Return to Transcripts main page
Pentagon: Russian Plane Harassed Drone For "30-40 Minutes"; Source: Justice Dept Investigating Silicon Valley Bank Failure; Northeast, Interior New England Brace For Heavy Snow, High Winds. Aired 3-3:30p ET
Aired March 14, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FADI: I know you don't want to share lots of information, especially intelligence information, but are you able to say whether the MQ-9 was flying near Ukraine or near the Crimea Peninsula?
And then I believe you said, if I heard right, that the Russians did not recover the drone. However, have you seen any effort by the Russian Navy to try to recover the drone? Thank you.
BRIG. GEN. PATRICK RYDER, DEPARTMENT OF DEFENSE PRESS SECRETARY: Yes. So on your latter question there, Fadi, I'm not going to get into that.
In terms of where it was flying, it was well clear of any territory in Ukraine. It was over international - in international airspace, over international water, so. Thank you.
NANCY: Thank you. During Secretary Austin's visit to Egypt, he held meetings with officials, even though all press were banned from covering it. Past defense chiefs, when they've been in a similar situation, have refused to proceed.
Given that the Biden administration has said that one of its key pillars in terms of foreign policy is that one presented with the - a choice between autocrats and democracies, that it stands with democracies, can you help us understand why the Secretary decided to proceed with those trips, given the ban, and should we expect that going forward? Thank you.
RYDER: Thank you. So our relationship with Egypt is obviously a very important strategic partnership. The Secretary did appreciate the opportunity to meet with his counterparts and talk about that.
I will tell you, when it come - when it came to the press coverage of that portion, having looked further into it, the Egyptians lived up to what they had agreed upon. Some of the lessons learned out of that was in terms of making sure that we were on the same sheet when it came to understanding press access. And so we will continue to work that.
NANCY: I'm sorry, could you clarify - the U.S. had agreed beforehand that there would be a ban of journalists? RYDER: We did not agree to a ban on journalists. We agreed to have official photographers. We did have one reporter come into one of the sessions but then a portion that was going to be open to the press was subsequently not held and therefore there was not an opportunity to cover that.
But again, sometimes these meetings are very small, sometimes there's not the opportunity for media to come in, but again, it's something that we've noted and we'll continue to work closely with governments as we visit to ensure that there's press access. Thank you.
UNIDENTIFIED MALE: Just regarding the budget, for the last few years, the services have pursued a divest to invest strategy and Congress hasn't necessarily bought into that. This year, the Air Force is looking to retire more than 300 aircraft, double the amount last year. Again, Congress last year didn't give that full amount.
Is there a sense that things have changed on the Hill, that there's a willingness to approve greater divestment or is this now becoming kind of a cat and mouse game of shoot with a higher number, knowing you're going to get less, to try to get to where you want to be?
JOHN BERMAN, CNN ANCHOR: Right. You've been listening to the Pentagon press briefing with new information about the U.S. drone that was brought down in the Black Sea after an interaction with Russian aircraft. The Pentagon saying that the Russian aircraft struck the drone and then the U.S. military made the decision to bring it down because it was unflyable. That information just released there.
It is the top of the hour. I'm John Berman.
BIANNA GOLODRYGA, CNN HOST: And I'm Bianna Golodryga.
With us now to talk more about what we've just heard is CNN's Natasha Bertrand at the Pentagon; CNN Senior International Correspondent, Ivan Watson is in eastern Ukraine; and CNN Military Analyst retired Air Force Colonel Cedric Leighton.
Natasha, let's start with you because as John said we got more details about what took place. This interaction between the drone and the Russian MiG took place about 30 to 40 minutes. We heard from the Press Secretary there at the Pentagon that he believes that the MiG was also damaged and that so far, the drone has not been recovered by the Russians. What more did you learn?
NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Yes, that's right. We are getting an interesting new details hear from the Pentagon Press Secretary who said that those fighter jets were flying alongside that Reaper drone, that surveillance drone unmanned for about 30 to 40 minutes before they started messing with it.
And essentially what happened he reiterated what we have been told already, which is that the fighter jets started flying very close to that drone all of a sudden and actually started dumping fuel out in front of it. And at one point the Jets actually hit the propeller of that drone making it essentially unflyable and forcing the U.S. military to bring it down.
