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CNN This Morning
Biden Team Scrambles to Contain Financial & Political Contagion; First Nor'easter of Season to Slam New England with Heavy Snow; 30 Million People Under Flood Alerts Across California and Nevada; Trump Sharpens Attacks Against DeSantis on Iowa Campaign Stop. Aired 6-6:30a ET
Aired March 14, 2023 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KAITLAN COLLINS, CNN ANCHOR: Morning, everyone. It is another busy day ahead. Of course, we are following everything that has happened over the weekend. What is going on with the U.S. banking system.
Let's get started with five things to know for this Tuesday, March 14. All eyes are going to stay on Wall Street where they have been locked as the race is on to avoid the collapse of other regional U.S. banks.
Several of them have been suffering steep stock drops on Monday, even as the government came out, President Biden himself, trying to calm nerves of financial support. All this turmoil is coming as the Fed is awaiting a highly-anticipated inflation report that we're expected to get this morning.
DON LEMON, CNN ANCHOR: And no relief. What is going on? Dueling storms set to pound the East and the West Coast, both coasts. Nor'easter forecast to bring heavy rain, wind, and snow to millions in the Northeast. California bracing for yet another round of severe flooding.
Also this: Governor Ron DeSantis breaking from many in his own party on the war in Ukraine. The likely presidential candidate told FOX News that protecting Ukraine is not vital to U.S. interests. Instead, he called it a distraction to bigger challenges here at home.
POPPY HARLOW, CNN ANCHOR: Also, Senate Minority Leader Mitch McConnell is out of the hospital. That is good news this morning. His spokesman says he's recovering well from a concussion he suffered last week during that fall. He is 81 years old.
He also suffered, we've learned, a minor rib fracture. He will be getting physical therapy at a rehab facility before he heads home.
Also, a heartfelt request from one president to another. President Biden says former President Jimmy Carter asked him to deliver his eulogy when he passes. Carter remains in hospice care at his home in Plains, Georgia.
CNN THIS MORNING starts now.
LEMON: Welcome in, everybody. Good to see you.
So Poppy, how bad is it that they are -- they have six banks under review right now as a possible downgrade?
POPPY HARLOW, CNN ANCHOR: Well, that's Moody's. That's one firm looking at these smaller, regional banks. I think the Biden administration thought this was contained. We all hope it's contained to these two banks plus a crypto firm.
But this morning, we don't know. I mean, shareholders are putting so much pressure -- I mean, look, First Republic, that's a big, well- known bank. The shares are down 60 percent this morning.
LEMON: We thought thought it was possibly -- you know, would stem the tide. We heard folks on our air yesterday saying -- some of them saying, Well, we think this is over. And others saying, This is just the beginning. And it clearly seems to be.
COLLINS: I think that's -- we have to be really cautious about that. President Biden came out and tried to say that the U.S. banking system is safe and secure, but big questions. And I think people are rightfully concerned about what could be next.
LEMON: As they should be. That's where we begin.
HARLOW: We do begin this morning with the growing fallout from the largest bank failure in the 2008 -- since the 2008 financial crisis. Regional banks across the nation grappling with turmoil, plunging stock prices, even after President Biden took emergency action, tried to ease panic following back-to-back collapses of Signature Bank and Silicon Valley Bank.
We're keeping a close eye on Wall Street this morning to see if banks can recover after yesterday's free fall. The shares of more than two dozen banks plummeted, even after President Biden tried to assure markets before the open.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: Americans can rest assured that our banking system is safe. Your deposits are safe. Let me also assure you we will not stop at this. We'll do whatever is needed.
(END VIDEO CLIP)
HARLOW: Not assure a lot of spooked customers. Look at the dramatic fallout yesterday for these four banks. As we just said, shares of First Republic were down 60 percent.
We'll get new inflation numbers this morning in just about two hours. The Fed is trying to face an incredibly delicate balancing act of raising interest rates to fight inflation while also trying to prevent more banks from collapsing. Our chief business correspondent, Christine Romans, is here this
morning. I mean, it's like they cannot get a worse scenario. And today, we're going to get core inflation numbers, and then the question becomes, does the Fed address inflation head on? Or do they try to prevent more bank collapses?
