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Pentagon: Russian Jet Dumped Fuel on U.S. Drone & Hit Propellor; California Soaked, Northeast Buried as Storms Batter Coasts; DOJ, SEC Investigating Silicon Valley Bank Collapse. Aired 6- 6:30a ET
Aired March 15, 2023 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR/CHIEF BUSINESS CORRESPONDENT: "Everything Everywhere All at Once," just named Best Picture at Sunday's Oscars. And No. 3.
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UNIDENTIFIED MALE: Don't you think it's time to add a little fire?
UNIDENTIFIED FEMALE: Don't overthink it. I'm the fire.
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ROMANS: That's "Daisy Jones & The Six," a story inspired by Stevie Nicks and Lindsey Buckingham from Fleetwood Mac.
All right. Thanks for joining us. I'm Christine Romans. CNN THIS MORNING starts right now.
KAITLAN COLLINS, CNN ANCHOR: Good morning, everyone. It is Wednesday, March 15. Thanks for waking up with us. Here are five things to know this morning.
There are new tensions between the U.S. and Russia over the downing of a U.S. surveillance drone. The Pentagon says that Russian fighter jets clipped the drone over the Black Sea, forcing it to crash. Russia denies the accusation, claiming that the drone fell on its own.
DON LEMON, CNN ANCHOR: Yes. And another day of jitters over the fate of America's banking system appear to be easing slightly. Stocks of some regional banks bouncing back after suffering dramatic declines.
The fallout, however, is far from over. DOJ and the SEC now investigating the collapse of Silicon Valley Bank.
Also this morning, a high-stakes case over abortion pills set to get its day in court. A federal judge in Amarillo, Texas, will hear arguments over a lawsuit that could disrupt access to the pills nationwide. Protests are planned outside the courthouse.
POPPY HARLOW, CNN ANCHOR: Also, the FAA convening a rare safety summit today after seven close calls on U.S. runways. The latest incident just happened on March at Reagan National.
The FAA says the flight crossed a runway just moments after another plane was given the OK for takeoff.
And as Mars Blackmon said, It's got to be the shoes, right? Sotheby's announcing the auction of Michael Jordan's game-worn 13s from the 1998 NBA finals. Some estimates say they could go for $4 million.
COLLINS: Yes. All this is coming as, you know, that --
COLLINS: One thing everyone in Washington is going to be watching is that hearing on those plane incidents that have been happening. There have been so many near misses that I just think it's raised so many concerns.
LEMON: It's time for some action. Don't you think? They should be talking about it. And --
HARLOW: And doing something about it.
LEMON: People on the planes, and Americans are definitely talking about it.
HARLOW: And doing something about it? For sure. We'll see what comes of that.
COLLINS: Yes. That's what the acting FAA administrator said.
HARLOW: It's still acting. To your point, they still don't have a permanent one.
COLLINS: They had a hearing for the other one. But we'll see if it actually becomes permanent. We'll get to that later in the show.
But also this morning, we're seeing tensions escalate after the Pentagon said that a Russian fighter jet clipped a U.S. spy drone and forced the U.S. to down it.
The dangerous encounter happened yesterday over the Black Sea. The U.S. says that a Russian jet dumped fuel on the drone several times, then clipped its propeller, which forced the U.S. to down it into the water nearby. They're still working to recover it this morning, actually.
National Security Council spokesman John Kirby said the confrontation is reckless.
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JOHN KIRBY, SPOKESMAN, NATIONAL SECURITY COUNCIL: And we don't want to see this war escalate beyond what it already has done to the Ukrainian people. And so this is -- this is clearly -- this was inappropriate, unsafe, unprofessional conduct by the Russian pilots.
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COLLINS: After that happened, the U.S. summoned Russia's ambassador to the State Department. You can see him here. He was going in.
He was there for about 30 minutes. He claimed there was no collision and that he U.S. has been warned not to enter U.S. [SIC] air space as this war is raging on in Ukraine.
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ANTOLY ANTONOV, RUSSIAN AMBASSADOR: This drone can carry a few bombs. You'll see that what will be the reaction of the United States if you see such Russian drones very close, for example, to San Francisco or New York. What will the United States do? For me, it's clear.
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COLLINS: Those are comments he made after leaving the State Department yesterday. Again, that's the Russian ambassador to the U.S.
All this comes as President Vladimir Putin is about to make a public appearance any moment now. We're waiting to see if he weighs in on the drone incident.
Our national security reporter, Natasha Bertrand, is tracking this developing story for us.
