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Russia Baselessly Accuses U.S. of Being Behind Kremlin Drone Attack; Pac West Considering All Options as Shares Plunge More Than 50 Percent; White House Says, Budget Talks Ok, But Biden Won't Negotiate on Debt Ceiling. Aired 7-7:30a ET

Aired May 04, 2023 - 07:00   ET


JEFFREY TOOBIN, FORMER FEDERAL PROSECUTOR: He's now the attorney general, but he has the same attitude toward publicity.


He does not want to call attention to things unless it's an actual court case. And I think that is unfortunate. Because I think, as attorney general, you have platform where he could call out the continuing danger of right-wing extremism in this country, and he hasn't it to the degree he could.

POPPY HARLOW, CNN ANCHOR: Look, it's a fascinating read. You went to the University of Texas where the lead attorney for McVeigh donated all the documents, 635 boxes, a million documents. And you found things that people hadn't seen.

TOOBIN: Well, Poppy, you are a student of the law, an actual accredited student of the law, and you know that lawyers are not supposed to disclose their conversation with their clients even after they're dead. That's what Stephen Jones, the attorney, did. I think it was a questionable decision on his part. It was a tremendous boom to me as a journalist to get behind the scenes in the investigation. Plus, I got all the material that federal government turned over to the defense as part of their investigation. So, I have the federal government as well.

How nice to see you both.

HARLOW: How nice to see you, Jeffrey Toobin. Congratulations.

TOOBIN: Thank you.

HARLOW: Book after book, not sure how you do it, it's a phenomenal write.

TOOBIN: All right.

HARLOW: Thank you.

Be sure to pick up Homegrown, Timothy McVeigh, the Rise of Right-Wing Extremism. Also, we're going to his book. We'll speak to one of the authors of the Clarence Thomas-Harlan Crow ProPublica report. That will be later this hour. KAITLAN COLLINS, CNN ANCHOR: And right now, our coverage will continue, as CNN This Morning continues right now.


HARLOW: Russia is now accusing the United States of being behind that drone attack on the Kremlin.

ANDERSON COOPER, CNN ANCHOR: The video of a purported drone strike is almost unimaginable given the location and the security surrounding it.

UNIDENTIFIED MALE: This would have been made by Russians.

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: We don't attack Putin. We fight on our own territory.

HARLOW: Another regional bank is showing trouble. Pac West Bank, it's weighing what they're calling strategic options.

KAITLAN COLLINS, CNN ANCHOR: Shares of Pac West are plunging more than 50 percent after a report suggested the bank could be seeking a sale.

JEROME POWELL, CHAIR, FEDERAL RESERVE: The U.S. banking system is sound and resilient. We'll work to prevent events like these from happening again.

UNIDENTIFIED FEMALE: Patterson is accused of killing one and injuring four others. The suspect that was wanted is now in police custody.

UNIDENTIFIED MALE: He'll be charged and stand trial for his crimes.

SEN. RAPHAEL WARNOCK (D-GA): What are the long-term traumatic effects of telling our children, we can't protect you?

ALISYN CAMEROTA, CNN ANCHOR: In New York City, a reportedly homeless man on a subway was put into a chokehold by another rider.

MAYOR ERIC ADAMS (D-NEW YORK CITY, NY): We can't say what a passenger should or should not do in a situation like that. He snuck up behind him, choked him out and the man died.

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: This was baby number four Derek and Kenyatta Coleman (ph). At their routine 30-week ultrasound, a nightmare began.

UNIDENTIFIED MALE: The majority of all babies with this condition will get very sick immediately. There is about a 40 percent mortality.

GUPTA: His team offered something new in (INAUDIBLE).

UNIDENTIFIED MALE: This is Ms. Denver Coleman and she is about to change the world.

(END VIDEOTAPE) COLLINS: Good morning, everyone. You'll hear from Dr. Sanjay Gupta on that story right there at the end. It's a really good that people will want to pay attention to.

But we're going to start this morning with breaking news, as Russia is now claiming that the United States is behind that drone attack that happened on the Kremlin yesterday, of course, with zero evidence to back up that claim coming from them. The White House's National Security Spokesman John Kirby just responded to that claim moments ago, calling the allegation, quote, ridiculous. He is going to join us live here in studio in the next hour to take more questions on what happened here.

