Natalia Chi
Below is a transcript of an interview with Rep. Patrick McHenry of the Republican Party of North Carolina that aired on “Face the Nation,” which aired Sunday, March 19, 2023.
Margaret Brennan: Currently chairman of the House Financial Services Committee, which includes Rep. Patrick McHenry from North Carolina. good morning. I’m glad I came here in person.
Contact PATRICK MCHENRY: Nice to be here.
Margaret Brennan: I’d like to talk to you about the banking crisis, but first I’d like to ask you a little bit of business about what Speaker McCarthy said. He is directing Congress to investigate whether federal funds are being used by the state of New York, where a grand jury could soon indict the 45th president, he tweeted. Why is he issuing this threat? Isn’t this kind of congressional inquiry just using federal money from American taxpayers for political purposes?
Rep. McChenley: Since that tweet, I haven’t had the opportunity to speak to Speaker of the House McCarthy overnight, nor have Oversight and Investigation Committee Chairman Comer, or Judiciary Committee Chairman Jordan. I’m chairing the House Financial Services Committee, and I’m caught up in the turmoil of the banking sector…
MARGARET BRENNAN: But you’re one of the leading Republicans in Congress, do you agree that federal money is used to investigate states or cast doubt on them? I mean, what is it about? ?
Rep McCenley: Here’s a question-here’s a question. I think the viable question for the American public is whether there are progressive prosecutors who use the judicial system to track political opponents for political turmoil. As with Manhattan DA, as I said earlier, I’ve spent most of my time focused on what’s at hand.
Margaret Brennan: Do you think it’s a good use of taxpayer money?
Rep McCenley: Well, I think it’s a questionable use of taxpayer money for prosecutors to use the justice system to track someone…
Margaret Brennan: It’s a New Yorker problem, isn’t it?
Contact McCenley: Right. But when you see Americans being targeted, it’s becoming a problem for Americans. That is why House Speaker McCarthy created the Government Weaponization Committee within the Judiciary Committee. And that’s why Jim Jordan is leading the effort.
Margaret Brennan: But you are now trying to focus on the real thing that is at crisis level in the banking sector. How can a bad bank step in and buy a troubled bank like First Republic?
Rep MCHENRY: I think we need to consider all options. That is what I am considering legislatively, and what I would like to encourage the administration to consider as well. there are various things–
Margaret Brennan: Is there anything that would prevent such a White Knight from being rescued?
Rep. MCHENRY: Well, that’s what we have to figure out. At this point, I think it’s important that the American people have faith in their financial system and their banks. That’s why I said last Sunday night he supported the FDIC and Feds-Treasury decision. I thought it was necessary for the country. Now, what I need to get to the bottom of the investigation in Congress is the who, what, when, where, why, how of these bank failures and their decisions…
Margaret Brennan: Signatures and Silicon Valley?
Officer McCenley: That’s right. And, and about the decisions made over the weekend. We have seen a private sector response to help banks. Was it a viable option last weekend? Or was there an ideological lens that prevented them from taking advantage of these institutions and softened the turmoil in America?
Margaret Brennan: That’s why I asked you. Because what you’re suggesting is that the Biden administration didn’t want the big banks to come to the rescue here.
Officer McCenley: I don’t know.
Margaret Brennan: And we are now facing an ongoing crisis. you don’t have the answer–
Rep McCenley: I don’t know the facts about whether the FDIC had a viable buyer last weekend. We have coverage of a couple of banks that have been at the table. Comments from other bankers prevented them from bidding. I don’t get the facts. I’m not going to draw any conclusions until I have the facts. Especially in situations like this…
Margaret Brennan: But you’re suggesting that it could have made things worse.
Rep MCHENRY: Well, you know it’s been a very tough week for the American banking industry. I lost my confidence. And I think so, but it raises the question of what happened last weekend.
Margaret Brennan: Well, when it comes to what’s happening right now, banks that are “too big to fail” can buy one of these banks like First Republic to stop the bleeding. can you?
Rep. MCHENRY: All options should be considered.
Margaret Brennan: I heard Senator Elizabeth Warren suggest that she support Congress’ initiative to uninsure currently uninsured deposits, deposits over $250,000. She capped her $2 million to her $10 million. for how long? how big is it? Who does it apply to? how do you make that? Any chance of working here?
Rep McCenley: Well, it’s the first time I’ve heard of such a suggestion. Nor have I ever spoken with the White House or the administration about changing the level of deposit insurance. What I do legislatively and as an oversight function is to determine if there is a need to address FDIC deposit levels. From $100,000 he raised $250,000 after the last financial crisis. There was a temporary program to help with deposits after the financial crisis to help people have confidence in their local banks. What I want to know is the trade-offs, the moral hazards of taking more risks in the financial sector, and the implications of that for community banks. I’m here. This is a critical issue for competition in the financial services sector.
