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Declassified Footage Shows Russian Jet Colliding With U.S. Drone; Sources: Russia Ordered Jets To Harass U.S. Drone; Pentagon Chief: U.S. Will Continue Drone Surveillance Flights; Video Of Mid-Air Collision Heightens U.S.-Russia Tensions; Yellen: U.S. Banking System Is "Sound"; Treasury Secy Yellen Testifies On Capitol Hill After SVB Collapse; Biden Admin To TikTok's Chinese Owners: Sell Or Face Ban; TikTok CEO To WSJ: Sale Won't Solve Security Concerns. Aired 12-12:30p ET

Aired March 16, 2023 - 12:00   ET



JOHN KING, CNN HOST: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing your day with us. A high- altitude picture of the mid-air encounter between an American drone and Russian fighter jets. The declassified video shows Moscow putting the drone in its crosshairs, igniting a cloud trail of jet fuel, then buzzing the drone twice.

Plus, our banking system remains strong. The treasury secretary tries to calm nerves. She's up on Capitol Hill today, assuring Americans, your money is safe. And today, the Senate barrels toward a vote on undoing the use of force authorizations against Iraq. Yes, against Iraq. It happens two decades after the run up to shock and awe.


GEORGE W. BUSH, 43RD U.S. PRESIDENT: Tomorrow is a moment of truth for the world. Saddam Hussein and his sons must leave Iraq within 48 hours. At this hour, American and coalition forces are in the early stages of military operations to disarm Iraq, to free its people and to defend the world from grave danger.


KING: Up first for us though, 42 seconds and simply hold your breath video, adding the sky-high tensions right now between the United States and Russia. Today the Pentagon declassifying this, surveillance footage from that MQ-9 Reaper drone, taken as Russian pilots harassed the aircraft over international waters. That is jet fuel you see sparked by the SU27's afterburner, splashed on the drone in an attempt U.S. official say to blind it.

On a second, high speed past Russia flying too close, clipping the Reaper's propeller, knocking the video feed offline. The damage though clearly visible when the camera kicks back on. Washington and Moscow now trading accusations and blame over which side is at fault. And the White House gave the green light to release that video. So, you can see the aggressive Russian behavior. Let's begin at the Pentagon this hour, with CNN's Natasha Bertrand. Natasha, the video is wow. I guess the big question is what now?

NATASHA BERTRAND, CNN NATIONAL SECURITY REPORTER: It's a great question, John. And we are not necessarily seeing any escalating rhetoric coming from the U.S. vowing consequences for example, but this video really is kind of a response in and of itself to the statements that Russia has put out over the last several days, denying that those Russian fighter jets ever came into contact with that U.S. drone over the Black Sea.

As we can see quite clearly from this video, the pilots do actually make contact with the drone, causing that propeller of the drone to be damaged. Now U.S. officials say, really that damage could have only happened by a direct impact from that fighter jet. However, you Russian officials still denying that their pilots acted irresponsibly or recklessly.

The U.S. now is saying that they do not believe necessarily that they're going to be able to recover the wreckage of this drone, because they do not have any naval assets in the area that would be readily available to actually collect the debris.

The Russians meanwhile, we are told have already arrived at the crash site. Unclear whether they are also going to be able to pick up that debris just because the water there is so deep and the U.S. officials who spoke yesterday at the Pentagon said, that they do believe that this drone actually broke up when it hit the water. But the U.S. is also telling us, U.S. officials are also telling us that they did take steps to wipe that drone of anything sensitive.

But I should note, John, that in addition to the Russian denials about their pilots acting irresponsibly, and about any direct contact with this drone, we were also told that this order to harass the drone actually did come from senior Russian officials within Russia's Defense Ministry. So, this was not pilots going rogue here. This was actually a direct tasking from the Russian Ministry of Defense, John?

KING: Markable moment to say the least. Natasha Bertrand, appreciate you're kicking us off. Let's get some important insights and perspective now from the former NATO Supreme Allied Commander General Wesley Clark, and the former Deputy Director of National Intelligence Beth Sanner.

General Clark, let me start with you, and let's listen to General Mark Milley. He's America's top military commander, Chairman of the Joint Chiefs of Staff. He says there is no doubt in his mind that Russia was being provocative and being reckless. The question he says, he does not have the answer to is did they ram the drone on purpose? Listen?


GEN. MARK MILLEY, JOINT CHIEF'S CHAIRMAN: It wasn't intentional or not? Don't know yet. We know that the intercept was intentional. We know that the aggressive behavior was intentional. We also know it was very unprofessional and very unsafe. The actual contact of the fixed wing Russian fighter with our UAV, the physical contact with those two not sure yet.



