1 00:00:02,720 --> 00:00:07,560 Speaker 1: Bloomberg, Audio Studios, podcasts, radio News. 2 00:00:08,720 --> 00:00:09,280 Speaker 2: Good Evening. 3 00:00:10,119 --> 00:00:13,840 Speaker 3: Federal Reserve Chair Jerome Powell issued an extraordinary statement on 4 00:00:13,920 --> 00:00:16,840 Speaker 3: Sunday night. The FED posted a video of Powell reading 5 00:00:16,840 --> 00:00:17,319 Speaker 3: it in full. 6 00:00:17,920 --> 00:00:21,079 Speaker 2: On Friday, the Department of Justice served the Federal Reserve 7 00:00:21,120 --> 00:00:25,200 Speaker 2: with grand jury subpoenas threatening a criminal indictment related to 8 00:00:25,239 --> 00:00:28,920 Speaker 2: my testimony before the Senate Banking Committee last June. That 9 00:00:29,000 --> 00:00:33,159 Speaker 2: testimony concerned, in part, a multi year project to renovate 10 00:00:33,280 --> 00:00:35,199 Speaker 2: historic Federal Reserve office buildings. 11 00:00:35,960 --> 00:00:40,839 Speaker 4: These developments represent an extreme excavation of the pressure campaign 12 00:00:40,920 --> 00:00:44,000 Speaker 4: that the Trump administration has been putting on the FED 13 00:00:44,040 --> 00:00:47,240 Speaker 4: and chaired Jerome Powell for months now. 14 00:00:47,600 --> 00:00:50,240 Speaker 3: That's Amera amok Way. She covers the Federal Reserve for 15 00:00:50,280 --> 00:00:51,920 Speaker 3: Bloomberg along with Enda Current. 16 00:00:52,400 --> 00:00:55,320 Speaker 1: What you're talking about is effectively threatening the Federal Reserve 17 00:00:55,440 --> 00:01:00,000 Speaker 1: chair with criminal charges over the costs of a building project, 18 00:01:00,440 --> 00:01:03,560 Speaker 1: when we know the backstory is that the White House 19 00:01:03,640 --> 00:01:06,720 Speaker 1: is very unhappy with where interest rates are at and 20 00:01:06,800 --> 00:01:09,560 Speaker 1: they want to use his current opportunity to remold the 21 00:01:09,840 --> 00:01:10,680 Speaker 1: Federal Reserves. 22 00:01:11,200 --> 00:01:13,840 Speaker 3: Enda and emer have been tracking how the relationship between 23 00:01:13,880 --> 00:01:17,760 Speaker 3: Trump and Powell has evolved or devolved since Trump first 24 00:01:17,800 --> 00:01:19,800 Speaker 3: tapped Powell to be the chair of the Federal Reserve 25 00:01:19,959 --> 00:01:23,520 Speaker 3: in twenty seventeen, and they've reported on the President's efforts 26 00:01:23,600 --> 00:01:26,679 Speaker 3: to try to fire Powell and to reshape the Central Bank. 27 00:01:27,120 --> 00:01:30,160 Speaker 3: Powell's term is fed share ends in May, and Preston 28 00:01:30,200 --> 00:01:33,040 Speaker 3: Trump says he's close to naming someone to succeed him. 29 00:01:33,640 --> 00:01:37,360 Speaker 3: In the face of insults and threats, Powell has kept quiet. 30 00:01:37,680 --> 00:01:41,520 Speaker 3: He's been reluctant and often unwilling to answer reporter's questions 31 00:01:41,640 --> 00:01:44,520 Speaker 3: about what President Trump has said about him. So his 32 00:01:44,600 --> 00:01:47,040 Speaker 3: statement on Sunday is a sea change. 33 00:01:47,200 --> 00:01:50,560 Speaker 2: This unprecedented action should be seen in the broader context 34 00:01:50,640 --> 00:01:53,520 Speaker 2: of the administration's threats and ongoing. 35 00:01:53,120 --> 00:01:57,960 Speaker 3: Pressure, controversy over that renovation, and allegations he misled Congress 36 00:01:57,960 --> 00:02:01,720 Speaker 3: in testimony last summer. Those are pretacts, Powell said. 37 00:02:01,880 --> 00:02:04,560 Speaker 2: The threat of criminal charges is a consequence of the 38 00:02:04,600 --> 00:02:08,680 Speaker 2: Federal Reserve setting interest rates based on our best assessment 39 00:02:08,840 --> 00:02:11,640 Speaker 2: of what will serve the public, rather than following the 40 00:02:11,680 --> 00:02:13,040 Speaker 2: preferences of the President. 