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Wagner Boss Says He's Pulling Russia Mercenaries from Bakhmut; Police Arrest Former U.C. Davis Student in String of Stabbings; Officials Say, China and Russia Will Exploit Chaos if U.S. Defaults. Aired 7-7:30a ET

Aired May 05, 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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KLAY THOMPSON, GOLDEN STATE WARRIORS GUARD: So, we've got to go to L.A. for game one and go from there.

LEBRON JAMES, LOS ANGELES LAKERS FORWARD: And they made the adjustments and we knew they were going to do that. That's what a championship team does. And, you know, they held serve when they were on court tonight, and we've got to obviously see the adjustments they made. We've got to make our adjustments coming into game three.

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ANDY SCHOLES, CNN SPORTS ANCHOR: Yes. And the series now shifts to L.A., guys, for game three on Saturday. And as a basketball fan, really just hoping this one ends up going seven games, because that would be certainly something special watching Steph and LeBron.

KAITLAN COLLINS, CNN ANCHOR: You always wanted to go seven games, because that's more playmaking that you get to watch and watch these amazing athletes continue to play. Andy, we'll be watching. We'll be rooting for seven games, thank you.

ERICA HILL, CNN ANCHOR: And CNN THIS MORNING continues right now.

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UNIDENTIFIED FEMALE: The leader of Russia's Wagner group, the mercenary group, says he is pulling his troops out of Bakhmut, that key Ukrainian city.

YEVGENY PRIGOZHIN, FOUNDER, WAGNER GROUP: These men here who died today are Wagner PMC. Their blood is still fresh.

UNIDENTIFIED MALE: They're out by the middle of next week just after a very important date in the Russian calendar, Victory Day on May the 9th.

UNIDENTIFIED FEMALE: Police in California have arrested a former U.C. Davis student accused of stabbing three people, killing two of them.

CHIEF DARREN PYTEL, DAVIS, CALIFORNIA POLICE: These crimes were horrific. We hope that the announcement provides some level of relief.

UNIDENTIFIED FEMALE: Dominguez could be arraigned in court as early as Monday.

UNIDENTIFIED MALE: Protests in support of Neely have called for answers.

UNIDENTIFIED MALE: There could have been somebody there to help him. He should still be alive today.

GOV. KATHY HOCHUL (D-NY): There have to be consequences. His family deserves justice.

UNIDENTIFIED FEMALE: They're supposed to use intelligence and compassion and know how to talk to each other.

UNIDENTIFIED FEMALE: A jury convicting more far-right extremists of sedition, all members of the Proud Boys.

UNIDENTIFIED FEMALE: This happened, this was real, and justice must be served.

UNIDENTIFIED MALE: I'll never regret something that I said.

MERRICK GARLAND, ATTORNEY GENERAL: The Justice Department will never stop working to defend American democracy.

ALISYN CAMEROTA, CNN ANCHOR: A jury decided that Sheeran did not copy Marvin Gaye's classic hit, Let's Get It On.

UNIDENTIFIED FEMALE: This is a very big moment for the music industry, especially for Ed Sheeran.

ED SHEERAN, SINGER/SONGWRITER: I will never allow myself to be a piggy bank for anyone to shake. I'm just a guy with a guitar who loves writing music for people to enjoy.

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COLLINS: Good morning, everyone. Poppy is off today, much deserved. Erica Hill in with us.

HILL: Nice to be with you.

COLLINS: On Friday morning.

HILL: Yes, Happy Friday.

COLLINS: Yes. We have a lot of breaking news this morning, a lot of headlines to get to.

This morning, the Ukrainian military says they may be witnessing a turning point in the war. The head of Russia's Wagner Group, the mercenary group, says he is pulling his troops out of Bakhmut. That is a Ukrainian city where there have been so much fighting happening recently. Russia has been trying to capture it for months but they've suffered heavy casualties as a result of that.

The head of this group is now blasting the Russian military and its leaders, accusing them of withholding ammunition from him and from his fighters. He released an angry video overnight standing next to a pile of what he says are dead mercenaries, their bodies.