The Kremlin spokesperson told reporters, quote, we are well aware that decisions on such actions and terrorist attacks are not made in Kyiv but in Washington. And Kyiv is already executing what it is told to do, such attempts to disown this both in Kyiv and Washington are, of course, absolutely ridiculous. Of course, they have long tried to claim that it is Washington dictating what Ukraine should do.

HARLOW: That's right. And to be clear, Ukraine has vehemently denied any involvement in that attack. Moscow keeps insisting the Ukrainians were trying to assassinate Vladimir Putin. Overnight, we did see Russia unleash a wave of its own drones on Kyiv and other Ukrainian cities. They had handwritten messages on them reading for the Kremlin and for Moscow.

Just yesterday after the drone attack, the State Department made it clear the U.S. is not helping or urging Ukraine to launch attacks on Russian soil. Listen.


VEDANT PATEL, PRINCIPAL STATE DEPARTMENT SPOKESMAN: I would take anything coming from the Kremlin and the Russian Federation with a shaker of salt. But we also have been clear and consistent as you said, that about not encouraging or enabling the Ukrainians to strike beyond its borders.



COLLINS: Let's bring in retired U.S. Army Major Mike Lyons for more perspective on this. A big question, and I have watched this video in slow motion several times, is where these drones could have come from. Because Russia is claiming, of course, Ukraine is behind it, now saying the U.S. told Ukraine to do it. Ukraine has denied this.

MAJOR MIKE LYONS (RET.), U.S. ARMY: Yes. A couple courses of action. It actually could have come from somewhere inside of Russia, Russia dissidents, if that's a possibility, they could have it. But I think, in all likelihood, the fact that this drone had to travel 280 miles, get through multiple air defense platforms and systems that they had set up already in Russia, it's just not likely it came anywhere from within the boundary of Ukraine. It could have been a special op that came somewhere close to Moscow or so, but in all likelihood, this is more pointing towards that false flag operation.

COLLINS: And what do you mean by that false flag operation?

LYONS: Russia set this up. I mean, you look at the explosion itself, a slow, small drone flying towards the symbolic capital of Russia, taken out at the right time, right over the flag, all these things. You know, as much as it is embarrassing for the Russian military and for Vladimir Putin, I think that they've traded off the propaganda effect that they're trying to get. So, now they drag the United States into it. They're trying to blame the United States.

COLLINS: Yes. And it is pretty embarrassing for Russia, right, the fact that this could get so closely. I mean, the idea they were actually trying to target then, this is the roof of the Senate palace. But here's my question. You don't see a lot of damage here. I mean, obviously, you can see on the surface of the roof, but if they were actually trying to assassinate Putin, as the Kremlin is claiming, this does not seem to be what would have done that.

LYONS: Right, I would agree. I mean, he has got an office in this building a lot further away. This is not an assassination attempt. I mean, again, it looks like a well-scripted type of operation to show that perhaps they're being attacked. But, I mean, very clearly, there is no damage there.

COLLINS: Yes. And so, obviously, we're seeing Ukraine deny this. They've said it wouldn't further the military goals. They would allow -- it would allow Russia to justify strikes. And they're saying basically too busy defending Ukraine to actually strike inside Russia. But there are real concerns, as you heard Vedant Patel over at the State Department saying yesterday that Ukraine would try to do this, because that is something the U.S. had warned them against on the anniversary of the Russian invasion. So, this is a concern that the U.S. does have that Ukraine would try something like this.

LYONS: It does and they have the capability. Technically, the drone can get to that spot there. But it's wasting a lot of intel assets, it's wasting resources on the ground if they decided to do that. But Russia had just more to gain to try to think that this attack was real because they know this counteroffensive is coming. They have got to draw attention away from that. They're doing everything they can. Perhaps they'll use this as a way to get more Russian soldiers. It's more in their interest to have done it and that faults like manner (ph).

COLLINS: Yes. And, of course, we should note, Putin was not actually inside the Kremlin at that time. Major Mike Lyons, thank you for all of that.

In the next hour, we're going to talk about these claims from the Kremlin, how the U.S. might respond, what they're role in all of this is from the White House's John Kirby. He'll be live in studio coming up.

