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Biden Insists Banking System Safe As Two Lenders Suddenly Collapse; GOP's Comer Subpoenas Bank Records For Three Of Hunter Biden's Business Associates; Attorney: Trump Has "No Plans" To Testify In Hush Money Case. Aired 3-3:30p ET

Aired March 13, 2023 - 15:00   ET




JOHN BERMAN, CNN HOST: Top of the hour now on CNN NEWSROOM. I'm John Berman.

BIANNA GOLODRYGA, CNN HOST: And I'm Bianna Golodryga.

This morning, President Biden reassuring Americans that the U.S. banking system remains safe, this Despite the failure of two significant banks within 48 hours, Silicon Valley Bank and Signature Bank have now been taken over by federal regulators.


JOE BIDEN, PRESIDENT OF THE UNITED STATES: All customers who had deposits in these banks can rest assured - I want to - rest assured they'll be protected and they'll have access to their money as of today. That includes small businesses across the country that banked there and need to make payroll, pay their bills, and stay open for business. No losses will be - and I want - this is an important point - no losses will be borne by the taxpayers.


BERMAN: The President emphasized the customers will be fully protected while the banks managers and investors will be held accountable. He also outlined the emergency measures his administration took to protect the bank's customers.

CNN's Priscilla Alvarez is with us.

So look, a lot of this is trying to ease the anxiety about the anxiety because fear is the real problem. So what else is the administration doing to try to ease these fears?

PRISCILLA ALVAREZ, CNN POLITICS REPORTER: And, of course, maintaining confidence in the bank. So the administration taking dramatic emergency actions here to address the near term crisis and any spillover in the future, so two significant actions here. Backstopping all deposits from these two banks and launching the Federal Reserve lending facility to maintain liquidity. Now, again, all of this with the intended effect of maintaining the

competence in the banking system. And it is the combination of hours of a scramble behind the scenes over the weekend to try to avoid panic because, of course, perception matters in situations like this, like the situation itself.

So a senior administration official telling our colleague, Phil Mattingly, that speed mattered here, and they were trying to prevent additional contagion. And that's really what you were hearing from President Biden today is assuring Americans of the banking system. Not only that, but also differentiating from the 2008, 2009 bailouts and noting that taxpayers will not bear the burden of this. And, of course, that those responsible will be held accountable.


BIDEN: The management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore.

Third, investors in the banks will not be protected. They knowingly took a risk and when the risk didn't pay off, investors lose their money. That's how capitalism works.


ALVAREZ: Now, there are still risks here and officials are watching this and the hours and days to come. But President Biden taking the opportunity in his remarks today to assure Americans that the banking system is safe, Bianna, John?

GOLODRYGA: All right. Priscilla Alvarez, thank you.


Well, the President also urged lawmakers to strengthen the rules for banks to prevent this from happening again, one California Democrat has already called for an investigation into what happened to SVB.

BERMAN: CNN's Jessica Dean is on Capitol Hill.

So Jessica, what are you hearing from lawmakers this afternoon?

JESSICA DEAN, CNN CONGRESSIONAL CORRESPONDENT: Well, John and Bianna, it depends on who you talk to. But the bottom line is there's a plenty of blame to go around here on Capitol Hill from lawmakers. But again, depending on which side of the aisle you're talking to, members from which side of the aisle, it depends on what kind of answer you're getting and how they think they should move forward and what if anything they should be doing.

What we do know is the - is that Democrats and Republican leadership, both briefed by the Treasury Department over the weekend they were in the loop about this. We know that House Speaker - Republican House Speaker Kevin McCarthy and Democratic Senate Majority Leader Chuck Schumer, both expressed some concerns about any sort of systemic failures within the economy.

If you talk to liberals, people like Sen. Elizabeth Warren, who had an op-ed today in The New York Times, they really point back to a 2018 vote in which a bipartisan group of lawmakers voted to overturn some federal banking regulations that had been put into place after 2008. So let me read to you what - part of what she wrote.

She said, "Had Congress and the Federal Reserve not rolled back the stricter oversight SVB and Signature would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. These bank failures were entirely avoidable."

