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A $30 Billion Bailout: Megabanks Save First Republic; Banking Turmoil Complicates Fed Decision On Rates; Yellen: Rescues Only Happen If Failure Would Pose "Systemic Risk"; Xi To Visit Putin For First Time Since Russia Invaded Ukraine; ICC Issues Arrest Warrant For Putin; U.S. Assessing Ops Over Black Sea After Russian Jet Forced Down Drone; Poland, Slovakia To Send Fighter Jets To Ukraine; Sources: Mar- a-Lago Staff Subpoenaed In Classified Docs Inquiry. Aired 12-12:30p ET
Aired March 17, 2023 - 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, INSIDE POLITICS: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing another busy news day with us. A bailout all the bank, by the banks, for the banks. The biggest banks in the United States toss a $30 billion lifeline to the struggling First Republic. The hope is that this massive cash infusion will come mock markets and stop a panicky sell off.
Plus, the Trump special counsel takes sweeping steps to get his questions about classified documents answered, subpoenas for a dozen of Trump insiders and Mar-a-Lago workers from Trump's communications handler to the staff member caught on video helping move boxes in and out of a storage room.
And next week, China's president makes a state visit to Vladimir Putin's Russia. The trip has trajectory altering consequences for Ukraine's war of survival and it happens the very day, the Hague issues an arrest warrant for the Russian president.
Up first for us though, an Avengers like teamed up to save another bank from ruin. 11 banks, $30 billion. That's how much money and how many lenders it took to save First Republic from going the way of Silicon Valley Bank. $5 billion each from Bank of America, Wells Fargo, JPMorgan Chase, and Citi. $2.5 billion from Goldman Sachs and Morgan Stanley, $1 billion from U.S. Bank, BNY Mellon, Truist, State Street and PNC.
This mega deal from the mega banks included behind the scenes closed door talks between the Treasury Secretary Janet Yellen, the Fed Chair Jerome Powell and the JPMorgan Chase Chief Jamie Dimon. The goal that the rescue returns the markets to normal and convinces you at home that your money is in safe hands.
Let's get straight to our chief business correspondent Christine Romans. Christine, the goal is normal. It's noon on Friday after a roller coaster week. Do we have normal? CHRISTINE ROMANS, CNN CHIEF BUSINESS CHIEF CORRESPONDENT: Yes. I mean, look, we have - the best normal we've had in the last week and a half and your source who is inside those talks, close to those talks, telling me painting the picture of a 48 hours, it's just really remarkable.
The CEO of JPMorgan Chase going down to D.C. for previously scheduled meetings. He's meeting with a Jay Powell and the treasury secretary. The FDIC chief is pulled in and they begin brainstorming about what to do specifically about First Republic.
The source describes this as the biggest example of a bank that could go down and shouldn't go down. A first-class bank that was being taken down unfairly, they worried about a chain reaction. And it was the treasury secretary who came up with the idea of banks infusing capital into this bank, infusing cash deposits into this bank.
And quickly everyone agreed. By the end of the day, you had four big banks, committing the $20 billion. And in the next day was the charm offensive in the sales job to get everyone on board, pull together and show your confidence. This source told me was the message other banks and quickly they had $30 billion in just two days raised for First Republic.
The idea here is to show confidence in the banking system, and specifically in First Republic to prevent some kind of a chain reaction. But also, the goal here was not to have the taxpayer involved. That was - this was not to be a bailout. This is the industry stepping inherited, John?
KING: So, as we watch it play out, Christine, number one, we're watching the markets down a bit today. You can invest anyone day in the market that's dangerous to just base it on one day. But we're going to watch the banking system obviously throughout the weekend and into next week. And then the Fed meets on Tuesday, after this incredibly topsy turvy week. There are some who say keep up the inflation fight raise rates. There are some who say, let's just have some calm, call a timeout.
