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Quest Means Business
U.K. Defense Secretary Quits After Scandal; Trump Vows to Scrap Green Card Lottery; Facebook Faces the Music on Capitol Hill; Donald Trump Poised to Make Fed Pick; Resistance as Silicon Valley Stamps Out Trolls. Aired 4-5p ET
Aired November 01, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: An hour ago the closing bell rang on Wall Street. No records. The Dow is up 57 points. Had been up much
higher during the day. Those gains dwindled as the session moved on. Clock changes mean it is now 5:00 in New York. The gavel has been struck.
The day is over. It is Wednesday. It's November the 1st.
In the last couple of hours shock as Britain's defense secretary quits. A sexual harassment scandal is now reaching the heart of the British
government.
Donald Trump says it's time to scrap the green card lottery after the New York terror attack.
And Facebook beats earnings, hits a record high. And yes, get hauled in front of Congress.
I'm Richard Quest, live in the world's financial capital New York City where I mean business.
Breaking news tonight from the United Kingdom from Westminster where an astonishing resignation at the heart of Theresa May's government, the
British defense secretary has resigned over allegations of inappropriate sexual behavior. Now the claim is extraordinary and widens even further.
The whole issue of sexual harassment, which is now going around the world. On Tuesday Sir Michael Fallon apologized for touching a journalist's knee
more than 10 years ago. And tonight, he had this to say on camera.
(BEGIN VIDEO CLIP)
MICHAEL FALLON, FORMER BRITISH DEFENSE SECRETARY: In recent days allegations have been made about MPs conduct, including my own. Many of
these allegations have been false. But I realize that in the past I may have fallen behind the high standards that we require of the armed forces
that I have the honor to represent. I have reflected on my position in government, and I am therefore resigning as defense secretary. It has been
a privilege to have served as defense secretary for the last three and a half years. I have the utmost admiration for the courage, the
professionalism and the service of the men and women who keep this country safe. Thank you.
(END VIDEO CLIP)
QUEST: CNN's Diana Magnay is in London tonight. Shock? I mean, how does one describe this?
DIANA MAGNAY, CNN CORRESPONDENT: It is surprising especially if we look at what the original allegation was, Richard, that Sir Michael Fallon said it
was sorry for. This was 15 years ago at a conference party dinner where he sat next to a journalist, Julia Hartley Brewer, she's called. As she in
her -- she told the tale it, he repeatedly touched her knee until she said she would punch him in the face if he did it again. At which point she
stopped. And she said, she found it mildly amusing. And has described these swirling allegations in Westminster, is what she feels is a witch-
hunt.
So, it is interesting to see what she has tweeted as a result of Sir Michael Fallon's resignation. She says, bloody hell, to Sir Michael Fallon
has just resigned as Defense Secretary. Knee-gate, though I doubt my knee was the reason. We won't necessarily know, of course, if allegations
weren't made public. But it's entire possible that others were taken, for example, to the chief whip's office and therefore Sir Michael Fallon felt
he needed to resign. We do not know.
QUEST: Diana, so to just parse on what you've just said. So, she didn't make a complaint. Is that your understand?
MAGNAY: Yes. This was first splashed in "The Sun," at which point she responded and said, look I never found this a big deal in the first place.
I think this is a whole lot of fuss about nothing.
QUEST: I presume nobody knows where it's come from and one of those stories that sort of has been batting around the lobbies of Westminster for
years in some shape or form.
MAGNAY: That is entirely possible. I think it's quite instructive, that when you look at Sir Michael Fallon statement, he says the number of
allegations have surfaced, including some about my previous conduct. Many of these have been false. But I accept that in the past I've fallen below
the high standards that we required of the arm services. And that would suggest that he's not talking about a single case.
QUEST: How serious -- there are two sides to this. One is, you know, the seriousness of what Fallon did and the reasons why he's gone.
[16:05:04] But we have to look at this in the wider context of the May government battling through -- he doesn't say he's leaving Parliament, just
the cabinet. Is this a case of going quickly so he can come back at some point in the future?
MAGNAY: Well that is entirely possible. But I'm not sure that what's interesting is what happens to Michael Fallon and his future. I think it
is what is so critical happening for Theresa May now. She is going to have to shuffle around her cabinet. He is the first high profile figure to
resign. But given the media feeding frenzy, which many people have termed this this as. There's certainly a huge amount of media interest in these
various allegations swirling around Westminster at the moment. It is entirely possible that other claims may be substantiated, but other figures
may have to go. She is in an incredibly precarious situation politically. She has a very slim majority in Parliament. A cabinet reshuffle with
Brexit coming up is the last thing she needs.
Diana Magnay, in London. Diana, thank you.
President Trump says he wants to and the green card lottery. It's a way that tens of thousands of people get to live and work in the United States,
getting green cards, which eventually can lead to citizenship. The President made the vow in response to the New York terror attack. He said
he'd consider sending the suspect to Guantanamo Bay.
