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Jamie Dimon On The Importance Of Community Branches; Biden Administration Releases Review of Afghanistan Exit; The Biden Administration is Proposing A New Federal Rule Change That Would Allow Schools To Impose Some Restrictions On Transgender Athletes, But It Also Prevents Schools From Categorically Banning Those Students From Participating On Sports Teams That Match Their Gender Identity. Aired 6:30-7a ET

Aired April 07, 2023 - 06:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[06:30:00]

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UNIDENTIFIED FEMALE: Welcome back to CNN this morning. The banking crisis, the U.S. is experiencing right now has pushed us closer to a recession. That is the headline from JPMorgan Chase CEO Jamie Dimon, who told us that and a lot more in his first extensive interview, since the collapse of Silicon Valley Bank and Signature Bank last month. We went down to Atlanta to sit down with him, he was taking part in a community center branch opening in the historic district of Summerhill.

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JAMIE DIMON, CEO, JPMORGAN CHASE: One mortgage, and one business, one account that gets us on the save or helps get a job from one skills. And we do a lot of work in the community around the community colleges and skills and affordable housing, and you can lift up society.

POPPY HARLOW, CNN REPORTER: This is the community center branch here. But you have a lot of them. You opened the first one in Harlem and New York City in 2019. You've got 16 cities now, Atlanta, why do you do this?

DIMON: Yes, there is a great idea someone had, wasn't mine, called a community branch, so it's bigger. There's a community space. It's built by local contractors, think of (ph) minority contractors, local food, local art, the artists, people put the art up. When we - we hire locally, we have what we call a community manager. So, you have a branch manager traditional, with a community manager gets to know all the local businesses not-for-profits, religious institutions, we invite people in to learn about mortgages and saving money and starting a business.

And it's been unbelievable, I've been to like 14 of the 16 or so. We've also taken the community manager, we have 120. That's work so well, we're putting them in a lot of different communities. So, that's just part of what we try to do when we enter a town we have 30 percent of our branches, and so in lower income neighborhoods, and we just try to lift all the neighborhoods and bring in all the things that JPMorgan Chase can do to help.

HARLOW: One of the things you say, though, because this is part of the $30 billion commitment to black and brown communities across country, but you explicitly say this isn't charity.

DIMON: Yes.

HARLOW: There's a strong business case.

DIMON: Yes, that's totally true. And there's two things. So, those are huge numbers that we say, 12 billion (ph) in affordable housing, 8 billion in mortgages, but the end of the day, it takes place in a local, local place, the mortgage loan officer, reaching out to people, helping them through the progress, getting them - homeowner's grant, they need something like that. So that's how it takes place. But when you do it, we're right across from Georgia State University, their businesses opening up around here, partially because you have a branch in here, and it lifts up the community, but it's also good business.

And you want good business, as these businesses come here, they are - they're hiring locally, their paychecks in the neighborhood, and a list of everybody. So that's part of the job of a bank.

HARLOW: What's interesting, though, about this time, exactly this moment that we're sitting down is we're in a rising interest rate environment. And this is harder for folks to get mortgages, you've lamented that reality, especially for lower income individuals, especially for lower income individuals in this country right now. Do you think given the high prices of homes now, the rising interest rate environment, this American dream of owning a home is really no longer for a lot of folks?

DIMON: I think we have to bring it back. If you look at homes, they're for most people, the way you start building family net worth, and family wealth, and there are a lot of things to do, which you already see home prices down in some places, builders already making concessions. We do a lot of special things, special purpose credit for sometimes in low-income neighborhoods.

I think the government can do a lot of things. So, I've - we talk about these things here. But the government can do a lot of things to reduce the cost.

HARLOW: Better than they are doing now.

DIMON: Absolutely.

HARLOW: What?

DIMON: Reducing production costs, servicing costs, origination costs, securitization costs, which would make the cost of a small mortgage, probably 50 basis points to 75 basis points cheaper, that alone--

HARLOW: It's a lot of money a month. DIMON: That's a lot of money a month and make it available to more people. So, we try to take policies, things we do here, but also worry about what Washington could do to make it easier to accomplish these goals.

HARLOW: Are they listening to you?

DIMON: I've been begging in this one for a long time. I'm praying, I'm begging I hope they'll listen to this. It's so important. And it's - the other important is, we're not doing it for JPMorgan, it won't affect the future JPMorgan, if we make mortgage more available to lower income folks around America, it's so important for lower income America. And so, we won't stop pushing this one until we get it done.

Like I think we should double the earned income tax credit. And then there is--

HARLOW: Warren Buffett has been saying that for years.

DIMON: Absolutely. So, if the American public, if you - if someone's --if a single parent is with two kids is making $14,000 a year, the government gives you six roughly, if you're - don't have children, they give you about $600. My view is, we need to get more income into neighborhoods. So, if you kind of add to that earned income tax credit, I would get rid of the child--

HARLOW: Requirement.