HARLOW: Also this morning, another regional bank showing signs of real trouble. We're talking about Pac West Bank confirming a Bloomberg News report that it is weighing, quote, strategic options, including maybe a sale. Exploring strategic options, that is Wall Street lingo for please help.

The news sent Pac West stock tumbling yesterday. Shares cut in half in afterhours trading. The last bank to announce it was exploring strategic options is First Republic. As you know, it failed on Monday. JPMorgan Chase came in, bought up most of that bank's assets. It was the third regional bank to collapse this year.

And this all comes as the Federal Reserve again hiked interest rates by a quarter basis point, the tenth hike since March -- last March, I should say. Fed Chairman Jerome Powell did hint, though, maybe a pause is around the corner.

Let's bring in our Chief Business Correspondent Christine Romans on all of it.


HARLOW: Good morning. So, we will get to the Fed and Powell in a moment, but Pac West?

ROMANS: Yes. And the company last night saying essentially the bank saying nothing has really changed since the FDIC took over First Republic. I mean, you look at the shares down about cut in half overnight. This year, they were $22 a share earlier this year. They closed at about $6 yesterday. And now, they're about half that right now. So, that's been a tough chart there.

But you look at their deposits, Poppy. I think it's interesting. The deposits actually rose from March 20 to March 31, and the company pointing that out. But, materially --

HARLOW: They aren't pulling their money out.

ROMANS: They're not pulling their money out. So, this is a case of Wall Street. I mean, maybe traders and investors hunting around for the next weak link, which seems unfair, but that's what is happening here right now.

HARLOW: And just before we move on to Powell, these regional banks, especially smaller, they matter for communities.

ROMANS: I know. They really do. And so the big banks get bigger and the smaller banks seem to be under a little bit more pressure because the microscope is on their investments that have lost value because interest rates have risen.

HARLOW: Right. Okay. So, a rate hike again, the tenth since last March. How are we going to feel this?

ROMANS: So, this is really the most important consumer story out there, quite frankly. I mean, let's start with mortgage rates. If you are buying a new home, you have seen this. Mortgage rates a year ago when the Fed started raising interest rates, just 4 percent. [10:10:00]

Now, they're 6.43 percent. In real world terms, that means the house payment last year that was $2,600 a month is now $3,100 a month. That is $563 difference in the house payment on the same mortgage. So, that is more money.

For auto loans, same deal. Last year, 4.5 percent was the typical auto loan. Today, it's just about 7 percent. That is about $63 more for the typical auto payment every single month. That is real money.

And credit cards, this is where it is really the most dangerous, and I've been sort of sounding this alarm. Credit card debt is so much more expensive today than it was a year ago. Rates on credit cards last year were about 14 percent. Now, they're record highs above 20 percent. It's 30 percent if you're using a store card, which is incredibly dangerous if you're carrying a balance.

An example, a credit card -- $2,000 balance on a credit card, you're going to add 11 more months to pay it off if you're paying that minimum payment, if you're paying the minimum on that credit card. So, that's just really, really dumb debt and so be very, very careful of that. That's what Fed interest rate hikes mean. It means you're borrowing is more expensive.

HARLOW: Or just say no when they offer you a store card and check out for 10 percent off or something. Christine Romans, thank you very much.

ROMANS: You're welcome.

HARLOW: Kaitlan?

COLLINS: Also this morning, we are tracking new audio revealing how the mother of the suspect in that deadly shooting in Atlanta yesterday, the medical center actually helped track him down.


UNIDENTIFIED FEMALE: They're now advising an active shooter, a person shot. Advising female shot. She is seriously bleeding, shot in t he side and the back. Black male about six feet tall wearing a hoodie, he's going to be the perp (ph) between 20 and 25, named Deion Patterson. Caller is still on the phone with 911 advising that it's going to be her son.


COLLINS: Charges happening overnight, as Deion Patterson, whose mug shot you see here accused of killing one woman and wounding four other women. He was taken into custody after a chaotic eight-hour-long manhunt.

CNN's Nick Valencia is live in Atlanta, outside where the shooting happened there at that medical center. Nick, what are we hearing from police this morning? I know he's expected to appear in court. But what are they saying? Is he talking? What's the latest?

