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Tom Tillis Flinches
00:03:36
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unidentified
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| Politoeconomics correspondent Victoria Guida joins us now to discuss the Justice Department's criminal investigation into Federal Reserve Chairman Jerome Powell, an investigation we learned about on Sunday when Jerome Powell revealed the investigation in the form of the video statement that he put out about this, an unusual statement that got a whole lot of attention. | ||
| The headline in Politico from your latest piece, Why Jerome Powell is Not Flinching at Donald Trump's attack. | ||
| Explain why you think he made that statement on Sunday night and why you don't think he's flinching. | ||
| Yeah, so first of all, that was, as you said, an extraordinary statement, particularly for him. | ||
| I mean, this is somebody who Donald Trump has been attacking since 2018. | ||
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unidentified
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So they have a long and contentious relationship. | |
| And in that time, Jay Powell has pretty much resisted engaging directly with Trump at all. | ||
| So this is the first time he's ever really said, hey, you know, publicly, hey, this is the president trying to pressure me to lower interest rates. | ||
| And the reason why he is doing this, approaching it in this way, is because he has a lot of support. | ||
| And we saw that actually in Congress, not just Democrats, but we actually saw Republican lawmakers saying, hey, I'm not so sure about this investigation, raising worries that this is going to compromise the independence of the Fed. | ||
| Tom Tillis, one of those Republicans, and his statement also getting a lot of attention yesterday in the wake of this investigation coming to light. | ||
| He said in his statement, if there is any remaining doubt about whether advisors within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should be now none. | ||
| It is now the independence and credibility of the Department of Justice that is in question. | ||
| I will oppose the confirmation of any nominee for the Fed, including the upcoming Fed chair vacancy, until this legal matter is fully resolved. | ||
| Tom Tillis, how unusual a statement from Tom Tillis towards the administration? | ||
| I mean, it's very combative. | ||
| Notably, the senator is retiring after his term, and so he doesn't have the same re-election concerns that some of his colleagues do. | ||
| But even so, he tends to not really do this level of confrontation. | ||
| Bring us back to the heart of the matter here, this renovation project and the statements that Jerome Powell made to Congress about this project. | ||
| What should we know about this investigation itself and the particular statements that the Justice Department is digging into? | ||
| So there are two buildings that are under construction right now. | ||
| One is the Eccles Building, which is part of the Fed headquarters, and then the other is a sort of aging, somewhat dilapidated old building that they bought at a discount that they are renovating. | ||
| And the renovations of both of these buildings, which are in the National Mall, they're marble buildings, has ballooned past $2 billion. | ||
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Powell's Defense Costly Plans
00:15:18
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| And so this is, you know, I mean, that's a pretty eye-popping number. | ||
| And so the question is, why is it costing this much? | ||
| Is this a waste of money? | ||
| So, you know, this was something that came up last year in a hearing at the Senate Banking Committee. | ||
| Chairman Tim Scott asked Powell about this. | ||
| And Powell downplayed the New York Post's framing of this, which is kind of what started all of this, where they were sort of casting it as a palace of Versailles, saying that it was rooftop gardens and beehives and all that. | ||
| This is where the C SPAN archives comes into handy here. | ||
| This is about a minute and a half. | ||
| Let me just play the exchange that you're describing. | ||
| Page 129 of the final plans reflected rooftop garden terraces. | ||
| Page 127 and 129 were where we found the ornate water features and final plans. | ||
| The new elevators that dropped board members off at the VIP dining suite was page 37 of the final plans. | ||
| The white marble was pages 40, 41, 65 of the final plans. | ||
| I would welcome your staff coming in to walk my staff through what is happening there, as opposed to what we have only read in the New York Post, not only in the Wall Street Journal, but also at the National Capital Planning Commission's website. | ||
| So we would welcome that opportunity to have a Can I just quickly say some of those are just flatly misleading. | ||
| The idea of elevators, you know, it's the same elevator. | ||
| It's been there since the building was built. | ||
| So that's a mischaracterization. | ||
| And some of those are no longer in the plans. | ||
| That's earlier. | ||
