the nation’s medium-sized banks. If you’re a banker, investor, financial regulator, business owner or Biden administration official, you might still be plenty nervous. While Sunday’s announcement was aimed at restoring faith in the banking system, the early word Monday is that the markets might not be buying it. Another mid-sized bank, First Republic, that has similar issues as SVB and has come under close scrutiny over the past week, saw its shares drop precipitously in early trading. Global stock markets are also trending downward amid fears, Bloomberg’s Jan-Patrick Barnert observes, “that all the containment measures taken so far won’t solve the core problem of some banks” — that rising interest rates are shredding their balance sheets. That would suggest that the federal government’s emergency moves last night could be just the beginning, not the end, of Washington’s response. To recap, here’s what the Treasury Department, the Federal Reserve and the FDIC have already announced:
All of SVB’s depositors will be able to access all their money as of this morning. Keenly aware of the unpopularity of bank bailouts, an issue that scarred the first year of the Obama-Biden administration in 2009 as it grappled with the financial crisis, the Biden administration is taking pains to note that “no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.” How can that be true? Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” Yellen, Fed Chair JEROME POWELL and FDIC Chair MARTIN GRUENBERG noted last night. And what about the bad apples at SVB? “Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed,” the trio said.
Banks with SVB-like problems will have a new federal lender to help them: the Bank Term Funding Program. SVB’s problem was that it had too much of its money invested in long-term Treasuries and mortgage-backed securities that tanked in value as the Fed raised interest rates over the last year. As customers, mostly tech companies that were having trouble getting loans, began withdrawing money, SVB started selling off the bonds at a major loss. When the bank revealed last week that it was having trouble keeping up and had to raise money, SVB’s customers panicked, sparking a run on the bank. There are other banks with the same problem (such as First Republic). To make sure they don’t suffer the same fate, the BTFP will allow them to access loans with generous terms. Instead of having to sell off their interest-rate-ravaged treasuries, they will be allowed to use them as collateral for a loan at their original value. This is a very friendly policy for the eligible banks, which is the whole point, and the program will likely come under fire from some quarters for being too solicitous. This line in the WSJ’s write-up of the news caught our attention: “The new lending programs didn’t include restrictions on compensation for bank executives.”
New York-based Signature Bank, which suffered a run on Friday, was closed and will get the same treatment as SVB. Interestingly, the bank has some notable political connections. Former Rep. BARNEY FRANK (D-Mass.), of Dodd-Frank fame, sat on its board, and according to the Times, Signature “lent money to JARED KUSHNER” and “helped finance Mr. Trump’s Florida golf course.” Signature’s problem was more about crypto than interest rates. It was a banking destination for crypto companies and its depositors had been gradually pulling their money out since the collapse of FTX. But then depositors freaked out over SVB’s collapse. “It was an SVB-generated panic,” Frank told the WSJ. “We were fine until the last couple of hours on Friday.” | | | | A message from TikTok: We work hard to create a positive experience for teens. That's why accounts for anyone aged 13 to 15 are set to private by default without access to direct messaging. It’s also why we developed Family Pairing tools that let parents link their account to their teens’ and decide together what settings work best. Set screen time limits, decide who can comment on their content and more, so everyone can use TikTok safely and responsibly. Learn more at http://tiktok.com/safety. | | | Biden will speak later this morning at a time TBA about the actions he signed off on last night. The reaction from Republicans so far has been fairly predictable. Members of the responsibility wing of the GOP have been supportive. “Right decision,” tweeted Sen. MITT ROMNEY (R-Utah).
“I have confidence in our financial regulators and the protections already in place to ensure the safety and soundness of our financial system,” said PATRICK McHENRY, chair of the House Financial Services Committee.
