RM Warren Discusses Fed Independence on Squawk on the Street

Steve, thank you. Pleasure, Steve Leeman. Uh, let's continue the conversation uh involving the Fed and the Fed Governor, of course, Lisa Cook. Senator Elizabeth Warren joins us now. Senator, always good to have you. Um, obviously I should remind people as well. You sit on the Senate Finance Committee. Uh, you know, give us first your take overall in terms of what is certainly the continued attacks on the Fed's independence by uh the president. So look, what's going on right now is the single biggest attack on the independence of the Fed in American history. And just to remind everybody, uh we have had in the United States much success by trying to keep our central bank politically isolated. That's why we have the long terms. That's why Fed governors can be uh fired only for cause. And all of that is because we want a Fed. We want a central bank that is making decisions based on the data on what the data are actually telling us about the best direction for the economy, not based on the politics of the president of the United States. Now, this is Donald Trump's third big run at trying to crush the Fed, right? First, he said he was going to fire Jerome Powell, and you watched the markets tank over that. Then he went after him uh on the idea that he was spending too much money on renovating the Fed buildings. Remember that episode? And now we're on the third episode of Go After the Fed, and that is to uh claim that he's firing Lisa Cook. So, you know, it's all attacks on the Fed. And I don't have to remind people on this program of all places. we undermine the independence of the Fed and politicize it, then that undercuts our economy and confidence in our economy, not just with investors here in the United States, but worldwide. Countries that do this, look at a country like Turkey, where a strong man takes over the central bank and they end up with 80% inflation. That's not the place that the United States wants to go. We are the gold standard. because of that Fed independence and all of us wherever you are politically should be there to defend the independence of the Fed and say no to Donald Trump on this. We we've heard that plenty on our air over the last 24 hours or so as well. You know, regardless of whether the president is successful in replacing Governor Cook right now, he is going to have the opportunity to appoint the next Fed chair. That is not that far away. And I'm curious, Senator, how you're going to view that appointment, regardless of who it may be in terms of whether they are going to be independent from the administration. Well, you know, that's the problem Donald Trump already now has created for himself, and that is once he starts appointing these Fed governors uh and a Fed chair, as he will next year, who believes that they're independent? Did you see the cabinet meeting yesterday or at least excerpts from that three-hour cabinet meeting where cabinet uh official after official sucked up to Donald Trump and said all of my policies, everything I'm doing is whatever it is that you want Donald Trump. You know, it's really hard then, even if nominally we're going through the process of of naming a replacement Fed governors and a new Fed chair. It's hard to make the case that anyone will believe that Donald Trump is nominating people who in fact will be independent. I mean, don't you think that every nominee right now, potential nominee, is out there trying out? And how do you think they're trying out? They're trying out by saying, "Mr. President, whatever you want, I will be the one who can deliver." And they all take a look over at the Bureau of Labor Statistics and say, "And they fully understand, you deliver bad news to Donald Trump, he fires your fanny." Um, that's not independence. Yeah. specific to to uh to Fed Governor Cook. I am curious the charges of mortgage fraud. Obviously uh she's going she's fighting them. They haven't even been brought. But I am curious if in fact this were to play out and she was guilty of that. Do you feel that that is a fireball offense? Would you want to see her step down from the Fed if in fact she is found guilty of uh you know of mortgage fraud? So, so first of all, as you say, these are allegations and where did they come from? They came from a Donald Trump lackey who said in effect, I have access to a whole bunch of data that nobody else sees. And let me see if I can go through the Donald Trump enemies list and find anything that I can claim is dirt that you might be able to use to lever somebody else. That's this process that's been going on so far. What I care most about is that we follow the law here. And the law is pretty clear that firing for cause means jobreated. Like someone who has been inefficient or someone who's been corrupt in doing the job. That is the history of what for cause means here. If you want to change the law, look, the Republicans are in charge of the House, the Republicans are in charge of the Senate, and Donald Trump sits at the White House, then bring an amendment to the law. But we are a nation of laws. Let's let's just follow the law here. Well, Senator Warren, I mean, the principles of Fed independence has been one of pretty broad agreement uh over the over the decades. Are you hearing from your Republican colleagues at all concerns uh that are similar to yours? And do you think that would build toward anything like actual public uh push back on this push back from the Republicans in Congress? I mean, what do you think it's going to take? These guys are going to need spine transplants uh to be able to say anything to Donald Trump. They've gone along with letting Donald Trump set tariff policy even though it is clear that he is in violation of the law. I haven't heard anybody speak out about his plans to invade American cities with armed forces with the National Guard. I look right now the Republicans that I talk with in the United States Senate, they just say whatever