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JPMorgan Chase to Buy Most of First Republic Bank Assets; 200 Officers Searching for Gunman Accused of Killing 5 Neighbors; Destructive Tornado Hits Virginia Coast; U.S. Launches 2 Convoys to Evacuate Americans from War-Torn Sudan. Aired 6-6:30a ET
Aired May 01, 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: And at No. 3 --
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UNIDENTIFIED FEMALE: If you want to be in the club, then you have to wear a bra.
UNIDENTIFIED FEMALE: Oh! Do you think you need one?
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ROMANS: Judy Blume comes to life with "Are You There, God? It's Me, Margaret."
All right. Thanks for joining me this Monday morning. I'm Christine Romans. CNN THIS MORNING starts right now.
POPPY HARLOW, CNN ANCHOR: Good Monday morning, everyone. It's already a busy one.
KAITLAN COLLINS, CNN ANCHOR: Yes, I know. Such a busy week. And this is actually something, this top headline today that people in D.C. were talking about on Friday.
HARLOW: That's right.
COLLINS: There was speculation among Gary Cohn, other top former economic advisors in Washington about what was going to happen with First Republic.
HARLOW: And now we know, breaking about 3:30 a.m. So we're glad you're with us. We'll let you know.
Let's get started with "Five Things to Know" for this Monday, May the 1st, 2023.
Breaking overnight, regulators seizing control of First Republic Bank and striking a deal to sell most of its assets to JPMorgan Chase. This is the second largest bank failure in U.S. history. It's also the third U.S. bank failure since just March. COLLINS: Also this morning, zero leads as FBI agents in Texas say they do not know where a mass shooting suspect is and right now have no leads. They're now offering an $80,000 reward for information on the man that they say killed five people, including a 9-year-old boy.
Also, the U.S. government is helping American citizens evacuate out of Sudan. The State Department says two convoys were safely let out of the conflict zone over the weekend.
HARLOW: Also, the clock is ticking in Hollywood to avert a writer's strike. If a new contract deal is not reached by midnight tonight, the Writer's Guild of America will walk off the job.
And Steph Curry sets a new NBA record, scoring 50 points, the most ever in a game seven. The Warriors advancing to take on the Lakers.
CNN THIS MORNING starts right now.
So this is what we're talking about. All weekend, we were wondering, is it going to come Friday, when this is going to happen --
HARLOW: -- with First Republic. But this did break just about an hour and a half ago, breaking this morning.
First Republic Bank has become the second largest bank failure in U.S. history. Regulators have seized the bank, sold off most of its assets to JPMorgan Chase in a rescue deal, as America's banking crisis flares up again.
In a statement this morning, JPMorgan Chase's CEO, Jamie Dimon, says, "Our government invited us and others to step up, and we did." He didn't know if this will benefit JPMorgan Chase. We'll talk a lot more about it.
But First Republic is now the third major bank to fail since March. The announcement came just hours before markets open. We're keeping a close eye on Wall Street to see how it reacts when the markets open.
Our business and politics correspondent Vanessa Yurkevich, outside the First Republic Bank here in New York City.
Vanessa, good morning to you.
What is so shocking is that 11 weeks ago, Jamie Dimon and JPMorgan led the way for all these banks to inject $30 billion into First Republic to try to save it, and even that didn't work.
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: That's right, Poppy. And later this morning, when this First Republic branch behind me and 83 others around the country open, it will be under new ownership.
JPMorgan Chase buying First Republic Bank in a deal overnight, announced this morning by the FDIC. This was an effort by regulators to shore up consumer confidence in the banking system.
As part of this deal, JPMorgan Chase will assume all deposits of First Republic Bank. So when people go to the bank this morning, their deposits are safe.
This all started to unfold several weeks ago after the failure of SVB and Signature Bank. But as you mentioned, there was that big cash infusion of $30 billion, led by JPMorgan.
But things really started to spiral last week after the first quarter earnings call by First Republic, where they revealed that deposits fell by 40 percent, totaling about $100 billion. That sent stock prices falling. Just on Friday shares were trading at about $3 down from about $122 earlier in March.
We do have a statement from the Treasury Department early this morning, reacting to the news. I will read that to you. Here's what they said. Quote, "Treasury is encouraged that this institution was resolved with the least cost -- the least cost to the Deposit Insurance Fund, and in a manner that protected all depositors. The banking system is remains sound and resilient. And Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfill its essential function of providing credit to businesses and families."