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT/ANCHOR: And is this whole banking drama disinflationary, taking some of the pressure off the Fed? So there's so many conflicting story lines here.
Let's look what happened to those regional banks yesterday. They really got slammed. A 60 percent move, as you know, for a stock in one day is real -- it just -- it shows extreme concern about what's on the balance sheets of these banks and also concern that depositors are going to walk away and go to a bigger bank.
Now we were told by a senior treasury official yesterday that, in fact, those deposit outflows are slowing. That's good news for these. And this morning, I'm seeing pre-market trading of these banks they're up 20 percent, 10 percent. So we'll look for some stabilization there today.
HARLOW: Is it something that is so fundamentally different from 2008, the fact that we're not talking about toxic assets?
ROMANS: Oh, yes. These are -- these are the opposite of toxic assets. These banks have treasury securities or mortgage-backed securities on their -- on their books.
And so they're just trying -- with the Fed having raised interest rates so aggressively, now those are worth a lot less, and they're just trying to balance that imbalance, frankly.
HARLOW: Can the Fed do both at the same time? Can they keep raising rates to attack inflation without making these -- what are safe securities, fixed income securities, less attractive to central buyers?
ROMANS: I think there's a feeling the Fed is going to go more slowly. And this is what the Fed is -- this is the delicate balancing act of the Fed right now.
The next meeting is March 22nd. We have this big CPI report that's coming today. And the feeling is, look, the chances of no rate hike has risen dramatically since this banking drama. And now a lot of people are thinking it's going to be more like 25 basis points.
Just a week ago the Fed chair was saying --
ROMANS: -- preparing us for 50 basis points.
And again, what I keep hearing is all of this is disinflationary. This is, in a weird way, not what the Fed designed but working -- working toward the Fed's goal of cooling inflation.
HARLOW: Why? Because there are some skeptics of that argument.
ROMANS: There are. But that's the big discussion this morning. If they're going to slow lending, right, if you're going to have this frothy part of the market, which is startups and crypto, which has been cooled; you know, when you're getting some of the easy money out of the system, that could be working in the Fed's favor.
HARLOW: OK. So, we're going to get a few hours from now a really important inflation reading?
ROMANS: The consumer price index. And this is the last big reading on inflation, I think, one of the last big readings before the Fed meets. And 6 percent for the year over year number.
If you look at this chart here, you can see clearly, consumer inflation is peaking. If you go to the grocery store, you might not agree with me.
But I'm telling you that the overall number has been moving in the right direction. But still much higher than the 2 percent number the Fed would like to see.
So, we'll be watching very closely at 8:30 to see what this signals about the economy.
HARLOW: I don't believe you because my kids wanted pickles last night, and they were almost 7 bucks.
ROMANS: Were they really?
HARLOW: That's just New York.
ROMANS: I went to a grocery store recently. I got 10 things, and everything was $10 or more. Like, a thing of Nutella. My kids are going to eat me out of house and home.
HARLOW: Yes, your three boys will. Christine Romans, thank you very much.
ROMANS: Sorry. I'm just talking to my friend Poppy.
COLLINS: We can talk grocery lists later on. But for now, I want to bring in CNN economics commentator and "Washington Post" opinion columnist Catherine Rampell and our CNN reporter Matt Egan.
Both of you have been covering this over the last several days. Matt, are you surprised what the president said yesterday was not enough to just calm everybody down and help these regional banks out?
MATT EGAN, CNN CORRESPONDENT: I'm not surprised only in the sense that, you know, fear is a powerful thing. A lot of this is psychological. We haven't talked about, you know, a major bank failing in a long time. And I think people are understandably nervous.
But I do think that everyone needs to kind of take a deep breath. Remember, the FDIC insures up to $250,000 on deposits.
HARLOW: They may be in for everything now.
EGAN: Well, right. But always, they've have been doing 250,000. I mean, that -- for a vast majority of people, that -- that covers it.
Now they're saying, listen, we'll actually insure more than that, at least in these instances when these two banks collapsed. So I do think that everyone needs to kind of calm down a bit here.