DIMON: Requirement, you get more money into the neighborhoods and that money will be well spent. It will lift up those communities. There'd be nothing like that. And the other thing you got to remember is jobs bring dignity, jobs bring better social outcomes, jobs, that first job because sometimes people make fun of the burger flipper job, very often that burger flipper own - ends up owning the restaurant--

HARLOW: I've done it.

DIMON: Exactly. We've all done it and that first job, that first rung in the ladder.

HARLOW: Have you done it?

DIMON: No, but I served in a restaurant.

HARLOW: Yes, I learned so much being a waitress.

[06:35:00]

DIMON: So, just getting people to open an account, we've got accounts, you can open here, start saving money--

HARLOW: Yes.

DIMON: Thinking about it. A lot of us had the benefit, their mom or dad took us to a branch, and we started the first passbook--

HARLOW: I remember that.

DIMON: And then you see your money go from like, $84.75 to $85.17. It's like, there was magic, there's a God, like interest. And so, if people learn, and we want them to take place here. We don't want people to be afraid to walk into a branch here, it will come as you are, bring your kids, learn what you're doing it, that's why the community manager is so important, because a lot of people look at a bank, and they're going to walk by. It's not what they're comfortable with. And we want this community very comfortable walking in here.

HARLOW: I just read your annual letter that just came out this week. And let's dive into the banking crisis, because you write a lot about it. Is the current banking crisis over?

DIMON: This is not 2008. OK, this is much more limited. There are only a handful of banks that had this particular problem, they'll eventually be resolved one way or another. And I think then people should take a deep breath. In a week or two, lot of these banks can be reporting earnings, I think they'll probably be pretty good. The Federal Reserve made some bold dramatic moves to help it easier for some of the issues they had. And I'm hoping it will resolve rather shortly.

HARLOW: You're hoping.

DIMON: Hoping, yes.

HARLOW: But is the crisis over? You wrote in your letter, there will be repercussions for years to come.

DIMON: Well, that's, that's different. I think those repercussions are regulatory, like the - I acknowledged, obviously, we have a problem, things need to change. But I'm begging the regulators just take a deep breath, there are hundreds of rules, you have to be very careful. What do you want in the banking system? What do you want out? How do you make it easier for community banks and regional banks? How do you reduce their cost, not increase their costs on it, but also make it safe?

HARLOW: Do you expect more banks to fail this year?

DIMON: I don't know. But if there are, I don't, honestly, they'll be resolved, and it'll probably be left of them. I think we're getting near the end of this particular crisis and fewer financial institutions. Remember in 2008, it was hundreds of institutions around the world, far too much leverage. We don't have that huge problems in mortgage markets. We don't have that. This is nothing like that. And the American public shouldn't think that. This will resolve and then we should go look at what went wrong and fix it in the clean, in the light of day.

HARLOW: Well, so then, then what - why is it if this is coming to an end? Is this a situation like Warren Buffett famously said, only when the tide goes out, you learn who's been swimming naked? Were these banks swimming naked? DIMON: Yes, so I said there is hide in plain sight. Everyone knew about uninsured deposits. Everyone knew about insured exposure, everyone knew about held to maturity portfolios, the only difference, the only real difference was, recall concentrated clients. So, Silicon Valley Bank had a handful of people who controlled 35,000 corporate accounts, and they just left $140 billion, or something over a course, of course of two days. That's not happening to other regional banks, they don't have that issue, nor do they have all these issues. So, there's only a handful, that much offsides.

HARLOW: But then what's going on with First Republic, I mean, you led the effort to swoop in $30 billion from you and your fellow banks to try to study First Republic. And you've acknowledged, we don't even know yet if that worked.

DIMON: Yes. So that was an attempt to try to resolve, help give them time to resolve a situation. We represent them. So, I really can't talk about any more than that. And we hope it resolves one way or another. So, that'll come in the future. But I don't - I don't think this is that kind of crisis that you're going to have it ongoing forever. It will be - now, Warren Buffett said, when the tide goes out, you mentioned something else, rising rates is that tide going out? And if that tide goes out a lot, so I would tell people be prepared for higher rates.

I don't know if that's going to happen, but be prepared in that tide--

HARLOW: Be prepared. You think the Fed raises again in May.

DIMON: Well, there are two rates, one is the short rate, I do not know what they're going to do. And obviously, they may not because, financial conditions, but there's also longer rates, and that has a different effect and that the Fed does not control directly. That's controlled by global investors, sentiment, supply and demand. And that's gone bad for sovereign debt. OK, so, to me, yes, you have a chance of loan rates will be going up and people might have to get used to higher for longer.

HARLOW: Higher for longer.

DIMON: Yes.

HARLOW: Get ready for that.