So clearly, this is an effort by the FDIC, an effort by JPMorgan Chase and an effort by the Treasury Department to assure customers and consumers that the banking system here in the United States is, in fact, safe -- Poppy.
HARLOW: Still just stunning to see three big U.S. bank failures since March. Vanessa, thank you. We'll check back in with you throughout the morning.
And Kaitlan and Christine, I mean, the truth is, the FDIC still is going to pay $13 billion here, in terms of, you know, the cost of this.
ROMANS: Well, that's what they forecast, actually. Because we don't know what the ultimate cost will be, but they've said it could be about $13 billion.
COLLINS: Yes. Christine Romans, obviously our chief business correspondent. What do we know about the details of how all this happened and what it looks like? What they've agreed to?
ROMANS: So it was just an amazing weekend, I've got to tell you. I mean, this is -- JPMorgan taking over the assets and deposits of this bank.
And then there's going to be a loss-sharing provision with the FDIC for anything that comes up that could be problematic on the bank's books. So a little bit of a sweetener from the FDIC to make sure that JPMorgan will come to the table. We know there was an auction of this bank. So over the weekend, you had all these banks who were vying for pieces of First Republic. But it was --
COLLINS: PNC, JPMorgan, and others.
ROMANS: You know, by the end of last week, it became pretty clear that the FDIC was going to have to step in and take over this bank. It was not going to be able to stand alone.
COLLINS: Yes, and I think if you're waking up this morning, and you're looking at this, I was just texting with a top House Republican who deals with all of this. And he says, essentially, this is unfinished work from SVB weekend, from what happened with Signature [SIC] Valley Bank.
ROMANS: Well, so --
COLLINS: Silicon Valley Bank.
ROMANS: Yes, so let's talk about what happened there. Because you have this bank, First Republic, lost 41 percent of its deposits: $100 billion walked out of the door after SVB and Signature Bank failed.
Because what happened was that showed that these banks like First Republic, that have a lot of uninsured deposits, people didn't want to be sitting there with all of their money in a bank, more than $250,000 in a bank with uninsured deposits. And so they walked out the front door and just took the money to other banks.
First Republic catered to wealthy clients on the coasts. It was known for, like, its $5 million jumbo mortgages.
ROMANS: So when you talk about Republicans in the House, look, nobody is crying over First Republic Bank. But you don't want chaos and turmoil to spread to the rest of the banking system, as well, here.
COLLINS: And do we think that there's going to be more chaos in the banking system as a result of this?
ROMANS: So I've been talking to a lot of people over the weekend. And they think -- You call this unfinished business. They think that what happened with the three -- all that money that was the life line that went six weeks ago, that went into --
COLLINS: Yes, the $30 billion.
ROMANS: Right. That bought it some time. It calmed down market fears. It bought it some time and allowed the industry to be able to find a way to manage this problem.
Will there be more banks? No one knows for sure. I mean, three big bank failures in just a couple of months is really remarkable. But for the most part, most banks are perfectly healthy and will be able to manage this interest rate risk.
COLLINS: But can we talk about the FDIC report here? Because I'm obsessed with this. This is an aspect of this. You were talking about the root causes of here and what went down.
The FDIC report basically said that, because they have so many staffing shortages, that led to a part of what we've been seeing play out with these banks.
ROMANS: Yes. That Fed report on the collapse of SVB was really interesting, in part because the Fed is both the regulator and the supervisor and basically said there were all these open red flags at Silicon Valley Bank that were not followed up on.
And that management didn't understand what was going on. But also, just poor bank management, and oversight was not as robust as it should have been.
COLLINS: Yes. So when you think that you have this bank, and you're a regulated bank and you've got all of this oversight, clearly, there were a lot of shortcomings, as well.
COLLINS: All right. Christine Romans, I know you'll stay with us all morning on all these developments as we're tracking them, Poppy.
HARLOW: Guys, thank you very much. We'll get back to that top story in just a minute.
But also this developing this morning. An urgent manhunt in Texas is intensifying today as FBI agents say they don't have any tips. They're running into dead ends.
Now they're offering an $80,000 reward. They're trying to find this man. Look at your screen. That is Francisco Orepesa. He is accused of killing five people, including a 9-year-old boy, on Friday after his neighbor asked him to keep the noise down when he was shooting his gun in his front yard.
