Senior Republican clears path for next Fed chair

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0:18Good morning from the Financial Times. Today is Monday, April 27th, and this is your FT News Briefing. Kevin Warsh just cleared a major hurdle to become Fed chair. And we look at a cybersecurity AI model that could be too effective for its own good. And if this gets into the wrong hands, that could be really dangerous. But first, an update on the alleged Trump shooter. I'm Sonia Hudson, and here's the news you need to start your day.

0:58The man suspected of firing shots during the White House Correspondents' Dinner is set to be charged in federal court today. U.S. President Donald Trump was attending the black tie event on Saturday at the Washington Hilton when multiple shots were heard. City officials said a suspect had run toward the hotel's ballroom entrance but was quickly apprehended by Secret Service officers. Authorities say the alleged shooter was targeting Trump and other administration officials, but U.S. Attorney General Todd Blanche said yesterday they're still looking into the motive. Blanche told ABC News that investigators had searched the suspect's home in California.

1:38Trump told Fox News that the suspect had written a, quote, manifesto referencing administration officials, and that family members had alerted the police beforehand.

1:54U.S. Republican Senator Tom Tillis said yesterday he'll allow Trump's pick for Federal Reserve chair to face a confirmation vote. Tillis led a group of senators in blocking Kevin Warsh's nomination. He was concerned about a federal criminal investigation into the current chair, Jay Powell. Tillis and others saw it as part of a larger assault on the central bank's independence. But prosecutors dropped the probe on Friday. Here to tell us what comes next is the FT's U.S. economics editor, Claire Jones. Hi, Claire. Hi, Sonia. So, Claire, just to back up for a minute, remind us what this probe was all about.

2:32So the Department of Justice said it needed to investigate Fed Chair Jay Powell's handling of a$2.5 billion renovation of the Fed's headquarters. They said they were looking into whether or not he'd misled Congress over the project, which has cost overruns of around$700 million. However, Powell denied the allegations and went as far as to say what the probe was actually about was pressure from the Trump administration for Fed officials such as himself to cut US borrowing costs. There was this dramatic reversal, of course, that we saw on Friday. And what that really spoke to was just an appreciation from the White House that they were not going to get Powell out of the job of Fed chair and Trump's pick to replace him, Kevin Walsh, in on time unless this probe went away.

3:33So Tillis essentially got what he wanted. He got the Department of Justice to drop this criminal investigation into Powell. And as a result of that, has now said that he is not going to block Warsh's nomination. Does this mean that Warsh will get confirmed? I think it almost certainly does. Tillis did have the blocking vote on the Senate Banking Committee. they'll now vote on Wednesday and probably vote in favour of Walsh moving to a vote on the Senate floor. The sense we're getting is that all of the Republicans who had objections to Walsh, those objections were really centering on the probe.

4:13And now that the probe looks as though it's gone away, they're likely to support Walsh. There's 53 Republicans in the Senate at the moment. So it looks like Walsh will pass the crucial hurdle of 51 quite easily. Claire, something I'm wondering about is, is there anything stopping the Trump administration from reopening the investigation into Powell after they get what they wanted, which is Warsh getting confirmed? So the US Attorney for the District of Columbia, Janine Pirro's remarks on Friday did raise a little bit of concern because she did mention in a post on social media site X that she will not hesitate to restart a criminal investigation should the facts warrant doing so.

5:02So the sense we've got from remarks that Tillis made yesterday was that he'd had assurances from the DOJ that the only way the probe would be reopened was if the Fed's internal inspector general recommended that it do so. So he seems to have been assured enough by conversations with the DOJ to think that they will not reopen the probe, despite there being some gray area created by Pirro's remarks on Friday. Claire, this has been quite a saga. And, you know, we haven't even touched on some of the other ways that Trump has potentially attacked the independence of the Fed. What kind of environment is Walsh stepping into, you know, if and when he does take the helm at the Fed?