DIMON: I believe that is a - I think it has a high outcome than other people. I'm not predicting it.

HARLOW: Right. Is the American banking system truly safe and secure?

DIMON: Yes. I mean, the banks have extraordinary liquidity, extraordinary capital. When they report earnings next quarter, the earnings going to be quite good in my opinion. They can handle not just one stress test, but multiple ways of being stressed--

HARLOW: That's the big guys who have to abide by all those requirements, I'm talking about the mid-sized and little guys that don't anymore.

DIMON: Well, they have formal requirements than you think. So, I don't think it was the requirement, some people think that they were--

HARLOW: Rollback.

DIMON: That rollback literally had nothing to do with it.

HARLOW: How do you know?

DIMON: Because they had the same internal liquidity requirements, stress requirements, reporting requirements, supervisory requirements, they made mistakes--

[06:40:00]

HARLOW: It was different if they were under $250 billion in assets--

DIMON: Not as much as you think.

HARLOW: So, all those senators that are saying, it was wrong to roll them back, Democrats rolled it back too, some of them, those senators are wrong.

DIMON: Yes. Look, it's not - again, when we talk about regulations, they're looking at one thing, I'm looking at multiple others. So, they had high liquidity requirements, high capital requirements, they met the requirements, they had too much and straight exposure and things should change. But they were not out of line with super - with regulations. It wasn't the regulatory change. It was other things.

And in life, that's going to happen, this notion that somehow you can make everything perfect is wrong.

HARLOW: I know. But you know, one big well-known banks to collapse.

DIMON: No, you don't. But you also really want is that every now and then something will happen. And the system can handle it in due course.

HARLOW: Let them collapse.

DIMON: And that's what the - yes. Failure is OK. You just don't want this domino effect. And so when you have a bank run that you end up with some kind of domino effect. So, I guess my point is, we are close to it, get to the point where a bank can fail and it doesn't have this kind of perfect.

HARLOW: OK.

DIMON: And I think just monitoring, changing a few things can get much, much closer to that.

(END VIDEO CLIP)

DON LEMON, CNN HOST: Is the American banking system safe? HARLOW: Yes.

LEMON: Yes. In fact, like no hesitation, nothing. Just emphatic.

HARLOW: Really important to hear from him.

KAITLAN COLLINS, CNN HOST: I guarantee you, every lawmaker on Capitol Hill is watching that. And for him to say failure is OK. And some banks should be allowed to fail.

HARLOW: Yes.

COLLINS: And that he says the rollbacks and the regulations, which has been the center of all this, that that did not contribute to this, is fascinating.

HARLOW: Yes. Well, look, there's a question of what the bank - a banker's view is, and what a lawmaker's view is.

COLLINS: We'll vote on it.

HARLOW: Vote on it. And the truth is somewhere in the middle, but people have different perspectives. And when Jamie Dimon talks about this stuff, yes. Markets listen in and Washington, listen.

LEMON: Not many - see, we're talking.

COLLINS: Why does he cares?

HARLOW: Why does Jamie Dimon - he doesn't do a lot of interviews.

LEMON: But he does--

HARLOW: He sits down and talks because this matters a lot. He saw this through us through the 2008 almost collapsed, right, acquired Bear Stearns and Washington Mutual on that crazy weekend, and now he cares a lot about as do the lawmakers in Washington, what happens to our financial system, we all have a stake in it.

COLLINS: And whether you agree or disagree with what he says, amazing that he actually answers the question. Lawmakers to CEOs, that's so rare.

LEMON: But not give, talking points, just--

HARLOW: We asked him some questions you'll see later that he didn't want to answer. But Jamie Dimon has a stark warning about the debt ceiling and the risk of even coming close to the brink. That's ahead.

LEMON: Well, this morning, the Biden Administration is proposing rule changes for transgender student athletes, why some schools could still be able to limit those students participation.

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[06:45:00] LEMON: Welcome back, everyone. You might recognize that house we just show, that was the White House and this morning the Biden Administration is proposing a new federal rule change that would allow schools to impose some restrictions on transgender athletes, but it also prevents schools from categorically banning those students from participating on sports teams that match their gender identity.

CNN Arlette Saenz live at the White House with more this morning. Good morning, Arlette, explain this rule and why now.

ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: Good morning, Don. The Biden Administration had really been working for some time to try to offer some clarity as many states across the country have implemented laws on transgender athletes. Now this would be an update to Title 9. that federal law which bars schools from discriminating on the basis of sex.

And for the most part, kids who are in elementary - transgender kids in elementary school will generally still be able to participate in sports that align with their gender identity. But it is when these kids get into more competitive levels like high school and college where there could be some restrictions. The rule would provide schools with flexibility to identify their own educational objectives. They say that could include ensuring fairness or trying to prevent a sports related injuries. It would also require schools to take into consideration, the nature of the sports when they're enacting any types of restrictions.

