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Dow Dives in Another Wild Swing on Wall Street; John Kelly Knew of Abuse Allegations for Months; White House Says Trump Aide Reporter was Terminated Yesterday. Aired 3:30-4p ET

Aired February 8, 2018 - 15:30   ET



BROOKE BALDWIN, CNN HOST: Another up and down day there on Wall Street. You see all the red on your screen. The Dow down nearly 600 points here. Half an hour let to the trading day to go. And let's get a check in why this is happening again today. Clare Sebastian is down at the New York Stock Exchange for us. Clare, what's behind the drop?

CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Yes, Brooke, this is the critical last half hour of trading. Quite often you see volatility increase in any moves are exaggerated in this last half hour. It's not just people making the moves. You know, the machines are behind 60 plus percent or sometimes more of these market moves. They're set to sell or buy at a certain level, and that does exaggerate these big moves that we've been seeing. I will tell you this, since we last spoke more shares are being sold around 700,000 at the moment. It was about 600,000 last time we spoke. That's not as bad -- not as high as it was Monday when we saw that biggest points drop in history.

That day we reached about 1.3 billion shares changing hands. Underneath all of this, Brooke, are fears about the bond market. Treasury yields have been spiking close to four-year highs. That leads people to worry that people will move out of stocks and into bonds and it will lead to higher inflation, which will mean the Fed will raise interest rates faster than expected. But overall, this is the picture that we have on the markets now. Volatility is definitely back. And I think we are going to see it for some while yet.

BALDWIN: Clare, thank you. Clare Sebastian.

Let's go to Washington. Let's go to the White House briefing room. We are still waiting, Jim Acosta, for this briefing to start, our chief White House correspondent --


BALDWIN: -- is there and live. Jim, this has been delayed not once, not twice, but three times. What's up?

ACOSTA: Don't blame me for this, Brooke. Yes, that's right. This briefing was supposed to start at 1:00 this afternoon. Then it was delayed to 2:30. Then we had an announcement saying it was at 3:15, and here we are waiting. And it's around 3:30 and we're still waiting. How does everybody feel in the room about this? You're happy about this? These are not happy campers.

BALDWIN: Sorry guys. ACOSTA: I just took a poll of the room there, unscientific.

BALDWIN: Very scientific.

ACOSTA: We are waiting. And this is a very critical day for this White House. Obviously, there are some big questions that need to be answered. They've been going through a very, I think, big storm over here the last 24 hours, dealing with the departure of Rob Porter, the staff secretary to the President. And I think the big question here is going to be what about John Kelly, the White House Chief of Staff? Who we're told through our sources, along with other top White House officials, knew about some of these issues in the background check for Porter months ago, and yet this White House apparently did nothing about it.

Now, we're waiting for Raj Shah to come out here. We should point out, the White House Press Secretary, Sarah Sanders, she's off. She's not here today. The principle deputy press secretary, Raj Shah, is filling in for her. This happens to be his first day doing the briefing here in front of reporters. He has taken questions from reporters on Air Force One and so on. There's the two-minute warning. Brooke, not an ideal day for somebody to be filling in, in the briefing room on a day like this -- Brooke.

BALDWIN: In the two minutes we have until we see Raj step behind the podium, I mean, there's so many questions, right? We were told the President was in the dark until this week. He's upset learning about the allegations. We've learned that, obviously, Porter wasn't able to get that full security clearance because of, you know, FBI, and the investigations and the allegations from his ex-wife. Let's be precise. When exactly did the Chief of Staff know about that?

ACOSTA: We believe that happened last fall and I don't think we have a precise date as to when John Kelly found out about this. But we believe it happened last fall, and that other White House officials were aware of this as well. If you talk to folks who know a good deal about this background check, security clearance issue, when an issue is flagged of this nature, it is only natural, it's standard operating procedure in the administration for top staffers in the administration to be made aware of that. And so, it would either be gross negligence on the part of the Chief of Staff to not be told about this, and not hear about this among his top staffers, or he knew about it. And they're just going to have to have some explaining to do when and if we finally hear from the Chief of Staff about all of this.

Brooke, I think the other question, obviously, is for the President. We have not heard what the President thinks about all of this. Yesterday Sarah Sanders was pressed on this. She did not give a response to that as well.

