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CNN This Morning
200 Officers Searching for Texas Gunman Accused of Killing Five Neighbors; First Republic Bank Fails, JPMorgan Chase Buying Assets in Rescue Deal; Rising Mississippi River Levels Threatening Midwest Communities. Aired 7-7:30a ET
Aired May 01, 2023 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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STEPH CURRY, GOLDEN STATE WARRIORS GUARD: You define us by still playing at this high of a level and I know everybody wants to see you fail, that's kind of the nature of, you know, where we're at right now. So, you know, we love and we still can prove a lot of people wrong.
REPORTER: So, who can stop Steph Curry?
CURRY: Hopefully, we never find out.
(END VIDEO CLIP)
WIRE: It's not cocky. That is confidence. Showdown of epic proportions, in round two next. Curry and LeBron, they've gone three out of four times in play-off series. It's gone to Curry for the win. All have been in the finals when Lebron was in Cleveland.
And, Kaitlan and Poppy, how about, Curry? He is a master of the mind, hitting his four of five free throws the past two games. He was seen smiling on the free throw line during this game. He said attitude can manifest a lot of things. I want to live in the moment, and he sure did that.
KAITLAN COLLINS, CNN ANCHOR: Yes. It is when the chips are down, he's at his best. It's just amazing, Coy. All right, I can't wait to watch later this week. Thank you.
POPPY HARLOW, CNN ANCHOR: Thank you. CNN This Morning continues right now.
UNIDENTIFIED FEMALE: What is now the second biggest bank failure in U.S. history, most of First Republic Bank is being bought by JPMorgan Chase in a deal arranged by the federal deposit insurance corporation.
UNIDENTIFIED MALE: This is a bit of a seismic moment. These banks are not well-regulated and they admitted it themselves. UNIDENTIFIED MALE: Investigators continue this manhunt. They've been searching for Francisco Oropeza since he was able to flee the scene.
UNIDENTIFIED MALE: They do believe this man is armed and dangerous.
UNIDENTIFIED MALE: This $80,000 is a real good motivator to have somebody turn him in.
UNIDENTIFIED MALE: We're asking everyone for your help so we can bring this monster to justice.
UNIDENTIFIED FEMALE: A powerful tornado touching down in Virginia Beach, just one of several damaging storms this weekend. The National Weather Service reported winds of about 130 miles per hour.
UNIDENTIFIED MALE: I could not believe when I walked over here and saw this damage. I have never seen anything like this.
UNIDENTIFIED MALE: Officials say the U.S. is overseeing the departure of nearly 1,000 American citizens stuck in the conflict zone.
UNIDENTIFIED MALE: Another ceasefire was broken with fighting in the country entering a third week.
UNIDENTIFIED FEMALE: It's really bad because all of my family is there.
UNIDENTIFIED MALE: You're scared for them?
UNIDENTIFIED FEMALE: Yes.
JOE BIDEN, U.S. PRESIDENT: I have a lot of Ron DeSantis jokes ready, but it beaten the hell out of me, he got there first.
UNIDENTIFIED MALE: We should be inspired by the events in France. They rioted when the retirement age went up two years to 64. Meanwhile, in America, we have an 80-year-old man begging us for four more years of work.
HARRY ENTEN, CNN SENIOR DATA REPORTER: I've had a few laughs, a few jokes. But at the end of the day, Washington won't change me. I'll change Washington.
HARLOW: The Harry Enten.
COLLINS: Harry was so great on red carpet at the White House Correspondents Dinner this weekend.
HARLOW: It was my first, first time there.
COLLINS: And what did you think?
HARLOW: You can convinced me to go.
HARLOW: (INAUDIBLE) full effect.
COLLINS: Us together on the red carpet.
HARLOW: I had a total ball. I've never been with so many people in my life, that ballroom, 2,500 people.
COLLINS: Yes, 2,600 people. It's crazy.
HARLOW: It was a ball. I had a lot of fun. At 12:30 P.M., I have to tell you, I was like I have to go to bed.
COLLINS: 12:30 A.M.
COLLINS: Because you said 12:30 P.M.