Now, this is a hot button issue with many Republican-led states across the country implementing outright bans on transgender students in sports. The White House has said that that amounts to legislative bullying and that they stand with transgender kids. Now there has been that mixed reaction. LGBTQ advocacy groups are concerned that this could pave the way for more discrimination, while Republicans don't want the federal government to get involved on this matter.

LEMON: All right, and we'll follow. Arlette Saenz from the White House this morning. Thank you.

COLLINS: Also this morning a new report looks at the chaotic withdrawal of American troops from Afghanistan, but where the Biden Administration is placing the blame, next.

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[06:50:00]

COLLINS: The White House releasing a review of that chaotic withdrawal of American troops from Afghanistan in 2021. This released to Congress. The Pentagon and State Department completed their separate after-action findings. as they're known. It's classified, but a 12- page summary was also released yesterday. The White House is putting much of the blame for what happened on the Trump Administration.

(BEGIN VIDEO CLIP) JOHN KIRBY, COORDINATOR FOR STRATEGIC COMMUNICATIONS, NATIONAL SECURITY COUNCIL: While it was always the president's intent to end that war, it is also undeniable that decisions made and the lack of planning done by the previous administration, significantly limited options available to him.

(END VIDEO CLIP)

COLLINS: CNN's Natasha Bertrand is live at the Pentagon this morning, Natasha, this document is really fascinating because we are hearing from officials who say yes, this could have happened sooner, this could have happened better, but they're not really acknowledging a lot of the mistakes that were made during that.

NATASHA BERTRAND, CNN NATIONAL SECURITY REPORTER: Kaitlan, this document that the National Security Council released yesterday was really a full-throated defense of how they handled the withdrawal from Afghanistan in 2021. They said that they were severely limited by the decisions that the Trump Administration made, namely, that agreement between the former President Trump and the Taliban, whereby U.S. troops would be forced to withdraw by May 2021.

So, the Biden Administration says they were really left with very limited options here for how to handle this withdrawal. That being said, they did acknowledge that there are certain things that moving forward, they have learned from that episode, namely, they are going to prioritize earlier evacuations, that was the one big thing that they have gotten criticized, arguably the most about, which is that they did not begin those evacuations of American personnel, U.S. citizens in Afghanistan, and of course, Afghans who had helped the military over 20 years, much sooner.

Now, their argument for not doing so is that they did not want to erode competence in the Afghan government at the time, but they now say they're going to air on the side of earlier evacuations, warning American sooner to get out of these security - these environments where the security situation is rapidly deteriorating, Kaitlan.

COLLINS: Yes, we know Republicans in Congress are also looking into this. They're not too pleased with this document. Natasha Bertrand, thank you for those main takeaways.

HARLOW: We have been closely following the case of Richard Glossip, he has spent a quarter of a century on death row for the death of his boss, why now the Oklahoma Attorney General is requesting his conviction be vacated.

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[06:55:00]

HARLOW: For this morning, Oklahoma's Attorney General has filed a motion to vacate the conviction of this man. That is Richard Glossip. He is facing execution for the third time - by the way, he's facing an execution date of May 18th after nearly 25 years on death row. This case now heads down to an appeals court. Glossip was convicted twice and sentenced to death for ordering the 1997 killing of his boss. People have since come forward, claiming the person who actually carried out the murder set up Glossip. Ed Lavandera joins us live in Dallas with more.

Ed, I know we've been following this case for a really long time. This is something that has garnered bipartisan support, a number of Republicans who are pro-death penalty in the state have said to prosecutors, you've got this wrong with Glossip and now the AG is speaking.

ED LAVANDERA, CNN SENIOR NATIONAL CORRESPONDENT: And just to highlight how intense this has been. Richard Glossip has had - his execution date scheduled nine times, three times he's been served his last meal, only to get a last-minute reprieve. So, imagine all of that.

The Oklahoma Court of Criminal Appeals has denied hearing new evidence multiple times. But this time, Richard Glossip now has the support of the state's attorney general who says that he can no longer stand behind this murder conviction. And the attorney general of Oklahoma goes on to say that this is not to say that I believe Glossip is innocent. However, it is critical that Oklahomans have absolute faith that the death penalty is administered fairly and with certainty considering everything I know about this case. I do not believe that justice is served by executing a man based on the testimony of a compromised witness.

And what the attorney general is referring to there is that another man convicted in this case Justin Sneed, who was the man who confessed to actually murdering their boss where the two men worked at the time, and he had - Sneed has since kind of started to recant his confession and pinpointing Richard Glossip as the man who hired him to carry out this murder. That has come out in new investigations. So, all of this information now going to the Oklahoma Court of Criminal Appeals and obviously Glossip side is hoping that this saves his life.

HARLOW: Equal justice under law.