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Swiss Central Bank Rescues Credit Suisse; Weekly Unemployment Claims Fall; Odds of Recession Boosted by Bank Turmoil; U.S. Releases Video of Russian Jet Downing U.S. Drone; More Audio of Trump Pressuring Georgia Official. Aired 11-11:30a ET

Aired March 16, 2023 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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KATE BOLDUAN, CNN ANCHOR (voice-over): Hello, everyone. AT THIS HOUR, the video that the public never gets to see, what really happened when a Russian jet clipped a U.S. drone.

The banking system is remaining sound, is the message from Treasury Secretary Janet Yellen, testifying before Congress and trying to restore confidence.

And the White House is giving TikTok an ultimatum: cut ties with China or be banned. That is what we are watching AT THIS HOUR.

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BOLDUAN: Thank you for being here. I'm Kate Bolduan and first to Capitol Hill where Treasury Secretary Janet Yellen is trying to reassure the American people that the banking system and their money is safe.

In a hearing intended to focus on the president's budget, but in light of the collapse of Silicon Valley Bank, her appearance there is taking on new importance.

She is the first Biden administration official to appear before the Senate. Global markets have been rattled by problems at another bank. Credit Suisse has been propped up by over $54 million from the Swiss central bank.

This a look at where it is standing right now, as Christine Romans is watching all of this for us.

First, Christine, start with Janet Yellen, who is testifying now.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: She is speaking to Congress but speaking directly to the American people, telling them that your money is safe here and we have taken steps to make sure that, if you are a depositor, the depositor in a U.S. bank, you can get it out.

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JANET YELLEN, U.S. TREASURY SECRETARY: I can reassure the members of the committee that our banking system is sound and that Americans can feel confident that their deposits will be there when they need them.

This week's actions demonstrate our resolute commitment to ensure our financial system remains strong and depositors' savings remain safe.

(END VIDEO CLIP)

ROMANS: Meanwhile the Swiss national bank rescued Credit Suisse, something U.S. regulators watching as well. I think they think there is a limited sort of cross border problems here but watching Credit Suisse here. And you have this wave of depositors pulling out of their small banks. Those stocks are down.

(CROSSTALK)

ROMANS: And a couple of years of problems but both of them are when there is pressure on the banking industry overall, because of the higher interest rates and because of the banks' profiles and deposits they have that are not insured by the FDIC right now.

BOLDUAN: So Goldman Sachs is saying that the chances of a U.S. recession just went up.

ROMANS: Yes, so Goldman Sachs is saying that the strain on the small banks, maybe they will have to pull back on the lending and this is going to cool the U.S. economy and is acting like the tightening that the Fed wants to see actually. But it could raise the risk of a recession.

So Goldman Sachs, who has been pretty sanguine, has now raised risk of recession to about 35 percent.

BOLDUAN: And what about jobs?

ROMANS: Jobless claims are low. Overall, despite Meta and some of the banks, for example, the job market is strong and that is why the Fed is raising interest rates.

So what does the Fed do next week?

BOLDUAN: All I heard you say is that defense job just got harder and harder.

ROMANS: The hard jobs just got harder. The balancing act got more difficult. The European Central Bank raised interest rates 50 points. So you will have the Fed who has to fight the inflation.

Now a week later, the people are worried about the money in the bank. The Fed has to keep stability in the banking system and they also have to fight inflation.

[11:05:00] BOLDUAN: I am no expert on this but if it is either/or, don't you have to have stability in the banking system or who cares about inflation?

ROMANS: But inflation, if it is entrenched, it can be like a lead blanket on the economy for years.

BOLDUAN: Thanks, Christine. So a big week ahead.

Stand by to stand by.

ROMANS: According to Kate Bolduan.

BOLDUAN: OK. Joining me for more perspective is Mark Hamrick. He's senior economic analyst and Washington bureau chief for bankrate.com.

The banking system is sound, according to the Secretary of the Treasury.

What do you think of her message so far?

MARK HAMRICK, BANKRATE.COM: She is trying to lend credibility, confidence to the banking system and so the comments were safe and sound and also rather, you know, well scripted along the lines of what we would expect from a central banker and Treasury Secretary. And she has been both.