41 00:02:20,680 --> 00:02:22,480 Speaker 3: I'm David Gera, and this is the big take from 42 00:02:22,520 --> 00:02:26,040 Speaker 3: Bloomberg News today. On the show, the Department of Justice 43 00:02:26,080 --> 00:02:28,840 Speaker 3: subpoenas the Federal Reserve, what it means for one of 44 00:02:28,880 --> 00:02:32,160 Speaker 3: the most important financial institutions in the world, for its leader, 45 00:02:32,280 --> 00:02:35,160 Speaker 3: Jerome Powell, and for the White House, and where things 46 00:02:35,200 --> 00:02:43,080 Speaker 3: could go from here. In Feed Reserve Chair Jerome Powell's 47 00:02:43,080 --> 00:02:45,880 Speaker 3: statement about the subpoenas the Department of Justice served the 48 00:02:45,880 --> 00:02:49,360 Speaker 3: FED on Friday, Powell said, they're part of something bigger. 49 00:02:49,720 --> 00:02:52,399 Speaker 3: They're a threat to the Fed's long standing independence. 50 00:02:52,760 --> 00:02:54,560 Speaker 2: This is about whether the FED will be able to 51 00:02:54,600 --> 00:02:58,160 Speaker 2: continue to set interest rates based on evidence and economic conditions, 52 00:02:58,639 --> 00:03:02,079 Speaker 2: or whether instead monetary policy will be directed by political 53 00:03:02,120 --> 00:03:03,399 Speaker 2: pressure or intimidation. 54 00:03:03,760 --> 00:03:06,560 Speaker 3: Amara, let's start with this statement and what made it 55 00:03:07,280 --> 00:03:10,520 Speaker 3: unique or unprecedented. Why in terms of medium and message 56 00:03:10,520 --> 00:03:11,840 Speaker 3: was the statement so significant? 57 00:03:12,280 --> 00:03:15,120 Speaker 4: Wow, David, when I read this statement, I had to 58 00:03:15,160 --> 00:03:17,800 Speaker 4: take I mean, usually take a minute before you start writing, 59 00:03:17,800 --> 00:03:19,800 Speaker 4: but I took like an extra minute because I was like, 60 00:03:19,880 --> 00:03:24,720 Speaker 4: this is this is truly remarkable that j. Powell is 61 00:03:24,760 --> 00:03:28,400 Speaker 4: coming out with both video and text and doing a 62 00:03:28,560 --> 00:03:33,480 Speaker 4: very direct response to the administration, a very forceful response 63 00:03:33,520 --> 00:03:37,119 Speaker 4: to the administration. Usually, when Chair Pale is asked about 64 00:03:37,520 --> 00:03:39,600 Speaker 4: things that President Trump is saying or things that the 65 00:03:39,600 --> 00:03:42,240 Speaker 4: administration is doing, you can almost predict what he's going 66 00:03:42,320 --> 00:03:45,320 Speaker 4: to say. It is usually we at the FED, we 67 00:03:45,400 --> 00:03:46,880 Speaker 4: just try to stick to our knitting. We try to 68 00:03:46,880 --> 00:03:48,560 Speaker 4: stay out of politics. We just want to do a 69 00:03:48,560 --> 00:03:50,680 Speaker 4: good job for the American people, some version of that. 70 00:03:51,400 --> 00:03:54,440 Speaker 4: This was so very different than what he usually says 71 00:03:54,480 --> 00:03:58,800 Speaker 4: in response to attack and pressure from the administration. He said, 72 00:03:58,800 --> 00:04:02,240 Speaker 4: this issue of the building renovation and what he said 73 00:04:02,280 --> 00:04:05,680 Speaker 4: to Congress last year about it are essentially pretexts for 74 00:04:06,080 --> 00:04:08,760 Speaker 4: the administration to go after him and go after the 75 00:04:08,800 --> 00:04:11,880 Speaker 4: FED because the FED has not delivered their preferred policy, 76 00:04:12,080 --> 00:04:15,240 Speaker 4: and he basically just came out swinging and for the FED, 77 00:04:15,320 --> 00:04:18,560 Speaker 4: which just likes to kind of take sort of a detached, 78 00:04:18,720 --> 00:04:22,160 Speaker 4: above the freight approach, this is really a departure from 79 00:04:22,160 --> 00:04:25,440 Speaker 4: how they usually respond to these kinds of situations, and 80 00:04:25,480 --> 00:04:27,840 Speaker 4: it just shows that they, I think that they are 81 00:04:27,880 --> 00:04:30,840 Speaker 4: taking it very seriously and they do see this as 82 00:04:31,160 --> 00:04:33,960 Speaker 4: perhaps the realist and most serious threat to the Fed's 83 00:04:33,960 --> 00:04:37,240 Speaker 4: independence since President Trump returned to office. 