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Quest Means Business
New FTX CEO Slams Management Of Founder, Sam Bankman-Fried; FTX Collapse Raises Questions About Consumer Protection; UK Faces Recession, Inflation, Lower Living Standards; Nancy Pelosi Announces The End Of An Era; Russian Missile Attacks Wound 23 In Dnipro; Call To Earth: Brazil; Qatar Dogged By Controversy Ahead Of World Cup. Aired 3-4p ET
Aired November 17, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RAHEL SOLOMON, CNN BUSINESS HOST: With one hour left of trade, stocks are headed lower. Markets are concerned after a key Fed official said that he
believes rates need to go to at least five percent to control inflation.
Those are the markets and these are the main events.
The new FTX CEO, a veteran of Enron says he has never before seen such a complete failure of corporate controls.
In the UK, people brace for the biggest drop in the standard of living since the 1950s.
And a Dutch Court finds three men guilty of mass murder for their role in bringing down MH17.
Live from New York, it is Thursday, November 17th. I'm Rahel Solomon, in for Richard Quest and I too mean business.
He oversaw one of the biggest bankruptcies of all time at Enron. Now, John Ray is in charge of FTX and says he has never seen anything quite like the
failed crypto exchange.
In a US Court filing, Ray shredded the company's founder and former CEO, Sam Bankman-Fried, saying: "Never in my career have I seen such a complete
failure of corporate controls. And such a complete absence of trustworthy financial information as occurred here."
Matt Egan with us now from New York. Matt, good to have you.
Look, as I said, John Ray, not new to cleaning up corporate failures, but even according to him, this is something he has not seen. What else did he
say in this filing?
MATT EGAN, CNN REPORTER: You know, Rahel, you know, it is never a good sign when the Enron guy sounds freaked out by what he is finding in the
company's books. That's what we're hearing today.
You know, this bankruptcy filing paints the picture of a company that is basically a train wreck. Let me just run you through a few of the
highlights from this filing.
They say that FTX is basically controlled by a small group of inexperienced, unsophisticated individuals, none of the financial
statements appear to have been audited. Again, none of them.
Unable to locate any financial statements for at least one affiliate, many units did not have corporate governance, some never had Board meetings.
Cash management is so poor that they don't even know how much cash FTX really has. And this is the kicker, corporate funds had been used to buy
homes for some employees in the Bahamas.
Just stunning findings from this bankruptcy filing that we just had out this morning. And this line from John Ray, I think really sums it up. He
said: "From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group
of inexperienced individuals, this situation is on unprecedented."
Now, Rahel, none of this, of course, is going to sit very well with the hundreds of thousands or even more than a million creditors, mostly
customers who have their money stuck with FTX. You've got to wonder how much of a recovery they could really expect, given that the new guys in
charge, they don't even know how much cash this company even has.
SOLOMON: It really sounds like a mess, Matt. You know, John Ray, not the only one stunned by how things were handled at FTX. Also, some US
lawmakers, including Senators Warren and Durbin asking SBF and FTX for documentation. What are they looking for? What are they trying to learn
besides the obvious where the money went?
EGAN: Yes, you know, now we're at the point where Congress is getting involved. Yesterday, it was the House Financial Services Committee that
says they're going to launch an investigation, a hearing next month, a bipartisan hearing on FTX. And now, Senator Elizabeth Warren and Dick
Durbin, they want answers and they want documents.
Here are a few of the things they are looking for: Copies of all balance sheets at FTX and its subsidiaries since it launched in 2019. The terms of
the bailouts FTX has given to other crypto companies, and a complete list of all transfers between FTX and its sister hedge fund. And that last point
is a big one because FTX is reported to have propped up this sister hedge fund known as Alameda Research, using customer funds without their
knowledge, without their consent, which is obviously a very big deal. These lawmakers are trying to get to the bottom of it.
And meanwhile, you know, we continue to have fallout from this bankruptcy. You know, just in the last few days, we had a new lawsuit from FTX
investors. They are naming not just Sam Bankman-Fried, but some of the big celebrities who have backed FTX including Tom Brady, Gisele, Steph Curry.
[15:05:07]
We are also seeing more crypto companies essentially get sic. Crypto lender, BlockFi, is reportedly planning layoffs and a potential bankruptcy;
investment bank, Genesis has halted redemptions. That is never a good sign.
For his part, SBF put out a tweet yesterday. He apologized for his firm's failure and he did concede that they may have been reckless at times. He
wrote: "I was on the cover of every magazine and FTX was the darling of Silicon Valley. We got overconfident and careless."
And Rahel, we are seeing more and more evidence seemingly every day about just how careless they seem to have gotten.
SOLOMON: Matt Egan, thank you.
