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QUEST MEANS BUSINESS
Wells Fargo Drops Sales Goals Tied to Scandal; U.S. Treasury Calling for Urgent Tax Reform; Facebook Faces Revenge Porn Trail in Northern Ireland; Rare Access Inside Zimbabwe as Protests Escalate; Israel's Peres Hospitalized After Stroke; Blackstone CEO Launches Scholarship to China; BBC Loses "The Great British Bake Off"; GM Unveils All-Electric Chevrolet Bold. Aired 4-5 ET
Aired September 13, 2016 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: What a difference 24-hour's makes. The Dow is very sharply down, off more than nearly 1.5 percent having risen
by a similar amount yesterday. We'll get to the reasons why. Now it is time -- 6, 7, 8, 9, 10, 11, 12, 13. No, sir, you're only supposed to do
three. It's Tuesday. It's September the 13th.
Wells Fargo closes the stable door after the horse was bolted. General Motors zooms past Tesla in its race for reigns.
And you can't have your cake and eat it too. The new owners of "The Great British Bake-Off" lose two of its key hosts. I'm Richard Quest and we have
an hour together, and I mean business.
Good evening, tonight the wagons are circling around Wells Fargo bank. As the beleaguered bank has now agreed to appear before Congress to explain
its misdeeds. The opening of thousands, some say even millions of bank accounts and credit cards by customers who didn't request them and had to
pay, in many cases fees. As far back as the mid-19th century, Wells Fargo wagons crisscrossed the American heartland. It became an icon and an
institution in its own right. Now in 2016, a tactic called cross selling has caused a scandal that's destroy consumer trust in the bank, and cause
the bank to circle its own wagons to protect itself.
Remember what I said about how thousands of employees were opening up bank accounts and credit cards for customers who never requested it. Well now,
Wells Fargo has announced that it will stop setting sales targets for its employees. It was the setting of those targets that created the pressure
cooker environment to open as many accounts as they possibly could to meet those goals as well as that, of course, there will be calls for a claw back
in the $124 million payday that was received from the executive Carrie Tolstedt. Now Carrie Tolstedt left the bank. She's in charge of the unit
that created the fake accounts that encourage the cross-selling. She conveniently retired with a $124 million in her back pocket.
To recap, the enormity of the offenses last week, the bank fired 5300 staff, roughly one to 1.5 percent of its global workforce. Agreed to pay
$185 million in a fine to the Consumer Financial Protection Bureau. But the point about the whole thing today is that Wells Fargo's chief executive
John Stumpf, has been called to testify on Capitol Hill. As for the Wells Fargo share price, this shows you how serious it is. Yes, the market is
down overall, but Wells Fargo is down 3.2 percent. It's a loss of 1.5 at 46.95. The shares down more than 5 percent since the scandal broke late
last week. Putting it all together, the wagons throw up the dust, and the Wells Fargo chief executive has been invited to testify to the Senate
Banking Committee. I was joined by the Democratic senator, Bob Menendez, of New Jersey. He will be one of those questioning John Stumpf when he
gives his testimony. I asked him what he wants to hear.
BOB MENENDEZ, U.S. SENATE DEMOCRAT: When he says he wants to tell the Wells Fargo story, but we don't need the story, we want the truth. We need
to understand how the Wells Fargo wagon could roll over 2 million customers. Have over 5,000 employees open up accounts that weren't asked
for. Credit card accounts that weren't asked for, and say that it is all of those low level employees who were responsible here.
QUEST: Isn't the big question here just how high up the Wells Fargo management tree there could have been knowledge of unrealistic targets
being met, that could only have been met by subterfuge means.
[16:05:03] MENENDEZ: Well, that's certainly a critical issue. How far up and also the how perverse is this within the industry? I'm not sure that
this is only unique to Wells Fargo. Since this came out about Wells Fargo, I've been hearing from other quarters that this is not limited to Wells
Fargo. So the reality is that you after having dealt with the big banks and their challenges during the Great Recession as a member of the Senate
Banking Committee, I want to make sure that consumers are treated on an equal footing. And that's why we need a consumer financial protection
board to be the cop on the beat. Otherwise we wouldn't have these actions as we've had with Wells Fargo.