| The plans have continued to evolve. | ||
| Victoria Guida, did we actually get any answers on why this project has ballooned past the original estimates? | ||
| And where are we today on that project? | ||
| Yeah, so as the administration has ramped up focus on these renovations, the Fed has released a lot more information. | ||
| It seems like one of the things that has been a significant cost is a lot of the security features. | ||
| So things like bulletproof glass and the marble, because there's also, you know, these are historical buildings. | ||
| And so there are limitations. | ||
| You know, the senator mentioned the National Capital Planning Commission. | ||
| There's also the National Fine Arts Commission that are part of making sure that building renovations like this preserve the character of historic buildings. | ||
| And so those are just a couple of the things. | ||
| There's also, I think, a parking structure that's underground, and that might have also led to these cost overruns. | ||
| And so there's a question as to whether this was a wise use of money. | ||
| And the Fed's own inspector general is actually looking into that as well. | ||
| But the Justice Department investigation is a criminal investigation, right? | ||
| Which is not something about like, is this a stupid use of money, right? | ||
| It's a totally separate question. | ||
| And, you know, Chair Powell mentioned specifically that they were probing his statements to Congress. | ||
| And so this sort of gets to, I think, the political unease around this situation because, you know. | ||
| Is the Justice Department saying that Jerome Powell lied to Congress and that is the criminal action here, that you can't lie in sworn testimony before Congress? | ||
| Is that why it's a criminal probe? | ||
| So that is the implication, right? | ||
| Like, Chair Powell has not been indicted. | ||
| And actually, Janine Pirro, who's the U.S. Attorney who is bringing this case, made that point on Twitter. | ||
| I'm sorry, X. Never get that one right. | ||
| But yes, I mean, that would be the implication. | ||
| And so, you know, if we're going based on this exchange, it would be something like, did he lie when he said there are no rooftop gardens, right? | ||
| And so, you know, bringing a criminal indictment potentially, right? | ||
| As I said, they haven't done it yet, against the sitting chairman of the Fed over a statement like that is a pretty striking move. | ||
| Janine Pirro, her statement on X last night at 8.30 p.m. Eastern, the United States Attorney's Office contacted the Federal Reserve on multiple occasions to discuss the cost overruns and the chairman's congressional testimony, but were ignored, necessitating the use of the legal process, which is not a threat, she says. | ||
| The word indictment has come out of Mr. Powell's mouth and no one else's. | ||
| None of this, she says, would have happened if they had just responded to our outreach. | ||
| The office makes decisions based on the merit, nothing more and nothing less. | ||
| She said, we agree with the chairman of the Federal Reserve that no one is above the law, and that is why we expect his full cooperation. | ||
| So take us through the next couple weeks and months here. | ||
| How much longer does Jerome Powell have as chairman and what happens to him after his term is up as chairman? | ||
| So his term as chair ends in May. | ||
| And he also has an underlying board seat. | ||
| There are seven seats on the Fed board. | ||
| And that term doesn't actually end until 2028. | ||
| And so now one of the questions is whether he might decide to stay, not as chair, but just as a regular governor, right? | ||
| Because technically he is confirmed to that level of term. | ||
| Now traditionally, chairs leave when their chair term is up, regardless of when their board term is up. | ||
| And the expectation had been that Powell would leave. | ||
| But now, as a result of this sort of, you know, criminal investigation, there's a question as to whether Powell might have more motivation to stay. | ||
| Victoria Guida of Politico, our guest with us for about another 15, 20 minutes or so here on the Washington Journal, a good person to call in to ask questions about this investigation that we all learned about on Sunday. | ||
| She's been tracking it and has been tracking the story for months and I guess years now. | ||
| 202-748-8,000 for Democrats to call in. | ||
| Republicans, 202-748-8001. | ||
| Independents, 202748-8002. | ||
| As folks are calling in from the Washington Post, the Wall Street Journal, they both mentioned the name Bill Pulte of the Federal Housing Finance Agency, the editorial board of the Wall Street Journal, saying that it was his report that made its way to Janine Pirro, which sent this investigation into motion. | ||
| What should we know about Bill Pulte, and are you hearing that as well? | ||
| So yes, Bill Pulte is the head of what's called the Federal Housing Finance Agency, which is a financial regulator that oversees Fannie Mae and Freddie Mac that are important in the mortgage market. | ||