84 00:04:37,720 --> 00:04:40,479 Speaker 3: That was your reaction? What was the reaction of markets 85 00:04:40,480 --> 00:04:42,480 Speaker 3: to this news, both of the subpoenas and the statement 86 00:04:42,480 --> 00:04:43,120 Speaker 3: from the FED chair. 87 00:04:43,440 --> 00:04:45,920 Speaker 4: So initially we saw and I think we are still 88 00:04:45,960 --> 00:04:48,840 Speaker 4: seeing sort of this selloff in sort of the America 89 00:04:48,880 --> 00:04:51,479 Speaker 4: trade right. As ND and I have written about, markets 90 00:04:51,560 --> 00:04:55,240 Speaker 4: have tended to take these threats to FED independence kind 91 00:04:55,240 --> 00:04:58,640 Speaker 4: of enstride, and it'll be interesting to see if people 92 00:04:58,800 --> 00:05:04,800 Speaker 4: see this development something that is more serious than previous developments. 93 00:05:04,839 --> 00:05:07,839 Speaker 4: You know, even when the President moved to FIREFED Governor 94 00:05:07,880 --> 00:05:09,880 Speaker 4: Lisa Cook, we didn't really see much of a reaction 95 00:05:10,400 --> 00:05:13,200 Speaker 4: in markets, and that was really surprising because people were like, WHOA, 96 00:05:13,400 --> 00:05:15,680 Speaker 4: that is unprecedented that the President is trying to remove 97 00:05:15,720 --> 00:05:16,440 Speaker 4: a FED governor. 98 00:05:16,800 --> 00:05:20,880 Speaker 1: I think in terms of attacks on an institution that 99 00:05:21,040 --> 00:05:23,880 Speaker 1: is at the center of steering the economy, at an 100 00:05:23,920 --> 00:05:26,760 Speaker 1: institution that is meant to be independent of politics and 101 00:05:26,760 --> 00:05:30,360 Speaker 1: a scene as such, it's pretty unprecedented in its nature, David, 102 00:05:30,520 --> 00:05:33,039 Speaker 1: no doubt about it. So on paper, it's an argument 103 00:05:33,080 --> 00:05:36,640 Speaker 1: about classic government cost overrun, but we know the backstory 104 00:05:36,720 --> 00:05:37,839 Speaker 1: runs much deeper than that. 105 00:05:39,160 --> 00:05:41,800 Speaker 3: And it didn't take long before we heard from members 106 00:05:41,839 --> 00:05:45,080 Speaker 3: of the Senate Banking Committee. What have lawmakers said in 107 00:05:45,120 --> 00:05:48,039 Speaker 3: response to again the news of the subpoenas and also 108 00:05:48,360 --> 00:05:49,760 Speaker 3: what Chair Powell said about them. 109 00:05:50,000 --> 00:05:53,599 Speaker 1: Well, we've had one interesting intervention in particular, David, with 110 00:05:53,760 --> 00:05:57,680 Speaker 1: a Republican Party. Senator phyllis making the point that he 111 00:05:58,320 --> 00:06:00,560 Speaker 1: first of all views this as a police little attack 112 00:06:00,640 --> 00:06:02,880 Speaker 1: on the FED, and he has made the point that 113 00:06:02,960 --> 00:06:05,640 Speaker 1: he will use his role on the relevant committee in 114 00:06:05,680 --> 00:06:09,120 Speaker 1: the Senate, the Banking Committee, to block the approval of 115 00:06:09,160 --> 00:06:11,000 Speaker 1: wherever the White House puts up to be the next 116 00:06:11,160 --> 00:06:14,520 Speaker 1: FED Chair or any other Federal Reserve appointment in the meantime. Now, 117 00:06:14,520 --> 00:06:17,640 Speaker 1: that's very important because it's the first major intervention from 118 00:06:17,680 --> 00:06:20,840 Speaker 1: the Hill and into the pressure that the White has 119 00:06:21,000 --> 00:06:23,400 Speaker 1: have been putting on the FED. Number one, it comes 120 00:06:23,440 --> 00:06:26,320 Speaker 1: from the Republican side of things as well. But number two, 121 00:06:26,400 --> 00:06:30,000 Speaker 1: it means that President Trump and the treasure Tecuy Bestin 122 00:06:30,080 --> 00:06:31,760 Speaker 1: had been floating we're going to announce a new FED 123 00:06:31,839 --> 00:06:34,040 Speaker 1: chair at some point soon overcoming weeks. Well, if they 124 00:06:34,040 --> 00:06:36,400 Speaker 1: go ahead and make that announcement, now, the entire FED 125 00:06:36,440 --> 00:06:38,200 Speaker 1: watching world in the rest of the world will say, well, 126 00:06:38,200 --> 00:06:40,159 Speaker 1: hold on, you don't have the numbers to get that 127 00:06:40,200 --> 00:06:41,080 Speaker 1: person approved. 