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Special Counsel in Russia Probe; Damaging New Reports About Michael Flynn; Trump Admin. Extends Iran Nuclear Deal. Aired 4-4:30a ET

Aired May 18, 2017 - 04:00   ET


[04:00:10] DAVE BRIGGS, CNN ANCHOR: The Russia probe is out of the hands of the Trump administration. A former FBI chief tapped as special counsel. What this means for the investigation? The White House and members of Congress reeling from the barrage of bad headlines.

Good morning, everyone, and welcome to EARLY START. I'm Dave Briggs.

CHRISTINE ROMANS, CNN ANCHOR: And I'm Christine Romans. It's Thursday, may 18th. It's 4:00 a.m. in the East.

It will be interesting to see what the markets make of that, because yesterday, you had the biggest decline in the year in the markets because the feeling the president had been knocked off trajectory with his policies, but also was facing an existential crisis in the presidency and that was a real problem.

Now, the temperature has gone down a little bit. Don't you feel?

BRIGGS: I feel like Washington, D.C. exhaled.

ROMANS: Exactly.

BRIGGS: The entire town, Congress, the White House.

ROMANS: Now, there's a process, and the process is underway. The investigation into Russia's meddling in the 2016 election now in the hands of the former director of the FBI. Robert Mueller appointed special counsel overseeing the probe. He has the power to investigate, to question, to issue subpoenas and to prosecute federal crimes if any are discovered. Mueller appointed by Deputy Attorney General Rod Rosenstein.

BRIGGS: In a statement, Rosenstein emphasized the move was not a finding that crimes had been committed, but that, quote: Based upon the unique circumstances, the public interest requires me to place this investigation under authority of a person who exercises the degree of independence from the normal chain of command.

ROMANS: The appointment comes following a series of damaging headlines from the firing of the FBI Director James Comey to the president divulging sensitive intel to Russian officials inside the Oval Office, to Comey's memo saying the president asked him to end his investigation of Michael Flynn.

BRIGGS: On Capitol Hill, the news of the special counsel is being greeted with relief. That includes Democrats demanding answers and Republicans who just want the barrage of questions to ease up.

We begin this morning with Justice Correspondent Pamela Brown in Washington.


PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, good morning, Dave and Christine.

A significant move from the Justice Department with the Deputy Attorney General Rod Rosenstein handing the reins to a former FBI Director Robert Mueller to oversee the Russia probe now. He's appointed him as special counsel.

He said in a statement that he did this out of public interest. He thought it was important especially given all of the recent revelation, including the revelation of a memo from former FBI Director James Comey where he indicated in the conversation he had with the president that President Trump apparently asked him to end the probe into Michael Flynn, the former national security adviser.

It's unclear how much of that revelation factored into the Rod Rosenstein's decision to appoint Robert Mueller as special counsel. But we can tell you Comey did not share the memos with him or other top DOJ officials familiar with the matter.

Now with Bob Mueller overseeing the investigation, he will have the same authority as an attorney general. He can convene a grand jury. He can issue subpoenas. He can even interview the president. So, it's really up to him in terms of where he wants to take this investigation -- Dave and Christine.


ROMANS: All right. Pamela, thank you.

New details still coming in on how the Mueller appointment went down. Law enforcement and other sources telling CNN Rosenstein started thinking about appointing a special counsel soon after FBI Director Comey was fired last week. He signed the order yesterday.

And this is what is fascinating, Dave. He signed the order, and then only then alerted the White House and top lawmakers. Remember, this was taken out of the hands of the attorney general because he recused himself from anything related to the investigation.

White House counsel Don McGahn quickly told the president who called in senior staff to talk it over.

BRIGGS: The top White House official says the general feeling about the special counsel is let them do their thing and we'll do ours. So far, aides aren't saying what President Trump's reaction has been other than from frustration. One administration official telling us, it's still sinking in.

With more on how the West Wing is taking all this, CNN's Jim Acosta.


JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Christine and Dave, the White House is reacting cautiously to the news that the Justice Department has tapped former FBI Director Robert Mueller to be the special prosecutor in the Russia investigation. President Trump issued a statement insisting there was no collusion between his campaign and Russia, adding that he looks forward to the matter concluding quickly.

An administration official says the White House received almost no advanced notice of the Mueller news before it was announced by the Justice Department. Same goes for Attorney General Jeff Sessions who was here at the White House when the news came down.

It's unclear how the Mueller news will impact the White House. But one White House official describes staffers es exhausted after 72 hours of damaging bombshells all just a few days before the president leaves on his first foreign trip to meet with critical U.S. allies -- Christine and Dave.


ROMANS: All right, Jim Acosta.

Plenty of Capitol Hill insiders caught off guard by the appointment of a special prosecutor. Speaker Paul Ryan, he got a heads up shortly before the announcement. He was alerted before the announcement, but the entire rank and file was not. Still lawmakers on both sides of the aisle are applauding the choice of Robert Mueller.

BRIGGS: That especially goes for Republicans who have seen their agenda sidetracked amid mounting pressure to push back against the president. One Republican aide tells our Phil Mattingly said the daily pounding was beginning to take its tool and members are happy to get this issue off of their plate.

We get more now from CNN's Sunlen Serfaty on Capitol Hill.



Well, the response initially up here on Capitol Hill has been overwhelmingly positive and certainly seems to have gone a long way to lower a lot of the temperatures up here on Capitol Hill, praise coming from both Democrats and Republicans, saying that Robert Mueller is someone who is very well-respected, someone with great credentials, someone that is a known commodity to them, someone that they trust to lead this investigation.

Now, the two members, the ranking member, Mark Warner, and the chairman of the Senate Intelligence Committee, Richard Burr, coming out and praising this selection as well. As you know, they are leading their own investigation on the Senate side, and adding in their statement, quote: The Senate Select Committee on Intelligence will continue its own investigation and to the extent deconfliction is required, we will engage with Director Mueller. And our expectation is he will engage with the committee as well.

So, making clear that their investigation continues and they do expect to work with Mueller and the days ahead. Now, today, Deputy Attorney General Rod Rosenstein will be up on Capitol Hill to brief the full Senate. This was something that was already scheduled, already put on the schedule as of last week. We know he will also brief the full house on Friday, certainly a very new context to his briefings on both sides of Capitol Hill -- Dave and Christine.


ROMANS: All right, Sunlen. Thank you, Sunlen.

A little more this morning on Robert Mueller. He's the 72-year-old who served as FBI director for 12 years starting in 2001, serving both Republican and Democratic presidents. It's the second longest tenure in history behind J. Edgar Hoover.

The former U.S. attorney is widely regarded as one of the most credible law enforcement officials in the country. He has a history also with a man who succeeded him, Jim Comey.

BRIGGS: In 2004, Comey was acting attorney general while his boss John Ashcroft was seriously ill in the hospital. Comey and Mueller worked side by side to fight the Bush White House attempt to renew the controversial warrantless wiretap program. The pair raced to Ashcroft's hospital bed when they found out two Bush West Wing officials were headed there to get the ailing attorney general to sign off on the renewal.

ROMANS: A really dramatic moment. Mueller and Comey ultimately threatened to resign and the White House eventually backed off.

One other note: special counsel is not fully independent and can be fired. Without the protection of the independent counsel law, President Trump can order Deputy Attorney General Rod Rosenstein to fire Mueller anytime. And Trump can fire Rosenstein if he refuses. And, Dave, it's interesting. They've already started hiring up. You know, he's got several former associates who work with him at the law firm. They all resigned. They're all getting -- he's already starting to hire. He'll have to get space. They'll have to make sure that space can handle classified information.

BRIGGS: Long time.

ROMANS: They will have to hire clerks. They will have to hire and make sure people have the right classified status and they'll have to begin their own investigation.

BRIGGS: A lot of questions. Will we still hear from James Comey next Wednesday when they want him to testify in front of Congress in a public hearing?