I want to warn you, though, we have blurred this video, but it is still quite graphic.

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PRIGOZHIN: These men here who died today are Wagner PMC. Their blood is still fresh.

You think you are the masters of this life? You think you can dispose of their lives? You think because you have warehouses full of ammunition that you have that right?

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HILL: Now, he says his mercenaries are leaving in just five days. Losing the battle for Bakhmut could be a major setback for Russian forces as they brace for Ukrainian counteroffensive.

Meantime, Moscow is warning the United States and Russia are on the verge of what it says is the chance for open armed conflict after this mysterious drone attack on the Kremlin this week. The White House is rejecting the Kremlin's baseless claims that the U.S. was somehow responsible, calling it ludicrous. Here's what Russia's foreign minister said just a short time ago.

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SERGEY LAVROV, RUSSIAN FOREIGN MINISTER: It was clearly a hostile act. It is absolutely clear that the Kyiv terrorists could not have committed it without the knowledge of their masters. We will not respond by talking about whether it was (INAUDIBLE) or not, but we will respond with concrete actions.

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HILL: We also have brand new CNN reporting this morning. We are learning Russian forces have been ramping up their use of electronic jammers in an effort to throw off American-made rocket systems on the battlefield. Ukraine's military has hailed the HIMARS system as a game changer in this war. The jammers, though, have been causing the rockets to miss.

For more now, let's bring in CNN's Senior National Security Correspondent Alex Marquardt. So, Alex, just how disruptive has this jamming been?

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, Erica it has made the piece of weaponry that has had the greatest impact on the Ukrainian battlefield less effective. Normally, this is an extraordinarily precise rocket system. The HIMARS can fire six rockets at a given time at targets 50 miles or some 80 kilometers away.

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When you talk to Ukrainians on the ground, both civilian and military, they talk about it in almost a mythical way. But because these rockets are guided by GPS, that means that they can be jammed, and that is what has been happening with increasing regularity, we are told, that these rockets are being jammed, they're being thrown off course. I spoke with Ukrainian source who talks to drone operators on the frontlines who fly over targets. They say that targets are increasingly being missed, that the HIMARS are increasingly less precise.

And so what that has forced is the U.S. and Ukraine to come up with workarounds to pierce that Russian jamming. When the Russians figure out how to jam, the Ukrainians have to figure out how to get around that. Then the Russians will figure out how to counteract that, and Ukraine will have to come up with another countermeasure.

So, in the words of one senior pentagon official, it is constant tweaking. It is a constant game of cat and mouse, and that has to be done because the HIMARS are so critical to Ukraine's fight.

COLLINS: Yes. I mean, it's not good news for Ukraine, period, but also this comes, Alex, as we are expecting the counteroffensive to begin. We don't know exactly when but soon, relatively. So, how pressing of an issue is this given that nature?

MARQUARDT: It's really important because the HIMARS have been so important throughout this fight and will be critical for this counteroffensive. The HIMARS are needed and will be needed in this counteroffensive to reach well beyond the frontlines, to hit logistical hubs, command posts, communications notes, ammunition depot. We are told it is a high priority, and the U.S. is focusing on helping Ukraine find these jammers and destroy them.

It is not just HIMARS that are affected. It is other GPS-guided smart munitions, we are told. So, this is certainly a priority for the U.S. and for Ukraine to seek out and destroy those jammers. Kaitlan and Erica?

HILL: Important reporting and context. I appreciate it, Alex, thank you.

COLLINS: Also this morning here in the U.S., police in California have arrested a former U.C. Davis student in that string of stabbings that happened near campus. Two of the victims died, as we noted. One was wounded. Authorities released this photo of the suspect. He's 21- year-old Carlos Dominguez. They believe he is responsible for all three stabbings that have happened within a relatively close distance of one another this week.

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PYTEL: These crimes were horrific. They're hard to imagine. They struck fear in the community, and we know that. We've also experienced loss.

We hope that the announcement today provides some level of relief.

