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Biden Sees "Reason For Some Optimism" As Inflation Eases; Inflation Cools More Than Expected In November; Disgraced FTX Founder Indicted On Wire Fraud & Conspiracy; Bankman-Fried This Weekend: "Don't Knowingly Commit Fraud"; Pew: 16 Percent Of Americans Have Invested In, Traded Or Used Crypto; Sen. Tester: "No Reason" Why Cryptocurrency Should Exist; Indicted FTX Founder Was Major Midterms Donor To Dems; Long Lines Of Migrants Flood U.S.-Mexico Border Facilities; Sinema, Tillis Target Immigration Reform During Lame-Duck Session. Aired 12-12:30p ET
Aired December 13, 2022 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN KING, CNN HOST: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing your day with us. From crypto king to criminal suspects, 30-year-old Sam Bankman-Fried arrested in the Bahamas, an extradition hearing happening as he was supposed to be testifying on Capitol Hill right now.
Plus, an alarming surge of migrants crossing the U.S. border near El Paso. It's draining resources and overflowing - overwhelming border towns. And it comes just ahead of a major Biden administration policy change. And history today in the White House Rose Garden, President Biden will sign a bill protecting same sex marriage, that a decade after he publicly changed his stance on LGBTQ rights.
Up first for us though, important new numbers that tell us inflation is cooling some. The consumer price index, which looks at what you pay for goods and services, was up 7.1 percent for November compared to last year. Now that's still high. But it was a lower number than most economists expected. Stocks today staging a rally.
Investors see these new inflation numbers as proof. The Fed will make a more modest hike in interest rates when it meets tomorrow. At the White House this morning, President Biden predicting prices will keep coming down. And he suggests, he deserves some of the credit.
(BEGIN VIDEO CLIP)
JOE BIDEN, 46TH U.S. PRESIDENT: Our goal is simple. Get price increases under control without choking off economic growth, bring inflation down while keeping our labor market resilient, build an economy from the bottom up in the middle out, an economy with good jobs, good wages, and for the long run, not a boom or bust economy. Because of my plan, we're beginning to see historic investments that are leading companies to invest hundreds of billions of dollars.
(END VIDEO CLIP) KING: With me to share their reporting and their insights on this important news, CNN's Kasie Hunt, Tia Mitchell of the Atlanta Journal- Constitution, CNN's Matt Egan, and our CNN economics commentator Catherine Rampell. Catherine, I'll start with you. The president voicing hope that this decline is a slide, and it will keep going down. Does the data back that up?
CATHERINE RAMPELL, CNN ECONOMICS AND POLITICAL COMMENTATOR: Well, it looks like inflation may have peaked. And to clarify, going down does it mean that prices go down? It means that price growth slowest, right?
KING: Yes, the rate of price increase is slow.
RAMPELL: Remember your calculus a long time ago, it's about the derivative. But basically, it means that most things are not getting cheaper. There are somethings that our used cars are getting cheaper, gasoline is getting cheaper, overall prices are still going up. They're just not going up as quickly as they had been.
And actually, there had been some signs in this or that were not in this report, but from other data that indicate that the report may even understate how much better things have gotten. For example, the report today showed that rent costs, shelter costs are going up. If you look at some private sector data that looks at new rents being offered, those rents seem to be falling. So, it does seem like there is good news on the horizon.
KING: And so, let's stick there for a minute, Matt Egan, and we'll get to tomorrow on how the Fed handles this. But you mentioned that the rent shelter costs in this report up 7.1 percent, gasoline up 10 percent from a year ago, food up 10.6 percent.
So, if you're an average American family struggling out there, you're looking at these numbers and you're saying, I hope it's getting better, but you're still feeling the punch. The question is, you know, when does it - when do you actually start? OK, this is not as bad as it was two months ago, three months ago, six months ago?
MATT EGAN, CNN BUSINESS REPORTER: Well, hopefully people are feeling that right now. Because we know that they pay so much attention to gas prices. We've seen it plunge in gas prices. I mean, it's kind of amazing to think that it's cheaper nationally to get gas now than a year ago, given everything that's happened. But to your point, food prices remain high, they're going up pretty quickly.
And so, it is too early to declare victory, because I think that inflation is still hurting people. But the trend right is finally going in the right direction. It's the fifth straight month of annual inflation cooling. This is the lowest annual rate since late last year. And that is a big deal. I think it's a big deal for families. It's also a big deal for the economy, and of course, for the Federal Reserve.
