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Big Banks Rescue First Republic with $30 Billion Infusion; U.S. Drone Encounters Russian Jets; Russia's War in Ukraine Continues; Severe Weather Slams Parts of U.S.; Communications Aide & Dozens Of Mar-A-Lago Staff Subpoenaed; Major Outrage After Govt. Rams Through Pension Reform Bill; China: U.S. Has Failed To Produce Evidence Of TikTok Threat. Aired 2-3a ET
Aired March 17, 2023 - 02:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[02:00:00]
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KIM BRUNHUBER, CNN ANCHOR: Welcome to all of you watching us here in the United States, Canada, and around the world. I am Kim Brunhuber.
Ahead on "CNN Newsroom," $30 billion may be enough to save a troubled bank, but will it ease investors' fears of a global market meltdown? We will discuss that just ahead.
Plus, you will see the moment a Russian jet buzzed a U.S. drone seconds before their mid-air collision over the Black Sea.
And later, severe weather, including a tornado, moves across Texas. We will tell you where storms are headed, next.
UNKNOWN (voice-over): Live from CNN Center, this is "CNN Newsroom" with Kim Brunhuber.
BRUNHUBER: It is 2:00 a.m. here on the U.S. East Coast where investors may be waking up in a few hours wondering if another regional bank needs rescuing. The outlook is much better now for the First Republic Bank after 11 major banks descended $30 billion lifeline to keep it afloat.
The banking turmoil has sent the stock prices on a wild ride over the past week. Right now, the U.S. Futures are mixed, but basically flat. The need for $53 billion loan for Credit Suisse has rattled international markets. But at this moment, markets in Asia are moving higher.
U.S. Treasury Secretary Janet Yellen will return to Capitol Hill in the day ahead to try to reassure lawmakers that the banking situation is under control. Here she is.
(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 remain safe.
(END VIDEO CLIP)
BRUNHUBER: Shares of First Republic surged after news of the $30 billion lifeline from big banks.
CNN's Rahel Solomon has more.
(BEGIN VIDEOTAPE)
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Two major developments Thursday on the banking front helping calm the nerves of investors. Eleven banks now stepping up to provide a financial lifeline to First Republic Bank. The regional U.S. bank facing significant challenges over the last week, similar to those that led to the demise of Silicon Valley Bank, including customers rushing to withdraw their money.
The banks now stepping up include JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, who announced Thursday they are each making $5 billion uninsured deposit into the bank. All stabilizing markets today, news that Credit Suisse will be borrowing 50 billion Francs from the Swiss Central Bank. That sent its shares surging.
This is a major development for the larger economy because Credit Suisse is considered a systemically important bank for the global markets and that just means it is too important and too big to fail. Since SVB's troubles began last week, markets have been on a wild ride, posing volatile swings.
What is ahead? Brian Levitt, a global market strategist for Invesco, that is an independent investment management firm, tells me, we may not out of the woods with regards to potentially seeing other bank challenges. However, policymakers stand ready to provide support, and the decline in inflation and end of rate hikes should provide some optimism.
Rahel Solomon, CNN, New York.
(END VIDEOTAPE)
BRUNHUBER: Now, despite the turmoil in the banking sector, European regulators are moving forward with another interest rate hike meant to fight inflation.
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The European Central Bank has announced the half-point increase just a week before decision on interest rates from the U.S. Federal Reserve. The official ECB policy statement says it is raising rates because inflation is projected to remain too high for too long.
All right, Michael Hiltzik is a business columnist for "The L.A. Times." He joins me now from Los Angeles. Thank you so much for being here with us.
So, first off, those U.S. banks stepping up to provide that lifeline and helping each other out, but as we heard a few minutes ago from that expert, you know, we may not be out of the woods with regards to seeing other bank challenges, was the word that he used, but challenges is one thing. How worried should we be about a systemic meltdown here?
MICHAEL HILTZIK, BUSINESS COLUMNIST, LOS ANGELES TIMES: I think the chance of a systemic meltdown has largely passed. The fact that 11 banks stepped up to rescue First Republic, that is a good sign. That is a sign that the banking industry in general recognizes that a lot of these banks that have come under pressure from shareholders and share investors are essentially solvent and solid and they just need help to get through this moment of chaos.