Police today, named the eight victims the youngest was 23 the oldest is 48. They came from New York, New Jersey, Argentina where several of them were
on a trip, a reunion trip in Belgium. The suspect who's in hospital entered the United States on a green card lottery, having won the green
card lottery system. And at the president's cabinet meeting, Mr. Trump made this an immigration issue.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What we are demanding is merit-based immigration. We want people that are going to help our
country. We want people that are going to keep our country safe. We don't want lotteries where the wrong people are in the lotteries. And guess
what? Who are the suckers that get those people? And we want a merit- based system.
(END VIDEO CLIP)
QUEST: So, the official name is the diversity visa program. Better known to most of us as the green card lottery. 45,000 -- actually the total
number allowed by law is 50,000, but 5,000 are reserved for a specific category. So, 45,000 of these visas are issued each year giving green
cards, aimed at people living in countries with low rates of immigration to the United States. It costs nothing to register interest and to take part
in the green card lottery. Every year the Department of State randomly selects the applicants. They actually have to choose twice as many to a
those not eligible. The winners are encouraged to apply online. Scheduling an appointment at U.S. embassy or consulate. Now even before
Donald Trump made comments that he wanted to get rid of it. New York Governor said the president's tweets criticizing this program were counter-
productive.
(BEGIN VIDEO CLIP)
ANDREW CUOMO, NEW YORK GOVERNOR: I am bothered by an attempt by anyone to try to politicize this situation. That plays right into the hands of the
terrorists. They are trying to disrupt. They are trying to create mayhem. They are trying to divide.
(END VIDEO CLIP)
QUEST: Juliette Kayyem joins me. CNN national security analyst, also served in department of homeland security during the Obama administration.
So, look, it's not new this idea of the relationship between the green card lottery and security concerns. Going back to 2007, 2008 you will be aware
here were attempts to get rid of the lottery on security grounds. All those grounds valid?
JULIETTE KAYYEM, CNN NATIONAL SECURITY ANALYST: Yes, absolutely. There is no question the entire visa process should be revised. But that actually
has less to do with security and safety and more to do with what we call future flows. What kind of immigrants, who do we want coming into the
country? This particular diversity visa system, just about 50,000 of the millions granted some sort of access to the United States, is because in
the United States previously we tended to sort of select a certain type of immigrant, Irish, British. This was a way to get more diversity into the
system.
So that would be one reason to change it. It just doesn't make sense from a U. S. perspective. But from the security perspective -- I just want to
make clear here -- simply because you are chosen does not mean that you are in. In other words, the safety and security apparatus still basically
looks at these people and decides as between this person and that person, who's going to satisfy this process.
[16:10:06] He came in -- you know, the suspect here came in in 2010. That's a long time ago. And I think we're looking at visas rather than
domestic radicalization is the problem here.
QUEST: Now but if you take, for example, of the top five population centers in the world or countries in the world, four of them are eligible
for the green card lottery. The United Kingdom, for example, is also ineligible. Because it sent more than 50,000 visas over the last five
years. There's an argument that says you do end up with some of the more exotic countries getting into the green card system because others are shut
out.
KAYYEM: Well, they are shut out of this particular system. And remember, the diversity visa system was a counter-weight to all the other visa
programs that exist out there that tend to benefit in particular family unification. So, the fact we have a lot of western Europeans in this
country who are bringing family members here or unifying with family members here, meant that the diversity program was essentially a counter-
weight. It wasn't sort of a special access.
I think and agree, and I think most people even in safety and security and immigration agree the whole system needs to be revised to think about,
right, what kind of future flows do you want in this country with safety and security at the forefront. But just because you get access to a visa
does not mean you're in this country. You still have to go through the entire process. It's the same thing with refugees. Because you qualify
still have to go through the process.
QUEST: Stay with me Juliet, I need your interpretation of this. It's just been reported, Sayfullo Saipov the man who is accused of this has been
charged on federal terrorism charges connected to yesterday's attack in Manhattan. He's been charged with providing material support to ISIS and
violence and destruction of motor vehicles. One imagines that a few murder charges will come in the fullness of time on the back of that as well. And
these charges are not -- the fact that they have gone initially -- they haven't gone for murder just yet that I can see. But it does this idea of
growing facts, material support of ISIS. What do you make of that?
KAYYEM: They have a clear-cut case of his sort of evidence around him, that he had ties, was maybe passively absorbing ISIS may have had contacts.
We don't know what the nature of his contacts our with ISIS. That's going to take a little while. To be honest, he may say one thing, want to say
that he's a soldier of ISIS, and it turns out maybe he was just on the passive side.
What is important here is that this is a terrorism charge. Why is that important? Because it is a motivational charge. It actually goes to the
motivation. You could have just charged him with murder. It means that prosecutors have a pretty tight case that this was motivated by terrorism.
And that matters mostly for sentencing purposes and potentially the death penalty.
QUEST: That was my next question to you. Under this White House or this Justice Department under Jeff Sessions, even though, of course, in a
nonpolitical sense he's supposed to be acting in a prosecutorial sense, is it likely they do for the death penalty here?