And we're now hearing from one man whose wife and son were killed.
Ed Lavandera joins us live in Cleveland, Texas, with more. Is that a correct assessment, Ed. They have no leads?
ED LAVANDERA, CNN CORRESPONDENT: That's what the FBI special agent in charge of the Houston office, who is leading this investigation, told reporters yesterday afternoon. That after more than 48 hours of hunting for this suspect, there has been nothing that has turned up.
And this comes as one of the survivors of this deadly shooting tearfully described how it all unfolded.
LAVANDERA (voice-over): A manhunt for the suspect accused of killing five, including a 9-year-old boy in Cleveland, Texas, continues this morning.
JAMES SMITH, FBI HOUSTON SPECIAL AGENT IN CHARGE: Right now, we're just running into dead ends. Right now, we have zero leads.
LAVANDERA (voice-over): More than 200 members of various law enforcement agencies are searching for Francisco Orepesa, the alleged 38-year-old gunman who the FBI says is armed and dangerous.
The shooting happened Friday night after the father and husband of two of the victims, Wilson Garcia, says that he, along with two other men, approached Francisco Orepesa and asked him to stop shooting his weapon so close to their property, because their baby was sleeping.
Garcia says they called 911 five times to report Orepesa shooting his gun. The suspect then allegedly approached the house with his rifle, about ten to 20 minutes after the encounter.
From there, the home turned into a scene of carnage that left four adults and Garcia's 9-year-old son Daniel all shot dead. Garcia's wife, Sonia Argentina Guzman, was killed first, just outside the front door.
WILSON GARCIA, HUSBAND OF VICTIM (through translator): I'm trying to be strong for my children. Because my daughter already more or less understood. It's very difficult when she comes and she starts asking about her mom and then about her brother.
LAVANDERA (voice-over): An 18-year-old was also killed, and two women who were also shot and killed while protecting the children who survived the massacre, authorities say.
SHERIFF GREG CAPERS, SAN JACINTO COUNTY, TEXAS: The three children that we loaded that night and put in the ambulance, they were covered in blood from the same ladies that were laying on top of them, trying to protect them.
LAVANDERA (voice-over): Garcia says one of the women who was killed urged him to flee out of the window so his two other children would not lose both of their parents that night.
GARCIA (through translator): That was my 9-year-old son and my wife, too. And two people who died protecting my 2 1/2-year-old daughter. My 1 1/2-month-old son was protected with a lot of clothes, so the killer wouldn't kill him, too.
LAVANDERA (voice-over): A vigil was held Sunday for 9-year-old Daniel at his elementary school. Supporters sang "Amazing Grace" in Daniel's honor as his father was seen crying.
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LAVANDERA (on camera): And Poppy, late Saturday night, investigators were saying that they had found the suspect's clothing and a cell phone that had been discarded.
They also said they believe that the suspect has communicated with friends a couple of times. Whether or not that has continued, we don't know at this point.
But they are saying this morning and yesterday afternoon that the trail has gone cold.
LAVANDERA: They can't really say if they believe he's still in the area or perhaps somewhere else in the state.
HARLOW: Do they know if he is still in the U.S., Ed? I guess they don't know.
LAVANDERA: They don't. Right. They don't. They're saying that they just -- they can't make any assumptions.
But clearly, this suspect is a Mexican national. So there is concern that perhaps he would be trying to make his way back to Mexico.
But he's -- unless he has help in terms of driving and that sort of thing, if he's on the foot, there are heavily wooded areas. You know, places where it could take some time to find someone like this.
There was a similar manhunt last year, and it took several weeks to find an inmate that had escaped from a prison in this area. So it could take time.
HARLOW: Ed Lavandera, thanks for all the reporting.
COLLINS: Also this morning, 100 Americans have now been safely evacuated out of Sudan. We are live at a port in Saudi Arabia where they are arriving. And watch this.
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UNIDENTIFIED MALE: Holy cow. Oh, my God.
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HARLOW: Those -- those are winds so strong in Florida they flipped a car. More on the tornadoes that tore through South Florida and Virginia, next. Wow.
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UNIDENTIFIED MALE: Cars flipped on top of each other. Dumpsters, you know, flung hundreds of yards. You know, fences here from God knows where. I mean, it's just insane.
