Rep. Mike Flood (R-Ne.) joins Yahoo Finance Live from Berkshire Hathaway's Annual Shareholders Meeting in Omaha to discuss what investors can expect from Warren Buffett during Saturday's gathering, the government's efforts to fix the regional banking crisis, and the debt ceiling debate.
Video Transcript
- Well, Berkshire Hathaway's annual meeting is almost here. The big meeting kicks off tomorrow, Saturday, in Omaha, Nebraska. Investors are eagerly awaiting to see what Warren Buffett has to say on the turmoil that has engulfed regional bank stocks. Let's bring in Nebraska Congressman Mike Flood, member of the House Financial Services Committee.
He is already there on the ground. Congressman, this is kind of the Super Bowl for your home state. Every year you've got thousands of people going there to try and get a good just a piece of investing advice here from Warren Buffett. What are you looking to hear?
MIKE FLOOD: Well, obviously, we celebrate and have celebrated the success of Warren Buffett and all of his investors for decades here in Nebraska. Nebraska is home to a lot of top 10 Fortune 500 companies. Today is a celebration of everything that Berkshire Hathaway has been able to do for investors. And what we look for from Warren Buffett is the stability and the common sense leadership that he provides in our markets.
Every single year you take away a couple of real nuggets from Warren Buffett. And he's careful not to share them much along the way throughout the rest of the year. And so we're looking forward to that. And I know that not just Nebraskans but Americans and investors from across the world are converging on Omaha right now. And you're right, this is the financial services Super Bowl of America right now and I'm in the middle of it.
- Well, Congressman, I'm sure many investors are going to be eagerly awaiting for what Warren Buffett has to say about the recent instability and turmoil that we've seen play out within the regional banks. I'm curious to get your perspective on that turmoil and what you think that landscape looks like for regional banks here going forward.
MIKE FLOOD: Well, one of the big strengths to the American financial system is that we have diversity in the types of financial institutions that we have. Obviously, we have thousands of community banks. We have that middle tier, which we're very worried about right now. And then we have the large banks like Bank of America, Wells Fargo. One of the things that we're working on in the Financial Services Committee is what do we need to do when it comes to FDIC insurance?
What does the Congress need to do in terms of rules and policies to protect that middle tier, SVB, Signature, obviously First Republic, different situations in the last one. But at the end of the day, we need to protect that middle tier. It provides us the diversity in our financial markets that the European Union doesn't have. In the EU you just have the big banks, which allows policies like climate change to seep into the markets and to have a disproportionate effect.
Here in the United States we're very focused and we're very focused under Patrick McHenry's leadership, protecting that middle tier and promoting diversity in our institutions.
- Investors still certainly trying to process the wild swings we saw in the regional bank stocks this week. There's some concern about short-sellers targeting these names. And potentially that was the reason behind the volatility that we saw. You're on the House Financial Services Committee.
Would you support a temporary ban on short-selling? And do you think something like that is necessary to at least restore the confidence within the financial system?
MIKE FLOOD: You know, I'm not ready to go there yet. I think that what we need to do is we need to recognize that investors, depositors need to have confidence in that middle tier. That was the issue that led us down the road with SVB and Signature Bank. We also recognize that we're in an environment now where the wrong tweet or digital information can cause a modern-day bank run.
Do we need to take some steps? Yes. I'm not convinced exactly what those steps are. I'm still sifting through the Fed's report. And I know as a committee, we've been off this week and we're planning to meet next week and get more information and ultimately chart out a course that protects that middle tier of banks in the United States.
- Another thing that's keeping Congress, lawmakers very busy is the showdown over the debt ceiling. And I know President Biden planning to meet with congressional leaders, speaking with them next Tuesday. I'm curious just to get your perspective. It doesn't leave much time to get a deal done. Are there any signs that these talks are progressing at all?
MIKE FLOOD: Well, if you would have told Americans 60 days ago that a majority of House Republicans could land on a debt ceiling plan, I think a lot of people would have been surprised. The fact that we got 217 votes to put everything together speaks about the unity we have in the House Conference right now.
The ball is clearly in President Biden's court. It's clearly in the Senate's court. We need them to act in the best interest of our nation. And there's never been a debt ceiling conversation that hasn't included talks about spending cuts. We have to look at both the short-term and the long-term.
And that's our message from the House Financial Services Committee. We're committed to a responsible raise of the debt ceiling. But we also have to look at how we are mortgaging our children's future. And we are looking for, as you know, $4 billion, or $4 trillion in cuts over the next 10 years. And that's exactly what we delivered to the Senate.
And I know that President Biden got a real wake-up call when it happened. His spending has gotten us into this jam, and now he needs to figure out how we're going to lift this ceiling and work with the House Republicans to make it happen.
- Congressman, there are some reports out there that suggest there are a handful, a small handful, of some of your Republican colleagues that are potentially considering a debt limit increase by a procedure that would essentially bypass House leadership. Where do you stand in that debate? And would you ultimately support a temporary increase in the debt limit to allow for further negotiations?
MIKE FLOOD: I think what America is missing right now is that the Republican conference is united behind Speaker Kevin McCarthy's leadership. When I voted for that debt ceiling deal in the House of Representatives, I essentially was voting to empower Speaker Kevin McCarthy to transact this deal on the House's behalf.
And I think when you talk to our conference, you will find almost to a one, we are united in our belief that Kevin McCarthy is going to be the one at the negotiating table. Kevin McCarthy, our Speaker, is going to be the one that makes the decision. And this idea that we're somehow fractured is-- I don't know where that's coming from.
It's probably a rumor the Democrats want to start. That's not what I see where we're in the room. And don't get me wrong. There's a lot of us like myself. We, I would say almost all of us, we see the value of, and we know the importance of a debt ceiling increase, when we're facing these problems. But we also know that it has to be paired with cuts.
It has to be paired with slowing down our financial spending. And that's why when we talk about negotiating, Speaker Kevin McCarthy is our proxy. He's the one doing it and we're united behind him.
- Well, we will see whether your party and the other side of the aisle is able to reach an agreement here in a timely fashion. Congressman Mike Flood, thanks so much for your time. Have a great time at the conference.