Unfortunately, fear is powerful emotion and we have seen the fear gripping banking and gripping financial markets over the last week. And it is difficult for officials to overcome that very powerful emotion.

BOLDUAN: Let me ask you this, one concern that we have already heard voiced by Republicans on the committee this morning and in the hearing continuing, it is about the precedent that the U.S. government's move here can set, guaranteeing the deposits from the banks.

Setting a market expectation going forward, Mike Crapo said something to the effect that, once started, moral hazard, like inflation, is not easily contained and does long lasting damage.

Do you see that concern?

HAMRICK: Well, I try to have a truckload of salt ready to go when I am listening to members of Congress talking about subjects like this. And particularly when talking about opposing parties.

It is not moral hazard on the part of people with deposits in the banks. That hazard that the regulators are trying to guard against is regarding the management of the bank and what investors do.

So there is not much of a question whether regulators had to guarantee these bank deposits or we would have been talking about a multi-day sharp decline in the stock market, much different than what we have seen this week. BOLDUAN: It is a good distinction. As Christine has been laying out,

at Credit Suisse, do you see a lesson that everybody should be taking at home with a shock to the system?

HAMRICK: Well, the lesson is that we need to be alert and make sure that the bank deposits are insured. And we have that insurance for the bank depositors, whether it is individual or joint accounts. And the limits are well understood and advertised and available at sites with information like bankrate.com and credit unions.

Make sure that the deposits are insured and if they are -- and in the case of Silicon Valley Bank, the regulators have gone above those limits and provided essentially safety in banking for all.

BOLDUAN: And Christine and I were also talking about the even more complicated job now that the Fed has next week, when they talk about the rates.

What does the Fed do, when you have the jobless claims, when they need to make a decision?

HAMRICK: I think there was a great trial balloon floated today by the ECB, the European Central Bank, in raising the interest rates attentive to its mandate for the stable prices as is the case for the Federal Reserve.

And that is job one over the past year as it has raised interest rates. And there is no question -- let me put it this way, I would bet it against the Fed raising the rates by 50 basis points.

They could make the case of 0.25 percent. But in Europe, you have to ensure financial stability and, at that point, in fact, financial instability is deflationary and so, in some ways, these problems that have emerged can do some of the Federal Reserve's work for it.

BOLDUAN: Interesting. The Goldman forecast now, that they see a 35 percent chance of the U.S. entering a recession, up 25 percent before the banking troubles started to set in last week.

Prescient, prudent or what do you think of that?

HAMRICK: I think they want to say, we told you so. But saying that there is a 1 in 3 chance is hardly a bold move. We have been surveying economists over the past six months.

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HAMRICK: And they have been saying that, if you are taking the collective wisdom of the economists the chances are 50-50 over the coming year, if anything, Kate, the timing of the recession is a greater question, not whether we have one.

We will always have one; that is part of the economic cycle and the chances of the recession happening sooner are greater now than they were before but it need not be a deep or severe recession. And fingers crossed on that. BOLDUAN: Absolutely. Fingers and toes. Good to see you and thank you

for coming in, I really appreciate it.

HAMRICK: Thank you.

BOLDUAN: And now, the big story today, the moment when a Russian fighter jet collided with a U.S. drone -- and the U.S. military put out this today -- this still shot, one of the things that the Pentagon has put out, Russian jet dumping fuel in one shot.

Then Russia has denied that it collided with the drone. But in the side by side photos, you can see that the drone's propeller has been damaged because of the collision.

Oren Liebermann is live at the Pentagon.

Not only is this video is extraordinary but you are also learning what the Russian leadership knew about this.

OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: Absolutely. Look at the video to get a better sense of this. And there are two clips here of the two passes of the Russian fighter jets as they approached the MQ-9 Reaper drone.

Here is where they dump jet fuel. In the first pass, it doesn't hit the drone. And you can see the propeller is spinning there and it is working fine. It is the second clip that shows what happened here and the Russian denial does not hold water.