Let's stick with this story now. As authorities in several countries ramp up their investigations into FTX, its founder, as Matt just pointed out
there has been trying to explain himself. In an exchange via Direct Message on Twitter with a reporter from VOX, Sam Bankman-Fried, SBF said that he
regretted his decision to file for bankruptcy.
And he added regulators, ". make things worse and they don't protect customers." That's a change in tune from last month when he publicly
tweeted that the industry needs more regulatory oversight.
"Fortune Magazine's" Jeff John Roberts wrote a recent cover story about Sam Bankman-Fried asking if the 30-year-old was the next Warren Buffett. Well,
his follow-up article is called, "How SBF Fooled Everyone Including Me." It says "The answer is that like any good con man, SBF told us a story we
wanted to hear and were eager to believe."
Jeff joins me now from Buena Vista, Colorado.
Jeff, thanks for being with us. Good to have you.
You know, I think before this, SBF was certainly a name within the crypto industry, within the financial industry, he has become a household name.
You are one of the few people who he has actually spoken to that you've actually interviewed him. What's he like?
JEFF JOHN ROBERTS, CRYPTO EDITOR, FORTUNE MAGAZINE: Yes, no, like you said, I did the cover story on him. And you know, I feel kind of sheepish
at this point. I mean, our cover at least did, will he crash and burn? I think we have our answer.
But no, I'd like to say, you know, I love people coming out saying, I saw through him, but you know, where were they two weeks ago?
He just had a really good schtick of this like this nerd kid. You know, kind of like fuzzy hair and looked like kind of a slob. He had a fidget
spinner and he liked playing League of Legends, you know when he is doing everything all the time and he just sold the story that he was this genius
and he was a better trader than anyone else.
And his parents both were Stanford Law Professors. You know, and he had all the right connections. And you know, I guess yes, just a really good con
man, he took in everyone.
SOLOMON: I'm curious, you say in that piece that you were charmed by SBF, but you say: "In hindsight, there were red flags." What were the red flags?
ROBERTS: Enormous ones. Well, I mean, the fact he is playing League of Legends during congressional hearings, or during Board meetings all the
time, that's not a good one. That place only had 300 employees, also a red flag, and the fact that he didn't share any documents, red flag; and he
didn't have a Board. I mean, this is crazy.
Like, they raised billions of dollars from those prestigious VC firms and pension funds. And, you know, they didn't share their books, which in
retrospect, is the is the biggest red flag of all.
SOLOMON: I'm curious, do you think that you, as a journalist, and look, I appreciate you coming on here and admitting you didn't see it. But do you
think you as a journalist, maybe didn't do the normal due diligence that you would, because you expect it that some of these larger entities like
Sequoia had already done the due diligence? I mean, is that part of the reason why no one saw it or very few people saw it?
ROBERTS: Yes, no, you make a really good point. I mean, you know, in hindsight, I should have pushed harder to see for them to show me, not just
tell me, but there was, I guess, a groupthink going on.
You know, every other crypto publication, every mainstream publication thought this is the guy. And at certain point, if Sequoia believes in him
and he is friends with Joe Biden, and he has all the right connections, I mean, you just assume it is true.
But it's sort of like being betrayed by, we all have like friends or partners who you discover they are not who they think they are, and this
was the case and it is just getting darker every hour.
SOLOMON: Yes, and you are, as we said, the crypto editor at "Fortune" Magazine. When you asked SBF in one of your pieces about the crypto crashes
of 2014 and 2018, he responded in part that sometimes it is actually a healthy weeding out and that you build back a stronger industry.
I'm curious because of your expertise, do you think that this is that or do you think this is a real defining moment for the crypto industry?
ROBERTS: Yes, I've sort of watched a few of the previous crashes and crypto always comes back stronger than before, and crypto is going to
survive this, too. But this is probably the worst blow ever because this time around, you know, crypto is really mainstream. It was just coming to
the mainstream.
[15:15:00]
I mean, Sam Bankman-Fried was supposed to be the guy who is going to get legislation in Washington to really help the industry thrive in the US, so
his reputation is a catastrophe. Financially, we haven't seen the last bit of the dominoes that are going to fall. But I've covered crypto closely and
unfortunately, people who casually watch it like will point to things like this and say, oh, it's all a scam. I told you so, it's a Ponzi scheme. This
was a Ponzi scheme.
But I did reporting. I mean, so many smart people, good entrepreneurs building really neat technology around blockchain and Web 3, and you know,
I think blockchain can change the world, but this has set it back a couple of years.
SOLOMON: So what's the takeaway do you think for investors who maybe lost a lot of money here, but still believe in crypto? What's the takeaway here
in terms of moving forward, how to invest perhaps differently?
ROBERTS: Well, I mean, you know, crypto has always been a speculative asset. So are going to see these people selling their house to buy Bitcoin,
that's never a good idea. I mean, I think, the advice I have is, if you're interested, you can put up to five percent of your wealth in it, no more
than you can lose.