Natasha, I know that the U.S. says, you know, these interceptions happen all the time. But the way this happened, this kind of contact between the Russia and the U.S. militaries, it's the first we've seen of something like this. This grave. What else do we know?
NATASHA BERTRAND, CNN NATIONAL SECURITY CORRESPONDENT: Yes, Kaitlan. And of course, it comes at a very sensitive time between the U.S. and Russia. Right? Obviously, they're both operating in the region, and the potential for escalation and miscalculation is very high.
So what we're learning is that the Russian fighter jets kind of tracked this drone for about 30 to 40 minutes over the Black Sea, in international waters, before coming close to the drone and actually dumping fuel on it. And then going behind the drone and making contact with its propeller, causing the drone to essentially become inoperable and forcing the U.S. military to then take it down over international waters.
Now, the U.S. is saying that this was extremely incompetent, essentially. They are saying that the pilots lacked competence and that they were reckless and dangerous.
The big question, however, is was this just a maneuver, an unsafe maneuver by the pilot itself, or was this something that actually came from the Kremlin?
The Pentagon is not saying at this moment. However, they are warning the Russians in very stark terms that this kind of behavior can cause an escalation that could draw the two countries into a conflict.
The Pentagon saying that there was no confrontation -- there was no communication directly between the U.S. and Russians while this confrontation actually occurred, which is raising questions, of course, about whether those lines of communication are operating properly -- Kaitlan.
COLLINS: Yes. Obviously a concern if they're not even talking to each other. We know the U.S. is working to recover this. But what is the concern that officials have if Russia gets there first?
BERTRAND: Yes, so it's unclear whether the U.S. will actually even be able to recover this. We are told that there are no naval assets in the Black Sea at this moment that are working to recover it.
But the White House has said that they have taken steps to protect their equities. They would not go any further than that. But implying, essentially, that they are taking steps to prevent the drone from falling into Russian hands.
Now, the Pentagon press secretary was asked about this yesterday, whether the Russians have been themselves trying to get ahold of the drone, which again, fell into the Black Sea. They would not go there.
But what we are told is that they are taking all possible steps to prevent sensitive technology -- of course, this drone -- from falling into Russian hands, Kaitlan.
COLLINS: Yes, absolutely. Natasha Bertrand at the Pentagon, thank you.
LEMON: Obviously, something the White House is following. I want to get now to CNN's Priscilla Alvarez with the very latest reaction from the White House. What are they saying?
PRISCILLA ALVAREZ, CNN WHITE HOUSE CORRESPONDENT: Well, President Biden was briefed on this just yesterday by national security adviser Jake Sullivan.
But the through line, as you heard there from Natasha, has been that the contact by the Russian pilots was, quote, "inappropriate, unsafe, and unprofessional." That is what we have been hearing from the White House as they've also stressed that intercepts in this region are common.
But what was different and unique about this incident was just how unsafe it is.
Now the White House has also dismissed Russia's denial of the incident and said that they are taking steps, again, as you heard there, to protect their private equities. But not sharing much more than that.
Now, of course, the administration has been in touch with allies, going so far as to also summon the Russian ambassador to the U.S. to relay those concerns.
But the bottom line is really that the U.S. will not stop operating in this region -- Don.
LEMON: Is the White House hesitant to take further action against Russia here?
ALVAREZ: Now, of course, this comes at a critical time, and there's always risk of a dangerous escalation, as this war continues.
But they have stressed that they have those lines of communication, those diplomatic lines with Russia. We saw evidence of that just yesterday, again with the Russian ambassador to the U.S. And that is where they are right now at risk, of course, of any escalation. That's what they're trying to avoid.
LEMON: All right. Priscilla Alvarez at the White House for us this morning. Thank you very much for that.
HARLOW: Let's talk about more about what has developed here. CNN military analyst, retired Air Force colonel Cedric Leighton is here.
Cedric, good morning. So explain to us what the capabilities are of what is known as an MQ-9 Reaper drone. And do you understand what John Kirby is saying when he says they're working to, quote, "protect the equities" of it? How do you do that?
CEDRIC LEIGHTON, CNN MILITARY ANALYST: Yes, that's a great question, Poppy. Good morning to you.
The -- the whole business here is, of course, about sensitive intelligence.
So the basic capabilities of the Reaper, it flies at up to 50,000 feet. So almost as high as that balloon that we shot down off the coast of South Carolina.
But what it does is it's an intelligence collection platform. It can also be an armed platform. But in this particular case, I'm certain that it was intelligence collection platform. Supports strike missions but mainly it's done for surveillance purposes.
