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Legal View with Ashleigh Banfield
Big Banks Lose 30 Percent Of Value, Taxpayers On The Hook; Cameron Meets With EU Members; British Banks Lost About $10 Billion Since Brexit Vote; U.S. Markets Rebound After Huge Two-Day Losses; Brexit Leader Booed By EU Parliament; Interview With Nigel Farage, Says He Never Liked EU Leaders; Farage Praises Trump And Slams Clinton; Farage Says Brexit Should Start Within A Few Weeks. Aired 12:30-1p ET
Aired June 28, 2016 - 12:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[12:30:19] ASHLEIGH BANFIELD, CNN ANCHOR: Things may be starting to calm down. The fallout from the Brexit vote abating somewhat today. If you need proof of that, you look at the Dow Jones big board. That's a plus sign. We are in positive territory after coming off of two days of losing nearly 900 points in that index. Over in Europe, the pressure is on officially to get the divorce proceedings going. The outgoing U.K. Prime Minister, David Cameron, met with E.U. leaders for the first time since the Brexit vote. And Germany and Italy are warning Britain that you cannot have your cake and eat it too.
(BEGIN VIDEO CLIP)
MATTEO RENZI, ITALIAN PRIME MINISTER: In my view, it's impossible to belong to community only with the good things and not with the bad things.
(END VIDEO CLIP)
BANFIELD: CNN's Richard Quest is at the E.U. Summit in Brussels. So I want to bring this home for the American audience if I can, Richard. The banks over there are getting hammered, losing about 30 percent of their value. The AAA rating for U.K. debt just got knocked down a notch and that's uncomfortable. And yet, the Dow is up 138. And I think a lot of people here want to know, is it over for us at least on this side of the ocean?
RICHARD QUEST, CNN BUSINESS CORRESPONDENT: The reason that the Dow is bouncing back of course is that there really is no specific direct link if you like, between what's happening over here and what is happening within the U.S. economy, other than those U.S. companies that will be affected by the uncertainty generated over the Brexit crisis. And those companies affected by the higher dollar, those exporting companies that are clearly going to see and feel a significant hit to their bottom line as their sales take a hit because their products are more expensive.
That is the only, if you like, technical reason why the U.S. I can throw into that melting pot, Ashleigh, uncertainty, a certain unease what the future going to hold. Will the companies stop spending, will the banks be hit? All these reasons -- good enough reason for the investors to say, go into treasuries, buy gold, don't do anything, let's wait and see.
BANFIELD: Quick question for you, since you are in Brussels. There was some tape that I saw earlier where the leader of the U.K. Independence Party, Nigel Farage, who was the big proponent of exit, of the campaign. He stood in front of all these ministers at the E.U. and we has mortifyingly offensive to them saying none of you is ever had a job in your life effectively, none of you know the thing about business or about the working man. It was really uncomfortable to listen to. Let's have a quick listen to it and I want to ask you about the interview you have coming up.
(BEGIN VIDEO CLIP)
NIGEL FARAGE, U.K. INDEPENDENCE PARTY: Good Morning. Good morning. Funny, isn't it? Thank you very much for that warm welcome. Good morning. Good morning. Funny, isn't it? Funny, isn't it?
(END VIDEO CLIP)
BANFIELD: Obviously this was not a very warm welcome. And this is before he got really ugly and nasty to all of those people booing. You're going to talk to him in a couple of minutes and I want to know what your chief question is for the architect of the exit?
QUEST: Well, the man is sitting just off to the side of me at the moment. I think, you know, the core issue, Nigel Farage has been a member of the European parliament for quite a long time and has made no secret for the disdain that he has for the institutions at various points and he was spectacularly rude with the former president of European Council. I think he was calling him bank clock when he was appointed.
But the gist of it is, the serious message that he was saying was, look, "You need a deal. We need a deal. Grown up people go ahead and do a deal." Now, the fact that he don't dressed it up with a nice bow by sort of telling them they have never had a job in their lives or most of them haven't, didn't go exactly go down terribly well. But I -- I suspect and I'm, you know, that's not going to be anything of which he is going to lose any sleep over in the next 24 hours.
