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Special Counsel Named to Probe Russia Meddling; Damaging New Reports About Michael Flynn; Trump Admin. Extends Iran Nuclear Deal. Aired 4:30-5a ET

Aired May 18, 2017 - 04:30   ET



[04:30:37] CHRISTINE ROMANS, CNN ANCHOR: A former FBI chief now in charge of the Russia investigation after his successor was fired while overseeing it. What Robert Mueller's appointment means for the probe and for the White House. A new probe, really, a new probe, really --


ROMANS: -- with the special counsel.

Welcome back to EARLY START. I'm Christine Romans.

BRIGGS: So, now, you've got the Senate, the House, the FBI and special counsel.

Good morning, everybody. I'm Dave Briggs. It is 30 minutes past the hour.

As the investigation into Russian's meddling in the 2016 election is 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, question, issue subpoenas and prosecute any federal crimes if any are discovered.

Mueller appointed to the job by Deputy Attorney General Rod Rosenstein.

ROMANS: 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.

BRIGGS: 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 official. Comey's memo saying the president asked him to end his investigation of Michael Flynn.

ROMANS: So, on Capitol Hill, the news of a special counsel is being greeted with relief. That includes Democrats demanding answers and Republicans who just want all of these 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.


BRIGGS: Pamela Brown, 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 the FBI Director Comey was fired last week. He signed the order yesterday and only then alerted the White House and top lawmakers. White House counsel Don McGahn quickly told the president who called in senior staff to talk it over.

ROMANS: A top White House official says the general feeling about the special counsel is let them do their thing and we will 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.


BRIGGS: Jim, thank you.

Plenty of Capitol Hill insiders were caught off guard by this appointment of a special prosecutor.

[04:35:00] Speaker Paul Ryan did get a heads up shortly before the announcement. But rank and file lawmakers were not notified. Still, lawmakers on both sides of the aisle are applauding the choice of Robert Mueller.

ROMANS: That especially goes for Republicans who have seen their agenda blocked by the mounting pressure to push back against this president. One Republican aide tells our Phil Mattingly said the daily pounding was beginning to take its tool and members are happy to have this issue someone else's problem for now.

We get more 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.


BRIGGS: Sunlen, thanks.

A little more on Robert Mueller now. The 72-year-old served as FBI director for 12 years starting in 2001, just after 9/11, serving both Republican and Democratic presidents. That'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.

ROMANS: In 2004, Comey was acting attorney general while his boss John Ashcroft, remember this, he was seriously ill in a hospital.


ROMANS: Comey and Mueller worked side by side fighting the Bush White House attempt to renew the controversial warrantless wiretap program. The pair raced to Ashcroft's hospital bed when they found out the two Bush officials were also headed there to get the ailing attorney general, the hospitalized attorney general, to sign off on the renewal.

It was literally a race to the bedside. And Comey took very careful notes and felt strongly to make sure justice was done here.

BRIGGS: Some serious political drama at the time. Mueller and Comey ultimately threatened to resign and the White House eventually backed off.

One other note: a 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. Trump can fire Rosenstein if he refuses.

ROMANS: Senate Democrats are less likely to try to block the next FBI director now that a special counsel has been named, although two sources in the party tell CNN they still have to see who is ultimately picked to replace James Comey. President Trump was interviewing candidates for the job when the administration was formerly notified about the appointment of Robert Mueller.

We are told Attorney General Jeff Sessions was also there.

BRIGGS: They met with former Senator Joe Lieberman, the Democratic vice presidential candidate in 2000. Lieberman later became an independent and actually backed Republican John McCain for president in '08. Trump also met with acting FBI Director Andrew McCabe, former Oklahoma Governor Frank Keating, and retired FBI official Richard McFeely.

ROMANS: All right. Two damaging new developments emerging overnight about former national security adviser Michael Flynn. "The New York Times" reports Flynn told the Trump transition team weeks before the inauguration he was the target of a federal investigation for secretly working as a paid lobbyist for Turkey. Sources tell "The Times" Flynn's disclosure was made January 4, suggesting the Trump team knew far earlier than reported about these potential conflicts.

BRIGGS: 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 and the decision conform to the wishes of his secret client, Turkey. 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.

ROMANS: That plan was run by the incoming national security adviser, General Flynn, who told the Obama team to hold off for reasons that are unclear.