QUEST: we had the great financial crises with all the bad behavior that led up to that and created that environment. And we had the scandals of
2010, 2012 and 2011 of LIBOR and others. It seems to ordinary people that the banks never learn. Because this behavior has happened sense those
MENENDEZ: And that is why we have to go after it. You know, that's why I was one of the coauthors of Dodd/Frank. That's why I asked the chairman of
the Senate Banking Committee to have a hearing on Wells Fargo particularly, but also to look at industry practices in this regard, and that is why I
think that will lead us to ask questions of what is the appropriate penalty so that it isn't the cost of doing business. It's a real consequence to
the bank so that they stop their behavior that average citizens can't do.
QUEST: Senator, finally, do you believe ultimately, and I know it's never pleasant to say this, but ultimately it's the criminal law, not civil
penalties? The sound of handcuffs and a jail doors clanking behind you that will really get top management attention?
MENENDEZ: If in fact individuals are found to have violated the law criminally, then they should be prosecuted criminally. Where there are
civil violations, they should be significant although not the cost of doing business. At the end of the day, the banks should not be above the law,
they should not be too big to jail, and ultimately I think this will lead us to a series of questions and actions that hopefully will get us to the
right disciplinary processes so no American has to be defrauded by their bank.
QUEST: The hearings will be instructive, indeed, to see how the bank justifies the actions that were taken by the employees and indeed the
culture of Wells Fargo itself. I spoke to the director of the Consumer Financial Protection Bureau, Richard Cordray. The bureau was responsible
for bringing the case in the first place, and for levying the large fine of $185 million. I asked the director if he was surprised by what he
discovered with Wells Fargo's behavior?
RICHARD CORDRAY, DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU: This is really shocking conduct for a bank. What you expect when you put your
money in a bank is that they're going to handle it carefully. They're going to keep you closely apprised of what they're doing with it, and not
do things that would violate your trust. None of those things happen here, and for all the customers who were affected, whether they were hurt by fees
or not, this is a real abuse of trust.
QUEST: Do you think in a case like this, the person who has to fall and take responsibility has to be almost as high as the chief executive?
CORDRAY: I don't think that's for me to say, but I would say this, but I would say people higher up, when they put in programs like this, incentive
compensation schemes, they know what that's going to do. Is it's going to push people to accomplish the goals that the incentive schemes lead to
giving them bonuses. And they will have shortcuts to take to establish those goals, and you need careful monitoring to make sure people aren't
taking those shortcuts at the expense of consumers. When that doesn't happen, it raises troubling when questions of responsibility of those
QUEST: I realize that the fine and discouragement of $185 million is the largest so far. But between you and me, it's really peanuts in comparison
to the resources and wealth of an organization like Wells Fargo. And it pales into insignificance when you look at the sort of penalties that were
paid by the banks in the LIBOR trading scandal in the foreign exchange in the interest rate swap set scandals. So should they have been fined and
penalties, should they have been higher?
CORDRAY: It appears that there was about $2.5 million in harm to consumers. And then $185 million total in penalties That is a very sharp
statement about the extent and severity of the wrong doing even though there was not much damage done to individual consumers' pocketbooks.
[16:10:03] But let me say something else. Which is, there is the fine in this case, which was unprecedented in this type of situation, given other
situations to date. There is also the result that you have thousands of employees who have been terminated. Which demonstrates, as you say, the
extent of the systematic wrong doing. You also have cascades now of negative publicity for Wells Fargo in terms of whether their customers feel
comfortable having their money at a bank where they have abused their trust. All of these things are going to lead to a further change.
QUEST: It comes after the great financial crisis where we had already seen banks behaving badly in the way they lent money. It follows on from bad
behavior in LIBOR, in foreign exchange, and if you like, the investment banking side. And 2011 onwards, we see this. Which raises the really
troubling ethical question. Sir, do or you think banks ever truly understand what it means to act ethically?
CORDRAY: I think what it shows is that there are still considerable problems. I agree with you. That there would be a problem of this
magnitude in the wake of the problems we've already seen at the banks, is surprising. But what it goes to show is that any large organization that
tries to operate and manage money for millions and millions of customers has to be itself watched carefully.
By the way, the bank needs to watch itself carefully and have it's on proper systems in place to do its own monitoring. And every bank has a
responsibility to do that. But we also need regulators in place who will look over the shoulder of these institutions, find these problems and
address them. And address them in terms of changing the conduct at the banks going forward, and penalize them where appropriate to do so. And
we're never going to be able, I think, to move away from that system all together and put the banks on an honor system. That's just not going to
QUEST: An honor system for the banks and we talk about this tonight's QUEST MEANS BUSINESS newsletter. It arrives in your email box just after
the New York close, any time now, and of course ahead of the Asian market open. Tonight I'm writing in the Profitable Moment about why Wells Fargo
is so troubling. CNNMoney.com/quest to subscribe.