BRUNHUBER: Do you think -- I mean, we have seen a lot of movement of money from, you know, investors, from people like you and me, towards the bigger banks. Will the navigable result be that the big banks just become bigger?
HILTZIK: I think that is what the American regulators are trying to avoid. The big banks, JPMorgan City, Bank of America, Wells Fargo, they are all ready too big. We don't really want to see them get much bigger.
I think the fact that regulators, the FDIC, the treasury of the fed, have said that deposits are going to be protected right up to no limit, really tells you that what they are signaling is that your deposits are safe.
As Treasury Secretary Yellen told Congress today, deposits are safe no matter where they are, and if they're in an impaired bank, then the regulators will shut it down and protect depositors. That is really the key to keeping the banking sector healthy.
BRUNHUBER: So, I've been following your columns. You've been writing about what brought us here, the fact that SVB's problems were hiding in plain sight, as you said. So, why is that and what does that say about the current state of our oversight, of our banking system?
HILTZIK: Well, it is not a good sign for the level of oversight in our system. And I think the Fed, which is -- which was a primary regulator of Silicon Valley Bank, is going to come under a lot of scrutiny. In fact, they have started their own self-examination.
The question is going to be, why wasn't the Fed really scrutinizing banks like SVB more closely when it knew that its own regime of raising interest rates was going to give these banks a certain amount of heartburn?
And that is exactly what happened, banks were all holding long-dated securities, treasury securities, government-backed agency, mortgage securities. We all know that when interest rates are on the rise, the value of those securities declines. So, this is something that the Fed really should've been on top going back a year and it should have been really pressing the management of these banks to explain what they were going to do about this change -- this changing trend.
BRUNHUBER: Hmm. The talk now is of how to prevent this from happening again. Certainly, part of the conversation was the deregulation of banks that happened during the last administration. So, what more needs to be done, do you think? Is there the political will to do it?
HILTZIK: I think at this point, there's a lot of political will to do something. The question is, what? I think making sure that the Fed takes much more seriously its responsibility to monitor the safety and soundness of the banking system, that is going to be topic A on Capitol Hill, no doubt.
Questions about what other regulators and overseers did or did not do in the case of SVB and other banks, that include the auditors who gave Silicon Valley Bank a free pass in its last annual report. The question is going to be, why didn't they -- why weren't they more aware of the possibility that this bank's balance sheet was going to be seriously impaired?
The investment community, investment analysts, were touting Silicon Valley Bank right up to the days before it failed. I think their judgment is going to come under scrutiny. So, there is a lot to look at here.
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BRUNHUBER: Yeah, absolutely, plenty of questions. We really appreciate your insight. Michael Hiltzik in Los Angeles, thank you so much.
The U.S. Military is assessing its drone operations in the Black Sea region after the encounter with Russian fighter jets earlier this week.
Officials tell CNN Russia has recovered some small debris from the drone which crashed in the waters of Ukraine. U.S. has also released that shows that the Russians are lying about forcing down the aircraft.
CNN's Oren Liebermann has details.
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OREN LIEBERMANN, CNN CORRESPONDENT (voice-over): High over the Black Sea, a U.S. spy drone points its camera backwards towards its own tail. A Russian fighter jet closing fast on a much slower MQ-9 Reaper. The Russian jet then begins dumping fuel as it passes by the drone. The cloud of fuel vapor and crucially spinning propeller clearly visible in the video after the pass.
The Russian Sukhoi SU-27 fighter then flies by on another pass. Dumping fuel once again, the jet comes even closer, and the video pixelates when the Russian fighter collides with the U.S. drone. When it comes back online, you can see the propeller with a bent blade, damaged in the impact. In these side-by-side images, you can see the propeller before and after, operating and damaged.
GEN. MARK MILLEY, CHAIRMAN, U.S. JOINT CHIEFS OF STAFF: We know that the intercept was intentional. We know that the aggressive behavior was intentional. We also know it is very unprofessional and very unsafe. The actual contact of the fixed-wing Russian fighter with our UAV, the physical contact of those two, we are not sure yet. That remains to be seen.