ROMANS: What a balancing act for Jay Powell, right. A week ago, issue number one was inflation. Today it's balancing still too high inflation, consumer inflation triple what the Fed would like to see. With this fragility that we've seen in the banking system because of interest rate increases over the past year. We saw the European Central Bank raise rates as expected 50 basis points yesterday, signaling that their banks are strong, and their inflation fight is still a really important priority.
I think, growing consensus here is that the Fed might do 25 basis points won't be too aggressive, may not pause. It's got to show Wall Street and the American public that it can do both things at once. It can be have an eye to the stability of the banking system, but also keep fighting inflation.
KING: We have a weekend and Monday to get through before the Tuesday meeting. We'll see if anything changes. Christine Romans, grateful for the important reporting and insights. Let's continue the conversation. With me to share their reporting and their insights, Jeanna Smialek of The New York Times and the Moody's chief economist Mark Zandi.
Jeanna, you just heard, you know, Christine going through just this, wow, of bringing Jamie Dimon in with the Fed chair and the treasury secretary and getting all the other banks to sign on. If you look at just in the past few days, the bank's weeks of huge loans.
$153 billion borrowed by banks from what's called the discount window, $12 billion from this emergency lending facilities. That is not normal. That is not normal. The question is, when you look at numbers like that, meetings like this, how do you put this crisis into context?
JEANNA SMIALEK, FEDERAL RESERVE AND ECONOMY REPORTER, THE NEW YORK TIMES: This crisis is unfolding clearly. But I think that the important thing to know about that discount window number in particular that big jump in borrowing that we saw from the banks, is we know that Silicon Valley Bank tapped the discount window last Thursday.
I've reported that the Wall Street Journal followed up on my reporting. And we know that First Republic tapped the discount window. And so, I think there is some hope that some of that what we've seen in those numbers is actually a reflection of the turmoil we have already seen and not necessarily broader turmoil coursing across the system.
Now that said, obviously, we are seeing some broader turmoil coursing across the system. And so, I think, you know, if the Fed is looking at this situation, they've just got a bank. You can't make up your mind today.
You know, it may be Friday afternoon, the week before the meeting, we would usually have basically, you know, a playbook we would know what we were doing next week. But I think we're really going to be looking at an event where they are just going into next week completely uncertain about what the world looks like.
KING: And to that point, Mark Zandi, we just show on the screen, this is just three of the regional banks and their stock since last Friday. If you're looking at First Republic, Zion, Pacific Western, you see the downs, you see the spikes. If that's a hospital monitor, the patient is jumping around a little bit.
We started on Monday thinking what is this week going to bring us. At noon on Friday, where are we? Are we back to a situation where whether it's big investors or everyday Americans can think, OK, there are a few houses on fire, but we're OK, or is it a risk that this will still spread like a wildfire, treetop to treetop?
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Yes. Two choices. I take the first, John. I think we're good. I mean, the U.S. government, that's the Treasury, that's the Federal Reserve, the FDIC. And all that said that they're going to do whatever it takes to keep the system stable. You know, they are guaranteeing the deposits of all depositors, small and big institutions that are running into trouble. The Federal Reserve is setting - set up a facility to lend to banks that need the liquidity to pay off their depositors.
And those are secured by the treasuries and mortgage securities that they own. You know, the government has organized this effort by the large banks to come in and help out First Republic. So, I think it's very clear that the U.S. government has the banking systems back. And as such, I think we should all feel comfortable that, you know, while there's going to be a lot of drama here, we're going to get through this reasonably well.
The other thing I'll say, John, and I think it's important for people to recognize. You know, on a daily basis, we're seeing ups and we're seeing downs, we're seeing all around. But just take a look at the stock market, the stock market today is pretty much where it was a week ago before this all began.
So, you know, despite all the drama, you know, the market itself is - and that use that as a barometer of kind of the general angst out there. You know, it feels like, you know, it's hanging in there. And I think that goes to the government response.
KNIG: That context is absolutely critical. Reading a piece of your reporting, Jeanna just jumps out at me. So, everybody's trying to figure out how to deal with this. And it's complicated. And there's policy, there's economic factors. There's politics involved in this.
