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Federal Reserve Makes Big Announcement On Interest Rates; Federal Prosecutors Say American Airlines Mechanic Accused Of Trying To Sabotage A Commercial Airliner In Florida In July Had An ISIS Video On His Phone; Intel Chief Refuses To Reveal Urgent Whistleblower Complaint. Aired 2-2:30p ET

Aired September 18, 2019 - 14:00   ET


BRIANNA KEILAR, CNN HOST: At least read the beginning, you'll get a sense of what you're looking for. This is so important. Kris Goldsmith, thank you so much.


KEILAR: And that is it for me. NEWSROOM starts right now.


ANNOUNCER: This is CNN Breaking News.

ERICA HILL, CNN HOST: Hello, I'm Erica Hill in for Brooke Baldwin. At any moment now, the Federal Reserve is expected to announce a move President Trump we know supports, despite the fact that it may warn of what he sees is a huge negative -- signs of a coming recession.

The Fed expected to cut the benchmark interest rate by a quarter percentage point. Now if that happens, it will be just the second time the Fed has reduced the rate since 2008. That last cut coming less than two months ago, just 49 days. This latest reduction would come as well after months of the Fed Chair, Jerome Powell being cut down himself by the President.

The President has ripped Powell as you know, multiple times on Twitter for not lowering rates sooner, saying quote, "Jay Powell and the Fed don't have a clue. Where did I find this guy Jerome? Our Fed has been calling it wrong for too long. Who is our bigger enemy? Jay Powell or the Chinese President?"

President Trump also said that Powell had a quote, "horrendous lack of vision." Those in the business world, however, are placing much of the blame for the economic conditions on President Trump and his trade war with China.

And in a just released "Business Roundtable" report, it found more than half of CEOs reporting a somewhat very negative impact on sales from trade retaliation by foreign nations.

CNN Business and Politics Correspondent, Cristina Alesci is here along with CNN Political Commentator, Catherine Rampell who is a columnist at "The Washington Post."

So as we look at this and we're waiting for the number, there is no speculation that we are going to see this cut.

CRISTINA ALESCI, CNN BUSINESS POLITICS AND BUSINESS CORRESPONDENT: Yes, and we just got the number OK. And the cut was as expected, a quarter of a percentage point. So now the Federal funds rate is within a range of 1.57 percent and two percent.

This is what was expected, but it's not going to be low enough for Donald Trump because he wants negative interest rates. He wants zero or negative interest rates and every time we hear the President call for lower or negative interest rates, you have to ask yourself, what is he talking about?

The Federal Reserve is out there trying to play this delicate balancing act, trying to say the economy is strong. We're doing this as an insurance policy to protect against any slowdown. If you go negative, or if you go to zero or negative, that essentially signals to the market that there's a recession or real recession fears in the market.

So I know Donald Trump wants zero and negative interest rates. It just doesn't seem to make sense right now.

HILL: Which is interesting, too, because as we look at this and all the speculation leading up to it, we know that in particular, the President of the Kansas City Federal Reserve, Esther George has been pretty outspoken. She did not want that rate cut in July, even as recently as last month. She was saying, look where we're at, we do not need another one.

That being said, we have seen some signs of weakness, right? Some signs of slowing. Weakness in manufacturing, some of the numbers that we look at regularly have been revised. Could an interest rate be what's needed, Catherine, to keep the economy on track and to keep it at level of where it's at?

CATHERINE RAMPELL, CNN POLITICAL COMMENTATOR: I think what the Fed is trying to figure out right now is what to do with all of these mixed signals that it's getting, because on the one hand, you do have some very good headline numbers, including the unemployment rate, right? Unemployment rate is, I think, it is 3.7 percent, a historically low number.

But you have a lot of these other numbers, including this survey that came out today of CFO's suggesting that they're expecting or most of them are expecting a recession next year. You have manufacturing already in a technical recession at this point.

You have some consumer sentiment numbers that are weak. So how do you make sense of this conflicting data? And how do you avoid spooking markets by maybe doing something that's so dramatic as Cristina said, something like reverting to the policies that we had when there was a financial crisis and we were when we were worried about a great depression? How do you avoid doing that? How do you give the markets what they

need? And to some extent, you know, I think that the Fed probably feels boxed in by the fact that this administration has been putting political pressure on them.

On the one hand, they want to do what's right for the economy. On the other hand, if what's right for the economy looks like it is being done because of pressure in response to bullying, then maybe their reaction is to just sort of do the opposite. Right?