LIEBERMANN (voice-over): The video undercuts the Russia narrative of what happened during the encounter. The Pentagon says it lasted 30 to 40 minutes in total. Russia claimed there was no physical contact.
ANATOLY ANTONOV, RUSSIAN AMBASSADOR TO THE U.S.: There was no collusion. (INAUDIBLE). The problem is that we did not (INAUDIBLE). We did not start firing. It is very important.
LIEBERMANN (voice-over): And CNN has learned the intercept was at the direction of some of the highest levels of the Russian ministry of defense, according to two U.S. officials familiar with the intelligence. But the official said there is no indication Russian President Vladimir Putin knew of the planned aggression in advance.
Russia has already reached the crash site, some 80 miles southwest of Crimea, two U.S. officials tell CNN. They've been able to cover some debris from the wreckage, but the U.S. downplayed the significance of the drone remnants, saying that there probably is nothing left of real value.
(On camera): Following the collusion between the Russian jet and the U.S. drone, the military began conducting assessment of U.S. drone operations over the Black Sea. That is according to three officials familiar with the matter. It is a look at what is gained, what is risked, the patterns, the routes, of these drone operations to find out how to continue and where to continue.
We have also learned that this is not a pause in any way, shape or form. In fact, at least once, since the collision between the Russian jet and the U.S. drone, U.S. operated the same type of drone. Another MQ-9 Reaper in the same area as the previous flight likely to find out and get a better look at Russians trying to move towards the wreckage site and collect some of that debris.
Oren Liebermann, CNN, at the Pentagon.
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BRUNHUBER: U.S. lawmakers are keeping a close eye on developments in the drone crash, especially as some are questioning the Biden ministration's military support for Ukraine. Democrat Jim Hines is a member of the House Intelligence Committee. Here he is.
(BEGIN VIDEO CLIP) REP. JIM HIMES (D-CT): Strategically speaking, we are having a debate in this country about whether we should be sending F-16s and other advanced weaponry to Ukraine. If that weaponry arrives, it would be a very, very bad day for the Russians. So, I just do not know why they believe it is in their interest to down one of our drones over international water and international airspace.
So, it is just one of these things that adds to the (INAUDIBLE) in Ukraine where you will just say to yourself, how is it possible that the Russians seem to do exactly what it is they need to do to assure that they lose in this conflict?
(END VIDEO CLIP)
BRUNHUBER: The White House is making it clear that it will not follow suit after Poland promised to supply fighter jets to Ukraine. Warsaw says it will send for Soviet era MiG-29 jets in the coming days. No other NATO member has sent fighter jets so far despite repeated pleas by Kyiv. The decision could put pressure on them to reconsider. Polish President Andrzej Duda suggested that these four jets are only the first step. Here he is.
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ANDRZEJ DUDA, PRESIDENT OF POLAND (through translator): Literally, within the next few days, we will hand over, as far as I can remember, four aircraft to Ukraine in full working order. The rest are being prepared, serviced, and will be successfully handed over.
(END VIDEO CLIP)
BRUNHUBER: The former Soviet Union and its allies used Migs during the Cold War. The jets are a staple of Ukraine's air force.
The leader of Russia's Wagner mercenaries is suggesting that his group helps straighten up former prison inmates. In the new video, he says that prisoners who served in Wagner's units rarely commit crimes after returning to civilian life, at least in short term. He claims that they also change in other ways while fighting for Wagner.
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Let's listen.
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YEVGENY PRIGOZHIN, LEADER, WAGNER MERCENARY GROUP (through translator): There is reduced sense of self-preservation. Just like me, if my time comes, then so be it. You know, I just don't really give (bleep). That is number one. The second is my cockiness because you won't get me (bleep) here. I came here and I am staying here. That is the second thing. And the third thing is unpretentiousness.
(END VIDEO CLIP)
BRUNHUBER: CNN cannot independently confirm his claims. Prigozhin has been fighting a public feud with Russian military brass. But as Melissa Bell reports, that strategy now appears to be backfiring.