[12:35:05] BANFIELD: The only thing that could be more entertaining and watching that moment, you know, with all the E.U. ministers is Richard Quest with your individual (ph) personality interviewing that man after it happened. And Richard, I'm going to actually have you live on the program doing that interview just as soon as Nigel Farage gets miked up and ready to go. So we're going to go to break and get you all organized.
BANFIELD: Yeah, right. You're going to be on in just a moment.
QUESTT: Absolutely. BANFIELD: We are producing live on the fly, Richard Quest. So, we'll see you in three minutes time. Richard quest. Thank you. Back right after this. Do not miss this interview, folks. Don't miss it.
[12:40:08] HALA GORANI, CNN ANCHOR: Welcome to our viewers in the United States and around the world as we continue to follow the aftermath of the Brexit vote, a historic decision by the United Kingdom to leave the E.U.
My colleague, Richard Quest, joins us now from Brussels with Nigel Farage, the leader of the U.K. Independence Party. Richard?
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN BUSINESS CORRESPONDENT: Hala, if David Cameron is to some extent the official player on behalf of the United Kingdom in the dinners and meetings. Nigel Farage is probably the unofficial leader in that sense because he was the unofficial leader within a large part of the Brexit campaign.
We've already heard your speech or part of it in parliament this morning. You were almost gratuitously rude to the parliamentarians. And you enjoyed it.
NIGEL FARAGE, U.K. INDEPENDENCE PARTY LEADER: Now look, they were abusing me from the moment I started. Twice, the president of the parliament had to cease proceedings and say please listen to Mr. Farage.
Then what I said to them, can we be grown up about this? Can we talk about trade deals? And then they all laughed and giggled.
That was when I said to them that was the trouble of you people is, none of you have ever had a proper job, which wasn't wrong.
QUEST: But the point is, Mr. Farage, it hardly endears you to the very people who are going to have to give their consent to an agreement in two years time if you are rude to them.
FARAGE: Well, they called me all the names under the sun. I just teased them about the fact that a bunch face of bureaucrats you've never had a proper job. Look, forget that.
QUEST: You don't like them?
FARAGE: They don't like me. It's mutual.
QUEST: And you haven't liked them for how many years?
FARAGE: With all 17 that I have been here. What they tried to do is to build a political union without consent. And I've been in there to fight against it. And finally, a member state of this union just said, we wish to succeed. And they didn't like it much.
QUEST: So, our viewers in the United States ...
QUEST: ... who are watching now and wondering what on earth is going to happen to Britain. How can Britain thrive, I didn't say survive, I say thrive outside of the European Union when the banks are being decimated in the share price and the threats have been very severe?
FARAGE: You know, yesterday ...
QUEST: And the pound has fallen 13 to 14 percent.
FARAGE: And puts it up 3 percent today, 12 percent up since it's lows in February. Sterling is marginally lower than it was in February, so could we stop this nonsense about the markets. You know, the pound has been in a bear market since July 2014, fact.
Now, American viewers, imagine if NAFTA was a political union. Imagine if a coal in Mexico could overrule and then the Congress did. Imagine if you had free movement of people with Mexico.
How would you feel? You wouldn't like it. And what we are doing in the U.K., we're reasserting our democratic rights and in terms of business and trade, we'll go on trading.
QUEST: You are starting to sound in some way with the similar policies to Donald Trump. Now, he admires the Brexit result. He said it was fantastic. It was brilliant.
Do you admire Donald Trump, in U.S. Presidential election?
FARAGE: Donald Trump dares to talk about things other people want to brush under the carpet. But what Mr. Trump is doing in America is very different than what I am trying to do in the United Kingdom.
My problem in politics is far greater than Donald Trump's. We literally have lost our sovereignty, lost our borders, lost our ...
QUEST: He would say the same thing about U.S. borders.
FARAGE: Well, the problem that you got in the U.S. is illegal immigration. Our problem is legal immigration to half a billion people.
