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Georgia Officials Release New Trump Audiotape; Janet Yellen Says U.S. Banking System Is Sound; Video Shows Russian Jet Force Down U.S. Drone; Aired 1-1:30p ET
Aired March 16, 2023 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN KING, CNN HOST: President Barack Obama, yes, playing along with the rest of us and revealing his NCAA brackets.
Obama predicts Duke, without Coach K, will win it all in the men's tournament, beating Houston for the national championship. On the women's side, Obama, you might say, goes chalk, guessing South Carolina will stay undefeated and defend its title.
Thanks for your time today on INSIDE POLITICS. We will see you tomorrow.
Brianna Keilar picks up our coverage right now.
BRIANNA KEILAR, CNN HOST: Hi there. I'm Brianna Keilar in Washington.
Today's banking fiasco could cause tomorrow's recession. Goldman Sachs says the chaos unfolding in the banking sector has boosted the odds of a recession in the U.S. within the next year. But Treasury Secretary Janet Yellen is about to wrap up her Senate testimony, and she argued the fallout has been contained.
(BEGIN VIDEO CLIP)
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 that our financial system remains strong and that depositors' savings remained safe.
(END VIDEO CLIP)
KEILAR: Now, the market seemed skeptical until they got word that chase and Morgan Stanley are considering rescuing the struggling First Republic Bank.
Now regional bank stocks are mixed, which is actually a major improvement from earlier today. Elsewhere in the economy, some promising new data on jobs and mortgage rates.
We have CNN's Matt Egan, who's here once again to help make heads or tails of all of this for us.
OK, Matt, let's start here with the banks. You have Secretary Yellen saying, everything is sound. Is that what the markets are saying?
MATT EGAN, CNN REPORTER: Well, Brianna, in a word, no.
Markets remain very much on edge, with a lot of attention right now on what's going on with bank stocks, in particular regional banks. Now, as you mentioned, all of these stocks, they were actually down very sharply earlier today. First Republic was down 36 percent at the opening bell, very steep losses, after days of steep losses.
But look at this. They're all moving higher. First Republic is now up 10 percent on the day. And that's because we have Wall Street banks. They are in talks to rescue First Republic, this ailing regional bank. That's according to a person familiar with the matter.
Now, these banks that are in talks to rescue this company, they're talking about a major capital infusion. And the rescue would come from the industry itself, Bank of America, Citigroup, J.P. Morgan, and Wells Fargo. These are some of the banks that are in talks for a rescue.
Now, nothing has been announced officially. These banks, along with First Republic, they're all declining to comment. But a deal could be announced as soon as today. Now, just word of this potential rescue has turned the entire stock market around. U.S. markets opened the day in the red.
But look at this. Now we have the Dow up 350 points, 1.1 percent, even bigger gains, 2.2 percent for the Nasdaq. The S&P is up 1.7 percent. Now, over in Europe, they already have a rescue in place for Credit Suisse. This is the ailing Swiss bank whose stock was crumbling yesterday.
But the Swiss National Bank, their Central Bank, announcing a $54 billion rescue. Now, the fact that the markets are all up on this shows, Brianna, just how concerned everyone is about the banking industry right now.
KEILAR: So, when we're talking about people looking at banks and saying, hey, is my money going to be there my deposits OK, we should be clear, we're talking about $250,000 or more, right?
Because when you're talking about people with less than, that's OK. You're backed up there. But we're looking, of course, at maybe some folks who have more than that and businesses that have more than that and may not be insured.
Is the expectation that the government can and would swoop in to save uninsured deposits again, if another bank goes under?
EGAN: Well, that's not totally clear yet.
We know that they have already come in. And they did save all of the depositors, even above this $250,000 insurance limit, at Silicon Valley Bank and Signature Bank. Those are the two banks that collapsed in recent days. We know that the FDIC insures up to $250,000, no matter what the bank is doing, no matter what the bank stock is doing.
The question is, what would they do if the next bank failed? And Treasury Secretary Janet Yellen, she was asked about this, whether or not all depositors would be saved above the $250,000 limit, and she sort of said they would be saved if a supermajority of the regulators, herself, and, after advising the president, they all agreed that they needed to rescue them.
So it was sort of a dodge, but I do think the government is implying, Brianna, that they would rescue all depositors, even the uninsured ones.
KEILAR: Navigate these recession fears and the talk now about these -- this possibility again.