ALESCI: And I think the markets are not quite sure what to make of this yet, because they don't just want guidance from the Fed on the interest rate. They don't want the Fed to only cut the interest rate, but they also want the Fed to start what's called quantitative easing, which is increasing the money supply. And this is something that Donald Trump wants as well.

And you know what? He may very well get it because of that sort of abnormal situation that we had in the very short term lending markets that everyone is talking about today. And that may put more pressure on the Fed to increase money supply, add more stimulus to the economy.

HILL: Let me back you up for a second. So what you're talking about there is this with the New York Federal Reserve. This is separate.


ALESCI: This is -- what I'm talking about is what's called the repo market. And let me geek out for one quick second just to explain that, but essentially what happened two days ago where banks decided they needed more money, because their capital is tied up with Treasuries and corporate debt. So they wanted to get more liquidity.

So when they tried to access this very specific part of the lending market called the repo market, interest rates just went berserk. They went -- so this debt became very expensive to access. And the Federal Reserve had to step in and lower the interest rates in that market, right?

RAMPELL: Now, the reason this happened, what was during the financial crisis.

ALESCI: Right, exactly. So that's why everybody is freaked out.

HILL: This has set up alarm bells, obviously just based on history.

ALESCI: Exactly. And there's a debate whether this was a glitch in the system, or is does this mean that there's trouble ahead? But the bottom line is, the Fed did lose control of this key interest rate.

HILL: And so that has people concerned, understandably, right? Although, to your point, maybe it was a glitch. We're waiting for that final determination.

ALESCI: Maybe technical, right. HILL: It could have been technical. I do want to go back really

quickly, though, to what you brought up, Catherine is that that survey that came out of Duke that 53 percent of CFOs, say they say recession -- they see a recession in the U.S. economy within a year.

They also talked about their number one concerns where about, you know, the economy itself. That message alone, that this is what a majority of CFOs are concerned about, what does that do?

RAMPELL: I think it suggests that we probably need to revisit a lot of the policy and major economic policies and I'm not talking about monetary policy, which as we discussed is in the throes of being revisited right now. We just saw an interest rate cut, the second one this year.

But some of the other major ones including our trade policy, right? If you talk to economists about what they think the number one threat to the U.S. economy is, it has to do with the trade policy, not only the tariffs that has already been introduced, but the greater uncertainty about whether those trade wars will escalate.

HILL: Well, and that survey found that their number three concern was government policies, which is interesting that you bring that up. Catherine, Cristina, appreciate it. Thanks for making it understandable as well, as always.

A lot to get to in this hour. I want to turn now to this bit of breaking news. Federal prosecutors say the American Airlines mechanic who was accused of trying to sabotage a commercial airliner in Florida in July, had an ISIS video on his phone.

CNN's Rene Marsh is following the story. So Rene, the suspect in court today, what else are we learning about this case and this video?

RENE MARSH, CNN AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Yes, I mean, a lot came out in Federal Court just for viewers taking a step back. Remember, he was accused of disabling part of a navigational system on a commercial flight with 150 people on board that was just moments away from taking off at Miami International Airport.

Today, in Federal Court, Federal prosecutors allege that Abdul-Majeed Marouf Ahmed Alani has ties to ISIS. Now they say -- and this is again, according to Federal prosecutors that he downloaded ISIS video on his phone and sent it to other individuals.

We also know coming out of court that prosecutor said that Alani had traveled to Iraq this year and that he sent some $700.00 in payment to someone in Iraq around July of this year.

This was all in the context of the bond hearing. Prosecutors making an argument about what bond the judge should grant and in the end, after all of this, the judge said that his bond was denied.

But really striking information coming out here that, you know, originally this mechanic told investigators, look, this was all about a labor dispute. I was upset about it. I tampered with the plane because I wanted to get overtime.

Essentially, he thought that by doing that, the plane would need to come back which it did, and he is a mechanic would have to then fix it and he would get overtime.

But now these prosecutors are kind of inserting other information here, suggesting that he has ties to ISIS. But it is very important for us to point out, although the prosecutors are pointing out this information, he himself -- this mechanic -- has not been charged with any crimes related to terrorism at this point.

HILL: And that is important. But, wow, what a development. Rene, thank you. I also want to bring in now CNN Transportation Analyst, Mary Schiavo, former Inspector General for the Department of Transportation.

Mary, as you look at this, one of the first questions that I think people at home would have would be, how are these mechanics vetted? How are the people who are working on these planes to ensure that they're safe to go into the sky? How much of their background is looked into? How much even of their social media presence?