LEMON: OK. Psychological, do you agree with that? Because listen, we have the -- Moody's saying they're going to place six other U.S. banks under -- on review for potential downgrades. I mean, that has a ripple effect on the economy. Do you think it's mostly psychological? Do you agree with Matt that we should calm down?
CATHERINE RAMPELL, CNN ECONOMICS COMMENTATOR: I think people are actually looking at the balance sheets of these banks and saying, Hmm, maybe things are not as solid as we once assumed. Maybe they are withstanding the stress of rate hikes a little bit more poorly than people had appreciated before.
I mean, if you had looked, some of these risks should have been evident, especially with Silicon Valley Bank. But with some of the other banks, as well.
The fact that they didn't guard against interest rate risk, for example. That was relatively well-known if you paid attention.
Now, most of the American public would not have done so, but now investors are doing so. Regulators belatedly, it seems like, are doing so.
So yes, a lot of this sort of irrational fear. But I think that there actually is a reason to take another look, to reassess, at the very least, how these banks are doing and maybe to assume that they may be subject to more regulation, which will allow them to do less risky things in the future, which could also curb some of their profits. So there are a lot of things going on here.
HARLOW: Matt, you spoke to a former really high-ranking Fed official and FDIC official yesterday who thinks the Fed can walk that tight rope?
EGAN: Well, yes. I talked to Tom Hoenig. He was a former vice chair at the FDIC, former KC Fed president. And he said, Listen, the Fed is basically in this no-win situation.
Because if they keep raising interest rates, that could cause more pressure to the banking system. But if they don't, that could actually cause more instability, in his view, because we still have this inflation situation, right? And inflation is still the No. 1 problem in the economy. And so his argument is, the Fed is in a tough spot, but they have to
keep raising interest rates, because in the long run, that is what will actually create stability.
COLLINS If they do downgrade the -- for these banks, these six banks that Moody's has put on its list, what are the implications of that?
RAMPELL: Certainly not good for the stock prices for those banks. Whether it spooks depositors, I think we don't know.
It does look like the emergency measures that were taken over the weekend for Silicon Valley Bank and Signature Bank stemmed some of the outflow of deposits from these other banks. Didn't stop it, but it does seem like, you know, if people were running in to pull their money out of Western Alliance or First Republic or whatever before, maybe they calmed down a little bit because, to Poppy's point, they were like, Hmm, maybe the FDIC is actually insuring everything that I have there, not just up to that usual cap.
But, you know, the investors still got wiped out. The equity holders got wiped out. The bondholders look like they're going to get wiped out, as well. We don't know. Depends on, like, how much -- what the assets are actually worth in the end.
But you could imagine that you'll see sort of similar analogies drawn to these other banks that if, in fact, they're not as credit-worthy, then the investors, the bondholders might say, maybe not a good invest -- not a good place to keep my money.
HARLOW: Before we go, Catherine, you tweeted what do bailouts, price gouging and porn have in common? No one can precisely define any of them, but we know it until you see it. Referencing Supreme Court Justice Potter Stewart's famous line, "I know it when I see it" about pornography.
The Biden administration keeps saying this is not a bailout. But let's be straight with the American people. Isn't it especially with that lending facility, as well?
RAMPELL: Well, what is a bailout? We all know a bailout is a bad thing. It's a toxic word. And you don't want the thing that you were responsible for to be a bailout.
But, look, this was a rescue for the depositors, right? They were getting insurance they did not pay for in the sense that, if they had several million dollars in this bank, it was insured. They were not having to, you know, pay effectively -- get assessed FDIC fees for that insurance. So it was a rescue for them.
Now, I'm sympathetic. I think that probably, it was the right thing to do, because there were a lot of innocent bystanders, people who might not have been paid, you know -- regular workers who would not have been paid if this money had been made unavailable, and they just lost it.
But it was a rescue of some kind. Is it the "B" word? I don't know. LEMON: But it goes back to what you said in the beginning. And I think
that -- correct me if I'm wrong -- you were saying that at least now there's more of a review if there is some good news in this that we're going to be checking to make sure that these banks can pass a stress test.
RAMPELL: One hopes. One hopes. I mean, it certainly seems like somebody was asleep at the switch before.
LEMON: Thank you, Catherine.