EGAN: Well, let's look at the latest job numbers, because we're actually seeing more evidence that this is a very hot jobs market.
Initial jobless claims down 20,000 in the last week, continuing claims also dipping. This is particularly significant, because last week there was actually this big spike in jobless claims that raised some questions, are there some cracks showing up in the jobs market? The latest numbers suggest that is not the case.
Mortgage rates -- we know mortgage rates they have spiked as the Fed has waged this war on inflation. Some good news on that front, because mortgage rates, after several weeks in a row, they have gone down in the last week to 6.6 percent. Of course, that is almost double where they were a year ago.
I think the question now is, what does all this bank stress mean for the economy? And as you mentioned at the top, Goldman Sachs is actually out with a new report raising the risk of a recession. They're still betting on a soft landing, Brianna, but they now see a 35 percent chance of a recession in the United States over the next 12 months.
And they point specifically to the risk that all the stress in the bank industry causes banks to slow down loans, and that would actually trickle down into the real economy.
KEILAR: Yes, still low. So we will keep an eye on that number.
Matt Egan, thank you so much, as always.
We're joined now by former Wall Street executive and CEO of Nature Energy North America, Alexis Glick, and University of Michigan economics Professor Justin Wolfers.
So, Justin, we heard the CEO of one of these embattled regional banks telling CNN this morning, the crisis is over. That was the quote. But Bridgewater's founder says Silicon Valley Bank was actually the canary in the coal mine. So translate the mixed messages for everyday Americans who are looking at this and wondering if they should be worrying.
JUSTIN WOLFERS, UNIVERSITY OF MICHIGAN: There was a good time to worry, and that time was last Thursday.
Last Thursday, we saw the run on the Silicon Valley Bank. And we saw that there were some banks were that were more exposed to financial distress than you might hope for. Secretary Yellen is correct, though, to say the government then moved forward with an absolutely forceful plan, effectively saying to all Americans that, if you have got money in the bank, we're going to make sure that it's there, no matter what sort of financial distress your bank gets into.
Now, banking is a confidence game. And so that gives you and I and all our viewers the confidence that your money will remain in the bank, and that, in itself, is enough to prevent further financial distress. So there may be a few smaller banks that have some trouble along the way, like First Republic.
But I think the overwhelming message right now is, think about the dog that didn't bark. Over the past few days, we have heard no really big stories about new bank collapses, about people being nervous, about enormous amounts of money flowing out of banks.
And it's the absence of bad news that is really terrific news about the stability of the financial system.
KEILAR: And, Alexis, that's important. I also want to look back to 2008. Of course, that's a reference point for us. It's not exactly the same thing, right?
But when you look at that financial crisis, you had six months between the collapse of Bear Stearns and Lehman Brothers. So how do we know when this storm has passed, when we can be confident that there isn't another shoe that's going to drop?
ALEXIS GLICK, FINANCIAL EXPERT: Well, there's a couple of things that are different this time, right?
Number one, they're trying to shore up and address that confidence issue out of the gate, because, right now, the fragility of the system is clear, based on what we witnessed last Thursday and Friday and into the weekend. And that is very reminiscent of the kind of action we saw in 2008, that you had to rescue banks over the weekend, so that they were actually solvent. Or, in that case, it was really around the broker dealers.
Now, the issue here, right, is that we have risen rates so aggressively by 450 basis points in the course of the year. The ECB just raised rates by 50 basis points today. The reason we're in a conundrum, and it's different this time, is that inflation is still high. Target inflation should be at about 2 percent.
We're sitting at about 6 percent. So we still have a strong economy. The consumer has still been doing well. Retail sales in January were strong. They were not as strong in February. So if you're the Fed right now, how do you start to quell the demand without right now disrupting this confidence game?
You have to show everyone, we have backstopped the financial institutions. You don't need to worry about your deposits, at the same time try to slow down the strength of the economy. But we're starting, Brianna, we are starting to see the beginnings of cracks.
The most important thing I would tell you about this story is, it's the domino effects. It's the things that we don't yet know. It is what it will do to payroll, what it will do to other businesses, what it will do to borrowing costs. A lot of debt is going to come available between '24 and '26. If you have to go out and refinance when rates are at exceptional highs, what will that do to the marketplace?
So, right now, there's a lot of things we don't yet know about the consequences of what we have seen over the last five days. But the key thing is, we have to calm the fears. And that is what the Fed and the Treasury are doing right now. And that is a coordinated dialogue that's going on with the ECB and around the globe.