The jet approaches again. Once again it dumps fuel. As it hits the drone, video is disrupted a little bit. But when it comes back online, you can see that the damaged propeller with the bent end.

And this is the telling signal where you can see the collision of the Russian fighter jet or the effects between the Russian fighter jet and the drone itself.

For context, we have learned from two U.S. officials familiar with intelligence behind the matter, the orders to harass the drone, the orders for the Russian fighter pilots, came from highest levels of the Russian ministry of defense; to harass, disrupt the drone. They say it is not clear that it went higher than that.

Not clear that president Vladimir Putin knew it would happen. But it is telling that the officials are telling us that the highest levels of the Russian ministry of defense gave the orders to harass the U.S. drone over the Black Sea.

And then the drone went down according, to U.S. Air Force Europe some 70-80 miles southwest of Crimea.

And the video itself is giving support to the U.S. side and the U.S. position, narrative of what happened here and seriously undercuts the Russian claims that there had been no collision, which is what the Russian ambassador to the U.S. said when he was summoned to the State Department on the day the story came out. And we will follow this and to see the incredible video of how this

all played out.

BOLDUAN: Oren, thank you very much.

For more, let me bring out retired General Ben Hodges.

Thanks for coming in.

So 19 passes here by this jet for 30-40 minutes, what sticks out to you?

LIEUTENANT GENERAL BEN HODGES (RET.), FORMER COMMANDER, U.S. ARMY FORCES IN EUROPE: Well, obviously, this was not an accident and was a deliberate act. And Oren did a very good job of laying out the context of that.

But what makes this important is not the loss of a drone but this is what it means to defend the so-called international rules-based order, international airspace, freedom of navigation and claims to territorial waters.

And all of these things are being played out because of Russia's illegal annexation of Crimea and illegal war of aggression against Ukraine. And the Chinese will watch to see how we respond as well because of their own illegal claims of the Pacific.

BOLDUAN: What do you think of the response that we have heard from the Pentagon, the Defense Secretary and the Chairman of the Joint Chiefs coming out clearly and talking about this now a couple of times?

HODGES: I have been impressed actually.

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HODGES: And Secretary Austin, of course, conveying the seriousness of this and Chairman Milley but also not overreacting. This is not the kind of thing that we are going to go up and start kinetic engagements against the Russian aircraft.

Instead, Secretary Austin said that we will put another drone up there. This is international airspace and we were doing everything according to law. And so this how we protect and defend the use of international airspace.

This affects all of us, not just in and around Ukraine. It's also important to see the example of the United States with transparency immediately releasing the video, saying this is what happened. And you and your team there have done a great job of making it clear what happened.

You can be sure that the two Russian aircraft have video capability. And if they were in fact not guilty of what is clear that they have done, no doubt the Kremlin would have rolled out that video immediately to make their case. And we have not seen any of that. BOLDUAN: One question as always; with every move is there is a

counter move from Russia?

Do you think that though important for transparency, showing leadership at the Pentagon, do you think that Russia is going to see a reason to further respond now that the video has been put out?

HODGES: I think that they will wait to see what we do next obviously. This is the typical Kremlin playbook of deny everything, distort, distract and try to change the narrative and, of course, if we don't respond by putting a drone up again, this gives weight to the claim that their airspace around Crimea is actually theirs.

And the secretary is correct to go back in and challenge that. But I think that there is no need to overreact and go try to shoot something down. But we have to make sure that we continue to uphold freedom of navigation and use of international airspace.

BOLDUAN: And as we can see in the video and as Oren laid out well, the video undercuts Russian denial, though the Russian strategy, that the Russian jet, that the incident did not happen and the Russian jet did not clip the drone.

But what is unclear is if the Russian pilots intended to strike the drone.

Does that question matter from your perspective?

HODGES: Well, this reflects exactly what John Kirby said yesterday. It is a reckless and unprofessional and unsafe act by the Russian pilots. I have not been impressed over the last 14 months with the level of training and discipline of Russian pilots.

It is one thing to take off and land and fly close to something. But when you are talking about getting up next to another aircraft, getting as close as they did there with turbulence and things that can happen, the chances of a mistake are very high.