MARY SCHIAVO, CNN AVIATION ANALYST: Well, surprisingly, very little. Pilots receive the most extensive background, but for aviation workers, and it does depend on where they are in the chain, but often, just a rudimentary criminal background check whether they have a criminal background check, nobody looks at their social media et cetera.

And that's a huge issue here and I think that's probably the biggest and most important issue to come out of this story is what are we going to do for background checks for aviation workers going forward?


SCHIAVO: Obviously, we fully vet the pilots and the flight attendants and passengers to a certain degree, but how about the people who put the planes you know, under the pilots and the passengers. It is a very important question.

HILL: Well, and to Rene's point, it is important to remember, he has not been charged with anything terror related. The video was on the phone. So that raises the question to? I mean, do we get to the point where it's -- I'm just going to randomly take your phone and look at it and see if there's something on there that's concerning. And if so, what do you do with it?

SCHIAVO: Well, that's possible, but also there was the travel -- potential for traveling there. The contributions allegedly and all of that. That could be uncovered with a more in depth background check.

But those are very costly and that's why the industry, not just airlines, the repair industry and the various aviation industries have resisted those because they are very costly to do, and the thousands of dollars to do a full background check. But now it's not an issue, it's an issue that we have to go forward

because now this has been brought forward to the world. And we know it's a possibility. So whether or not this fellow is really involved with ISIS or not. Now ISIS and other would-be terror groups have this possibility in mind, and copycat -- sorry, are big.

HILL: And the copycat is always a concern. Really quickly before we let you go. When a mechanic comes in to fix an issue with the plane. Do they come in by themselves? Is there a buddy system? What's the checks and balances on that?

SCHIAVO: Great question. Now a few years ago, a solo mechanic working was able to steal a plane and so their rules put in airline by airline and airport by airport where in many cases you do have to have two persons come in. But that rule is not industry-wide and as I said, if this person was called in to work on a plane and had to get a job done, it is possible to access the aircraft at various points in the airport, also, by the way without going through security. You come in through other entrances.

HILL: Mary Schiavo, always appreciate your insight and your expertise. Thank you. We will continue to stay on that as we learn more developments.

Meantime, still ahead, a mystery whistleblower complaint targeting the Executive Branch, now being withheld from the public. Is the nation's Chief Intelligence Officer hiding something?

Plus President Trump battling with California stripping the state of its own power to regulate vehicle emission standards. But that's not his only fight in California. Stay with us for that.



HILL: The nation's top Intelligence Chief, Joseph Maguire refusing to comply with a deadline to hand over a whistleblower complaint to the White House Intel -- to the House rather Intelligence Committee.

This despite the Inspector General deeming it credible and urgent and that's the normal chain of events by the way for Federal law.

Well, the big alarm here, the complaint involves the Executive Branch. According to a letter from Maguire's office sent to House Intel Committee leader, CNN obtained a copy of that letter, which says the complaint quote, "does not meet the definition of urgent concern," because it does not relate to, quote, "intelligence activity."

The letter does confirm, however, the complaint involves confidential and potentially privileged matters relating to the interests of other stakeholders within the Executive Branch.

Confused? Stay with me. House Committee Chairman Adam Schiff responding saying he expects Maguire to actually show up at tomorrow's hearing under subpoena, if necessary. Carrie Cordero is a former Senior Associate Counsel for the Office of

the Director of National Intelligence also CNN's National Security Analyst.

OK, so step back with me here because I'm so glad you're with us for your expertise on this one.


HILL: First of all, based on your experience, so the way I understand it, the independent Inspector General is the one who gets the whistleblowers complaint, and then determines if it's an urgent concern, and if it's credible, then it gets passed on to the Director of National Intelligence who then is supposed to pass it on by law to the House Intelligence Committee -- to Congressional Intelligence Committees.

Do you have any idea what an Inspector General would consider of urgent concern, but then the DNI would say, it's actually not?

CORDERO: Well, there actually has not been this circumstance before. As far as I'm aware, since the creation of the Director of National Intelligence and the creation of the position of the Inspector General of the Intelligence Community, there has not been a circumstance where an IG determined that something was of urgent concern, reported that to the DNI and then the DNI withheld that information from the Congressional Intelligence Committee.

So the urgent concern is not defined specifically in the statute, so there is a bit of a judgment call there. But this particular situation has never occurred before, as far as I know, based on public information. And this is the second time in two months that the administration is violating the law as it relates to the Intelligence Community.

It was just last month that they -- the administration did not appoint the Principal Deputy Director of National Intelligence as the acting Director when the former DNI resigned.