[15:35:00] And so, obviously, we're waiting to hear for an answer on that as well. But, obviously, this is a very big day for this White House, there's a lot of critical questions. I was talking to retired general last night about Chief of Staff, John Kelly, and this person who wanted to remain anonymous was saying, listen, I don't recognize this John Kelly anymore. This is somebody who was highly decorated, very respected in places like Iraq and around the world. Somebody who understood, you know, we get down in the weeds of the personnel of people serving under him and handled those duties effectively. That really stands in stark contrast with the stories that we're hearing behind the scenes here at the White House. That, well, if Kelly did know about it, maybe he didn't know about everything. Perhaps Porter was giving them false stories, keeping them in the dark in terms of the full picture.

But the thing that is very mysterious to a lot of us, Brooke, is how they could be putting out statements yesterday just before the briefing from the Chief of Staff, John Kelly, praising Rob Porter as a man of integrity and honor, and so on. At the same time there releasing a statement to us from Rob Porter saying, well I took these pictures many years ago, and so on. It just smacks of some political malpractice and perhaps some inexperience on the part of people in the White House here. First among them, John Kelly, in allowing statements like that to go out to the press, giving the impression that they were standing behind Rob Porter when something truly awful was being alleged about him.

BALDWIN: What about -- I'm going to hold you there, Jim, until we see Raj walk in the room. What about the role of White House counsel, Don McGahn? Because didn't he know -- wasn't he tipped off at something based upon an ex-girlfriend as well of Rob Porter's? How much was he aware of?

ACOSTA: I think that's also a key question. And Don McGahn is somebody whose name pops up time and again in these melodramas that take place here at the White House. What did the White House counsel know in terms of his handling of all of this? I think that's also going to be a question here. But Brooke, keep in mind, John Kelly, the Chief of Staff -- the buck stops with the President, obviously, but before the President, when it comes to these staffing issues, it really stops with the Chief of Staff. That is why this is such a critical question for John Kelly. Because he was brought in here to be the, quote, unquote, adult in the room, to dispense with a lot of people who were coming in and speaking to the President and giving him bad advice, bad information. He was supposed to clear out a lot of the underbrush when he came into the administration.

And for the Chief of Staff to have just fallen down on the job in the way that it appears over the last several months when it comes to Rob Porter, I think, raises serious questions about it. That is why we're hearing the President has not been happy about this as well. No question about it. This is a very -- people hear about Rob Porter or they think, I don't know about this person, he's not a household name. Staff secretary. What is that job, and so on. It's really a larger issue than that. It is about the management of this White House. White House should be a shining example to the world in terms of what is expected, in terms of behavior, staff members and so on. It shouldn't be in the process of sort of scrambling around, fumbling around the dark in terms of trying to deal with a major staff scandal like this -- Brooke.

BALDWIN: Jim, I'm going to -- go ahead and take your seat, take a breath. We're going to take a break. Again, this thing has been pushed three times, this White House briefing. Listen, I get it, people run late. But this is mighty late today. Raj Shah is the one who's briefing. Sarah Sanders out. Raj Shah in -- filling in, I should be precise on that. Quick break. We are back with a look at the Dow and hopefully White House briefing.



RAJ SHAH, PRINCIPAL DEPUTY WHITE HOUSE PRESS SECRETARY: Good afternoon everyone. I want to start with a statement and then will take your questions.

Our normal policy consistent with the policies of past administration administrations is to not comment on background checks and security clearances. Given the unusual nature of these circumstances and a number of false reports floating around, we wanted to try to explain as best we can within our security limitations how the background investigation process works. And then talk a little bit about Rob Porter and how his situation fits within that process.

Background investigation process is the process for evaluating allegations about a White House staffer's conduct prior to joining the White House. It's run by the federal law enforcement and intelligence communities. It's used throughout the U.S. government. It's thorough. It's complex. And it takes time. It takes time because we want to get it right. It's also costly, but it's absolutely worth it.

Over the course of any investigation, some information may arise that seems troubling or complicated and requires additional investigating. It's important to allow that process to continue in order for a fulsome understanding of the information. The whole U.S. government takes this process seriously. It's not politicized or interfered with. But we do not push -- we do push for -- we do push to obtain accurate, fulsome information as quickly as possible.