KING: So, two questions. Number one, is there any way to definitively answer that question? Can you pick up maybe communications, can you try to go back and scrub all the intelligence to see if there's any radio traffic back and forth that answers that question. And number two, from your perspective as a military man, what now? What happens if this doesn't happen again? The Pentagon says, they'll send the drones back up, they'll do the surveillance. But what happens if Russia downs another one?

GEN. WESLEY CLARK (RET.) FORMER NATO SUPREME ALLIED COMMANDER, EUROPE: So, first of all, obviously, we're looking at all of the communications and intercepts. It's hard to believe that that wasn't intentional. Because what's the advantage for the pilot to get that post to the drone, he tried to bind it with the fuel. It could have been an intentional takedown of the drone.

It's happened before we had a Chinese pilot 20 years ago, who got close to a U.S. Navy intel platform out in the Pacific and actually hit it and it landed and the Chinese got a bonanza of intelligence from it because the system wasn't completely sanitized when they landed. Now, hopefully, this drone has been totally sanitized.

As to what happens next, well obviously, we're going to put more drones up there. Do they have to be protected? Is there some way to protect them? Non kinetically in international airspace. Can you put another platform up that warns the Russians to stay away from it? Can you activate the hotline if it starts to happen before the Russians interfere with it? All of those options will have to be considered.

KING: All of those options they have to be considered. Beth Sanner come into the conversation. Pretty much the same question. But let's listen first to the Defense Secretary Austin. Part of the question in Washington right now, and around the world is what will the United States do to response? The initial response is simply to say, we're going to keep doing this, regardless of how the Russians behave.


LLOYD AUSTIN, DEFENSE SECRETARY: I'll just reiterate that the United States will fly and operate wherever international law allows. Now, we take any potential for escalation very seriously.


KING: What are the conversations going on right now in the military community, in the broader intelligence and national security community? Is it just business as usual? Don't be intimidated, don't back down? Or would there be conversations about should there be some kind of a response?

BETH SANNER, CNN NATIONAL SECURITY ANALYST: There will be conversations about what kind of response, but also there'll be conversations about do we need to change what we're doing based on what the Russians told us in order to prevent an escalation. But I think, you know, Austin's making it pretty clear that we're going to go back up, we're going to keep flying. But we also understand what the Russian reaction is going to be. So, we do have to keep our seatbelts fastened here.

KING: Keep our seatbelts fastened here. General Clark, another thing, the Pentagon number one, the White House National Security Council, the Pentagon debating whether to release this, declassified this video. That in and of itself is a pretty remarkable step that Pentagon and the White House warning to say, look, what the Russians are saying is simply not true. They did act aggressively. They did act recklessly.

They also this morning released this map with locations on it, showing they are saying that the drone was operating in this area, the Black Sea. You see Crimea over here, Russia proper is way over here. Take us inside these kinds of deliberations about we should - whether or not to release this information.

Obviously, if you look at where it is in the Black Sea, the Russians say the United States shouldn't be there in any circumstance. The United States has to bad international waters. When you look at this map, what is the value of the Pentagon putting this out essentially, to say the Russians are lying?

GEN. CLARK: Well, I think it's important both for our allies to see it. And it's also important for the, let's say, the Global South, and the fence sitters and the people who might be inclined to take the Russian side on this. You know, there are a lot of nations in the world have not sided with the United States on this.

So, I think this is important. And I think it's also important for some members, some people in the United States who may doubt about what's going on in Ukraine and may think this is some kind of justified territorial dispute to understand the recklessness and the inappropriateness of the Russian behavior.

And this is clearly international waters. The Russians have said, no, no, we're going to do military exercises. Sure, they'd like to say that, but it's not legal and it's not justified in this case. So, we're clearly within our legal rights. And it's very important that the Pentagon released this information and the map information.

KING: And you heard, you know, Secretary Austin talking about the potential for escalation. Ukrainian military officials are telling us right now that they see already, Russia increasing its naval presence in the Black Sea. If we could put the map back up there. Again, you know, the Pentagon says the drone was operating here. And we know the drones had been up for quite some time, other reconnaissance planes, other manned reconnaissance aircraft as well, not just the drones.

If the Russians are increasing their presence in this area, this is their country, their coast. This is, I said yesterday, I'll use it again stolen property, Crimea. If they are increasing their presence. What will the reaction be at the Pentagon National Security Council conversations? Is it, let's back off, let the temperature go down or is it we cannot be intimidated, we need to be there in a higher up tempo as well.


SANNER: It might be a combination of both. I mean we're definitely going to have the drones back up there. We may not encroach as close. Look, you know, here's the Russian perspective here. I don't say this as an apologist in any way, but these flights are, they see them as a threat. They see them as a threat. Because even at that distance, we can optically take great pictures of Crimea, and the whole battlefield in the south, the supply lines.