KAYYEM: Absolutely. I'm not thinking twice about that one. One because just comparatively if you look at the Tsarnaev brothers. This was more
extensive -- more deaths, excuse me. It looks like may be more significant ties to a foreign country or terrorist organization or foreign planning.
And it is a different presidency and a different Department of Justice. The Obama administration struggled a little bit because of the president's
feelings about the death penalty. Under this administration I really highly doubt that anything, but the death penalty will be sought.
QUEST: Juliet, we'll need you more in the days and weeks ahead to help us understand what's going on. We appreciate it, as always, thank you.
As we continue tonight on QUEST MEANS BUSINESS, U.S. tech giants are back on Capitol Hill for second day of hearings into Russian interference. One
senator accuses the companies of not understanding the threat of cyber warfare. Somewhat extraordinary when you think of the companies involved.
We will analyze that after the break.
[16:15:00] (COMMERCIAL BREAK)
QUEST: On Capitol Hill, as top senators accuse Facebook, Twitter and Google of not doing enough to stop Russian meddling in U.S. politics. They
are the giants of Silicon Valley and it was the second day of aggressive questioning on Capitol Hill. So also, today -- have a look -- we've seen
the first examples of the Russian ads specifically use during the 2016 presidential election. This one, for example, which comes from a sponsored
ad about Hillary Clinton. Adverts like this reached 150 million people according to Facebook, which raised the number of people who actually saw
them.
This one was clearly designed to diminished support for Hillary Clinton. Hillary Clinton is the co-author of anti-police and anti-constitutional
propaganda, down with Hillary. And even puts a demonstration which was supposed to take place on Saturday the 1st, 180 people interested according
to this. That was one of them. And then you've got this particular one this shows the ways in which these ads were designed to amplify divisions
across U.S. society. Take for example this one. Black Panthers dismantled by the U.S. government, they were black men standing up for justice and
equality. Never forget that the Black Panthers formed to protect black people from the KKK was dismantled by the U.S. government.
So, you get the idea. It's all designed to create discord, disharmony in the U.S. The top Democrats on the U.S. senate committee who has Silicon
Valley in her home state says the companies testifying today do not understand the seriousness of this threat.
(BEGIN VIDEO CLIP)
SEN. DIANE FEINSTEIN (D), CALIFORNIA: I've been very proud, and I know Senator Harris is as we well, to represent this tech community from
California. But I must say, I don't think you get it.
What we're talking about is a cataclysmic change. What we're talking about is the beginning of cyber warfare. We are not going to go away, gentlemen.
And this is a very big deal. I went home last night with profound disappointment. I asked specific questions. I got vague answers. And
that just won't do. You have a huge problem on your hands. And the United States is going to be the first of the countries to bring it to your
attention. And others are going to follow, I'm sure, because you bear this responsibility. You've created these platforms. Now they are being
misused.
(END VIDEO CLIP)
QUEST: Dylan Byers is with me in Washington. I don' t believe I have heard a better encapsulation of the problem, the challenge, and the
delinquent responsibility of the companies involved than we've just heard from Senator Feinstein. Would you agree?
DYLAN BYERS, CNNMONEY SENIOR REPORTER: I would absolutely agree, Richard. And that quote from Senator Feinstein is so important, not only because she
does represent the state where these companies come from, but because it highlights the two different world views that exist between Silicon Valley
and Washington. The way these tech companies see themselves, they are global companies.
[16:20:01] They have open platforms -- or they would like to believe they have open platforms. They don't want to go down the road of starting to
regulate and put parameters on the kinds of speech that people can have, or at least that's what they say. The view from Washington is drastically
different. They see this as the beginning of a very potentially long- standing information war between Russia and the United States. And they do not want to see the platforms that, so many millions of Americans get their
news from being manipulated by foreign actors.
QUEST: They are being naive if they believe that is going to hold water. And I'll give you an example for you to argue back to me. As the senator
says, the U.S. may be the first, but you can bet your bottom dollar it won't be long before the U.K., Germany, EU, Japan, Australia and other
companies all start to say, do this in our country and we will regulate you.
BYERS: Richard, that is absolutely right. And look, another argument that many senators have brought forward. And indeed, executives at Silicon
Valley companies that do more carefully curate the content on their the platform say is, look, you already outlaw porn. You already outlaw hate
speech. So, why can't you put the parameters in place to stop foreign actors from meddling in our elections? The answer that these companies
have, is that when you talk about issues advertising, when you talk about creating political content or content that maybe promotes one political
issue, it becomes very tricky and nuanced to determine that before it happens and then to address it after its on your platform.
QUEST: What I've got here -- the two that we saw. The one with Hillary Clinton and the one with the Black Panthers. Now I can see an argument
that somebody says, all right, fair enough. Russia brought this up but, you know, that's up to them. I mean you know it's really the point this
shouldn't be allowed or that it should be transparent where it comes from. Because on its merits, nothing wrong with it in that sense.
