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JPMorgan Chase Steps In To Buy First Republic's Assets; Ex- Biden Economist: Bank Failures Won't "Seep Out" To Rest Of Economy; Poll: Only 39 Percent Of Voters Approve Of Biden's Handling Of Economy; RNC Chair: GOP Candidates Must Address Abortion "Head-On"; Hutchinson: Would Sign Abortion Ban With Exceptions; Pro-DeSantis Super PAC frames DeSantis As Trump Replacement; Today: Civil Battery, Defamation Trial Against Trump Resumes; Defense Attorney Joe Tacopina Cross-Examines E. Jean Carroll. Aired 12-12:30p ET
Aired May 01, 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: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing your day with us. Shaky or sound, First Republic Bank collapses weekend deal to buy it, bails out Uber wealthy depositors but it does stir worries about the strength of the economy.
Plus, the head of the Republican National Committee delivers a blunt warning to Republican candidates coast-to-coast, ignore the abortion issue at your own expense and entire lives packed into a single suitcase. CNN captures the desperation on the dock in Port Sudan, thousands hoping to leave a nation at war with itself.
Up first for us, First Republic goes bust. The company's 84 branches are open, but under a new banner that after regulators seized it and then broken an emergency weekend deal to sell it off. JPMorgan Chase now takes over, nearly all of First Republic's assets. The government says all depositors are protected, and that the 92 billion in First Republic deposits are safe. First Republicans failure is the second largest in U.S. history.
And it happens despite a big bank effort to prop it up, remember a $30 billion cash infusion in March. The president hopes bad things come only in threes and that the string of bank failures; Silicon Valley, Signature, now First Republic is finished. And the president hopes the collapse doesn't complicate the Feds mission of trying to cool down inflation.
Let's get straight to CNN's Matt Egan in New York. Matt, a big deal over the weekend. Walk us through what happened and what it means?
MATT EGAN, CNN BUSINESS REPORTER: Well, John, JPMorgan is coming to the rescue. And that is a big relief to U.S. officials and really everyone worried about this banking crisis. Let me run you through some of the numbers here. So, JP Morgan is paying the FDIC $10.6 billion to buy most of First Republic. So, what does that mean?
Well, JPMorgan is taking $173 billion of First Republic's loans, putting it on their books, and this is very important. JPMorgan is acquiring all $92 billion in First Republic deposits. That means if you have your money with First Republic, you're good, your money is safe. Even above that $250,000 FDIC insurance limit. The government did have to sweeten the deal here a little bit that the FDIC is sharing with JPMorgan on the bulk of the losses on potential loan losses.
Now all of this comes together after a another weekend scramble in Washington and on Wall Street to try to come to a solution on this First Republic situation. A source tell CNN that, Secretary -- Treasury Secretary Janet Yellen, she had been in touch with regulators all week as First Republic was teetering. JPMorgan says that more than 800 of its employees were doing homework and doing due diligence on First Republic trying to get this deal done.
Ultimately, First Republic does become the second biggest bank failure in U.S. history. Second only since the 2008 failure of Washington Mutual, but they are breathing a sigh of relief in Washington and on Wall Street about how this deal gets done. The fact that JPMorgan is stepping up here with a private sector solution is certainly better than a situation where the government had to control this bank and rescue uninsured depositors. John?
KING: Matt Egan, appreciate you're kicking us off that clear explanation. Let's get some more help. Now understanding this important moment, Jeanna Smialek of The New York Times is with us. So, Matt describes it, this is allegedly the way the system is supposed to work. And this is how it goes.
This is Ben Harris here. He was an economist for Vice President Biden, before Joe Biden was president in the Obama ministration. He says, the system worked here, don't worry. Listen?
(BEGIN VIDEO CLIP)
BEN HARRIS, FORMER BIDEN ECONOMIST: We got a very well-established bank, obviously, taking the bank over from the FDIC, which is exactly how the system is supposed to work, really feels like the stress is unique to these three banks that have failed. And it doesn't look -- here we are, you know, the first day of May, it doesn't look like this will seep out into the rest of the financial system.
(END VIDEO CLIP)
KING: You read about that? We done, three banks, done, system work move on.