Margaret Brennan: Right now it’s the midsize banks that are under pressure, not the community banks.
Contact MCENRY: Yes. These mid-sized banks have regulatory capital requirements, substantial capital requirements, and are placed in a similar position to their peers. we must see it too.
Margaret Brennan: In this divided Washington, is there really anything you can get through other than clawbacks, which seem to be very popular on both sides of the aisle?
Rep McCenley: Well, what we do know is that depositors are made entirely in America with bank failures.
Margaret Brennan: Well, nobody wants to use the word government bailout.
Contact McCenley: Um–
Margaret Brennan: But we are in the midst of a potential ongoing crisis. Is it possible that something like FDIC insurance actually passes and that cap is lifted?
Rep MCHENRY: All options have to be considered and that’s how I’m approaching it. But to do this, we need to understand those trade-offs. This is not pure play to allow greater insurance coverage. It will put a huge strain on the financial system, especially community banks. You should watch this very carefully. But step back and the question of what the FDIC did to protect the deposits of these two institutions is in the nature of the laws we made 90 years ago he created the FDIC fund . It’s a mutual insurance fund, paid for by industry, not taxpayers, and I think they’ve done the right thing.
Margaret Brennan: You’re calling the FDIC Commissioner and the Fed’s Vice Chairman of the Board of Governors. what is your intention And can you call Mary Daly of the San Francisco Federal Reserve?
Rep. McCenley: First of all, the heads of these agencies, the Fed’s Vice Chairman of Oversight, and the FDIC Chairman, we need to understand the decisions that were made last weekend – Thursday through Sunday night. until whether there is a viable private sector solution. We also need to understand the root causes of these bank failures, and we intend to get there. The San Francisco Fed’s problem is a supervisory problem. We need to find out if this is a supervisory issue, a regulatory issue, a bank mismanagement issue, or perhaps all three.
Margaret Brennan: I would like to ask you about some of the things that have been said.
Rep. McCenley: It never ends.
Margaret Brennan: There is no end. But his two banks that failed were in New York and California. Conservatives like Mike Pence, Ron DeSantis, Donald Trump, and your colleague James Comer are throwing in words like, “I woke up banks pushing a liberal agenda.” They denounce diversity and environmental commitment. In terms of culture wars, isn’t there any danger in provoking a very substantive and active crisis?
Rep. MCHENRY: I think everyone preaches their own book. In the first segment we heard-
Margaret Brennan: Right.
Rep. MCHENRY: Preaching their book. And their book is that what you thought was a problem a month ago applies to this situation. It’s happening on both sides of the aisle. But on the issue of ESG and these initiatives, my fellow–
Margaret Brennan: Going Green–
Rep.Matchenley: Society and Governance–
Margaret Brennan: That’s right. Encourages companies to take it into account when investing.
Contact McCenley: Yes. So there was a lot of political discussion about it. There is substance here. And if the management of these institutions were more concerned with politics and the environment and social goods than with governance regulation, had competent boards, and had adequate oversight of people’s deposits, this would be It shows they were mismanaging. So I think there’s a natural question we have…
Margaret Brennan: But is there any evidence of that? I mean, Silicon Valley Bank didn’t have a perfect risk officer for a long time.
Rep MCHENRY: Yes, very few people on the bank’s board of directors had banking expertise. So there are some questions, and of course the question we should ask is…
Margaret Brennan: But that’s bad. It’s bad management. It’s not “wake banking”.
Rep. McCenley: But as I said, whatever your book as a politician a month ago, a year ago, applies to this general situation. What I’m trying to do is take a detailed look at what happened and then determine if there is appropriate legislation. But when you have a hammer, you see the world like a nail. I am tangible, focused on the problem at hand, and trying to solve the problem with certainty.
Margaret Brennan: Yes. So President Biden has asked Congress so far, but maybe he asked for something else. So far, the only thing he wants is to get those salaries back or pay executives of failed banks and ban them from working in the financial industry. already exists. Senator Warren supports it. Will it pass Congress?
Rep. MCHENRY: Well, that’s what I’m going to see – look, consider.
Margaret Brennan: But you don’t have to have an active crisis.
REPRESENTATIVE MCHENRY: No, it’s – it’s not. But for these things we know they are known failures of this. We found that deposits left at a faster rate than those with insurance. It’s a new phenomenon. Given the speed of Twitter and bank runs, and the speed of e-banking, these need to be considered from a legislative and regulatory perspective. Bank executives’ performance issues certainly need to be looked at and made sure they are aligned with consumer protection and depositor interests.
MARGARET BRENNAN: Congressman, I will be monitoring the upcoming hearings. thank you. Face the Nation will be back soon. stay with us
