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Democracy Task Force Co-Chairs Speak with CNN; Mark Zandi is Interviewed about Banks; Shipwreck off Italian Coast; Vess Mitev is Interviewed about the Gilgo Beach Case. Aired 8:30-9a ET

Aired August 09, 2023 - 08:30   ET

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

[08:30:00]

J. MICHAEL LUTTIG, FORMER JUDGE, U.S. COURT OF APPEALS FOR FOURTH CIRCUIT: And we simply don't have two competing parties in America.

POPPY HARLOW, CNN ANCHOR: Secretary Johnson, when we look at the polling here, it is very disheartening. So few Americans actually trust our elections. Only 42 percent are even somewhat confident in them. And the numbers are even worse when you look at how Republicans feel. Can we turn that around?

JEH JOHNSON, FORMER HOMELAND SECURITY SECRETARY, OBAMA ADMINISTRATION: I certainly hope so, Poppy. I'm an optimist about this country. I'd like to make the point that this task force, the work we'll be doing is about far more than Donald Trump, though he was the one that really lit the match for the conflagration on January 6th. But the work we're going to be doing is going to be strictly bipartisan, by people who care about our democracy, care about our country, want to see the maximum voter participation and want to see Americans have confidence in the importance of their vote and the importance of our democracy. And we're going to do that, Democrat or Republican, on a strictly bipartisan basis, because we want the American public to have confidence in the work we do and the report we're going to issue.

HARLOW: Yes, it's really foundational to our still young democracy, right? They call it the American experiment, and we have to work together to uphold it.

Before you go, Judge Luttig, to you. We have heard some central claims by Trump's legal team after this most recent indictment that looks like the defense they're going to present in court. They're going to make a First Amendment claim, this was all speech. They're going to say he just relied on advice of counsel, so he did nothing wrong. And that he truly believed that he won. And, therefore, it's all OK and it's all legal. What do you think?

LUTTIG: Well, Poppy, the special counsel, Jack Smith, had anticipated that the former president would claim First Amendment in defense of the charges against him. And, as a consequence, Jack Smith brought charges that -- against the former president that would not allow for a First Amendment defense. And he did that in this way.

The former president now stands charged with criminal offenses of conduct. The indictment makes crystal clear that the former president was not being charged in any way whatsoever with his speech. That is, his calls for the march on the Capitol and all of the multitude of other speech acts that he committed on January 6th, and even before then.

You know, the way - the way to think of it -- the way I think of it, Poppy, is that the other offense for which the former president could have been charged, and many thought might be charged, was with insurrection against the United States of America. That would have entailed, at least potentially, a charge involving the president's speech. But Jack Smith chose not to bring that particular charge under 18 USC Section 2383, most likely to avoid the First Amendment claim that the president was going to make to begin with.

As to the advice of counsel defense, Poppy, of course, you know, standing alone, any defendant would have that potential defense. But in this particular case, for reasons that we won't go into here, that defense will not carry the day for the former president.

HARLOW: And knowingly, that he thought he won?

LUTTIG: Neither will that claim prevent a conviction, Poppy, because the evidence is overwhelming that the former president knew full well that he had lost the election, and the standard will be, could a reasonable person have believed otherwise in the face of the overwhelming evidence to the contrary.

HARLOW: Judge Michael Luttig, Secretary Jeh Johnson, thank you not only for your time this morning, thank you for committing your time to this task force, which so important for this country.

[08:35:09]

I appreciate it.

JOHNSON: Thanks for having us.

LUTTIG: Thank you, Poppy.

HARLOW: You're welcome.

VICTOR BLACKWELL, CNN ANCHOR: Such an important conversation. And to hear Judge Luttig say there is no Republican Party --

HARLOW: It stopped me in my tracks.

BLACKWELL: Yes. Yes.

All right, we have our eye on the stock futures this morning. Good story so far. But Moody's put the credit ratings of six large U.S. banks on notice for a possible downgrade. Moody's chief economist joins us next.