5:52Well, I think, as you say, Walsh is taking the helm at a time when the Fed is under the sort of political pressure, which I think it's never really experienced. We've seen the attempt to take legal action against Powell. We've also seen the US president attempt to fire Fed Governor Lisa Cook over allegations of mortgage fraud, which she also denies. And Cook remains at the Fed. However, you could argue that the resistance of Powell and Cook and the sense in which the Fed has had some success in the courts does provide cover for Walsh and that, in a sense, he is going to have a few legal protections that we now know about that maybe we weren't quite aware of at this time last year.

6:42Claire Jones is the FT's U.S. economics editor. Thanks, Claire. Thanks, Sonia.

6:52Speaking of central banks, several major ones are meeting this week. They include the Fed, the European Central Bank, and the Bank of England. They're all expected to hold off on raising interest rates. You see, the energy price shock from the U.S.-Iran war is making inflation harder to predict. That's partially driven by social media posts from President Donald Trump. Traders have struggled with the volatility caused by his frequent posts and the responses from the Iranian regime. Monetary policymakers are now relying less on single forecasts. Instead, they're focusing on scenarios that take into account a range of possible outcomes in the Middle East conflict.

7:41Artificial intelligence is massively boosting cybercrime. It gives amateur hackers cheap tools to write harmful software, and it also allows a criminal to automate and scale their operations. Enter Anthropic's Claude Mythos model. Some people are worried it's so good, it could actually backfire if it gets in the wrong hands. And last week, the AI lab started investigating whether it was accessed by unauthorized users. The FT's Christina Criddle is here to tell us more. Hi, Christina. Hi. Hi. So what was Anthropic setting out to build with this cybersecurity AI model called Mythos?

8:22Eleanor McLoughlin: So Anthropic didn't actually set out to build a cybersecurity-specific model. It was just building its next big general-purpose AI model in its clawed series. And it then discovered in testing that it was very capable at cybersecurity. And in particular, it was good at detecting bugs or flaws in software, but also this new capability of being able to generate exploits, ways to work around those bugs or flaws and exploit them. And that's why it decided to only release it to a select amount of partners. Yeah, and those partners include Amazon, Microsoft, and Cisco. Tell me a little bit more about concerns that have been raised about this model.

9:07Eleanor McLoughlin: So AI models have been able to do this for some time now, but I think Mythos really was a lightning rod. And the idea that AI can scan for these vulnerabilities and bugs should be a positive one, right? So you can spot where all the flaws are and then go and fix them. But the issue is a volume problem where the AI means that you're potentially detecting more bugs than you can solve for at a particular time. That means that they're left vulnerable to attack by hackers and potentially foreign adversaries. So earlier I mentioned this potential unauthorized breach of Mythos. What concerns is that raising?

9:48Eleanor McLoughlin: Yeah, I mean, I would just say there is some skepticism about how elevated Claude Mythos is with cybersecurity compared to what we've seen before. But I definitely think this is a moment where wider sectors and industry and governments are recognizing this as a problem. And then to add on the pressure here of the threat, Anthropic is investigating this report, which claimed that a group of people had unauthorized access to Claude Mythos. Apparently, they were able to access the model through a third party vendor environment, as one member of the group apparently was a contractor for Anthropic.

10:25Eleanor McLoughlin: And in the run-up to Mythos, there were already two security issues. So there is this criticism that maybe Anthropic doesn't have its own security in order. And what does that then mean if unauthorized people are able to access this model, which they claim is so powerful, and if this gets into the wrong hands, that could be really dangerous? Well, what has Anthropic said about these issues? Anthropic has said that they're investigating this report, which claims unauthorized access. They say it's through one of this third-party vendor environments and not through its API, which is how most developers would access this model.

11:04Eleanor McLoughlin: And in terms of the previous two security issues in the run-up to Mythos, they've said this was human error. This was not caused by AI. But that still raises quite a big question about how secure their infrastructure is. Christina Criddle is a tech correspondent for the FT. Thanks, Christina. Thank you. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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