Now let me talk about Rob Porter. The allegations made against Rob Porter, as we understand them, involve incidents long before he joined the White House. Therefore, they are best evaluated through the background check process. It's important to remember that Rob Porter has repeatedly denied these allegations and done so publicly. That doesn't change how serious and disturbing these allegations are. They are upsetting. And the background check investigates both the allegations and the denials. The investigation does not stop when allegations come to light. It continues to determine the truth.

We should not short circuit an investigation just because allegations are made unless they can compromise national security or interfere with operations at the White House. The truth must be determined. And that was what was going on with Rob Porter. His background investigation was ongoing. He was operating on an interim security clearance. His clearance was never denied, and he resigned. To summarize the allegations against Rob Porter are serious and deeply troubling. He did deny them. The incidents took place long before he joined the White House. Therefore, they were investigated as part of the background check, as this process is meant for such allegations. It was not completed, and Rob Porter has since resigned. During his time at the White House, Rob received no waivers and no special treatment. And this is the tried and true process. It was followed meticulously. We hope this will help explain how seriously these matters are taken and how the process works to investigate such allegations. With that I'll take question -- John.

UNIDENTIFIED MALE: Can you tell us, Raj, when the White House first became aware of these allegations?

[15:45:00] SHAH: I know there's been some reports about the Chief of Staff. He became fully aware about these allegations yesterday. I'm not going to get into the specifics regarding who may have known what pieces of information, because they were all part of an ongoing background check investigation.

UNIDENTIFIED MALE: You say fully aware. Was he partially aware?

SHAH: I think we all became aware of the news reports that emerged on Wednesday morning and some of the graphic images.

UNIDENTIFIED MALE: But did he know any of this back in November?

SHAH: Again, I'm not going to get into specifics -- Peter.

UNIDENTIFIED MALE: Let me ask you if I can. The statement changed from John Kelly yesterday morning to the statement yesterday evening. He said based on new allegations. But what changed yesterday absent a photograph in terms of new allegations?

SHAH: Well, I think what I just referenced, the reports had additional allegations. They had more information.

UNIDENTIFIED MALE: So, you're saying the initial reports were two former wives accused him of violence, both physical and verbal abuse, was not sufficient for him to say he was not a man of honor?

SHAH: There were a number of statements from the press secretary, from the Chief of Staff and others that reflected the Rob Porter that we've come to know working here for over a year. And the Chief of Staff for about the last six months. But the reports are troubling. And I think the statement from Wednesday night reflects the Rob Porter that we had seen in these news reports and some of these credible allegations.

UNIDENTIFIED MALE: So, to be clear, what was so shocking that had changed? He said it was shocking. What was he referring to?

SHAH: Yes, and it's the full nature of the allegations, particularly the images.

UNIDENTIFIED MALE: Just answer one more thing. You talked about the fact that there weren't any concerns, you said, that could compromise national security or interfere with operations here at the White House. But we've spoken to one of Porter's ex-wives who told us she warned the FBI that he could be susceptible to blackmail because of the allegations against him.

SHAH: I'm not going to get into the specifics of the investigation itself. I think that's a question for the FBI and others. This is not our process. This is the process the U.S. government uses across agencies and has existed over numerous administrations.

Just hang on a second. Say that again.

UNIDENTIFIED FEMALE: I want to clarify what you're saying.

SHAH: Sure.

UNIDENTIFIED FEMALE: Are you saying that the Chief of Staff of this White House had no idea that Rob Porter's two ex-wives had domestic violation allegations against him when they made those claims to the FBI, that John Kelly did not know that? How is that possible that the Chief of Staff did not know that?

SHAH: Again, this is part of an ongoing investigation. We trust the background check process and the Chief of Staff does not get detailed updates about what may or may not have been alleged. This is a process that involves a thorough investigation. And as I went through the process it involves looking at not just accusations but denials.

UNIDENTIFIED FEMALE: The White House had said yesterday that Porter's decision to leave was a personal one, that he wasn't pressured to do so. So, would Rob Porter still be on the job today, had he not decided to resign?

SHAH: Rob Porter was terminated yesterday and his last day --

UNIDENTIFIED FEMALE: Did he resign or was he terminated?