KING: The United Airlines' CEO was on CNN this morning, talking about a big purchase, big deals to buy new jets from Boeing, that's manufacturing jobs here in the United States. And Scott Kirby says, he says that people keep talking about a recession. And he says maybe we'll talk ourselves into a recession. But he says he's looking at the data for his business and maybe not.
(BEGIN VIDEO CLIP)
SCOTT KIRBY, CEO UNITED AIRLINES: If I didn't watch business shows or read the Wall Street Journal, the word recession wouldn't be in my vocabulary because we just don't see it in our data. In fact, every month we set new records. A lot of what's happening I think is return to normalcy that feels like a recession to some, but it feels great to all of us that are in the services industries.
(END VIDEO CLIP)
KING: When it comes to the politics of this, if you're the president United States, coming out of the midterm year, getting ready for a presidential reelection cycle, you say I hope that guy is right.
KASIE HUNT, CNN CHIEF NATIONAL AFFAIRS ANALYST: Yes. I was going to say you listed all the people for him this is great. The other person is great for us, Joe Biden, the president United States. And frankly, any politician that that holds power and is going to be held responsible by voters for the economy.
I mean, I do think if they're able to actually solve the inflation problem without sending us into a recession, or without spiking the unemployment rate in a way that people start to feel it, I mean that would be a really remarkable event. I'm not sure we've seen that. I mean, you would know - you both would know, in terms of the economics, I think, from political terms, I've never reported on something like that.
KING: And there is in this, we're about to shift into divided government here. I guess there's a couple of weeks left or a week or so left in the lame duck session. But this is up to the Fed, really now in terms of no big policy changes, because the president of the Republicans in the House are not going to be to agree on anything, right?
TIA MITCHELL, WASHINGTON CORRESPONDENT, THE ATLANTA JOURNAL- CONSTITUTION: Yes. And I think for the Fed to them, this good news might have them cooled off because they've really been raising interest rates vary. I guess (crosstalk) yes, aggressively is the word I'm looking for. And so, I think this might allow them to stop that, calmed down a little bit, which I think businesses like that airline CEO would really appreciate. But it's right. You know, when we get into this new Congress, it's going to be, I think the new Congress is not going to be able to get much done on any levels, particularly when it comes to these economic issues.
HUNT: Should be crises to crisis.
KING: And the Fed tomorrow, we think 50.50. EGAN: Yes. It's a slam dunk that they're going to raise rates. I think the question is how much and today's report does give them I think the leeway to go from 75 basis points, the last four rate hikes to 50 basis points, but they are still, you know, they still do have their foot on the brakes in the economy. And there is a little bit of a timing factor because these rate hikes, they don't hit the economy right away. There's a delayed impact. It could take six months. So, we may not be done feeling the impact of these rate hikes for quite some time.
KING: The report suggests the Fed approach is working. The question is check back in a month, check back in another month and see if that slide one of the last increase rate? We could do our Venn diagrams.
KING: No, I like that. Let's turn now to what the SEC calls a house of cards on a foundation of deception. Former crypto CEO Sam Bankman- Fried, you see him there, now facing eight criminal charges. This morning, he was had an extradition hearing in the Bahamas as federal prosecutors in New York released this indictment.
The arrest timing is noteworthy. Bankman-Fried was scheduled to testify before Congress today. At that hearing, you see right there. The veteran executive who took over as the FTX CEO said the company is a mess, says it lacks basic accounting and ethics tools. And he's the guy who fixed and runs. CNN's Kara Scannell joins us now. Kara, take us inside this indictment?
KARA SCANNELL, CNN CORRESPONDENT: Yes, John. So, it is an eight-count indictment, two counts of wire fraud and multiple counts of conspiracy. The prosecutors and the U.S. Securities and Exchange Commission in a civil complaint are alleging a massive fraud, a fraud that they say started at the inception of these companies.
Now, one of the allegations here is that it centers around FTX. This trading platform and also Alameda, that's a hedge fund that Bankman- Fried had also set up. The prosecutors allege that Bankman-Fried had taken customer deposits that were supposed to be used in the trading and use them to backstop the hedge fund to cover expenses, its loans, and even to what prosecutors say was worth already say, Bankman-Fried used as a piggy bank to cover personal expenses, including he's taking out $1.3 billion in loans.
