00:00We're going to be there for the hearing this week, and I'm curious, how is this going to unfold?
00:04There's been so much protestation from the Senator for North Carolina, Tom Tillis.
00:08What's it going to be like in the hearing room when this takes place?
00:11It'll be probably a little more interesting than usual because there are some questions, certainly, about Kevin Warsh's views and
00:17how he would run the Fed.
00:19But it's not going to be any kind of hearing that would end in him not getting the job.
00:25Republicans are pretty much aligned.
00:27The Tom Tillis situation isn't going to change until the administration drops its probe into Jay Powell.
00:34But they can hold a hearing and then hold off on a vote until such time as the senator decides
00:42he can vote one way or another.
00:44And then Warsh is expected to be confirmed.
00:46They've got to get him to the floor.
00:47It's always hard to get floor time in the Senate.
00:50So it is certainly possible that it ends up with Jay Powell staying on for a bit as chair.
00:57Tyler, can you update us?
00:59What is the latest with that investigation?
01:00Because we had this moment last week where you had these prosecutors from the D.C.
01:04Attorney's General's Office show up at the Federal Reserve and were turned away.
01:08And then we have this tweet then from Senator Tillis where he tweeted a photo of the three stooges in
01:13response.
01:14Do you think he's going to hold his ground on this?
01:16Do you think the investigation is going to keep going?
01:17Or are we just going to stay at loggerheads?
01:19Well, Christina, at this point, Tom Tillis is indicating that he is going to hold firm on not voting to
01:25advance the nomination to the full floor.
01:28Now, the Trump administration was handed a potential off-ramp last month when the judge had blocked the subpoenas by
01:35the Department of Justice.
01:36But at this point, as you're indicating, these reports that we saw, some of these prosecutors show up at the
01:41Federal Reserve and statements from officials themselves saying that they are vowing to appeal that decision.
01:47So as of now, the Trump administration is maintaining its course.
01:51The thing is, Tom Tillis really does have the power to derail this.
01:56At this point, Republicans only have a 13-11 majority on the committee, so he is that key swing vote.
02:02Now, I can say I've heard it suggested before that maybe Republicans could try to find a workaround to this
02:08by doing what's known as a discharge petition.
02:11I have to say, though, I called up a few sources on the Hill when this idea seemed to be
02:16circulating.
02:16And it would be a lot easier said than done for a flurry of reasons, including that when this happens,
02:24it would be subject to debate, which means that we would have to see what's known as cloture invoked.
02:28And that would require two-thirds of the Senate to get on board, which means that Republicans would need Democrats
02:34to get on board.
02:35And at this point, they're not.
02:37That Christina and David were actually seeing pushback from Democrats that they want to delay Tuesday's planned testimony.
02:43A letter was just sent to the Senate Banking Chair, Tim Scott, saying that they stand with Tom Tillis, that
02:48as long as this legal matter against Fed Chair Jerome Powell is not resolved, they don't want to have a
02:53hearing at all.
02:54Tyler, we heard from the ranking member of the Senate Banking Committee, Elizabeth Warren, who expressed some hesitation about the
02:59financial disclosure that Kevin Warsh filed with that committee ahead of the hearing.
03:02What is she upset about or interested in learning more about?
03:06So she's saying that the full assets of Kevin Warsh weren't properly disclosed in these financial hearings.
03:14Michael McKee may have a little bit more information on this because we just got his disclosure showing that he
03:19has an upwards personal net worth value of $190 million.
03:25So we'll see where this goes, but it sort of tracks with what we had been expecting from the ranking
03:31member, Senator Elizabeth Warren, who has long been an opponent of Kevin Warsh's nomination and being that person on the
03:39banking committee that has tried to be a pushback to the Trump administration's policies when it comes to this.
03:45Mike, I want to ask you, Mike, I want to ask you because there is a deadline here.
03:48Powell's term expires on May 15th, but he could stay on as governor, as we've been talking about.
