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Investors on Edge; Trump Tweets About Investigation; McCarthy Comments about Trump and Putin; DOJ Names Special Counsel. Aired 9:30- 10a ET

Aired May 18, 2017 - 09:30   ET



[09:30:32] JOHN BERMAN, CNN ANCHOR: All right, the opening bell on Wall Street just moments ago. And, take a look, we are down 50 points already. That's not bad. Yesterday, though, was horrendous. The worst day, I believe, of the entire administration. The question is, where is it headed today with investors clearly nervous with the way things are going.

Joining me now, CNN chief business correspondent, star of "Early Start," Christine Romans.

They're afraid.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: They're afraid. Look, the calm has been broken, as I said, on Wall Street. And the calm, look, it was almost impenetrable, right? There was a Trump high in this market that people just couldn't shake. They were really convinced that this president has an agenda that is going to make companies richer and investors richer. Tax cuts, deregulations.

For the first time yesterday, you saw a dent in that confidence because of the Comey memo. Now, that was a whole different news cycle ago, right? Now we're talking about a special counselor. And there was some discussion overnight maybe there could be a bounce back because now at least you have a process by which all of this Russia stuff is going to be examined, investigated. But, instead, you have a resumption of that selling.

I'm showing you the fear gauge.


ROMANS: Remember, we were telling you how complacent investors were? They were just so euphoric about a Trump presidency that nothing really mattered. They - earnings season was strong. The economy was doing well. Jobs were being added. But, most importantly, companies, the investor class, was making money, and so you had a big sense of complacency. That spike yesterday shows you that complacency was broken.

BERMAN: And, again, you know, the market today, not notable because 40 points is a big drop. Notable because it didn't bounce back. ROMANS: Exactly.

BERMAN: As you said, there were some people - you know, Bob Mueller, I think, is the political and legal equivalent of like a sedative -

ROMANS: Right.

BERMAN: You know, for all of Washington.

ROMANS: Almost bed sheets (ph).

BERMAN: I mean, but investors don't seem to think that it will make the controversies go away.

ROMANS: It won't make controversies go away. I mean you heard traders yesterday and investors saying that their - there was a difference. There's always been this assumption that the agenda would get done one way or another. But yesterday there was a first talk - the first talk about the existence of the presidency, this president in the White House, and that's a long shot, of course.


ROMANS: But that was something that had never been under consideration. So, look, one day is just one day. Yesterday we lost 370 points. That's not even 2 percent. So put that in perspective. But you're not seeing a bounce back here this morning.

BERMAN: All right.

ROMANS: It will be incredibly important to see if there's anything that Steven Mnuchin says, the Treasury secretary, today on the Senate - in front of the Senate Banking Committee about tax reform. That could be, I think, a headline risk (ph) one way or the other here for investors.

BERMAN: To look at (ph).

ROMANS: They want to see signs of - of movement there.

BERMAN: That's what Republicans want to be talking about.

ROMANS: Right.

BERMAN: The question is, can they sustain that discussion with everything else going on.

Christine Romans, always great to see you.

ROMANS: You're welcome.

BERMAN: Thank you so much.

New this morning, the president is complaining about the appointment of a special counsel to investigate alleged campaign ties to Russia. This is what he wrote just a short time ago. "This is the single greatest witch hunt of a politician in American history."

Joining me now is Democratic Congressman Ted Lieu of California. He is a member of the House Judiciary Committee. Also the Foreign Affairs Committee.

But, congressman, as a member of the Judiciary Committee, the president basically saying you are now part of a witch hunt. Your response?

REP. TED LIEU (D), JUDICIARY COMMITTEE: My response is, it may be this is the greatest political witch hunt in history, or it may be the greatest political crime in history. And that's why I'm so pleased that a special counsel has been investigated to see in fact what has happened.

BERMAN: Well, if his tweet was hyperbolic, then the statement you just made was equally hyperbolic. The greatest political crime in American history? That's a high bar, sir, considering, of course, Watergate.