SHAH: His last day was yesterday. I know he came in earlier to cleared out his stuff.

UNIDENTIFIED FEMALE: But would he still be on the job? I mean, Sarah Sanders made it --

SHAH: He offered his resignation and it was accepted -- Jim.

ACOSTA: Yes. So, in terms of the Chief of Staff's handling of all this, no regrets?

SHAH: I think the second statement that he sent out reflected his thoughts, which is that these allegations are deeply troubling. They are shocking, and I think the first statement reflected, you know, the Rob Porter that we have known.

ACOSTA: Let me ask you to follow up on that. Because as you were coming out here yesterday -- or Sarah Sanders was coming out here yesterday, you were releasing a statement from Rob Porter, saying that he took those photographs. That appears to be an acknowledgement that this abuse took place. That he helped document it. How can the White House Chief of Staff -- how can the press secretary, how can this White House still be standing behind him when Mr. Porter appeared to be acknowledging that he had --

SHAH: I think it's fair to say that we all could have done better over the last few hours or last few days in dealing with this situation. But, you know, this is a Rob Porter that I and many others have dealt with. That Sarah have dealt with, that other officials including the Chief of Staff have dealt with. And the emerging reports were not reflective of the individual who we had come to know.

Acosta: If I can just ask you one other follow up --?

SHAH: Jeff. We've got a few over here.

UNIDENTIFIED MALE: Rah, did the President know Rob was using -- was working on a temporary clearance?

SHAH: No. The President saw the news report on Tuesday night and was informed of the resignation on Wednesday. He was saddened by it. Saddened for all the individuals involved.

UNIDENTIFIED MALE: Over the last year, is that ever something he was concerned about?

SHAH: He was not informed about the specifics regarding Rob Porter's security clearance.


UNIDENTIFIED FEMALE: Do you have any information on how many senior White House staffers are currently working under an interim security clearance?

SHAH: I got into the security clearance process as much as I'm allowed to discuss it and I'm not going to go further. Yes?

[15:50:00] UNIDENTIFIED FEMALE: What is the White House's reaction to comments made by former White House aide, Omarosa, on "Celebrity Big Brother." Where she said, quote, she was haunted by the President's tweets. She described the situation inside the White House as bad and said, it is not going to be OK.

SHAH: Not very seriously. Omarosa was fired three times on "The Apprentice." And this is the fourth time we let her go. She had limited contact with the President while here. She has no contact here -- Peter.

UNIDENTIFIED MALE: Raj, we were initially told that Rob Porter was going to stay on a while and oversee a transition period. Now you're telling us he was terminated yesterday. What changed?

SHAH: I think that we have looked at the things that are necessary to ensure a smooth transition. There will be a new acting staff secretary that we can name later on, and operations can continue smoothly -- Lalit. UNIDENTIFIED MALE: Thank you. Congratulations for your (INAUDIBLE).

Over the last one week, (INAUDIBLE) rallies by skilled Indian Americans who are seeking to lift off the per-country limit on green card. Everyone has been talking about illegal immigrants. These Indian Americans have been talking about legal immigrants. What is the administration part on this?

SHAH: Well, I think the President wants to see legal immigration reform. He wants to see us move from a process that currently exists in law of extended family chain migration towards merit-based immigration reforms. We want to make sure people coming in the country are the best and brightest regardless of nationality, creed, religion, or anything else in between. We want to look at educational background, ability to contribute to the work force in a way that helps American workers. So, the President wants to see reforms that improve America's economy -- Noah.

UNIDENTIFIED MALE: Normally, when you hire people, do you wait for the investigation to come back before hiring them? Is the burden of proof not on the people seeking the job to prove that they are qualified and don't have any skeletons in their closet? Or do they just get to come aboard, and you wait and see what happens with the investigation?

SHAH: The process tends to be a little bit different with the White House because there's a lot of officials coming in with the new administration, and a lot of individuals coming in have an interim clearance.

UNIDENTIFIED MALE: And then also, what about women who don't have photographs? Do you trust their stories? Because a lot of times -- you haven't been at the podium, but Sarah has said that allegations weren't credible from other people. Do you need a photograph? And how should women feel if they don't have a photograph?

