CNN Newsroom: Interview With Rep. Jake Auchincloss (D-MA)

Interview

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I'm concerned, as everybody paying attention is, and Silicon Valley Bank had almost half of its branches in Massachusetts which I represent, including their headquarters in my home town. They banked not just our start-up economy, the life sciences and the high-tech firms, but also affordable housing developers and nonprofits focused on early education.

This was a cross-section of our economy and the FDIC and the Fed were right to come in strong and clear on Sunday night. But now we are seeing that nationally, midsize regional banks are under a lot of strain. And for that reason, amongst others, I do think that Congress should raise the FDIC insurance limit through a higher special assessment on banks, so that we give depositors and these regional banks more confidence that those deposits will be there. And also so that we stem some of the contagion of fear that has rippled through our banking sector.

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This is not 2008 rerun. The banking sector is much better capitalized, much more liquid than it was then. This is about interest rate risk management, not about credit risk management as it was in 2008. And so we do not need to fear, I think, a meltdown of the banking sector as happened so disastrously then.

Having said that, Americans should expect regulators from the Feds, the FDIC, to the Treasury to be firm and forceful in how they oversee these banks, and there should be some tough questions asked in congressional hearings about whether the Feds and particularly the San Francisco branch of the Fed fell down on the job in overseeing SVB's disastrous interest rate risk management.

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Over the last two years I have heard from some very smart people the whole litany of confident predictions about what's going to happen in the next six months to one year. We don't know what's going to happen. We do know that financial instability threatens what has been a very strong economic recovery and for that reason, we need to act forcefully, and with clear communication to prevent any contagion in our financial sector.

But we also know that many of the answers to a strong and fair economic recovery are in our hands. We need to build more housing in this country by reforming our local zoning laws. We need to build on the success of the Inflation Reduction Act to permit more clean energy generation and transmission. We need to continue to go after lowering drug prices by taking on the PBMs.

So many things that we can do in Congress and elsewhere to lower costs for working families don't require a crystal ball about what's going to happen in the next year. They're just good policy and they help everyday Americans.

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For the last 70 years, the triangle between China, Russia and the United States has been the most important set of international relationships in the world. And clearly right now Xi Jinping is saddling up to Russia as it compares to compete with the United States in the 21st century. If Xi Jinping decides to send weapons to Russia for its brutal unprovoked invasion of Ukraine, that would be the most significant development in that war since the invasion itself on February 24th. And United States and its allies need to be prepared to respond with severe sanctions and international condemnation. Whether those arm sales happen overtly or covertly because China does have a long track record of covert arms shipment over the last 30 years. But it really just reminds us that we can't rely on the good will or the good judgment of Xi Jinping. He is bent on a world order in which China is at the top of a hierarchy.

It's in direct competition to the rules based international order, where might does not make right that the United States helped to put together after World War II, and we've got to defend it forcefully on the world stage. Economic alliances, initiatives to strengthen democracy, diplomacy and security initiatives. We need to do all of this with countries like Nigeria, India, Brazil, Mexico. The rising nations of the global south to build a web of alliances against the Chinese Communist Party.

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Taiwan crystalizes the threat from the Chinese Communist Party and the United States, one, needs to continue to send arms to Taiwan as it prepares its strategy, defense in-depth against a potential Chinese invasion. We should also work with Taiwan on their energy security. Right now they have two to three weeks of energy reserve. That's not a good place to be in when you're on an island faced with a dubious invasion or a blockade for that matter.

And finally, and this really applies to Taiwan but everywhere else in the world especially in democracies, we have got to do a better job of countering disinformation and propaganda. We should be supporting local journalism efforts. We should be holding social media companies to account for how they allow disinformation and deep fakes to propagate because the Chinese are watching concerted propaganda efforts throughout the world.

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Good to be with you.

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