(BEGIN VIDEOTAPE)
MELISSA BELL, CNN CORRESPONDENT (voice-over): Wagner fighters at an industrial plant inside Bakhmut. They are making very gradual advances, but at huge costs. This soldier says that Ukrainian forces have vast amounts of ammunition and are heavily shelling the area.
We can't even raise our heads, he says.
Wagner has been trying to take Bakhmut for two months and may now be running short of fighters.
(EXPLOSION)
It's boss, Yevgeny Prigozhin, has lashed out at the Russian defense ministry for starving his men of ammunition.
PRIGOZHIN (through translator): We need the military to shield the approaches. If they manage to do so, everything will be okay. If not, then Wagner will be encircled together with the Ukrainians inside Bakhmut.
BELL (voice-over): In his latest social media post, Prigozhin praised honest Russian soldiers, but claimed -- quote -- "unprofessional scoundrels and intriguers crushed these modest guys and began to push them around and humiliate them."
Yet another jive at the military hierarchy in Moscow. Prigozhin has accused the defense ministry of incompetence and corruption, and compared his own almost continuous presence in Bakhmut to the notable absence of Defense Minister Sergei Shoigu.
But now, Yevgeny Prigozhin wants a Kremlin ally and nicknamed Putin's chef, a man under pressure. He recruited tens of thousands of men from Russian prisons, but they have endured horrendous losses, as many as 80% in some units. He is dredging (ph) Russian sports clubs for recruits, and his more experienced units are stretched as they try to encircle Bakhmut.
Western analysts think that Prigozhin has fallen into a trap laid by Shoigu, a trap designed to weaken both Wagner and its boss. Just when Wagner most needs the support of the Russian military around Bakhmut, it is curiously absent. Russia's elite piling on the graph (ph) outspoken oligarch.
Commentator Alexey Mukhin accused Prigozhin of political ambitions and said that he was an incompetent commander, adding, he has exposed the Wagner fighters to a major risk of encirclement from the expected counterattack.
The Kremlin has long tolerated Prigozhin as Vladimir Putin's licensed disruptor. But if Wagner is decimated in an unsuccessful bid to take Bakhmut, he might find himself out in the cold.
Melissa Bell, CNN, Lviv. (END VIDEOTAPE)
BRUNHUBER: Hundreds are dead after a cyclone sweeps through Malawi. Just ahead, the conditions rescue crews are dealing with. And mass demonstrations across Israel. Protesters say Benjamin Netanyahu's proposed judicial overhaul amounts to constitutional crisis. Coming up, Israeli prime minister on the defensive. Stay with us.
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BRUNHUBER: The death toll from Cyclone Freddy has jumped to at least 326 in Southern Malawi. Rescue crews have been forced to use shovels and their bare hands to search for those trapped in rubble. Officials say a number of roads and bridges have been flooded or cut off entirely. Floods also washed away the homes and possessions of thousands. The government estimates that more than 22,000 people have been displaced.
Millions of people in Central U.S. faced the threat of severe weather Thursday night. Tornado watches were issued for portions of Texas and Oklahoma along with Southwestern Arkansas and Northwestern Louisiana. At least one tornado was spotted near Fort Worth, Texas. Sirens in nearby communities like Richardson warned residents to take shelter. The manager at a local car dealership described what it was like. Here he is.
(BEGIN VIDEO CLIP)
DAVID MULLINS, GENERAL MANAGER, AUTOS OF DALLAS: I looked up and you could see that it was coming this way, and then this one was coming this way. You could see circulation. So, I thought it would be best for everybody to get inside. Right at that time, it just quadrupled in intensity with the storm.
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BRUNHUBER: The weather system also brought heavy rain and hail. Even the airport took precautions, briefly moving passengers to the basement during a tornado warning.
CNN meteorologist Derek Van Dam has the details.