[04:40:02] Trump eventually went ahead with the Obama plan weeks after Flynn was fired for lying to Vice President Mike Pence about his contacts with the Russian ambassador.

BRIGGS: 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 graduates.


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.


ROMANS: Even with all the complaints about the media, the White House isn't always pushing its message. Trump adviser Kellyanne Conway was supposed to be the first Trump adviser to go on TV to talk about the appointment of Robert Mueller that was 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.

BRIGGS: Although maybe, I mean, there are typically two questions when he stands beside a world leader. Those two questions are usually highly scripted in terms of who he knows he's going to call on, usually very friendly outlets. So, we shall see if there are pointed questions in that situation.

But, ahead, there is anger in Oklahoma after a police officer is acquitted in the death of an unarmed black man.


PROTESTERS: No justice! No peace! No justice! No peace!


BRIGGS: Hear from the victim's distraught father, next.


[04:46:05] ROMANS: All right. President's latest drama finally rattling Wall Street. After months of calm and steady gains, markets fell, falling sharply here on reports the president asked James Comey to end the FBI's probe into his ex-national security adviser. Dow down 373 points. That's the worst selloff since September. The dollar also erasing all post-election gains.

Investor calm really broken here. Money moved into so-called safe havens like gold and bonds. While Wall Street's fear gauges, which have been just complacence, is all get out. The VIX index jumped 42 percent. That's a big move in one day. It had been the lowest level in decades.

So, the calm has been broken. That is because until now, markets ignored Washington's drama, the promise of tax cuts and deregulation was all anybody cared about. They thought no matter what headlines from the White House, the president was going to cut corporate taxes which would be a gift for their bottom line.

Investors, this latest drama doesn't signal uncertainty about the president's economic agenda, but future of the presidency. In fact, former Fed Reserve Chief Ben Bernanke was talking to a group of investors. He said that concerns over stability in the White House is reasonable, adding that markets are blase about political risk, until the very last moment and that changing mood could mean more losses.

But corporate earnings have really strong. And socks at records two days ago. All three indices are up for the year.

Dave, you made a really good point. This is just one day. Really important to see what we follow through from here. But it is the first time we have seen that Trump rally calm really broken since the election.

BRIGGS: With someone that doesn't understand the mechanisms that drive the Dow, you are skeptical of one day, of over-reading one day in any direction.

ROMANS: It is one day. It is one day. But for a market that has gone up and up and up on the promise, promise, promise of an agenda from the president, now this is the first definitive question you've seen about whether this president's agenda is going to be slowed or sidelined.

BRIGGS: All right. We'll see perhaps at the end of trading today.

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 nine hours before reaching their 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. And 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 tell us the protests remained peaceful.

BRIGGS: Sad news for rock lovers around the world. The lead singer of Soundgarden Chris Cornell died overnight.

Cornell was performing in Detroit with the band which launched a U.S. tour in April. Cornell's representative said the death was sudden and unexpected, but didn't specify a cause. Cornell was also a frontman for Audioslave. Chris Cornell dead at the age of 52.

Boy, was he beloved. Social media exploding with people that love their music.

ROMANS: Oh, wow, unexpected there.

All right. Fifty minutes past the hour. Do you have student loans or credit card? You are helping household debt reach new highs. Were going to tell you how much in CNN "Money Stream" next.


[04:54:14] BRIGGS: House Majority Leader Kevin McCarthy says the comment that Russian President Vladimir Putin was then paying candidate Trump was a bad joke. McCarthy denying he meant the remarks seriously after "The Washington Post" reported on the private Capitol Hill conversation from last June. "The Post" cites an audio recording.

"The Post" says McCarthy told fellow Republican leaders, including Speaker Paul Ryan, quote, there are two people I think Putin pays, Rohrabacher and Trump. Adding, swear to God.

GOP Congressman Dana Rohrabacher is a staunch defender of Putin.

ROMANS: "The Post" reports that right after that comment, Ryan stopped the conversation and swore those present to secrecy. Now, McCarthy says it was merely just a failed attempt at humor.


REP. KEVIN MCCARTHY (R-CA), HOUSE MAJORITY LEADER: If you listen to it, everybody laughed. So, you know it is a bad attempt of a joke. That is all there is to it. No one believes it to be true.