The Dow has lost all of yesterday's gains. It closed 240 points up yesterday, but as you can see, we're down 258. So far, 18,000 is looking a
little bit dodgy, and the Dow is off more than 470 points on it's moving five days over the last five days.
The IEA reports that the oil glut won't subside as long glut remains there is a downward pressure on prices. And our old friend with concerns about
the Fed. Particularly after Brainard's comments yesterday. Look, she's obviously a doubter, she didn't say anything extraordinarily different.
But the fact is there is a view now of what the Fed is not going to do in September.
The U.S. Treasury Secretary is calling for urgent reforms to America's tax system after a major ruling in Europe. The commission recently handed
Apple more than a $14 billion tax bill. Saying the Irish government had helped Apple artificially lower it's taxes. Now Jack Lew, U.S. Treasury
Secretary, is warning that American companies now would claim their foreign tax credits against their bill at home.
In other words, think about it. If you pay tax in Ireland, you won't be paying tax on that same money to the U.S. government. In an opinion piece
for the "Wall Street Journal," Lew said "The Apple decision and the bipartisan reaction to it, may present a new opportunity to make reform a
reality. That opportunity should not be lost."
Now, Jack Lew has also warned that the penalty undermines Europe's business climate. Joining me now is Martin Shanahan, the chief executive of the IGA
Ireland. He joins me now. The industrial development for Ireland, the inward investment arm. Now you're here to talk obviously, about, the wider
issues. But let's just deal with the question of the Apple taxes. The Irish government is going to appeal. The Irish government says that Apple
has paid all of the tax that it was supposed to pay in Ireland. That's their position, correct?
MARTIN SHANAHAN, CEO, IDA IRELAND: Absolutely.
QUEST: The only problem is the way the relationship with Ireland was structured, it meant not very much tax was paid.
[16:15:00] SHANAHAN: But Ireland's flex tax on activity in Ireland and our revenue service has said, clearly that all tax due from Apple and activity
in Ireland has been collected by Ireland. We're not a global tax collector. We have a fundamental problem with the Commission Decision. It
is imposing a 2016 Commission view of taxation on a ruling that was given in 1991 by our revenue service.
QUEST: I don't want to get too detailed on this. I want to talk about how you're going to work around this in terms of getting inward investment.
But when that ruling agreed that Apple could split its revenues. A little bit to Ireland. A big bit to this company, the international bit, that
have many don't sign anywhere. That's effectively was giving Apple a blank check to pay no tax.
SHANAHAN: No, what is happening here, our tax system is set down in statute. Our revenue service has no discretion in relation to how the laws
are applied. They gave an opinion in 1991. And we collect tax on activity in Ireland. We fully support that all companies should pay tax. We been a
full participant in the OECD base erosion profit shifting initiative. And we are completely compliant with international law.
QUEST: How difficult do you think it will be to make your job to attract businesses to Ireland even with your 12 1/2 percent corporate tax rate.
How difficult is it going to be to attract businesses? Now they're going to say, hang on, we can't rely on the promises being made by Ireland.
SHANAHAN: Firstly, the commission has made a decision, but obviously as you said in your introduction, Apple is going to appeal that decision, and
the Irish government is going to appeal that decision. So we haven't seen the end of this yet. And that process, which will go to the European
courts, may take years to come. Investors will remain with Ireland. They will keep faith with Ireland, because it is an attractive place to do
business. It's one of the most pro-business environments in the globe.
QUEST: Ireland, I mean, I don't want to sort of subject to besmirch your good character. Remember, Ireland does have a reputation for attracting
businesses. I remember Intel in the 1980s, people say that was a dodgy deal that had been done to bring Intel in. Ireland has a reputation for a
favorable tax regime for foreign companies.
SHANAHAN: Richard, we're unapologetic about the fact that we have a competitive taxation regime. We also have one of the most transparent and
consistent taxation regimes in the world, 12.5 percent general corporate tax rate. Which is applied to everyone. And it isn't just about taxes,
it's about the talent availability. The investment in tech and talent.
QUEST: Europe doesn't like your 12.5 percent, do they. They don't like it. The French don't like it. The Germans don't like it. None of them
like it, because it is taking business from them.
SHANAHAN: That may be so that they don't like it, but taxes and national competence, it's not for the European Union to set our tax rate, or
interfere with our tax regime. It is a matter for Ireland. And Ireland will remain pro-business. There is no question over our regime. There's
no question over our tax rate. Even the commission admitted that in their own press release when they announced the Apple decision.