128 00:06:42,640 --> 00:06:44,280 Speaker 3: Mara at the center of all of this is this 129 00:06:44,360 --> 00:06:47,960 Speaker 3: renovation project of these two feder Reserve buildings in Washington. 130 00:06:48,160 --> 00:06:50,839 Speaker 3: Just remind us what that issue is and sort of 131 00:06:50,839 --> 00:06:52,520 Speaker 3: why it's become so controversial. 132 00:06:52,960 --> 00:06:57,080 Speaker 4: Yes, So this issue really bubbled up over last summer 133 00:06:57,680 --> 00:07:00,400 Speaker 4: after there were media reports about this and a half 134 00:07:00,400 --> 00:07:03,600 Speaker 4: billion dollar renovation of two historic buildings that the FED 135 00:07:03,680 --> 00:07:07,040 Speaker 4: is doing at its headquarters in DC. The media reports 136 00:07:07,120 --> 00:07:10,720 Speaker 4: kind of characterized the project as very extravagant, that it 137 00:07:10,800 --> 00:07:14,080 Speaker 4: had all these fancy design features and things like that. 138 00:07:14,280 --> 00:07:17,560 Speaker 4: And so when Chirpal went to do his semi annual 139 00:07:17,640 --> 00:07:21,600 Speaker 4: testimony before Congress, he was asked about this and he 140 00:07:21,640 --> 00:07:23,679 Speaker 4: sort of pushed back against the idea that the project 141 00:07:23,720 --> 00:07:26,880 Speaker 4: is very extravagant. He did have to answer questions about 142 00:07:26,880 --> 00:07:29,360 Speaker 4: the fact that the project's costs have risen over time, 143 00:07:30,080 --> 00:07:33,120 Speaker 4: and that testimony is really at the center of the 144 00:07:33,240 --> 00:07:38,120 Speaker 4: subpoenas because you had allies of President Trump after the 145 00:07:38,160 --> 00:07:41,640 Speaker 4: testimony say that Palell was not honest during that testimony, 146 00:07:42,160 --> 00:07:45,640 Speaker 4: and they called on Congress and the DOJ to investigate 147 00:07:46,120 --> 00:07:49,480 Speaker 4: whether he had lied to Congress, And evidently we now 148 00:07:49,480 --> 00:07:52,920 Speaker 4: have that DOJ investigation now. For his part, pal has 149 00:07:52,920 --> 00:07:56,080 Speaker 4: said that he was truthful during that testimony, and he's 150 00:07:56,120 --> 00:07:59,120 Speaker 4: also said that during the entire course of the project 151 00:07:59,400 --> 00:08:01,880 Speaker 4: that the FED has aimed to be transparent about its 152 00:08:01,920 --> 00:08:04,920 Speaker 4: costs and other issues and keep Congress informed. 153 00:08:05,800 --> 00:08:08,760 Speaker 3: It was maybe like a month after that congressional testimony 154 00:08:08,800 --> 00:08:12,480 Speaker 3: that President Trump made that unprecedented trip to Federal Serve 155 00:08:12,520 --> 00:08:15,600 Speaker 3: headquarters the ERA and got a tour of the construction site. 156 00:08:15,880 --> 00:08:19,840 Speaker 3: Could you just describe that moment, both the tours of 157 00:08:19,840 --> 00:08:22,080 Speaker 3: what the President said afterward, there was this kind of 158 00:08:22,160 --> 00:08:25,160 Speaker 3: memorable exchange between the FED Chair and the President about 159 00:08:25,160 --> 00:08:26,360 Speaker 3: how big those overruns are. 160 00:08:26,560 --> 00:08:29,440 Speaker 4: President Trump went over there, walked around, and then he 161 00:08:29,520 --> 00:08:32,719 Speaker 4: threw out a number about how much the project costs. 162 00:08:33,000 --> 00:08:35,680 Speaker 4: It looks like it's about three point one billion, one up. 163 00:08:35,559 --> 00:08:37,040 Speaker 1: A little bit or a lot. 164 00:08:37,880 --> 00:08:40,200 Speaker 4: And you may have seen the memes. 165 00:08:41,360 --> 00:08:43,960 Speaker 2: Yeah, it just came out. 166 00:08:44,480 --> 00:08:45,560 Speaker 1: I haven't heard that from anybody. 167 00:08:45,559 --> 00:08:48,920 Speaker 4: To FED Chairpaul was like what like looking at a 168 00:08:48,960 --> 00:08:51,400 Speaker 4: piece of paper and it went completely viral because Cherpaul 169 00:08:51,480 --> 00:08:53,400 Speaker 4: was like, no, actually, that's not how much it costs. 