JEANNA SMIALEK, FEDERAL RESERVE AND ECONOMY REPORTER, THE NEW YORK TIMES: That is clearly the optimistic read on this situation. I think that it's also possible to tell a much more pessimistic story here. And I think on both fronts, the first being the system worked. It is clearly the case that we ended up with a resolution here. The bank failed, but the bank was taken over.
But I think there are going to be a lot of people, already there are a lot of people questioning how this played out. JPMorgan was already the largest bank in the country. It is now even larger. We went through a decade where we tried to sort of crack down on this idea of too big to fail. Think about how big banks should be and now we have an even larger bank coming out of this crisis. So, I think that's sort of the first issue.
The second issue is someone described it to me this morning as we've moved from sort of the acute phase of the banking crisis where we've just had three banks fail. They were all pretty related. Those bank failures were all interconnected to the chronic phase of this issue, where we're going to see sort of a crunching credit. We're potentially going to see a big pullback and lending across the country. And we don't know what's going to happen. When that occurs, it could be that we see further weaknesses.
KING: And so, when that happens, depending on the degree of it, but even at a minor degree, it's usually the little guy out there on Main Street, that gets screwed, forgive me. But, you know, the billionaire banks, the giant banks come together, Wall Street helps them, Washington helps them. What happens to the little guy out there now harder to borrow money for things like a car and things like a mortgage?
And the Fed meets on Wednesday. Already, we are seeing some evidence that its higher interest rates are slowing inflation. Is this something where the Fed says no more? Or at least take a pause? Or will they continue most anticipated, at least one more interest rate hike?
SMIALEK: Yes. Most people I've talked to this morning still anticipate one interest rate increase on Wednesday. It's just so early. We don't know what's going to happen. They don't want to get behind the curve. But the question is what happens after this. We've seen some Fed officials coming out and saying, hey, the economy looks pretty resilient. Inflation is still pretty rapid. Maybe we need to do more.
And I think that what we saw this morning, what we saw last night is probably an argument against doing more. You know, it certainly puts the thumb down in that that camp, because like you said, what we're going to see out of this is some amount of nervousness on the part of banks, and that's likely to lead to less lending, less mortgages, fewer business expansions and that's going to hurt the little guy.
KING: Right. To your point about the system work. I'm going to do this in layman's terms. And you help me because you're way smarter than I am in this. But so, the fire department worked, they put out the fire once you had a fire. The question is, why was there a fire, right?
We went through this in 2008. There was supposed to be these new rules. The regulators are supposed to be keeping an eye on this. The banks are supposed to be following those rules more closely. Is this a case of the sheriff wasn't watching what was happening out there?
SMIALEK: I think it's a case of somebody took the batteries out of the smoke detector, potentially. We after the -- after the financial crisis, we put a lot of rules in place that were supposed to make banks better policed. But in the sort of 2018, 2019 era, during the Trump administration, we rolled back some of those rules on midsize banks.
And we saw a review from the Fed last week, they made pretty clear that some of those rollbacks probably mattered in the case of Silicon Valley Bank, which is the one that really tipped off all of these problems. And so, I think that the question is, how do we beef up bank regulation and supervision going forward to make sure that those problems that we can these banks that allowed these problems to grow? How do we make sure that that doesn't happen again? And I think that's the next phase of the situation.
KING: Next phase of the conversation legislatively, though, given the divided government, the Republican House, Democratic Senate, unlikely anything will pass. So, help me this way. First to the perspective of you're the president United States, and you just formally announced your reelection campaign.
And at the moment, 35 percent, just more than a third of Americans approve of your handling of the economy, nearly two-thirds 63 percent disapprove. How much of a threat is this? You mentioned, we're moving into the next phase of this. How much of a threat is due to the overall direction of the economy, which is proven from a job creating standpoint and a growth standpoint, remarkably resilient, but there's always the asterisk?
SMIALEK: Yes. I think there are some real questions here. I think on a fundamental level, that the fact that this is happening in the banking system matters, banks are an important conduit to the rest of the economy. So, you see a pullback in the banking system. You can pretty quickly see that translate into a pullback in jobs and wages, and all the things that we all care about.