HARLOW: That picture is me and you before 12:30 A.M., and I was like, okay, I'm old, I need to go to bed, but I had a ball, thanks in part of you, the queen of D.C.
COLLINS: We had more of President Biden's jokes. You saw him. He laughed very hard at that joke from Roy Wood Jr. about how he is begging for four more years in office despite what we're seeing happening in France, something we're tracking here.
HARLOW: And he joked about his own age.
COLLINS: Yes, it's a quite a moment for that. We'll have more on the dinner later on in the show. But this morning, we want to start with some big headlines that came out this weekend. This morning, the man who accused of opening fire and killing five his neighbors is still on the run. Police say they're on a trail. They're trying to find him. But, so far, it has run cold. There is an $80,000 reward, though, that is being offered to help track down 38-year-old Francisco Orepeza.
The shooting happened on Friday night in the city of Cleveland, Texas. It's about an hour north of Houston. According to the sheriff's office there, Oropeza had been drinking and was shooting a rifle in his yard when his neighbors asked him to stop because a baby was trying to sleep. The sheriff says that the suspect then went to the neighbor's house where he shot the victims.
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SHERIFF GREG CAPERS, SAN JACINTO COUNTY, TEXAS: Everybody that was shot was shot from the neck up, almost execution-style, basically in the head.
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HARLOW: Five people were killed including a nine-year-old, you see him right there, nine-year-old Daniel Enrique Laso-Guzman and his mother, Sonia, both of them murdered. The child's father says he called 911 five times to report the suspect shooting his gun.
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WILSON GARCIA, WIFE AND SON KILLED BY NEIGHBOR: That was my nine- year-old son and my wife, too, and two people who died protecting my 2.5-year-old daughter.
My 1.5-month-old son was protected with a lot of clothes so the killer wouldn't kill him too.
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HARLOW: Wow. The sheriff said the team got there as fast as they could, but said because the force is small and covers the county at large, the whole thing, officers did not get there fast enough.
Our Chief Law Enforcement and Intelligence Analyst John Miller is us with now. It is so, so tragic.
JOHN MILLER, CNN CHIEF LAW ENFORCEMENT AND INTELLIGENCE ANALYST: It's extraordinarily sad and it's a sign of what we're seeing these days.
HARLOW: I think it really is. Also the fact that they cannot find this guy, they don't even know if he's in the country.
MILLER: Well, he's from Mexico, has contacts in Mexico, is in Texas, could have fled to Mexico. You know, he did this terrible act and then fled into the woods near his home. They found clothes. So, he's thinking there is going to be tracking dogs and bloodhounds. They found his phone. So, he's anticipating that law enforcement would be looking for a signal. So, this is someone who has some skills and, you know, they have a challenge.
COLLINS: And what does that look like? I mean, they're offering this $80,000 reward. The fact that they can't find him, though, what else do they do?
MILLER: So, that looks like a lot of things. If you think back to the Olympic Park bomber who fled into Nantahala National Forest, Eric Robert Rudolph, 1997, he hid there for years undetected as a fugitive being sought for by hundreds, sometimes thousands of law enforcement people. But he planned every bombing carefully and he planned his escape carefully.
This is a spontaneous incident out of anger and a spontaneous escape. There's no plan behind this except running. So, given his resources and background and given you have got the FBI involved, you have got the U.S. Marshals, you have got the sheriff, you've got money on the street, you have informants from the criminal world, you have got an $80,000 reward for the public. The complicating factor is if he made it into Mexico. Not a game ender, complicating.
HARLOW: You have zero leads. What do you do, John?
MILLER: You do one of two things. One, you could increase the reward. But if you have $80,000 and you have zero leads, it's probably not about the money. It's about increasing community engagement.
HARLOW: To get people to talk?
MILLER: I mean, this is -- if there was any case ever that should generate community engagement, even in a community where people might be reluctant to talk to the police, this should be the deal breaker there.
COLLINS: Yes. Just so concerning, as we're seeing this bigger pattern of this snap aggression, and we'll have more on that, I know, to come. So, keep us updated on how this investigation just progress.
MILLER: Will do.