Thank you, Matt. We appreciate it.
We're going to move on now. We've got to talk about the weather, because more than 20 million people are under winter weather alerts this morning as a huge nor'easter, the first of the season, is bearing down on New England, and New York is declaring a state of emergency.
The region is bracing for up to two feet of snow and dangerously strong storms, which could lead to widespread power outages.
Straight now to CNN's Derek van Dam, live in Worcester, Massachusetts, with more.
Wow, Derek. Good morning. Quite a different scene than what we're seeing in New York. It's a little drizzly here, but you've got a bit more. What are you seeing on the ground. What's expected?
DEREK VAN DAM, CNN METEOROLOGIST: Yes. We've got a cold, quite frankly, miserable rain here in Worchester. But that's the precision -- hairline precision of forecasting these Nor'easters.
I want to see what's over my left-hand shoulder here. And we're actually at a salt barn in Worchester County. And this is the pre- deployment of the salt trucks and the brine trucks that are going to help treat the roads here in and around the higher elevations of interior Massachusetts.
Now, this storm system has edged warmer. And that's the problem, because that's why we're receiving rain. But it's going to change later this afternoon, and conditions on the roads are going to deteriorate very quickly.
Yesterday at this time, we were talking to the director of the weather prediction center, Dr. David Novak. And he told us that his greatest concerns with this storm is that the heavy wet snow that will eventually accumulate will bring down power lines, bring down trees, as well. So the potential for power outages, because the wind is going to pick up.
I just looked at some of the graphics here closely. And I want you to see just how close that rain/snow line is.
As you can see, it's rain in Boston. Very light drizzle in New York. But just on the interior, Berkshire into the Catskills, it is snowing hard, but it is a heavy, wet snowfall. So these salt trucks at the salt barn here in Worchester are going to
make all the difference for the roadways as the temperatures drop, the snow starts to form.
In fact, I want my cameraman to pan around to this light here. These are the first snowflakes that we've seen from this Nor'easter. So the change is happening. And we're going to start seeing things more of a winter wonderland here in the hours to come as this Nor'easter takes grip on the Northeast -- Don.
LEMON: Derek van Dam, Worcester, Mass. Be safe. We'll see you soon. Thanks.
COLLINS: All right. And from New York to storm-ravaged California, where much of the state is under flood watches and wind alerts this morning.
There are new warnings in communities ranging from San Jose to Los Angeles that are in danger of serious flash flooding and mud slides.
Or CNN meteorologist, Chad Myers, is live in the weather center. Chad, I know you've been tracking all of this. If you're waking up in California this morning, what do you need to know?
CHAD MYERS, CNN METEOROLOGIST: That there is going to be another atmospheric river approach by 7 a.m. local time, your time. And there will be significant flooding again. Not because this is a bigger storm than the one for the weekend, but because we have pre-existing conditions. Dr. Gupta talks about that all the time.
But the pre-existing conditions, there's no place for this rain to go. This rain is all going to just run off.
Here is the atmospheric river. It's going to move on shore today. The one you see over here is actually going to go South of California. Great news, it's going to miss. So at least we're not worried about the second one in line.
But here comes the rain right now. Rain is already falling. We are seeing these areas here with the wind advisories you just talked about. There will be wind on top of this very flooded land. Trees that are sitting in mud with 50 mile-per-hour gusts. Trees are coming down. Power lines are coming down. It is going to be a very difficult day in California today. Difficult in the mountains again.
We're going to see an awful lot of snow. This snow is going to be feet deep again, above about 6,000 feet. But it's the rain fall that is going to run off that's going to be the problem. Look at L.A.: 11 p.m. tonight. If you're flooded last time, you may flood again this time.
And that is not exactly what they wanted to hear in that forecast today. Chad Myers, I know you'll stay on top of it. Thank you.
Also today, President Trump is digging in when it comes to a potential candidate Ron DeSantis as he is campaigning in the same Iowa City that the Florida governor was in just a few days ago. We have brand-new CNN polling showing what Republican voters want in their 2024 candidate. CNN's David Chalian is standing by with the numbers.
(BEGIN VIDEO CLIP)
HARLOW: Do you have Final Four picks?
