A Family’s Lawsuit Against OpenAI 8/27/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. What unfolded between chat GPT and a 16-year-old boy and how it led to tragedy? That teenager's parents are suing OpenAI and their lawyer Jay Edelson explains why. Sam Altman and OpenAI knew that there were going to be problems. They rushed us to market because they wanted to be Google Gemini. So they did a week of training instead of months of training. How technology impacts our mental health and how we can help or hinder our paths to wellness with happiness scholar Arthur Brooks. Politics never raises happiness.

0:41Anytime a politician says I'm going to make you happy, you should be very, very nervous. Plus, Cracker Barrel has heard the social media uproar about its rebrand. And our own Steve Leisman is following the White House Federal Reserve drama and who the president might put in a few jobs next. How do they prioritize their loyalty to the president versus their loyalty to the congressional mandate of low inflation and low unemployment? It's Wednesday, August 27th, 2025. Squawk Pod begins right now. Stand under by in three, two, one, up and enter. Good morning and welcome to Squawk Box right here on CNBC.

1:20We're live at the Nasdaq market site in Times Square. I'm Andrew Ross Sorkin, along with Leslie Picker and Wilfred Frost in for Becky and Joe on what has been a wildly newsy, a wildly newsy last week of August. Quiet August week. Pretty incredible. All sorts of international markets this week, bonds and equities, have moved around a lot on various stories that are not insignificant, like there potentially being a, you know, well, there will be a vote of no confidence in the French government. So, you know, tariffs in India, et cetera, which we're going to talk about. But it does show the resilience of the U.S.

1:54market in light of a potentially massive threat. And you kind of wonder what that will lead the administration to do. But also credit to them that it hasn't derailed it, as we might have all expected, which we'll talk about. Yeah, I think the market, too, when you kind of get into these unprecedented territories, these historic ramifications, they don't know what to make of it because there is no playbook for how it's happened in the past. And when something looks likely to go to the courts, even potentially the Supreme Court, I mean, it's impossible to really know how to trade that. I also think people are saying the key person remains the Fed chair.

2:30And it's a long way until, and I know Steve's going to come up and join us about, until you can really change the balance effectively. But the flip side, I then think, to that is it is now more clear than ever that in nine months' time, the Fed chair will be different and will be someone who is going to do what the president wants. So again, I don't see why markets can't look ahead to that. I think they already are. But in light of that, then how come the 10-year is only at 4 point whatever we're at? Because I think, and Steve, I'm very curious what Steve will say. We had a whole conversation about this maybe a month or two ago.

3:05The idea that there is already a shadow Fed chair in place, in the role, we just don't know the person's name. meaning that the market has already just assumed that there is a dovish, relatively loyal follower of the president that's in that job. We may not know exactly who that human being happens to be and that the market is already and that and that any sort of shifts have already taken place. This was sort of months out. Sure. I mean, but my point is, you know, it's all stable until it suddenly isn't, obviously. But the U.S. tenure is at 4.27, well off its highs. You've got the U.K. tenure at 4.72, other way around.

3:44You know, the dollar fell 10 percent first half of the year, but then it's kind of stabilized. It is remarkably stable at the moment. And I think what you're seeing is even despite the one big, beautiful bill and the deficit going up to 6 or 7 percent in the short term, even despite all of this, there is this reserve currency of the world status of the U.S. that's holding up for now. And by the way, that is the argument of the president. Right. That is the president to say, look, this is we are the you may think the world is screwed up and you may think we're screwed up even. But we are like the best thing going.

4:16And if you want to do business with us, you're going to do a business with us on our terms. That's the way this whole thing is going to go. I know. Yes. The end. That's the point of leverage. But to that point, the 30 year yield is up 20 percent over the last year. I mean, it has been ticking higher. So regardless of whether, you know, the ultimate outcome of all of this leads to a 25 basis point cut in September, maybe some more cuts after that, a more easing cycle, the market rates themselves have been pretty steady, if not ticking higher. So kind of getting, you know, what President Trump says is getting mortgage rates lower, getting credit card payments lower.

4:55All of that is dictated by the market rates, which have kind of gone in the opposite direction of easing. Well, and that's the other piece of this, which is even if, right, no matter what he does on the low end of the, you know, on the two year, who knows what the future is going to hold? Unless what Scott Bessent has argued works, which is, again, a very tough, but we'll see this over the coming months, which is to issue way more short dated bills than longer dated debt, which is, you know, a kicking the can down the road solution. It's not a long term solution. But again, only a greater argument to want to keep shorter end rates lower because, you know, it'll help on those costs.

