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Concerns on Banking Sector Cause U.S. Stocks to Decline; Interview with Federal Reserve Bank of Atlanta Former President and CEO Dennis Lockhart; Rehearing of Election Cases by the North Carolina Supreme Court; Ron DeSantis Receives Criticism from GOP Senators Over Ukraine; Interview with TIME National Political Correspondent Molly Ball; First Trip to Iowa for Kamala Harris as Vice President; FAA Safety Summit Begins as 7th Runway Close Call Under Investigation. Aired 10:30-11a ET
Aired March 15, 2023 - 10:30:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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[10:30:00]
JIM SCIUTTO, CNN NEWS ANCHOR: The major stock indexes are back down again this morning despite encouraging news on inflation. Right now, I see the Dow there down just over 500 points. Lots of folks watching the markets blaming this on questions about the banking industry. Swiss bank Credit Suisse dropped more than 20 percent at one point, now shares of other major U.S. banks also falling. Regional banks, way down in the last several days.
Joining us now to speak about all of this, Dennis Lockhart. He's the former president and CEO of the Federal Reserve Bank of Atlanta. Sir, thanks for taking the time this morning.
DENNIS LOCKHART, FORMER PRESIDENT AND CEO, Federal Reserve BANK OF ATLANTA: Thanks for having me on, Jim.
SCIUTTO: So first, as you see, markets are down again today after some signs of hope yesterday. As you watch this, is the storm still brewing here specifically over concerns about risked to banks?
LOCKHART: Well, I think the developments we saw this morning on the news this morning in the United States of Credit Suisse and other European bank shares being under pressure. It indicates to me that the systemic question, the systemic worry is still alive and we will just have to see how this plays out over the coming day. But certainly, a touch of contagion is -- seems to be happening with the European banks.
SCIUTTO: We saw, over the weekend, the Fed, the Department of the Treasury take immediate steps to try to calm this by one, ensuring depositors that their money was safe. Also, offering some measures to banks to help them cover, particularly banks who had some long-term holdings in U.S. Treasury's here. As you look at this, do the Fed and the U.S. Treasury have to take more steps now? And if so, what steps, specifically, to rein this in? LOCKHART: Well, if it turns out to have a global dimension, then I think the regulators and the Federal Reserve, particularly, will be activating swap lines for -- dollar swap lines for the European central bank and be coordinating or at least talking very frequently with their colleagues in other jurisdictions around the world just to evaluate what kind of disruption is occurring and whether there's going to be a need for the Fed to provide liquidity to dollar markets around the world. That's typically what happens when something morphs into an international problem, and that seems to be the news this morning.
So, you know, again, I -- you know, you have to watch this minute by minute to and see how it evolves. But that's one thing they could be thinking about.
[10:35:00]
SCIUTTO: The sad fact is, we've been here before. It's not to that degree at this point, but in 2008 you had similar concerns. Dodd-Frank Law was passed afterward, it did a number of things, including imposing stress tests on banks, increasing the assets they have to hold. Some of those regulations rolled back in 2018, including raising the size of the bank that needs to abide by some of these regulations. You were in support of those changes, those relaxations in 2018. I wonder if you look at the situation now, was that a mistake and is that rollback partly to blame for what we're seeing now?
LOCKHART: Well, I don't remember being in support of it. No one asked me. I had been retired from the Fed by that time. But your question is, was it a mistake? I think, in retrospect, it appears now to have been a mistake to raise the threshold for stress tests to, I think, $250 billion. It turned out that Silicon Valley Bank was just below that level and therefore didn't apparently go through the same stress test regimen that the larger banks do. And the stress test would conceivably -- and the most adverse case would have picked up on the potential illiquidity, even though their balance sheet two or three weeks ago looked pretty sound, but you know, the stress test might very well have uncovered that.
SCIUTTO: Well, Dennis Lockhart, we'll continue to watch this closely. We appreciate you sharing your thoughts this morning.
LOCKHART: Thank you.
SCIUTTO: Don't miss CNN primetime tonight, "Bank Bust: What is Next for America's Money," that's only on CNN, 9:00 eastern time.
ERICA HILL, CNN ANCHOR AND NATIONAL CORRESPONDENT: After afraid (ph) of Republicans visited Iowa, the White House, we're learning, is now sending Vice President Kamala Harris to the state. Why? Stick around.
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[10:40:00]
HILL: In a rare move, North Carolina's Supreme Court is re-hearing two cases that were already decided last year. That's because when those rulings came down, the court had a Democratic majority.