We use that information. We give it to the Ukrainians. The Ukrainians use it just to fire off high mars, they use it to plan a spring offensive. So, the Russians who see this as an existential war, see this as a threat. That's why they're trying to blind the optics, right? So, we should expect them to be pushing back. We got to keep going.

KING: That's the big question. What happens if and when that continues to happen, and if it gets even more aggressive. Beth Sanner will be back with us later in the program for another conversation. General Clark, grateful for your time. Sir, we will call on you again. I'm sure in the 10 days ahead. Up next, though, the banking crisis and your money. Right now, the treasury secretary is testifying on Capitol Hill.




KING: Right now, you see the live pictures right there. That's the Treasury Secretary Janet Yellen, taking questions from members of the Senate Finance Committee. Secretary Yellen, making her message to lawmakers and to Americans crystal clear. She says turmoil in the banking sector is zero reason for panic.


JANET YELLEN, TREASURY SECRETARY: Our banking system is sound, and that Americans can feel confident that their deposits will be there when they need them. This week's actions demonstrate our resolute commitment to ensure that our financial system remains strong.


KING: CNN's Matt Egan, joins us live now. Matt, the secretary is speaking to Congress. But her message really aimed at financial markets here in the states and around the world.

MATT EGAN, CNN BUSINESS REPORTER: John, that's right. And the public at large, you know, Secretary Yellen is trying to preach this message of calm, trying to restore confidence in the banking system. There's been a bit less calm on Wall Street. You look at what the stock market's doing, specifically bank stocks, regional bank stocks, they've gotten clobbered in recent days.

First Republic Bank, that is a San Francisco bank lender, you can see down 19 percent. As we speak, PacWest down 12 percent. But what's notable is that in the last few hours, the Wall Street Journal's reporting that First Republic Bank is in talks over a rescue, a rescue from big banks, including JPMorgan and Citigroup. And reportedly, this rescue would include a sizable cash infusion.

Now, the bank itself is not commenting. But this is a big deal. And even just the report of a potential rescue from Wall Street is lifting the broader stock market. As you can see, the Dow was up over 150 points. And we've seen the S&P 500, the NASDAQ up even more on a percentage basis.

Now, we've already seen a rescue of sorts mounted in Europe, where the Swiss central bank provided a $50 billion lifeline to Credit Suisse, after that banks stock fell sharply. What's interesting, though, John, is that despite all these concerns about the banking system, the European Central Bank went ahead with a big interest rate hike today. The question is whether or not the U.S. Federal Reserve is going to do the same thing next week.

KING: Next week. So, the conversation shall continue at least through then, and I suspect beyond. Matt Egan, appreciate the important live update there. Let's get some more insight and perspective now from our CNN economics commentator, Washington Post columnist, Catherine Rampell, and the former chairman of the FDIC, Bill Isaac.

Catherine, let me start with you. One of the questions, one of the issues being discussed it with Secretary Yellen up on Capitol Hill is where do we go from here? There are progressives who say, you know, Dodd-Frank was - parts of Dodd-Frank were rescinded back in 2018. We should go back to the original. There are others who see the problem somewhere else.

Listen to this exchange, Senator Elizabeth Warren, among those who thinks Congress made a mistake when it pulled back parts of Dodd- Frank, putting that question to Secretary Yellen.


SEN. ELIZABETH WARREN, (D-MA): Do you agree with the president that we need to strengthen our banking rules?

SECRETARY YELLEN: Well, I think we certainly need to analyze carefully what happened that triggered these bank failures and reexamine our rules and supervision and make sure that they're appropriate to address the risks that banks face.


KING: Secretary Warren wants new legislation - Senator Warren, excuse me. Secretary Yellen was saying, we're going to look at the rules and make sure we're enforcing them right. So, I hear that right?

CATHERINE RAMPELL, CNN ECONOMICS AND POLITICAL COMMENTATOR: Yes. I think that there is a legitimate debate right now about who dropped the ball on this one. Was the issue, the fact that Congress in 2018 decided to roll back parts of Dodd-Frank and do essentially less frequent required stress testing on these mid-sized banks, stress testing that might have caught these vulnerabilities on, for example, Silicon Valley Bank's balance sheet, or might regulators have caught this anyway.

And even with that, whether or not, those provisions were - still those Dodd-Frank provisions were still in place. Should the Fed, for example, have noticed that there was a problem here? And I think we just don't know the answer yet.

I mean, if you look at Silicon Valley Bank's annual yearend statements from 2022, they were fairly explicit about the fact that they had taken on this interest rate risk that they had not been hedging, essentially, they had stopped hedging against the risk of rising interest rates. So arguably, if they were very public about it, maybe regulators supervisors should have seen it anyway.