QUEST: So, you wouldn't be looking to him for too much support. Because on the one hand he also says if he becomes president of the United States, Barack Obama is going to the back of the trade cue wouldn't happen. You'd be at the front of the cue. So you must -- so in many ways you must hope he becomes president.
FARAGE: Well, I think for the United Kingdom, I think Trump will be better for us than Barack Obama has been and that was no doubt.
QUEST: And against Hillary Clinton or you're not going to take sides at this early stage?
FARAGE: There is nothing on earth could persuade me ever to vote for Hillary Clinton.
QUEST: You sure you don't want to think about that?
FARAGE: Absolutely not. I mean she represents the political elite. It's almost as if she feels she has a divine right to have that job.
QUEST: You keep talking about the political elite. You keep talking about the establishment. Sir, you're part of it. You've been here for 17 years.
FARAGE: Yeah, but I came into it from business. I used to trade commodities and currencies. I had a proper job once.
QUEST: So, how on earth do you have the effrontery to criticized Wall Street, the banks, you criticize a big business when you were part of those markets?
FARAGE: Well yeah, but the markets aren't just donated by big business and good markets have small and medium size competitors trading in them too. And look, you know, the actions of Goldman Sachs, in cahoots with this European commission getting Greece into the Euro and everything else. We need change.
[12:45:14] QUEST: All right, you've got your change. You've got your referendum.
QUEST: You got to agree that the U.K. at the moment, the labor party has imploded with the, you know, Jeremy Corbyn has lost the opposition party that has lost the vote of confidence. The Prime Minister has resigned. You got leadership elections in two parties. This is sending a terrible message about what's happening in Britain.
FARAGE: It is a great message.
QUEST: How can you say that sir?
FARAGE: It is a great message. Our political class have let us down like a cheap pair of braces and what we did last week in that referendum was say, get the gun. Political change will be a good and healthy and constructive.
QUEST: How much damage are you prepared to see? Because the chancellor now accepts that there will be a recession. He said so on BBC radio this morning. He accepts that there is going to economic damage. How much damage are you prepared to accept before you rebuild the house?
FARAGE: You know something, freedom, independence, democracy, not being a slave to somebody else is something upon which you can't put a price. And what we did last Thursday is we voted to take back our country, to take back our laws, our courts, our borders, our pride and self-respect. And you know what? Actually, I think, in trade terms, we're going to do better than we did before. Just last night, the Australian and New Zealand Prime Minister said they want to come to the front of the cue for a trade deal with Britain.
QUEST: Now let's just look at our European partners. Angela Merkel sounds as if she is -- pardon but an angling to do a deal or at least as a deal. But they won't allow informal negotiations without Article 50 being invoked. And that's not going to be invoked. This is the article around that time limit begins.
So when would you like to see it invoked?
FARAGE: I feel now that there is a logic that says that there is a degree of uncertainty as to where we are going right with us. And it doesn't make sense to wait until the autumn. I think what the government needs to do is to put a negotiation team in place and to declare audit with 50 to invoke it within the next few weeks.
QUEST: Within the next first few weeks.
QUEST: Before the next leader is invasive, before the new prime minister ...
FARAGE: Yeah I think your duty (ph) to send the message that we're serious about this, we didn't play around, what all of them, you know, the referendum results. Let's crack on.
QUEST: Couple more questions. Do you have a view on the next prime minister of the United Kingdom and Great Britain and Northern Island?
FARAGE: As long as he or she is committed to upholding the will of 17.5 million people last Thursday that referendum I couldn't kind of guess who it is.
FARAGE: What I don't want to see is backsliding.
QUEST: Are you -- I just don't miss question about the money, you've been asked a million times, you said you heard -- you would never have made that promise about spending 350 million on the ...
QUEST: But when that promise was being made, Mr. Farage, you weren't out there saying, hang on, this isn't right, you can't make this guarantee. Hang on, this is being disingenuous. Hang on, this money needs to be spent elsewhere. You kept quiet.
FARAGE: I kept saying that next our contribution was 200 million pounds a week which we could spend on whatever we chose.