Other executives also took out hundreds of millions of dollars of loans. They use it for political donations, that is another one of these criminal charges. They say that he had made political donations in the names of others. Of course, the whole world of crypto and whether and how it's regulated is a big issue. This was one area where Bankman-Fried was trying to be the player. The person who set - helped set rules of the road as you said the SEC called this a House of cards. Here's a big myth free told the BBC this weekend.
(BEGIN VIDEO CLIP)
SAM BANKMAN-FRIED, FORMER FTX CEO AND FOUNDER: I knowingly commit fraud. I don't think I committed fraud. I didn't want any of this to happen. I was certainly not nearly as competent as I thought I was.
(END VIDEO CLIP)
SCANNELL: No, that's obviously going to be a question for the jury. As you said he is in the Bahamas now. At this hearing, big question is will he fight extradition? And how quickly will he get back to the US to face these charges? His lawyer issued a statement saying that Mr. Bank been freed is reviewing the charges with the legal team and considering all of their legal options, John?
KING: Kara Scannell, appreciate your team that up for us. Let's bring the conversation back in the room. And what is striking about this, I was - because I was laughing about it. It's not a laughing matter to anybody who invested in FTX. Is they brought in John Ray, when Bankman-Fried had to step aside, when they file for bankruptcy in FTX. John Ray is the guy who came in to clean up Enron. And listen to how he describes what he inherited.
(BEGIN VIDEO CLIP)
JOHN RAY, FTX CEO: The FTX group's collapse, appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced, unsophisticated individuals, who failed to implement virtually any of the systems or controls that are necessary for a company entrusted with other people's money or assets.
(END VIDEO CLIP)
KING: I mean, what's the A, we'll see how the criminal case goes forward. But what's the word for this? I'm listening to this. I'm reading some of these articles about all this. It's not quite a Ponzi scheme. You're not taking people's money and giving it to like that. But the people think they're investing in crypto. And the allegations are that this was essentially a slush fund.
RAMPELL: Yes. That the money was being gambled away for either personal expenses or for the hedge fund itself. Look, I think it's never a good sign when your accounting practices are being compared unfavorably to Enron. Enron maybe had two sets of books. FTX had no sets of books. They had, you know, emojis that they would slack back and forth about expenses and things like that. This is a mess. This is absolutely a mess.
And I think Sam Bankman-Fried strategy, if you look at his bizarre media appearances today, has basically been to try to convince the world that this was not deliberate fraud. This was incompetence. We were just kids. We didn't know what we were doing, you know, whatever. And look, obviously, they were sloppy, obviously. But those kinds of excuses are maybe more palatable if you're running a lemonade stand. And then if you're running like a billion-dollar company.
KING: And so, what is the impact? And I actually apologize for laughing because there are a lot of people out there who saw this come along and saying, here's a chance because it was sold to them. As here's a chance with a modest amount of money to get involved in the next big thing. Pew did a survey on this that said 16 percent of Americans have invested in traded or used crypto.
A 71 percent said no, and 12 percent said they haven't heard of it. But I was surprised that 16 percent seemed a little high to me. But what is the impact for somebody out there who whether it was $10, $20,000. What's the impact on them?
EGAN: Well, a lot of people, they have their money tied up in court right now, in this bankruptcy, and a lot of people are going to lose money. And the crazy part about this is, you know, FTX and Sam Bankman-Fried, they weren't just some fly by night, like entities that no one had ever heard of. I mean, they really were the faces of crypto.
And they were presented as sort of the gold standard here, right? The guys that you could go to entrust to put your money with them. And they had these endorsement deals, right. with Tom Brady, and Gisele, and Steph Curry, their logo was on the patch of the MLB umpires and the arena of the Miami Heat.
So, this was a big, big brand. And the fact that now the SEC is alleging that it was all just the House of cards and built on deception is incredible. And it really shows without a shadow of a doubt that crypto is just the wild-wild west of the financial industry. And now Congress is going to try to get this right in terms of regulator.
KING: And that's an interesting point, because Congress is trying to figure out what should we do here? What is the federal role in this? And that's always done in the rearview mirror. You learn about these abuses, alleged crimes, and you see it, but listen to, John tester, he's a Democrat. He's on the bank Committee. He says I don't want to get involved in this at all, because that would legitimize it.