I think the second thing that matters, and we haven't seen this yet, but you could see this is there have been a lot of headlines about this. You know, I've been reading about this every day for the last month and a lot of my colleagues have as well.
And sometimes you can see a situation where that will sort of trickle out to hurt consumer sentiment. It will make people feel less confident and will make businesses feel less good about expanding. Again, we haven't really seen that show up in the data yet, but that doesn't mean it's not coming.
KING: And in terms again of the average American out there, someone whose deposits in a bank are well below, you know, they're fully insured. Now is there anything the average American, the average family small business should be doing today differently? Or just watching and hoping everyone gets this right?
SMIALEK: I think we're at the watch and hope phase at this stage. It does seem like the bank failures, at least for now are unlikely to be contained. It does seem like we don't have other obvious candidates that are on their last legs, First Republic really was the problem child. So, we are in this situation. We're at that moment where things could definitely get better from here. The optimistic case isn't necessarily wrong. It's just also worth being cautious.
KING: I loved your analogy. I hope the regulators are making sure that all the batteries are in the smoke detectors. I think that's great advice. Up next for us. The Republican Party chairwoman offers candidates some advice, state your position on abortion and stated clearly even if it's unpopular.
KING: A warning from the Republican Party's chairwoman to 2024 candidates up and down the ballot. Don't dance around the abortion issue. It is a lesson Chairman McDaniel says, she learned, and the Republicans learned the hard way in the 2022 midterms.
(BEGIN VIDEO CLIP)
RONNA MCDANIEL, RNC CHAIR: Abortion was a big issue in key states like Michigan and Pennsylvania. And so, the guidance we're going to give to our candidates is, you have to address this head on. They're uncomfortable, but they can't be. And it's not just talk about at once. The Democrats are putting 360 million against you on TV in lies. So those lies become the truth if you don't fight back.
(END VIDEO CLIP)
KING: With me to share their reporting and their insights, CNN's Manu Raju, Francesca Chambers of USA Today, and CNN's Isaac Dovere. She says lies. Her point is what Democrats have done to a lot of Republicans is say, that Republican candidate is for a ban on abortions, maybe the candidate is for after six weeks or 12 weeks or 20 weeks different things and the Democrats isolate. But that's a full acknowledgement for the chairman of the party. You better talk about this issue or else you will lose.
FRANCESCA CHAMBERS, WHITE HOUSE CORRESPONDENT, USA TODAY: And you saw Asa Hutchinson detail yesterday that he would support a national ban but say specifically with exceptions for rape and incest. So, you do hear some Republicans trying to do exactly what she's saying. But then you have someone like Nikki Haley who says that there should be a conversation about it and that Republicans still need to figure out what it is that they even want to do on this at the national level.
KING: Right. And so, you mentioned a size. And so, let's listen. And we could show you first the Republican presidential field. Donald Trump has declared. Nikki Haley has declared. Vivek Ramaswamy has declared. Asa Hutchinson the former governor Arkansas is declared. Tim Scott is exploring although, we expect him to fully jump into the race later this month.
You'll see to the right of your screen, so potential candidates, Asa Hutchinson, yesterday as Francesca just noted, says here, they want us to be playing, here it is.
(BEGIN VIDEO CLIP)
ASA HUTCHINSON, (R) PRESIDENTIAL CANDIDATE: I would support the restrictions that I would advocate for the exceptions of the life of the mother and the cases of rape and incest. I believe that's where the American public is. I don't think anything will come out of Congress without those exceptions. And I certainly would sign a pro- life bill, but I would expect those exceptions to be in place.
(END VIDEO CLIP)
KING: It is fascinating. He states his position clearly. Mike Pence has always stated his position clearly and again, parts that are unpopular in certain parts of the country. But even Lindsey Graham, the Republican senator from South Carolina, who had a federal ban at 15 weeks. He's not even sure now he will push his own bill.
MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yes. And it's not even clear that's even going to get a vote even in the Republican controlled House. Kevin McCarthy has didn't say explicitly. He was asked directly whether he'd support and put a federal ban on abortion on the House floor. He said it's up. It's going to go through the committee process, sidestep that question.