QUEST: But you didn't challenge your fellow Brexiters on their assertion, the people go to -- should you have 12. FARAGE: That's my problem. I'm just too soft, too kind and too easy.
QUEST: There are many words that I would choose to describe you, sir. None of those would come within that modern vocabulary.
Finally, if you were in the room tonight at dinner ...
QUEST: ... you'd probably be on the menu rather than at that table. But if you were in the room at dinner, what would you be saying to your fellow European partners over the chateau Brignon? We don't what's on the menu book.
FARAGE: The one would be good. I would just say, let's stop threatening. Let's stop being silly. You need us far more than we need you. Let's crack on, have a sensible time of free trade deal and allow us to be free to go off and pursue our global ambitions.
QUEST: Nigel Farage, thank you sir. There is an enormous number of people waiting to talk to you. So I thank you as always for being honest and forthright as always.
Brussels is -- he's being attacked front and center. Sir takes your microphone off before you go. Thank you very much ...
UNIDENTIFIED MALE: Can we talk to you from the CBS News Network?
QUEST: I'm sure you'd like to but not at the moment, stand back please sir. As we continue, you get an idea now of the sheer tension that is in this building. And so, from Brussels where frankly all hell could break loose at any moment. Back to you.
BANFIELD: Thank you, Richard. And I'll tell you something. You are one person I would describe as soft, kind and easy. Richard Quest, doing this fantastic interview for us on the fly with Nigel Farage, the leader of the U.K. Independence Party. And then effectively that guy behind the exit.
And with the union flag firmly planted behind me, I want to bring in a great American Christine Romans, our chief business correspondent.
So much to go over with that interview.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Oh my gosh. It's a great interview.
[12:50:08] BANFIELD: She whispered to me, this is such a British interview. I expect them to go for tea afterwards.
ROMANS: It's so British.
BANFIELD: It really was. But what I really want to ask you about is, the question that he asked Nigel Farage because this pertains to us.
ROMANS: Oh, it does. BANFIELD: When you talk about damage, economic damage, this pertains to us. And he said, how much damage are you prepared to accept?
And Nigel Farage seems just to blow it off so it is going to be far more successful for the U.K. to be, you know, independent if you put that way.
ROMANS: He does not acknowledge the potential consequences for financial markets and economies in Britain and around the world. He does not acknowledge it.
BANFIELD: And the current damage.
ROMANS: And the current damage. He does not. He dismissed the pound falling to a 30-year low. And said, oh it's been in a bear market since last summer.
He dismissed what many people are very concerned about which it is a sharp move in its currency and sharp moves in markets. You know, Janet Yellen even before this vote said there would be consequences to economies and financial markets if there is a Brexit. Many -- Larry Summers this morning, the former undersecretary in the United States very concerned that we're are in this cycle of populism feeding bad decision-making and bad politics that this warbads (ph) doing.
BANFIELD: But if you ask him, he says, and I'll give you his exact words. He said, "It's not a terrible message. It is a great message".
So the question I have is, we all look at the markets, not just here, let's pop up the big board if we can so I can keep an eye on what has been happening as well.
ROMANS: I call it as Brexit breather.
BANFIELD: The Brexit breather, OK. Well, this is what I want to ask you. Is this something that you can, you can bounce back from? If you look at the 30-year lows of things stock, if you look at the triple A rating that they just got hacked up. I've heard of this before, it was 2007 in this country and all the ratings, the bond ratings went down. But we did recover.
It may have taken a while. But, will they also recover. And thus, might we skip over this ugly period. They will suffer through it and we will not.
ROMANS: Well, we have analysts and the U.S. banks starting to downgrade their growth forecast for the U.S. So this is not just a British problem. Down grading their growth forecast for the U.S.
And you have this feeling that maybe it is the people who voted for Brexit who will be the first to be hurt. Because this is a recession in Britain as many are calling for. You're going to have job losses right away, potential tax increases right away. Those are going to hit people who are paycheck to paycheck or working class voters very first because they don't have the cushion. And that's kind of the irony here. You essentially have some of these Brexit voters who voted for higher taxes, lower growth and this period of financial adjustment. Until we -- if these drivers surprises right, you're going to have some blooming economy and new trade architecture.