Fringe members in the House GOP, meanwhile, made fringey comments on Twitter. (See MARJORIE TAYLOR GREENE’s twitter feed for a sampling.) GOP presidential candidates didn’t rush to put out statements last night. (Trump was preoccupied with CNN’s ratings instead.) But before the Biden administration’s announcement last night Haley warned, “Taxpayers should absolutely not bail out Silicon Valley Bank,” while Florida Gov. RON DeSANTIS blamed SVB’s collapse on wokeism run amuck. “This bank, they’re so concerned with DEI and politics and all kinds of stuff,” he said yesterday on Fox News. “I think that really diverted from them focusing on their core mission.” A lot of conservatives will be looking to the WSJ editorial page for guidance, and in a piece this morning headlined, “The Silicon Valley Bank Bailout,” the Journal is warning that the guarantee for depositors at SVB and Signature is misguided: “Will a universal uninsured deposit guarantee be next? This would be a monumental policy surrender, essentially admitting that the regulatory machinery established in 2010 by Dodd-Frank failed. We may be the only people in the world who still worry about ‘moral hazard.’ But a nationwide guarantee for uninsured deposits, even for a limited time, means this will become the default policy any time there is a financial panic.” Some other notable criticism to keep your eye on as the Biden response to the crisis is digested today: — WaPo: “Critics have warned that any support from the government could set a troubling precedent, leading other banks to expect federal authorities to intervene if they went under. It could also spark a populist backlash over the appearance of U.S. taxpayer money going to save some of the country’s richest residents.” — POLITICO: “To be sure, the Fed is facing growing scrutiny of how it supervised SVB and what it might have missed in ongoing oversight by bank examiners. … ‘What’s really at issue here isn’t the rules,’ said Federal Financial Analytics managing partner KAREN PETROU, who advises bankers and others on policy. ‘It’s how they were enforced by supervisors clearly asleep at the wheel because they thought they had a safe, self-driving car.’” Finally, there’s lots of speculation about how SVB’s collapse will affect the Fed’s inflation-fighting efforts. As the WSJ reports, there are signs the markets are expecting at least a pause in its interest rate hike campaign: The dollar weakened against key foreign currencies over the weekend, and Goldman Sachs issued a research note last night predicting no rate increase at the Fed’s meeting next week due to the unrest (though the bank expects more hikes later this year). Good Monday morning. Thanks for reading Playbook. Drop us a line if you’ve been affected by the SVP news: Rachael Bade, Eugene Daniels, Ryan Lizza. | | | | A message from TikTok:   | | | | | BIDEN’S MONDAY (all times Eastern):
8 a.m.: The president will receive the President’s Daily Brief.
9:50 a.m.: Biden will depart the White House en route to San Diego, Calif.
4:30 p.m.: Biden will participate in a trilateral meeting with Australian PM ANTHONY ALBANESE and British PM RISHI SUNAK.
5 p.m.: Biden will deliver remarks on the AUKUS Partnership.
5:45 p.m.: Biden will participate in a bilateral meeting with Sunak.
7 p.m.: Biden will participate in a bilateral meeting with Albanese.
9:45 p.m.: Biden will participate in a DNC reception in Del Mar, Calif.
Press secretary KARINE JEAN-PIERRE will gaggle aboard Air Force One en route to San Diego.
VP KAMALA HARRIS’ MONDAY: The VP has nothing on her public schedule.