(BEGIN VIDEO CLIP)
SEN. JON TESTER, (D) MONTANA: t's not been able to pass the smell test for me. I have not been able to find anybody who's been able to explain to me what's there other than synthetics. If we regulated, it may give it the ability if people think it's real. I see no reason why this stuff should exist. I really don't.
(END VIDEO CLIP)
KING: I get it. I get it, but it does exist. The genie is out of the bottle. So, the question is, what is Washington going to do?
MITCHELL: Yes, right. I wasn't saying we're talking about billions of dollars here. And we're also talking about whether Tester and other lawmakers want to accept it or not. Now Congress is brought in and Sam Bateman free try to ingratiate himself with political players in ways that I think now draw more scrutiny if Congress doesn't act to regulate crypto currency.
KING: And $37 million in contributions to the Democrats, about $240 grand to the Republicans, including one of the senators on the far right there. Bozeman, who wrote the bill that Bankman-Fried likes, in sort of regulation light.
HUNT: But I think it's important to also underscore that it's been acknowledged that Bankman-Fried also used nonpublic channels to donate money to Republicans. And there really are two big picture problems and questions here.
One, Congress has not shown an adaptability to deal with cutting edge technology in any sort of sophisticated way. And that has applied to content moderation, foreign interference on platforms, and now to crypto. So, there's a real competence question in terms of what can they do?
But secondly, look, this guy was in there saying to Congress. Look, hey, you can have some of my money. Also, here's a great way to make a lot of money without a lot of rules, right? There's a lot of people in Congress who actually are sympathetic and interested in using this platform.
And the ones who have fewer scruples than, you know, actually I'm impressed Jon Tester was out there, kind of with that message of like, hey, this is not necessarily real. We shouldn't endorse it because many of his fellow members of Congress do not have those scruples. And there's a lot of questions about whether they're willing to do what needs to be done because they want to take advantage of it themselves.
KING: Now you have a prominent legal case to air out the details, which we'll see if that - we'll see what action it brings in our age of divided government. Up next. What to do about this? Look at these photos, more than 2000 migrants crossing into the United States near El Paso, Texas. The Biden administration now facing tough choices just as Republicans prepare for aggressive border policy investigations.
KING: A major surge of migrants now at the U.S. Mexico border. Look at these images, right at the border coming across from Mexico crossing the river lining up to turn themselves in. That's an important distinction, lining up to turn themselves into border patrol officers. More than 2400 crossing near El Paso, Texas each day over the weekend. It's at least partially because the Trump era immigration policy that allows officials to quickly send migrants back home is going to end very soon.
This influx pushing homeless shelters in El Paso to the brink. Many local officials say our app are over capacity. Officials fear what might happen Ben if title 40 to a Trump administration policy is officially lifted next week. POLITICO's Jonathan Martin joins our conversation. and CNN's Priscilla Alvarez as well.
I ask the question, if Title 42 disappears, the assumption is it is gone. What does the Biden White House do? A, when you see these pictures, more migrants - surge is continuing caravans allegedly forming to come and the fact they know that House Republicans are about to take over.
PRISCILLA ALVAREZ, CNN WHITE HOUSE REPORTER: Well, this is exactly the situation that they have been nervous about. And that has generated concern within the administration is the images that we are seeing, which is hundreds of migrants crossing only one part of the U.S. Mexico border on a daily basis. And that has strained already overwhelmed resources.
In fact, just moments ago, the U.S. border patrol chief tweeted that last October, and to this October in just that sector, there has been a 288 percent increase, such a massive increase for a sector that is now dealing with what we are seeing. And to your point about the if on Title 42, there is still ongoing litigation.
So, it is entirely possible that the deadline of next Wednesday when we expect this to end, maybe push but all of this is tied up in the courts. And in the meantime, the Biden administration has to face the reality that there are hundreds of migrants across Mexico who are interested in crossing the United States.
KING: And so, there's the policy challenge there. There's a huge humanitarian challenge there and then there's the politics, Jonathan. And looked, you just put this graphic up southwest border encounters, it goes back to October 2019. Just look at the right hand of your screen, you don't even need the number
So, here's that it's both a giant policy challenge and the political challenge for the Biden ministration. has been since day one. But it's more complicated now, because Republicans promised to investigate this issue. They say they may possibly even impeach the homeland security secretary.