BYERS: No, that's absolutely right. And in fact, senators yesterday in the judiciary hearing brought up the fact they put up a number of ads that
look very similar to these Russian ads that were actually from American users. It's not so much the question about politically divisive content,
it's very hard in fact, to imagine social media platforms t having politically divisive content. It is that question of transparency. It is
that question of authenticity and accountability. And do you and I, Richard, going on Facebook, going on YouTube, going on Twitter, do we know
where that information is coming from? And can we use that to contextualize the information we're interpreting when we read the news on
these platforms.
QUEST: Dylan, thank you with that. Dylan with that side of the story. But let us not forget whatever is happening in Washington, look at that.
Third quarter profits from Facebook, which are up 79 percent $4.7 billion. It doesn't seem to matter what happens. The numbers -- excuse me. The
numbers seem to just get better. Yet Mark Zuckerberg says investment and security. Samuel Burke is in London -- Samuel.
SAMUEL BURKE, CNN TECH, TECHNOLOGY AND BUSINESS CORRESPONDENT: Richard this the most remarkable quarterly report that we've ever seen from
Facebook for both reasons. One, the business here is incredible. It is just amazing capitalism. They are doing business 50 percent better than
they did the year before for this quarter. And amazing to hear the CEO saying at the same time that they are actually going to cut into their
profits because they know they have to use that money to fight the abuse that you and Dylan were just talking about, on their platform. Now of
course, he has multiple audiences he's going for there. He's going for the politicians that were grilling him on Capitol Hill today and business
people who are concerned about this long term.
QUEST: Right. But let's look at these results. Where did they make the money? Where is this vast improvement coming from? Let's also remember
Facebook the shares ended at an all-time high give or take.
BURKE: An all-time high. And it looks like they're just going to keep on going. Where did they make all the money? Well a lot of it is in the
United States. And It is just what they do best if not, they are the best at it. It is digital ads. Think about, Richard, how often do you actually
notice a digital ad, do you engage with it? Facebook is one of the rare platforms where they do this.
But this is the whole crux of their problem, the fact it is so easy for them to make money here, easy. They don't even have to meet the people
that they are making money with. They are the systems on their platform which allow anybody to go in, buy an ad. This is why they are making
money, but this is also their downfall at the moment.
[16:25:00] QUEST: All right. But is there not a feeling that Facebook is taking this seriously what's happening. That Zuckerberg does not want to
be known as the man who dented democracy?
BURKE: Well, there absolutely taking it seriously. He doesn't want to be known that way. But he also doesn't want to be the man who dented his own
profit. As Donald Rumsfeld once said, this is a true unknown that is known. And the fact they don't know what will happen the next election
cycle. Just like ratings go up on CNN during on an election cycle, the same thing happens on Facebook. And the real known, unknown here is the
fact that maybe people won't log on as much next time during the next election cycle if they don't feel they can trust the platform. So, it is
about the image of democracy. It's also the profit. It is about the bottom line.
QUEST: Samuel Burke who is in London. Both sides of the story coming to you tonight. Samuel, thank you.
Elon Musk tells Tesla today, also reported after the bell. And it is not pretty. Not at all. The electric car maker posted its biggest ever
quarterly loss. Peter Valdes-Dapena is CNNMoney's senior automotive writer. What happened?
PETER VALDES-DAPENA, CNNMONEY SENIOR AUTOMOTIVE WRITER: They have been having a lot of problems. What investors are looking at also is with the
Model 3 model. Their sales are actually pretty good on the Model S and X. Those are doing well. And they are having some other issues in their
battery department that are affecting Model 3 production. And investors I think are getting a bit impatient with that.
QUEST: Is this fair? I mean, Model 3, all right, the ramp up has been much slower than they forecast. But the task at hand is large. And we
might just look back at this in five years' time and say what a fuss about nothing.
VALDES-DAPENA: Well we might. But on the other hand, I have never heard in my almost 20 years covering the auto industry, I've heifer heard any
other manufacturer go on so much about how hard it is to build a car. And I think what investors are looking at -- what people are looking at, there
saying, you know what, Tesla, let's face it is facing competitors. General Motors, Daimler, Ford, that have been making cars for over a century that
don't have these problems.
QUEST: What? And the problem with the Model 3 is what? Because the other models, they've not had -- they've had some problems, but not of the same
magnitude. The problem Model 3 is what? Size, scale and ramp up?
VALDES-DAPENA: Yes, well the Model 3 is designed to be simpler actually to make than Model S was, but on the other hand Tesla says that they're also
attempting to make a much more automated production line than they've ever made before. They are putting battery factory in Nevada online. They are
saying they are having trouble there getting those battery packs produced. That's one of their big bottlenecks.
QUEST: What would Henry Ford have said I wonder? Thank you, sir, good to see you.
Some news I need to bring to your attention tonight. The FBI is seeking information about a second individual now in connection with the terror
attack in New York. The FBI says the man they are seeking was born in Uzbekistan in 1984. Mukhammadzoir Kadirov is also -- this is the first
time we're seeing this tonight. Born in those days and in connection with the attack yesterday. QUEST MEANS BUSINESS, we will have more on this
after the break, good evening to you.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. When Donald Trump gears up an historic power shift at the
Federal Reserve. We'll show you the changes planned and how extreme that will be in terms of the makeup of the Fed. And we'll meet the online
extremist trying to create a new home. Some of the internet's ugliest content. As we continue tonight, this is CNN, and on this network the
facts always come first.