Now, the - Russia does not currently have the drone according to the Pentagon Press Secretary and he would not answer questions about whether Russia has actually tried to retrieve the drone, but essentially the message here has been that while this behavior, this kind of interception of the U.S. drones is not uncommon. The behavior of the pilots is very uncommon.
They have not seen this kind of activity by Russian pilots before just being so kind of reckless around these U.S. assets in a way that actually could be dangerous as well to the Russian fighter jets.
Now, the Pentagon Press Secretary did say that they understand that the Russian jets did ultimately land. But that these maneuvers that they were conducting were very provocative, did have the possibility of causing both of those aircraft to crash. And that ultimately, this is not obviously the kind of behavior that they would expect, even from the Russian pilots with whom, of course, the United States currently has a very tense relationship with the Russians right now.
So all of this to say that this has been a pretty unprecedented moment over the course of the war in Ukraine. The U.S. never before revealing any way that such an incident where an actual collision has taken place between Russian and U.S. aircraft has actually occurred, guys.
BERMAN: Colonel Leighton, talked to us about the significance of the loss of a U.S. drone due to foreign activity, this being Russian activity, in this case, the significance of that how unusual it is and the potential intelligence value if the Russians do recover this piece of equipment.
COL. CEDRIC LEIGHTON (RET.), CNN MILITARY ANALYST: Yes, John. Well, with the last - your last question, first of the potential intelligence value is absolutely would be profound, though you can bet that the Russians are actively trying to go in and recover the drone, the MQ-9 and see if they can - if they do fit - see if they could reverse engineer it kind of like what we did with the balloon, the Chinese balloon. This is the kind of thing that they would want to do.
So as far as the intelligence aspect of this is concerned, this was - this drone was most likely on a collection mission for intelligence, surveillance and reconnaissance, as we call it and what its capabilities are. It's pretty significant. It's able to collect signals intelligence, if it's configured for that. It can do imagery. It can do some other intelligence collection efforts.
So the loss of any one of these can really serve to make it much harder for us to pick up intelligence in areas that would otherwise be denied to us.
GOLODRYGA: And Ivan Watson, this took place over international waters there in the Black Sea. We heard from the Pentagon briefing that the Defense Department has not yet spoken with Russian officials about the incident. The State Department is reaching out for some more explanations on this as well. The Russian Defense Ministry is putting out their side of the story won't get into that. But in terms of how Ukraine is responding, what if anything are you hearing?
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: So far we have not heard any kind of confirmation or information from the Ukrainians about what took place here. Just to follow on with this. I was aboard a U.S. Navy plane, reconnaissance plane just about three weeks ago in a very different theater.
This is the South China Sea, but witnessed firsthand a Chinese war playing conducting an intercept of a U.S. Navy, a piloted plane that I was aboard where the Chinese jet flew along the wing of the U.S. plane, the Navy plane for about an hour. There were communications between the Chinese Air Force and the U.S. Navy plane to make sure that no accident could take place.
And this is a routine thing that takes place in there in the South China Sea heavily contested waters. The Black Sea also is an area where prior to the Russian invasion of Ukraine, there had been incidents where Russian jets had buzzed us destroyers, for example, that were conducting maneuvers in the Black Sea.
But this is different, of course. The description, the accusations, the Pentagon saying that these jets were actually in physical contact with a drone, with an unmanned aerial vehicle, a very different story, a hostile act, quite frankly, which is what the U.S. has called it.
There were hopes in this incredibly tense area, Bianna and John of perhaps something moving forward. The Russians had just agreed with the United Nations to continue this Black Sea initiative, allowing grain to be exported from Ukraine to international markets, despite the fact that Russian and Ukrainian troops are killing each other on frontlines about 20 - 30 miles from where I'm standing right now.
But this new development is going to ratchet up tensions, certainly over the Black Sea, and in Ukraine and between Moscow and Washington.
BERMAN: And again, this incident not over yet, as the drone has yet to be recovered either by the Russians or any forces friendly to the United States.
Natasha Bertrand, Ivan Watson, Colonel Cedric Leighton, thanks to all of you for your help on this.
We'll come back to this, obviously, if we hear anything else over the next several minutes.