LIEU: If there was collusion with the Russians, that is far beyond what happened with Watergate. Collusion with the Russians, in fact, would be the greatest political crime in history that then resulted in the election of a president. And that is why I'm so pleased to have this special counsel.

And, keep in mind, our democratic institutions are being tested like never before. Our courts have stood up. Yesterday the Department of Justice stood up. Now it's time for Congress to stand up and investigate as well.

BERMAN: So you think the appointment of Bob Mueller as a special counsel is necessary. Is it sufficient? Your House minority leader, Nancy Pelosi, said she still wants to see a special committee appointed to investigate this. Should that go on pause right now to let this new special counsel begin his work?

LIEU: No, because these are two separate investigations. During Watergate, you had investigations from both Congress, as well as a special prosecutor. And that's what we need right now. We need both investigations through the executive branch, through the special counsel, as well as through counsel - Congress with an independent commission. We need both.

[09:35:04] BERMAN: The fact that Rod Rosenstein, the deputy attorney general, made this appointment apparently, you know, with no counsel or suggestions from the White House or from the attorney general himself, does this paint him in a different light for you? Because you, along with many Democrats, were highly critical of the memo that he had written to the president which suggested that former FBI Director James Comey had behaved inappropriately.

LIEU: Rod Rosenstein saved his integrity. He followed the law. If you just look at the law, Title 28 of the code of federal regulations says that the attorney general will appoint a special counsel when there's a conflict of interest. And Rod Rosenstein realized that he cannot investigate his boss, the president, for obstruction of justice and other matters. And Rod Rosenstein did the right thing and I commend him for it.

BERMAN: Well, it's interesting because you - you say he saved his integrity when he does something that you like, yet you and many Democrats attacked him when he did something you do not like. You know, many Rod Rosenstein, who many people think is a distinguished lawyer, really did think that James Comey stepped over bounds during the investigation into Hillary Clinton. So might it be that he was behaving with integrity in both cases?

LIEU: I don't have any problem with the memo that Rosenstein wrote. My problem was that Donald Trump fired Comey for entirely different reasons. Donald Trump admitted on national TV he fired James Comey because of the Russia probe. That looks like obstruction of justice. The memo that Rosenstein wrote talked about how Comey was unfair to Hillary Clinton, I don't have any problems with the Rosenstein memo. I have problems with how it was used by the president to mislead the American people.

BERMAN: Do you have problems or do you have concerns, I shouldn't say problems, do you have any concerns going forward about the independence of this special counsel? Because, you know, under the law, this special counsel can be fired still more or less by the president of the United States?

LIEU: That is correct. But I have great faith in Robert Mueller. He was appointed by Bush and extended by Obama as FBI director. He's a former prosecutor. And I think he will stand strong. And if the president fires Robert Mueller, then we know that the house of cards is coming down.

BERMAN: Do you still need to see James Comey before Congress in the next few weeks?

LIEU: Absolutely. Because James Comey can shed a great amount of light as to why the president fired him because if the president fired James Comey to influence or obstruct the FBI investigation, that is obstruction of justice. That's a high crime and it's a federal crime.

BERMAN: All right, Congressman Ted Lieu, thank you so much for being with us. Appreciate your perspective, sir.

LIEU: Thank you.

BERMAN: The House majority leader, Kevin McCarthy, he once claimed that President Trump, or then candidate Trump, was on Vladimir Putin's payroll. Now he says he was just kidding. We'll tell you how he's defending those comments today.


[09:41:55] BERMAN: All right, controversy swirling around the House majority leader, Kevin McCarthy, this morning. He is on tape telling his colleagues last year that Vladimir Putin pays Donald Trump. Now, this is according to "The Washington Post" whose reporters heard the tape and provided a transcript. People in the room with McCarthy at the time, they apparently laughed. McCarthy now says he was just kidding, but we'll let you judge for yourself. This is how it went down. A dramatic reading here.

Republican leaders were talking about the DNC hack last summer when Kevin McCarthy said, "there's two people, I think, Putin pays, Rohrabacher and Trump." After some laughter in the room, he added, "swear to God." Then Paul Ryan responded as the laughter continued, "this is an off the record. No leaks, all right?" And then he added, "this is how we know we're a real family here."