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COLLINS: CNN's Veronica Miracle joins us now from Davis, California. Veronica, one thing that stood out to me is that this suspect was a student until about April 25th when he was separated for what they said were academic reasons. What do we know?

VERONICA MIRACLE, CNN CORRESPONDENT: That's right, Kaitlan. The university is being pretty tight-lipped about exactly what that means, but we know he was a junior. That separation happened last week, and then the first murder took place two days after that separation due to academic reasons.

Police say that they were able to make this arrest thanks to the community, thanks to all of the students and the people that live in Davis for their help, because they got about 15 phone calls two days ago about -- and all of these calls describing a man at a park with the same description as the suspect. And when they arrived, they found 21-year-old Carlos Dominguez at that park where the second homicide took place.

That first homicide happened last Thursday where a man was killed. The second homicide took place on Saturday where a U.C. Davis student was killed. And then on Monday the latest stabbing attack happened and a woman was critically injured. She is still in the hospital.

Now, when asked if -- police when asked about whether Dominguez was at that second park when he was discovered searching for his next potential victim, they said they didn't know but that he did have a large knife on him. Here's what the police chief had to say.

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PYTEL: We decided to first arrest him for possessing a large knife that was on his person when he was picked up. He was wearing a backpack. And in the backpack was a large knife that was consistent with one that we were looking for based on evidence from the first homicide.

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MIRACLE: And Dominguez has been placed under arrest for two counts of homicide, one count of attempted homicide, and he could be arraigned as early as Monday. Kaitlan?

COLLINS: We'll be watching for that arraignment. Veronica Miracle, thank you.

HILL: There is a significant development in the probe of Donald Trump's handling of classified documents. New York Times reporting this morning federal prosecutors have secured the confidential cooperation of an unnamed insider witness who has worked at Mar-a- Lago. Now, that witness has reportedly given investigators a picture of the storage room where the material had been held.

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As for what other information may have been disclosed by this person, that is unclear in terms of what prosecutors may have learned from the insider.

But this news comes less than 24 hours after CNN was the first to report that prosecutors issued several subpoenas to the Trump Organization about the handling of surveillance footage from Mar-a- Lago after last summer's subpoena.

COLLINS: Also this morning, Wall Street preparing for what could be another volatile day. Investors are closely watching what the forthcoming April jobs report is going to show. We'll bring you those numbers because they'll be released in the next hour.

But, of course, the fear around regional banks is far from subsiding right now. Pac West saw its share price cut in half after it confirmed it was, quote, exploring strategic options. Western Alliance's stock tumbled after the financial times reported the bank was also exploring a sale. First Horizon scrapped a $13 billion merger with T.D. Bank, which sent its stock plunging more than 30 percent.

As the banking turmoil continues to drag on, one senior analyst at a foreign exchange company tells CNN there's a lot of concern that, quote, something is about to break. It's a pretty dire warning.

Let's bring in CNN's Chief Business Correspondent Christine Romans and CNN Chief White House Correspondent Phil Mattingly for this.

I mean, it seems like this is all just a crisis of confidence because these banks that are in the eye of the storm are saying we're fine, our finances are solid, but no one seems to believe them.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: You're absolutely -- I mean, confidence is the whole -- the oxygen of the banking system here. And you look at these most recent two that we're watching, they're bouncing back this morning, so that's really important. So, some confidence has returned, but these are small, itty bitty regional banks. They're not a systemic problem.

And I think that that's what Jamie Dimon, the chairman of JPMorgan Chase, was suggesting to analysts and investors earlier this week. There could be other shoes to drop, but the overall banking system is still fine. I think what you have here is you have Wall Street is looking for the weakest gazelle in the herd and they're looking for those little regional banks, and that's -- so that's what you've been seeing there.

PHIL MATTINGLY, CNN CHIEF WHITE HOUSE CORRESPONDENT: And I think what's so fascinating is, look, SVB was a terribly mismanaged bank. Failure, I think, was a necessity to some degree. Signature was caught up in some of the same mismatch issues in terms of what their balance sheets look like, but also some crypto issues as well. First Republic, everyone has known for the last two months, was right on the brink, and it was only a matter of time.