But meantime, a senior GOP source telling CNN Mueller's appointment as special counsel for the Russia investigation does it make it unlikely James Comey will testify publicly before Congress. The House Oversight and Senate Intelligence Committees were trying to get Comey to appear as early as next week. But the source now saying, quote, this shuts the whole thing down.

ROMANS: Lawmakers want Comey to testify about the FBI investigation into Russia's election meddling and they are pressing the fired director on his memo, which claims President Trump asked Comey to shutdown the Michael Flynn probe. The source also described the Deputy Attorney General Rod Rosenstein as angry and exasperated with the White House and believes he is throwing the president overboard by naming the special counsel.

BRIGGS: Two damaging new developments emerging overnight about former national security adviser Michael Flynn. Now, "The New York Times" reporting Flynn told the Trump transition team weeks before the inauguration he was being investigated by the Feds for secretly working as a paid lobbyist for Turkey. Sources tell "The Times" Flynn's disclosure was made January 4th, suggesting the Trump team knew far earlier than reported about Flynn's conflict.

ROMANS: The other story comes from McClatchy News, reporting it was Flynn who made one of the administration's first decisions about the fight against ISIS.

[04:10:05] And the decision conformed to the wishes of his secret client Turkey. The Obama administration had a plan to retake ISIS' self declared capital of Raqqah. The plan called for using Syrian Kurdish forces, something Turkey very much opposed.

BRIGGS: Yes, that plan was run by the incoming national security adviser, General Flynn who told the Obama team to hold off for reasons that are still unclear. Trump eventually went ahead with the Obama plan weeks after Flynn was fired for lying to Vice President Pence about his contacts with the Russian ambassador.

ROMANS: All right. All of this coming hours after President Trump stood before graduates at the Coast Guard Academy and told them life is not always fair. He then instructed the graduating class to put their heads down and fight, fight, fight, and never, never, never give up. The president seemed to be wallowing in his problems, and he couldn't resist taking a shot at the media on a day that should have been all about the students.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Look at the way I've been treated lately, especially by the media. No politician in history, and I say this with great surety, has been treated worse or more unfairly.


BRIGGS: With great surety indeed.

Even with all the complaints about the media, the White House is not always pushing its message. Trump adviser Kellyanne Conway was supposed to be the first Trump adviser to go on TV and talk about the appointment of Robert Mueller last night on FOX News. She canceled at the last minute.

We expect to hear more from President Trump when he welcomes Colombian President Juan Manuel Santos to the White House later today.

ROMANS: All right. Has President Trump's latest drama finally shaken Wall Street? What a day yesterday, biggest losses for a year, for this year rather. We're going to check in on how markets are reacting to the news out of Washington now.


[04:16:05] ROMANS: All right. President Trump's latest drama finally rattling Wall Street. After months of calm and steady gains, markets tanking on reports the president asked James Comey to end the FBI's probe into his former national security adviser. The Dow down 370 points. That's the biggest selloff since September. And we like to look at the dollar here, the dollar also erasing all post-election gains.

Investor calm is over. Money moved into so-called safe havens like gold and bonds. While Wall Street's fear index, the VIX index, remember I told you how it had been calm and complacent. Look at that. It spiked. It was the lowest level in decades. That's because until now, markets were ignoring the Washington's antics.

They were ignoring the pressure on the president and the way he behaves in office. Instead, they were banking on the promise of tax cuts and deregulation. They thought, no matter what that would happen. But for investors, this latest issue doesn't signal uncertainty about the president's economic agenda, but the future of his presidency.

Here is how one Wall Street trader put it.


PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: I kind of think, though, we're at a point where it seems like his presidency is starting to crackle and become vulnerable. And I think Wall Street is feeling that for the first time.


ROMANS: A changing mood could mean more losses. But I've got to tell you, corporate earnings are strong. And stocks hit record highs two days ago. All three major indices are still up for the year.

But hearing that veteran trader say there's a change, the president -- the markets had been impenetrable to any criticism of this president because they were convinced that there will be tax reform, that there will be deregulation.