HARLOW: All right. Breaking this morning, First Republic Bank becoming the second largest bank failure.
COLLINS: This is really notable. Obviously, regulators seized it and struck a rescue deal with JPMorgan Chase to buy most of the bank's assets for $10.6 billion. We're learning JPMorgan Chase did not assume First Republic's corporate debt or their preferred stock. Instead, in a statement, the CEO, Jamie Dimon, said, quote, our government invited us and others to step up and we did. First Republic is now the third major bank to fail since March as America's banking crisis has flared up again. We're keeping a close eye on Wall Street right now to see how stocks react. The market does open soon.
CNN Business and Politics Correspondent Vanessa Yurkevich meanwhile is live outside a First Republic Bank here in New York City. Vanessa, I know they're going to open this morning, operating as JPMorgan. People have access to this. This is coming, though, after First Republic got that $30 billion life line from other banks. Clearly, it did not. I mean, it helped them limp along for the last few weeks but it did not help them ultimately in the end.
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Exactly. And that's why here today, this branch behind me, as well as 83 others around the country, are going to open under new ownership. JPMorgan Chase buying First Republic Bank in a deal that was announced by the FDIC early this morning.
And this marks the second largest bank failure in U.S. history, a third bank failure in just the last couple of weeks. And this is an effort by regulators to shore up consumer confidence in the banking system.
But the FIDC takes control of this bank on Sunday, opens in auction, JPMorgan clearly the winning bid on this, but this all started several weeks ago when you had SVB and Signature Bank failing. That created some nerves about First Republic.
You then have a first quarter earnings call just last week by First Republic, where they announce that deposits fell by 41 percent, totaling $100 billion. That sent the stock market spiraling. You had shares of First Republic falling by last Friday to about $3 a share down from about $122 in early March. [07:10:09]
Now, the Treasury Department out this morning with a statement on this deal, they've said, quote, the banking system 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 providing credit to businesses and families.
But, Kaitlan, we should note, there is a cost to the FDIC, about $13 billion. But at the same time, you have JPMorgan Chase paying about $10.6 billion to the FDIC to close this deal. Kaitlan?
COLLINS: Yes. And JPMorgan was already the nation's largest bank. They just got even bigger. I think that's going to get a lot more scrutiny from Washington. Vanessa, we'll check in with you this morning. Thank you.
HARLOW: Yes. It will get scrutiny, that's for sure. When I sat down with JPMorgan CEO Jamie Dimon just last month, I asked him about this string of bank failures. Would there be more? Here's what he said then.
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JAMIE DIMON, CEO, JPMORGAN CHASE: This is not 2008, okay? 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, a lot of these banks will be reporting earnings. I think they'll probably be pretty good.
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HARLOW: What we subsequently learned as we bring in Roger Altman, former Deputy Secretary of the Treasury and founder and senior chairman of Evercore. Roger, thank you.
What we learned when those bank earnings came in is how much money fled from First Republic in the first quarter. But it's notable because Jamie Dimon, who is now leading the bank that is buying up most of their assets, is the one who led the initial attempt to rescue. He's the one who picked up the phone, called the other bankers, said, let's get in here, let's try to rescue First Republic. I wonder why it didn't work.
ROGER ALTMAN, FOUNDER AND SENIOR CHAIRMAN, EVERCORE: I think it didn't work because deposits kept leaving First Republic. Basically what happened here is that after the failure of Silicon Valley Bank a few weeks ago, a lot of depositors just simply decided that they didn't want their money at medium-sized banks and they moved that money either to the very largest, banks like JPMorgan or Bank of America, or to money market funds.
And First Republic in recent weeks lost almost all of its deposits. And what happens is they had to replace those deposits with a higher cost in loans from the Federal Home Loan Bank Board and from the Fed. And that crushed their earnings, that crushed their share price and it's a snowball downhill.
HARLOW: If you're waking up this morning and you have your deposits at First Republic, if you have a mortgage through First Republic, if you pay your small business payrolls through First Republic, what do you need to know? You're fine?
ALTMAN: You're fine. You're fine. In fact, all depositors in the United States today are fine.