To Christine's point, all very large banks, particularly SVB and First Republic, these banks we're talking about right now, are 40s, 50s, 60s in terms of size overall. What's fascinating is the issues that took down SVB in terms of having long-term securities that are deeply under water and not necessarily having the equity to match up with them. That's not necessarily out of the norm, particularly in a high interest rate environment.

What's different now is people are looking at that data, which is publicly available, and then talking about it, talking about it on social media, talking about it online, driving short sellers to go after these banks, which in any other world would probably be fine, be doing normal course of business, and then you have pressure. And so they say, well, we have to raise money. And it comes out they're going to raise money, and that shows weakness. So, people attack them for that. So, they're not necessarily doing anything different or wrong or catastrophic. It's the chatter about it that's really driving this now.

HILL: It's the chatter and the lens that that brings too, right? I mean, this is almost the exact conversation in many ways that we seem to consistently have on the economy. Even when the numbers are good, even when the job numbers are good, it's how people feel. And part of that feeling is what did they see online, what did they see out there that's raising an alarm bell for them, even if the data may not back it up.

ROMANS: And, so far, the deposits are not fleeing these banks. That's what's so interesting. It's investors that are selling the stock. It's not the depositors are fleeing these banks. But at some point then, it becomes a vicious cycle. Then people start hearing, wait, is there something wrong with this bank, and they decide to pull their money out.

So, I think we're in a new phase of I'm not calling it a banking crisis, banking stress. We're in a new phase of banking stress, and I think we will see headlines like this. We saw that merger that was scuttled yesterday. That was kind of a plain vanilla merger in February. Now, it's like, okay, everything has really changed here. They said there was regulatory uncertainty over the timeline is the reason they scuttled that merger. I think it's a new phase in banking.

COLLINS: But, Phil, what is the White House thinking on all of this? I mean, I'm sure they're tracking all of this closely. But what are they saying behind the scenes?

MATTINGLY: We'd like this to go away as soon as possible, particularly given the fact that in about a month, we're looking at another crisis. But what I think Jamie Dimon said publicly and the Fed chair said publicly over the course of the last ten days very much are aware of the White House is on this issue. I think they feel like the crux of the, quote/unquote, crisis over the course of seven weeks is past them because the major banks that were of concern are now gone or merged or wherever they are. But I also think they understand from a pure market basis, from a pure system basis, that when people are unsettled, when the markets are unsettled and we're in this very kind of volatile moment, there's a lot of risk that comes with that. So, I think they're watching it very closely.

ROMANS: The irony is that big banks just get bigger and community banks and regional banks, which are good for the economy and good for the country, those are the ones that are kind of on the ropes. I think that's the irony for the White House that has been -- The Wall Street Journal says it hates the big banks, which is not true.

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MATTINGLY: Right. But I also think that survive in advance is a pretty good economic posture if that's the moment. So, they'll deal with the two big failures afterwards.

COLLINS: Yes. We'll see what progressives on Capitol Hill say about that. Phil, Christine, thank you both.

HILL: Well, the U.S. could default on its debt, of course, just weeks from now. The White House now footing a short-term fix to prevent an economic disaster. President Biden's senior adviser is going to join us live here on set.

COLLINS: And the maker of a popular weight loss drug now setting limits because of skyrocketing demand. Which drug, what are the limits? We'll tell you next.

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SHALANDA YOUNG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: They love this. They love to see chaos in the American system. They love to see that we can't do our basic jobs. It's no less than a test of what works in this world. Does democracy still work or does the Chinese way work?

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COLLINS: That's Shalanda Young. She runs the Office of Management and Budget for the White House. She's warning that countries like China and Russia are going to take advantage of the chaos if the U.S. does default on its debt, something that could happen in just a month from now.

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That warning from the treasury secretary, Janet Yellen, saying the U.S. could run out of money to pay its bills as soon as June 1st unless Congress does raise the debt limit. That is in the big fight on Capitol Hill.