BERMAN: In the meantime, a source tells CNN that the Justice Department is investigating the collapse of the Silicon Valley Bank. The Wall Street Journal reports the Securities and Exchange Commission is doing its own investigation into these failures.
GOLODRYGA: On Sunday, the U.S. regulators took the extraordinary step of taking over SVB and New York-based Signature Bank to guarantee their clients' deposits.
CNN's Matt Egan is here.
Matt, what more are we learning about these investigations by both the Justice Department and the SEC?
MATT EGAN, CNN REPORTER: Well, John, Bianna, clearly authorities for taking this bank collapse very seriously. Our colleague, Paula Reid, just confirmed that the Justice Department is looking into potential criminal violations here and that's on top of the Wall Street Journal reporting that the SEC is looking into potential civil violations. So what are authorities looking at?
Well, two things: One, the actual collapse of Silicon Valley Bank; two, stock sales that were made by Silicon Valley officers in the days before this collapse.
Now, we should caution that this stage - these investigations are in preliminary stage. We don't know yet if there's going to be any sort of findings of wrongdoing, any charges here. But clearly, there is an effort across the government to try to understand how this happened.
I mean, Silicon Valley Bank was not a household name just a week ago, but now it's going down in history as the second biggest bank failure ever. And a lot of people just want to understand how did this happen, including how did regulators miss what in hindsight were some pretty big red flags.
I mean, the Federal Reserve has launched his own review into the regulatory failures here.
BERMAN: So Moody's is downgrading the entire U.S. banking sector.
EGAN: Yes. So they are downgrading the outlook on the entire U.S. banking sector. This is another sign of continued concerns about banks. Moody's is warning that more banks are going to come under pressure, especially those that share two characteristics with Silicon Valley Bank.
One, having a lot of uninsured deposits, because the last few days has reminded us how the uninsured deposits can go away when people are nervous. They're also looking at what banks are sitting on a lot of long-term treasury bonds that have gone down in value as the Federal Reserve has lifted interest rates because that is another concern here.
They're also warning that they could downgrade six U.S. banks, including First Republic Bank, Western Alliance and Comerica. I think the good news here, though, is that the regional banking sector has stopped going straight down, which is what it was doing the last few days. It's actually rebounding. We've seen big share price rebounds for First Republic and other major banks. And importantly in - and you can see in the screen, most of those regional banks are still up on the day, although --
BERMAN: Oh, yes, not what they were, though, which is interesting.
EGAN: Not - they have paired some of their gains, so we do need to keep an eye on that. One other positive sign, though, is that U.S. Treasury officials are saying that the deposit outflows, how much money is being taken out of small and mid-sized banks, that has started to ease and that is exactly what U.S. officials are hoping will continue to happen as confidence comes back, hopefully. Thanks to this big government intervention that was announced Sunday night.
GOLODRYGA: Yes. And that perhaps is a more important element here in terms of what we're seeing, even relative to the stock process.
All right. Matt Egan, thank you.
BERMAN: All right. Joining us now Seth Harris. He was the deputy director of the Biden White House National Economic Council. He was also Acting Labor Secretary for President Obama and is now a distinguished professor at Northeastern University. Douglas Holtz- Eakin was chief economist on the White House Council of Economic Advisers under President George W. Bush. He is also the president of the American Action Forum.
Seth, let me start with you. I guess we're day five into this, depending on how you're counting, exactly. We're about an hour from the markets closing, how do you see things right now, have things sort of stabilized a little bit?
SETH HARRIS, FORMER NATIONAL ECONOMIC COUNCIL DEPUTY DIRECTOR UNDER BIDEN: Yes, I think the President and Secretary Yellen and the Federal Reserve did a nice job of immediately communicating to the American people that the banking system is not at risk, there is not systemic risk in the system, that their deposits are safe on the whole. And that investors and the managers who are responsible for these two bank failures are the people who are going to pay the price, not unintended victims like depositors and the rest of the economy.
So I think that very rapid action over the weekend has calmed the waters. We saw a little dip in Wall Street with respect to midsize banks, now they're recovering slowly. Their confidence level is being restored and that is the only meaningful systemic risk to our economy is that people lose confidence in our banking system.
If that happens, we're in trouble. But the President and Janet Yellen reacted very quickly and I think they addressed that problem.
GOLODRYGA: So Doug, as you know there's already debate going as to who is responsible for this.