QUEST: Good of you to come on, sir. Come back when you have more investors to come and talk to us about.
SHANAHAN: Loads of investors coming to Ireland.
QUEST: Well, let's see if they're still coming after this decision.
SHANAHAN: They will be, trust me.
QUEST: Good to see you, sir SHANAHAN: Thank you.
QUEST: Now, when we come back in just a moment, the serious story of Facebook being sued over a nude photo. We'll have that story in a moment.
[16:20:23] QUEST: Welcome back, a lawsuit over a nude photo that appeared on Facebook is going to go to a full trial. It'll take place in Northern
Ireland. The 14-year-old girl is suing Facebook saying, it failed to prevent a man from repeatedly posting a nude picture of her. And the girls
lawyer said it's a clear-cut case of revenge porn. Samuel Burke, is our technology correspondent and is in London tonight. Samuel, I've read both
arguments here. The Facebook argument that says, look, we did what we could. We took the picture down when we were told about it. So I guess --
what more would they like Facebook to have done?
SAMUEL BURKE, CNN MONEY BUSINESS AND TECHNOLOGY CORRESPONDENT: It is an interesting distinction that they're making here, Richard. They're saying
Facebook didn't have to stop it from going up the first time, they needed to stop it from going up the second, third, and fourth time. Third and
there is indeed automated technology that Facebook uses. If I upload a music video, for instance, they know it is a song from Alicia Keys. This
is in ISIS video for example.
QUEST: So, why didn't they?
BURKE: Well, that is what we don't know here, and what we really want to find out from this court case. Because we know that Facebook uses the
what's called photo DNA. Which was established by Microsoft at Duke University. It's essentially a thumbprint, Richard, that goes into a
photo. So once it's been flagged once, you would think, you would think that that would be it. It would be automatically stopped from going up.
But that clearly did not happen in this case.
QUEST: Now Facebook are defending themselves, but not on that ground though, are they? They're saying we don't know the full range of the
Facebook defense is at the moment.
BURKE: What we do know is that they said, look, as soon as we got the photo, we took it downright away. And as soon as somebody flag it up again
we took it down. And in fact, in a statement Facebook told me by email the following "There's no place for this kind of content on Facebook and we
remove it when it is reported to us.nudity and sexual exploitation are not allowed." So basically what they're saying, Richard, is we have the
buttons. Everyone knows where they are. You can flag something. We will take it down in a reasonable manner, but the family is trying to make a
distinction here. It should be automatic. It shouldn't eve have gone up the second or third time.
QUEST: Final question. Is it inevitable, Samuel, that Facebook that Facebook is going to be enmeshed in these sort of battles. Whether it is
last week with the Vietnam photograph, or just questions about its algorithms for trending news stories. They're going to have to accept
someday that they are the cornerstone of media.
BURKE: absolutely. And I think they've accepted it. It's quite interesting in doing my research for this story, I found a quote from your
very show, from QUEST MEANS BUSINESS, when you had the Norwegians on and they said it should not be machines doing it. Humans should be deciding
these type of things when it comes to the napalm photo. And on the other hand, the family is saying machines should be deciding this. At the end of
the day, Richard, we have so many problems with Facebook. Some but Facebook is the leader when it comes to really leading the way for showing
other social networks the most efficient ways in taking the content down.
QUEST: Samuel Burke, thank you for staying up late with us tonight in London. We appreciate it.
Zimbabwe's economic woes have spilled on to the streets and violence is following close behind. Citizens have organized demonstrations against
high unemployment. CNN has gained rare access. David McKenzie reports.
DAVID MCKENZIE, CNN CORRESPONDENT (voice-over): The protests now happen every week. The response from Harare's police always brutal. Here a tear
gas canister is lodged into a backed commuter van. For 36 years, Robert Mugabe, has depended on the police to enforce his rule to crush dissent.
But the dissent is now building from within.
UNIDENTIFIED POLICEMAN: I think people don't know what is actually happening in Zimbabwe.
MCKENZIE: This veteran police officer has taken an enormous risk just to meet with us. We're concealing his identity for his protection.
UNIDENTIFIED POLICEMAN: We were told to beat up everyone who was there, that that was not the initial instruction that we had been given. It came
MCKENZIE (on camera): For the politicians are ordering the police to beat up protesters. Is that the case?
UNIDENTIFIED POLICEMAN: That I believe.