SHAH: I don't think any standard applies. I just think that we do take allegations of misconduct, of domestic violence, other issues like that very seriously. We are very concerned about them. In this instance, in the case of Rob Porter, we relied on the background check investigative process. That process hadn't been completed, so we were relying on the information that we had -- Anita.

UNIDENTIFIED FEMALE: Two question on two different things. I just want to understand -- you used the term "fully aware." I don't understand what that means. What does that mean John Kelly knew or didn't know? What does "fully aware" mean?

SHAH: Well, I do know, for instance, that he had not seen images prior to the statement on Tuesday night.

UNIDENTIFIED FEMALE: Did he know of the allegations?

SHAH: I'm sorry, say that again.

UNIDENTIFIED FEMALE: Did he know of some of the allegations?

SHAH: Again, I'm not going to get into the specifics of what may have emerged from the investigation.

UNIDENTIFIED MALE: But you used the word "fully aware," so I'm just trying to understand --

SHAH: I understand. I'm saying, specifically, on images. I don't have every single detail, and I'm not going to get into every single specific. We relied on a process. This is a process used throughout the U.S. government. It's a process used by every agency for an individual seeking a security clearance. Rob Porter was never denied a security clearance. He was never given any special treatment. The process was still ongoing. We relied upon it.

UNIDENTIFIED FEMALE: I had a second topic which was, on Capitol Hill, members and their staffs are saying that, because the court case regarding DACA is now -- meaning that the administration is now accepting DACA applications again -- that they feel that there's breathing room and that March 5th is no longer the deadline.

SHAH: March 5th is the deadline.

UNIDENTIFIED FEMALE: And what's going to happen if they haven't done anything by then? Because it doesn't look like they're going to.

SHAH: When you say, "they haven't done anything," what do you mean?

UNIDENTIFIED FEMALE: If Congress hasn't acted by March 5th, what is going to happen?

SHAH: Well, we fully expect Congress to take action on the President's immigration reform framework -- April.

UNIDENTIFIED FEMALE: OK, Raj. Two questions. I want to follow up on Noah. You said the President takes the issue of violence against women seriously.

SHAH: He does.

UNIDENTIFIED FEMALE: Why did this administration close the Violence Against Women Office when he became President last year? He defunded it and everything. And also, he shut down the Women and Girls Office as well. And I have another question on Rob Porter.

SHAH: I don't know, specifically, why those specific offices may have been closed. But look, I did talk to the President earlier today. He told me he was very saddened by these reports and by the information that he saw, by the images that he saw. We do take violence against women and these types of allegations very seriously. What is your second question? Yes.

UNIDENTIFIED FEMALE: The interim security clearance, does that allow Rob Porter to be able to touch -- at the time when he was employed -- to be able to touch and see classified materials?

SHAH: It would, yes -- Blake.

UNIDENTIFIED MALE: Thanks, Raj. Let me turn your attention back to the Hill where there's a spending deal going on. Republicans, for years, have said there needs to be fiscal restraint -- years and years and years. Now we know that the deficit for this fiscal year is potentially going to reach a trillion dollars.

You've got the House Freedom Caucus saying, about this deal, that growing the size of government by 13 percent adds to the swamp instead of draining it. This is not what the American people sent us here to do.

[15:55:00] Essentially, they're saying some within their party are being hypocritical. Is the President concerned about all of this spending? And what exactly is your plan to pay for it?

SHAH: He is concerned about spending in Washington. He's expressed that for years. Let me just say off the bat, we do support the two- year spending bill that is being discussed and voted on in the House and Senate. You know, it lifts the caps on defense spending, which is something that the Secretary of Defense, the President's generals have told him that they need to ensure that we rebuild our military and protect our national security.

With respect to deficits. You know, we're going to be releasing a budget on Monday. The budget does move us toward a path of restoring fiscal responsibility. It reduces our deficit by trillions of dollars. I'm not going to get more specific; you guys will get more on Monday. But it does incorporate these budget caps, it incorporates the tax bill, incorporates our other priorities. So, we do think that that budget will outline the path to our fiscal responsibility.

UNIDENTIFIED MALE: You're still going to be running deficits at that point, and now you've got this $300 billion cap to raise. So, is it just economic growth? Is that the only way that you do it?

SHAH: Economic growth is essential to cutting deficits and to restoring fiscal responsibility. Again, the budget will outline a lot more detail.