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|  British Prime Minister Rishi Sunak, center, walks on the deck of the USS Midway Aircraft Carrier in San Diego, Sunday, March 12, 2023. | Stefan Rousseau/Pool Photo via AP | | | PLAYBOOK READS | | 2024 WATCH DEMS’ PLEASANT PENINSULA — “How Democrats disarmed a brewing Senate battle in Michigan,” by Nicholas Wu and Burgess Everett: “Rep. ELISSA SLOTKIN (D-Mich.) has largely cleared the field in what could have otherwise been a messy Senate primary. … Behind-the-scenes maneuvering by [Sen. DEBBIE] STABENOW and [Senate Majority Leader CHUCK] SCHUMER, a former Senate campaign arm chief himself, helped quell fears of a messy fight over succeeding Stabenow in a must-win battleground state.” THE TRUMP EFFECT RETURNS — “Trump continues to suck the air out of the GOP primary,” by David Siders: “The problem for Republicans is that Trump is making it impossible to run anything other than yesterday’s campaign.” ON THE GOP’S RADAR — “Republicans release top targets of Democratic-held House seats in 2024,” by Brittany Gibson: “The [NRCC] target list, which was shared first with POLITICO, includes 35 incumbents and two open seats that are currently held by [Slotkin] and KATIE PORTER (D-Calif.) who are both retiring to run for Senate.” FIRST IN PLAYBOOK — In an early whack at a potential challenger to Sen. BOB CASEY JR. (D-Pa.), the DSCC is releasing a new “book” on DAVID McCORMICK (who’s releasing his own book this week), titled “Chameleon,” detailing the former Pennsylvania Senate candidate’s record, including chapters on McCormick’s “MAGA Makeover,” his philosophy that “when China succeeds, America succeeds” and more. THE WHITE HOUSE THE BUSINESS OF BIDEN — “GOP killed Big Business. Biden buries the corpse,” by Ben White: “[T]he broader shift to more populist policies, like the ‘Buy American’ campaign also championed by Trump, could drive up the cost of production for companies — and consumers — at a time when the Federal Reserve is jacking up interest rates to bring down record-high inflation. And companies themselves fear a chilling effect on their operations from both Democrats seeking to toughen regulations and from Republicans ready to rip any firm that adopts progressive policies on climate and a range of social issues.” PALMETTO PIPELINE — “Kimpson leaving South Carolina Senate to join Biden admin,” by AP’s Meg Kinnard in Columbia, S.C.: “State Sen. MARLON KIMPSON, a South Carolina lawmaker and early backer of President Joe Biden, is leaving his legislative post more than a year early to take an appointment in the Biden administration.” KNOWING ERIKA — “At White House, Asian American Liaison Juggles Celebrations and Crises,” by NYT’s Stephanie Lai: “Ms. [ERIKA] MORITSUGU will return to Monterey Park with President Biden on Tuesday when he makes his first visit there since the shooting. It is the kind of assignment that comes with the territory of representing the Asian American community at the White House at a time when concerns are rising about racism and hate crimes as tensions with China escalate and the coronavirus pandemic grinds on.” FOR YOUR RADAR — “Vice President Harris to visit Africa in latest US outreach,” by AP’s Chris Megerian CONGRESS THREE’S A CROWD — “A third former House GOP candidate alerted to unapproved military records request,” by Olivia Beavers: “A Democratic-aligned firm made a failed attempt to obtain personal information from the Army National Guard on at least one House Republican candidate, according to a document obtained by POLITICO. It’s the same firm that the Air Force has identified as securing the unauthorized release of multiple House GOP candidates’ records last year.”