But this time around, just be really careful who you give your money, and the original like old school, Bitcoin people would say something, not your
keys, not your coins, because crypto is something you can control and be your own bank for. When you trust a third-party entity, like in this case,
FTX, they can steal it from you.
So if you're really hardcore about your privacy and your crypto just hold it yourself. It's kind of the crypto equivalent of like having your own
vault and protecting it. And otherwise, I mean, I think Coinbase is still safe, you know, they've got real reserves. But you know, anything else out
there, just be careful.
SOLOMON: Jeff John Roberts, thank you. Appreciate the expertise and the insight.
ROBERTS: Thank you so much.
SOLOMON: Big questions are once again being asked about the future of crypto regulation. Speaking to Julia Chatterley earlier Hester Peirce, one
of five commissioners that the US Securities and Exchange Commission said that the FTX collapse should help accelerate reforms. Listen.
(BEGIN VIDEO CLIP)
HESTER PEIRCE, US SEC COMMISSIONER: These are rules that we should have been writing years ago. And so if we can turn our attention to doing that
now, that's a good thing.
There are a couple of things, though, to worry about and one is that in the wake of something bad happening, it is often very tempting to craft
regulations just based on what you just saw. And second, you know, rushing to regulation can mean that you don't get the public input that you need to
develop good regulation.
So I think we need to turn our attention to it, work on it, get the broad public input that we need.
SOLOMON: And it has been an autumn of discontent for the tech sector. But there is one bright spot.
After major cutbacks during the pandemic, Airbnb's CEO, Brian Chesky told CNN this morning that his company is bucking the trend and hiring.
(BEGIN VIDEO CLIP)
BRIAN CHESKY, CEO, AIRBNB: Two-and-a-half years ago, we lost 80 percent of our business in eight weeks. People were predicting we were going to go
out of business. We did a layoff back then.
POPPY HARLOW, CNN ANCHOR: You had to lay off 25 percent.
CHESKY: Twenty-five percent, and that doesn't even include contractors. Now, when you do a layoff, a lot of people leave after the layoff because
they figure like maybe there's opportunities elsewhere. And this is not an -- this is in a much better economy where the people had other options and
people thought a travel company is not the place to be during a pandemic.
So a lot of people left, and we just hunkered down. It was like a thousand of us got in a foxhole, we rebuilt the company from the ground up, and we
stayed really lean. And because we stayed lean, we generate a lot of free cash flow, so we're stepping on the gas, we're not putting on the brakes.
(END VIDEO CLIP)
SOLOMON: Things however, not so rosy at Roku right now. It is the latest tech company to cut jobs announcing plans to lay off 200 employees. The
losses add to the tens of thousands of jobs slash from the sector in recent weeks. That's amid persistent recession fears. It is a stark contrast to
the tightness we're seeing elsewhere in the US labor market, Vanessa Yurkevich has the story.
(BEGIN VIDEOTAPE)
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT (voice over): In three weeks, the tech industry lost tens of thousands of jobs, historic
layoffs at Twitter, Meta, Lyft, and Amazon.
Layoffs.FYI, a crowdsource layoff tracking site puts it at more than 35,000 layoffs so far this month.
ROGER LEE, FOUNDER, LAYOFFS.FYI: That's the highest month since the pandemic. So, that beats April 2020 which was 17,000 employees laid off.
YURKEVICH (voice over): Meta cut its workforce by 13 percent. CEO Mark Zuckerberg saying he is taking accountability and apologizing to those
impacted.
New owner Elon Musk slashed half of Twitter's staff with founder Jack Dorsey tweeting, "The company grew too quickly. I apologize for that." And
Amazon is laying off 10,000 workers this week, citing an unusual and uncertain macroeconomic environment.
NELA RICHARDSON, CHIEF ECONOMIST, ADP RESEARCH INSTITUTE: There were big investments made during the pandemic time, while the rest of the economy
for example was plummeting by 3.4 percent. Tech grew by four percent.
YURKEVICH (voice over): But in a poll Is pandemic high-inflation world, consumer behaviors and spending habits are changing with the threat of
recession on the horizon.
[15:15:10]
RICHARDSON: I take this as a sign that maybe companies got over their skis at some point, right, and they are trying to kind of sit upright
again.
YURKEVICH (voice over): Roger Lee founded Layoffs.FYI, as the pandemic unfolded. Recently. He's been digging deeper into the numbers.
LEE: There have been many companies who have been letting go half or more of their recruiting HR teams, just because they are not hiring as many
people anymore.
YURKEVICH (voice over): Aaron Backman, a recruiter at a tech company was one of those layoffs. What did that feel like for you?
AARON BACKMAN, LAID OFF FROM TECH COMPANY: It was a really awful feeling. We were told really early in the morning, an e-mail saying layoffs are
coming today, and if you get a call, it's going to be you. And I sat there for six hours on Slack and watched my colleagues get laid off one by one.