CORDERO: So this is two incidents in quick succession where the administration is just ignoring what the law says.

HILL: So ignoring what the law says, there's also this issue of the letter. Right? So let's say that this complaint involves the Executive Branch, whether it does or not, the whistleblower is protected regardless, right? It doesn't matter where the complaint is coming from.

CORDERO: Well, the whistleblower -- so this provision of law was created specifically so that Intelligence Community personnel could be protected. They could report wrongdoing to the Intelligence Oversight Committees of Congress, and they would be protected.

The claims that the administration is making in this letter from the DNI General Counsel cite issues of privilege, which is not something that's mentioned in the statute regarding the chain that this information is supposed to be reported.

So this is an unknown privilege, very consistent with the administration's wide assertion of different privileges. We don't know who the whistleblower is, but based on the complaint being made to the Intelligence Community Inspector General, we can presume it's somebody in the Intelligence Community. So it should involve in some way intelligence matters.

HILL: Somebody in the Intelligence Community, do you think, though, based on the pushback that we're seeing as well, and talk once again of privilege that it likely involves the President or those close to him?

CORDERO: Well, the complaint itself, because now the letter is saying the back and forth between the administration and Congress is saying that it involves someone else. I think there's a reasonable conclusion or a reasonable assumption that it may very well involve someone senior, involved somebody in the White House because it's hard to imagine other circumstances where they would be raising a privilege issues specifically.

HILL: I also want to your take on this, Carrie, the White House firing the General Counsel for the Department of Homeland Security, John Mitnick. This is just the latest in a string, a pretty substantial purge, as we're seeing here. There's a lot going on to put it mildly in terms of litigation right now for DHS.

What does this say to you? I mean, does this set off an alarm bell for you?

CORDERO: Yes, it absolutely does. And I think it's, it's related to the first story because both of these incidents, the DNI issue and this issue regarding now the new firing of the DHS General Counsel, these are all about accountability. And this is the administration doing things that make them unaccountable.

The DHS General Counsel was confirmed by the Senate. So he is somebody actually who had been nominated by the President, confirmed by the Senate and general counsels of big agencies like this, especially DHS, they are responsible for making sure that the agency is following the law.

DHS is really pushing the envelope at the urging of the administration. I mean, these are administration priorities, and there are so many areas where the activities that they are engaging in, whether it's the practice of family separation, whether it's issues related to the border wall, whether it's the reinterpretation of asylum law. All of these are issues where the administration is doing things that push the boundaries of law.

The general counsel is the person who is supposed to keep the agency in the bounds of that law. And so it is -- this should be a huge story, in my opinion, that the DHS General Counsel was fired. HILL: It is a busy day, Carrie. I'm glad you're here to help us make

sense of it all and what is happening there, we will certainly stay on it as well. Thank you.

We also want to continue on this breaking news. Saudi Arabia, blaming Iran for the brazen attack on its oil facilities. The President also making a move as some of his allies press him for military action.



HILL: Breaking details now on those recent attacks on a Saudi oil field. Secretary of State Mike Pompeo just escalating his blame against Iran calling this incident, quote, "an act of war." The Secretary is in Saudi Arabia today where he is meeting with Crown Prince Mohammed bin Salman.

Also today, Saudi military officials holding a news conference where they presented an elaborate display of the drones recovered, they say from the wreckage, and while the Saudi official identified the origin of the weaponry, he actually stopped short of pointing the finger directly at Iran.


LT. COL. TURKI AL-MALKI, SPOKESMAN, SAUDI MINISTRY OF DEFENSE: This UAV is Iranian. The UAV delta wing and all the components that we have recovered, and we have analyzed through our expert that show the capability of the Iranian regime.

Some of the components here, the Iranian regime and the IRGC, they are trying to erase the information. However, we have collected enough information and to know what's behind it. Thank you.


AL-MALKI: Thank you.

ROBERTSON: Is it Iran?

AL-MALKI: Thank you.


HILL: President Trump, meantime announcing more sanctions against Iran as CNN's Chief International Correspondent Clarissa Ward is here now. At the end of that video that we just showed that voice was our colleague, Nic Robertson, who was saying, "Is it Iran? Is it Iran?" They didn't answer putting out this elaborate display, but stopping short of officially saying Iran did it. That has to be a calculated move.

CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: I think the Saudis can't quite decide what they want to happen here because on the one hand, they know full well that Iran was behind it. The world understands that by now.

But they don't want to be the ones to have to take decisive action. They really seem to want right now for the U.S. to kind of ride in on its hobbyhorse.