UNIDENTIFIED MALE: What can you tell us about the involvement of the White House Communications Director in crafting the statements that your office issued yesterday? Among them, you have the defense issued by the Chief of Staff; you have the statement that Sarah read from the podium, in which Rob Porter calls the allegations against him "vile" and "outrageous." What can you tell us about the extent to which the Communications Director was involved in crafting those statements?

SHAH: Well, I'm not going to get into the specifics, but I would say that all the statements were crafted by a number of senior White House officials -- Margaret.

UNIDENTIFIED MALE: Just one more question.

SHAH: Yes.

UNIDENTIFIED MALE: Because you have repeatedly referred to the denials that Rob Porter issued, how much weight were those denials given within the White House? SHAH: You know, I think you've got to take allegations seriously. You've got to take denials seriously. And again, the statements reflected our experience with Rob Porter and other officials' experiences with Rob Porter. But again, looking at more of the reporting and looking at more facts emerging, you saw the Chief of Staff's statement, and the White House did accept his resignation -- Margaret.

UNIDENTIFIED FEMALE: Thanks. A couple more questions about this issue. It sounded like you're saying the investigation is ongoing. Is that right?

SHAH: Well, I don't think -- now that he's been terminated, I don't think it continues. But I can get back to you on the specifics.

UNIDENTIFIED FEMALE: So, I guess what I was going to ask is, once the investigation is totally completed -- you're satisfied, you know the answers to those questions -- could you elaborate more specifically on the first time anyone mentioned this to the President? When, you know --

SHAH: I know that any issues regarding his security clearance weren't made available to the President prior to Tuesday.


UNIDENTIFIED FEMALE: I'm sorry, hang on a second, please. So, I guess, does the President retain full confidence in his Chief of Staff?

SHAH: Yes.

UNIDENTIFIED FEMALE: And his White House Counsel?

SHAH: Absolutely.

UNIDENTIFIED FEMALE: In his Communications Director?

SHAH: Yes, absolutely.

UNIDENTIFIED FEMALE: And all of the rest of the top staff?

SHAH: The President has confidence in his Chief of Staff, Counsel, and Communications Director.

UNIDENTIFIED MALE: Can I ask you a finance question really quickly, on the spending plan?

SHAH: Sure.

UNIDENTIFIED FEMALE: As I understand it -- and notwithstanding whatever the budget is going to say -- the U.S. is going to have to borrow more than a trillion dollars this year, and it could affect markets globally. Does the President feel confident -- would you dispute that? And does the President feel confident that that's still the right thing to do and it can be, kind of, mitigated in the budget plan?

SHAH: Well, I'd refer you to Treasury on the specifics. I know that some of those numbers have more to do with the previous administration's accounting than it has to do with this administration's policies. But I would say that we are committed to fiscal discipline, and the budget next week will show that in greater detail -- Ann.

UNIDENTIFIED FEMALE: Yes, back to Mr. Porter.

SHAH: Sure.

UNIDENTIFIED FEMALE: If I understood your description of the background check process correctly, the fact that the two ex-wives had made statements to the FBI about alleged abuse during that investigation was not a disqualifying factor in his initial hiring. Does the White House regret that? And going forward, do you plan to change the way you consider allegations of domestic abuse?

SHAH: Well, again, understand that the background investigation was not completed. There was no determination made about Rob Porter's security clearance. There was not a thumbs up or thumbs down. There was no denial of his security clearance. He was operating off an interim clearance. That is the clearance that many individuals who have never had a security clearance would get when they first come to the White House. With respect to allegations made, again, every allegation has to be investigated. Any denial has to be thoroughly and fully investigated. We allow that process to play out. Sorry, -- Francesca.

UNIDENTIFIED FEMALE: Thank you, Raj. I wanted to clear up a few things that you said today on this. So, first, you said that the President wasn't aware of Mr. Porter's security clearance status. But when was the President aware of the allegations of abuse?

SHAH: On Tuesday night, when there was a report issued.

UNIDENTIFIED FEMALE: And then secondly, you have said that Rob Porter was "terminated" twice in this briefing. Is the White House now saying that Mr. Porter was fired?

MR. SHAH: No, I just mean the process --