NICK VALENCIA, CNN CORRESPONDENT: Well, we just got some new information that gives us potential some insight into why he did what he did, according to police. Our affiliate WSB here in Atlanta spoke to his Deion Patterson's mother. He's the suspect in this shooting. And according to the mother, he became agitated after he was denied an anti-anxiety prescription for Ativan.

According to police, Patterson came here yesterday to this north side midtown medical facility because he was unhappy with the treatment that he was being given at the V.A. He opened fire killing a 38-year- old woman and injuring four others. All the victims are women, three of them in critical condition, one of them in stable condition.

And according to police, Patterson then took off running. He stole an unattended car at a nearby gas station. And according to police, technology really played a part in helping capture this suspect about 20 minutes after he stole that vehicle, a license plate tag was caught on camera alerting police that he was in a northwest suburb in nearby Cobb County, just about ten miles away.

Ultimately, it was a plain-clothed police officer that found Patterson hiding in a pool area inside an apartment complex after neighbors had alerted police to some suspicious activity ending what was a terrifying nearly eight hours-long manhunt here in the city of Atlanta and beyond.

Later this morning, Patterson is expected to make his first court appearance at 11:00 A.M. local time, charged with four counts of aggravated assault, one count of felony murder. His mother is reportedly still cooperating with police as is the Coast Guard. We should mention that Patterson was a member of the Coast Guard between 2018 to 2023 in January, when he was discharged from active duty. Kaitlan?

COLLINS: Yes. And we'll be keeping an eye on that court appearance this morning. Nick, thank you.

HARLOW: Also this morning, we're getting a dire warning from the White House. 8 million Americans could lose their jobs if the government defaults on its debt. Congressman Adam Schiff here in studio to talk about what he thinks should and can be done at this point.

COLLINS: Also, a New York subway rider was killed after being put in a chokehold by another passenger following what is described by witnesses as erratic behavior. The dramatic video and the details of the investigation into his death, next.




KARINE JEAN-PIERRE, WHITE HOUSE PRESS SECRETARY: It is Congress' constitutional duty to prevent default. This is not an issue that we will negotiate on. The debt limit was increased three times under President Trump. It should be no different this time.


HARLOW: Time is running out for Washington to strike a debt ceiling deal. The U.S. government remains in danger of running out of cash to pay its bills as early as June the 1st. That is according to the Treasury secretary, Janet Yellen. And that would lead to America defaulting on its debt for the first time ever.

It is raising the stakes for a critical meeting set at the White House on Tuesday with Republican leaders McCarthy and McConnell both expected to attend. As you heard though, the White House standing firm, insisting on a clean debt ceiling bill only.

Let's talk about this and a lot more with the Democratic Congressman of California, member of the House Judiciary Committee Adam Schiff, also running for Senate for Senator Dianne Feinstein's seat in 2024. Good morning.

REP. ADAM SCHIFF (D-CA): Good morning.

HARLOW: You're always remote. We never get you here in person. It's a pleasure.

SCHIFF: Thank you, great to be with you. Yes.

HARLOW: So, we heard your Democratic colleague out on the Senate side, Joe Manchin, say last night, we are not going to default. Can you actually guarantee that to the American people this morning?

SCHIFF: I don't know that I can, because I think there are enough extreme MAGA people in the House conference that would be perfectly fine just to see what would happen and just because of the notoriety, because so many of them to be only interested in the notoriety of things, no matter good or bad. I think they're going to take us right to the brink. And the only question is, are they really willing to destroy the nation's credit, and I just don't know.


But I think the president is absolutely right. You can't negotiate with people who are taking the whole economy hostage. If you do, then we're just going to go through this each and every year, every six months. There will be new demands. Both Democratic and Republican administrations have seen the debt limit increase on their watches for past debt, and we're doing the responsible thing. They're supposedly governing in the House, but we're ready to put up votes to raise the debt ceiling. We just need at least a handful of them to do the right thing.

COLLINS: I understand you think the White House is right here and that Republicans are acting recklessly with this, and they did raise the debt ceiling under Trump multiple times. We talked about that with every Republican who has been on here. But in the end, is the White House position sustainable here given Republicans do have a majority in the House?