Now, Paul Ryan's office says this is all just a joke and we got the same message from Kevin McCarthy.


REP. KEVIN MCCARTHY (R), MAJORITY LEADER: Because if you listen to it, I said everybody laughs. So you know it's a (INAUDIBLE) joke and that's all there is to it. No one believes it to be true.


BERMAN: All right, Adam Entous from "The Washington Post," he wrote the story. He listened to the tapes. He joins us right now.

Adam, you know, the $6 million question is, was Kevin McCarthy joking? You listened and listened and again and again, I'm sure. What do you think?

ADAM ENTOUS, STAFF WRITER, "THE WASHINGTON POST": Yes, I mean, I think he - you know, it's a very serious conversation that's taking place before McCarthy makes that - delivers that line. And you can see from Ryan's reaction that he clearly saw - saw that statement as something that he didn't want to escape the room. He wanted to keep it quiet and then he kind of instructs everybody to keep it - keep it there. And - and what's said in the family stays in the family is the way he wraps up that discussion.

So the reason why we wanted to let people see the transcript was so that they could try to judge for themselves. And we saw - we saw this as a window into the way Republicans were talking among themselves about Trump, who's position on Putin was clearly not completely in line with their own.

BERMAN: And that is so important. The timing here is so important. This was June of last year. This was immediately after the first reporting about the DNC hacks had come into place. But not before, you know, tons of other Russia information had come out. This was very early on here. Then you had the House majority leader, at that time, already even joking about, you know, a relationship between Donald Trump and Russia.

ENTOUS: Yes. I mean Hillary Clinton had not gone nearly this far yet. It would take months before she would make a similar suggestion publically. In fact, you know, the DNC was hacked the day before McCarthy made this statement and Hillary Clinton's statement after that was, you know, she wasn't suggesting at that point that it was designed to help Trump, which is what McCarthy is sort of suggesting in that statement. So, yes, no, I agree with what you're saying, which is, he was - he

was a very early person to take notice of this maybe strange affinity that Trump had for Putin and he makes this remark, which, frankly, when you listen to the tone in his voice, he says it seriously. It's - if it is a joke, he's - it is very dead pan. And he doesn't say at the end, I'm telling the joke. He says, "swear to God."

[09:45:10] BERMAN: Yes.

ENTOUS: The words are the words, you know?

BERMAN: Yes. And, you know, and it cuts both ways. I think Kevin McCarthy is a man known to make light of situations. On the other hand, he makes light of situations that he thinks are serious, too. So you just can't tell in some cases. That's why you printed the transcript. And the facts are the facts here. And when you went to the various congressional offices at play here to confront them with this, you got an interesting response. Explain.

ENTOUS: Yes. And keep in mind, after McCarthy makes his statement, Ryan admonishes everybody in the room to be quiet. We went to Ryan's office and McCarthy's office. We told them that we were going to report these comments. And they told us that the conversation never happened, 100 percent. They called it fiction.

We then told them that we actually were basing our remarks on a transcript, to which they said that the transcript was made up. They had been in the room, they said, and it never - it never happened. Then we told them that we actually listened to a recording, and that's when they changed their story and said that McCarthy was joking.

BERMAN: All right, Adam Entous of "The Washington Post," thanks so much for bringing us this story.

Again, this congressional office do say it was just a joke. But even if it is a joke, look at the timing there. Very, very interesting.

This special counsel appointment of Bob Mueller to lead the investigation into alleged ties between the Trump campaign and Russia causing great concern within the White House. This is not the first time this has happened. We can learn a lot from history here about what the Trump administration can expect and they might have reason to worry.


[09:51:05] BERMAN: All right, in just a couple hours, President Trump will face questioning from reporters as he battles the news that a special counsel has been appointed to investigate the ties between his campaign and Russia. Up until just a few hours ago, the White House and the president had been very subdued about this news. That's gone out the window.

Joining me now, CNN senior legal analyst Jeffrey Toobin.

Jeffrey, thanks so much for being with us. Let me just read you again -

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: The high road experiment was about ten hours long.