MCKENZIE (voice-over): politicians from the regime that he says will stop at nothing to stay in power. A government spokesman told CNN that it's not
the case. He denies that Mugabe's party is ordering the police to attack protesters and they say the protestors are out to damage property.
[16:25:00] UNIDENTIFIED POLICEMAN: the very same people we are beating, some of them are my schoolmates, some of them are my friends, or people
that we live within the community. It's a job, but hey, there is nothing you can do.
MCKENZIE: Having to go months without pay, he says he and many of his fellow officers sympathize with the activists that they've been ordered to
MCKENZIE (on camera): we've spent days trying to get the trust of this group of activists that were following. And were going to a secret
meeting. Their aim is to unseat the government of Robert Mugabe.
UNIDENTIFIED MALE: You can wait inside.
MCKENZIE: Yes, that's fine. No problem. Will wait inside.
UNIDENTIFIED MALE: I studied --
MCKENZIE (voice-over): Hidden from view, political gatherings like this are taking place in backyards and houses throughout Zimbabwe. Social media
is used to organize the movement and stay ahead of state security operators. They face a risk and say federal activists have disappeared,
but they are undeterred.
(on camera) Are you afraid the police will strike back?
UNIDENTIFIED MALE: Whether or not they strike back or not, we are not afraid.
MCKENZIE (voice-over): This police officer has seen the orders, and he is afraid.
UNIDENTIFIED POLICEMAN: They talk of use of tear smoke, they talk of use of animals, like dogs, horses and the like then the last one is firearms in
MCKENZIE (on camera): Are you afraid someone is going to get killed?
UNIDENTIFIED POLICEMAN: Yeah, if the momentum of this demonstration continues, I think eventually they're going to use live ammunition. That
is my worry.
MCKENZIE (voice-over): Mugabe says the protesters are playing a dangerous game. But his fate in the fate of Zimbabwe could finally be in their
QUEST: David McKenzie is now back in Johannesburg and joins us. David, how much of this renewed unrest is because Mugabe now in his 90s probably
doesn't have that much longer and therefore it is what we're looking at, is the post Mugabe jockeying for power within his own party.
MCKENZIE: I think that is part of it, Richard, and have got both from the ground of these youth protesting, because they feel hopeless. Because the
economic situation that they face, and also those stalwarts within Mugabe's party that are jettisoning form his party and pushing from more senior
I think a lot of this is about the economy in Zimbabwe. The cash has run out. People feel that there is no future. And they see the president who
they believe is ailing. Who is he is 92, of course, and they see it's time to push for change. But we have seen this before. The need for change in
Zimbabwe and it hasn't happened. But one long time Zimbabwe analyst said this is the perfect storm. Everything coming together at once and it could
be the end game, Richard.
QUEST: Ok, with that in mind, as long as I can remember Mugabe being in power, there has been the potential and the reality of civil unrest. I
think back in January. I think back to the MDC, now in the opposition. So David McKenzie, how much worse is the situation now?
MCKENZIE: Well, it is different. It is not necessarily worse, but it is desperate. There was a time in 2009 around that time when the Zimbabwe
currency became worthless and people's savings were just obliterated. That was a bad time. Before that in 2000 where they were pushing farmers off of
their land, that was a bad time. But now it's different. Because of his age of Robert Mugabe, because of this confluence of factors, both political
and economic and frankly environmental, because of the drought, hitting a large part of the country.
You have these all coming together and it could be a game changer. But people just don't have access to cash. Meeting people on the street, they
aren't able to get formal jobs. They wait for days sometimes to get money out of the accounts, and crucially the government is not able to pay civil
service servant salaries. Like that policeman, like the army. That is never a good sign for a government when they can't afford to pay those
people that they employ, Richard.
David McKenzie, in Johannesburg. Thank you for that troubling report from Zimbabwe.
As we had to the half past the hour, let me remind of you what happened on the Dow. It's one of those days where you do need to be aware. Down 258
points, a loss of one .4 percent. So the Dow gave back all of the gains of yesterday and some more.
[16:30:00] We done really need to dwell on the reasons too much. It is Fed worry, volatility, and in the usual noxious cocktail as you head toward the
prospect of an interest rate rise.
The chief executive of Blackstone says there is a 75 percent chance of a war between the U.S. and China -- but don't panic, unless something is done
to improve understanding between the two cultures. You'll hear Steve Schwartzman after the break.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When the chief executive of Blackstone says, there is a
good chance of a war between the U.S. and China. And he believes he's got the solution.
And a super popular "Great British Bake-Off," the television program is off to channel four, after the BBC failed to come up with enough dough. Before
that this is CNN, and on this network, the news comes first.