BRIGGS: The markets are wildly unpredictable. And corporate profits are massive. Are we over-blowing this one day?

ROMANS: No, I think we are saying exactly as it is. On that one day, more than 300 point decline. For the first time, there was a question. A question about what's going on.

BRIGGS: And if the markets are up 200 points today? Is that erased?

ROMANS: I want to see what happens today because does the special counsel mean the markets think the president can now get focused on his agenda?

BRIGGS: Right.

ROMANS: Do they think he will have Republicans behind him to get a tax reform? You know, you had Cohn and Mnuchin on Capitol Hill talking about tax reform. We need to see some progress on that.

BRIGGS: Indeed.

All right. An Oklahoma jury returning a not guilty verdict in the police shooting of an unarmed black man last year. Officer Betty Shelby faced first degree manslaughter charge for the fatal shooting of 40-year-old Terence Crutcher. Video showed Crutcher with his arms in the air before being shot. Shelby, who is white, testified in her own defense that he acted bizarrely and she feared for her life.

ROMANS: Jurors deliberated for no d for nine hours before reaching a verdict. The Crutcher family having a hard time accepting it.


JOEY CRUTCHER, TERENCE CRUTCHER'S FATHER: I have four grandchildren at home now that have lost their daddy. I said I would accept whatever the verdict was. I'm going to do that. Let it be known that I believe in my heart that Betty Shelby got away with murder.


ROMANS: Following the verdict, dozens of people protested outside the courthouse blocking the road. Chanting no justice, no peace. The police say protests remained peaceful.

BRIGGS: All right. President Trump said he would rip up the Iran deal, but now the State Department taking steps to keep the U.S. involved. We are live in Tehran with how this is playing the day before a critical presidential election in Iran.



[04:24:13] TRUMP: One of the worst deals I've ever seen is the Iran deal. The nuclear deal is a disaster. It was a terrible agreement. It shouldn't have been signed.


BRIGGS: It was a popular campaign pledge for candidate Trump. The U.S. will remain part of the Iran nuclear deal for now. The Trump administration renewing sanctions relief for Iran as required under the deal. At the same time, imposing sanctions related to the ballistic missile program. The moves coming ahead of the Friday's presidential election in Iran.

CNN senior international correspondent Frederik Pleitgen live for us in Tehran with the details.

Good morning to you, Fred.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, Dave. This is actually Iranian election which has a Trump factor as well. That tough rhetoric that we've been hearing from President Trump.

[04:25:02] Also those new sanctions that are related to the ballistic missile program really hurting the moderate incumbent President Hassan Rouhani who, of course, brokered that nuclear agreement between Iran, the United States and other countries that curb Iran's nuclear program but also is supposed to give them sanctions relief as well.

And many people here don't believe that that sanctions relief is coming fast enough. They're angry about a lot of these sanctions that are being brought on to Iran. And the conservatives, the hard liners here in this country want to get tougher on America. They are trying to capitalize on that. They're saying, look, Hassan Rouhani, you negotiated with America. What are we getting in return?

The economy is a big problem. Also unemployment is high here. So, right now, the election here in Iran is anybody's guess for who may win. It could be Hassan Rouhani once again. But it could also be a tough hard liner who wants to get very, very tough on America, Dave.

BRIGGS: Boy, the U.K., France and Netherlands, always seems to be a Trump factor in elections around the world. Frederik Pleitgen for us in Tehran -- thank you.

ROMANS: Great to have Fred there. He's made many, many trips. We're really fortunate, CNN, to be able to have Fred's access right there on the ground for us.

BRIGGS: Indeed.

ROMANS: All right. A special counsel will investigate the Trump campaign ties to Russia despite the objections from the White House. So, what will Robert Mueller --


SEAN SPICER, WHITE HOUSE PRESS SECRETARY: Frankly, no need for a special prosecutor. We discussed this before. (END VIDEO CLIP)

ROMANS: So, what will Robert Mueller find and how long is his reach in this probe?