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DEREK VAN DAM, CNN METEOROLOGIST: They say everything is bigger in Texas. And apparently, that includes the size of the hail that falls from the sky. Just get a load of this comparison picture. This is coming out of the greater Dallas-Fort Worth region, just west of Fort Worth in fact. That is a clementine and that is a three-inch hailstone. You certainly do not want to be under that when it falls from a thunderstorm cloud, right? These are the reports coming in from the National Weather Service. Just really impressive hailstones that fell from Fort Worth to Weatherford as well as Mineral Wells. Two and a half to three inches, that is the size of the hailstone. There were also 12 reports of wind damage.
Forty-nine reports of hail damage in particular, but the National Weather Service highlights some of the larger hailstones that were reported. Those are two inches or larger in diameter, and there are actually nine reports of that. We saw a picture of just that a moment ago.
Now, there is still the potential of severe weather as this line moves eastward overnight. So, heads up Shreveport to Lake Charles. This is an area that will see the line of storms move through the overnight hours and then to the early morning hours on Friday across the Gulf Coast region.
Here it is on our forecast radar, there are the showers and thunderstorms kind of picking up some of that moisture, maybe perhaps a little bit of circulation from the Gulf of Mexico. But they start to peter out as you get into the middle of the day on Friday. And really, we just focus our attention on precipitation, though, along the entire eastern seaboard.
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Here's our chance of severe weather for Friday. Damaging winds, can't rule out a tornado, although the risk is not as high as what we experienced on Thursday. Panama City, (INAUDIBLE) to New Orleans, that 30A corridor right along the Florida panhandle has a potential for some strong to severe weather.
Look at the rainfall totals across that region. You could see 1 to 3 inches locally, and we are anticipating some snowfall across the Great Lakes. In fact, lake-enhanced snowfall possible across the upper peninsula and to portions of Minnesota as well as Wisconsin. So, look out for 6 to 12 inches of snowfall across that region. Back to you.
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BRUNHUBER: Growing legal problems for Donald Trump. One of the former U.S. president's aides has been meeting with a grand jury about his handling of classified documents, and dozens more get subpoenaed. We will have more coming up. Stay with us.
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BRUNHUBER: A list of people called to testify in the Donald Trump classified documents investigation just keeps growing. Sources have exclusively told CNN that at least two dozen witnesses have been subpoenaed, including a communications aide who appeared before the grand jury on Thursday.
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CNN's Katelyn Polantz has the details.
(BEGIN VIDEO CLIP)
KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE REPORTER: Another Thursday, another witness being subpoenaed to testify in the classified documents investigation into Donald Trump. We know today that there was a woman who works with Donald Trump quite closely. Her name is Margo Martin. She's an aide to him that has remained on his payroll since he left the presidency. And she has been in Florida with him quite a lot, assisting him with his various needs.
Margo Martin also worked within the White House at the end of the Trump presidency. She was a deputy communications person there. And so, investigators are very likely to want to ask her about what happened in those chaotic last days of the Trump presidency when there were boxes being packed up, when documents were being handled by various people in the White House, how things may have gotten to Mara- a-Lago. And then also she's one of the few people that stayed with the president -- the former President, when he moved to Florida, so she may be asked about all kinds of things that she could have seen or heard at Mar-a-Lago as well.
Now, it's not clear at this time, what she said in the grand jury. We know that she didn't have a marathon day of testimony. She was only there for a few hours this afternoon, but she does become the latest witness in a long line of witnesses.
My colleagues and I here at CNN, we've also been able to confirm that Margo Martin is one of more than two dozen people who have been sought by prosecutors in this classified documents investigation around Donald Trump that they are trying to get answers from or that they already have gotten answers from. Two dozen people at least. That includes resort staff working at Mar-a-Lago. It includes people who are very close to Donald Trump himself. It is the type of group that scours the grounds.
One source told us today that they're casting an extremely wide net, anyone and everyone who may have seen something is being pursued by prosecutors in this investigation as it is in this mature phase. And right now, we are also waiting to hear whether we can learn if one of Donald Trump's personal defense attorneys, Evan Corcoran, who has handled communications with the FBI, and with the National Archives in this investigation, whether he will be forced to answer more questions before the federal grand jury.
Katelyn Polantz, CNN, Washington.