Is it the investors and bad management decisions as Seth just laid out or is there something more deeper here in terms of what some lawmakers are suggesting, and that is that regulation had been rolled back in 2018 in particular, the Dodd-Frank Act and some of the regulation that specifically followed what these smaller regional banks should be doing and that that perhaps led to where we are right now. I know you are skeptical about that argument, why?
DOUGLAS HOLTZ-EAKIN, CHIEF ECONOMIST, WH COUNCIL OF ECONOMIC ADVISERS UNDER PRES. G. W. BUSH: Well, I think if you look, in particular, at Silicon Valley Bank, what you see is a business model that was questionable to begin with. Their customer base, their depositors were narrow, all startup techs and venture capitalists. When one is - gets in trouble, they're all in trouble simultaneously and they all want their money back. That's a very undiversified approach to getting deposits.
At the other end of their operation, they had this heavy concentration of long-term treasuries as their capital and they didn't manage a noble interest rate risk. There was no surprise that the Fed was raising rates. And somehow, they managed to make a terrible management decision and not move away from that as well.
It's also a fact that the supervisors didn't pick this up, I find that mysterious that the bank examination process didn't flag this. So none of that has anything to do with the actual regulatory structure, it has to do with execution within the management, execution within the bank examination process. Same results would have happened with the 2017 rules, 2019 rules. I don't think that's what's behind Silicon Valley Bank.
The one systemic thing I am concerned about, I don't know, is that we went 15 years with zero interest rates. And I'm nervous that there's a generation of managers out there who look a lot like SVB and don't know how to manage a more complicated interest rate environment and that's something to keep an eye on.
BERMAN: It's been a long time. I mean, it's been a long time ...
BERMAN: ... since there were interest rates ...
BERMAN: ... in this economy.
I asked - yesterday, I brought up the idea of moral hazard of guaranteeing deposits of greater than $250,000. And it elicited a groan in the room ...
GOLODRYGA: For me. BERMAN: ... by some bias, but look, I mean, the one thing that people know is that your money was guaranteed up to $250,000. Beyond that, it's not. But now, Doug, is it?
HOLTZ-EAKIN: Well, they have set a precedent that makes me very, very nervous. They have said it's all insured. There are $10 trillion of deposits in the American banking system. Is that really what they're promising that they're going to hundred percent insure $10 trillion in deposits. That is a bridge too far that - I'm worried about what they've done there.
Interest rates also is very unfair, right? This is in the end a consequence of the policy errors that gave us inflation forced the Feds to raise rates. There's going to be other people who were hurt by that fallout, there are going to be carpenters and there are going to be small businesses, and they're going to close and lose their jobs, and we're not going to do anything for them. But we stepped in and took care of these venture capitalists, I don't like it a bit.
GOLODRYGA: This is the same argument that Sheila Bair made with me in the last hour.
So Seth, let me turn to you as far as what we can now expect to see the Fed to do at least as if they need any more crises on their plate. Last week, at this time, we were talking about perhaps 50 basis point, interest rate hike. We got a - mixed CPI report this number. The core CPI is really in question and not headed in the right direction. What do you think that Fed Chair Powell does, given what we're seeing in the banking sector and this instability?
HARRIS: I would be surprised if these two bank failures change Chairman Powell's perspective on the interest rate trajectory. What I hope will change his perspective is not merely that we're seeing somewhat improved inflation numbers, although we all would like to see the inflation numbers come down more quickly.
But then we're beginning to see some early signs of slowing down in the labor market. There are some good news in the labor market and there are some bad news in the labor market. We saw the unemployment rate kick up a little bit, but that's because more workers are coming back into the labor market about 200,000 in the last report.
That's a very good thing that's because wages are up, that's because jobs are available. But that also means that there will be lesser wage pressures and we saw a slowing in wage increases. And although I don't think that wages are the reason that we have inflation in the economy, it is something that the Fed is looking at fairly closely.
So my hope is that he'll pump the brakes on the increase in the rates, maybe go to 25 basis points or even zero, I think that the numbers justify going to zero. I think a lot of folks might disagree with that. But my hope is that they're going to slow down. I think this banking situation is not going to affect them very much.
GOLODRYGA: Yes. I see Doug raising his hand too. Look, there are a lot of strange ...