And one of the big things about this is that it has a range of about 1,150 miles. It can stay up for about 24 hours. And it -- you know, it has a big wing span of 66 feet. So it's wider than a lot of aircraft.
But it can do a lot of collection of different intelligence sources, specifically signals and imagery intelligence. So that's why it's a big deal to make sure that the Russians don't know exactly how good it is at collecting this kind of intelligence.
HARLOW: Is -- I was just going to say, do you have any insight into how the U.S. could remotely, if they don't get their hands on it first, how can they remotely protect all of that intelligence?
LEIGHTON: So one of the things that can happen, Poppy, is they can actually zeroize the equipment. So what they can do is they can take the -- the cryptography that is associated with that and make it null and void, in essence. So what that does is anybody who looks at that then won't be able to
see what has been transmitted.
COLLINS: But let's talk about how this all happened. Because it's the details of what we're hearing from John Kirby that are also fascinating here, where he's saying, you know -- and other Pentagon officials -- is that, basically, these Russian fighter jets were flying in front of the drone. They were dumping fuel on it before this even happened. You actually think it was a mistake that they clipped the wing, right?
LEIGHTON: Yes. I do think that, Kaitlan. And, you know, the reason I think it was a mistake is, you know, when you look at the way in which these drones operate and the way in which the Russians fly their aircraft, they come really close to this.
This is a picture of the drone as it's getting ready to take off.
But what the Russians did is they went to this area right here, dumped fuel on this part. And then they moved back as the craft was flying, and they hit the propeller right there.
So that was the key thing. When it -- when they did that, that made it impossible for the drone to fly. And the Air Force, which was operating this remotely, had no choice but to basically let it sink into the ocean, and they -- into the Black Sea.
And they made it that way because they needed to clear it from the sky so that it wasn't a risk to other aviation assets.
LEMON: I think what stands out to me is just looking at the drone. It's an enormous drone. Most people don't think of them being --
COLLINS: It's not like a household drone.
LEMON: Yes. It's huge.
LEIGHTON: Yes, it is. And you know, take a look right here, Don. What you can see is it's about 36 feet in length. The wing span is 66 feet. Compare that to the Russian fighter, which is a lot longer. But it has a shorter wing span of only almost 50 feet, 48.2 feet.
So what you're seeing there is really a relative comparison. This is a smaller aircraft. But it is a highly-effective aircraft. These guys, though, can fly a lot faster than the Reaper can.
LEMON: Hey, real quick. Is that a typical size?
LEIGHTON: Yes. That's -- that's the average size of a Reaper right here and of the fighter. That's about average for a fighter of that type.
HARLOW: It's all fascinating. Colonel, thanks very, very much.
LEIGHTON: You bet. HARLOW: So we are going to be joined by John Kirby from the White
House a little bit later in the program. Where do things stand now? What did they learn overnight? He is here on CNN THIS MORNING.
COLLINS: And as we wait for that, we want to move to the extreme weather that is battering both coasts. In the West, it's rain. Parts of California have been shattering daily records as the rain just keeps on falling.
More than 13 million people there and in Arizona are under flood watches this morning.
In the East, it's a -- it's snow, a lot of it. The Nor'easter that left parts of New York and New England buried under at least three feet of snow. More is actually on the way.
Some areas of the mid-Atlantic and the Northeast are also seeing high wind alerts. More than 237,000 people in five states are without power this morning.
Our meteorologist, Chad Myers. is in the CNN weather center, tracking it all.
I mean, it's like every different spot on the map, something else is going on. What are you watching the closest, Chad?
CHAD MYERS, CNN METEOROLOGIST: Watching the storm in the Northeast pull away. But after it's already dumped about 36 inches of concrete snow there, so people really having a hard time digging out.
And also now, the snow and rain coming into Southern -- Southwestern California. I mean, we are really seeing rain all the way even into San Diego at this hour.
Here's what's left of the snow right now. But what's not going away is the wind. The winds here will be 40 to 50 miles per hour today. The snow totals, from 3 feet down to almost nothing in Boston because of that ocean effect.
But here's the wind. The wind is going to be all day long. 40, 50 miles per hour. The branches are loaded with snow. These branches are going to be blowing back and forth, possibly coming down, and really even bringing down more power and more power lines.
Here's the rain into Southern California for this morning. Take it when you can get it, but some spots just don't need any more.