(END VIDEOTAPE)
BRUNHUBER: Protests intensified for another day in Israel against the government's plan to overhaul the judicial system. In Tel Aviv, Jerusalem, and cities across the country, crowds packed the streets and express their discontent. Protesters say the plan legal reforms would weaken the country's courts and erode the Judiciary's ability to check the power of the other branches of government. Israeli Prime Minister Benjamin Netanyahu defended the proposed changes while in Berlin on Thursday for a meeting with the German leader. Netanyahu insists the reforms don't threaten Israeli democracy. Chancellor Olaf Scholz says Germany is monitoring the issue with great concern. The proposed changes to the judiciary would allow lawmakers to overturn Supreme Court decisions and will drastically alter how judges are appointed.
An explosion of anger across France. Clashes in the streets and chaotic scenes in Parliament after the government found a way to raise the retirement age. We'll explain how that played out. Coming up. Stay with us.
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BRUNHUBER: The French president has been trying to overhaul the pension system for years. And now it appears he's finally succeeded even without getting enough votes in Parliament. Workers are furious with clashes and protests. It's breaking out in Paris and several other cities.
Fires have been burning in the streets. And unions are already planning another day of nationwide strikes. There was also outrage among lawmakers who shouted down the prime minister in the National Assembly. CNN's Jim Bittermann has the story.
(BEGIN VIDEOTAPE)
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: For weeks, the protests and strikes have continued trying to stop the government from enacting changes to the French retirement system, changes which would raise the retirement age from 62 to 64 years old.
(voiceover) Thursday, the French Parliament was meant to vote on the new law, which had already been passed by the French Senate. But before the vote in the lower house, Prime Minister Elisabeth Borne said the government had counted votes and realized that it would lose. The prime minister went before the National Assembly and announced that there would be no vote, that the law would be enacted by decree, something allowed by the French constitution but something that further enraged the opposition.
ELISABETH BORNE, FRENCH PRIME MINISTER: (Speaking in a foreign language)
UNIDENTIFIED FEMALE: We cannot bet on the future of our pensions. This reform is necessary. It's so sad because I am attached to our social model and because I believe in parliamentary democracy. It is your reform on Parliament text, fruit of a compromise between the two assemblies, the time ready to engage my responsibility.
BITTERMANN: Outside the chamber where protesters had gathered, there was further outrage that went on for hours. The spontaneous demonstration that moved to Place de la Concorde in central Paris and was finally broken up by police using a water cannon and tear gas.
(on camera) The prime minister and our government now face the possibility of a no-confidence vote, which could bring down the government if it succeeds. And a French joint Union Committee announced plans for another round of strikes and demonstrations next Thursday to keep up the pressure on the parliamentarians to vote against the government plan.
Jim Bittermann, CNN, Paris.
(END VIDEOTAPE)
BRUNHUBER: North Korea has confirmed what was initially reported by South Korean and Japanese officials its launch of an intercontinental ballistic missile on Thursday morning.
[02:40:05]
Now, look. These images released by state media appear to show leader Kim Jong-un overseeing the operation with a child believed to be his daughter. The ICBM was fired into the waters off the east coast of the Korean Peninsula, according to officials in Seoul and Tokyo. Japan's military released this rare video of the suspected ICBM. Experts say the burning object resembles a ballistic missile boost rocket reentering the atmosphere.
All right, thanks so much for joining us. I'm Kim Brunhuber. For those watching outside of North America, "WORLD SPORT" is next. For everyone else, I'll be back with more news after a quick break. Stay with us.
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BRUNHUBER: Beijing is criticizing the U.S. after the Biden administration threatened to ban TikTok nationwide unless the Chinese owners of the app sell their steaks. China's foreign ministry slammed the apparent ultimatum saying Washington has failed to produce evidence that TikTok is a threat to national security. The popular social media platform is under growing scrutiny.
Governments around the world are concerned data collected from users' phones could end up in the hands of the Chinese government. New Zealand and the UK announced TikTok will be banned on government devices following similar measures by the U.S., Canada, and the European Union. British officials gave this explanation to lawmakers.