BANFIELD: And those bank stocks will somehow miraculously jump 30 percent ...
ROMANS: Some stocks are down 30 percent. And taxpayers, British taxpayers own those big shares in those companies.
BANFIELD: Little known fact to those who don't read the economist all the way through. And that is this that the British taxpayers, not unlike America, bailed out the banks. We bailed out the auto companies and they came back and we got most of our money back. But they are on the hook. They own those banks. They own those bank stocks.
The British taxpayer, mom and pop, tea party fellows, they just saw a 30 percent reduction in their asset.
ROMANS: And that's the latest addition of cut off your nose to spite your face Brexit version. I mean that's one of the issues here. There are going to be a lot of issues. And this, you see this bounce today. Don't get too excited about it and don't get too upset if there is a 300-point decline tomorrow.
You're going to see a lot of big swings until this -- there's some clarity who will be the next prime minister. What will the politics look like there? Who are -- is there going to be a new trade architecture between the U.K. and the rest of the world?
BANFIELD: Those are all the questions that it leads to this uncertainty and the comments that we've been witnessing over here as well. So I guess I want to ask, when the prime -- with the outgoing Prime Minister, David Cameron says, "OK, OK, I'll speed things up", and he has speed things up.
ROMANS: That's good.
BANFIELD: He's now looking to get a new P.M., at least, you know, a vote on the docket by the end ... . ROMANS: (Inaudible) do I think stocks are up today?
BANFIELD: ... fighting into summer. And that was my question Christine. Every little thing that's uttered, will that have an impact on them and then us?
ROMANS: Yes. Yes.
BANFIELD: Every little thing?
ROMANS: We call it headline risk in my business. And there will be so much headline risk for your 401k. I will tell you the best -- the only silver lining I figured, mortgage rates have plunged again. You're getting advertisement for three and a half year of 30 year fixed year mortgage -- three and a half percent for your fixed rate mortgages.
And money is plowing in the U.S. Treasury to safety. And that's driving down those mortgage rates. That's ...
BANFIELD: The fed knows really darn well what it's going to be doing in the next three, six, nine months.
ROMANS: You know, if the fed is going to have to be on hold. Because they cannot -- even Janet Yellen even said the consequences, this was a big risk for the fed raising interest rates. You got very low interest rates in the U.S. that's likely to continue for the foreseeable future.
BANFIELD: You know, we had like a scandal with one stock trader in Britain, I want to see about 10 years ago. And every single one of us saw that the markets plunged all over. One stock broker screwing around with, you know, millions and billions of dollars and it affected us. That's why I really want to know, have we learned lessons from that or are we that vulnerable to one country's decision.
[12:55:10] ROMANS: I think what, you know, with one percent of, you know, S&P 500 revenue is tied to the U.K. But that understates how globally connected everything is and how it takes one asset class off (inaudible). You know, you've got bonds moving, stocks moving, currency is moving, the yen has had huge moves. Japanese stocks and around the world, trillions of dollars are trying to find a home, trying to find safety. It has been very disruptive.
BANFIELD: Fifteen seconds left. A 161 points up on the Dow today. Are these people looking to get a discount and buy on the dip?
ROMANS: They're buying cheap bank stocks, they're trading short-term. They see two huge days at losses and think, maybe I will sneak in over here.
BANFIELD: Should anybody watching do this or should you be super skilled before you touch this market?
ROMANS: Do not trade international crisis with your 401k. It's just a fool's earned.
BANFIELD: Yeah. I think that's very wise. And again, you're going to be on every single day as we hang on every single word. You said a headline, market hearing right? Is that what you call it?
ROMANS: But Richard Quest has a better accent.
BANFIELD: Was that the best interview ever? I'm not kidding. Christine Romans, chief correspondent. Thank you. And if you just had that British accent, that'd be it. You had me at hello.
[12:56:22] And you had me. Thanks for watching "Legal View". Brianna Keilar is fitting in for Wolf Blitzer. She starts right after this break. (COMMERCIAL BREAK)