Russian fighter jet collides with Air Force drone, a look at the bank collapses: 5 Things podcast

On today's episode of the 5 Things podcast: Russian fighter jet collides with US Air Force drone

A Russian fighter jet collided with a U.S. Air Force drone on Tuesday. Plus, USA TODAY Money & Personal Finance Reporter Medora Lee puts the bank collapses in perspective, President Joe Biden signs new executive action on gun background checks, Arizona Republic State Politics and Issues Reporter Ray Stern discusses abortion legislation in Arizona, and Novo nordisk will dramatically cut insulin prices.

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Hit play on the player above to hear the podcast and follow along with the transcript below. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.

Taylor Wilson:

Good morning. I'm Taylor Wilson and this is 5 Things you need to know Wednesday, the 15th of March 2023. Today, the latest after a Russian jet collided with a US drone. Plus, how concerned should Americans be about this past week's bank collapses? And we take a closer look at abortion laws in Arizona.

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A Russian jet collided with a US Air Force drone over the Black Sea in Eastern Europe yesterday. The incident caused the drone to crash. US officials said Russia intercepted the drone on purpose. National Security Spokesman John Kirby told reporters that Russian pilots have intercepted US war planes in recent weeks, but not in such a reckless manner. He said the drone was flying in international airspace when it was knocked down. The Russian fighters dumped fuel on it before the collision. State Department officials plan to speak directly with their Russian counterparts to express concern about the incident, but the US likely won't respond with direct force. Notre Dame Law School Professor Mary Ellen O'Connell is an expert on international law and the use of force. She said Russia's disruption of the drone was within the laws of armed conflict.

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It's been a rough week for American banks. First, Silicon Valley Bank collapsed last week followed by Signature Bank. The Department of Justice and Securities and Exchange Commission have said they'll investigate what happened, but how concerned should Americans be? I spoke with USA TODAY Money and Personal Finance Reporter Medora Lee to find out. Medora, welcome back to the pod.

Medora Lee:

Hi, thanks for having me.

Taylor Wilson:

You're coming during a tumultuous few days for banks. First off, could you just explain what's happened over the past week or so to Silicon Valley Bank and also Signature Bank?

Medora Lee:

Silicon Valley Bank, it turns out, they lend a lot of money to smaller kind of tech companies and startups, and so as the Fed has raised interest rates, a lot of those companies are requiring a lot more money to operate. So they decided to withdraw large amounts of money from Silicon Valley Bank. So to cover some of those withdrawals, the bank had to sell some assets that it had on its books. But here's the problem, is that a lot of their assets, although they are among the safest assets, you could possibly have - long-term treasuries that are backed by the government mortgage-backed securities - the problem is that because of inflation and the Fed raising rates so quickly and so high, the market value of those securities have dropped. So they had to sell these securities that they've been holding for a loss, a huge loss to cover those withdrawals. Then, as they kept selling for a huge loss, they had less money to cover other deposits, and over the weekend, the FDIC took it over. Biden said yesterday that they were going to make sure that all the deposits were covered, not just up to the FDIC limit, usually up to $250,000. So while this is happening in Silicon Valley over in New York, Signature Bank is another one that had some problems. They also took over that bank as well.

Taylor Wilson:

Yes. You mentioned some of what regulators said over the weekend. What else can we expect from regulators on this?

Medora Lee:

To cover all of the deposits, the Federal Reserve and the US Treasury, mostly the Federal Reserve, is backstopping all of these assets that these banks have. So basically what they're doing is if you're a bank and you need some money to cover some withdrawals or whatever, they are allowing these banks to come to the Fed. They're opening up a temporary facility and they can put up their high quality assets like the treasuries, mortgage-backed securities, as collateral to get a loan. And the Fed will value those at their face value, not the market value, which is down because the Fed's been raising rates and we've had all this inflation.

Taylor Wilson:

On the issue of inflation, Medora, we have new data out from the Consumer Price Index this week. What impact do these collapses have on those numbers and what can we expect on inflation going forward?

Medora Lee:

It's funny because I was trying to figure this out myself. I guess some people think that the run on banks might help inflation. I know this sounds absolutely crazy. But basically because there's this little panic in the market about these banks maybe collapsing, they're going to tighten up their lending now. That the tightening of the lending is going to slow down the economy. Especially with the tech sector, I think that a lot of people think that Silicon Valley Bank was heavily into tech companies and some of them are having trouble, so they're going to pop that bubble a little bit and the easy money for the tech companies won't be there really as much. So some people think that this could be helpful for the Fed since financial conditions have tightened so much, but we'll see if it lasts. I don't know, that CPI report still looked a little hot to me.

Taylor Wilson:

When Americans hear failed banks, a lot of folks' minds go back to the 2008 financial crisis. Should we be concerned that these bank collapses are the beginning of some kind of financial meltdown?