Jerome H. Powell, the Chair of the Federal Reserve blocked efforts to include a phrase mentioning regulatory failures in the joint statement released early Sunday morning by the Fed, the Treasury Department and the Federal Deposit Insurance Corporation. There was the chairman of the Fed not thinking they were regulatory failures, or did he just not want to put that out there, because of how it might impact the confidence in the markets.
SMIALEK: He clearly didn't want to put that out there because he wanted to keep the focus on what was in the statement. They actually, the Federal Reserve, the next morning released an announcement that it is looking into supervision and regulation at the Fed and what went wrong with Silicon Valley Bank in particular.
So, I do think there has been some acknowledgement from the Fed that something might have gone really arrived here. I think it was interesting the timing there. You know, it was clear that the focus in the statement, the Fed thought should be really on what the government was doing.
While I think the politics of this were really already starting to play out, and the politics of this where, you know, it's better to sort of signal what happened right at the outset. And I think we've really seen Democrats in the day since this happened, come out and say the Fed messed this up. Jay Powell was overseeing the Fed, at the moment the Fed chair was overseeing, the Fed at the moment when this mistake happened. And so, the buck sort of stops with him. KING: And Mark, again, it's policy where it's connected to politics. You've seen a number of people, Republican senator from Ohio, Republican senator from Oklahoma, asking, what if this was a community bank in my state? Would the government do the same thing for a small community bank in my state? Or is this the government rushing to help, you know, a bank out in California?
Is there a fairness question at risk here? Or do you see the government acting even handedly? The way Secretary Yellen put it is, if they have a risk of systemic failure, the government is going to jump in. If you don't see the threat, is that high, maybe not.
ZANDI: Yes. I mean, there's certainly a question of fairness. And I do think if you say, listen, at the market close today, another bank fails, and you know that's a possibility. It'll be a small bank. It won't be a large bank. I do think the government, the FDIC, the Fed, the Treasury should guarantee the deposits of all depositors in that institution just like they did for Silicon Valley Bank depositors.
In this environment, this is a very uncertain environment, lots of uncertainty, people are really nervous. It's a systemic of crisis. And in that kind of context, I think it's appropriate and necessary for the government to guarantee all depositors, big institution, small institutions, everyone in between that their money is good. If they deposit it in a FDIC insured institution, they're going to get their money back.
KING: The in this environment part is the critical context, which is why we're grateful you're here. Mark Zandi, Jeanna Smialek, appreciate it. I'm sure we will continue this conversation as we get through the weekend and into next week.
Next for us though, some breaking international news and arrest warrant for Vladimir Putin. It brands him a war criminal. The details next. Plus, Russia and China schedule a big summit. President Putin and Xi will meet next week. The Ukraine war on the agenda as well as rising tensions with the United States.
KING: Now to a summit with enormous global consequences. The Chinese President Xi Jinping will meet with Vladimir Putin next week in Moscow. It is a chance for both presidents to compare notes on rising tensions with the United States and it is the first face-to-face Xi- Putin meeting since Russia invaded Ukraine. Washington says Beijing is debating whether to help Putin on the battlefield. China says, this is all about peace.
On the same day, we get word of scheduling this summit, also an indictment from the Hague charging Vladimir Putin with war crimes in Ukraine. Let's begin our coverage units, Will Ripley joins us now live from Taiwan.
Will, the two presidents getting together already a summit of huge consequence, now with the news against Putin from the Hague. But from Xi's perspective, as Xi travels to Moscow, the United States says he is considering giving Putin battlefield weapons. The Chinese say, not at all, we want to talk peace.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they're not exactly saying, not at all. They're saying, well, the United States is the one that's throwing all the weapons in the battlefield. So, they kind of deflect the issue while justifying what they call Russia's legitimate security concerns, refusing to criticize Russia for the unprovoked invasion, or even call it an invasion.