Police in Germany have arrested three young Syrian men suspected of fighting for ISIS. A Sources telling CNN one suspect may be linked to an
attack last year on a passenger train that was going to Paris. That attack was foiled after passengers tackled and subdued the gunman.
Edward Snowden is makes the case for presidential pardon before Barack Obama leaves office. The NSA whistleblower has leaked a trove of documents
to news outlets around the world. He was granted asylum in Russia. Snowden told "The Guardian" newspaper, "if not for these revelations we
would be worse off."
Hillary Clinton says she has met a high standard of transparency about her health. And she is now challenging her rival, Donald Trump to do the same.
The U.S. Democratic Presidential Candidate told Anderson Cooper, she didn't disclose Friday's pneumonia diagnosis immediately because she didn't think
it was going to be that big of a deal.
The former Israeli President, Shimon Peres has suffered a major stroke on Tuesday. His doctors say he's an intensive care and on a respirator.
President Peres just turned 93 and underwent surgery in January after suffering a mild heart attack.
Oren Lieberman is in Jerusalem and joins me now. Oren, looking at the report, obviously, any ailment for a 93-year-old is serious, this is
OREN LIEBERMANN, CNN CORRESPONDENT: Absolutely so, and we just got the latest update from the doctor who said he is trying to be optimistic right
now, but he is very cautious given the current condition of Shimon Peres. Now what we know so far is, as you mentioned the latest update, he suffered
a major stroke with bleeding.
[16:35:03] He is in intensive care. He is sedated and intubated. Doctors are constantly watching him, evaluating him and they will do so again.
Keep evaluating him in the coming hours. Now we also heard from Hemi Peres. That's former president Shimon Peres' son, who says, "My father is
a special man. I remain optimistic, although these are difficult hours." Very difficult hours. We've seen Israeli leaders and politicians wishing
their very best for Shimon Peres for a speedy recovery, but that speedy recovery something we're waiting to hear about very critical moments here
after Shimon Peres has suffered this major stroke, Richard.
QUEST: The one thing I always remember in, having met president Peres many times, is that he is the only leader still around who remembers and was in
the original cabinet of Ben-Gurion at the founding of Israel. We're not just talking here about any leader are we? Or any Israeli.
He is Israel's history. He is Israel's elder statesman. His story goes back to the beginning and even before the beginning. It was before the
creation of the state of Israel. His resume is unprecedented. He's held virtually every major cabinet position. He was prime minister three times.
He was a minister of defense, and then he became president. Perhaps one of the biggest statements about Shimon Peres is that to the end, and the end
is not here yet, right? He is still in treatment, still undergoing evaluation, but he very much believes in peace. He believes in dreaming,
and he is 93 years old. He's sharp as a tack. I interviewed him not that long ago, and he still believes. He still sharp as a tack there.
Oren Liebermann, please come back the moment there is more to report on this story, thank you.
The chief executive of Blackstone says there is a good chance of a war between the United States and China if misunderstanding between the two
countries are allowed to persist. Stephen Schwarzman is launching a new scholarship program that sends students to China to learn about the culture
and in doing so, foster better understanding. He spoke to CNNMoney's Cristina Alesci.
STEPHEN SCHWARZMAN, CHAIRMAN, CEO BLACKSTONE GROUP: The Schwarzman scholars is a lot like the Rhodes Scholarship from Oxford. Instead of
Going to Oxford, we're bringing 200 students a year to a Tsinghua University in China. Because the important thing is for these future
leaders to learn how China works given China's importance in the world. Let's get the best and the brightest and introduce them to the leaders of
the country. And then have them go back to their own countries where they can interpret what China is saying, so we can have rational dialogues.
CRISTINA ALESCI, CNNMONEY CORRESPONDENT: Where did the idea for the program come from?
SCHWARZMAN: I tried to think about what issue there was in the world that was important to me, and important to the world, and worth doing. And what
I was concerned about the rise in China and the simultaneous rise of populism in the West. And that with populism in the West, and the
perception that jobs were going elsewhere, and the West stagnating, that usually with populism, they find devils, and usually what happens is they
continue getting frustrated, they find another country that seems to be winning the game. In my view was they would find China. And so I looked
at this and said, the world is at more risk.
ALESCI: Are you saying that in one way you're trying to prevent a war between the West and China?
ALESCI: You really think that is a possible outcome here?
SCHWARZMAN I think historically. It is a 75 percent probability.