On the other hand, you have Republicans who are blaming what they call woke policies by the banks that got them into this position to begin with. They say that there are these liberal policies that put them in these vulnerable positions. And we also heard from the ranking member on the Senate Banking Committee, South Carolina senator, Tim Scott, who really urged against any sort of culture of government intervention.

What is clear from everyone Bianna and John, one thing they do seem to agree on is there is no appetite for a major government bailout and again, as Priscilla was alluding to just a moment ago, the President very clear that the taxpayers will not be bearing the burden of this, that this is not a bailout that is like 2008, John and Bianna?

BERMAN: Jessica Dean up on Capitol Hill, Jessica, thank you.


BERMAN: So small business owners who use Silicon Valley Bank, they're relieved that regulators are stepping in because they're getting their money back. This is including the co-founder of Shelf Engine, a startup in Seattle. He says the $250,000 normally guaranteed by the government, that's what is FDIC insured would not have been enough to keep his company going.


STEFAN KALB, COMPANY "SHELF ENGINE" USES SILICON VALLEY BANK: So $250,000 would have been nice to have starting today. However, for us, that means that we basically would have to shut down by the end of the week. And the reason that's the case is because we would have to make payroll, and that doesn't even really cover a full payroll for us.


GOLODRYGA: Joining us now is CNN Economics and Political Commentators, I meant to call you senior which you should be, Catherine Rampell and a columnist at The Washington Post, and Damian Paletta, who is Deputy Business Editor at The Post. Welcome both of you.

So Catherine, let me start with you in this emergency lending facility that was created over the weekend. The Fed is indicating that there's plenty of money in the financial system and that other banks should not panic and that depositors in those banks should not be panicked at this point as well. Do you think that this facility alone will reduce any spillover effects that we've seen from SVB.

CATHERINE RAMPELL, CNN ECONOMICS AND POLITICAL COMMENTATOR: It should help, right? The whole idea here is to allay fears that depositors are at risk, that investors in fact are at risk, because there is this backstop for these financial institutions.

However, if you actually look at what's happened to some of these regional banks today, their stocks have continued falling. So I'm not really sure how to reconcile the measures that have been taken with the fact that there still seems to be a lot of anxiety out there about the future of these two.

BERMAN: Let's dig in a little bit deeper to that, Damian, because that's the key here. There's a lot of complicated words and facilities being used here. But basically, one of the major goals for the administration was just to calm people down, have people less scared, because fear is what causes bank runs and they don't want that anymore. So as we sit here an hour before market closing, what's your assessment of how people's nerves are?

DAMIAN PALETTA, DEPUTY BUSINESS EDITOR, THE WASHINGTON POST: I think you're exactly right. I mean, this is all about confidence and making sure people feel safe having their money in excess of $250,000, in some cases in a bank. On the other hand, the shareholders of Silicon Valley Bank did lose all their equity. So if you're a shareholder in a regional bank and you're worried, the stock price of those companies could go down, even if your money is safe in the bank, the share prices might not be safe, so I think that's probably what we're seeing.

But it shouldn't be lost on us that this has never been done before. I've covered many bank failures, they've never come in retroactively and given unlimited deposit insurance for a single bank failure like this. So this is very unchartered territory, the Biden administration must have decided this is the lesser of two evils, rather than let this fail and see what happens, they have to come in and retroactively bump up everyone's deposit insurance.


And so we're going to - it's going to take some time for us to see how this is all going to play out.

GOLODRYGA: So for those of us whether you're at home and lived it or us, as journalists, who covered it, we're sort of having PTSD from 2008. This is a very different picture. These banks, for the most part, are well capitalized.

That having been said, it does raise the question of where regulators were here, were they too focused on the "too big to fail banks," and making sure that they were following through on regulation as opposed to some of these regional banks that perhaps slid beneath the surface in terms of following up on Dodd-Frank or whatever. I mean, we know there's questions about whether that was rolled back

and what role that played in the Trump administration, but is this a regulatory issue?