And so, they might say that, you know, in the name of peace, they'll provide, you know, Russian troops with ammunition and weapons. I mean, you can find all sorts of justifications if you need to. If you are Xi Jinping, justifying this, no limits partnership with Vladimir Putin. I mean, he's going to go off.
This is his first overseas trip since he got this unprecedented third term, surrounded by an echo chamber of yes men, allowing Xi to pursue his own ambitions. And of course, the worry here in Taiwan is that, taking this island is one of those ambitions in the medium or term or down the road.
We don't know a timeline, but Xi certainly said, he wants to do it. And therefore, by you know, offering support and potentially weapons for Putin, it would certainly add momentum to this authoritarian movement and these two are the ringleaders of it. John?
KING: Ringleaders is well put. Will Ripley for us in Taipei. Thank you. And as noted, the Hague wants Vladimir Putin in handcuffs. Just moments ago, the International Criminal Court issuing an arrest warrant for the Russian president on war crimes charges.
Let's get more details, CNN's Nic Robertson live for us out in London. Nic, tell us more.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes. The charges stemmed from the fact that Russia under President Putin's direction and the leader, of one of the principal, children's charities in Russia have taken Ukrainian children out of Ukraine, separated them from their families in many cases, and transported them to Russia and implanted them into Russian families. And this is at the center of this alleged war crime.
This is astounding that a leader of a G20 nation, the leader of a country that sits on the U.N. permanent security council, is now being charged with being a war criminal. So, these are very, very serious charges, of course, but the implications for President Putin are serious. He would have been perhaps expecting this year to travel to the BRICS summit in August in South Africa to the G20 Leaders' Summit in India in September.
This puts those moves into questions. Undoubtedly, he's not likely to touch down in Europe anytime soon. But he's going to have to know now, wherever he travels in the world, the nation he lands in is going to be friendly to him, and it's not going to turn him over to the ICC.
Now, look, there are some medium size, you know, names out there on the ICC's watchlist who've had charges put against them, red notices put out against them. Thinking here the former president of Sudan Omar Al-Bashir has essentially been on the lam for the last - from the ICC for the last about 13 years.
There are about 15 people that fall into in that category, no one any close to the stature of Putin. This is a very clear signal from the ICC that President Putin's moves from now on a much more limited. He used astride the global stage and take pride in that no more, can he do it.
KING: No more. We'll watch out how it plays out. But certainly, it is a stain on the reputation of Putin. We will see if the ICC can put any teeth behind it as well. Nic Robertson, appreciate the hustle and the reporting there. Let's get some important insights. Now in this moment in Ukraine and in the relationship, our CNN military analyst, retired Air Force Colonel Cedric Leighton is here.
Xi goes to Moscow. The United States says this intelligence shows the Chinese leadership is thinking about helping Vladimir Putin with weapons, other military assistance on the battlefield. The fact that Xi is going, if Chinese deny that, they say no, their only interest here is peace. But the fact that he's going at this moment, does that tell you that a decision could be at play?
COL. CEDRIC LEIGHTON (RET.), CNN MILITARY ANALYST: I think so, John. I think one of the key things to note is that, you know, on the one hand we're talking about, we don't know who the intelligence community says they have no idea that China is providing lethal aid to the Russians at this point. However, there are reports out there, that there are shipments from Russia that to make their way through countries like Iran and other countries. And they're making their way into the Ukrainian theater on the Russian side.
So, my supposition is, as a former intelligence officer, is that the Chinese are already providing lethal aid in some form to the Russians in Ukraine. And that's something that, of course, goes against everything that they've been saying. And it also goes against what should be happening for a neutral peacemaker.
KING: And so, at a big summit like this from an intelligence perspective. If that is the case, and they're doing it under the table, if you will, do you just continue that? Or does Xi decide to publicly acknowledge it, essentially standing next to Putin, sending a message, not just to President Zelenskyy, but a very clear message to President Biden and to the NATO alliance?