In Britain the defense secretary, Sir Michael Fallon, has resigned over allegations of inappropriate sexual behavior. Sir Michael apologized for
touching a journalist's knee some 15 years ago. Comes amid a series of accusations of sexual harassment an inappropriate behavior at Parliament.
U.S. president Donald Trump is calling for the termination of the green card lottery in the wake of the New York terror attack. The program
distributes thousands of visas and green cards to countries where there is been a low rate of immigration to the U.S. historically. Mr. Trump said
instead he wants to introduce a merit-based system.
Investigators our digging into suspect's terrorist background. Sayfullo Saipov's reportedly talking with authorities whilst in hospital. They have
also been speaking to the man's wife. Apparently, he became radicalized after moving to the United States in 2010. The police say he followed ISIS
instructions for truck attacks almost to the letter.
So, now major development in this hour in the New York City attack. The suspect has been charged with federal terror offenses. Now FBI is seeking
information about a second individual. Jason Carroll is with me. Jason, let's start -- the charges to some extent were inevitable and were going to
arrive at some point. This second person, this is totally new.
JASON CARROLL, CNN CORRESPONDENT: Right. That is totally new. Let's start with the charges. We're just getting information about this now,
Richard. The announcement is going to be made just in about ten minutes from now. But we have a copy of the complaint. He's charged on two
counts. Count one -- I'm going to read part of it to you here. It says, provision of material support and resources to a designated foreign
organization. The complaint goes on to read the suspect, Sayfullo Saipov, knowingly and intentionally provided material, support or resources to a
foreign terrorist organization. That organization named, of course, as ISIS on count two.
And here's what's interesting about this. Count two reads that the suspect will be charged with violence an destruction using a motor vehicle. That
motor vehicle being the rented Home Depot truck that he used in the deadly attack. But what's interesting about this, in count two. It also says
Saipov and other known persons, known or unknown. So that suggests there might be others involved in this as well. And as you just said we also
received a development just within the past 15 minutes or so ago that the FBI is now seeking a second person of interest. That person named as
Mukhammadzoir Kadirov. That person also a Uzbek national. Investigators want to talk to this person now as well.
QUEST: Jason Carroll, thank you.
The Federal Reserve says it is not making a change on interest rates. Change of another kind may come to the Fed. Donald Trump will soon
announce who will be the next America's top central bank. We'll find out machinations to lead the Fed after the break.
[16:35:00] (COMMERCIAL BREAK)
QUEST: Wall Street is pushing ever higher. You've got two greens and a red here over at the trading post. No records though. We did go through
ever so briefly 23,500, because the Dow was up very sharply during the day, but then fell back towards the close. The Nasdaq actually had finished off
just a tad. And all of this time the Feds holding interest rates on hold. The economy is rising despite hurricane disruptions. And the hint in the
Fed minutes, the FOMC minutes suggest a December rate hike likely.
But the issue still remains inflation. And if you read the Fed's -- not the minutes -- if you read the FOMC statement, they do still talk about it
being under the 2 percent target and likely to remains so. So, you've got a balance on Fed -- we'll talk about that in a moment -- the Fed's mandate
when it's time to raise rates. All these stay the same, 54, 50, 62, there were no records on any of the markets including the European markets.
Incidentally, the Dax had the best session in Europe. That was up over 1.5 percent on the day.
So now with the Fed hike out of the way for the moment, and eyes are now turning to President Trump as he picks the next person to lead the
America's central bank. Donald Trump told reporter he believes the current chair Janet Yellen is excellent. He has declined to say whether he will
re-nominate her.
(BEGIN VIDEO CLIP)
TRUMP: I think Janet Yellen is excellent, I think she's excellent. I didn't say that. I think she's excellent. Go ahead, thank you very much.
(END VIDEO CLIP)
QUEST: She's excellent. I didn't say that. She's excellent. Clare Sebastian is with me. Patrick Gillespie is with me in the Federal Reserve
boardroom. There we go. All right. You're our Fed expert. This is going to happen tomorrow. Start with you Clare. Janet Yellen, take me through
the scenarios.
CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: At the moment this is the Federal Reserve Board. You can see the seven members is the maximum you can have,
and it is critically understaffed at the moment.
But actually, whether or not Trump knows it, picking Jerome Powell could give him the maximum amount of control over who fills these seats. Because
Jerome Powell moving into the chair role leaves his seat empty. The first scenario.
QUEST: So, at the moment Jerome Powell is a governor.
SEBASTIAN: Just a governor.
QUEST: And he is believed to be according to "Wall Street Journal" tonight, the man who is being picked.
PATRICK GILLESPIE, CNNMONEY ECONOMICS REPORTER: Yes. That's what the journal is reporting. What's really interesting, we need to call a spade a
spade, Richard, is this reshaping monetary policy at the Fed or is this President Trump saying
I want to make my mark on the central bank. And when you look at policies between Powell and Yellen, this is essentially picking the same person.