HARLOW: Also, three people charged after that brawl at the riverfront dock in Montgomery, Alabama. The police chief tells CNN more arrests likely. Much more on that ahead.

(COMMERCIAL BREAK)

BLACKWELL: This morning there are new concerns about the health of the banking sector. Stocks fell yesterday after Moody's downgraded several regional banks and warns that it could do the same to six larger banks. Now, the U.S. banking industry, you'll remember, was shaken earlier this year by the collapse of Silicon Valley Bank, Signature Bank and First Republic, one after the other.

Joining us now is chief economist at Moody's Analyst, Mark Zandi.

Mark, good to see you.

So, is this the reason that these banks have been downgraded, is that the same reason we saw the problems with those three banks earlier this year?

MARK ZANDI, CHIEF ECONOMIST, MODDY'S ANALYTICS: Yes, Victor, I can't comment on the ratings, but I think it's pretty clear the banking system is under a lot of pressure, similar to the pressure that existed back in March. You know, at root it's the Federal Reserve's very aggressive interest rate hikes that's raising the cost of funds, the deposit rates that banks use to fund their loan growth, and, therefore, it's undermining or weakening their profitability.

And there's other issues. You know, credit quality, which has been very good, is starting to weaken. (INAUDIBLE) delinquency and defaults on credit cards and commercial real estate loans are starting to rise. Loan growth is weak. You know, the economy has turned softer because of the higher interest rates. And the banks themselves have tightened up under - under -- on their standards for making those loans.

HARLOW: Yes.

[08:40:06]

ZANDI: So, there's a lot of things that are coming together that are putting pressure on the banks, and that's, you know, I think, pretty clear.

But one thing I - one thing I will say, though, Victor, is that this isn't a surprise. In - this, to a large degree, is by design, right? The Federal Reserve is working really hard to slow the economy's growth rate down. And one way they do that is though, you know, putting pressure on the banking system so that the banks pull back on their lending. And that's exactly what's happening.

HARLOW: You make such a good point, when the banks pull back on their lending. So, what does that mean for you, me, and every American in -

BLACKWELL: Peggy in payroll.

HARLOW: Yes.

BLACKWELL: Remember Peggy in payroll, Mark? I used to talk about her at 2:00. The average person at home. What does it mean to her?

HARLOW: Totally. Totally.

ZANDI: Yes.

HARLOW: Yes, because the thing is, you make -

ZANDI: Well -

HARLOW: You make it harder for someone to get a mortgage, it's more expensive to get a mortgage. I think Victor asked Karine Jean-Pierre at the White House a brilliant question. Like, you're tying the president's name, Bidne, to what this economy is going to look like on Election Day, is that wise? I just think, are people going to feel more of this pain, even if inflation is, quote/unquote, improving?

ZANDI: Well, I think, for most people, number one economic problem is inflation, getting inflation down. And, you know, one way you do that is you try to slow things down so that the, you know, the businesses don't raise their prices as aggressively. And one way that, you know, that works is through, you know, making it more costly to go get a mortgage loan, an auto loan, more difficult to get a loan if you're, you know, a business. And - and that's exactly how it works. It's no fun. You know, no one likes it. But, you know, if you're going to get inflation back in the bottle, this is part of the process.

Good news is inflation is getting back in the bottle. It is moving in the right direction. And we'll get another read on that tomorrow with the Consumer Price Index. But that should be a pretty good report.

So, things feel like they're moving in the right direction. And hopefully, you know, six, 12 months down the road the Fed can start taking its foot off the brakes and lowering those interest rates and the banking system will, you know, feel a lot better as a result.

BLACKWELL: All right, Mark Zandi, always good to see you. Peggy in payroll, that was for you. We got the clear explanation of what all this means.

HARLOW: That's what I'm like always going to think about that now.