YURKEVICH (voice over): Then he got the call.
BACKMAN: It is depressing.
YURKEVICH (voice over): As American workers watch tech giants shed jobs at a rapid clip, many in other industries are asking, "Am I next?"
Should they be nervous?
RICHARDSON: First of all, the tech economy are just two percent of the labor market. Tech is an important part of the economy, but it is not the
whole of the economy. The rest of the labor market is looking pretty good. The economy is adding jobs at a pretty healthy clip.
YURKEVICH (voice over): Vanessa Yurkevich, CNN, New York.
(END VIDEOTAPE)
SOLOMON: Coming up: Households in the UK are feeling the pain of recession and also fearing the biggest drop in living standards in 70
years. That and Jeremy Hunt's plan to deal with it next.
(COMMERCIAL BREAK)
SOLOMON: Welcome back.
People in the UK will soon have to stomach higher taxes and reduce public services. It's all part of Rishi Sunak and Jeremy Hunt's new budget plan.
They say the measures are needed to save $65 billion and bring the economy out of recession. The plan will lower the threshold for who is considered a
highest earner and also increase windfall taxes on oil and gas companies.
Under the budget, a large chunk of public spending cuts will take place in two years after the next election.
Clare Sebastian is with me now in London.
So Clare, of course, I think you know one of the main goals of economic policy right now is to try to at least contain inflation. I mean, walk me
through the UK inflation issue. I mean here in the US, we're at about 7.7 percent, but it is higher in the UK.
Walk me through inflation there and if this budget will help at all.
[15:20:10]
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, so in terms of whether it will help, it is helpful to look at what it is reversing, because of course, the
mini budget that we saw from the previous short-lived government in September was problematic in the sense that it was inflationary, right? So
it was working against the Central Bank.
If you have tax cuts, it increases demand, but of course, doesn't increase supply, so it fuels inflation. This, with tax rises and spending cuts does
the opposite, so of course works, as Jeremy Hunt said, in lockstep with the Central Bank and may potentially mean that monetary policy going forward
has to be less aggressive, although the jury is still out on that one.
In terms of UK inflation and how it compares, it's not great, honestly. It is worse than most of the G7. It's worse than the Euro area. It's worse
than the US, which of course, has been sort of coming down a little bit recently. And part of that is because of the international factors that we
see, namely, of course, Russia's war in Ukraine, which was sent interest rates and inflation soaring around the world.
But there are unique factors to the UK as well, Rahel. The Bank of England Governor this week was talking about the fact that the UK's workforce has
shrunk since pre-COVID, fairly significantly, because of long term sickness, and things like early retirement. That, of course, leads to
worker shortages, pushes up wages, or they're not enough in this climate.
And the other thing, of course, is Brexit, which is still hampering trade, raising costs for businesses and all of that. That may mean that things are
slightly worse. Now, and also it may take slightly longer to recover here in the UK.
SOLOMON: I think it's an interesting point, Clare, because we hear a lot about the impact of the war on inflation, but it's not entirely the war,
and so I think it's important to also talk about some of those other factors driving inflation.
You know, I think part of what the goal here was to restore some stability, maybe create some credibility, restore credibility. I mean, do you think
that this budget did that?
SEBASTIAN: You know, I think some stability was already restored when Jeremy Hunt took over from Kwasi Kwarteng, and then of course, pledged to
reverse most of their -- all in fact, of their tax cuts. But I think the jury is still out on what this actual budget today has done.
We saw that the pound weakened a little bit against the dollar, not too much, but a little bit. Gilt yields rose a little bit, so nothing compared
to the reaction that we saw to the mini budget, but still not exactly a ringing endorsement.
I think there are major concerns about the OBR, the fiscal watchdog in the UK that gave its forecast today that was pretty bleak for the medium-term
outlook and the UK living standards are really going to drop, they say by about seven percent in the next two years, which will wipe out the last
eight years of progress.
I think there is some trepidation around what that could do. Could it worsen a recession, crush demand, things like that. And of course, there
is, as you pointed out some politicking in this budget as well. They have backloaded some of the most draconian spending cuts to potentially when we
might see another election.
So I think that there are some concerns around that as well.
SOLOMON: Clare Sebastian, thank you.
And as Clare just mentioned, British households are already facing the biggest standard of living drop since the 1950s and is set to fall seven
percent over the next two years. That is according to projections, from the Office of Budget Responsibility.
Households are feeling the pain of decades high inflation, skyrocketing mortgages and higher unemployment.
Now, despite government efforts to shield citizens from rising cost, Sonali Punhani is the Chief UK economist at Credit Suisse and she joins me from
London.
Thank you for being with me.
You know, top line reaction to this budget, JPM put out a note that said most of the fiscal squeezing, and Clare was alluding to this, most of the
fiscal squeeze happens too late to help the BoA control inflation over a two-year horizon.