Mitch McConnell, in the immediate aftermath of the Dobbs decision would not get behind a federal ban. So, this is a state's issue. The Republicans have been, the dog who got the car since Roe went over was overturned. They want this. They advocate for this for so many years. They got conservative justices on the Supreme Court.
But when it happened, what was the Republican response really all over the map? Law saying states-rights, law punting on the issue, some saying a federal ban as far as Lindsey Graham has pushed and it's created this issue opening for Democrats to seize upon.
KING: And do we know the answer. I mean, I agree with Chairwoman McDaniel in the sense that state your position. This is a very controversial issue, stated clearly or else your opponents will understandably so come after you for. George W. Bush won two elections. He was very pro-life antiabortion. Ronald Reagan did as well.
But post Roe, are now in Dobbs America. Do we know that a position you might be able to sell, say Mike Pence in Indiana, maybe you can't sell it in the Philadelphia suburbs or the Phoenix suburbs?
ISAAC DOVERE, CNN SENIOR REPORTER: And it's a problem went with Rogen, where is the line? What's it going to be? Tim Scott, who has been -- was very clear on this issue for a long time. In the last couple of weeks, over the course of about 48 hours took a bunch of different positions on what we -- he would favor a ban being in place.
It's not just about the presidential candidates, though, it's about what's happening on the state levels. Lots of states that are passing, are trying to pass various bills would happen in South Carolina. Last week, as an example of this of a bill that would have been really restrictive on abortion. And putting that forward, not just for Nikki Haley and Tim Scott, who are from South Carolina, but for all the Republican candidates. Or is the standard going to be the Florida ban after six weeks at Ron DeSantis is at.
I've talked to Democrats who say to me that they are expecting that when the Republican candidates come together for their first presidential debate. One of those raise your hands, do you agree or disagree moments is going to be? Do you think that the Florida ban after six weeks should be the national standard? If it is, then that is pretty far from what seems like based on polling where many voters are.
I think the other thing that's going on here is that after the Dobbs decision, there was a lot of talk of Republican legislatures of well, we're going to do things to make adoption easier or things like that none of that has been in place. Notice has been no motion that the only motion there has been this to do restrictions on board.
CHAMBERS: But contrast this meanwhile, with what Democrats had been doing where they had been very united in their position on this, you have the three major groups coming together on the Democratic side to hold that event last week where they're stating their position, you have the vice president joining them and getting behind that, they view this is also an organizing issue. And they are trying to be better organized than Republicans and they look at places like Wisconsin to show evidence that their strategy is working.
KING: And you mentioned the upcoming first debate that is in August. We expect by then Governor DeSantis of Florida will be in the race and he will have to answer for that, his decision to sign and support. For the six weeks ban, DeSantis had a rough month or so in the polls. That's just a fact of life. Whether it's because of that, his fight with Disney, Trump Super PAC attacking him, a combination of all those things. He's had a tough fight.
The Super PAC not supposed to coordinate directly with the governor or his campaign, but his Super PAC has a new ad out and it is no secret what they're trying to do here. You might like one guy, I'm the heir apparent.
The bumper sticker-shock. It's smart advertising. Again, whatever your views, whether you're Democrat Republican support DeSantis or not, that's a creative. If you love Trump. How about me?
RAJU: Yes. Look, it's also been interesting to see DeSantis in the same Super PAC go after Nikki Haley, who's they seem to think that also could be emerged is that Trump alternative. You're right, DeSantis has taken an absolute hit over the last month is feud with Disney, some other things that is, has stepped on his message. And he really has not been out there. Well, how will that change when he's out there? There is a lot of time in this race for him to emerge potentially as the clear Trump alternative, but he'll have to get good through other people that are maybe in his way.
KING: You use the term, clear Trump alternative. The governor of New Hampshire Chris Sununu has made this point before. But as we get closer and closer that debate, I know, it's just May, that debates in August. But imagine five or six candidates up on the stage, Chris Sununu says probably pretty quickly after that, we need to have a conversation.
(BEGIN VIDEO CLIP)
GOV. CHRIS SUNUNU, (R) NEW HAMPSHIRE: Now, there are a couple of candidates there that we could all potentially galvanize behind. Maybe it's Chris Sununu, maybe it's DeSantis or Nikki or Pence or whatever it might be. There's Tim Scott, we're going to overly crowd this field and let Trump, you know, win a nomination with 35 percent of the vote, only to get absolutely crushed in November. And then we're all looking at each other going, Gee, (Ph) I wonder what happened.