BLACKWELL: Yes. For the person who's sitting at home, what's this mean?

Thank you, Mark.

ZANDI: Thank you.

BLACKWELL: The adult children of the suspected Gilgo Beach killer have now hired their own attorney who says his clients have been caught up in a hellscape. We'll talk to that attorney, next.

HARLOW: Also, a triple homicide investigation underway after a family was served what police suspect could be death cap mushrooms. What are those? We'll tell you ahead.

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[08:45:35]

HARLOW: Breaking news we are following here. Forty-one people reported missing and presumed dead in a migrant shipwreck off the coast of Italy. That is according to the Red Cross this morning. We know 45 people were on board at the time of the wreck. A three-year-old child, a pregnant woman are, sadly, among the dead.

And let's go straight to our CNN senior international correspondent, Ben Wedeman, who joins us in Rome.

Ben, we just think back to what -- what happened just a few months ago. What do we know about this wreck?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, we know that this wreck was caused -- the immediate cause was a wave that basically capsized this boat that set out it's believed perhaps last Thursday from the Tunisian port of Sfax heading in the direction of the Italian coast.

Now, four people have been picked up, survivors from that boat, and they told the Red Cross that there were, when the boat left Tunisia, there were 45 people onboard, as you mentioned, three -- a very young child, a pregnant woman and others. And this is really just the latest in a regular series of tragedies that are taking place as -- in the Mediterranean as ever greater numbers of people are trying to flee war, instability, hopelessness in places like sub-Saharan Africa, the Middle East, and as far away as Bangladesh.

Now, this year, so far, as of today, the 9th of August, nearly 94,000 people have reached -- migrants and refugees have reached Italy alone. Now, that's doubling the number of people who, by this day last year, had reached Italy, and three times the number from the year before. So, the number is increasing. This is a crisis that we see seems to be getting worse and worse. But the fundamental problems that lead to this mass migration, war, instability, corruption, hopelessness, unfortunately, those problem are not being addressed.

Poppy.

HARLOW: That's exactly right. So important what is underlying all of this and causing them to flee.

Ben Wedeman, appreciate the reporting from Rome.

BLACKWELL: In the wake of their father's high-profile arrest, the children of the suspect in the Gilgo Beach murders are trying to regain their sense of normalcy. The case throws Rex Heuermann's two adult children into, quote, hellscape, according to their attorney, Vess Mitev.

Vess, thank you for being with us.

A 26-year-old daughter, 33-year-old son who has special needs. And the evidence, according to investigators, shows that these first three women were killed when the family, the wife and your two clients, were out of town. Now a hellscape after the arrest. What had they been going through? What are they feeling?

VESS MITEV, LAWYER FOR ADULT CHILDREN OF GILGO BEACH SUSPECT: Well, good morning and thanks for having me.

They're, obviously, living in a waking nightmare. It's not one of their own making. Every day, every moment, the earth is literally shifting beneath their feet as more and more details come out in the investigation. Obviously, the shock and grief that they've experienced is not something you'd wish upon anyone. I don't think I can imagine it. I don't think you can imagine it. But they're trying to realign their reality with what's going on minute by minute. And it's not easy. It's not an easy road. And - And that's - it's not an easy road ahead as well. They have a long ways to go to try to piece back any sense of normally, which, at this point, is nearly impossible.

HARLOW: Yes, of course. Of course. What they're enduring is almost unimaginable.

Can you tell us what you are able to share about their involvement in this investigation? Are they cooperating with authorities, sitting down, speaking with them, sharing DNA samples with them?

MITEV: Well, we don't know what the investigation is going to go -- where it's going to go next. And that's - that's the problem with criminal investigations, you don't know where they go until they get there. And, of course, they have civil rights and liberties that needed to be protected. All of us have civil rights and liberties under the Constitution, under the state of New York laws, and, of course, their civil liberties, at some point, may become intertwined with the district attorney's investigation, which, as we have all learned in the last few days, is massive. There's troves of data being turned over. So, again, needing to protect that and needing to protect their involvement and their place in what could be potentially, you know, an investigation or they could be potentially, you know, they're, again, they have rights and liberties that needed to be protected as this investigation develops further.