RAMPELL: I think we still don't know entirely for sure. We do know that after the 2008 financial crisis, Dodd-Frank was put in place in part to try to prevent these kinds of future bailouts, to try to prevent the kinds of risk taking that would lead to a failure that would require a bailout. But for the most part, it's the really big financial institutions that were that have been subject to much stricter regulatory requirements and regular stress testing.

And more recently, some of these smaller to medium-sized institutions have had some of the regulations relaxed, they're not stressed tested to use the term of art as frequently. Would the vulnerabilities at Silicon Valley Bank have been caught, had they been stress tested more frequently, had regulators been more proactive, I think probably based on the bank experts and economic experts that I've spoken with, it seems like Silicon Valley Bank in particular made a pretty basic no, no, which was essentially not hedging against interest rate risk and when everybody kind of knew interest rates are going to go up.

So that's something that seems like it should have been caught, whether you can directly draw a linkage between that deregulatory action, rolling back part of Dodd-Frank and this collapse, I don't know yet, but it seems quite plausible.

BERMAN: Moral hazard is a term that sort of ...

GOLODRYGA: Don't, John.

BERMAN: I know, I'm sorry. It's been on the shelf for, what, like 15 years.


BERMAN: But I am curious, Damian, if it's back now. I get that the investors in the bank aren't being bailed out. But the depositors, they knew that their deposits of greater than $250,000 were not FDIC insured. You mentioned this is unprecedented to bail all of them out, does this create a precedent where now people are going to feel that any investment in a bank - not investment - deposit in a bank is forever guaranteed?

PALETTA: John, absolutely. And I think we're going to be living with the legacy of this for a long time. I mean, if you're from a smaller bank, let's say in the southeast of the United States and your bank fails, and you don't have billionaire venture capitalists calling the White House and Treasury Department demanding your money, and you lose out, how is that going to be seen as fair?

This is a - there's going to be lawsuits, there's going to be all kinds of things about this, that are going to play out over many months and years. And I think you're exactly right, the moral hazard aspect of it, and no one I know wants to talk about it in the immediately days after it happened, but we're going to be talking about in the months and years after it happens for sure.

GOLODRYGA: It's true. Listen, I agree. I think it's worthy of asking the question of whether the - if this were a small Midwest regional bank versus these two banks, these coastal banks, whether we would be talking about it the way we are now and whether we would see the Fed step in the way it has as well.

BERMAN: I wasn't expecting the groan when I said those words from both of you when I said that.

GOLODRYGA: I mean, it's just like Pavlovian almost.


GOLODRYGA: Catherine Rampell and David - Damian Paletta, thank you so much.

PALETTA: Thank you.

GOLODRYGA: Well, the House Oversight Committee Chair has quietly sent subpoenas to three of Hunter Biden's business associates. We'll have the latest on the GOP investigation up next.

BERMAN: And when it comes to the Manhattan grand juries investigation into hush money payments made to Stormy Daniels, former President Trump may not be testifying but his former lawyer, his fixer, Michael Cohen, sure is. How Trump is responding that's next.



GOLODRYGA: House Oversight Committee Chair Congressman James Comer is ramping up his probe into the President's family, specifically Hunter Biden, the Kentucky Republican is seeking the financial records for three of Hunter Biden's business associates.

BERMAN: According to a letter from the committee's ranking member, Congressman Jamie Raskin, Comer sent the subpoena to Bank of America and Democrats were given little notice.

CNN Reporter Alayna Treene joins us now.

Elena, tell us more about what the Republicans are after here the subpoena.

ALAYNA TREENE, CNN REPORTER: Right. Well, John, the subpoena is very broad. It looks at the financial records for three of Hunter Biden's associates and spans 14 years. It also - what we're told is - looks at not just their financial records, but it's also digging into what Democrats are criticizing as being overly broad, not only just the payments that they made to potentially do this business deal, but also for paying parking tickets or their kids' dance lessons.