| And he has been very vociferous in supporting President Trump's criticisms of Powell, particularly saying that higher rates are hurting the mortgage market. | ||
| And he says regularly publicly that Powell should be fired and needs to go. | ||
| So yes, we are also hearing from administration sources that this idea did originate from Bill Pulte. | ||
| You know, there was disagreement within the administration. | ||
| Some people did not think that this was the best course of action. | ||
| Now, there's Bill Paltz, he's been particularly critical of Jerome Powell in the past. | ||
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unidentified
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Yeah. | |
| Yes, definitely. | ||
| I should also mention that Pulte himself has denied that this came from him. | ||
| And part of what's a little bit of a question mark at this point is, you know, okay, so the idea originated with Pulte. | ||
| Does that mean that the idea went through Trump, right? | ||
| Because President Trump has said that he didn't know anything about this investigation. | ||
| And the question is whether, you know, there is some sort of if Pulte recommended to Trump or if he recommended to the Justice Department. | ||
| The through line there is a little bit unclear. | ||
| We don't really know exactly how that works. | ||
| Would Pam Bondi have to know about this investigation for something as politically explosive as this? | ||
| Would Attorney General Pirro have to have brought this up the chain to Pam Bondi before issuing this request, whatever set off the Fed on Friday night? | ||
| Yeah, so with the caveat that I don't cover the Justice Department and that's a world that I'm much less familiar with, it just logically seems difficult to imagine that the Attorney General would not be made aware of a criminal investigation of a sitting Fed chair, which is an unprecedented thing. | ||
| Let me come to the next Fed chair. | ||
| The expectation is that Kevin Hassett could be the next chair of the Federal Reserve. | ||
| He is the White House National Economic Council director. | ||
| He spoke to reporters yesterday about this investigation. | ||
| This is what he had to say. | ||
| I would expect that the markets would be happy to see that there's more transparency with the Fed. | ||
| It's something that people have been calling for for quite a long time. | ||
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unidentified
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Are you worried that the probe undermines the independence of the central bank and could destabilize the markets? | |
| I guess the question is, if you think the building costs $20 billion or $10 billion, do you think at some point that it's appropriate for the federal government to investigate? | ||
| And it seems like the Justice Department has decided that they want to see what's going on over there with this building that's massively more expensive than any building in the history of Washington. | ||
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unidentified
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And if I were Fed chair, I would want them to do that. | |
| I think that it's really important to understand where the taxpayer money goes and to understand why it goes this way or that. | ||
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unidentified
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Do you think Mr. Trans-Powell will stay on as a governor on the board even after his term as chair? | |
| I'm not sure about that. | ||
| I've not talked to Jay about that. | ||
| He's a good person. | ||
| If he wants to continue government service, he'll make that call when the time comes. | ||
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unidentified
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Do you think that that would be something the next Fed chair, whether it's yourself or someone else, it would? | |
| You know, we'd have to see how it goes. | ||
| But Jay's a good person. | ||
| Victoria Aguida, what do you take from that exchange? | ||
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unidentified
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So this was striking that he chose to comment on this. | |
| I mean, actually, this entire thing has been unusual. | ||
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unidentified
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The fact that Pirro actually publicly commented on it, I think, is relatively unusual to comment on a grand jury investigation. | |
| Something where there has not been an indictment. | ||
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unidentified
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Right, yeah. | |
| You know, it's interesting because he is potentially the next person to lead this organization. | ||
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unidentified
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And he's basically saying, you know, there's legitimate questions here about how this money was spent. | |
| He sort of didn't really get into the idea that this is technically about how Chair Powell spoke to Congress. | ||