[16:40:00] They don't disagree on any policies. They vote the same way all of the time.
QUEST: OK. No difference. Let's put aside about monetary policy. In terms of Donald Trump longer term affecting a change on the Fed --
GILLESPIE: He has more influence than arguably any other president in recent history on the future of the Fed and the future of monetary policy.
SEBASTIAN: If you look at this, Richard, Randal Quarles is already a Trump pick.
QUEST: We've got Quarles over here who is already a Trumper, right. So, he is already there,
SEBASTIAN: Three more vacancies. That is one more.
QUEST: So, with Quarles, Fisher and the two vacancies, he's already got four, even if he re-nominates Janet Yellen.
SEBASTIAN: Right.
GILLESPIE: Important to note, these are people who have primitive vote on the Fed's monetary policy committee, they have some rotating seats, these
people are always allowed to vote.
SEBASTIAN: Potentially he could nominate five people to the board of governors. Four you can see there.
QUEST: Quarles vacant, vacant --
SEBASTIAN: Then if we see if Janet Yellen leaves, as she could do if Jerome Powell is nominated as chair.
GILLESPIE: Which is the president.
QUEST: Only once has apparently not happened in the 1970s where a Fed governor after ceasing to be chairman stayed on for three months.
GILLESPIE: These two, Powell and Yellen are very close. You can see Yellen will be respectful as was her predecessor Ben Bernanke, and step
aside and not step on your toes and let you handle the Fed from here on out.
SEBASTIAN: If that happens Richard, we have five Trump picks on the Federal Reserve Board, five out of 12 voting members on the FOMC. Almost
half of all votes on monetary policy will be those appointed by Donald Trump.
QUEST: This is getting complicated for my simple brain here. Let's assume -- the status quo, is whatever happens, the president will have had four
seats. That will be Fisher's, two vacant and Quarles who is already there, if Powell tomorrow gets the nod and Yellen goes --
SEBASTIAN: Then we have five.
QUEST: Then he has five. 5 out of 7 completely re-changes the Fed.
SEBASTIAN: Absolutely. And he may be able to do it quickly because he has Congress. Two of these vacancies were inherited from the Obama
administration. There hasn't been a seven-member Fed board since August 2012.
GILLESPIE: They have been overworked.
QUEST: But what will they be doing. Patrick, taking Clare's scenario, where does the change happen? Either monetary policy or a banking
deregulation, where will we see the change?
GILLESPIE: It really may not be from the chair position, could be from vice chair position, or from some of these other governorships. What we've
talked about could be possibility this gentleman from Stanford University, John Taylor coming in, he's a very
different mind on monetary policy.
He wants to create a mechanism to lower or raise interest rates, I think the change you could see is not only from the chair position, which is
really more of just a political makeup really, much more the policy changes from the governorships and from the vice chair position.
QUEST: OK. So, what about deregulation, banking reform, all banking supervision. All the issues that the president is very different even to
the Volcker rule which -- a change but believes in fundamentally its purpose.
GILLESPIE: Powell isn't going to shift deregulation -- the Fed's financial regulation. Powell is not going to change that. Again, this goes into,
can Powell, who is not an economist convince his other colleagues on the Fed's Board of Governors, hey, we need to keep these reforms in place.
He's going to face political pressure from Trump's other nominees to roll back the tape.
QUEST: The Fed is often seen amongst the most tedious, slow moving. If you're right in your analysis tonight, this could be the biggest change to
the U.S. economy in a generation, more so than the tax reform package which might just be tax cuts.
SEBASTIAN: I think Trump has a unique opportunity, Richard. I was looking back at previous presidents, Obama managed to appoint seven governors to
the Fed, Bush nine and Clinton was six over their term. So, it's not unusual for the presidents to have a fair few denominate because of natural
attrition.
This will happen possibly very quickly. He's clearly aware the administration is under pressure, having not appointed people to key
positions fast enough. He has the Republican Congress and he has the midterms around the corner. He may be looking to push these through.
GILLESPIE: He wants low interest rates.
QUEST: Jerome Powell?
[16:45:00] GILLESPIE: I am going with it.
QUEST: Jerome Powell?
SEBASTIAN: Yes.
QUEST: We return to the European markets. Export heavy Dax is the one to watch right now, I just mentioned it, it was at a record high 1.8 percent,
it went up, it is down to a weak euro against the dollar. Making German exports of luxury goods cheaper and more competitive.
Silicon Valley gets grilled in front of Congress. Lawmakers are threatening new regulations. We'll show you what happens when trolls get
pushed into the dark corners of the Internet.
First, Traders.
(BEGIN VIDEOTAPE)
(UNIDENTIFIED MALE): In a London rehearsal room, this musician is perfecting his skills through a tutorial.
COMPUTER: Playing the notes which is 16th notes, and we move on to step two.
(UNIDENTIFIED MALE): The journey of knowledge for my master to a pupil starts across the Atlantic in the U.S. state of Maine. At the Vic Firth
drumstick factory.