ROMANS: Aides to McCarthy and to the House Speaker Paul Ryan denies the remarks were made. Then after being told of a recording, then they said it was a joke. McCarthy says the story changed because, quote, no one even remembers they're transpiring.

BRIGGS: There was a popular campaign pledge for candidate Trump, vowing to rip up the Iran nuclear deal. Despite that, the U.S. remains part of it for now. The Trump administration renewing sanctions relief for Iran as required under the deal.

At the same time, imposing new sanctions related to Iran's ballistic missile program. The moves coming ahead of Friday's presidential election in Iran.

We are very fortunate to be joined by senior international correspondent Frederik Pleitgen who is actually live for us in Tehran with details.

Fred, great to have you on in Tehran. It's so interesting, when you have these Trump factors in the U.K., in France, in the Netherlands regarding their elections. Is there one there as well?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, there certainly is one here in Iran. You know, it is so interesting, Dave, because it was actually out and about here in Tehran in the past couple days. And you can really feel how every time there's a statement by the Trump administration that is tough on Iran or today, for instance, where the Iranians have heard about those new sanctions that were slapped on Iran by the U.S., it really hurts the moderate, incumbent president, Hassan Rouhani. He's the one who negotiated the nuclear agreement, with the promise that it would bring sanctions relief and more jobs here for the people in Iran.

And so far, that really hasn't happened the way many thought it would. I asked if there is a Trump effect. And he said, absolutely, it's a Trump effect. Every time the Trump administration does something like this, it hurts the moderate candidate.

You see it actually in presidential debates here in Iran as well where the hard line candidate said Hassan Rouhani negotiated with the U.S. You said things would get better. So far, they haven't. The hard liners want to get tougher on the U.S., want to get more confrontational. Right now the election here is too close to call, but the will certainly be very interesting -- Dave.

BRIGGS: Great reporting for us. Frederik Pleitgen live for us in Tehran, thank you, sir.

ROMANS: So lucky to have them there.

All right. Let's get a check on CNN "Money Stream" this morning. U.S. political drama sending global markets lower this morning. Futures are flat after the selloff on Wall Street. But, wow, look at London and Paris, look at Tokyo there.

Months of calm and steady gains, President Trump's latest drama over a possible Comey memo is finally rattling these markets. The Dow plummeted 373 points, the harshest selloff since before the election. In fact, all three indices dropped, ending a long period of investor calm.

Wall Street's fear gauge, the VIX Index, jumped 42 percent. It had been the lowest level in decades. That's because until now, until this latest development, markets ignored all of the political risk in Washington, because they just cared about the promise of tax cuts and deregulation which fueled a rally.

However, this latest report doesn't just fuel uncertainty about the president's economic agenda, but the future of his presidency. The market is not in a full-blown panic. I want to be really clear about that.

That was a big move for one day, but it is just one day. And corporate earnings are strong. Stocks still near records and the market is still up for the year.

ROMANS: OK, another big money headline for you this morning. Household debt is topping records. Household debt now exceeds 2008 peak.

Debt climbed to $12.7 trillion in the first quarter of the year. That's according to the New York Federal Reserve. The majority of the debt is mortgage balances, but the increase is due to student loans and auto loans.

Higher debt levels are not necessarily a bad thing. It depends on who holds the debt and more consumers borrowing is sometimes a sign of economic recovery. People are feeling comfortable. The student loan part of that concerns me a bit .

BRIGGS: Yes, student loans. Massive.

All right. EARLY START continues right now with new news about the special counsel.


ROMANS: The Russia probe out of the hands of the Trump administration. A former FBI chief tapped now as special counsel. What it means for this investigation and the new investigation? The White House and members of Congress reeling from the barrage of bad headlines. Will this take down the temperature and mark a new chapter here to mix my metaphors?

Good morning and welcome to EARLY START. I'm Christine Romans.

BRIGGS: I'm Dave Briggs. It is Thursday, May 18th. It's 5:00 a.m. in the East.

You do get a sense there was a massive exhale in Washington, really on both sides of the aisle, even at this is now ramped up. That investigation into Russia's meddling in the 2016 election is now in the hands of a former director of the FBI. Robert Mueller appointed special counsel overseeing the probe. He has the power to investigate, question, issue subpoenas and prosecute federal crimes if any are discovered.