SONALI PUNHANI, CHIEF UK ECONOMIST, CREDIT SUISSE: Yes, I completely agree with that. I think what the government has done is it has postponed a
large amount of the fiscal consolidation into the later part of the forecast period, which actually provided near-term support to the economy,
which, you know, from an economic perspective is probably the right thing to do, because it does reduce the severity of recession by providing help
to the vulnerable households who require help with energy bills.
But at the same time, I think it does make the Bank of England's job a little bit harder, given the fact that most of the consolidation is much
later and in the horizon that the Bank of England forecasts inflation and, you know, fiscal policy is still slightly supportive.
And as a result, you know, you end up having the Bank of England to hike rates more in order to bring inflation under control.
SOLOMON: Do you think this windfall tax on energy companies -- the UK says that it expects to earn $65 billion? There have been similar calls
here in the United States, although economists, at least here disagree about whether the net benefit of that would be positive for the economy.
Where do you stand on that issue?
PUNHANI: Yes, I mean, I think it's difficult to say firstly how much the windfall taxes would raise and also I think what the impact of windfall
taxes would be on investment in other parts of the economy.
[15:25:10]
So, I think the jury is still going to be out on that. But I think what's interesting is that, in terms of the macroeconomic impact of the taxes on
energy companies is, I think unlikely to have a very big macroeconomic impact, because it's something that's quite difficult to measure, unlike
taking away taxes from or raising taxes for people and households, who are going to potentially spend it and spend that money into the economy.
I think windfall taxes generally have a more limited macroeconomic impact.
SOLOMON: Interesting. It's been interesting to see the Central Bank sort of move in lockstep between the Bank of England, you know, the Federal
Reserve, the ECB. You know, this idea with this budget of cutting taxes, or excuse me, raising taxes and cutting spending, I mean, do you think that
the UK is sort of the first, but not the last? In other words, might we start to see that in other nations? Maybe like the US? I mean, what do you
think about that?
PUNHANI: I mean, I think the UK had a specific problem because of which, some of these measures had to be taken maybe in a more extreme manner than
what is necessary. You know, I think, after the sort of mini budget got announced, the UK assets lost a lot of credibility.
And, you know, today was a step that the government had to take in order to regain fiscal credibility and in order to make sure that the books are
balanced in the medium term.
So I think the pressure was probably more acute in the UK, but I think in other countries, the concept sort of applies that most countries are facing
high inflation, which are much higher than target and Central Banks are obviously trying to do their best in order to curtail that inflation.
But I think, fiscal policy also has a role to play in order to make sure that it doesn't make the problems worse, while at the same time supporting
what they build through the energy prices, as well.
SOLOMON: And so just to button that up a bit, so do you think that this actually did restore some credibility and did provide some stability to the
markets?
PUNHANI: I mean, I think, as we just heard, I think I agree with what was said that fiscal credibility was already restored by reversing a large part
of the unfunded tax cuts that were announced in the mini budget. I think today, you know, the market's reaction was fairly calm. So it wasn't
anything like what the reaction was when the mini budget was announced.
So in some way, we could say they ended up announcing a budget, which markets are okay with and they didn't react negatively to it. There was a
small drop in sterling and a bit of rice in gilt, but nothing, like what was seen after the mini budget.
So I think, it could be said, I mean, maybe I'm saying it too early, but it could be said that maybe the calm is restored, and in some sense, going
forward now, the focus of UK assets will now be on the macroeconomic outlook, as well as the Bank of England's outlook rather than focusing too
much on the fiscal side,
SOLOMON: And how it actually plays out in the real economy. It will be one to watch for sure.
PUNHANI: Yes, exactly.
SOLOMON: Sonali Punhani is the chief UK economist at Credit Suisse. Thank you for being with us today.
PUNHANI: Thank you very much, Rahel.
SOLOMON: And coming up, a huge shake up in the US Congress as Speaker of the House Nancy Pelosi says that she will relinquish her leadership post
after leading House Democrats for two decades. What this means for the party going forward next on QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
SOLOMON,: Welcome back. I'm Rahel Solomon. There is more QUEST MEANS BUSINESS in a moment. When the mark of the changing of the guard on Capitol
Hill, as Nancy Pelosi confirmed she will not return as Democratic House leader.
And Taylor Swift cells sets a ticket sales record, despite all the problems on Ticketmaster's website. First the news headlines this hour.
(MUSIC PLAYING)
SOLOMAN (voice-over): Ukraine says that its experts will join the investigation of a deadly missile blast in eastern Poland. NATO, U.S. and
Polish officials all say evidence indicates the missile was misfired by Ukrainian air defenses amid Russian strikes.