(END VIDEO CLIP)
HARLOW: March Madness kicks off today. Duke is in the dance but without the legendary Coach K. He is on the sidelines for the first time in 42 years. Which team he thinks could go all the way to win the championship.
LEMON: The former president taking his 2024 campaign to Iowa last night where he sharpened his attacks against Florida Governor Ron DeSantis. Take a listen.
(BEGIN VIDEO CLIP)
DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: Did anyone ever hear of DeSanctis? DeSanctimonious? Ron DeSantis strongly opposed ethanol. Do you know that?
And we don't even know if he's running. I might as well tell you, if he's not running, I'll say he was fine on ethanol. Don't worry.
And he also fought against Social Security. He wanted to decimate it and voted against it three times. Voted against Social Security. That's a bad word.
But you have to remember, Ron was a disciple of Paul Ryan, who's a RINO loser who currently is destroying FOX. And to be honest with you, Ron reminds me a lot of Mitt Romney.
(END VIDEO CLIP)
LEMON: Wow. That could be 2016, or it could be 2020. Same old thing, over and over again. This was Trump's first visit to Iowa since he announced his bid for the White House. And follows visits by none other than Ron DeSantis himself and Trump's primary challenger, Nikki Haley.
Brand-new CNN polling this morning painting a picture of a divided party heading into the race for GOP presidential nominee. And for more on that, we turn to -- ba-dum, bum, bum -- CNN political director David Chalian this morning. David, we're lucky to have you bright and early on a Tuesday morning.
DAVID CHALIAN, CNN POLITICAL DIRECTOR: Good morning, sir.
LEMON: Good morning. Thank you so much.
Why is Trump spending so much time attacking Ron DeSantis? I kind of know the answer, but I wanted to hear it from you.
CHALIAN: A very leading question, Don. But because clearly, DeSantis is his closest competitor. What we did is sort of get a baseline at the starting gate of this race. We talked to Republicans and Republican-leaning independents, who tell us they are likely to participate in the nomination process.
And take a look here among first choice, Donald Trump is at 40 percent. Ron DeSantis at 36 percent. Nobody else in double digits. This is why he's spending a lot of time on DeSantis.
You talk about the divide in the party, Don. The education divide is one to watch throughout this entire cycle. It's really a fault line in American politics, but so is it inside the Republican Party.
Among college graduates in this Republican, Republican-leaner universe, Trump is at 23 percent support. DeSantis is at 41 percent support. Pence at 8. Haley at 12 percent.
Without a college degree, this is -- this is Trump's homeland, 48 percent support here. DeSantis at 34 percent support, and single digits for Pence and Haley.
Also, we wanted to see, there's room for movement, right? It's so early. People aren't even going to vote for nearly another year or so. Sixty percent of those in this poll tell us they're kind of locked into who they're definitely going to support as their first choice.
Forty percent, a healthy chunk here, might change their mind. But look at it when you look by the candidates' supporters. Seventy-six percent of Trump supporters say they are locked in. They're definitely going to support their first-choice candidate. He's got really sticky support.
Fifty-nine percent of DeSantis supporters say the same thing.
HARLOW: What about cultural concerns, David? Where does that fall?
CHALIAN: Yes, Poppy, I kind of look at this as, like, the mood music for where the Republican electorate is as this campaign is getting under way. It's a pretty dour mood.
Thirty percent say America's best days are ahead of us. Seventh percent of these Republicans and Republican-leaning independents say that the best days are behind us.
Compare that over time. Again, that 30 percent best days are ahead of us, when Donald Trump was in office, that was at 77 percent among Republicans. It's -- it was at 43 percent on sort of the eve of the general election in 2016, where Donald Trump scored his surprise victory. You mentioned cultural issues. We asked about, what is the effect of
this increasing diversity in American culture? Is it mostly enriching or mostly threatening?
Well, 61 percent of Republicans called it mostly enriching. Thirty- eight percent say increasing diversity in American culture is mostly threatening. And on gender identity, you want to know why you're hearing the candidates talk so much about gender identity? We asked, "Are American values on gender identity and sexual orientation changing for the worse or changing for the better?" look at this, nearly 8 in 10 Republicans say changing for the worse.