ANDY TAMULYNAS, MANAGER, VIC FIRTH-ZILDJIAN COMPANY: The Vic Firth was the triple threat of percussion, he was a performer, he was an educator, and he
was a businessman, an accidental businessman.
(UNIDENTIFIED MALE): Firth spent half a century playing percussion for the Boston Symphony orchestra from 1952. And began whittling his own sticks.
TAMULYNAS: When he first started this, pitch pairing, and weight matching did not exist, and he was the first one to do it. Saw it as a problem that
could be solved, and as a musician he knew the drummers would appreciate having pitch paired and weight matched drumsticks.
(UNIDENTIFIED MALE): After 30 years of success and musical collaboration with the leading symbol maker Zildjian, kept the company rooted in profit
and ensured its continuation after Vic's death in 2015.
TAMULYNAS: It is still a small company, but we are the global leader in drumsticks with 60% percent of the market share.
(UNIDENTIFIED MALE): The trade-onomics of musical instruments is tuning up to the prospect of an $18 billion global market by 2020. But since the
global financial crash in 2007, overall profit has fallen flat. Pianos consistently hit the right note as the key purchase for consumers with
healthy bank accounts.
Japan is the largest net exporter of the instrument. But global desire for music has not been muted. Revenues are set to reach a crescendo of $15
billion this year.
TAMULYNAS: We are happy to be growing in industry that is flat overall, so we really use our digital marketing capabilities to attract customers on a
global scale.
(UNIDENTIFIED MALE): Today the skills of percussionist Matt Garstka are being captured on camera, social media videos like these inspire would be
drummers and showcase skills that made Garstka worthy of his own signature sticks.
TAMULYNAS: We have a ton lessons on our website and on our YouTube channel. If we have an opportunity to teach people and to create more
drummers and get people excited about playing music, that is a core value for us. 10 years ago, VicFirth.com was really the only place online where
you can go to get drum lessons. And I think there is brand equity built through that.
(END OF VIDEOTAPE)
[16:50:00] (COMMERCIAL BREAK)
QUEST: Earlier in the program I was talking about records on the markets, I did omit to tell you that the Dax, when I was telling you about the Dax
which was up 1.78 percent, the Dax did close at an all-time record. The Dax is 24 records so far, this year.
The FTSE and CAC they are at two-year highs at the moment. No records on the U. S. Markets.
As executives from Facebook, Twitter and Google round out their second day of getting grilled by congress, it's clear Washington could start getting
tougher on Silicon Valley. I discussed this with Martin Sorrell who told me to tech firms need to be treated like media companies.
(BEGIN VIDEO CLIP)
MARTIN SORRELL, CEO, WPP: Google and Facebook are not tech companies, they are media companies just like CNN. CNN is responsible for its content and
Facebook and Google are responsible for theirs like Twitter or SNAP or any potential alternatives to the duopoly that we see.
(END VIDEO CLIP)
QUEST: Now as tech companies work to stamp out extreme content, trolls are being pushed deeper dark corners of the internet. CNN's Laurie Segall met
one notorious anarchist as part of our new series "Divided We Code", we want to warn you that you might find some of the content that she uncovers
to be extremely offensive.
(BEGIN VIDEOTAPE)
LAURIE SEGALL, CNN SENIOR TECHNOLOGY CORRESPONDENT: The backlash has begun. Companies like Google, Facebook, Twitter have a dilemma.
On the one hand they are fighting violent content removing terrorist propaganda and trying to combat harassment on their platforms. They are
walking a delicate line between censorship and free speech. An increasingly, some people think they have gone too far.
Anthony Mayfield is the founder of PewTube.
ANTHONY MAYFIELD, FOUNDER PEWTUBE: When they see this crackdown, even if it's not personally their content being censored, I think they are
offended.
SEGALL: It is his alternative to YouTube. Can you describe your users?
MAYFIELD: I knew that at the beginning it would be mostly fringe characters.
SEGALL: Here is what it looks like. This is a pretty horrific title for a video.
Wow, so racist images, anti-Semitic images it's pretty awful. I'm running into trouble. Do we even show any of this or kind of scrap this? I don't
actually think some of these people deserve a platform.
Clearly some of the tech companies don't either. The news value there is they have a platform and that they are gathering. You can't ignore it even
if you don't agree with it.
PewTube is one of many alternative sites popping up.
This is Cody Wilson, I spoke to him years ago when he was working on a pretty controversial project.
CODY WILSON, INTERNET FREE SPEECH ACTIVIST: I think I'm known as one of the more radical free speech activists.
SEGALL: He was dubbed when the most dangerous people on Internet when he posted instructions showing how do 3D print a homemade gun.
Now he has a new crusade, is called Hatreon.
(END OF VIDEOTAPE)
JOON H. KIM, ACTING U.S. ATTORNEY, SOUTHERN DISTRICT OF NEW YORK: A man consumed by hate and with a twisted ideology attacked our country and our
city using a rented Home Depot truck as his weapon of terror, the man sped down west side highway, and then intentionally plowed his truck into a
pedestrian walkway and bicycle path hitting and running over people who were simply trying to enjoy a sunny afternoon in New York City.