(BEGIN VIDEO CLIP)
OLIVER DOWDEN, BRITISH CABINET OFFICE MINISTER: Mr. Speaker, this is a precautionary move. We know that there is already limited use of TikTok across government, but it is also good cyber hygiene.
(END VIDEO CLIP)
BRUNHUBER: For more on this, I want to bring in Chris Stokel-Walker, who's the author of the book TikTok Boom about how the app is shaping the future of social media. And he joins us now from Newcastle, England. Thanks so much for being here with us.
So, as we just heard, a growing number of governments around the world banned TikTok on official government devices, the Biden administration threatening a ban from all phones, so you're against this. Obviously, the fear here, as I said is that TikTok would share the user data of millions of Americans with China. Why doesn't that worry you?
CHRIS STOKEL-WALKER, AUTHOR, TIKTOK BOOM: Because it hasn't been proven, Kim. And I think this is kind of one of the foundational principles of the United States and of the free world of pretty much everybody but China is that we wait until we have evidence to act. I've been looking at TikTok for you know five plus more years.
And I'm not the world's best journalist but I'm far from the world's worst. I've been speaking to lots of my peers who are often better journalists than I am and also to cybersecurity consultants who have been poring through TikTok source code, the details of the app, and how it transmits and user's data. We haven't been able to find that smoking gun yet. We haven't been able to find the bat phone that connects Xi Jinping to TikTok.
And I think, absent that evidence, we do have to consider that actually, maybe it doesn't exist all of these things so far, and you play there the UK's government respond to was. This is theoretical. This is a sort of pragmatic approach that they're taking in case of an event like this. But there's no actual evidence yet.
BRUNHUBER: Right. But I mean, the fear, obviously, you know, even if something hasn't happened, there is a law that would force companies based in China to compel with any Chinese government request for data so that could still be, you know, in the pipe.
STOKEL-WALKER: It could, absolutely. And you're right. And you're -- it's worth pointing out TikTok do say they've never been asked by the Chinese government to hand over data. They say they wouldn't do so if asked.
I think we have to -- you know, your definition of whether or not they will actually tell you that will differ depending on your belief on it. And, you know, I am also quite skeptical about that idea of whether they actually would bake this grandstand against the Chinese government if they were really compelled to. But I think more fundamentally, there is this kind of idea that does the Chinese government really care about our teenagers and what they post on social media particularly given they posted on other platforms that are very easily accessible as well? You know, who's to say that you know, teenagers are posting anything different on TikTok than they are on Facebook, on Instagram, on Twitter, on Snapchat, these things can all be accessed by the Chinese government.
I think, potentially what we've got here, Kim, is we've sort of recognized the problem, which is that we overshare on social media and we can be manipulated through that. We've seen wide-scale propaganda threatened through social media platforms, but we've kind of misdiagnosed the problem here. We say it's China when actually it's kind of everybody.
BRUNHUBER: Yes. But in this case, the company obviously is owned by China. And so, in terms of the timing that the Chinese spy balloon over the U.S. here couldn't have come at the worst time in terms of you know, stoking those fears. How do you think that might factor into the pressure to ban or sell TikTok?
STOKEL-WALKER: I think enormously. And yes, it's worth saying around about a little over 12 hours ago after the UK ban was enacted, I sat down with Theo Bertram, who is the Vice President for Government Relations and Public Policy in the UK and Europe. And he said to me. "When the Chinese spy balloon goes up, TikTok comes down." He believes that this is very much a way of us attacking China, which is absolutely fine because you know, frankly, China is an abhorrent state. They do some pretty terrible things in the name of maintaining their kind of their harmonious well-being, as they say.
[02:50:12]
But I do think that you know we are punishing an app that you know is actually trying to make some decent strides toward getting rid of that Chinese link. Bertram told me that he can't change the nationality of his founder. He can't change the nationality of some of his employees. But he does recognize that that is seen as a problem for people. And so, they are trying to bend over backwards in order to try and assuage those issues that many, many politicians have.