JONATHAN MARTIN, POLITICS BUREAU CHIEF & SENIOR POLITICAL COMMUNIST, POLITICO: Yes. And I think you'll be hearing a lot more about this in 2023. You know, I think for the first few years, the Biden administration, this did not get a lot of attention apart because COVID was obviously so dominant.
I think we're going to be hearing quite a bit more because you're going to see the House GOP really push this to the fore. You mentioned the possible impeachment inquiry of Mayorkas, that's going to be a drive. I think, just generally they're going to focus on the instability of the border. And frankly, they see it as a winning issue.
There is some sort of last-ditch, hope that the Senate can come together and craft a bipartisan bill on immigration to address some of these issues, perhaps a grand bargain of surge more border security, for some kind of a deal on dreamers. That's really hard to see, given the current political environment and the offensive opportunities the GOP sees on the issue.
KING: Right. And so, let's put up the details of that. Because again, you have the now independent Senator from Arizona, Senator Sinema with the Republican Thom Tillis. So, you think, OK, you've got a more centrist Democrat who's now an independent. You have a Republican, there will be a path to citizenship for the dreamers that would extend Title 42 allowing you to turn back some migrants, money for border security.
And you look at that, you think, OK, there are plenty of votes for that. And then you laugh and say, for 25 years, again, laughs the wrong word. For 25 years, people have put together proposals that if they actually got a vote on the floor would pass, but they don't because of the competing interests in the politics.
MITCHELL: Right. And I think, you know, when you look at what Tillis and Sinema are working on, it seems reasonable in a lot of ways, but then you think about the new House Republican leadership that's coming in, and there's just no energy around doing something right now and the lame duck. Republicans want to take control of the House, and really have a more comprehensive and a more aggressive approach towards immigration.
And I think that's not necessarily a bad thing, either. But it's like getting past the theater of immigration and getting towards actually doing something. And that's where the question mark is, under a new Republican leadership.
KING: In the current environment, if you put that graphic back up there, it'd be hard to get progressives to agree to the $25-$40 billion for increased border security, without more. They would want more immigration reforms, they would want a guest worker program, they would want a more dramatic path to citizenship for more than just the dreamers. And you have no votes to spare in the house.
So, you can't get it done now, or very difficult to get it done now. And then in less than 30 days, three weeks, the Republicans are in charge in the House, where I can't see any agreement with this White House on anything that related to the border. Yes,
HUNT: I mean, I can't tell you the number of times we've seen this movie before, John, as a congressional reporter. I mean, the best chance they had was when George W. Bush was in office back in 2005. And they couldn't get it done then and every single time has been a disaster. And one of the things that's really changed, I think, in the last, you know, two, three years under the kind of in the Trumpian GOP is the decline of the power of the business lobbies, specifically the Chamber of Commerce.
They say historically have been a really strong voice for actually trying to figure out a way to bring immigrant labor of all skill levels into the United States. And it was a factor that allowed some Republicans in the past to get on board with some of these compromises. And that has really changed in a populist Republican Party.
[12:25:00] If you think about the way Ron DeSantis talks about in the business community, for example. It's just completely different than it used to be. And so, it's even harder to figure out how the constituencies would come together to make something like this happen.
KING: At the White House, look, the policy options here are difficult and trying to defend a threat a lot of needles. But is their tone changed at all early on, they were almost pushed back, right? So, it's just the Republicans or it's just Fox, or we're stuck with these Trump policies. It's not our fault. They're two years in now, is there a tone shift and realizing is complicated as we got to figure out a better way.
ALVAREZ: This is an issue that they have kept at arm's length. It was one of the first issues Biden face when there was a surge of unaccompanied minors in the spring of 2021. Then there were the congregation of Haitian migrants under a bridge in Del Rio. And now that's the big picture here is that the administration, had Title 42 because it came from the Trump administration, it may now go away.
And that means going back to protocols we had for decades beforehand, at a time of mass migration in the hemisphere, and that makes this uniquely difficult for the administration as it faces going back to protocols that frankly are outdated when they're dealing with so many people that are moving across the hemisphere.
KING: Big issue every day for the next two years without a doubt. Up next for us. Never before seen moments of Nancy Pelosi. And what the speaker's filmmaker daughter says was the best moment of her adult life.