BERMAN: The president has gone on Twitter this morning. I will let you be the analyst here. This is what he wrote. He called this a witch hunt, and he added, "with all of the illegal acts that took place in the Clinton campaign and Obama administration, there was never a special counsel appointed," and then that, you know, "the greatest witch hunt in all of American history."

Again, throwing out the window the idea that the White House is going to have a subdued response. Any impact on the investigation itself?

TOOBIN: You know, I think Director Mueller, Bob Mueller, is a very experienced, savvy person. He's not going to say, ooh, Donald Trump said a bad thing about me, I'm going to go investigate him harder. He's going to do his job. He's going to follow the evidence.

But I think politically, you know, you have a situation where Republicans, as well as Democrats, were saluting Mueller, and now you have Trump, by himself, attacking this investigation. You know, that's who he is.

BERMAN: I mean we'll have to wait and see what he says out loud. I guess that happens after 3:00 today. That will be interesting to see.

What do we know from history? You, in fact, are a human being who has worked -

TOOBIN: Indeed.

BERMAN: For a - at that point it was an independent, you know, counsel investigation during Iran Contra.

TOOBIN: Correct.

BERMAN: But what do we know about these investigations?

TOOBIN: Well, the - for one thing, they take a long time. I mean it is very hard to assemble a staff, especially in a case where there's a lot of classified information involved. You have to assemble a staff. They have to get security clearances. You have to start assembling documents, empanel a grand jury, start interviewing witnesses. It is often a matter of years, not months. I mean so that's just one thing to keep in mind.

The other thing to keep in mind is that independent counsels, special counsel, as they're known now, their interest is law enforcement, not public disclosure. So the fact that this investigation exists does not necessarily mean that the public is going to learn what Mueller finds out immediately, or perhaps even ever. And that's just worth keeping in mind, especially, I mean, just in the short term, about the Comey memos, which now is, you know, such obsessive interest. Comey, who was very close to Mueller personally, may go to Mueller and

say, do you want me to testify now or do you want me to let you conduct your investigation? Mueller may well say, you know what, let me get myself up to speed first. That means the public won't know what's in these memos.

BERMAN: If there is a public thirst, if there is a partisan thirst among Democrats, it may not be satisfied any time soon because of this appointment.

TOOBIN: Correct.

BERMAN: Another thing that we know, Jeffrey, is that sometimes these investigations start in one place and end somewhere very, very different. And specifically, in this case, the order signed by Rod Rosenstein says investigate the Russian ties with the Trump campaign, those alleged ties, but also anything else that might arise.

TOOBIN: Right. And the classic example of that, Kenneth Starr, independent counsel appointed to investigate Whitewater, the land deal in Arkansas, which turned out to have no criminal involvement by the Clintons. That, of course, led to Monica Lewinsky and Bill Clinton's impeachment, which was a very - whatever else you think about it, it's very different from a land deal in Arkansas. But it just shows, when you set a prosecutor with an unlimited budget, unlimited staff, loose, you don't know where they're going to go.

BERMAN: And no one - is anyone going to tell Bob Mueller how to do anything, based on what you know of him?

TOOBIN: Absolutely not. And, you know, technically, the law allows for him to be fired by Rod Rosenstein. I think it would take some sort of earthquake for him to do that. But, you know, I think we are talking about a truly independent prosecutor who's just going to follow the evidence where it leads.

[09:55:09] BERMAN: Jeffrey Toobin, great to have you with us. Thank you very, very much, sir.

So, what will President Trump say today? As we've been discussing, he holds his first news conference where he answers questions from reporters in a bilateral news conference. Will he address the growing concerns surrounding the administration? We will bring that to you live.


[09:59:54] BERMAN: All right, good morning. I'm John Berman. Poppy is on assignment this morning.

There is nothing special about a witch hunt, at least according to the president of the United States, angry this morning about the fact that a special counsel was named to investigate alleged Russian meddling in the election and any possible ties to the Trump campaign. He wrote just a short time ago, "this is the single greatest witch hunt of a politician