SCHIFF: I think it is sustainable. We ought to have a discussion over -- well, we should have a discussion over the budget when we do the budget. There is a proper time to be weighing, okay, what are the long-term fiscal consequences, how do we balance our budget, how do we pay down our debt, we should have the conversations.

But we shouldn't have them threatening to destroy the American economy. If they go through with this, it's going to mean, you know, from my home state, Californians are going to be paying a lot more for their mortgages and on their credit cards, they're going to be paying a lot more or seeing their benefits cut and our credit worthiness is going to be destroyed. You just can't risk economic catastrophe because you can't get your way in other ways. You just can't operate that way.

HARLOW: Couldn't you also say that the White House is risking it?

SCHIFF: No, because the White House is doing what presidents of both parties have done, which is to say this is not what we negotiate. America pays its bills. That is non-negotiable. You want to talk about the budget, you want to talk about other things, let's do that in the context of the budget but not threatening the country's economy.

COLLINS: Is there any chance Republicans, some, can be persuaded to vote with Democrats here, in your view?

SCHIFF: I think any number of Republicans, including many in California and in New York, who are in Biden-won districts, who would love a chance to not bring catastrophe to the country, because they know that if they do, they're not coming back.

COLLINS: So, that's a yes?

SCHIFF: Yes, I think if they're given the chance. The question is, will McCarthy do the right thing and allow a vote and allow a few other members to support it? But if you're waiting for Kevin McCarthy to do the right thing, you'll be waiting a long time.

HARLOW: Let me just ask you about California and banks, in particular. PacWest, another big California bank, is on the brink this morning. It may get bought up. Shares cut in half overnight. This follows Silicon Valley Bank's failure, First Republic's failure. All these California banks are obviously real questions about the regulators and the Fed report, particularly the San Francisco Federal Reserve Bank.

You voted in 2018 not to roll back some of the Dodd-Frank protections on these smaller and mid-sized banks, but a lot of your Democratic colleagues voted for that rollback. Was that an error?

SCHIFF: Absolutely was a mistake. I oppose these kinds of rollbacks because I think we needed stronger supervision, not weaker. And now we see the detrimental impact.

Now, whether that change was fully responsible, I think that the Fed report indicates that they were aware of problems at SVB. So, this was a failure of oversight. It wasn't like they didn't discover it because the regulations weren't what they should have been. And so there's, I think, a failure of oversight, there is a regulatory problem and you have in some of the banks, like SVB, terrible management that essentially put their own bonuses and other compensation ahead of the public interest and risked their depositors and risked the economy.

COLLINS: Switching subjects, I want to get your reaction to what ProPublica just broke this morning. The headline is Clarence Thomas had a child in private school, Harlan Crow paid the tuition. Of course, that is that billionaire real estate figure who we know was taking Supreme Court Justice Clarence Thomas and his wife on vacations. They've defended that. He did not report this. There was one disclosure where he reported someone paying for part of the tuition, did not report what came from Harlan Crow. What is Congress going to do in response to this?

SCHIFF: If these reports are accurate, it means that he was aware he should be reporting it, because, in the past, he did report things like that. It is just another powerful evidence point that there needs desperately to be a code of ethics in the Supreme Court. I think beyond that, there ought to be term limits on the court. I think we need to expand the court because they stacked it by withholding a nominee from one president to a Democratic president and then jamming down a Republican nominee. We have two justices on the court that have changed the balance for a generation, if it is left the way it is, but it begins with ethics.

And, clearly, now with multiple justices having serious questions raised about their ethics, there needs to be an enforceable code of ethics towards the Supreme Court.

HARLOW: Who else are you talking about?

SCHIFF: Well, there are allegations of other undisclosed transactions, property sales. There are allegations about compensation by spouses of justices with people with business before the court.


Multiple justices now, I think for which there are issues that ought to be investigated, and there ought to be a code of ethics so there's a clear standard when a justice is dealing with someone who has business before the court.

Now, we know what should be disclosed. The justices know. And there is a mechanism to take action when they fall short.