Basketball star Brittney Griner has been transferred to a penal colony in Russia. She was arrested after cannabis oil was discovered in her luggage
in February. In August, she was sentenced to nine years in prison. U.S. official have tried negotiating for prisoner swaps for Griner.
Myanmar's military junta has released nearly 6,000 prisoners in a mass amnesty. Among them, an Australian economic adviser to Myanmar's deposed
leader Aung San Suu Kyi.
Wimbledon says it is easing its all white dress code for women players. Organizers of the tennis tournament says they can now wear dark
undershorts. Several players had complained about having to dress in white during their menstrual cycle.
(MUSIC PLAYING)
SOLOMON: It is the end of an era. U.S. Congresswoman Nancy Pelosi, the Democratic House Speaker, announced she will step down from her party's
leadership when Republicans take control of the House next year. After two decades as the head of her caucus, Pelosi acknowledged her place in history
but said the time has come for a change.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: Never would I have thought that someday I would go from homemaker to House Speaker. In fact I never --
(APPLAUSE)
PELOSI: -- and with great confidence in our caucus, I will not seek reelection to Democratic leadership in the next Congress. For me, the hour
has come for a new generation to lead the Democratic caucus that I so deeply respect.
(END VIDEO CLIP)
SOLOMON: And while Pelosi is leaving party leadership, she will continue to serve in the House, representing the San Francisco area as she has for
35 years. This closes an important chapter Nancy Pelosi's trailblazing political career. She was the first and only woman to serve as House
Speaker.
She has been second in the line of succession behind the vice president to four U.S. Presidents. But Pelosi's time in power has also not been without
controversy. In January 2019, she barred president Trump from delivering his State of the Union address in the House chamber during a government
shutdown.
[15:35:00]
SOLOMON: The next February, after Trump seemed to ignore Pelosi's attempt at a handshake prior to his next State of the Union, Pelosi, seen on
camera, ripping up her copy of his speech as (INAUDIBLE).
And then in August of this year, Pelosi defied Beijing to become the first House Speaker to visit Taiwan in 25 years. CNN chief congressional
correspondent Manu Raju was on Capitol Hill.
Manu, explain to our viewers just the impact of her leadership. I think I saw tears on the Capitol as she announced her stepping down from her
leadership role.
MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: She has been the most dominant figure in Democratic politics for the past two decades. There have
been very few leaders, Republican or Democrat, who have been able to do what she has done in terms of uniting a party, getting them together,
trying to shepherd through legislation.
She has been one person who has been able to impose discipline among members of our caucus, which is why she has been an effective Speaker. Even
though her critics will acknowledge she has been effective in pushing through legislation that Republicans don't like but legislation
nonetheless, because of the way she's been able to maintain discipline and unity during her time in caucus.
She has been leader for the past 20 years of the House Democrats. She became Speaker for the first time in 2007, when she was serving with George
W. Bush at the time of the Iraq War.
She was a leading critic of, that battling George W. Bush over that issue. Barack Obama came to power a couple of years later. In 2010, she shepherded
through the Affordable Care Act in the United States, a sweeping health care bill that had been elusive for decades that Congress had tried to
pass.
A major priority, kept her party together but that was enough to cause her party control of the House of Representatives. Later in that fall, in the
minority for several years, they tried to battle, back and ultimately got back into power in 2019, when she became the Speaker of the House again for
the second time, the, only woman ever to serve in that position.
But doing it at a time when she was going toe to toe with Donald Trump, ultimately leading impeachment proceedings against the former president two
separate times. The only president in history to be impeached twice. That coming in the aftermath of January 6th, when her office was ransacked by
pro Trump rioters, when those rioters were targeting her.
Immediately after, the next, day at a press conference, she said this president needs to resign or he will be impeached. He was impeached a week
later, the fastest impeachment proceeding in American history.
But she has been so much, which is why the impact has been so profound. Democrats, even though the ones -- there have been many who wanted a
change, wanted a generational change, and are eager for new leadership, we're still recognizing the significance she has had through her time in
Congress.
SOLOMON: Manu, let's stick with that. This announcement and what seems to have been quite a bit of speculation.
What do we know now about what's next for the Democratic Party in terms of leadership?
Any clear front-runners here?
RAJU: Yes, this is a major shake up. We expect a whole new leadership team to take place. Basically, for the past two, decades she's had the same
leadership members, her, Steny Hoyer, who is an 82 year-old male, Jim Clyburn, who's a South Carolina Democrat, also in his 80s.
Both Clyburn and Hoyer said today, in the aftermath of Pelosi's decision, that they would step aside and allow another leadership team to come
forward. Most likely, part of those top there, Hakeem Jeffries, New York Democrat, 52 years old, a member of the Democratic leadership right now.
He's expected to succeed Nancy Pelosi. He's by and far the front-runner. He's expected to run unopposed for that position.