Medora Lee:

So yeah, you're right. There's always that fear that if they found some problems in these regional banks that there could be other problems elsewhere. But the good news is that US banks are generally well capitalized, especially the bigger banks. So they do these stress tests on some of the biggest banks regularly and they have all passed. So I think that's going to help. Then this new Fed facility where they can help banks cover the deposits if they need to is going to help. So I'm scared to say we're out of the woods, but it seems like this is going to be solid.

Taylor Wilson:

All right, Medora Lee, thanks so much.

Medora Lee:

Thanks so much. Bye.

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Taylor Wilson:

President Joe Biden took executive action yesterday seeking to increase the number of background checks conducted during gun sales.

President Joe Biden:

I'm here on behalf of the American people, to mourn with you, to pray with you, to let you know you are loved and not alone. But I'm here with you today to act.

Taylor Wilson:

Biden made the announcement while speaking at a Boys and Girls Club in Monterey Park, California, a town that suffered a mass shooting in January. The order stops short of requiring universal background checks, which the president has asked Congress to pass through legislation. Biden's move instead directs Attorney General Merrick Garland to clarify what it means to be in the business of selling firearms. Federal law requires that individuals in the business of selling guns be federally licensed and therefore check the backgrounds of buyers. Under the order, Garland will use his discretion to make sure gun sellers willfully violating the law and those unaware of background requirements become compliant. President Joe Biden faces increasing pressure to address gun violence after a series of mass shootings this year. But his proposals to reinstate a ban on assault weapons and require universal background checks lack the votes in the Republican-controlled House.

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A federal judge has granted legislative leaders in Arizona the right to intervene in a lawsuit against a state ban of abortions because of so-called genetic abnormalities. To learn more about this law and how abortion legislation in Arizona could influence other states around the country, I spoke with Arizona Republic State Politics and Issues Reporter Ray Stern. Ray, thanks so much for coming on the show.

Ray Stern:

You bet. Glad to be here.

Taylor Wilson:

Can you just start by explaining what this law is exactly?

Ray Stern:

That was a law that was passed in 2021 and signed by the governor, and it did basically two things. One, it bans abortions for reasons of genetic abnormalities, and then the law also created a fetal personhood rule, which basically would make fetuses have the same rights as a child, and that part of the law is on hold and they're reviewing the other part.

Taylor Wilson:

So what did a judge rule on this?

Ray Stern:

The genetic abnormalities part of the bill had been sort of under wraps and had been stayed because of an injunction that was made right before the Dobbs vs. Jackson Women's Health ruling last June by the Supreme Court. So when this law first passed, Roe vs. Wade was still in effect, and then in June, things changed. So the abortion rights groups that were protesting this 2021 law went to renew their preliminary injunction. This time, the judge said a different result is needed because there are no more protections from Roe vs. Wade. So he lifted the injunction.

As of now, you cannot have an abortion in Arizona for those reasons and basically, the physician and abortion providers can get in trouble if there's some kind of evidence that proves that they knowingly went ahead with an abortion when they had reason to believe that the abortion was being sought for these reasons of genetic abnormalities. So the abortion rights groups are now appealing this to the Ninth Circuit, and they want to get the injunction placed back on the law until the Supreme Court can sort of hash things out.

Taylor Wilson:

Ray, I'm curious, obviously now the states have control over abortion laws around the country. How might Arizona influence abortion legislation around the US?

Ray Stern:

I think Arizona is one of the important states on this issue because there's a couple reasons on that. Arizona has been looked to for many reasons. We're part of a group of states that is maybe more purple, but we also went for Trump in 2016; Biden in 2020. It's 150 years old and it has very harsh restrictions for abortion providers if it should go through. So to answer your question, if it ends up that this law is upheld, there are other states that have similar laws that they could feel buoyed by that. So a law like ours could spread to other states.

Taylor Wilson:

Ray Stern covers state politics and other issues for the Arizona Republic. Thanks, Ray.

Ray Stern:

You bet.

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Taylor Wilson:

Danish drug maker Novo Nordisk has announced it'll cut insulin prices in the US up to 75% next year. The company is one of the biggest sellers of insulin in the US and around the world, according to the Wall Street Journal, which first reported the cuts. The move follows pharma giant Eli Lilly's announcement that it'll cut prices of its most commonly prescribed insulins up to 70%, in addition to expanding a program that limits out-of-pocket costs for some customers. Cuts come amid pressure from lawmakers and patient advocates to reduce the price of insulin, which is a life-saving medicine for people with diabetes.

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There's a new episode of the true crime hit podcast Accused, out this week. The subject of the most recent season is Elwood Jones, who spent nearly three decades on Ohio's death row and now his conviction is being overturned. We've dropped a link to it in today's show description.

Thanks for listening to 5 Things. You can find us every day of the week right here, wherever you get your podcast. I'm back tomorrow with more of 5 Things from USA TODAY.

This article originally appeared on USA TODAY: Russian jet collides with Air Force drone, abortion in AZ: 5 Things podcast