Donald Trump wants is okay by them. They have forfeited the idea of checks and balances that our constitution put in place and they don't seem inclined to hold Donald Trump accountable and his administration accountable for just plain old basic follow the law. You know, like when Congress says, "Here's the money we want to spend on these projects," Donald Trump is supposed to, the administration is supposed to spend that money. They don't spend it. And so far, the Republicans in Congress do nothing. So, don't ask me to predict when the Republicans will finally grow a spine and say, "We're not putting up with any more of this." Donald Trump cannot tank our economy by undermining the independence of the Fed. Um, I'd like to see him do it, but I'm still waiting. It's interesting, Senator. You know, the last few days, the the Journal Oped page, both on the Intel uh stake and on this. Here's a good line from this morning. Has Trump considered what a politically malleable Fed might do when the progressive left takes charge under another president? Mike asks you about what Dems are saying. Are Democrats thinking about ways in which to harness the power that the president's trying to leverage? No, I have not heard anyone speak about that. I haven't heard anybody raise that idea. But let me tell you what I do think is going on here. You really have to ask yourself, why is Donald Trump spending so much energy in trying to corral the Fed? And keep in mind, I I get it. I've been after Jerome Pal for a very long time to lower interest rates. Jerome Pal said last month that he would have lowered interest rates back in February except for the chaos that Donald Trump was creating around tariffs. So that means for six months now Americans have been paying more on their credit cards, more on mortgages, more on car loans. All because of the chaos in the economy that Donald Trump has created. And even now the Fed is talking about lowering interest rates because it looks like Donald Trump and his policies are stalling out the economy. That's exactly what the Fed governor just said. So why is Trump doing this? The way I see it, Donald Trump made a big promise when he ran for president, and that is that he would lower costs for American families on day one. Those were his words, on day one. And after he got elected, he said the reason he won was because he promised to lower costs on day one. Well, here we are at day what? 220. And the cost of groceries is up. The cost of utilities is up. The cost of housing is up. Uh the cost of back to school shoes is up. The cost of backpacks is up. The cost of baby strollers is up. Costs for families are up, up, up. And Donald Trump desperately needs to change the channel and have an economic conversation where he can blame somebody else. and his target is he wants to blame the Fed for everything that's wrong in this economy when it's exactly backwards. We're having problems and American families are paying more because of Donald Trump. There were some reminders this week speaking of the Intel news uh about the amendment that you and Sanders put together when the chips act was being debated which I think did sort of open the door to potential stakes. Is that something you can get your arms around a little better now? So, keep in mind what Donald Trump has just done. Let's go back to 2022. Uh, remember we're talking about how we're going to give money to some of these private companies if they will come build chips here in the United States trying to onshore the production of chips. And there were a lot of restrictions put in place like the agreement that the companies would put hundreds of millions of dollars of investments here in the United States, that four states were going to get new uh factories, that the jobs would be good union jobs, um that there wouldn't be any stock buybacks during the first five-year period, that the money would only go out in steps as the companies showed that they were actually abiding by all the terms of the agreement. And so Bernie Sanders and I said, "All great. These are all good things to make sure that if American taxpayer dollars are being spent, they will be spent on behalf of the American people and the American economy. But we said we also think the American taxpayer ought to get a little upside here. If this turns out to be a bonanza, let's find a way for them to be able to do that." And so that was our amendment. Our amendment didn't pass, but that was the idea. What Donald Trump has done is different from that. He's cut a deal with Intel and said, "Remember all those restrictions that you agreed to to get this money? They're all gone. You do what you want. You offshore the jobs. You don't make the investments. You get the money up front. You do the stock buybacks. But we want 10% of the action. That's just becoming a partner with a corporation. That's not making sure that taxpayer money is spent to try to help the American economy. That's just Donald Trump doing another shakeddown. Just like he's doing shakedowns on American universities, just like he's doing shakedowns on American Democratic mayors, just like he's trying shakedowns anywhere that he thinks he can. And I think that's a big problem. Well, I there there is a I mean, I think there's a full expectation that it's going to help Intel continue to to build manufacturing capacity in this country, Senator. Well, Donald Trump just waved most of the restrictions that were in the original deal that would make sure that Intel was delivering on those promises to invest here in the United States as it got progress payments. So, why is Donald Trump waving on all that? Why is Intel asking for all that? And how is it that Intel can still get American taxpayer dollars when those restrictions are being waved? That just that's just Donald Trump doing shakeddowns and not advancing the interests of the American economy and the American worker. Senator, always appreciate having you. Uh, thank you. Always good to be here.