170 00:08:53,760 --> 00:08:55,760 Speaker 2: You just added into third buildings. 171 00:08:55,760 --> 00:08:56,280 Speaker 4: What that is. 172 00:08:56,320 --> 00:08:59,360 Speaker 2: That's a third building. It's a building that's being built 173 00:09:00,040 --> 00:09:01,400 Speaker 2: and he was built five years ago. 174 00:09:02,160 --> 00:09:04,480 Speaker 4: That visit by President Trump's of the construction site was 175 00:09:04,520 --> 00:09:08,520 Speaker 4: actually really surprising because given all the pressure and all 176 00:09:08,559 --> 00:09:12,160 Speaker 4: the criticisms that he and his administration have been lobbing 177 00:09:12,200 --> 00:09:14,280 Speaker 4: about the project. You would have expected him to go 178 00:09:14,320 --> 00:09:16,440 Speaker 4: over there and come out and really be critical, but 179 00:09:16,520 --> 00:09:18,880 Speaker 4: he was kind of nice. He was like, oh, you know, 180 00:09:19,840 --> 00:09:21,760 Speaker 4: it's okay. You know, this is not a reason to 181 00:09:21,800 --> 00:09:22,319 Speaker 4: fire him. 182 00:09:23,520 --> 00:09:25,920 Speaker 3: Are there are things the Chairman can say to you 183 00:09:26,000 --> 00:09:26,480 Speaker 3: today that. 184 00:09:26,440 --> 00:09:29,000 Speaker 1: Would make you back off some of the earlier criticisms. 185 00:09:29,280 --> 00:09:32,440 Speaker 3: Well, I'd love him to lower interest rates. 186 00:09:32,480 --> 00:09:33,959 Speaker 1: Other than that, I tell you. 187 00:09:34,040 --> 00:09:36,480 Speaker 4: So, you left with the impression that maybe the construction 188 00:09:36,600 --> 00:09:40,400 Speaker 4: project was something that the administration was kind of leaving behind, 189 00:09:40,679 --> 00:09:44,360 Speaker 4: because President Trump really was kind of tame when he 190 00:09:44,480 --> 00:09:46,320 Speaker 4: visited the site over the summer. 191 00:09:47,640 --> 00:09:50,160 Speaker 3: And the Fed chair in his statement counseled everybody to 192 00:09:50,240 --> 00:09:52,679 Speaker 3: kind of look at what's happened here over the weekend. 193 00:09:52,800 --> 00:09:55,320 Speaker 3: In this broader context, it does seem that, you know, 194 00:09:55,760 --> 00:09:58,760 Speaker 3: after that tour, things quieted down a little bit. Yes, 195 00:09:58,800 --> 00:10:00,959 Speaker 3: there's this matter involving le A Cook that's still kind 196 00:10:00,960 --> 00:10:04,000 Speaker 3: of roiling in the background. The President tried to fire her. 197 00:10:04,480 --> 00:10:06,080 Speaker 3: She's a FED governor in the Supreme Court is going 198 00:10:06,120 --> 00:10:08,120 Speaker 3: to wait the legality of that in the coming weeks. 199 00:10:08,800 --> 00:10:12,160 Speaker 3: Help us understand the broader context here of the relationship 200 00:10:12,160 --> 00:10:14,840 Speaker 3: between the Trump, White House, and the Federal Reserve. Going 201 00:10:14,880 --> 00:10:15,160 Speaker 3: into the. 202 00:10:15,160 --> 00:10:18,240 Speaker 1: Weekend, it's obviously a very tense day, but it is kind 203 00:10:18,240 --> 00:10:20,680 Speaker 1: of two front suit. On the one hand, there is 204 00:10:20,679 --> 00:10:23,600 Speaker 1: the headline that the White House wants lower boring costs, 205 00:10:23,880 --> 00:10:27,120 Speaker 1: you know, cheaper money, and the Federalerserve policymakers have been 206 00:10:27,400 --> 00:10:29,480 Speaker 1: reluctant to move as fast as the White House because 207 00:10:29,520 --> 00:10:31,679 Speaker 1: they're still worried about where inflation is at and if 208 00:10:31,679 --> 00:10:34,000 Speaker 1: you cut indust rates too low too quickly, they're worried 209 00:10:34,000 --> 00:10:35,960 Speaker 1: that inflation would take off. So that's the first point 210 00:10:35,960 --> 00:10:39,880 Speaker 1: of tension between them. But the subplot underneath this is 211 00:10:39,880 --> 00:10:42,520 Speaker 1: that President Trump is also looking for opportunities to reshape 212 00:10:42,520 --> 00:10:44,640 Speaker 1: and remold the FED in