BRUNHUBER: Yes. So, some of the issues are obviously around data collection but the other issue here is censorship, potentially. Limiting, let's say, mentions of Uyghurs for instance.
STOKEL-WALKER: Yes. And I think they've been relatively open about the fact that that was an issue. I've been covering TikTok for many, many years now and so I have seen progression of this app. And we are -- if we had been having this conversation probably about three or four years ago, I would have said absolutely, you know. I have leaked moderation guidelines from 2019. The documentation that content moderators use to try and decipher whether or not something should stay on the platform, which previously said, as you say, any videos on Uyghur Muslims were not allowed. We know that there has been a genocide of Uyghur Muslims in Xinjiang province in China by the Chinese state.
That is now allowed. Likewise, Tiananmen Square content used to not be allowed, that is now allowed. It's been a process of kind of westernizing the app because what previously happened with TikTok was they essentially just transplanted Chinese staff members into Western companies. And I think you know what happens there is you get kind of a bit of a culture shock because obviously, these people are encountering the free world for the first time and the opportunity to have free expression.
That I -- you know, I think it's not necessarily a bad thing that we're giving people a taste of that and actually saying, you know there is an opportunity outside of your Chinese great firewall for a different way of life. And so, I do worry some ways that actually what we're doing is we're cutting off the opportunity that we had maybe in the late 1980s in Russia with the idea of kind of bringing McDonald's into there. That if we suddenly bar TikTok from this, we're losing some pretty powerful decision-makers who are maybe a little bit more sympathetic to the Western we think.
BRUNHUBER: Yes, it's a fascinating debate and so much at stake with was a statistic I think, you know, Americans spend an average of an hour a day on this app, so clearly, very popular. We'll keep falling this issue. Chris Stokel-Walker, thanks so much for your insights.
STOKEL-WALKER: Thank you.
BRUNHUBER: All right, it is that time of year when American sports fans become obsessed with college basketball in the tournament known as March Madness and the U.S. Vice President knows no exception. Kamala Harris attended the first men's game of her alma mater, Howard University on Thursday with her husband, the second gentleman, Doug Emhoff. Howard is an HBCU, which stands for Historically Black Colleges and Universities. And Harris said it's important for their sports programs to be well-funded. The University of Kansas overcame Howard 96-68.
Now, Harris's boss, the U.S. president wished good luck to all teams in the tournament. Joe Biden had the University of Arizona taking home the men's championship but they fell in the first round to Princeton. And for the women's, he said Villanova always wins in his household. His wife Jill got her Master's there. And President Biden's former boss released his picks as well. Brock Obama has Duke winning the men's tournament. And for the women's, South Carolina.
And fans in Greenville, South Carolina went wild after the first big upset of the tournament. Furman University taking down fourth-seeded Virginia Cavaliers in a nail-biter. The final score, 68-67 with JP Pegues shooting the winning three-pointer.
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JP PEGUES, FURMAN UNIVERSITY GUARD: I don't know what I'm feeling right now. Like I'm super numb until this moment like, I can't believe like that's one of the biggest games in my life. And then I just hit that shot. So, I'm just trying to take it all in, you know. I'm just embracing it.
BOB RICHEY, FURMAN UNIVERSITY BASKETBALL COACH: Born ready, loves the stage, loves the lights, loves to compete, and leader. I mean just cares. And you know, there's something to be said when you can find a guy that really, really understands competing. You can't put a price on that.
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BRUNHUBER: This is Furman's first March Madness appearance in more than four decades. The Paladins will play the winner of San Diego State versus Charleston on Saturday.
All right, attention all. Swifties, four new songs from singer- songwriter Taylor Swift have just dropped ahead of her Eras Tour. Now, listen.
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BRUNHUBER: That one titled All The Girls You've Loved Before. The other three are new versions of some of her older songs.
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BRUNHUBER: Well, that's Taylor's version of If This Were A Movie. She had been re-recording many of her hits after a former label sold the master recordings of her music catalog back in 2019.
All right. That wraps this hour of CNN NEWSROOM. I'm Kim Brunhuber. I'll be back with some more of today's top stories after a quick break. Please stay with us.
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