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Early Start with John Berman and Zoraida Sambolin

New York Inmate Manhunt; President Obama Says No Complete ISIS Strategy; Battle for Baiji Refinery Ongoing; Pool Party Chaos Divides Dallas Suburb; Migrant Crisis Over Italian Coast. Aired 4:40-5a ET

Aired June 09, 2015 - 04:30   ET

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

[04:30:02] CHRISTINE ROMANS, CNN ANCHOR: Welcome back to EARLY START. I'm Christine Romans. Nice to see you all this morning.

JOHN BERMAN, CNN ANCHOR: I'm John Berman. About 30 minutes past the hour.

Happening now the manhunt intensifies for two ruthless killers who escaped from a maximum security prison in upstate New York. Officers now set up new roadblocks, they're using blood hounds, searching door- to-door in the area around Clinton Correctional facility.

The dragnet now stretches from Canada, just 20 miles from the prison, to Mexico where one of the inmates was once incarcerated. This is an international manhunt now. Authorities are also now zeroing in on how Richard Matt and David Sweat managed to escape and just who might have helped them.

Let's get the latest from CNN's Jason Carroll.

JASON CARROLL, CNN NATIONAL CORRESPONDENT: John and Christine, investigators still following up on now hundreds of leads that have come in to them. One in particular in terms of the investigation has to do with a woman who works here at the prison. She knew both Richard Matt and David Sweat. Knew them well. Worked with them tailoring clothes at the prison.

Unclear at this point what if any involvement she may have had with their escape and what an escape it was. Just to recount how it all happened both of them were in side-by-side cells. They somehow got a hold of power tools, were able to cut through a steel wall, maneuvered down a catwalk behind that wall, crawl through underground pipes, just about 24 inches wide. Finally emerging on the other side. Outside of a manhole located just about a block or so from the prison.

I spoke to a man who used to work at the prison. He used to be a guard here at the prison. Worked here for some 40 years. He says everything he knows about this prison leads him to believe that these men had at least, at the very least, inside help.

(BEGIN VIDEO CLIP)

JACK RUGAR, RETIRED PRISON GUARD: Got have a lot of help there somewheres.

CARROLL: Is it your thinking they may have had help from the inside or the outside or maybe a combination of both?

RUGAR: Probably a combination of both. I mean, you don't cut through a steel wall without somebody hearing it.

(END VIDEO CLIP)

CARROLL: Despite these inmates' violent past, both of them were housed in the so-called honor block of the prison. This is the place in the prison where inmates are put who have exhibited good behavior. And so as a result, they had access to other resources, added resource, such as washers and dryers, more outdoor time, access to phones and televisions. Things of that nature.

In terms of the investigation, where we stand now in this massive manhunt, still some more than 300 members of law enforcement on the ground. But at this point, they could be anywhere. Christine. John.

ROMANS: All right, Jason. Thank you.

This morning, the president is back in Washington facing criticism for saying at G7 meeting that the U.S. doesn't yet have a complete strategy for training Iraqi forces to fight ISIS. That remark gives a surprising opening to the president's foes are calling it an admission that his ISIS policy is failing.

But administration officials quickly made clear that the Pentagon is working on a strategy with three basic options for the president's review here. Expanding the number of conventional U.S. troops on the ground training Iraqis, increasing the number of Green Berets in 12 advise and assist teams now on the ground, and -- expanding, rather, the flow of weapons to Iraqi forces.

CNN's Michelle Kosinski has more from the White House.

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Hi, John and Christine. Yes, it is surprising to hear the president say these words. I mean, in any context regarding ISIS that we don't yet have a complete strategy. You know critics are jumping all over this. They've been sending out e-mails reminding people of something the president said almost a year ago that we don't yet have a strategy.

Well, back then, remember, he was only referring to what was going on at the time in Syria. And again, now, I mean, when you look at the totality of what he said during this press conference, he clearly wasn't referring to an overall strategy against ISIS, but how best to accelerate the plan to train and equipped Iraqi forces.

And he said, you know, it's not just an American question as he waits to get a more complete plan from the Pentagon, which we know could include sending more American trainers there, but it's also something that the Iraqis need to live up to. I mean, he mentioned in some areas there are -- there's a capacity to train more, but there just aren't enough recruits. And that the Iraqi government also has to prove that it's going to continue to be inclusive because the lack of that has deterred more people from joining up there. Also President Obama expressed confidence that some recent ISIS gains

we've seen like the takeover of the city of Ramadi are just temporary and that ultimately ISIS will be defeated. If you look at some recent polls of Americans, though, I mean, just last week about 2/3 said they feel the strategy against ISIS is not going well -- John and Christine.