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COLLINS: It is just unsane. This morning, the National Weather Service is confirming an EF-2 tornado touched down in Palm Beach Gardens, Florida, on Saturday.
Officials say the winds were clocked at well over 100 miles per hour. The tornado was on the ground for 11 minutes, which was, unfortunately, more than enough time to do plenty of damage to homes, to cars.
A similar scene played out up North over Virginia. Over 100 homes there were damaged when this massive tornado creeped onto the coast. These three schools are closed this morning as a result of what happened over the weekend.
CNN's meteorologist, Jennifer Gray, joins us now.
Jennifer, what do we see happening? I mean, just watching this culmination of these different weather patterns playing out over the weekend was remarkable.
JENNIFER GRAY, CNN METEOROLOGIST: It really was. Especially across the East. That's where we saw most of the severe weather. We had three tornado reports, 32 wind reports, five hail reports. Here's a look at some of that wild weather over the weekend.
UNIDENTIFIED MALE: (EXPLETIVE DELETED) tornado getting ready to hit me. I'm not even kidding. This is real.
GRAY (voice-over): A powerful tornado touching down in Virginia Beach and leaving a path of destruction in its wake. Tree after tree downed. Homes damaged and cars smashed. Witnesses say it all happened in an instant.
STEPHEN KECK, VIRGINIA BEACH RESIDENT: I was looking around. There were times where I didn't even recognize where I was. I couldn't tell, because the trees, they're such, you know, beautiful, older, bigger trees, and they were gone.
GRAY (voice-over): The aftermath creating a surreal scene in the Great Neck neighborhood.
KECK: I could not believe when I walked over here and saw this damage. But I've never seen anything like this.
GRAY (voice-over): People living there reported gas leaks and power outages. Virginia Beach officials say as of now, there are no reports of any injuries.
But Virginia Beach officials say up to 100 homes have sustained damages.
That tornado just one of several damaging storms this weekend. In Palm Beach Gardens, Florida -- UNIDENTIFIED MALE: Oh, my God. It's right in front of us.
GRAY (voice-over): Another powerful tornado flipped cars and spread debris along roads on Saturday. This video from CNN affiliate WPBF showed more cars flipped and stacked on top of each other in a parking lot.
UNIDENTIFIED MALE: There's cars. There's -- you know, there are 20, 30 cars in the parking lot that are totaled. Cars flipped on top of each other. Dumpsters, you know, flung hundreds of yards. You know, fences here from God knows where. I mean, it's just insane.
GRAY (voice-over): The National Weather Service estimated peak winds of 130 miles per hour. Grappling with the damage many are in disbelief.
UNIDENTIFIED MALE: The view of my balcony, I wasn't able to see the water before. And now, you know, I have a -- I have a water view from my place from all the tree damage.
GRAY (on camera): It really was remarkable what we saw, especially across Florida. You normally don't see tornadoes that strong down there.
But all of this moved up to the North. Kaitlan, the good news is the severe threat is over. But it is going to be just a messy and soggy first start of the week for much of the Northeast and Ohio Valley.
COLLINS: Yes, we can attest from our trip to work this morning. Thank you so much.
HARLOW: Wow. To this now. Actor Michael J. Fox is opening up about living with Parkinson's disease. He sat down with "CBS SUNDAY MORNING," and he said that every day gets harder and tougher.
He is 61 years old. And the actor says he knows he's not going to live to be 80. Watch this.
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MICHAEL J. FOX, ACTOR: This gift that keeps on taking, but it's a gift.
JANE PAULEY, "CBS SUNDAY MORNING": Every time I see you, I can see it's taken a little bit more of something.
FOX: It's 30 plus years. There's not many of us that had this disease for 30 years.
PAULEY: But at some point, Parkinson's is going to make the call for you, isn't it?
FOX: Yes. It's banging on the door. I'm alive. It's getting harder. It's getting harder. It's getting tougher. Every day gets tougher. But -- but that's the way it is.
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HARLOW: You heard him there saying it's banging on the door. Fox revealed that he recently underwent a spinal surgery for a benign tumor and has suffered two broken arms, a broken hand and broken bones in his face as a result of falls.
But he says he is focused on optimism, and he is always grateful.