Now, while James Comer has been very public about wanting to investigate the President's family, he's actually been pretty private about how he's doing. We first learned of this letter or of this subpoena from a letter that Jamie Raskin, the committee's top Democrat sent to Comer Sunday night and really criticize Republicans, again, for having this very broad subpoena, but also for giving them little notice.

They normally get at least 48 hours ahead of time before a subpoena like this is sent out, but this time they were only given just a couple of hours before it was issued. And one other thing I will add, our sources said that after the subpoena was sent out, Bank of America has actually begun complying with the subpoena and has turned over a considerable number of documents to the committee.

GOLODRYGA: All right. Continue to follow this story for us. Alayna Treene, thank you.

TREENE: Thank you.

BERMAN: So, former President Trump will not testify in the Manhattan grand jury case where prosecutors are finalizing their investigation into hush money payments made to adult film star Stormy Daniels.


GOLODRYGA: But Trump's former attorney and fixer, Michael Cohen, is under oath today.

CNN's Kara Scannell is following this for us.

So Kara, what was he saying? And we know the president's - former president's attorney said he will not be testifying, Michael Cohen different story.

KARA SCANNELL, CNN REPORTER: Yes, I mean, Michael Cohen, we caught him on video. He's walking into his first appearance before the grand jury. You'll know he's been in meeting with the DA's office some 20 times over the past three or four years. This is the first time he's gone before the grand jury and so that will be his testimony.

He was at the center of this hush money payment. And how this connects to the former president is how was this reimbursed to Michael Cohen. That's what the DA's office is looking into, the falsifying business records. And sources say they're looking to see if they can make it a felony, whether these records were falsified in connection to either conceal or commit another crime and that would relate to campaign finance.

So Trump's attorney, Joe Tacopina, was on Good Morning America this morning and he kind of gave a hint of what their defense might be. Take a listen.


JOE TACOPINA, ATTORNEY FOR DONALD TRUMP: He made this with personal funds to prevent something coming out false, but embarrassing himself and his family's young son. That's not a campaign finance violation, not by any stretch. So personal funds and personally use of funds spending to fulfill a commitment and obligation or an expense of a person that would be existing, irrespective of the campaign is not a violation and that's what you have here.


SCANNELL: Now, I spoke with another attorney for Donald Trump who met with prosecutors in recent weeks and she said that they did not articulate the specific charges that they're considering, what might be this other crime that was committed or concealed. She said that she thinks they're struggling to come up with a theory.

GOLODRYGA: Kara Scannell, thank you.

BERMAN: So CNN Senior Legal Analyst Elie Honig joins us now. He's a former U.S. attorney and the author of the new book "Untouchable: How Powerful People Get Away with It." It is on store shelves today and I ...

GOLODRYGA: Hold it up.

BERMAN: I'm going to hold it up.


BERMAN: Everyone needs to go read this right now because it actually is exactly about what is being discussed right now. Well, you've got a chapter in this book which talks about the fact that the Feds may have had a convincing case against Donald Trump when it came to the hush money payments. But that's a different case, in a way in some significant ways than what Alvin Bragg may be about to make. How do they differ and why is that so significant?

ELIE HONIG, CNN SENIOR LEGAL ANALYST: Yes, John. So there are some big differences here. As I report in the book, the Southern District of New York, the federal prosecutor's office across the street from Alvin Bragg's office looked at this exact question, should we indict Donald Trump for campaign finance violations, two - changed years ago.

In January 2021, as Donald Trump was getting ready to leave office. So the first thing has changed is two plus years have passed between now and then. The other big difference is we're really talking about different sets of laws here. The federal law is on point for a campaign finance violation.

Under New York state law, however, this is going to be a misdemeanor, which is a very lowly crime, unless they can prove that there was some sort of campaign finance violation. The problem is, it's not clear that New York State law covers a federal presidential campaign violation. So they've got a legal problem there in the New York State system.

GOLODRYGA: Talk about the significance of Michael Cohen's testimony today before the grand jury.

HONIG: Well, it's enormously significant. It's clear that the DA is going to rely on Michael Cohen. By the way, another big difference, the Feds rejected Michael Cohen. They put in a letter to a federal judge, we're not using him as a cooperator, Judge, because we don't believe he's fully credible.

