The Fed’s H.8 report: What is it?

Yahoo Finance’s Rick Newman joins the Live show to discuss the Fed’s H.8 report and why it matters.

Video Transcript

- Smaller banks are now getting a shock as bank clients look to move their funds to larger institutions fearing insolvency in the wake of Silicon Valley and Signature Bank's collapse. Here to discuss the bank narrative and his own latest take on "Bidenomics" is Yahoo Finance Senior Columnist Rick Newman. Rick, break down your take, please.

RICK NEWMAN: Hey, guys. Guess what the most important financial release is these days? It's not the unemployment report or even the inflation report. It's something the federal reserve puts out each week called the H.8 Release.

Hardly anybody used to pay attention to that, but that now tells us-- that has a lot of banking data in there, and it tells us what's happening with bank deposits. And there's been a remarkable outflow of bank deposits recently for two reasons. One is that people are looking for higher yields and money market funds. That's been going on for about a year as interest rates have been going up.

But the other obvious reason is that people got worried about whether their bank was safe after we saw these two bank failures early in March. So what's happening right now is we are just waiting to see if all of this stuff that the Federal Reserve and the FDIC and other bank regulators have done-- if this is enough to stabilize the banking system. We heard President Biden this week.

He said he wants to go back to these tougher standards for regulating mid-sized banks that were in place until the Trump administration weakened them. That will help in the future, but I don't think that's going to do anything if we still have wobbly banks in the system. So we are basically in a wait-and-see mode. And this could go on for months before we know the banking system has finally stabilized.

Just as a reminder, the 2008 financial crisis actually started in 2007 when two hedge funds failed. That was an early warning that a lot of people did not recognize at the time. But it was a year later before the panic spread throughout the banking system. So it's not going to be that bad this time around, but this can take some time.

- Yeah, I remember that. It was the summer of 2008. Two Bear Stearns hedge funds went down and it was only next year, about 15 months later, that Lehman fell. So thank you for that Rick Newman.