the way he wants it 213 00:10:44,679 --> 00:10:46,920 Speaker 1: to be, to share his worldview on the economy, and 214 00:10:46,960 --> 00:10:49,880 Speaker 1: in particular, he has the opportunity to of course appoint 215 00:10:49,920 --> 00:10:52,600 Speaker 1: a new FED chair at some point soon to replace 216 00:10:52,800 --> 00:10:55,120 Speaker 1: a chair Palell when he steps down his chair in May. 217 00:10:55,600 --> 00:10:58,800 Speaker 1: Chair Powell can actually remain on the FED board until 218 00:10:58,880 --> 00:11:02,240 Speaker 1: early twenty twenty eight, and the thinking speaking to FED 219 00:11:02,320 --> 00:11:04,800 Speaker 1: watchers is that the White House are very concerned that 220 00:11:05,160 --> 00:11:07,880 Speaker 1: Chapell might stay on the board for some time and 221 00:11:07,920 --> 00:11:11,040 Speaker 1: deny them the opportunity to fill that gap with somebody 222 00:11:11,040 --> 00:11:13,680 Speaker 1: who shares their view and where interest rates should be. 223 00:11:13,720 --> 00:11:15,800 Speaker 1: And that's why this is thinking that this is part 224 00:11:15,800 --> 00:11:19,360 Speaker 1: of a concerted pressure campaign to you know, pressure mister 225 00:11:19,400 --> 00:11:22,320 Speaker 1: Powell to move on off the board once his termers 226 00:11:22,400 --> 00:11:25,120 Speaker 1: chair steps up. So there's been that pressure, of course 227 00:11:25,120 --> 00:11:28,600 Speaker 1: on Governor Cook with that unprecedented attempt to fire her. 228 00:11:29,200 --> 00:11:32,520 Speaker 1: We had the insulation of Governor Myron. It adds up 229 00:11:32,559 --> 00:11:35,920 Speaker 1: to this idea that we're in a moment where, you know, 230 00:11:35,920 --> 00:11:37,839 Speaker 1: Trump really is trying to remold the FED the way 231 00:11:37,840 --> 00:11:38,600 Speaker 1: Trump wants it to be. 232 00:11:40,679 --> 00:11:42,920 Speaker 3: So what do we know about the Department of Justice's 233 00:11:43,000 --> 00:11:56,840 Speaker 3: threat of a criminal indictment? That's after the break Federal 234 00:11:56,800 --> 00:11:59,960 Speaker 3: Reserve Church. Jerome Powell acknowledged the FED was served grand 235 00:12:00,080 --> 00:12:04,320 Speaker 3: jerysapoena's late last week. The Justice Department is investigating whether 236 00:12:04,400 --> 00:12:07,840 Speaker 3: Powell lied to lawmakers in June when he testified before 237 00:12:07,840 --> 00:12:10,640 Speaker 3: the Senate Banking Committee. Bloomberg is reporting this effort was 238 00:12:10,720 --> 00:12:14,320 Speaker 3: largely driven by the director of the Federal Housing Finance Agency, 239 00:12:14,360 --> 00:12:17,480 Speaker 3: Bill Poulti. Pulty declined to comment on that during an 240 00:12:17,480 --> 00:12:20,920 Speaker 3: interview on Bloomberg television on Monday morning. The DOJ's outside 241 00:12:20,960 --> 00:12:21,640 Speaker 3: of my purview. 242 00:12:21,800 --> 00:12:23,559 Speaker 4: This is out of my purview. I don't know anything 243 00:12:23,600 --> 00:12:25,680 Speaker 4: about it, and I would defer you to the DOJ. 244 00:12:26,320 --> 00:12:29,360 Speaker 3: According to Bloomberg FED reporters Enda Curran and Amara amok Way, 245 00:12:29,600 --> 00:12:32,160 Speaker 3: President Trump has said he was not briefed on the 246 00:12:32,240 --> 00:12:35,960 Speaker 3: Justice Department's investigation and he had no prior knowledge of it. 247 00:12:36,280 --> 00:12:40,120 Speaker 4: He did an interview with NBC News on Sunday night 248 00:12:40,280 --> 00:12:43,400 Speaker 4: after news of these subpoenas came out, and he said 249 00:12:43,440 --> 00:12:46,040 Speaker 4: he didn't know anything about the subpoenas, and he said 250 00:12:46,120 --> 00:12:49,280 Speaker 4: that they didn't have anything to do with his desire 251 00:12:49,360 --> 00:12:53,960 Speaker 4: for lower interest rates. So make of that what you will. 252 00:12:55,920 --> 00:12:58,040 Speaker 3: And I posted the FED chair statement the text of 253 00:12:58,080 --> 00:13:00,800 Speaker 3: it on LinkedIn shortly after the FED public And this 254 00:13:00,880 --> 00:13:02,839 Speaker 3: is what our colleague John Author has commented. He's a 255 00:13:02,920 --> 00:13:05,679 Speaker 3: commist for Bloomberg Opinion friend of the show. He said, quote, 256 00:13:05,840 --> 00:13:08,920 Speaker 3: this is quite extraordinary. Powell steps down and Trump nominates 257 00:13:08,960 --> 00:13:11,439 Speaker 3: his success for only months from now. It's hard to 258 00:13:11,480 --> 00:13:13,680 Speaker 3: see the point of this. Even if there were a 259 00:13:13,760 --> 00:13:17,199 Speaker 3: study basis for prosecution, is it possible for you to 260 00:13:17,240 --> 00:13:19,439 Speaker 3: see what the point of this is? Given the timeline 261 00:13:19,440 --> 00:13:20,280 Speaker 3: that John laid out. 262 00:13:20,200 --> 00:13:23,800 Speaker 1: There, Well, there's no doubt it's very damaging optically for 263 00:13:23,840 --> 00:13:26,120 Speaker 1: the policy making process in the US. David, I mean, 264 00:13:26,160 --> 00:13:28,160 Speaker 1: if you're looking at this from the outside, the FED 265 00:13:28,280 --> 00:13:31,280 Speaker 1: is this pre eminent institution. It's independent, as we've been discussing, 266 00:13:31,280 --> 00:13:33,120 Speaker 1: and it's meant to set the rules of the road 267 00:13:33,160 --> 00:13:36,079 Speaker 1: based on month the economy needs, not on politics. That's 268 00:13:36,120 --> 00:13:37,679 Speaker 1: important not just for the US but the rest of 269 00:13:37,720 --> 00:13:39,800 Speaker 1: the world. But now, of course we have the situation 270 00:13:39,840 --> 00:13:44,199 Speaker 1: whereby it looks like a fairly deliberate attack on share 271 00:13:44,240 --> 00:13:47,400 Speaker 1: Powell himself through using the root of what's going on 272 00:13:47,480 --> 00:13:50,280 Speaker 1: with the building site and the costover runs there. And 273 00:13:50,400 --> 00:13:53,200 Speaker 1: of course, how will that impact the internal freed dynamic? 274 00:13:53,240 --> 00:13:55,520 Speaker 1: I mean, when the new FED chair takes over, will 275 00:13:55,520 --> 00:13:57,560 Speaker 1: the rest of the committee be willing to cooperate with 276 00:13:57,679 --> 00:13:59,720 Speaker 1: him or horror, or will they view that person as 277 00:13:59,800 --> 00:14:02,680 Speaker 1: very deliberately political? And will the new FED chair have 278 00:14:02,760 --> 00:14:04,800 Speaker 1: trouble convincing the rest of the FED team that is 279 00:14:04,840 --> 00:14:07,400 Speaker 1: on their side? For example, there's a question mark? Is 280 00:14:07,400 --> 00:14:09,640 Speaker 1: the question mark now over Chair Powell? I mean, I 281 00:14:09,640 --> 00:14:11,640 Speaker 1: think a lot of people would have thought he'd move on, 282 00:14:11,720 --> 00:14:13,680 Speaker 1: but will he now stay for a little while in 283 00:14:13,720 --> 00:14:16,200 Speaker 1: a deliberate attempt to push back against the administration. So, I 284 00:14:16,200 --> 00:14:20,400 Speaker 1: think in terms of the optics the policy making process, 285 00:14:21,080 --> 00:14:23,640 Speaker 1: this idea that this is really unprecedent and now political 286 00:14:23,680 --> 00:14:25,600 Speaker 1: assault on the FED, I think that raises a lot 287 00:14:25,600 --> 00:14:29,120 Speaker 1: of question marks over what happens next, how this process 288 00:14:29,120 --> 00:14:31,680 Speaker 1: plays out, and the reputational damage that it leaves both 289 00:14:31,720 --> 00:14:34,600 Speaker 1: on the FED and I think the US policy making process. 290 00:14:36,200 --> 00:14:39,600 Speaker 3: There is this conversation about what FED Chair Powell does 291 00:14:39,680 --> 00:14:42,400 Speaker 3: in the medium to long term. In the nearer term, 292 00:14:42,560 --> 00:14:45,160 Speaker 3: there's another FED meeting just days from now. What did 293 00:14:45,160 --> 00:14:46,760 Speaker 3: he say just about what's going to happen in the 294 00:14:46,920 --> 00:14:48,760 Speaker 3: coming days versus the coming months and years. 