| There might be more into the investigation. | ||
| We don't actually have the full scope of what kind of information they're looking for. | ||
| But the post, the social media post from Janine Pirro confirms that there is an investigation. | ||
| And Chair Powell said that the investigation is particularly focused on his statements to Congress. | ||
| Victoria Aguida, with us taking your phone calls, your questions about this investigation, again, that we all learned about on Sunday and has been a big story here in Washington around the country since then. | ||
| Phone lines for Democrats, Republicans, and Independents. | ||
| And we'll go to Larry on the Independent line in Tennessee. | ||
| Larry, thanks for waiting. | ||
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unidentified
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Good morning. | |
| I was an auditor, a fixed asset construction auditor in New York City, originally with the CPA firm, and then I went private with a corporation, which I won't say the name. | ||
| But normal process is you have weekly meetings throughout a construction process, even before when you start doing the site work, you take sealed bids, and there's a whole process that goes on. | ||
| We're many years into this process. | ||
| What happened? | ||
| Where did the balls fall through the cracks? | ||
| And who's really responsible? | ||
| I'm not saying that the chairman's not responsible, but there should have been oversight building up to this point. | ||
| We shouldn't be many years or billions of dollars down the road and then somebody all of a sudden saying there's a cost overrun. | ||
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unidentified
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So it sounds to me that a lot of things fell through the crack early on. | |
| And somebody needs to be questioning what really happened. | ||
| How did we get to this point? | ||
| Because there should have been architectural bulletins for any change orders. | ||
| There's a whole process. | ||
| Purchase orders issued for any overruns. | ||
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unidentified
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I'm totally confused as an accountant. | |
| Larry, thanks for that, Tennessee. | ||
| Yeah, so, you know, first of all, you know much more about this kind of thing than I do, clearly. | ||
| But what I will say is this all was a public process. | ||
| I mean, so as I mentioned earlier, there are a couple of organizations, a couple of agencies here in Washington, D.C. that are dedicated to projects like this. | ||
| And so, for example, the Fed submitted plans to the National Capital Planning Commission many years ago. | ||
| And those were proposed, and the commission weighed in on those and then they were amended. | ||
| And that was all public. | ||
| You can actually go find those documents. | ||
| And, you know, there was actually a front page story on the Wall Street Journal in, I think it was 2022 that was basically talking about the fact that these cost overruns had been happening. | ||
| It was sort of a little bit of a cheeky framing about how inflation is something that the Fed is supposed to fight and inflation was also affecting some of the building materials and part of the reason why some of these cost overruns had happened. | ||
| So it's not so much that the information wasn't available. | ||
| I think it was much more of just the political saliency of it. | ||
| I just don't think people were paying that close of attention. | ||
| More on the reaction yesterday on Capitol Hill. | ||
| Let me mention another Republican, French Hill, the Republican chair of the House Financial Services Committee, putting out this statement. | ||
| I've known Chairman Powell since we worked together at the Treasury during the George H.W. Bush administration. | ||
| Then as now, I know Mr. Powell to be a man of integrity with strong commitment to public service, while over the years we have our policy differences or disagreements. | ||
| I found him to be forthright, candid, and a person of the highest integrity. | ||
| He goes on to say, pursuing criminal charges related to his testimony on building reservations, renovations at a time when the nation's economy requires focus and creates an unnecessary distraction, calling it an unnecessary distraction. | ||
| How important is that from the chairman, the Republican chairman, the House Financial Services Committee? | ||
| I would say that it's an extremely important signal. | ||
| I mean, as a member of the House, French Hill doesn't have a direct say in the confirmation of nominees, which is one of the reasons why statements from Republican senators are getting more attention. | ||
| But French Hill is somebody who is somebody that other people in the House look to on matters of financial services because he chairs that committee. | ||
| And as he said, he's known Chair Powell for many years. | ||
| And one thing that I will say, too, is that Chair Powell has made it a regular part of his tenure to meet with politicians. | ||