KEILAR: Yes, I do think that's something that we take from 2008. We are primed to worry about what we cannot see and what we do not know.
And, Justin, you have you have been pretty consistent in recent months saying that recession fears are somewhat overblown. Where are you right now?
WOLFERS: Brianna, I think you mean I have been pretty right in saying that recession fears are overblown.
WOLFERS: But where I am right now, I want to remind viewers of one thing. The banks that are in trouble now are small banks. The thing about small banks is they're small. That's completely different than 2008.
So if we do have further banks like First Republic collapse, that'd be very sad for the folks who work there. And the shareholders will lose money. But in terms of its implications for the broader American economy as a whole, even if all the small banks tightened up their lending enormously, it would have a very small effect, because most of the lending happens out of the large banks.
And so I worry about the people who are directly affected by these collapses, but I'm not so worried about broader macroeconomic spillovers.
Well, I -- there's parts of I agree and parts I disagree, right? Yes, these are regional banks. But Silicon Valley was the 16th largest bank, right? So they still have a structural impact on the banking system. And, really, what it is goes back to this fragility and confidence.
So the key thing here right now is, if you look at where the marketplace is, yes, the market is reacting positively to what the Treasury secretary said on the Hill today. We have to calm fears.
If J.P. Morgan or Morgan Stanley, who were in discussions with First Republic Bank right now, can find a happy solution, that will abate the nervousness in the market right now. The issue, though, is that a lot of venture capital and technology money, a lot of health care money were associated with some of this bank risk.
So, when you simply just say, OK, some of the midsized banks not as big an issue, as long as we know that they're folded into another large institution, and you can feel safe about that. But there will be impacts in the commercial market, right?
We're seeing what's debt, basically, on companies that are what you call high yield, a little riskier, get a little dangerous, right, because can they pay their bills? Right? Those will be the kinds of questions we start seeing in the months ahead.
So the reason Goldman Sachs is coming out and saying they have increased the risks of recession by 10 percent is because what we're starting to see are some structural issues that we need to wrap our arms around. And some of that, right, is a reflection of raising interest rates so quickly to address inflation.
GLICK: So, right now, we're a little bit between a rock and a hard place.
But I do believe there's more to this story than necessarily meets the eye, and we're going to spend some time getting familiar with that over the next six months.
KEILAR: Yes, our eyes are wide open right now.
Alexis and Justin, thank you so much for your time. I appreciate it.
This morning, the U.S. military is releasing dramatic new video showing two Russian fighter jets intercepting a U.S. surveillance drone, leading to the drone crashing into the Black Sea. You can see this here, the jet approaching. That's fuel that it's dumping there on the drone.
And then, here, there's another high speed pass and also the dumping of fuel. The Pentagon says the jet actually collided with the drone on this pass here. You can see the camera feed going down. And when the video resumes, you can see damage to one of the drone's propellers. There you see it on the upper right-hand side of your screen.
That led operators to bring this drone down in international waters. CNN's Oren Liebermann is at the Pentagon for us.
Oren, what more are U.S. officials saying about this encounter?
OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: Brianna, from the very beginning, we have heard U.S. officials from the Pentagon and the White House say that this was an aggressive action by the Russians and by those fighter pilots.
You now see how aggressive and how clear it is from the video that this was intentional, the maneuvers around, the approaches, the intercepts, all done, in addition to the dumping of the jet fuel. And we have also heard from two officials familiar with the intelligence that the orders to carry out such aggressive intercepts, to disrupt, to disturb the operations of the surveillance drone over the Black Sea came from some of the highest levels of the Russian Ministry of Defense.
Crucially, those officials say it's not clear if that reaches all the way to the Kremlin. And it's not clear that Russian President Vladimir Putin knew about this in advance. But the orders to essentially mess with or harass the U.S. drone came from some of the highest levels of the Ministry of Defense.
It's also not clear if there was a specific instruction to down the drone. You saw the collision there in the video, the impact, the contact between the Russian Sukhoi fighter jet and the U.S. MQ-9 Reaper drone. It was that impact that damaged the propeller and forced the U.S. to bring the drone down in international waters.
We reported yesterday that CNN has learned that the Russians have reached the downed drone site, about 70 or 80 miles southwest of Crimea. The U.S. says there's probably not a lot of worthwhile, sensitive data to glean from that. The wreckage of that happened in nearly a mile deep of water -- Brianna.