BERMAN: All right. Thanks, Michelle.

There have been a series of new developments in that battle against ISIS. U.S. intelligence officials now believe the wives of many ISIS leaders may play a greater role in ISIS operations and communications than previously thought. Officials tell CNN that last month's Delta Force raid that killed an ISIS leader netted significant intelligence, including information from the captured wife of an ISIS official, Abu Sayyaf.

[04:35:11] ROMANS: CNN has also learned that the U.S. has had intelligence on possible locations for that man, the head of ISIS, Abu Bakr al-Baghdadi, rarely seen. In fact that's some of the only video you will see of him when he gave a sermon in Mosul. Officials say the information was too late or too vague or just could not be certified. And the U.S. was not able to launch raids or airstrikes targeting the ISIS leader.

Back in Washington, Senators Tim Kaine and Jeff Flake have introduced an authorization for the use of military force against ISIS that they hope will gain bipartisan support. And in London, the prime minister has decided to add 125 more troops to Britain's effort to train Iraqi Security Forces. That brings the U.K. total to nearly 300.

BERMAN: U.S. officials are casting doubt this morning on Iraqi claims that their forces have liberate the strategic town of Baiji. Officials with access to the latest intelligence say that only about half of the city is in Iraqi hands. Half remains in the hands of ISIS.

For the latest, let's bring in CNN's Jomana Karadsheh.

Good morning, Jomana.

JOMANA KARADSHEH, CNN CORRESPONDENT: Good morning, John. As you mentioned, of course, over the weekend we heard from the Iraqi officials, from the Iraqi military and also from the Shia militias. They declared the liberation of Baiji, saying that they gained control of the majority of that city and they described what was left there as pockets of resistance.

But as you mentioned, we are hearing from U.S. officials with access to the latest intelligence saying that it is too early to declare Baiji liberated as you mentioned there. They're saying half of the city remains under ISIS control.

This is not the first time that we are having these premature declarations of liberations especially when it comes to Baiji from Iraqi officials so at this point in time it remains that we have conflicting information both from the U.S. and the Iraqis.

Now when it comes to Baiji, all eyes have been on the Baiji oil refinery, that key installation that has changed hands several times over the past year. And in recent weeks, ISIS gained control over the majority of Iraq's largest oil refinery. While it is not functional, it has been very important for the group to maintain control over this because of its strategic importance and also symbolically for the group.

And there has been a lot of concern that if ISIS is forced to withdraw from the refinery, that it could destroy it on the way out. And now what U.S. -- this U.S. official with access to the intelligence says that there is some progress there that Iraqi Forces have managed to make a little bit of progress in the outer area of the complex punching through the outer parameter and trying to increase their foothold. What they have in there. So the battle for Baiji, John, remains far from over at this point.

BERMAN: No. Far from over. And this has been a point that's gone back and forth over the last several months. Let's see what happens there.

Jomana Karadsheh, thanks so much.

In the wake of the Texas pool party chaos, a Dallas suburb is divided. Protesters are accusing Corporal Eric Casebolt with McKinney Police of racial misconduct for pushing a girl to the ground and pulling his gun on two boys. The protesters say Casebolt should be fired. But some people who live near the pool say police were there to keep order and that their actions were not racially motivated and those actions are being blown out of proportion.

CNN's Nick Valencia has the latest from McKinney, Texas -- Nick.

NICK VALENCIA, CNN NATIONAL CORRESPONDENT: John and Christine, hundreds of residence in McKinney, Texas, showed up to a rally on Monday night to show support to the teenager who was wrestled to the ground by a McKinney police officer. The incident which was captured on cell phone video happened on Friday and it's drawing mixed reaction from the subdivision here just about 45 minutes north of Dallas, Texas.

Many of the residents I spoke to here defended the officers' actions with some going as so far to say that he deserves a medal of honor. Others say that this would have played out entirely differently if the teens were not black.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I completely support him drawing his weapon or a Taser or whatever it was that he did pull because he was being attacked from behind.

(END VIDEO CLIP)

VALENCIA: Late Monday, the union in McKinney released a statement saying that this was absolutely not motivated by race and there is no way that any police officer in the McKinney Police Department is motivated by racial or bias policing. Even still community residents are calling for the officer to resign or be fired -- John, Christine.

ROMANS: All right. Thanks for that, Nick. Not the last you've heard of this. No question.

Community leaders in Cleveland will bypass prosecutors and go directly to a judge seeking charges in the police shooting of this little boy, 12-year-old Tamir Rice. They say they plan to file their request today in the municipal court. The investigation into the Tamir Rice shooting was handed over to the county prosecutor last week but local leaders say they are skeptical pointing to other police-involved shootings where officers were cleared.