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FOX: I recognize how hard this is for people. And I recognize how hard it is for me. But I have a certain set of skills that will allow me to deal with this stuff. And I realize with gratitude, optimism is sustainable. If can you find something to be grateful for, then you find something to look forward to. And you carry on.
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HARLOW: If that doesn't give you some perspective, I don't know what will.
COLLINS: I'm always amazed by how candid he is about this but also optimistic. He always finds a moment to -- to try to say something positive about it.
HARLOW: And he's handled it with such grace. It was so hard to watch but important to watch. Perspective, for sure.
COLLINS: Yes. Also this morning, we're tracking this. Chief Justice John Roberts has declined to testify before Congress when it comes to ethics and the Supreme Court. Ahead, a unified statement from all nine justices. We'll tell what you they said.
HARLOW: And soon, protests in France pick up again after the retirement age was officially raised. We're live in Paris.
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ROY WOOD JR., COMEDIAN: We should be inspired by the events in France. They rioted when the retirement age went up two years to 64. They rioted. Because they didn't want to work until 64.
Meanwhile, in America, we have an 80-year-old man begging us to for four more years of work.
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[06:26:45] HARLOW: A good news update for you this morning. A U.S. Navy ship has evacuated 100 Americans from war-torn Sudan. And they have arrived in Saudi Arabia over the weekend. The U.S. government launched two convoys to get some of those stranded citizens out of the country.
"The New York Times" reports that armed American drones flew overhead and guarded the buses as they made that 525-mile journey to the Red Sea.
Our CNN international correspondent Larry Madowo is at the seaport in Jeddah where those Americans -- we see them behind you, Larry. They're being processed right now. And you actually traveled with them on this journey. What can you tell us?
LARRY MADOWO, CNN INTERNATIONAL CORRESPONDENT: So, this is where, when they arrive in Jeddah, they come here to the Jeddah Islamic Port, where they're getting processed. They received -- they received the U.S. embassy officials. Then they clear customs and then the journey.
They've got a couple of days here in Saudi Arabia before they were off to the U.S. So many of them relieved to be out of that and being back to safety in the U.S.
We took a journey, a similar journey that they've just taken with the Royal Saudi Navy, across the ports, across the Red Sea to Port Sudan and back. This is what that journey is like.
MADOWO (voice-over): Two a.m., and they're finally getting out of Sudan after many anxious days.
Saudi soldiers checked documents and let them through. A nightmare almost over.
MADOWO: Thousands of people have made the over 500-mile journey from the capital, Khartoum, to here in Port Sudan. One person told us it took them 36 hours. Finally, on a boat, and eventually to a ship to Jeddah.
MADOWO (voice-over): A sad final good-bye to Sudan. Victims of the stormy waters in Africa's third largest nation.
HAMZA NAVID, PAKISTANI EVACUEE: It's very hard for me and very hard and very painful for me, because this is like a second home. My home.
MADOWO (voice-over): CNN joined Saudi forces on an evacuation voyage from Jeddah to Port Sudan and back, bringing more people one step closer to safe shores.
But the demand is high, and the military ships can only take so many people at a time. Our round trip was more than 24 hours but brought back only 52 people across the Red Sea.
Sudanese-American businessmen Adil Bashir can finally sleep undisturbed for the first time in two weeks. He says his car dealership in Khartoum was trashed, burned, and some vehicles stolen. So he took the risky drive to Port Sudan.
ADIL BASHIR, SUDANESE-AMERICAN EVACUEE: A lot of human bodies, dead bodies on the street.
MADOWO: You say you were detained by men in Rapid Support Forces uniform after you told them you were a U.S. citizen.
BASHIR: They said, You are a U.S. citizen, you are a spy. I believe they want us to be like a human shield. But there were 13 ahead of me.
MADOWO (voice-over): As more people escape from Sudan, another cease- fire was broken over the weekend, with fighting in the country entering a third week.
The Saudi port city of Jeddah has become the main landing point for thousands fleeing the conflict. The Saudis are throwing everything at this rescue operation.
GEN. TURKI AL-MALKI, ROYAL SAUDI AIR FORCE: The assets, the capability, military, civilian, in Saudi, is taking the civilians from Sudan. So as long as it's safe, we will keep doing our role.
MADOWO (voice-over): This large commercial ship brought nearly 2,000 evacuees from Port Sudan, one of the largest arrivals in Jeddah so far.