| | | | A message from TikTok:   | | | JUDICIARY SQUARE WEIRD ONE — “Judge in Abortion Pill Case Set Hearing but Sought to Delay Telling the Public,” by NYT’s Katie Benner and Pam Belluck: “Judge MATTHEW J. KACSMARYK, of the Northern District in Texas, told lawyers in the case on Friday that he was scheduling the hearing for Wednesday morning. However, he asked them not to disclose that information and said he would not enter it into the public court record until late Tuesday evening. One person familiar with the case, which is being heard in federal court in Amarillo, Texas, said such steps were ‘very irregular,’ especially for a case of intense public interest.” JAN. 6 AND ITS AFTERMATH QANON SHAMAN UPDATE — “Prosecutors say newly aired Chansley footage paints misleading portrait of his Jan. 6 conduct,” by Kyle Cheney: “In their first response since Fox News’ TUCKER CARLSON aired the footage — supplied to him by Speaker KEVIN McCARTHY — prosecutors indicated that Carlson aired footage only from a four-minute period toward the end of [JACOB] CHANSLEY’s hourlong trip through the Capitol, omitting the most incriminating aspects of his conduct.” AT THE PROUD BOYS TRIAL — “Proud Boys prosecutors push back on claims of misconduct after discovery of internal FBI messages,” by Kyle Cheney and Josh Gerstein POLICY CORNER REGULATION ROLLOUT — “Biden Plans New Limits on Arctic Drilling Ahead of Controversial Willow Decision,” by NYT’s Lisa Friedman: “Biden is expected to declare on Monday the entire Arctic Ocean off limits to oil and gas leasing and also to announce that the Interior Department will issue new rules to protect more than 13 million acres in the National Petroleum Reserve Alaska from oil and gas leasing.” WAR IN UKRAINE THE VIEW FROM THE WEST — “U.S. turns to new ways to punish Russian oligarchs for the war,” by AP’s Fatima Hussein: “From the Treasury Department to the Justice Department, U.S. officials will focus on efforts to legally liquidate the property of Russian oligarchs, expand financial penalties on those who facilitate the evasion of sanctions, and close loopholes in the law that allow oligarchs to use shell companies to move through the U.S. financial system.” ON THE GROUND — “Russian advance stalls in Ukraine’s Bakhmut, think tank says,” by AP’s Karl Ritter in Kyiv, Ukraine AMERICA AND THE WORLD DANCE OF THE SUPERPOWERS — “China Plans New Middle East Summit as Diplomatic Role Takes Shape,” by WSJ’s Summer Said in Dubai, Stephen Kalin in Riyadh, Saudi Arabia and Benoit Faucon in London: Chinese President XI JINPING’s “diplomatic initiative shows that Beijing sees a central role for itself as a new power broker in the Middle East, a strategic region where the U.S. has been the most influential outside player for decades. No longer focused exclusively on energy and trade flows, China’s foray into the region’s politics signals a new chapter in competition between Beijing and Washington.” FOR THOSE KEEPING TRACK — “Saudi Arabia’s golf case threatens to spill kingdom secrets,” by AP’s Ellen Knickmeyer: “While Saudi Arabia is fighting the decision, insisting U.S. courts have no jurisdiction over its high officials, the ruling means lawyers for the PGA Tour would be able to question top officials about business secrets that the Saudis have held close, such as details of deal-making involving 2024 presidential candidate Trump and others.” ON THE KOREAN PENINSULA — “U.S.-South Korea drills begin after North Korea submarine missile test,” by AP’s Hyung-jin Kim in Seoul TEL AVIV TOP-ED — “Notes from my husband on the constitutional crisis,” by Miriam Adelson in Israel Hayom: “Regardless of the substance of the reforms, the government's dash to ratify them is naturally suspect, raising questions about the root objectives and concern that this is a hasty, injudicious, and irresponsible move. A good deal is reached through cold-eyed circumspection. Slow down!“ BEYOND THE BELTWAY LIVE FROM LANSING — “Gun bills coming in Michigan after 2nd school mass shooting,” by AP’s Joey Cappelletti: “Democrats are expected to bring a sweeping 11-bill gun safety package before the Michigan Legislature this week. ... Responding to two mass school shootings in 15 months, the party’s leaders say it is only the beginning of gun reform in the state.” PHONE HOME — “Fights Over Rural America’s Phone Poles Slow Internet Rollout,” by WSJ’s Ryan Tracy THE LATEST IN CALIFORNIA — “As atmospheric river exits, a new storm threatens California,” by AP’s Nic Coury and Stefanie Dazio in Watsonville, Calif.