[04:40:04] You can see that's him, he's 12 years old. He's got a toy gun. Police arrived just 12 seconds later.

BERMAN: Well, the question --

ROMANS: So a few seconds later he was shot dead.

BERMAN: Did they know it was a toy gun?

ROMANS: Right.

BERMAN: The Federal Railroad Administration is urging commuter rail lines to ramp up safety. It is recommending the train lines look at where they have sharp curves and that they adjust their automatic train control safety programs to prevent going too fast in those areas. If that technology is available, the federal agency recommends both an engineer and a crew member be at the train's controls. The action comes in the wake of the deadly train derailment in Philadelphia last month.

ROMANS: A new report by the Department of Homeland Security reveals the TSA failed to identify 73 active employees with links to terrorism. Just think about that for a moment.

BERMAN: Yes.

ROMANS: Seventy-three people working in sensitive locations in airports with links to terrorism. These workers had access to planes, tarmacs and luggage at airports across the country. This morning on Capitol Hill the DHS inspector general, John Roth, he's going to testify about the findings of the inspector general before a Senate committee. He's going to try to explain how these workers slipped through the cracks and the problems that led to that. He will outline the report's findings which say the TSA lacks effective controls to block potential employees with criminal histories or who are in the U.S. illegally.

Now isn't the whole point of the TSA is that this new infrastructure -- I guess it's 10 years old, but this new infrastructure is meant to take all of the other parts of the government and make sure we're safe in airports? The air traffic control system is safe. BERMAN: Let's hope they make the improvements that they need to make.

ROMANS: It's just ridiculous. Is that editorializing?

BERMAN: I don't think so.

ROMANS: OK. Thank you.

Let's get an EARLY START on your money this morning. Asian and Europeans stocks lower. Tracking the Dow's drop yesterday. It erased all the gains for the year. Stocks down three sessions in a row.

The big banking story today, a huge restructuring at HSBC, slashing up to 50,000 jobs. The British bank will sell its operations in Brazil and Turkey. Losing 25,000 positions and cut another 22,000 to 25,000 jobs across the bank.

The bank wants to save $5 billion a year by 2017.

BERMAN: Wow.

ROMANS: That's what this restructuring is for. Now the focus now shifts to online banking and self-service. They're going to shutter 12 percent of the bank's branches.

You know, I've covered banking for a long time. And there were years, decades actually, where they were just getting bigger and bigger and bigger. And you could see these brands on just about every street corner around the world. You know, it was the face of these big banks. Now they're going in the other direction.

BERMAN: You're not old enough to have covered banking for decades.

ROMANS: Yes, I am actually. OK. Two decades. Almost.

BERMAN: All right. Europe is facing a migrant crisis. Thousands arriving every day with nowhere to turn. We're going to take you live for a look at what is being done to battle this humanitarian disaster.

(COMMERCIAL BREAK)

[04:46:30] BERMAN: A new wave of migrants could arrive today in Italy. And that creates new problems for that country. Officials there struggling to cope with more than 1100 rescued Monday in the Mediterranean.

Our senior international correspondent Nic Robertson joins us now live with the latest.

Good morning, Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, John, good morning. And this flood of migrants doesn't stop. We just heard from the Italian coast guard, they are responding right now to a distress call, they believe. Two boats -- two wooden boats about 40 miles off the Libyan coast. They are sending a coast guard vessel there right now to investigate.

But if it's wooden boats, that means there could be many, many hundreds, 400, 500, even more aboard these boats. So that could be as much as 1,000 migrants that they're going to try to rescue right now. Coming ashore in the next hour or so, another 447 migrants that the coast guard and a merchant cargo ship picked up yesterday. They were picked up from rubber dinghies.

Just to give you an idea these inflatable dinghies are designed to carry about 20 people. These, 447 people, were picked up from four rubber dinghies. That's more than 100 per dinghy. Absolutely unseaworthy to try to cross the several hundred miles of Mediterranean. So they were saved. They're coming ashore.

And while we were standing here yesterday talking to the captain of the British ship who brought those 1100 plus migrants ashore right here yesterday, he's back out at sea. He said if he hadn't had done that yesterday, he felt sure many would have drowned because the weather at sea was changing overnight yesterday. But clearly they keep coming -- John.

BERMAN: They keep coming. They'll look for any opportunity to hit the ocean right there. Such a dangerous journey.

Nic Robertson, for us, thanks so much.

ROMANS: And saved for now. But now they still have an immigration process to go through. You know, Europe is struggling with what to do. How to process and give -- you know, now everyone is going to be able to stay for sure.