ALESCI: How much has the political rhetoric in this campaign cycle hurt the U.S.'s relationship with China.
SCHWARZMAN I think surprisingly little. The Chinese are quite sophisticated when looking at American elections, and this one is a doozy.
ALESCI: You're a long-time Republican, but you are not supporting Trump this time around, right?
SCHWARZMAN I have not figured out what to do yet. Because every week --
ALESCI: We're around the corner here.
SCHWARZMAN: -- every week is an adventure in the U.S. political world. We now seem to have a quieter Donald as opposed to a noisier Donald. I'm
still waiting to hear what everybody really wants to do with tax policy, with tax reform. My instinct is over the next two months were going to
learn a lot more God.
[16:40:00] This is a challenging election for a Republican. It is a challenging election for Americans, I'm not sure how many people are even
going to end up voting. There is a school of thought that we might have quite a low turnout in this election.
QUEST: Stephen Schwarzman talking to Cristina Alesci. And now, really, it is very simple. You take some flour, some milk, you make a nice bit of
baking, you create a major British television program, and then off it goes to the opposition.
QUEST: The BBC lost its hit show "The Great British Bake Off", the show in its seventh season is to move to the rival opposition Channel Four, and the
reason the BBC lost Bake Off all came down to the dough, so to speak. Join me in the QUEST MEANS BUSINESS kitchen for the story of the great British
bake off. We'll have to attire ourselves properly if we're baking.
When it all began, it was very simple. It started on BBC 2. A modest program, nothing fancy about it at all. It was really designed to show
people who love baking and the passion that was brought about. It was described as a quintessential British program.
But then it became a phenomenon. Huge ratings successes and everything became much more complicated.
More than 12 million people watched this season's premiere and the BBC's show production company has made it basically unaffordable.
What happened? Well, those who make it will have wanted more than $25 million for the renewal. The BBC was left holding the empty bowl and could
only afford about $15 million. What was left, of course, basically nothing for the BBC.
Two of the show's presenters announced they're also going to leave at the same time, too. The winner of the 2013 season, author of "Quintessentially
Baking", how sad are you. For bake off not to be on the BBC?
FRANCES QUINN, GREAT BRITISH BAKE OFF WINNER 2013: I think it is such a British show, and the BBC is British as well. I was on the year when it
was originally on BBC 2, and then to BBC 1, and I remember everyone was like, oh, it's going to all change.
[16:45:02] But actually, the format pretty much did stay the same, but now it's moving to a completely different platform and I think everyone is very
fearful. And particularly that Mel and Sue and not gong as well, and they are literally the lynch pins of that show. So I can't see how it can stay
the same now that they're not there.
QUEST: It is extraordinary, this program. You basically get people who, like yourself, who are messianic and passionate about baking. You create a
hothouse environment where you literally bake complicated things and you watch the explosions take place.
QUINN: In a tent. And that is the other thing, will it remain in a tent. Because Channel Four is known for having big brother which is in the big
brother house so will the bakers all now be in a house. So I keep saying baking, everyone says it is a science -- in the way, the format of that
show is a science and I worry that the formula is being messed around too much and I don't know if it will stay the same.
QUEST: Those of us brought up in the U.K., with a love of desert island disks, the archers bakeoff, and what is it about these very simple but
deliciously enjoyable genres that make it so successful. If you had to make an analogy with a cake or a bit of baking, what would it be?
QUINN: It is a multilayered cake. I remember the first cake I did on the show was my secret squirrel cake. Because the squirrel has an infamous
involvement with the show. I think there should always be a hidden surprise within the cake, and within show, and in itself is the bakers.
Because every year there is a new batch of bakers, and what they make is very different.
But like I said it is Mary and Paul and it is Mel and Sue that are like cornerstones of the show. And take them away and it's just not Bake Off.
QUEST: All right, I understand that now I and rather ham-fisted in the kitchen. Baking scares the living daylights out of me.
QUINN: That's what makes it such good drama to watch as well.
QUEST: It is difficult to bake a decent cake. I have a couple of very nice specimens here, nothing like your squirrel cake, I have to say, which
I'm going to hold you to, to enjoy a piece next time I'm back in the U.K.
Thank you very much for joining.
QUINN: Or a giant Joan SunBridge cake.
QUEST: Oh, please be still my beating heart. Thank you very much indeed for joining us.
Wonderful, "The Great British Bake Off." Now from competition in the kitchen to rivalry on the roads. General Motors is hoping to race ahead of
Tesla in the electric car market, I think instead of cars, more interesting are these strawberries. Nobody is noticing. Nobody is looking.