295 00:14:48,880 --> 00:14:51,560 Speaker 1: Well, he didn't comment on monetary policy in his statement 296 00:14:51,720 --> 00:14:54,160 Speaker 1: and video last night, David, I think most people following 297 00:14:54,200 --> 00:14:56,360 Speaker 1: this would say, this isn't really going to impact the 298 00:14:56,440 --> 00:14:59,640 Speaker 1: near term path for moneged policy in Chair Powell, whether 299 00:14:59,680 --> 00:15:02,800 Speaker 1: you or not, and the FMC committee have been setting 300 00:15:02,800 --> 00:15:05,560 Speaker 1: policy based on the other reasoning they set out for it, 301 00:15:05,560 --> 00:15:07,360 Speaker 1: which is they've been cutting rates because they're worried about 302 00:15:07,440 --> 00:15:10,080 Speaker 1: the employment market. Would have been cutting fast enough. Courting 303 00:15:10,120 --> 00:15:13,200 Speaker 1: to President Trump that story probably won't change near term, 304 00:15:13,440 --> 00:15:15,320 Speaker 1: but then you know, you go a few months out 305 00:15:15,360 --> 00:15:17,400 Speaker 1: from nine, if we have that new FED chair arriving 306 00:15:18,040 --> 00:15:19,800 Speaker 1: on the board as I mentioned, then does that FED 307 00:15:19,880 --> 00:15:22,240 Speaker 1: chair committed or saying we need lower interest rates at 308 00:15:22,240 --> 00:15:23,960 Speaker 1: a time when the rest of the FMC committee or 309 00:15:24,000 --> 00:15:25,960 Speaker 1: maybe a skeptical about the need for lower interest rates 310 00:15:26,160 --> 00:15:29,720 Speaker 1: and b they're already smarting over it's extraordinaryssault on the FED. 311 00:15:30,000 --> 00:15:32,360 Speaker 1: I mean, that's where things will get complicated pretty quickly. 312 00:15:32,400 --> 00:15:34,120 Speaker 1: So we're in for I think a very uncertain few 313 00:15:34,120 --> 00:15:34,640 Speaker 1: months ahead. 314 00:15:35,200 --> 00:15:38,360 Speaker 2: I have served at the Federal Reserve under four administrations, 315 00:15:38,480 --> 00:15:42,760 Speaker 2: Republicans and Democrats alike. In every case, I have carried 316 00:15:42,800 --> 00:15:47,040 Speaker 2: out my duties without political fear or favor, focused solely 317 00:15:47,120 --> 00:15:48,760 Speaker 2: on our mandate of price stability. 318 00:15:50,480 --> 00:15:53,440 Speaker 3: Who is the audience for that statement from FED Chair Jerome. 319 00:15:53,240 --> 00:15:55,400 Speaker 4: Pal Do you think I think he went directly to 320 00:15:55,520 --> 00:15:58,760 Speaker 4: the American people? The message is different this time, right. 321 00:15:58,800 --> 00:16:00,640 Speaker 4: It's not We're just going to do our jobs and 322 00:16:00,720 --> 00:16:03,040 Speaker 4: keep our heads down. It's Look, you all need to 323 00:16:03,120 --> 00:16:08,440 Speaker 4: understand that these subpoenas are directly related to the President 324 00:16:08,520 --> 00:16:11,960 Speaker 4: trying to bend this institution to his will and I 325 00:16:12,000 --> 00:16:14,560 Speaker 4: think he wanted the American people to know that and to. 326 00:16:14,480 --> 00:16:18,120 Speaker 2: Hear that public service sometimes requires standing firm in the 327 00:16:18,160 --> 00:16:21,520 Speaker 2: face of threats. I will continue to do the job 328 00:16:21,600 --> 00:16:25,280 Speaker 2: the said confirmed me to do with integrity and a 329 00:16:25,320 --> 00:16:27,440 Speaker 2: commitment to serving the American people. 330 00:16:28,160 --> 00:16:28,520 Speaker 1: Thank you. 331 00:16:34,200 --> 00:16:36,400 Speaker 3: This is the Big Take from Bloomberg News. I'm David 332 00:16:36,440 --> 00:16:38,880 Speaker 3: gurat To get more from The Big Take and unlimited 333 00:16:38,880 --> 00:16:41,720 Speaker 3: access to all of Bloomberg dot com, subscribe today at 334 00:16:41,760 --> 00:16:45,840 Speaker 3: Bloomberg dot com slash podcast offer. If you like this episode, 335 00:16:45,880 --> 00:16:47,920 Speaker 3: make sure to follow and review The Big Take wherever 336 00:16:47,960 --> 00:16:50,360 Speaker 3: you listen to podcasts. It helps people find the show. 337 00:16:50,760 --> 00:16:52,640 Speaker 3: Thanks for listening. We'll be back tomorrow.