HARLOW: Apparently up to any ceiling because --
ALTMAN: Well, the new policy essentially -- well, the new policy essentially is, first, all deposits up to $250,000 are and have for a long time been guaranteed by the FDIC. Second, if your bank is threatened, it becomes shaky, the federal authorities in recent weeks have made clear that they will protect all deposits regardless of size. So, effectively, if your bank is sound, your deposits are fine because the bank is sound. If your banks somehow become shaky, your deposits are fine because federal authorities will protect them.
HARLOW: Two of the things we've learned that help lead to this failure of First Republic, two-thirds of their deposits were uninsured, that a lot of wealthy clients, business owners. But if you talk about paying a payroll, for example, for a company of 100 people, a week payroll, two weeks, is going to top the FDIC insured amount of $250,000. But they have a lot of uninsured deposits and they also have a loan-to-capital ratio way bigger than most, 111 percent, meaning they had more loaned out than they had deposits in the bank. Can you regulate against those things? What would prevent something like this?
ALTMAN: Well, first of all, Poppy, there is nothing wrong with having a lot of business deposits to go beyond $250,000. If you're a bank, you want that. So, there is nothing unhealthy, inherently unhealthy about that.
What really happened here, and also happened with Silicon Valley Bank, is that in the last year or so, as interest rates rose very quickly with the Federal Reserve trying to fight inflation and being a little late to that game, they found themselves with a mismatch. They had taken deposits, invested them in longer term assets, like federal bonds and mortgages. And as interest rates rose, they started to lose money because the cost of, in effect, that their liabilities went up and the return on assets didn't, and they had a mismatch. In this case, it wasn't quite as bad as Silicon Valley Bank but it was unhealthy, and that's what really brought them down.
HARLOW: So, I thought it was interesting that Gary Cohn, who worked in the Trump administration, was also one of the top guys at Goldman Sachs for a long time, what he said about this. Because, remember, on Friday, right before we've seen this bank failure, we got this Fed analysis of all of the problems both in the government and at Silicon Valley Bank and Signature Bank.
But here's what Gary Cohn said about that. Let's listen. (BEGIN VIDEO CLIP)
GARY COHN, FORMER CHIEF ECONOMIC ADVISER, TRUMP WHITE HOUSE: I mean, this is a bit of a seismic moment because we believe in the United States and I think the U.S. population believes that the banks where they deposit their hard-earned money are well-regulated. And we have found out this week in the Fed's own report that these banks are not well-regulated and they admitted it themselves.
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HARLOW: You were deputy secretary of the Treasury. Do you agree that there are questions about whether the Fed has a handle on this in terms of how they were regulating and watching these banks and protecting people?
ALTMAN: Yes. I mean, as he just said, I think it was Friday last week, Michael Barr, who is relatively new on the job, the new Fed governor responsible for banks and provision, admitted, it was a remarkable admission, that the Fed failed to properly supervise Silicon Valley Bank. There were red flags everywhere and their response was passive.
And that's obviously unfortunate but it's also a good wakeup call. Because now, with these three failures, Silicon Valley Bank, Signature, and now First Republic, they're going to have to go back to the drawing boards and rethink all of their approaches to examination and supervision and, ultimately, that will probably be a good thing.
Now, there is one other factor here, which Gary didn't mention. After the 2008 financial crisis, the Dodd-Frank financial reform bill was passed, and it tightened controls over banking, tighter liquidity ratios, tighter capital ratios, limited on leverage, and then a few years later, about four years ago, five years ago, legislation was passed to loosen that back up again. And I think in retrospect, that latter legislation was a mistake and played a role in this also.
HARLOW: Yes. And the Fed report this weekend pointed that out. Although, you know, that was passed by 17 Democrats in the Senate too, and a lot of them are still defending it.
ALTMAN: And what was behind that bill was that the Dodd-Frank legislation of 2011 was very -- turned out to be very costly for a lot of small banks and rural banks to comply with. And so the spirit of loosening that up was probably right but it just went too far. And some banks, like Silicon Valley Bank and First Republic Bank, were not as tightly regulated as they would have been if that bill hadn't passed.
HARLOW: So, another question is will Congress act? I don't know. We'll watch.