HARLOW: Do you actually -- we just had Jeffrey Toobin on, who said, look, these justices are not only placing themselves above the law, by the way, all nine of them agreed that they don't think they need to answer to anyone or to Congress in this hearing this week, but putting themselves above federal judges as well. Do you think, to Kaitlan's question, Congress will act and impose what they can on the court?

SCHIFF: I think Congress absolutely should act. I think there is probably more support now that it's not just about Clarence Thomas because some of the Republicans felt that these questions, which are very legitimate, were just directed at this particular justice. But now we see there is a systemic problem. And I would hope that would mean that there is more support in Congress to actually do something about it.

But you're absolutely right, when you give people life tenure on anybody and you say there's no code of ethics that can touch you, there's no enforcement mechanism, then you're going to see power corrupting. And I think that is what we're seeing here.

COLLINS: House Oversight Chair James Comer is now subpoenaing records from the FBI. He has subpoena power, of course. He claims they could show then-Vice President Biden receiving bribes allegedly from a foreign national in exchange for policy favors. I should note the White House has strenuously denied this. We have gotten zero evidence. We haven't seen anything of what Republicans are talking about. But Comer is coming out and saying this publicly, other Republicans are as well. What do you make of that?

SCHIFF: You know, honestly, I don't think you can put much stock in anything that Mr. Comer has to say because his track record is very poor. When they put these so-called whistleblowers before Congress, none of that has borne out, none of it has represented what they said it would. It's been a fiasco.

And so I don't know whether this is just pure speculation that they believe there's a document of an interview, where there are lots of interviews. It doesn't necessarily mean there is any wrongdoing. So, I wouldn't give much stock to this. But I'm not surprised they push out these unsubstantiated allegations. They've been doing it for some time.

HARLOW: Do you think the American people deserve to hear from this person and the FBI should answer these questions?

SCHIFF: At this point, it's just the most rampant speculation. We don't even know if there is such a document or what the document pertains to. All we have is someone's representation, and it doesn't even sound like he knows what it pertains to. So, I don't want to speculate about it.

COLLINS: We can't let you go without asking about Senator Feinstein. You're running for her seat, of course, in California. She said she is not going to be running for re-election. There are calls from Democrats for her to step down because she's been out with a medical issue. She has not returned. It is impeding judicial nominations and confirmations. You have not called on her to resign. Why not?

SCHIFF: Well, I'm hearing and I'm getting all secondhand that she is coming back soon. And I would like to give her a chance to recover from shingles. And I have great respect for her. I hope she's back this coming week. I hope she's back in good health because we do need her.

But let's not forget the Republicans refused her request to fill her seat. And, frankly, if she were to --

COLLINS: On the Judiciary Committee?

SCHIFF: On the Judiciary Committee. And, frankly, if she were to leave tomorrow and someone new were appointed, would the Republicans seat them on the Judiciary Committee? I doubt it. I doubt it. And so, this is a lot of Republican gamesmanship, taking advantage of a senator whose health is ill. But I hope she comes back and comes back in good health.

COLLINS: But you said you hope she's back this week. If she's not, do you have a timeline where it does come to where she needs to step down?

SCHIFF: You know, I don't want to set out a timeline. That, I think, is ultimately a decision that Senator Feinstein will make in consultation with Senator Schumer. But for her health, I hope she's back very soon. We need to get these judges confirmed. And I think the Republicans who are making this argument, which is so disingenuous, that somehow they're ignoring Senator Feinstein's request out of respect for her, that is just absurd, and they ought to do the right thing.

Because, as you know, as Senator Feinstein was sitting in the Senate and one of the Republicans couldn't come back because they were ill, she would the first person to say, let's allow them to replace that member in the committee.

COLLINS: Yes. We do wish her the best, obviously. Shingles is incredibly painful. And so we are thinking of her health as well. Congressman Adam Schiff, nice to you have here in person. A lot of questions, a lot of subjects that we covered there.

SCHIFF: Thank you.

COLLINS: Also this morning, police and prosecutors here in New York are investigating the death of a man -- this is something I was talking about, after put in a chokehold by a fellow subway passenger. We'll tell you the details.

HARLOW: JPMorgan Chase CEO Jamie Dimon will be deposed this month in two civil cases related to Jeffrey Epstein. We'll tell you why, ahead.