What is good about this, the positive of this storm, is when it gets into Colorado. They're working on spring ski season now. There will be new feet of snow, feet of snow in Colorado. Just in time for all those spring breakers.
COLLINS: Yes. Welcome news for those spring breakers. Hopefully, they stay safe out there. Chad Myers, thank you.
LEMON: Chad Myers, always looking on the bright side -- COLLINS: Always got to keep spring break in mind.
LEMON: With the snow.
COLLINS: -- when you're thinking about the weather right now.
LEMON: The spring ski season.
Meantime, the Justice Department and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank as regulators scramble to contain the fallout. What prosecutors are now looking into.
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SEN. LINDSEY GRAHAM (R-SC): To say this doesn't matter is to say that war crimes don't matter.
SEN. MARCO RUBIO (R-FL) (via phone): Obviously, he doesn't deal with foreign policy every day as governor.
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HARLOW: Those are Republican hawks pushing back on Republican Governor Ron DeSantis after saying that support for Ukraine is not of vital national security interest for the United States. What it could mean for his chances at the GOP presidential nomination. That's ahead.
Do we have Romans next, guys?
COLLINS: There's new fallout this morning over the stunning failure of Silicon Valley Bank. The Justice Department and the Securities and Exchange Commission both now investigating the collapse of the bank and examining stock sales that were made by SVB's financial officers days beforehand.
We should be clear. We do not know this morning whether or not these investigations are going to lead to any charges or allegations of wrongdoing.
But it does come as shareholders have also filed a class action lawsuit against the bank's parent company. And Democrats, several of them progressive members of the Democratic Party, have unveiled a bill that would essentially restore the regulations that were rolled back by a pretty large bipartisan majority in 2018.
Wall Street is breathing a sigh of relief after yesterday, where stocks rallied, including those of other mid-sized banks that it tanked a day earlier.
It's a sign investors do feel reassured by the government's quick intervention.
So far, we are tracking these developments with CNN's Paula Reid.
Paula, what do these investigations look like? How similar are the ones between the DOJ and the SEC?
PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT: Kaitlan, it will be interesting to see how this plays out.
Because a source tells me the Justice Department is looking into the collapse of SVB. The SEC has also opened its own probe. And these investigations right now, they're in their preliminary stages.
They are looking into both the bank's failure, as well as actions by senior executives in the lead-up to the decision, of course, by federal regulators to shudder the lender last week.
And while the exact nature of the investigations remain unclear, when you have an event like the failure of SVB, something so significant, an investigation like this is very common in the immediate aftermath.
Now, I've spoken to some former federal prosecutors, and they say one area that may be of a special interest to Justice Department lawyers involves shares that were sold by top company executives before the bank imploded, as well as the disclosures by the bank about its financial health.
Now, interestingly, the SEC chairman kind of alluded to all of this in his statement Sunday. He didn't identify any specific institution. But he did say we will investigate and bring enforcement actions if we find violations of federal securities law.
Now, as you noted, nobody has been accused of wrongdoing. It's unclear if anyone will be charged. This could result in a criminal case. Or, it could ultimately serve as more of an autopsy and an after-action report, depending on what they uncover.
COLLINS: Yes. A lot of questions about what went wrong. Paula Reid, thank you.
LEMON: A lot, probably, to uncover.
HARLOW: A lot, too. Let's talk about what happened yesterday.
Interesting, at the close, most bank stocks did rally. The smoke has not cleared fully yet, though.
Moody's placed six U.S. banks on review for potential credit rating downgrade and slashed its outlook for the whole U.S. banking sector.
Let's bring in our chief business correspondent and CNN anchor, Christine Romans. That was huge. What does it mean that Moody's did this? And is it indicating future bank collapses? ROMANS: So I think the most important thing is things have really
stabilized here. We saw that yesterday. So stability is back in the system.
But what Moody's investors services is warning is that we should be prepared for harder times ahead for so many of these -- of these banks. The banking industry could stay under pressure. Just because the Fed has raised interest rates so dramatically. And you've got so many banks with a lot of deposits that are above the insurance line. Right?
So you've got people who could be trying to move banks at the same time that the investments that they parked their assets in are, you know, under value right now.
So we should be prepared for maybe more strain in the system. And if there are failures, and what I'm hearing, is that they will be contained. Right? They've ring-fenced (ph) these -- these banks that have failed, and we'll be watching closely for other weaknesses in the system. But right now, things have stabilized.