He killed eight innocent human beings and injured at least a dozen other people. That man has alleged in the complaint filed today was Sayfullo
Saipov.
[16:55:00] Today, thanks to the incredible work of FBI, NYPD, the joint terrorism task force, and law enforcement in the city and around the
country, just about 24 hours after Saipov's attack, we now have him charged with federal crimes of terrorism. The complaint filed today charges Saipov
with two counts. First, material support of a terrorist organization. That being ISIS.
Second, a federal charge of violence and destruction of a motor vehicle with willful disregard for the safety of human life that resulted in
multiple deaths, as the complaint alleges, after speeding through the walkway and bicycle paths running over and killing people Saipov crashed
his truck into a school bus carrying children.
Then he got out, yelled "Allah Akbar," meaning God is great. Brandishing two weapons, which turned out to be paint ball gun and pellet gun.
He was stopped by a brave police officer who confronted him and shot him in the abdomen. In the short time since this attack as alleged in the
complaint we have developed evidence establishing Saipov committed this attack in support of ISIS. That evidence is laid out in the complaint, but
it includes the following.
A note that was recovered just outside the truck that read in part, no god but god. And Mohammed is his prophet. An Islamic supplication, it will
endure. A phrase commonly used to refer to ISIS.
Also, a search of cell phones found in a bag that he was carrying, a search conducted pursuant to court authorized wiretaps revealed thousands of ISIS
related images and 90 videos, about 90 videos depicting among other things ISIS fighters killing prisoners by running over them with a tank, beheading
them, and shooting them in the face.
In Mirandized interview statements with law enforcement last night and today, Saipov allegedly admitted he was inspired to commit the attack by
the ISIS videos he watched and had been planning this attack for two months. He also admitted that he had rented a truck on October 22nd to
practice the turns he would may he would make an is Halloween day attack.
As I mentioned, it is incredible investigative work that has allowed us to bring these charges so soon after the attacks. I want to thank all the law
enforcement and citizens who responded to this attack in the way New Yorkers do. In particular, I want to thank
officer Ryan Nash for his selfless bravery.
I want to thank the FBI represented here today by Bill Sweeney, assistant director in charge of the New York field office. Their work in this case,
as in all terrorism matters that we have worked with them on has been extraordinary. I also want to thank the NYPD represented here today by
first deputy commissioner Benjamin Tucker and Deputy Commissioner John Miller.
Their leadership and that of commissioner O'Neal over the greatest police force in the
world has helped keep our city safe. In the wake of yesterday's attacks NYPD has kept our citizens reassured and continuing to live our lives.
Finally, I want to thank the terrorism prosecutors and investigators in my office who jumped on this immediately and haven't gotten any sleep since.
Andrew Beady, Amanda Whole, Matthew La Roche who are not here because they were in court at the presentment, and investigators Kevin Song and George
Cory, as well as the supervisors of our terrorism and international narcotics unit who are with me, Shawn Buckley and Elon Graf.
The folks in that unit working with FBI, NYPD, JTTF, have a long and unblemished track record of successfully investigating and prosecuting
domestic and international terrorists whether it's the Chelsea bomber just convicted a few weeks ago on all counts
will be serving mandatory life in prison. Or the other terrorist convicted in our courthouse just down the street in the last few years alone.
That list includes recent convictions by this office after the trial of Sulaiman Abu Ghaith, Osama Bin Laden's son-in-law, Abu Hamza, the United
Kingdom-based radical cleric.
Amid Al Gamal, the home-grown ISIS supporter and Khalid Al Fauaz, one of Al Qaeda's embassy bombing defendants. This is an amazing record of success.
Of the eight-innocent people Saipov allegedly killed yesterday, two were Americans and the rest were foreigners visiting New York City. It's been
reported that five of the victims were childhood friends from Argentina celebrating a high school reunion. Those Argentinian men came here like
the millions of other visitors to see the sites and spend some time in the greatest city on earth.
For the same reasons millions visit this city and find it so special, alleged terrorists view the city as a prime target for their hate-filled
crimes. But the thing is for the alleged terrorists, like Saipov they will find in New York City something else, justice. They will find and have
found that law enforcement and everyday people in the city are not afraid of their evil, these few through their false hateful rhetoric and are
committed to bringing them to justice.
And that is what we intend to do with Saipov. I would like to bring to the stand now Bill Sweeney assistant director in charge of the FBI.
BILL SWEENY, ASSISTANT DIRECTOR, FBI: Thanks, Joon.
Good evening for the past 24 hours hundreds of personnel from the joint terrorism task force both on this side of the river and in New Jersey have
been working around the clock developing and tracking leads, and executing searches as we dig deeper into life and motivations of Saipov.
The charges announced this evening while significant should be taken as no indication that I work here is over. We will continue to employ all
investigative techniques necessary to fully understand his social network and unearth his motivations.
END