KING: To that point, Bill Isaac, you sat in the chair. You understand how this works and what you can do and what you can't do, sometimes our signals get missed. To the point, Catherine was just making. Senator Mark Warner tried to essentially ask that question saying, did we not see the evidence, and should we have done more? Listen?


SEN. MARK WARNER, (D-VA): There were some bad actors in the VC community who literally started to spur this run by virtually crying fire in a crowded theater.

SECRETARY YELLEN: And one of the reasons we intervened and declared a systemic risk exception is because of the recognition there can be contagion in situations like this. The liquidity requirements and needs for bank with such heavy reliance on uninsured deposits that are runnable. I think we need to think about that.


KING: There's still a lot we don't know, Mr. Isaac. But do you see evidence that something clear was missed? That some agency of the government should have intervened earlier in this dispute, in the Silicon Valley Bank case?

WILLIAM ISAAC, FORMER FDIC CHAIRMAN: Well, John. Thanks for having me on. I'm very disappointed at what happened here. This should never have happened. It's primarily to follow the bank, its board of directors, its senior management. They clearly did not do their jobs properly. And that's where the first responsibility is to lie.

I also leaves the bank regulators could have and should have seen this. This bank tripled in size in the last two years, that should never have been allowed to go - to happen. And certainly not unattended. I mean, people should have noticed it, should have said, what are you doing? And why are you doing it? And it doesn't make sense. Stop it.

You know, that's the kind of things that bank regulators should be doing. But bank management should have been doing it. I don't know why the bank analysts weren't doing it. It really was a major flaw in my opinion.

KING: So, let me jump in on that point. You say a major flaw in your opinion. So, do we need new rules, new laws put back in those parts of Dodd-Frank that were rescinded? Or is there a current authority and somebody was just asleep at the switch?

ISAAC: I believe that every time something happens like this, there's an immediate call for more legislation, more regulations. And it doesn't change anything. I've been in this world for about 50 years in bank regulation. And we just don't seem to learn lessons, bankers. This bank here, this Silicon Valley Bank is the same problem that we dealt with in first Pennsylvania in 1979, when Paul Volcker was chairman of the Fed, I was at the FDIC.

First Pennsylvania did the same thing that Silicon Valley Bank did. And we thought we fixed those problems. We thought we would remember them always. And then Silicon Valley Bank turns around and does the same thing. I don't understand. I mean, you can't legislate that people are always going to do things the proper way and behave. And we can pass all these laws, but they ignore them. I mean, everybody sort of forgets what happened and why. We've been through all this before. Why are we going to it again?

KING: That seems to be a recurring theme in Washington and any number of issues, not just this one. Bill Isaac, Catherine Rampell, grateful for your time today. The conversation, I'm sure will continue. Yes, it does. Next for us, though, President Biden's ultimatum for the Chinese company that owns TikTok.




KING: Now to a major announcement from the Biden administration. It is now threatening to ban TikTok from the United States unless the apps Chinese owners agree to spin off their share of the social media platform. A potential ban would impact more than 100 million Americans who use TikTok daily. The administration says national security concerns are driving this latest example of rising tensions with Beijing.

Let's get some reporting and insights, with me in studio CNN's Nia- Malika Henderson, Olivier Knox of The Washington Post, Seung Min Kim of The Associated Press, and back with us the former Deputy Director of National Intelligence, Beth Sanner. So, the administration announced this last night, this ByteDance. The company issued a statement and now the Wall Street Journal has an exclusive interview with TikTok CEO. His message to Washington is this, Beth, a sale won't solve the security concerns. The company is essentially saying, you can break us up or force us to break up, but we can still share all the data back and forth. So, is the administration approach the right approach?

SANNER: I mean, they're trying to hold that, you know, a sledgehammer over the company to say, you know, divest or we will ban you. I actually think it depends on how you do the divestiture. I mean, yes, it can work, if it's a wholly owned American company that doesn't have links back to China. Yes, that would work. So, I think it's the best they can do right now. They don't want to ban it.

KING: There are a lot of Republicans on Capitol Hill saying, you know, praising the administration, they think it's late to this decision, but saying OK, fine, you're getting there. One though Marco Rubio, Republican of Florida, who happens to be the vice chair of the Intel Committee.

So, he says, it doesn't go far enough. He says this cannot be a separation and name only deal that allows ByteDance to indirectly retain control of TikTok. And he says, he has legislation that would make it go even further. So, this is a bipartisan issue, though, even though there are some disagreements about how tough to be.

OLIVIER KNOX, NATIONAL POLITICAL CORRESPONDENT, THE WASHINGTON POST: Yes. One of the defining aspects of this is that in domestic politics, Republicans and Democrats are largely united behind criticizing China going on after TikTok and the rest. What Rubio was saying there, and he's been going after TikTok for quite some time.

He and Mark Warner, who's the Senate Intelligence Chairman, they both have been going after TikTok for a while.