GOLODRYGA: ... (inaudible) in this argument of keeping rates where they are right now and just seeing how things play out.
Douglas Holtz-Eak, Seth Harris, great to have you on. Douglas, you don't agree? You think rate should go up?
HOLTZ-EAKIN: I wouldn't - they are not going to pause. They will go up.
GOLODRYGA: Yes. Okay. Well, we'll leave it there. Thank you.
BERMAN: All right, gentlemen.
So happening now, in New England, a powerful noreaster has already dumped more than two feet of snow in some places. We're going to go live to hard hit Massachusetts with the very latest.
GOLODRYGA: And Florida Governor potential 2024 contender, Ron DeSantis, is taking some heat from his own party over his recent comments on the war in Ukraine. We'll have details up next.
BERMAN: All right. A powerful noreaster hitting the Northeast all over this morning. This is what it looked like in Leeds, Massachusetts.
GOLODRYGA: At least two feet of snow has already blanketed Western Massachusetts and Southern Vermont. Now snow had been falling at a rate of more than two inches per hour.
The City of Worcester - is that right? Did I say it correctly?
BERMAN: It is Worcester and that was Leominister, which is the town next to my father's, there is Worcester right there, you can see it's just there.
GOLODRYGA: I see. I was worried about pronouncing that right for John. The City of Worcester is really getting slammed right now where officials warned that heavy winds could lead to huge power outages.
And that is where we find CNN's Chris Nguyen.
Chris, how fast is the snow falling there?
CHRIS NGUYEN, CNN NATIONAL CORRESPONDENT: (Inaudible) the snow has definitely picked up over the past hour. (Inaudible) the service says some parts of Worcester County could see up to a foot of snow. Now a lot of snow plows have been out this afternoon. You can see behind me they've been doing a pretty good job of keeping the roads clear. But (inaudible) that this started out as rain before (inaudible) ...
BERMAN: All right, Chris. Yes, the snow is getting into your audio equipment. I think which does happen when the snow comes out, it all gets wet and cold hands make it hard to fix. We'll get back to Chris if we can.
GOLODRYGA: But in the meantime, let's go to CNN Meteorologist Jennifer Gray.
Jennifer, just listening to his audio gives you a sense of the powerful winds in the storm right now. And New Jersey's governor said there could be a foot of snow by the time this is all over. What can we expect?
JENNIFER GRAY, CNN WEATHER CORRESPONDENT: Well, New Jersey has seen about nine inches. Those are the highest totals that we've seen reported so far. You can see it's mainly just the northern half of the state. Snow is still coming down so we could get close to that. Very heavy snow though falling across all of the interior sections of New England and much of the Northeast.
Now, the consistency of the snow is important. It's very wet, heavy snow. So this is definitely going to bring down trees. We've already seen a lot of power outages that's going to continue and could even compromise some structure. So that's something that we'll be watching for as well.
So as we go throughout the evening tonight, this is nine o'clock tonight, New York City should pretty much be in the clear by then. And then Boston will still be in it the early morning hours, but then clearing out by the time we get into mid morning. We should be finished with the storm.
So we could see an additional four to six inches of snow, you can see those areas shaded in purple. But once you get into those dark Pink's that's an additional foot to a foot and a half of snow. And that's going to be for those higher elevations.
Forecast winds also our big concern. We're looking at 40 to 65-mile per hour wind gusts with this storm. So as we go forward in time, you can see still calling for 40, 45-mile per hour winds by the time we get into Wednesday, even long after the storm is gone. So we're going to have a very cold and windy day across the Northeast on Wednesday.
So here are your impacts. You can see the area shaded in red. That's going to be our biggest impacts with wind gusts of 50 miles per hour or more with that very heavy snow. And guys travel is going to be a concern as we go throughout the evening hours as well.
BERMAN: Yes. That wind on top of the wet snow on these trees that's going to be dangerous ...
BERMAN: ... in those areas. People need to be very, very careful.
GRAY: Very dangerous.
BERMAN: Jennifer Gray, thank you very much.
GOLODRYGA: Senate Minority Leader Mitch McConnell is out of the hospital but he's now in a rehab facility after suffering from both a concussion and a broken rib. The details on when we may see the top Senate Republican back on Capitol Hill up next.