The following is the transcript of an interview with Rep. Ro Khanna, Democrat of California, that aired on "Face the Nation" on April 30, 2023.

MARGARET BRENNAN: We begin with Democratic Congressman Ro Khanna, whose district was home to SVB. Good morning to you. 

REP. RO KHANNA (D-CA): Good morning.

MARGARET BRENNAN: Last time you were here, there were urgent efforts underway to save a bank. Today, again, urgent efforts, this time First Republic. We are hearing it could be seized by the FDIC. But there are also efforts to find a buyer to absorb it. What are you hearing?

REP. KHANNA: This is what a modern bank run looks like. Let me tell you what companies in my district are saying. They're saying that payroll companies are telling them move your deposits out of First Republic, you're not going to be able to have access to the accounts. That's why I think it is so important that we guarantee all bank depositors. I had said this last time I was on. There's $8 trillion, Margaret, in uninsured deposits in these banks. 10 trillion is insured. Until we guarantee them and we can charge a fee, we run the risk that their--

MARGARET BRENNAN: We as Congress--

REP. KHANNA: Well, the Congress- yeah, Congress. I've been working with Senator Rubio on this, on a proposal to say, look, pay a fee, and have some guarantee on these deposits. Because otherwise, what's going to happen? Regional banks, they're going to be insecure, people are going to be concerned and they're going to start to consolidate into the top banks, and you have a lot of these payroll companies telling these companies to move to this- the bank. So I believe the FDIC is doing fine, and well now. But we've got to prevent this from happening again, and the best way to do it is to guarantee these deposits.

MARGARET BRENNAN: Well, in the meantime, what you're talking about takes- takes a long time. We're talking immediate sense here for First Republic, and some progressive Democrats have objected to the idea that some of the big banks who can afford to buy  little ones and the systemically important ones, that they should be prevented from stepping in to buy up First Republic. Is that where you fall?

REP. KHANNA: No, I think that the FDIC needs to look at the lowest cost alternative, that's their mandate. And right now, they may need to work with banks and private capital to save First Republic. I mean, that is the state we're in. But we can move quickly. Look, in the Cares Act, we actually said that all deposits were guaranteed for transaction accounts. I think if we do something like that, quickly, we prevent this going again. We also need reform. I mean, look at what has happened, Margaret, every time the economy heats up, we somehow say, deregulate, deregulate, and it never works out. In 2018, the deregulation basically sent a signal to the Fed to stop the oversight on these banks.

MARGARET BRENNAN: Well, there was a lot in that report that I want to get into that just came out. But first off, one of the things blamed was poor management. Gregory Becker, who you knew, the former CEO of SVB, he had donated to your campaign as well--

REP. KHANNA: He had.

MARGARET BRENNAN: When he was at the helm, did you think at the time it was a problem that he was also on the board of the chief regulator there, the San Francisco Fed?

REP. KHANNA: I did not know at the time, but I do think now that that should not be allowed. I mean, no, I didn't have a sense back then that Silicon Valley Bank was going to have a challenge. Obviously, there was mismanagement. One reform we should have is that bank executives should not be on the board of the Fed, regional Fed, that's overseeing them. And I think that's a lesson. I also think there needs to be a clawback of his bonus. There needs to be clawback of executive compensation and for tougher rules on bank executives who have failed banks.

MARGARET BRENNAN: And yet the momentum doesn't seem to be there in Congress, either from the Democratic Leader in the Senate or- on- in the Republican led house. Why?

REP. KHANNA: Well, there should be momentum for three things, one, the clawbacks on these executives that could be bipartisan. Two for greater oversight and the rules on these banks. I mean, we're- we basically told these banks not to regulate but the big place, and I'm working on a bipartisan basis, protect the regional banks. That's going to help regional community banks the most in mainstream America. That's the biggest risk to the economy. Look if, Margaret, you have 5% interest rate, people are moving out into money market funds, they're moving out of banks, if we don't have a guarantee, we run a real risk across this country.

MARGARET BRENNAN: On this, though, in terms of regulation, there were regulations in place, there were 31 supervisory findings, warnings from regulators about SVB when it failed. There were warnings in August, there were warnings in February, doesn't that suggest it wasn't lack of regulation, but regulators not acting? 

REP. KHANNA: Well, it was both.

MARGARET BRENNAN: They're raising flags and not doing anything.

REP. KHANNA: When Congress passed deregulation, there's not a straight line between that and what happened, but it certainly sends a signal to the Fed that maybe the Congress doesn't care as much and I think there was lax oversight. Look, they noticed that there was risk there, but they didn't do the right liquidity or stress test. I mean, they didn't do a test to see what happens in a high inflation environment. When Chair Powell has been saying for over a year, he's gonna raise rates. So--

MARGARET BRENNAN: You have confidence in Chair Powell and Mary Daly at the San Francisco Fed?

REP. KHANNA: I don't think you can blame Chair Powell. I've disagreed, but I don't think you can blame him for this. I do think we need to know what are the concrete reforms? Let's stop having bank executives on these boards. Let's make sure that you have better liquidity tests and stress tests. Let's have the regulations we repealed in 2018 back there and have some statement on guaranteeing bank deposits. So I don't have to come here every- every few weeks.

MARGARET BRENNAN: With another crisis. Let me ask you about a looming one: what to do about the debt ceiling. The Fed is predicting a mild recession is ahead of us. The President has overseen the highest inflation that we have seen in decades in this country. Whether he calls it or not, he's overseeing it. You have all these looming issues, and now you have the standoff over the debt ceiling. It is not a sustainable position for the White House to say they're not going to negotiate with Republicans is it? 

REP. KHANNA: Well, here's what's sustainable. They- the Republicans should do what I did under Donald Trump, and that's pay your bills, it's patriotic to pay your bills. Look, if you're a family, you have credit cards--

MARGARET BRENNAN: It sounds like you're agreeing it's not a sustainable position. 

REP. KHANNA: Well, I- I think we should pay the bills and then negotiate. And we should negotiate on deficit reduction. The last person to leave a surplus was Bill Clinton. I'll tell you how we lower the debt. Let's repeal the Trump- Trump tax cuts. Let's repeal some of the Bush tax cuts for the very wealthy. Let's not have all these overseas wars. The Democrats have a plan and let's raise taxes on the top wealthy. But before we get there, we pay our bills. If you're a family with a credit card debt, who says let's not pay the bill?

MARGARET BRENNAN: But the President was saying Kevin McCarthy passed something, or at least put out a plan and I'll talk to you. Now he's passed something, and the President says he still will not engage with him. I understand the back and forth, but the political cost and the economic one is very real here and it will stick to the President. 

REP. KHANNA: Well, the President's saying he's not going to be hostage in having veterans cuts on health care, and having cuts on K through 12 education, in having cuts on food stamps, in having cuts in manufacturing to just pay our bills. He's saying we can discuss that we can negotiate but first pay your bills. And I think that- I think Senator McConnell understands this, and I think the President will sit down with Senator McConnell, he knows that we can't default.

MARGARET BRENNAN: You think that's the back channel that's going to figure this out? 

REP. KHANNA: That's why I say that or Kevin McCarthy's got to come without 22 percent cuts on veterans benefits.

MARGARET BRENNAN: Well, we will see and I do hope to have you on again when there's not a looming crisis.