KEILAR: All right, Oren, thank you for the very latest on this amazing new video that we're seeing there.
Joining us now, we have retired Army Major General James "Spider" Marks.
General you're seeing this. These are critical moments, we're told from U.S. officials, of what was a 30-to-40-minute encounter with these Russian jets. What stands out about this to you?
BRIG. GEN. JAMES "SPIDER" MARKS (RET.), CNN MILITARY ANALYST: Well, the stupidity on the part of the Russians, let's be frank here.
I mean, it's no surprise that the assessment is that the orders to interfere with this international airspace peaceful mission the part of the United States was directed from above. And then you have two Sukhois that are in the area. And so they do their thing. I mean, it's -- and it's crazy. Who drops fuel on another aircraft?
And then you ram into it, which affects its ability to maneuver. And so the United States very wisely puts it down. This is a level of provocation that is incredibly -- look, it's incredibly unbelievable, but it's believable when it's coming from the Russians.
This is the Russians, Brianna, operating in what's called the gray area. Look, they're not going to directly take on NATO and the United States and Ukraine. So they will operate on the tangents. And they will do what they can, even though this is completely within legal parameters.
I mean, the -- this is international airspace, international waters, yet the Russians are interfering. So it's their ability, their desire to try to exercise influence. And I would also think this is a sphere of influence thing as well, where they're directing or at least they're stating through their actions that the Black Sea belongs to them, which is lunacy as well.
KEILAR: We look at this, and it's nuts, quite frankly, this video, what you see happening here, but I do wonder if it is encouraging to you that this entire incident has not brought about more escalation.
MARKS: It is exactly the right approach toward this.
When you saw the Secretary Austin and General Milley conference yesterday, both of those gentlemen were incredibly calm, very clear- eyed, very deliberate, unemotional about what took place. And you understand, of course. I mean, you're married to a soldier. You get it.
The first rule of engagement is to de-escalate. You want this thing to calm down. And you de-escalate either through wisdom or through overwhelming firepower, and maybe both. In this particular case, wisdom is what it took, a very calm approach toward this. Let's just let this thing de-escalate.
And let's let the diplomatic avenues take place. Let's engage with the counterparts, keep the communication lines open. And let's approach this very, very calmly, because this could be -- I mean, you have heard the narrative. Is this an act of war? How are we going to respond? We need to be more aggressive.
It was appropriately handled by our administration.
KEILAR: Yes, restraint can be a tactic as well.
Major General Spider Marks, thank you so much for your time.
MARKS: Thanks, Brianna.
KEILAR: A new twist in what could be the biggest legal threat to former President Trump.
Investigators in Georgia playing an audio recording -- this is a new recording -- for the grand jury, the special grand jury there, of a phone call that Trump made to a top state lawmaker pushing him to help overturn Joe Biden's win in the state. The public has not heard this call.
Plus, all eyes on Texas, where a federal judge could rule any minute on the fate of a long-approved abortion pill.
And TikTok's time could be up soon. A new ultimatum from the Biden administration could lead to a total ban on the app in the United States.
KEILAR: We have some new details about the pressure that then- President Donald Trump put on Georgia officials over his 2020 election loss in that state.
A source confirmed to CNN that Fulton County investigators have an audio recording of a phone call that Trump made to a top state lawmaker pushing him to help overturn Joe Biden's victory. And this recording was played for the special grand jury deciding if Trump should be indicted, making those recommendations anyways.
CNN senior crime and justice reporter Katelyn Polantz is joining us now.
Katelyn, what more do we know about this recording?
KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE REPORTER: Three audio recordings that that Georgia grand jury in Fulton County heard as they were deciding whether to recommend prosecutors should charge Donald Trump and others.
We don't know what the prosecutors are going to decide, whether that evidence will come back into play in a possible criminal case and maybe even a trial. And we haven't heard this third audio recording yet. But we know that it was a phone call that Donald Trump made to the Georgia House speaker, David Ralston, in December of 2020.
Ralston, the day after this phone call, spoke about it. It wasn't known that there was a recording of it. But he said that, basically, Trump was saying to him that he wanted to convene the state legislature in Georgia to convene the Georgia General Assembly so that they could block the popular vote in that state in which he lost.
That's a little bit different than the call he was making to the secretary of state's office twice, those two other recordings where he was trying to get them to investigate possible election fraud. So it's this -- it's another aspect of this pressure campaign. And this audio from Ralston is available.