ALTMAN: Unlikely, I think, over the short-term, which is the federal authorities have said all deposits will be protected regardless of size, because in a perfect world, you pass new legislation, reforming the deposit insurance system, but in this environment, this polarized environment, that probably won't happen.
HARLOW: Well, Deputy Secretary Altman, thank you for your time and your analysis.
ALTMAN: My pleasure.
COLLINS: Yes. We'll see what the markets think when they open shortly.
Also this morning, outgoing Chicago Mayor Lori Lightfoot is actually going to join us live here in studio. We're going to talk to her about her time in office, how she thinks crime in the U.S. could shape the 2024 presidential race.
Also, watch this, a Virginia man captured the moment where a tornado crept on to the coast. More on the severe weather there, ahead.
Also, these are live pictures this morning out of Davenport, Iowa, where communities along the cresting Mississippi River are working to keep floodwater out of their homes this morning.
COLLINS: Virginia Beach has now declared a state of emergency after a powerful tornado touched down in the city.
You see all of the boats there. We're also told around 100 homes were damaged, three schools are actually closed this morning because of the weather they saw over the weekend. Thankfully, there are no immediate reports of deaths or injuries.
Also this morning, we want to go to the Midwest, though, where the Mississippi River is cresting to dangerous levels. People who live along the river in states like Minnesota, Wisconsin, and Iowa and Illinois have all been stockpiling sandbags, pumping out water, as the river levels there are rising.
CNN's Adrienne Broaddus is live in Davenport, Iowa. Adrienne, you've been tracking all of this, I know, to see what these preparations look like. The scene behind you right now looks a lot like the one we saw just on Friday. What steps are they taking when it comes to the preparations and is the flooding let up at all?
ADRIENNE BROADDUS, CNN CORRESPONDENT: In some parts of the state, Kaitlan, yes. And to acknowledge what you said, you say it looks like it did on Friday. One thing is different. The train tracks are now covered with water. When we were here Friday, we were able to make our way across the train tracks. And as you can see at this hour, there is a train making its way through Downtown Davenport, slowly but surely. Fire hydrants are submerged in the water here.
About a block from where we are right now, we visited Mary's Bar. And the business owner there as well as some of his patrons survived the flood of 2019. And if history has taught them anything, they say they're confident their sandbagging efforts will he keep the water at bay. Listen in.
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JAMES PEREZ, DAVENPORT, IOWA RESIDENT: This time around, we knew ahead of time what to do. So, I don't know, I just kind of take charge, Bobby let me take charge, and I took all the volunteers who weren't sure what to do and organized them into a team, thank you, team work. So, yes, I probably laid about 90 percent of these by hand but it worked.
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They estimated they used about 180,000 tons of sand.
Meanwhile, this river here in Downtown Davenport, the Mississippi River, is expected to crest today. Kaitlan?
COLLINS: Adrienne, you're in Downtown Davenport. Do most of the streets look like where you're standing now, just basically, completely impassable for cars?
BROADDUS: No, not all of the streets, just this centralized area.
For example, where we are staying overnight, there is no water there. If you drive a little bit deeper into the city, there is no the water there. And, again, this is about as high as it will get. It's expected to crest today at 21 or so feet.
COLLINS: Wow. We see how slowly that train is moving behind you. Adrienne Broaddus, thank you for that.
HARLOW: A mysterious uptick in brain abscesses in children are on the Las Vegas area, what the CDC is saying what and what to look out for in your child, that's ahead.
COLLINS: Also, take a look at this new image from NASA. It shows a giant blob of seaweed. It's headed towards the U.S. What does it mean for your beach vacation that you have planned? We have Leyla Santiago tracking it in Key West this morning. We'll let you know.
HARLOW: Florida's beaches might start looking a bit more goopy. A type of large brown seaweed has already begun washing on shore on beaches in the Caribbean, Mexico, South Florida. The peak is not expected until June.
Take a look at this imagery from NASA. It shows the scale of the approximate 13 million ton floating blob of algae stretching from the west coast of Africa to the Gulf of Mexico.
It was record -- it was a record size for March.