The number two Democrat could be Katherine Clark, a Massachusetts Democrat, followed by Pete Aguilar for the number three. We'll see if they run
unopposed at all. Their leadership elections on November 30th, secret ballot elections.
The members of the Democratic caucus in the House will vote for who they want to choose as part of that team. It is expected that those three will
be the likely the top three members there.
So a brand-new leadership team at the time of a narrow majority. The Republicans will have the House in the next two years. And the Democrats
hope they can be back in power two years later.
SOLOMON: Thank you, Manu Raju on Capitol Hill.
Ukrainian authorities say Russian missile attacks on the central city of Dnipro have wounded 23 people at least.
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SOLOMAN (voice-over): Military officials in the city say the missile struck when people were out on the streets, going to, work living their
usual lives.
[15:40:00]
A factory, houses, buses and a busy street were reportedly damaged in the attacks.
(END VIDEO CLIP)
SOLOMON: Russia launched its full scale invasion of Ukraine back in February but the fighting started in 2014. That summer, MH17, a Malaysia
Airlines jet bound for Kuala Lumpur, was shot down over Ukrainian territory held by pro Russian rebels.
Now three men have been convicted for that horrifying attack. A Dutch court has found a Ukrainian separatist and two Russians guilty of mass murder for
their role in downing the plane and killing all 298 people on board. Nic Robertson is following this.
Nic, good to have you.
What do we know about the men convicted of the attack and if they will actually serve any time?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: The three of them did not cooperate with the court. They were tried in absentia. Russia says this
is politically motivated.
They're petitioning the court in going after these men. There was a fourth. He did cooperate with the court. His lawyers were there to represent him.
He was not found guilty of murder and bringing down the aircraft. He was found, however, to have known about it but not have the same hand that they
had.
So these three men, not going to be sent by the Kremlin to the Netherlands to serve out their lifelong sentences, as the court has determined. There
will be compensation paid to the families of the victims of this flight.
However, at the moment, this is being read as more than symbolic. It is being read in the context of the current war that Russia is prosecuting
inside Ukraine at the moment. Ukraine continues to call for Russia to be held to account for all its war crimes at every level.
This is what President Zelenskyy said about this decision, this judgment in the MH17 case. He hoped it would set a precedent, an example, that all
senior Russian officials could be held accountable for their involvement in the crimes here.
At the moment, the best that the international community appears to be able to hope for is to build off of this, toward further cases involving war
crimes that are being perpetrated in these months, this year.
SOLOMON: Nic Robertson for us there. Thank you.
Last century has been devastating for Brazil's forests. On today's "Call to Earth," we will meet the man who has devoted his life to planting trees and
creating a better future.
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[15:45:00]
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SOLOMON: Deforestation threatens vital benefits, like clean air and water, healthy soil and climate regulation. On today's "Call to Earth," a
conservationist in southern Brazil is fighting to restore the forest one endangered plant species at a time.
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PABLO HOFFMAN, FORESTRY ENGINEER (voice-over): The Araucaria ecosystem is an ecosystem within the Atlantic forest in Brazil. And within the last 100
years, because of timber exploitation and agribusiness and urban expansion as well, it is one of the most degraded and most risk of disappearing
ecosystems in Brazil.
Because of this degradation and (INAUDIBLE), most of the plants (INAUDIBLE) are also in a higher risk of disappearing. So what we try to do is to save
the species from extinction.
My name is Pablo (INAUDIBLE) Hoffman and I am the executive director of (INAUDIBLE).
In the beginning, our institution was informally funded in 1997 for a group of forestry students. We like very much kayaking and doing the troops are
cutting things discarded like loving the nature and loving specifically the plants.
The Araucaria is probably the most important or the symbol of the (INAUDIBLE). Its relationship with all the species make the ecosystem
function.
We have at this nursery, the Chaua (INAUDIBLE) nursery, the most important number of species of this ecosystem being produced forestation (INAUDIBLE).
We are talking about 250 species of plants among trees, shrubs and (INAUDIBLE).
The (INAUDIBLE) forest has more than 1,000 species of (INAUDIBLE) plants. When you do restoration projects, you need to reintroduce the most rare
species to improve the diversity. This will make the difference for maintaining the species in the long term, avoiding extinction.
So especially in this area, we planted 1,600 seedlings of around 100 species.
The first step we will map are finding the individuals in the remnant fragments of our forest. After, this we sow the seeds. Then we plant and
grow them at the nursery. And the last step is to replant them in the wild.
And, in the meanwhile, we also do some scientific research to produce more information about the species. Our project can be a replier to other
regions in almost the same way.
What we are trying to do is to leave a legacy for the next generations. This means that if we save a species, we will keep the ecosystem
functioning. And when the ecosystems are functioning, they bring benefits for humans because we are part of the ecosystem.
So I think my families and most of my friends' lives are dedicated to nature, to save nature, to save species and to save humans.