Ralston himself is dead. He died and passed away in December. And so he wouldn't be able to talk about it at this time. But the audio lives on and did become part of this potentially evidence in this maybe upcoming case -- Brianna. [13:25:11]
KEILAR: And, Katelyn, in the meantime, there's a new chief judge in D.C. federal court who could actually play quite a key role in Trump's legal troubles. Can you tell us more about this judge and the impact that he may have?
POLANTZ: That's right.
So, this judge who has been sitting on the bench since the Obama administration, his name is James Boasberg. He goes by Jeb. He's well- known in Washington. He dates back. He went to Yale Law School and was a housemate with Brett Kavanaugh, now the Supreme Court justice at that time.
But Jeb Boasberg, he now is going to be the person that decides on what happens anytime there's a challenge about the Justice Department's grand jury proceedings. So, Jack Smith, his investigation into Donald Trump around Mar-a-Lago, January 6, it's seeking information from witnesses, documents.
If anyone challenges any of those things, Boasberg will be the judge that steps in and decides whether they have to appear, speak more, provide information. He's going to be getting that gavel tomorrow to become the chief in the D.C. District Court -- Brianna.
KEILAR: Critical role.
Katelyn, thank you for the reporting.
Let's talk about all of this now with CNN senior political analyst Gloria Borger and former federal prosecutor Renato Mariotti.
Gloria, this is not the first time, as Katelyn mentioned, that we have heard about this particular phone call between Trump and Georgia's House speaker, former House speaker. It is the first time, though, that we have heard that it was recorded, that it was played for the special grand jury. What's the impact potentially here of hearing Trump's voice in this recording talking about the potential of calling a special session?
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, I think it's very important, just as the call to the secretary of state, Brad Raffensperger, was very important for the general public to listen to.
But you have to consider this in the context. I made myself a list here of the calls that Donald Trump was making in December of 2020. So he called the House speaker. He called a Georgia election investigator. He called the governor of the state of Georgia, Kemp, because he wanted him to convene a special session.
And then he had former Senator Perdue met with the governor, asking him to convene a special session to try and overturn the election. We don't know who put them up to it. But I have a good idea who might have done that. So you look at this in context, and you see that Donald Trump was
growing more and more and more frustrated, because he couldn't do anything.
KEILAR: That it was a campaign of communication.
BORGER: Totally. Totally.
KEILAR: And it paints that picture.
Renato, the process, then is, you have the special grand jury making these recommendations. The question, of course, is, will the former president actually be indicted? And the Fulton County DA, Fani Willis, still has to make those charging decisions.
She said in January that was imminent. Where do you think she may be heading?
RENATO MARIOTTI, FORMER FEDERAL PROSECUTOR: Well, I think there's no question that she's heading towards preparing an indictment and presenting that to the grand jury.
I really have no doubt at this point that that's the direction she's going. I think, really, what this recording reveals to me, or the existence of this recording, is, I think it makes it more likely that she's going to pursue more sweeping charges.
You mentioned a moment ago, Brianna, that this was almost like a campaign, right? And I think it seems to me like the -- it suggests a pattern of activity, right? I mean, Gloria just mentioned a moment ago all of these phone calls he was making at the time.
If you're on the defense side, you always want to portray missteps or questionable behavior as a one-off or an error in judgment. And I think, really, the power of this recording is really that it suggests that there's a pattern of activity. And it really -- I think that, for example, the Georgia Fulton County DA is probably considering some conspiracy or RICO charges.
KEILAR: So, when you say more sweeping, that's what you're talking about?
MARIOTTI: That's right.
I mean, I think right now, Brianna, there's a internal debate going on within the Fulton County DA's office that it often goes on when there's a key case, where there's people -- and I will put myself in this camp -- when I was a prosecutor, I always wanted the very narrow charges. Let's put up just the strongest charges that we can most readily prove.
And then we have vindicated the interest of justice by getting a conviction on something. That would be something here, like whether it's interference in an election, forgery, more narrow charges.
But if you want to -- there's certainly prosecutors there are advocating for more sweeping charges as well.
KEILAR: So, Gloria, you have the New York grand jury hearing testimony in a case against Trump.
KEILAR: His former personal attorney Michael Cohen testified before that grand jury twice this week. And here's what he told CNN this morning about it.
(BEGIN VIDEO CLIP)
MICHAEL COHEN, FORMER ATTORNEY/FIXER FOR DONALD TRUMP: They have a tremendous amount of information.