COL. LEIGHTON: Yes. That would be one course that he could potentially take, that would solidify his special friendship, his special relationship with Putin on that side of it. But it would also damage his ability to serve as a neutral broker for any kind of peace deal between Ukraine and Russia. And if he does that, he's going to really damage his prospects to be an international peacemaker. And I think there's too much at stake for him right now in that arena to do that kind of inaction.
KING: We've talked in recent days about the aggressive Russian behavior that led essentially to a Russian fighter jet knocking an unmanned American drone from the skies over the Black Sea. We have the Pentagon map, the Pentagon released map of where it says this took place and where the drone was.
The red dots in the bottom left of your screen there, where it says the drone was buzzed, essentially, and then knock from the sky. The United States, we know from flight tracking software, there have been other drones up since including today. But we also know from U.S. officials that they are "reassessing."
So, how do you go about - do we continue to do this? Can we do this in a "safer way?" I'm not sure that's the right word. And how do you go about, is there a better way to gather this intelligence in a way that doesn't look like you're blinking essentially, that the Russians have bullied you from the sky?
COL. LEIGHTON: Yes. That's a really excellent point, John, because on the one hand, you had the chairman and the secretary of defense, say very specifically, we are not going to be bullied out of the sky. We're going to continue our flights. We're going to continue to do these things. And then, the other hand is going and saying, OK, let's reassess. Let's make a safety judgment. So, in essence, they're doing a cost benefit analysis, are these missions worth it?
Now, in truth, all of these types of missions always get a cost benefit analysis. And anytime something like this happens, you may end up with, hey, maybe we need to do this a better way, or we have other collection assets to do this. But in this particular case, politically, it looks better if they continue these missions, even though they might be risky.
KING: A quickly enclosing. First poll and now Slovakia have said they will provide Ukraine with some MiG-29 essentially, Soviet era fighter jets. The United States says F-16s. We'll think about it but not now. What's the significance of that?
COL. LEIGHTON: It's very significant because this is the first time that we're actually adding to the Ukrainian Air Force. We be NATO in this case. So, if Slovakia has decided 13 MiG-29 the poles, initial shipment of four, possibly 24 more after that. So that's significant from a combat capability standpoint. It could provide a great deal of close air support, and battles like Bakhmut could end up going in Ukraine's favor because of these aircraft if it's done right.
KING: Lot happening all at once. Colonel Leighton, grateful, you're here to help us understand it. Up next for us. A CNN exclusive detailing a dramatic development in the special counsels' investigation of the former President Donald Trump.
KING: We want to bring you some exclusive new CNN reporting now, detailing the special counsels expanding investigation into former President Trump and his handling of classified documents. Sources tell CNN, dozens of staff from Trump's Mar-a-Lago have been subpoenaed. Investigators want to learn more about what they may have seen or heard and if and where they saw classified materials.
Just yesterday, CNN capturing a top Trump communications aide, entering a Washington courthouse where she appeared before the federal grand jury. CNN's Katelyn Polantz is part of the reporting team breaking this news, and the former federal prosecutor Shan Wu also here with us.
So, let's just put up on the screen. Two dozen witnesses saw in the Mar-a-Lago documents pro, at least one housekeeper, restaurant servers, staff members seen on security camera moving boxes, Trump aides, advisers and attorneys. So, anybody and everybody who may know something or have seen something about how these documents were handled.
KATELYN POLANTZ, CNN CRIME AND JUSTICE REPORTER: Totally, that's exactly the message that we're getting from every source that we're talking to. And right now, this really is the fullest picture of where this investigation is, and it is one that is scouring the grounds of what happened at Mar-a-Lago since the moment Donald Trump was leaving office, moving their classified documents would have gone with him.
And how were they handled? Who saw them? Did anyone see them inside his office? The former bridal suite at Mar-a-Lago, now the presidential office suite, from president's office suite. Are they talking to - they're talking to this housekeeper? They're talking to restaurant servers. They're looking to talk to not just the people that are closest to Trump, but people who would be the eyes and ears of the property as well.