00:00From where you sit, will this satisfy Tom Tillis, the senator from North Carolina's demand that the investigation be fully
00:06resolved before he is willing to vote on Kevin Walsh's confirmation?
00:11It's a pleasure to be with you again, Scarlett. That's a very good question, and I don't know the answer.
00:16I think partly what's causing confusion is the last line of Perot's statement, where she says that she would not
00:26hesitate to reopen this investigation if she believes the facts warrant it.
00:31Part of the problem with that statement is I think a lot of folks believe there were no facts that
00:36warranted opening the investigation to begin with.
00:39So what kind of reservation is she making now as she closes the investigation?
00:45So I expect there'll be a lot of discussion between Senator Tillis's office and Perot's office, as well as with
00:54the Federal Reserve, about what they think this statement means and how closed this investigation really is.
01:01Right. And Jeanine Perot is the U.S. attorney for Washington, D.C., who actually put out the social media
01:06post that indicated that the DOJ investigation was over.
01:09When it comes to Jay Powell and where he sits, will the Fed chair see this as clearing him?
01:16And will, do you think, will he be willing to leave the Fed when his term as Fed chair ends
01:20in mid-May?
01:22So I think there's two parts to that.
01:23I'm not sure if he'll think this is enough to close the investigation, and that's why I think there'll probably
01:29be some discussions to understand how far Perot is going with this and whether that's just a reservation of rights
01:36in case there is some truly bad thing that they find or whether she really is reserving all her right
01:43to reopen it in a harassment kind of way after he leaves.
01:47So that would be a key question. But the second thing is, you know, Kevin Warsh has made a lot
01:54of strong criticisms about the Federal Reserve board members and the members of the FOMC.
02:01Jay may want to stay on the board for some period of time to help Kevin to get his relationships
02:15built with these other members.
02:17So it's possible that even if the investigation is closed, Jay may want to stay on for at least part
02:25of his term, which continues on until January of 2028, but as a governor in a more supportive role.
02:32I just don't know how that will play out. I'm not sure what is in Jay's mind about that.
02:38Right, right. But he might see himself as more of a transitional role in providing support here.
02:42You know, a Fed general counsel, which is what you were, provides legal advice on banking supervision, monetary policy, information
02:49and financial regulations.
02:50You're a senior advisor to the bank's leadership. If you were Jay Powell's attorney, if you were advising Jay Powell,
02:57what would you what would you advise him?
03:00Would you ask him to request full immunity before agreeing to move on from his role at the Fed?
03:06So that's certainly I'd have. I'd want to have a discussion about with Perot's office, whether there is some opportunity
03:14to finally close this off with no chance of reopening.
03:19That would be the best possible situation. So I don't know that Perot would be willing or able to give
03:26immunity.
03:27I don't think I would ask for a presidential pardon. There's no nothing wrong that has been done. So no
03:34reason for that.
03:35And how would you ensure that the central bank itself is protected as well?
03:41Because the central bank and Jay Powell are both targets of this investigation.
03:45Right. I think a lot of that is going to depend on the Supreme Court's decision in the Lisa Cook
03:50case when that comes down.
03:52Does the Supreme Court believe that the governors have for cause protection?
03:58That is, they can only be removed for cause. And what does cause mean?
04:02And who gets to determine cause? And what is is there a due process right that goes along with that
04:10for cause protection?
04:11All those things are still on the table. We don't know where the Supreme Court will come out on those
04:15matters.
04:16But those are critical to understanding whether the Fed's going to have real independence.
04:21And it would be important to Jay Powell, too, because if he were to stay on, that would he be
04:27relying on those protections for the next 18 months.
04:31I mean, it's pretty much clear that we're going to have a Fed chair at Kevin Warsh.
04:35We just don't know when that's going to happen.
04:36What would be your advice as a former Fed general counsel to the incoming chair?
04:42So I think that he has to first build relationships with the other members of the board and with the
04:50FOMC.
04:52I would be very interested in what his plans are for restaffing the board.
04:57He's talked about wanting to change the staffings of the board.
05:00And that would be something that would be a topic of consideration.
05:05I have one more question, and this comes from my colleagues over in our Washington, D.C. Bureau.
05:10Will Jeanine Pirro's announcement come anywhere near meeting Jay Powell's demand that the investigation be resolved with transparency and finality?
05:19And I feel like those words are very important here.
05:21Right. I agree with that.
05:23And I think it does fulfill transparency and finality right up to the last sentence.
05:29And the last sentence is a critical one.
05:31And that's going to determine whether the remainder of it really means anything.
05:37Is this temporary?
05:39Is this left to some opaque decision-making that Jay will not understand?
05:47If the decision is truly based on the IG report, then there's probably a lot of confidence that it is
05:54clearly over.
05:55But if it's open to any kind of second-guessing by the Department of Justice, then it's not transparent or
06:04final.
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