All right. A king's ransom for a baseball being paid off by Apple. We'll tell you how this bizarre comes together.

(COMMERCIAL BREAK)

[04:52:13] BERMAN: So the test of a rocket powered flying saucer ended with just partial success. The NASA spacecraft was able to deploy an inflatable cushion that could be used on a future Mars mission. But the test parachute failed to work as planned. Those portable chute. The saucer shaped craft, it made a supersonic splash down in the Pacific Ocean. A test last year produced a similar result but NASA says it will study the data to learn and improve.

ROMANS: All right. Music streaming not the only big news from Apple Monday. The CEO Tim Cook announcing the company will pay the ransom playfully demanded by members of the Cleveland Indians' bullpen. The pitchers scribbled this ransom note demanding a slew of Apple products including iPhones, iPads, Apple Watches in exchange for the ball hit by team mate Brandon Moss for his 100th career homerun.

On Monday, Tim Cook proudly displayed the homerun ball telling the world his company is picking up the tab and presumably returning the ball to Moss.

BERMAN: All right. I know many of you might have been sleeping at 9:00 last night. Christine Romans did not stay awake for it. But something rather epic happened. There was a "CNN QUIZ SHOW" with a heroic finish.

(LAUGHTER)

BERMAN: Let's watch.

(BEGIN VIDEO CLIP)

DON LEMON, CNN ANCHOR: We think it's F. Lee Bailey.

ANDERSON COOPER, CNN ANCHOR: That is correct.

(CHEERS)

BERMAN: Yes.

COOPER: How much did you wager? 371 points. That brings you up to 1181. You guys win the game. Congratulations. Nicely done.

(END VIDEO CLIP)

ROMANS: I'm going to be honest. I had my money on Richard Quest.

BERMAN: We had --

ROMANS: That guy, like, knows a lot of stuff.

BERMAN: We did about 1100 times better than Richard Quest if you look at the miles score right there.

ROMANS: Wait. What was the question that the answer was F. Lee Bailey.

ROMANS: It was who represented Patty Hearst in the 1970s in her trial there. It was really fun. Everyone did such a great job last night. I have to tell you, it was incredibly entertaining. And the questions I think something everyone can identify with. Even if people were not born in the '70s like you, Christine.

ROMANS: No, but I mean, Brooke Baldwin was barely born in the '70s.

BERMAN: She barely was, but she knew her stuff, man. Richard Quest, not born in America. I mean, I don't even think the '70s happened in Britain, yet he crushed it last night as well.

ROMANS: You see? I think -- doesn't he think that everything originated in Britain in the '70s?

BERMAN: His answer to everything was Harry Potter. It was awful.

(LAUGHTER)

ROMANS: All right. The economy is on the right track. But according to a Fed chair, there's a looming threat that could destroy it all. What is it? That's next. [04:54:46]

(COMMERCIAL BREAK)

ROMANS: I'm Christine Romans. Let's get an EARLY START on your money this Tuesday morning. Stocks lower around the world. Here in the U.S., stocks barely moving. Futures that is. Stocks have been sinking for three days now in a row. Yesterday the Dow --

BERMAN: Unacceptable.

ROMANS: Yes. The Dow down 83. That erased all the gains for the year. You're flat in the Dow now but still pretty close to record highs but hanging up there.

A relief is coming to former Corinthian College students. The government forgiving federal student loans for students who attended this for-profit college. Nearly 350,000 students took out loans adding up to $3.5 billion to attend the school. And the Department of Education forcing Corinthian to close or sell its 100 campuses across the country. The government says -- the Department of Education says this college was preying on low-income people with expensive loans and not delivering on the degree.

All right. The American economy doing better than it has in a decade. And that's according to the former Federal Reserve chair, Paul Volcker. But one threat to that, he tells me, our financial regulation is inadequate.

(BEGIN VIDEO CLIP)

PAUL VOLCKER, FORMER FEDERAL RESERVE CHAIRMAN: We're basically left with the same rickety inadequate administrative system that we've inherited over the years with particular problems. There are too many agencies overlapping, gaps in between.

ROMANS: Alphabet soup.

VOLCKER: Alphabet soup. And it's getting more and more challenging. Much of finance is moving outside the banking system.

ROMANS: Right.

(END VIDEO CLIP)

ROMANS: Now of course I asked him what he thinks the Fed should do about interest rates because he famously, famously made some tough calls on interest rates in a very bad time.

BERMAN: Erased them.

ROMANS: In the '70s.

BERMAN: A lot.

ROMANS: And a lot of people said, look, maybe the Fed should be raising interest rates already --