03:52But President Trump last week ratcheted up the pressure yet again.
03:55We've got some sound for you.
03:57Whether it's incompetence, corruption or both, I think you have to find out.
04:02I really do.
04:02I think you have to find out.
04:04So you're not going to drop the probe?
04:05Oh, I'm not.
04:06I have to find out.
04:07And he said he's not leaving if, you know.
04:10Well, then I'll have to fire him, OK?
04:11If he's not leaving on time, I've held back firing him.
04:15I've wanted to fire him.
04:17But I hate to be controversial.
04:19All right.
04:19So what happens if Trump does fire him?
04:22How would the markets react?
04:23And do you think this is still a possibility?
04:26Well, ordinarily, you'd say that the markets would react very badly to this.
04:29And when the issue first came up last year, or even in the first term, they did go down.
04:35But I'm not sure the markets would believe Trump will succeed in firing Jay Powell, because so much has happened
04:43in the meantime.
04:44The Fed has already said that if Kevin Warsh is not confirmed in time, Powell will continue on.
04:50The person who is chair of the Board of Governors, there's a legal question about whether it can be Powell
04:57or whether the president gets a choice.
04:59But the person in charge of monetary policy would remain Jay Powell, because he was chosen by the Open Market
05:05Committee for a year's term.
05:07So nothing really would happen there.
05:09And I don't think the markets would have to panic over that.
05:12The idea would be that eventually the president would have to take it to court.
05:17But by the time it could get through the court system, Warsh would probably be confirmed.
05:22And at that point, it would be a mood issue.
05:25So the whole thing is perhaps a little more of a blown-up issue that isn't going to happen than
05:34it may seem.
05:36Mike, what do we know of Chair Powell's plans at this point?
05:40So a few meetings back, he said he'd announce what he planned to do at the appropriate time.
05:44At the last meeting, he said he'd stick around until his successor is named.
05:47And I'm not asking you to psychoanalyze what Jay Powell is thinking, but do we have a better sense of
05:53how he's regarding the position, the governor position, going forward?
05:57Well, we know he has told people, he has suggested that he does want to leave the Fed when his
06:03term as chair is up.
06:04And it's been tradition that Fed chairs, when they're termed as chair up, they resign their position even if they
06:10have time left on their governor's seat.
06:12But the governor's seat is the only real leverage that Powell has against Trump if they want to pursue this
06:19whole issue of the building overruns and the investigation that Jeanine Pirro is running.
06:24So he has said until and unless that is completely gone, he's going to remain on the Open Market Committee,
06:32remain on the board as a governor.
06:34So that part has yet to play out.
06:36It'll be interesting to see what the administration decides, because the way they're handling this is very odd.
06:42The president wants a new chair.
06:44He wants a chair that wants lower interest rates.
06:47And yet all of the administration's actions are keeping him from getting that.
06:52So at some point, you wonder, when are they going to give up and take the win?
06:56Mike, I am going to ask you to psychoanalyze Jay Powell.
06:59No, I'm kidding.
06:59I really won't do that.
07:00But I do want to ask you what this means for the reputation of the Fed overall, for what it
07:05means for people's reliance on its consistency and if that's been damaged by this whole process going forward.
07:13Well, if, for example, the Supreme Court should rule in a way that would allow the president to actually fire
07:19Jay Powell and he did that, that would put a big stain on the credibility of the Fed.
07:23The Fed's already had some problems with its inability to bring inflation under control quickly over the last three, four
07:31years.
07:31There are questions about certainly the way they handled the great financial crisis.
07:36So a new chair coming in would want to try to rebuild credibility and would not need an additional boulder
07:43on their back to push up the hill.
07:46Well, Kevin Warsh, there are questions about whether he's going to be the president's man and push for lower rates,
07:53even if lower rates aren't called for, or whether he's going to really defend the Fed's independence.
07:59So that'll be an interesting line of questioning at the hearing.
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