|
Fed Independence Debate
00:09:54
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| And so part of the reason why I think you've seen the reaction that you've seen on the Hill is just because these people know him. | ||
| So I've read you two Republicans. | ||
| Who's been the most interesting reaction besides those two that you've seen in the past 36 hours? | ||
| So Lisa Murkowski also, I don't remember her exact wording, but she also was saying that it seemed to be intentionally attempting to tamper with Fed independence. | ||
| A couple more that were quite interesting is Senator Dave McCormick and Senator Kevin Kramer, both of whom are close allies of the president, said directly, both said directly separately that they didn't think that Chair Powell had committed a crime. | ||
| And so you're definitely seeing unease, even from people that aren't necessarily happy with Chair Powell's tenure and that agree with the president that Powell should be lowering rates faster. | ||
| Taking your comments via social media as well, wanted to highlight one of them. | ||
| This is Renee from Ohio saying there seems to be a lot. | ||
| There seems to be a lot on this topic of getting rid of the Federal Reserve in Project 2025. | ||
| Can you elaborate on that? | ||
| Was this part of Project 2025 going after the Federal Reserve? | ||
| Yeah, so I don't remember the particulars of Project 2025, but yes, that sounds right. | ||
| There are definitely parts of the MAGA coalition that are interested in ending the Federal Reserve. | ||
| You know, President Trump doesn't necessarily seem to be one of those people. | ||
| I think he just seems to want the central bank to be more compliant with what he wants out of interest rates. | ||
| And that's sort of the crux of the fight here is, you know, President Trump as an elected official, right? | ||
| He's somebody that the American people elected. | ||
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unidentified
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You know, how much control should he have over the Fed? | |
| And of course, the reason why there's a political installation for the Fed is that sometimes the Fed, in order to do what's right for the economy, has to make politically unpopular decisions. | ||
| And so the worry is that the more you subject them to political pressure, the more they're going to make bad decisions for the long term. | ||
| The Fed has cut interest rates gradually, reducing them by 0.75 percentage points since September to a range of 3.5 percent to 3.75 percent. | ||
| Where would Donald Trump like to see those rates? | ||
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unidentified
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So he suggested that he would like to see them down to one percentage point or even less. | |
| That's something that I'll note that I don't know that I've heard any economists really agree with. | ||
| Even others in his administration sort of don't necessarily suggest that they would support that exact number, but you hear a lot of people saying, yes, we agree that rates should be lower. | ||
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unidentified
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The question is, how much are you worried about the potential weakening of the labor market versus the fact that inflation is actually still above the Fed's 2% target? | |
| It's a lot closer than it was before, but it's still above. | ||
| When is the next time the Fed could cut rates? | ||
| Later this month. | ||
| What have they said about cutting rates again? | ||
| So they're expected to pause, which is perhaps part of what's going on here. | ||
| I mean, you know, if we assume that there is a connection between this investigation and the rate decisions, as Chair Powell has alleged, you know, as you mentioned, the last few meetings they have cut, and now they're expected to pause because they think that they've done enough for now and can sort of wait to see what happens with the labor market and inflation. | ||
| Let me go to Jamie in Maryland Independent. | ||
| Jamie, you're on with Victoria Guida. | ||
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unidentified
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Hello, hello. | |
| I just wanted to say, it seems like it just seems like, I mean, well, first off, let me say I'm in a market for buying for purchasing a home myself. | ||
| So of course, I would like to see interest rates lowered. | ||
| I came out of the home that I sold, and it was hard, you know, because I had like a 3.75% interest rate then, and today's interest rates being somewhere around 6.5%, you know, just coming from about 7%. | ||
| That makes a really big difference. | ||
| And, you know, it's about a $1,500 to $1,800 a month difference for me. | ||
| So, of course, I would love to see the interest rates lowered. | ||
| I don't know why anyone wouldn't want to see the interest rates lowered, you know. | ||
| And it just feels like it feels like they want to bring the, like they bring the people to their knees until they can take no more before they lower the interest rates. | ||