(END VIDEOTAPE)
SOLOMON: And let us know what you are doing to answer the call with the #CallToEarth.
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[15:50:00]
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SOLOMON: Fans of Taylor Swift have a growing reason to be furious with Ticketmaster. The company now says it's canceling public ticket sales of
the singer's new tour. Ticketmaster says demand is too high and supplies too low for its systems to keep up.
More than 2 million Taylor Swift tickets were sold on Tuesday. That is the most ever for one artist in one day. But many people were unable to score
seats, including our very own writer, Delaney Murphy, after a surge of fans overwhelmed the Ticketmaster system.
The resale service StubHub says that the problem stems from so much demand going through just one source.
(BEGIN VIDEO CLIP)
ADAM BUDELLI, STUBHUB SPOKESPERSON: (INAUDIBLE) it was all funneled through one point of purchase, Ticketmaster, creates an absolute burden on
buyers. And that's now what we are seeing.
Being queued up and queued up and maybe get a chance to buy tickets, certainly there's a lot of pent-up demand for the Taylor Swift tour. And
this type of demand is not unexpected. But the problem becomes when it's all funneled through that one point of purchase, Ticketmaster.
That's were it creates the absolute burden on the buyer, where we are seeing and hearing the stories about fans being queued up and queued up for
hours and hours, for maybe a chance to even buy a ticket. And that is causing the issue that has hurt a lot of fans out there today.
(END VIDEO CLIP)
SOLOMON: And how about this?
Ticket resellers are not asking for as much as $25,000 per ticket online. Boy.
World Cup kicks off this Sunday in Qatar. Even though a ball is yet to be kicked, the tournament is already being overshadowed by growing list of
controversies. Isa Soares takes a look.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: We now announce the winner to organize the 2022 FIFA World Cup is Qatar.
ISA SOARES, CNN ANCHOR AND CORRESPONDENT (voice-over): The sport world was stunned when FIFA awarded the World Cup to Qatar. Controversy took center
stage and football risk becoming a sideshow.
Why was Qatar, a tiny desert state with no football pedigree, chosen to host FIFA's showpiece event?
Even the disgraced former chief of football's governing body has since described the decision as a mistake.
SEPP BLATTER, FORMER FIFA PRESIDENT: I was right at a certain time to say that we should not go there.
SOARES (voice-over): That move 12 years ago provoked unprecedented anger, accusations of corruption and sports washing. Qatari officials strongly
denied the allegation that bribery was involved in their bid.
Before a ball is kicked at this year's tournament, attention has focused on Qatar's human rights record, its stance on same sex relationship and, most
damaging to its reputation, the treatment of overseas workers, drafted in to build essential infrastructure.
Amnesty International claims authorities fail to properly investigate the deaths of thousands of migrant workers.
[15:55:00]
Despite evidence linking premature deaths with unsafe working conditions in the searing heat.
Qatari officials say they investigate all reports of abuse and exploitation and are committed to holding unscrupulous employers to account.
UNIDENTIFIED MALE: How important is it to keep traditions like this?
SOARES (voice-over): Ambassadors like David Beckham had been criticized for accepting the role, said to be worth millions of dollars.
DAVID BECKHAM, QATAR WORLD CUP AMBASSADOR: If you end your relationship with Qatar, I'll donate this 10 grand of my own money.
SOARES (voice-over): Comedian Joe Lycett called out the former England captain, saying his status as a gay icon was under threat. Homosexual acts
are illegal in Qatar, considered immoral under Islamic law. Punishments include prison sentences and even death.
Organizers told CNN Qatar is a tolerant and welcoming country and claim no one will be discriminated against. Nonetheless, calls to boycott the
tournament have gathered momentum. When the final whistle goes at Qatar 2022, the legacy will be judged not only over 28 days of football but in
the years that lie ahead -- Isa Soares, CNN.
(END VIDEOTAPE)
SOLOMON: There are just moments left to trade on Wall Street. We will have the final number and the closing bell right after this.
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SOLOMON: Welcome back.
Officials have made it clear that more rate hikes are coming. St. Louis Fed president said fighting has a only a, quote, "limited effect on inflation."
He presented a case that rates could soar well above expectations. Unsurprisingly, investors did not like that comment.
As you can see, the Dow is down fractionally, about 0.1 percent or 40 points. The Dow did climb into positive territory but again, as I said, has
struggled to stay there. S&P off by about 0.4 percent; the Nasdaq just about the same.
London's FTSE will have change. That is despite Rishi Sunak's new budget proposal that attacked 40 in Paris but it's about half a percent. And
Germany's DAX finished a bit higher.
And that is QUEST MEANS BUSINESS, I'm Rahel Solomon in New York. The closing bell will be ringing momentarily on Wall Street. As Richard would
always say, wherever you are, I hope it's profitable. "THE LEAD WITH JAKE TAPPER" starts right now.
END