SCIUTTO: When Republicans regained control of the court after the midterms, GOP lawmakers asked to revisit the rulings. The cases involve North Carolina's voting maps and voter identification laws.
CNN's Dianna -- Dianne Gallagher is following both hearings for us. She joins us now from Charlotte, North Carolina. I mean, Dianne, first, tell us about the cases and is this an OK thing to do? I mean, you change the makeup of the court and you go back to try to get a different outcome?
DIANNE GALLAGHER, CNN U.S. NATIONAL CORRESPONDENT: Look, Jim, I do want to be clear, the only thing that has changed about these cases is the political makeup of the court. Both of them decided last year, and to give you an idea of how rare this is, these two election cases equal the same number of cases that the state Supreme Court has re- heard over the past three decades.
The one that they are hearing today centers around a 2018 voter I.D. law that the -- that then-Democratic majority, state Supreme Court deemed unconstitutional last year. That will -- the re-hearing will be in about two hours here in North Carolina.
Yesterday, there was a re-hearing on redistricting. And what was interesting about that argument was not the fact that the -- the -- Weir (ph) who was representing the Republican defendants said that it wasn't an extreme partisan gerrymander because that is what the court ruled last year, forcing there to be a special master redrawing those maps.
But they say that the court shouldn't have been able to rule in the first place. And if that argument sounds familiar -- familiar to you, that is because this is the underlying case for that controversial so- called independent state legislature case that is currently at the U.S. Supreme Court, Jim, Erica.
SCIUTTO: All right.
HILL: And so, that is one of the many reasons that so many people are following this so closely today. Dianne, I really appreciate it. Thank you.
GALLAGHER: Yes.
HILL: Joining me now, CNN Political Commentator Errol Louis, political anchor for "Spectrum News", and host of the "You Decide" podcast. And Molly Ball, a "Time National" political correspondent. It's good to see both of you this morning.
Errol, if we start there in North Carolina, as Dianne pointed out, only two other cases has been reheard by the state Supreme Court in the last 30 years or so. This is about more than the content of those cases. This is about political power. Is this a foreshadowing of what may be to come in other areas?
ERROL LOUIS, CNN POLITICAL COMMENTATOR, POLITICAL ANCHOR, SPECTRUM NEWS, AND HOST, "YOU DECIDE" PODCAST: You'd have to really look state to state, Erica, because in North Carolina, you have an elected Supreme Court and they are very public, very highly contested, very hotly contested races. So, in some ways, that court, unlike in some other states, is really a part of the whole political storm that goes on, and what we're expecting to see happen really, sort of, tracks with that. It's almost like a third branch of the legislature that's getting involved.
The chances of them arriving at a decision that is not to the liking of Democrats are very, very high. At which point they're going to have to make some decisions within the Democratic Party down there about whether they want to fight it out on the ground or even try, maybe, a federal solution turn to the federal courts.
[10:45:00]
HILL: It'd be interesting to see. Let's move on to 2024 now. As we look at how this is playing out where there was a lot of activity, as we know, in Iowa over the weekend. But it's probably the comments from Ron DeSantis about Ukraine really getting the most attention. He's reduced the war, Russia's invasion, right, of Ukraine to a territorial dispute. He also said it's really not a vital interest to the U.S. and that prompted a very swift backlash from his fellow Republicans. I just want to play some of those moments.
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SEN. LINDSEY GRAHAM (R-SC): To say this doesn't matter is to say that war crimes don't matter. So, he's committing more crimes on an industrial scale, Putin. He's going to go beyond Ukraine, Putin. You know, if you don't get that you're not listening to what he's saying.
SEN. MARCO RUBIO (R-FL): It is not a territorial in the sense that, any more than it would be a territorial dispute if the United States decided that it wanted to invade Canada or take over the Bahamas. I don't know what he's trying to do or what the goal is. Obviously, he doesn't deal with foreign policy every day as governor. So, I'm not sure -- I can't speak to -- you know, I can't compare that to something else he did or has said.
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HILL: This could really be a defining moment, Molly, for the Republican Party, certainly moving into 2024 as we talk about not just Ukraine but foreign policy in general. How do you see this playing out?
MOLLY BALL, NATIONAL POLITICAL CORRESPONDENT, TIME: Well, I think that's what remains to be seen. Starting to see more activity, starting to see the candidates take positions or potential candidates, in this case, on some really high-profile issues. And DeSantis has made a clear bet that this is where the base of the Republican Party is headed, as has Former President Trump. And you see from those comments, that you just played, the immense amount of blowback that he's gotten from the Republican establishment. The question is, did he know that was coming? Did he intend to pick a fight with the Republican establishment to sort of place himself in that more populous lane, or did he not know that there would be quite so much incoming from taking this position? Was it surprising to him, you know, as some of those people noted, those Republicans noted, foreign policy is an area where he's going to have a lot to prove on the campaign trail. Having been a federal legislator but, you know, being more well known as the governor of a state.