LEMON: So a lot has been -- we've been talking about the social media aspect of this --
LEMON: -- the psychology, the information aspect. Because you remember Washington Mutual, the biggest bank failure, in 2008. Poppy and I were talking in the break. It took, what, ten days in 2008 for Washington Mutual to come down; 24 hours, though, for Silicon Valley Bank. Is there an Internet effect here?
ROMANS: Absolutely. This was a social media run on this bank. It was a run on the bank.
And if you look at the biggest failures, Washington Mutual, 2008, is right at the top of that list. And the second one is this SVB.
And if you look at the withdrawals, right, in 2008, at Washington Mutual, it was $10.7 billion withdrawn over -- over, I think, 10 -- or $16 billion withdrawn over ten days.
And this was $42 billion in 24 hours.
ROMANS: And that's because you had people texting each other. You had V.C. -- venture capitalists -- texting the founders of companies, saying, Get your money out of here. You had Twitter conversations about get your money out of this bank. And just so much more fast- paced banking.
I mean, think about it. If you -- for example, if you look at the website of Washington Mutual from 2008, it just looks like this old- fashioned website. Now you've got online banking. So people were moving their funds out
of -- in real time out of SVB. We just have never seen a run on that quite as quickly.
And I think that's one thing that really concerned regulators: how quickly that panic was -- was spreading and how quickly that money was coming out of those bank accounts.
LEMON: That was probably advanced in 2008.
COLLINS: But look how old that looks now. That looks like something's wrong with your computer.
LEMON: It was fancy back then.
COLLINS: It does shows you just how remarkable it is, like, the difference in what -- how people bank then and how people bank now.
Patrick McHenry, the congressman from North Carolina, he's the chairman of the House Financial Services Committee.
COLLINS: He's -- I'm fascinated on his thoughts on this. But he said, you know, this is the first Twitter-fueled bank run that we've seen.
COLLINS: He's not wrong.
ROMANS: He's not wrong. And that's what I think really got in -- you know, so many regulators so concerned. Because this spread so quickly here.
And what turned out -- at the base of it was sort of like Banking 101 failure. They just had the wrong duration of treasuries, and they were caught out. They were unable to raise $2 billion quickly.
And -- and just the way that it spread on the Internet, I think, is very interesting. And I think a cautionary tale for regulators to really watch here as the banking system stays maybe under pressure, as Moody's says, guys.
HARLOW: You know what's so interesting we learned from that "New York Times" reporting this morning? That a top treasury official went to Jamie Dimon, who is, like, you know, the only surviving CEO in terms of still running the bank he ran during the 2008 financial crisis.
HARLOW: Went to Jamie Dimon at JPMorgan on Friday and said could this be bigger? Could this be systemic to the financial system? And Dimon said there is potential it could be.
LEMON: Look, there's a lot -- there's nuance. We're saying, you know, this is the Internet. But basically, SVB is -- has the most responsibility.
HARLOW: Yes, yes, yes.
ROMANS: Oh, yes. Wait, can I just say, your -- your money is safe in your bank. And Moody's investors services made the point that the banking system is strong. The banking system is stronger today than it was in 2008.
If you go to your bank to withdraw your money, it will be there. You can -- you can rest assured about that.
HARLOW: Interesting that they went to the big banks, Treasury, to say, you know, do we need to step in here and in what capacity?
HARLOW: Thank you, Romans, very much.
ROMANS: You're welcome.
HARLOW: Be sure to tune in tonight, CNN prime time, to see "Bank Bust: What is Next for America's Money?" We're going to talk to experts about how this happened, what it means for you, for your bank, all ahead tonight.
LEMON: My favorite, though, is Christine Romans little bruised banks and --
HARLOW: The piggy bank?
LEMON: -- the piggy bank with --
COLLINS: It's a great graphic.
LEMON: -- Band-aids on it.
COLLINS: I don't think Romans created that herself. But we'll see.
ROMANS: I'll take credit for it.
LEMON: Thank you.
COLLINS: Poppy, I can't wait to watch that. That's going to be really --
HARLOW: You're going to be with me.
COLLINS: -- interesting.
HARLOW: No sleep for us to night. ROMANS: I'll see you tonight, Poppy.
COLLINS: Two people spending an hour talking about this. It's going to be a really good deep dive.
Meanwhile this morning, there's also a political divide. Governor Ron DeSantis angering Republican hawks and his party over his stance on Ukraine. What does it mean for 2024 and his position?
LEMON: And he is facing criminal inquiries and ethics investigations, yet he signaled his intention for a possible re-election bid. We're going to tell you what George Santos is up to now.
HARLOW: Like a week. Like the whole week. I have a question.