I don't know that they intended to actually hit it. I am sure that what they wanted to do was to cause it to fail or disrupt the operations by dumping fuel on it, which, in itself, obviously, that was a deliberate act. To actually hit it, of course, we don't know.

But when you are that close, those are the kind of things that can happen. And again, this is the same military that is committing war crimes every day in Ukraine and it is reflecting also a very brutal ruthless sort of society there. So I am not surprised that their pilots would be a reflection of that in terms of undiscipline (sic).

BOLDUAN: Lieutenant General Ben Hodges, thank you very much.

HODGES: Thank you for the privilege.

BOLDUAN: Of course.

And new details on yet another call from Donald Trump and a top Georgia official about the 2020 election.

What is the Fulton County district attorney going to do with this?

That is next.

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BOLDUAN: AT THIS HOUR, we are learning there is yet another recording with former president Trump pressuring yet another Georgia official and this is with the state's Republican house speaker of Trump's 2020 election loss. Kristen Holmes joins me now from Washington.

KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Yes, this is a call between Trump and David Ralston. And it is trying to get the Georgia assembly to convene a special session to overturn the election.

And Ralston interviewed the day after the call. And he said, "Well, obviously, he would like a special session of the Georgia general assembly. He's been clear on that before and he was clear on that in a phone conversation yesterday.

You know, I shared with him my belief that, based on the understanding I have of Georgia law, that it was going to be very much an uphill battle."

Now what he is talking about with the uphill battle is, in Georgia law, you can only call a special session in one of two ways. One is the governor has to do it. As we know, former president Trump tried to get governor Kemp to overturn the election and Kemp refused.

So then the general assembly can call itself into a special session.

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HOLMES: But you have to have three-fifths of the House of Representatives to sign off on it. And at that point, they didn't have that many Republicans and this why it matters. As you said, this call was recorded but, two, we have learned from the jurors who spoke to the "Atlanta Journal-Constitution," that they heard the recording of this call.

These are the members of the grand jury. Now they have heard three calls at least to these Georgia officials, asking them to convene a special session or to find fraud -- in the case of Frances Watson or in Brad Raffensperger's case -- to find missing votes.

This gives us the insight into what exactly the grand jury knew, were hearing and seeing when deciding whether or not they are going to indict.

BOLDUAN: And so we are standing by to see if the DA does indict. Thank you.

We are learning that Stormy Daniels met with Manhattan prosecutors yesterday as they are apparently nearing the end of their investigation of the hush money payments to her. And that happened the same day as Michael Cohen wrapped up testimony.

And we are now joined by Paula Reid.

Adding this together and where is the prosecutor or the DA in this investigation here?

PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT: It is strongly suggested that they are nearing the end of the investigation. On "CNN THIS MORNING," Michael Cohen says that he is believing that he is also at the end of the witness list.

We know that there is an invitation extended to the former president and that is extended to defendants shortly before an indictment. And so an indictment is likely and could come soon. And this morning Cohen shared details of what it was like when he went back before the grand jury. And let's take a listen.

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MICHAEL COHEN, FORMER TRUMP PERSONAL ATTORNEY AND FIXER: What I can tell you is that their questioning of me that started out at like 35,000 feet.

DON LEMON, CNN ANCHOR: OK.

COHEN: And by the time I hit the 20th interview, we were at three feet, ready to land. The grand jury was the actual takeoff back to -- we will call it accountability-ville. I will tell you that they have a tremendous amount of information.

(END VIDEO CLIP)

REID: So the question is what information do they have?

Because this conduct is about seven years old and this investigation has been going on for five years. And we have been seeing an uptick in the activity of this investigation.

So do you have new evidence or witnesses or are you bowing to political pressure?

And the former president's attorneys arguing that this is a result of politics and the biggest difference between New York and Georgia is clearly evidence that we have not ever seen in Georgia and to be determined what is going on in the New York case.

BOLDUAN: Good point. Good to see you, Paula.

Poland is making a big announcement this morning, saying that it is sending fighter jets to Ukraine. This is the first NATO country to make this move. What this could mean for the war, that is next. [11:30:00]