(END VIDEO CLIP)
KING: His math is right. Trump is in a very formidable position right now as the front runner. We'll see as time passes. But Donald Trump in 2016 wins 28 percent here, 37 percent there. You can win the nomination if you have a crowded field. But you're also asking a lot of people with big egos, healthier ambitions. OK. I had a bad day, but you should all get out and leave it to me.
DOVERE: This is game theory, I guess that didn't work in 2016. Remember, when Scott Walker dropped out, he said explicitly in 2016 we need to not let Donald Trump be the nominee and do what I'm doing and exit the field. And everybody else said, have a good time, (Inaudible) stay in.
RAJU: Remember (crosstalk) we have to galvanize opposition to it argued Ben Sasse who was not running at the time, was trying to get as someone behind one Trump alternative didn't quite work.
CHAMBERS: Well, he's not ready for it to be him. He told me that nothing has changed on his end, but you still looking at August as when he needs to make his decision. And I think that's where all of the candidates are right now. They want to get to that first debate and have a chance to state their case.
DOVERE: But it's also the question whether the Republican primary voters want an alternative. Republican presidential candidates seem to be saying, you should take an alternative, but there the primary voters don't seem to be crying out for it.
KING: They get the first and the last word, if you will, that actually matters when we count votes. And that's not until next January, February. We'll get there though. Ahead, a race to escape the United States conducting evacuations from Sudan to help 1000s Trapped Americans get out of the war-torn country. But first the judge this morning denying. Former President Trump's request for a mistrial in that civil battery defamation case against him will be live outside that courthouse with the latest next.
KING: Today more drama ahead of the battery a defamation trial against Donald Trump. We've now learned, a judge has denied the ex-president's request for a miss trial. His team claimed the judge made quote pervasive, unfair and prejudicial rulings against them.
Right now, E. Jean Carroll is back on the witness stand being cross examined by defense Attorney Joe Tacopina. Carroll says Trump raped her in the mid-1990. He first went public with that allegation in 2019. Trump denies the charges. CNN's Kara Scannell is tracking this trial for us. She's live right now outside the courthouse. Kara, what are we learning today?
KARA SCANNELL, CNN CORRESPONDENT: Well, John. You know, Trump's whole defense here is that this alleged assault, this alleged rape never happened. So, the focus of their questioning this morning so far has been focusing in on Carroll and whether she was really scarred from this alleged assault. So, they've gone through a couple of different scenarios with her.
They're asking her about Bergdorf Goodman. So had she returned to that department store or was the rape so scoring to her that she didn't. She acknowledged that she did go back, and they showed some receipts showing that Carroll had been there more than 20 times in the past 10 years, spending about $13,000.
Now they also pointed out some of her Facebook posts, where she said she was a huge fan, a massive fan of The Apprentice, which starred Donald Trump. She was explaining her testimony this morning that she enjoyed the competitive spirit. But she said she didn't watch the end of the show where Trump did the firing.
You know, but this all and then also pointing to another Facebook post of hers, where she wrote would you have sex with Donald Trump for $17,000. And Tacopina saying, you were making a joke about having sex with Trump for money in 2012, just a few years after this alleged assault took place. And Carroll acknowledged that she did right that.
They also were focusing in on that she never called the police about this alleged assault or other assaults that she wrote about in the memoir, where she first disclosed this alleged rape by Trump. And Carroll acknowledged that she only called the police once in her life and it was about someone vandalizing a mailbox.
You know, they pointed to several columns of hers where she kept telling people at her advice column that they should report the results to this to, you know, hotline about sexual assault, and she said she never did it because she was ashamed. She thought it was her fault.
You know, a couple of other interesting scenarios that came out in here. She acknowledged in testimony that George Conway, the Republican lawyer, had -- she saw him at a party, and it was two days after she met him and spoke to him that she retained the lawyer and that he recommended the lawyer for her and that all leading up to this lawsuit.
You know, part of the defense here is that this politically motivated Conway force is a big critic of former President Trump, John?