And so, as he states out these positions, there are definitely going to be a definitional all for DeSantis and his campaign, possibly in ways he didn't intend. So, he has got a lot more work to do as he defines himself as a candidate.
HILL: And as we look at what his campaign may look like, right? It's one thing to be in Iowa during the primary, but if he is opening up to a broader, national audience, what those messages will be. I know we're tight on time, Errol, but I do just want to get your take on the fact that we are seeing now Kamala Harris heading to Iowa. This is an important as we head into 2024. What should we read into it, if anything?
LOUIS: Well, you should read into it that the Biden-Harris ticket information wants to, at least, put a stake in the ground. Make sure that they don't miss every single news cycle and they have the power of the office and they can do that. But make no mistake, that is not friendly territory for the -- for that -- for this particular White House.
You know, if you remember back in 2020, Kamala Harris dropped out because she had gone all in on Iowa, made something like 87 appearances and was polling at around three percent when she finally pulled the plug before the caucuses. And in those caucuses, Joe Biden did terribly, I think he came in fifth. So, this is not friendly political territory, but they are going to try and make sure the Republicans don't have it all to themselves which is about the least they could do at this point.
HILL: Errol Louis, Molly Ball, good to see you both this morning. Thank you.
SCIUTTO: Still to come, right as the FAA is kicking off its major safety summit to review the uptick in close runway calls, an investigation into a seventh incident begins.
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SCIUTTO: Right now, the chair, see there, of the NTSB speaking in an emergency safety summit in Virginia, trying to find answers and solutions after numerous close calls on runways across the U.S. just this year.
HILL: CNN Aviation Correspondent Pete Muntean had been following and takes a closer look now at a problem that seems to be plaguing American airports.
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PETE MUNTEAN, CNN AVIATION CORRESPONDENT (voiceover): It is a runaway problem on America's runways from Hawaii to the latest incident at Reagan National Airport outside Washington, D.C.
UNIDENTIFIED MALE: United 2003 cancel takeoff clearance.
UNIDENTIFIED MALE: Aborting takeoff. Aborting takeoff, United 2003.
MUNTEAN (voiceover): Today, the Federal Aviation Administration is holding an emergency safety summit. Bringing together Transportation Secretary Pete Buttigieg, airlines, investigators, and regulators. It follows seven so-called runway incursions involving commercial airliners since the start of this year, an issue that landed on Capitol Hill last week.
SEN. TED CRUZ (R-TX), RANKING MEMBER, TRANSPORTATION COMMITEE: The numerous recent near misses by airlines just this year are very troubling.
MUNTEAN (voiceover): It was the latest grilling for FAA Acting Administrator Billy Nolen who insisted to lawmakers and passengers that flying is safe. In announcing the summit, Nolen said the FAA will examine which mitigations are working and why others appear to not be as effective as they once were.
BILLY NOLEN, ACTING FAA ADMINISTRATOR: The FAA absolutely has a grasp on this situation and it's something that we look at every day.
MUNTEAN (voiceover): Also in the meeting, representatives from airline unions. American Airlines Captain Dennis Tajer says, no meeting is necessary to know airlines are stressed to the max, still struggling to bounce back from the pandemic.
CAPT. DENNIS TAJER, ALLIED PILOTS' ASSOCIATIONA: The data is right behind me. It's happening out there. These incidents, things that we've been talking about well over a year ago are starting to show up on the flight deck and in operations.
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MUNTEAN (voiceover): So far, the FAA sees no apparent common cause of these incidents, a top concern for the National Transportation Safety Board.
JENNIFER HOMENDY, NTSB CHAIR: Just because we are the safest in the world doesn't mean that we'll continue. It only takes one, one serious tragedy to change all of that.
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HILL: Our thanks again to Pete Muntean for that reporting. And an important programming note, tonight -- tomorrow night, rather, on CNN prime time, Kate Bolduan will take a closer look at America's aviation problems. Tune in for that news, CNN primetime special "Flight Risk " at 9:00 p.m. eastern.
Thanks to all of your for joining us today. I'm Erica Hill.
SCIUTTO: And I'm Jim Sciutto. "At This Hour" starts right after a quick break.
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