Congressional leaders and President Biden are going to meet on Tuesday. But after that meeting, there are just a few days when the House and Senate are in session. Of course, they can talk, they can negotiate when they're not actually in session but the president is scheduled to travel for at least another six days later this month, he's going to Japan and Australia to be with other world leaders. That will put him out of the country as all these fights are going on.

It is a tight schedule. There's a lot at stake. The White House is warning this week that a protracted default could wipe out 8 million jobs, cut the stock market in half.

So, joining us now for more on this light, casual conversation, President Biden's Senior Adviser and Infrastructure Implementation Coordinator Mitch Landrieu. Thanks for being here. Great to have you.

Given we're so close to that warning date that Janet Yellen talking about, has the White House actually started planning for what a default would look like?

MITCH LANDRIEU, WHITE HOUSE SENIOR ADVISER AND INFRASTRUCTURE COORDINATOR: Well, the first thing to remember and understand, this is a manufactured crisis. Since the beginning of the '60s, 78 times the debt limit has been raised, and under President Trump, three times without preconditions.

So, this is really a manufactured crisis. During the regular budget process, you covered this, we all have arguments about what we're going to spend, what we're going to cut, how are we going to finance the government, and the president's position has always been, listen, stop holding a gun to the head of the American people because you're playing a very, very dangerous game, and that's been his position.

He's going to meet, of course, with the leaders on Tuesday. He's going to reiterate that message to them. They're going to continue to talk to see if they can figure out how to make sure that, number one, we raise the debt ceiling, and then if they want to have a discussion about the values in their budget versus the values in the president, the president is ready to have that argument every day.

COLLINS: But is the White House having conversations about what it does look like if we come to a month from now and there's no agreement?

LANDRIEU: Well, this White House is never going to be unprepared to respond to whatever crisis confronts us. That's presidential leadership is about. But, again, the president wants to be really clear about this to the American public. This is like walking up to somebody and say, I'm going to burn your house down if you don't let me hurt your neighbor who just came back from the V.A. and can't get medical care, or the old folks down the street that can't get hot meals on wheels, et cetera. That's not a good position.

And the consequence of burning the house down is actually to hurt every other American. That's the position that the House Republicans are putting the country in, and the president doesn't want that to happen and is going to lead, as he always has.

COLLINS: What's Tuesday going to look like behind closed doors? Is President Biden bringing a counteroffer? What's that going to look like when they're all in the room together?

LANDRIEU: I'm not going to be in the room, so I don't know. But the president is going to do what he always does. We talk about with the infrastructure bill. People said the president couldn't bring people together and he always tries to do that. But he always does it in a principled way, a thoughtful way with practical responses and consequences.

But you can't yield to ransom notes. That's a very difficult thing for the country to do. But the president is going to exercise presidential leadership and try to prevail upon the speaker of the House and the Republicans in the House to actually be thoughtful and reasonable and not to put the lives and the finances of Americans at risk.

COLLINS: But is that the strategy here, just hoping that in the end, some reasonable Republicans, as you say, will come to the table? Because right now, that doesn't seem likely to happen. Mitch McConnell is still aligned with Kevin McCarthy on this. And what is the plan here? Because it just seems like the White House is waiting on Republicans to come around, which they have shown no signs of doing.

LANDRIEU: Hope is never a strategy. There are always contingency plans. I'm not going to get ahead of the president of where he's going. But his message to the American public is that, as the president, he needs to protect the health, safety and welfare of the American people.

COLLINS: This comes as separately in another House or another chamber on the Hill, Senator Joe Manchin, a Democrat, is threatening to repeal the Inflation Reduction Act, which he helped write. He picked that title, as you know. He says that the administration that you all are trying to use the IRA to steer the U.S. quickly towards a clean energy transition and away from fossil fuels that you're using the electric vehicle tax credits that they put in there in the wrong way. Is he wrong?