[08:50:05]

HARLOW: So what - what - what I'm hearing you say as their attorney then is that they have not talked to the authorities yet, have not provided DNA yet, is that right?

MITEV: We have not been contacted by any investigators at this point.

HARLOW: OK.

MITEV: And, of course, when and if they do, they would have to contact us and go through us, of course.

HARLOW: OK. OK.

BLACKWELL: Speaking of DNA, we know that prosecutors have asked Rex Heuermann to provide DNA. Do you know if he is cooperating?

MITEV: We have no information. Obviously, we don't represent Mr. Heuermann. He has very capable defense attorney counsel.

BLACKWELL: Sure.

MITEV: So, at that - you know, that is something that we can't really comment on.

BLACKWELL: Yes.

What are your primary concerns for your clients moving forward?

MITEV: Sure. Well, I mean, in the immediate moments, obviously, it's their basic needs, their food, their water, their clothing, their shelter. Again, the house was completely destroyed from the floorboards to the rafters. You know, they have -- they lack the basic necessities. So, we're working together, obviously, with the help of the public and the outpouring of support that they've gotten to try to piece back, you know, again, the very, very basic building blocks of any human existence. And that's what they need right now. And, of course, you know, to try to establish some sense of normalcy away from the harsh glare of the spotlight, which it's not something that they asked for and they find themselves immediately under this microscope.

HARLOW: Vess Mitev, thank you for coming on and, please, you're welcome back as you have more information.

BLACKWELL: Thank you.

MITEV: Thanks for having me.

BLACKWELL: Well, the rapper who shot hip hop star Megan Thee Stallion now faces ten years behind bars. How she is responding to the sentencing.

HARLOW: Also, $1.58 billion. That's how big last night's Mega Millions jackpot was. We'll tell you where the winning ticket was sold.

(COMMERCIAL BREAK)

[08:55:42]

BLACKWELL: All right, as you're getting your day started here, "5 Things" you need to know.

Ohio voters overwhelmingly rejected a Republican effort that would have made it harder to amend the state's constitution. It's a major win for abortion rights activists ahead of a November vote on enshrining reproductive rights in the Ohio constitution.

HARLOW: Just look at this video from Hawaii. Winds associated with Hurricane Dora are fueling wildfires, prompting evacuations on both Maui and the big island last hour. The lieutenant governor told us the situation was dire, with hospitals being overwhelmed with burn victims and patients suffering from smoke inhalation.

BLACKWELL: Rapper Tory Lanez sentenced to 10 years in prison for shooting Megan Thee Stallion in the foot three years ago. Lanez pleaded not guilty but was convicted on all three gun charges. In a statement Megan said she was thinking about other victims of violence who could not speak out.

HARLOW: A murder investigation is underway in Australia after three people died after eating a meal that may have included poisonous death cap mushrooms. Officials say Erin Patterson served lunch to her former parents-in-law and her mother-in-law's sister and husband. Less than a week later, three of four were dead, one in critical condition.

Check on your people in Florida. One person just became a billionaire overnight. That winning ticket was sold in the Mega Millions lottery in Neptune Beach, Florida. $1.58 billion jackpot to one person, the biggest in the game's history.

HARLOW: That is "5 Things" to know this morning. Hope maybe one of you is a billionaire. More on these stories all day on CNN and cnn.com.

BLACKWELL: I should have played.

HARLOW: I should have played.

Don't forget to download the "5 Things" podcast every morning. You can find it wherever you get your podcasts.

We're glad you're with us today. A lot of news today. Stay with us for "CNN NEWS CENTRAL" right after this break.

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