Now, apparently, the DA is making another calculation. On the one hand, Michael Cohen certainly had insider access, he was part of this and he has been proven correct in many of the things he said. On the other hand, like it or not, he is a convicted perjurer. He's been convicted of perjury. He's been convicted of financial crimes. He's been convicted of tax crimes and the man hates Donald Trump with every bone in his body, we can argue about whether that's justified or unjustified, but it's going to make for right cross examination, defense lawyers are going to argue, you absolutely despise Donald Trump and, therefore, they'll argue to the jury that colors his testimony.

BERMAN: There's also a lot about Michael Cohen in this book. And Elie you write ...

GOLODRYGA: Are you his book agent?

BERMAN: It's a terrific book.

GOLODRYGA: (Inaudible) ...

BERMAN: And honestly, it's very relevant to what we're discussing right now. I mean, you suggested the Feds ultimately made a decision that it would be a hard case to make without Michael Cohen. And they would have had to have made it, they think, without Michael Cohen.

Can Alvin Bragg make the state case? Can he make a case without Michael Cohen? Or do you think that if this goes to jury that it'll put him on the stand?

HONIG: I do not think that the DA can make a case here without Michael Cohen. I think it's clear that he needs Michael Cohen and that he's going to rely on Michael Cohen. And as I said, John, that's a risky proposition. You're going to - look regardless of one may think about whether Michael Cohen has turned himself around, I believe he has, but his record is going to make it very difficult.

I'll give you one other example. We heard earlier, the clip of Donald Trump's lawyer Joe Tacopina saying this was entirely a personal payment, it had nothing to do with the contribution.


Do you know who else said that? Michael Cohen in 2018 to The New York Times and to the FEC, the Federal Election Commission, before he cooperated, so he'll have to explain why what he said back then was a lie and now he should be believed. Again, difficult witness to put in front of a jury of 12 average New York citizens.

GOLODRYGA: Elie, how likely is an indictment here?

HONIG: It seems very, very likely, Bianna, given the stage we're at, given that Michael Cohen seems to be one of the final witnesses, given that the DA has given Donald Trump. Now, essentially his last chance to go into the grand jury.

So I do think it's quite likely bordering uncertain that we will see an indictment soon, but I will stress this every time. I talk about the possibility of an indictment of Donald Trump and indictment and conviction are two very, very different things.

BERMAN: And just one more book-related question because it gets to something you just said. No, I mean, Elie was talking about the defense that Donald Trump is using, this was a personal not a campaign payment.


BERMAN: But in the book, Elie, you know that the timing of the payment makes that ...


BERMAN: ... really a hard argument for Donald Trump to make, why?

HONIG: Yes, I think that's the absolute best argument prosecutors have as to the true motive here. The affair - alleged affair with Stormy Daniels happened a decade prior. And this payment happens just a few days before the January - before the 2016 election, so how on earth you explain that?

I think what Donald Trump will say is, yes, I've heard his lawyer say something along the lines of, sure, but this person surfaced knowing that it was the optimal time to sort of approach him and seek a payment. But yes, I think that's very compelling. That's common sense evidence and you're allowed to argue common sense in front of a jury.

GOLODRYGA: Elie Honig, our brilliant esteemed colleague and if you don't know already the author of the fantastic book "Untouchable."

BERMAN: The author of the book "Untouchable."

GOLODRYGA: Thank you, Elie, (inaudible) ...

HONIG: Berman, you'll get your percentage in the mail soon. Thank you, guys. All right.

BERMAN: It is so relevant though to this case ...

GOLODRYGA: Of course, yes.

BERMAN: ... in the next week, you'll find out even more about it.

GOLODRYGA: Well, it's great to have them.

BERMAN: All right. Water is finally starting to recede in California though. It's just in time for a new round of severe weather to roll in. We're going to have much more on that straight ahead.

GOLODRYGA: And President Biden just landed in California to meet with the Australian and U.K. leaders. Why China and North Korea are now watching this meeting very closely, that's next.