QUEST: We have gone from the kitchen to the garage. The showroom where we are going to show you Bolt. This is the year of Chevrolet Bolt. It can
travel 238 miles on single charge.
That is enough to get you from New York to Washington, and it sells for under $37,500. It will go 0 to 60 in seven seconds. This is the crucial
part. It will go over 200 miles. Tesla's model three cost $35,000, it has less range at 215 miles and it takes six seconds to get from 0 to 60. That
has more miles and is a little more expensive.
Mark Reuss is the executive vice president for GM's global product development joining me from Detroit. The Bolt is the first out of the
gate, how significant is the number I keep reading about, 200 miles?
MARK REUSS, EXECUTIVE VICE PRESIDENT, GLOBAL PRODUCT DEVELOPMENT, GENERAL MOTORS: I think you know the threshold of 200 miles is important for
people really considering electric vehicles. It becomes a vehicle that begins to eliminate some of the range anxiety, if you will, around where
people can use it, and is it a primary car or not? And how the vehicle is used on a daily basis. So 200 miles has been sort of the mental and
consumer fear. If you get beyond that you solve some of those problems.
And we've done that. So it is very exciting.
QUEST: And the fact that you're going to be out of the gate and on the road faster than the Tesla model 3, is that significant, too?
REUSS: I think it is. I think, you know, we made a lot of cars, we're a ten-million-unit maker here. We have been at the electric vehicles here
for quite a long time. In fact, our EV1 was one of the very first electric vehicles on the road, but more recently in volume with the Volt.
But I think, you know, we sell and make more electric vehicles than anyone else in the world. Our proprietary chemistry, our proprietary electric
motor design and then packaging it in a usable small utility vehicle, that is what customers really want. We have researched that quite a bit. Being
out of the gate first is great, it shows our agility to the market and we're very proud of that. But more importantly it is great for our
QUEST: I guess, it's not an easy question to ask this, but I'm sure you have heard these things before. What about the sex appeal question? The
idea that the Tesla, rightly or wrongly I make no comment, there is a cache about a Tesla that the big three will find hard to replicate.
REUSS: I think, you know first of all, this is an electric vehicle for everyone. It is a beautiful little vehicle, and a great package and a
great interior different from anything else on the road. I think we need to have people see that number one, and number two, Tesla has done a great
job of that, but they have had price points a lot different than what we have had.
We're ahead of this, so we're into the pricing piece of it, the manufacturing piece of it, quite a bit sooner. We will see what Tesla
does. They have done a great job with the products they have, they should be proud, and we take that competition very seriously and you know, we do
vehicles, electric or not that are very beautiful, sexy vehicles.
We have a plug-in hybrid electric CT6 from Cadillac, we've done an ELR that was a piece of sculpture. That was a pure electric. So we've done these
as well, but they have done a great job of it and arguably they have a lot of us share a mind.
QUEST: This is fascinating, I'm not a car owner, I will freely admit I live in the city, but I do use the car sharing schemes, but listen, sir, I
am terrified with electric cars for the very reason that you say. That you know, I'm always thinking, "where is the next charging point?" I'm going
to be stranded somewhere inconvenient and two AA batteries will not get me home.
REUSS: There you go, and honestly, the industry has, other than the really high price points, the industry has struggled to offer, you know, really
good value with range up in the 238-mile range on this. It's great. If you look at the charge time for some of it, it is very quick with our new
SAE which is the industry standard charger. And we can do 90 miles in under 30 minutes. This is beginning to really change rapidly and most
people Having 238 miles of range. It should be not a concern anymore.
QUEST: We are delighted you joined us from Michigan. Thank you for joining us tonight, we appreciate it, good to see you. We'll have a
profitable moment after the break if I can find where they left those cakes.
QUEST: Tonight's Profitable Moment, the chief executive of Wells Fargo says it was the employees to blame, not the bank's culture. Unfortunately,
He's lost one percent of his workforce, he was fined $185 million and created a scandal that will take years to recover from. And yet so far we
have not heard two words from John Stumpf's mouth.
He has not said, I am sorry. Maybe he will say that when he goes before congress has to testify about why Wells Fargo allowed so many miscreant
accounts to be created. I am not sure we are going to get a proper explanation, but the reality is bankers have done many bad things. But the
Wells Fargo hit home because it hit consumers right in the pocket.
Mr. Stumpf it is time to say "I'm sorry." and that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the
hours ahead, I hope it is profitable. I think the cakes are up here!