LANDRIEU: Well, let's just say we have a difference of opinion what about it is that's happening, why it's happening and how important it is. The climate crisis is an existential crisis. The Inflation Reduction Act, which he did help write and help pass, is the largest investment in protecting us from my client. I'm from Louisiana. When you think about Katrina, Rita, Ike, Gustav, the B.P. oil spill, when you think about the fires in the west, the lack of water, we've got a real problem on our hands, and we have to get to a clean energy economy sooner rather than later. The president is and Senator Manchin right now on this particular issue have a difference of the speed, not really the direction.

So, the Inflation Reduction Act also, by the way, had significant health care provisions to save health care costs and lower the costs especially for prescription drugs. So, if you undo that bill, you actually are going to take away the ability to create high paying jobs in states, like West Virginia and Kentucky and in Tennessee, and we think that's a bad idea.

COLLINS: Do you think he's genuinely considering repealing that bill as he's threatened, or do you think it's more of a political play, because he's also weighing whether or not to run for re-election?

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LANDRIEU: Well, I know senator Manchin well. He's a good friend. He and the president have been, as you know, colleagues for a very, very long time. But you have to take Joe Manchin at his word. But his intention to do it is different from whether actually they can succeed in doing that.

The position of the administration is the Inflation Reduction Act is the largest investment in climate reformation in the history of the world, and it's necessary to get there sooner rather than later in a balanced, thoughtful, common sense way.

COLLINS: The other Democrat on Capitol Hill who often causes some headaches to the White House is Senator Kyrsten Sinema obviously from Arizona. She made this comment as Title 42 is set to expire next week.

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SEN. KYRSTEN SINEMA (I-AZ): Obviously the border is not secure. Anyone with eyes can see that.

It would be most helpful if the administration would start by actually enforcing the laws that are on the books.

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LANDRIEU: I'll make a couple of points about that. First of all, when we talk about Senator Sinema and Senator Manchin, always remember that's on top of 50 Republicans never supporting the administration ever. And so it requires us to work with Senator Manchin and Senator Sinema, who, as you know, have been allies mostly.

The border has always been a challenge. The president wants to secure the border, but having a border only approach to immigration doesn't work. We need a comprehensive plan from Congress, which we have not had. As you know, the president and the Department of Defense are deploying the National Guard to the border to help. And as we process people once Title 42 goes away, we need to get it really kind of focused and in the place where it needs to be.

COLLINS: And I should note, obviously, she switched her party. She's an independent now. When it comes to Title 42 expiring, though, is the administration prepared for that?

LANDRIEU: Yes, I think we are.

COLLINS: You do?

LANDRIEU: But it's a difficult problem, there's no question about it. Immigration has been a complicated problem for America for a long time. This is going to put more pressure on us, on the administration, through the secretary of DHS has been working on this. We have agents that are going to the border, to help with the border patrol agents. And, by the way, if we go into default or if the Republicans get their way with the cuts, they're actually going to cut Custom and Border Patrol agents. That's going to make the job much more difficult.

COLLINS: Yes, that crisis on top of what we're already warning could happen with a default.

LANDRIEU: Sure.

COLLINS: Infrastructure, that is why you're here in New York. That is obviously what your day-to-day role is, even though we've hit 20 other topics here. How much money has actually gone out the door so far?

LANDRIEU: Well, $210 billion has been sent out of the door. We have 25,000 projects that have been funded in some form or fashion in every community in the country. And so that's really exciting for us. We continue to work hard with the governors and the mayors to make sure that we build projects really, really quickly. And so roads, bridges, airports, ports, waterways, making sure that we have clean air and safe water, and then preparing, as you said, for the clean energy economy that's coming really, really fast, it's working well.

COLLINS: Mitch Landrieu, thanks for joining us here on set while you're in New York.

LANDRIEU: Thanks for having me.

COLLINS: I appreciate your time.

LANDRIEU: Thank you.

HILL: The U.K. preparing to officially crown its new king tomorrow. This is the first coronation, of course, in seven decades. And for much of the world, it means the first time they'll ever see such an event. So, what can you expect? We'll tell you next.

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