| | | | DOWNLOAD THE POLITICO MOBILE APP: Stay up to speed with the newly updated POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. The sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need, reimagined. DOWNLOAD FOR iOS– DOWNLOAD FOR ANDROID. | | | | | | | PLAYBOOKERS | | Yulia Navalnaya addressed her husband, Alexei Navalny, in a speech following a win for CNN’s “Navalny” documentary at the Oscars. Chris Licht sent a congratulatory note to his colleagues. Jimmy Kimmel skewered Tucker Carlson’s Jan. 6 footage fiasco. Kimmel also had a moment with Malala. Ted Cruz got a — uh, makeover for his new book cover. Ruben Gallego ribbed Kyrsten Sinema over the SVB collapse. Nancy and Paul Pelosi took a turn in the Vanity Fair Oscars portrait studio. FIRST IN PLAYBOOK — One of the most instrumental players in Democratic policy circles is leaving his longtime gig with Chuck Schumer — a sign that this Congress may not be as productive as the last. Gerry Petrella, who led Covid aid negotiations and helped cut the Inflation Reduction Act deal with Sens. Joe Manchin and Kyrsten Sinema, is leaving the majority leader’s office after more than 15 years of working for Schumer. He will depart in early April. Petrella isn’t a household name by design. But his fingerprints are everywhere on the last Congress’s list of accomplishments: The American Rescue Plan, the CHIPS bill, and the two-track infrastructure/IRA negotiation strategy. Schumer said “none of it would have happened without him” in a statement, crediting “his drive, his intelligence, his ability to see the complete picture and put different diverse pieces of legislation together, and his 24/7 dedication.” And recently departed White House chief of staff Ron Klain said that Petrella directly dealt with top officials in the Biden administration and “was trusted by senators to bridge gaps they often could not overcome on their own.” Klain said Schumer placed “unmatched confidence” in Petrella. TRANSITIONS — Tyler Dever is now a senior legislative assistant for Rep. Keith Self (R-Texas). He previously was a legislative assistant for Rep. Greg Stuebe (R-Fla.). … Daniel Gleick is now deputy director for media relations at NARAL Pro-Choice America. He previously was comms director and senior adviser for former Rep. Val Demings (D-Fla.). … Phillip Jerez is now deputy director of engagement for Surgeon General Vivek Murthy. He previously was political director for Charlie Crist’s Florida gubernatorial campaign. … … Ansley Bradwell is now a director at the Herald Group. She previously was press secretary for Sen. Marco Rubio (R-Fla.). … Catherine White is now a press assistant with the Office of the USTR. She previously was a press assistant for Rep. Jim Clyburn (D-S.C.). … Alex Vargo is now director of external affairs for Florida state House Speaker Paul Renner. He most recently was a senior policy adviser for Florida Gov. Ron DeSantis. ENGAGED — Maryam Ahmed, press secretary for Rep. Adam Schiff (D-Calif.), and Jacob Burman, senior adviser to LA City Councilmember Traci Park, recently got engaged. Burman popped the question by recreating one of their favorite dates on the beach in Malibu at sunset. The couple met in South Bend, Ind., while working on the Pete Buttigieg presidential campaign in 2019. WEEKEND WEDDING — Emma Sandoe, associate director of strategy and planning at North Carolina Medicaid and adjunct professor at Duke University and an Obama HHS alum, and Daniel Powers got married yesterday in Raleigh, N.C. Her dad delivered a father of the bride speech written by AI. SPOTTED: Dan Schory, Sophie Shulman, Will Mitchell, Read Holman, Sam Baker, Sasha Baker, Jake Stokes, Igor Volsky and Sacha Haworth. WELCOME TO THE WORLD — Matthew Gorton, EVP of public affairs and comms at Empire State Development and a Michael Bloomberg and Hiltzik Strategies alum, and Carmel Geoghegan welcomed Clare McCabe Gorton on Feb. 24. She is named after the county in Ireland where her maternal grandfather was born. Pic HAPPY BIRTHDAY: Sen. John Hoeven (R-N.D.) … Jeff Weiss … CNN’s Katelyn Polantz … Ari Rabin-Havt … POLITICO’s David Lim and Tamar Barsamian … White House’s Maya James … Kiki McLean … Ashley Hoy of Monument Advocacy … Erin Billings of Global Strategy Group … former Reps. Alan Grayson (D-Fla.), Joseph Cao (R-La.) and Rick Lazio (R-N.Y.) … Joe Rubin … WSJ’s Ryan Tracy … Erin Harbaugh … MSNBC’s Yelda Altalef … Brian Gaston … Lauren Inouye of the American Academy of Nursing … Chris Gaspar … Will Thomas of Rep. Derek Kilmer’s (D-Wash.) office … Tres York of the American Gaming Association … The Clearing’s Christina Roberts … Sarah Mulcahy … James Wesolek of the Texas GOP … JPMorgan Chase’s Jamie Dimon … Mike Murphy of the Committee for a Responsible Federal Budget (4-0) Did someone forward this email to you? Sign up here. Send Playbookers tips to playbook@politico.com or text us at 202-556-3307. Playbook couldn’t happen without our editor Mike DeBonis, deputy editor Zack Stanton and producers Setota Hailemariam and Bethany Irvine.
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