| And my last point, and I'll let you guys go, but I feel like our politicians are like in somebody's pocket. | ||
| So whether it's pharmaceutical companies, you know, or whether it's the oil companies, or whether it's the folks that actually own our mortgages. | ||
| I just feel like the American people get paid in that way, you know? | ||
| That's Jamie in Maryland. | ||
| What do you want to take from Jamie's call? | ||
| So I also would like to see mortgage rates lower, just personally. | ||
| So it's a little bit more complicated than that, though. | ||
| And this is where interest rates, there's actually a lot of different interest rates, right? | ||
| So what the Fed controls or guides is short-term interest rates, right? | ||
| It's actually technically it's overnight borrowing, but that sort of feeds more directly into very short-term debt. | ||
| And what influences mortgages is actually much more of longer-term debt. | ||
| So particularly the 10-year rate on U.S. government debt. | ||
| And what guides those rates is actually expectations among bond investors for what's going to happen with inflation, what's going to happen with growth. | ||
| And so the problem is if you set interest rates in the short term unnaturally low, right, or lower than they should be for where the economy is at, the concern is that that could then let inflation out of the box, which would then necessitate higher rates down the road in order to get that under control. | ||
| And so actually you have seen the Fed cut rates three times this year and about a percentage point at the end of last year. | ||
| And we've actually seen the 10-year barely move at all. | ||
| And that's because investors are, there's a lot of things, right? | ||
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unidentified
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One of them is growth, right? | |
| Like growth has been strong. | ||
| That's also a factor. | ||
| But there's also concerns about what's going to happen with inflation. | ||
| I'm sure there's some element of what's going to happen with the Fed, some uncertainty there. | ||
| And so it's not just a matter of the Fed lowers rates a percentage point and your mortgage rate goes down a percentage point. | ||
| It's a lot more complicated than that. | ||
| Running short on time, President Trump's State of the Union a year into his second term in office is coming up. | ||
| What does an economics reporter look for in the State of the Union address? | ||
| What will be interesting through your eyes? | ||
| So the President has actually just in the past week mentioned several economic policy ideas. | ||
| And so, you know, it's a matter of what is actually going to get done in terms of affordability, right? | ||
| Which is something that has been a talking point among both parties because all of the polling shows that people are very unhappy with the high cost of living. | ||
| Also, President Trump's economic polling numbers have been notably low. | ||
| I say notably because the economy is supposed to sort of be his thing that voters trust him on. | ||
| And lately, people have been unhappy. | ||
| And so he's mentioned, for example, a cap on credit card rates, although it's sort of unclear how he intends to do that because that probably has to go through Congress. | ||
| But he suggested that could take effect as soon as January 20th. | ||
| And he's also talked about other policies that he might pursue in housing to make that more affordable. | ||
| A big thing there that a lot of experts say is that we need to have policies that lead to the building of more housing because we just don't have enough and that's one of the reasons it's so expensive. | ||
| So yeah, I think that affordability is probably going to be a central focus because that's just one of the big things that the midterm elections are going to be about. | ||
| Victoria Aguida covers it all for Politico and Economics correspondent there. | ||
| You can see all of her work at politico.com on XVTG2. | ||
| Easy enough to find. | ||
| Thanks so much for your time. | ||
|
unidentified
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Thank you. | |
| C-SPAN's Washington Journal, our live forum inviting you to discuss the latest issues in government, politics, and public policy from Washington, D.C. to across the country. | ||
| Coming up this morning, Evan Bloom of the German Marshall Fund will talk about President Trump's push to acquire Greenland. | ||
| Also, we'll talk about the Justice Department's criminal investigation of Federal Reserve Chair Jerome Powell, U.S. relations with Venezuela and Greenland, the recent shooting in Minneapolis, and other congressional news of the day, first with Florida Republican Congressman Mike Haradopoulos, and then with California Democratic Congressman Brad Sherman. | ||
| C-SPAN's Washington Journal joined the conversation live at 7 Eastern this morning on C-SPAN, C-SPAN Now, our free mobile app, or online at c-SPAN.org. | ||
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