COLLINS: I mean, I'm fascinated with these numbers, David. especially the one I think that will be of the biggest concern to Trump is also when it comes to the GOP primary electorate says will definitely support their first-choice candidate, 60 percent. Might change their mind, 40 percent.
I mean, that is a number that they will be paying attention to.
But David, I just want to ask you about some significant news we learned overnight, which is probably the clearest view yet we have of where Ron DeSantis stands on a major foreign policy question for this election, which is Ukraine. And his statement that he gave to FOX News said, essentially, that while the U.S. has many vital national interests, becoming further entangled in a territorial dispute between Ukraine and Russia is not one of them. That does put him in a camp with Trump, compared to other Republican hopefuls.
CHALIAN: Totally, Kaitlan. It is a fascinating development. He had sort of been hinting he was more in this isolationist wing of the party. But this is the clearest comment we've gotten yet from Ron DeSantis.
And you just heard the sound that you guys were playing from Trump last night in Iowa, trying to put DeSantis in -- in the category of former House Speaker Paul Ryan or Jeb Bush, Mitt Romney.
Well, here's an example where DeSantis actually is aligning with Trump on Ukraine. The issue is, is Ukraine going to be a driving issue in this campaign? And if you look here among Republicans we asked, most important issue in the 2024 Republican presidential primary, far and away, it's the economy at 32 percent, then immigration at 16 percent. Candidate quality is at 13 percent. You see, you get down to 9 percent say foreign policy here.
Also, I think this is really interesting, guys, and something to watch. Are you looking for somebody who shares your positions? Or are you looking for somebody who can defeat Joe Biden? That's your ultimate goal in this Republican nomination race.
You see here here it's about a 60/40 split. Fifty-nine percent are looking for a Republican candidate who shares their positions. Forty- one percent looking for somebody with a strong chance of beating Biden.
LEMON: So what if their position, though, is to beat Biden?
HARLOW: Wait, why does it matter what their position is if they can't win? But OK. David --
LEMON: Thank you. Yes. Thanks, David.
HARLOW: Do you remember when Ron DeSantis said in 2015, just hit Obama for -- for not sending more weapons to Ukraine?
HARLOW: After Crimea. It was a completely different position. He said President Obama was making a mistake. Why do you think that --
LEMON: And he also didn't say -- he didn't mention when he talked about this territorial thing that, actually, Russia invaded Ukraine's territory. But it's not. It's just a territorial thing.
COLLINS: Yes, but he's saying, basically, it's not our problem. And it's not -- he's saying, with what's going on the border and other issues that the U.S. has, that's not the top of the list -- the list for him.
He completely did, in 2015, after Russia illegally annexed Crimea, he hit Obama for not supplying Ukraine with weapons. He was congressman then. Now, he's a presidential -- potentially, a presidential candidate, we should be clear.
HARLOW: There's that little asterisk there.
COLLINS: I know. Sometimes we get ahead of talking about it like he's already in the race.
HARLOW: Yes, but look at how well he's polling. But people in his office --
COLLINS: They're like, he's not in the race yet, you know.
LEMON: No, he's in the race.
COLLINS: But this is going to be one of the biggest foreign policy issues for Republicans. And as report has been softening among some Republicans for supporting Ukraine, they are drawing a clear line between them and with the Nikki Haleys and the Mike Pompeos.
HARLOW: Do you think he's following the polling, because the polling, just in January, showed a huge decline in terms of Republican support for this ongoing war.
COLLINS: Maybe -- or maybe he is -- we don't know anything about his foreign policy views. That's the thing. And he's coming out clearly being more isolationist than -- than we knew.
LEMON: I think it's going to be an issue for Democrats. In the beginning of the war, the question was how long? What was going to be the American patience and interest in continuing this war? HARLOW: How long?
LEMON: Especially if the economy doesn't get better. Why are we sending all this money to -- the question is, I'm not saying this -- why are we sending all this money to Ukraine when at home, people are hurting?
So that's going to be both Democrats and Republicans. Of course, you know, people care about democracy. Should support the people of Ukraine, but that is going to be a lingering question and a big one leading up to the election.
HARLOW: I think you're right. It's going to be a big question.