5:29you know, my view on this is slightly influenced by the problem we're having back home, which is the Chancellor can't even sneeze. And we go up another 10 basis points every day. You know, the 30 year was at a 30 year high, the close yesterday. So it is just a remarkable snapshot on the difference, right? Where, you know, can you imagine if, if the UK decided to say, do you know what, we're going to fire this member of the Monetary Policy Committee, and we want to do this. I mean, I think everything, the pound and the bonds would collapse overnight. And it's just a fascinating snapshot in the difference of market reaction here this week.

6:04Oh, I thought we were about to talk about... We've already passed. We've passed time. We'll talk about India and the tariffs in just a moment, but I think we're going to continue with the Fed piece. Yeah, the Fed... No one told me to wrap, my bad. Saying it will abide... I'll tell you to wrap. Wrap, Will. No, I'm just kidding. Says it will abide by any court decision on whether President Trump has the legal authority to fire Fed Governor Lisa Cook. A White House spokesman said Trump had determined there was cause to remove Cook over alleged but unproven mortgage fraud. Cook's lawyer says the president has no authority to remove her.

6:37For his part, Trump told reporters he would abide by any court decision. The president has been criticizing the Fed, which is designed to be insulated from party politics for not lowering interest rates. Here's what he said at a cabinet meeting yesterday. We just put a very good man in one position. We might switch him to the other. It's a longer term and pick somebody else. But we're very happy with the person we have in there. And we'll have a majority very shortly. So that'll be great. Once we have a majority, housing is going to swing. A Wall Street Journal report says Trump wants to move quickly to announce a replacement for Lisa Cook.

7:16The president said he could fill her seat with economic advisor Stephen Myron. The journal says former World Bank President David Malpass could be tapped for another opening. So we were just talking about a shadow-fed chair, shadow-fed two seats potentially on the board. I thought just one last piece on this. I know we've got to talk India, but there was a line, and at some point we should pull the video, maybe when Steve gets on the broadcast, because it reflects exactly what he was saying, and we had that graphic wall yesterday. The president said, we're about to shift the bounce. I think he said, we're about to have a majority.

7:47Yes, yes. And that is so much like the Supreme Court. Yes. About to have a majority. Or Congress. Or, I mean, how do we talk about these things? Does it go a full shift? It depends what the people who are being appointed think about why they're being appointed. And again, I would think Supreme Court justices don't publicly ever say, I'm of this particular view or that particular view because they think they're legal experts. But they must acknowledge that they're only getting selected under a certain president, not the other one. And I would think these economic experts are one step further removed from that.

8:24So you can try and politicize it and you can appoint certain types of people, but they have a longer term. They probably don't. Not a longer term than a Supreme Court. The Supreme Court is for life. Well, that's true. That's true. But you have an eight year. You can essentially be as independent as you humanly want once you get into that role. That was the whole reason we gave them a lifetime appointment. But do you think the types of people, look at the types of people he's already appointed, including in his first term. Are they as malleable, perhaps as you think a very purist legal interpretation on the Supreme Court is towards how it then influences decision?

8:59I don't know. I'm just raising it as a question. I think they have a particular, they have a particular. Bent. Bent. Political bent that has to do with. But they have a political bent to spike inflation. I think there's a political bent for the current president to want to influence someone in the very short term ahead of, say, the midterms next year. But once you pass that and you go forward, it's a genuine question. Do you really think they'll think, oh, let's hike rates because we're coming into a general election and now there's a Democrat president? I don't know if that happens. We will see.

9:34We are going to be able to talk about this a lot more throughout the broadcast. Now, an additional 25 % U.S. tariff on India is taking effect this morning, stemming from American anger over India's purchases of Russian oil. The U.S. is India's single largest export partner. U.S. tariffs will now be 50 % on Indian products, including garments, jewelry, furniture and chemicals. A 50 % tariff is on par with some of the highest U.S. rates for countries around the world. And it could weigh on American companies who've tried to diversify out of China and into India and could also push India towards stronger trading relationships with other countries.

10:09The stock market, though, is closed today. It was down yesterday and investors will be watching for any market reaction tomorrow when it reopens. And of course, these tariffs very much linked to trying to pressure Russia to the table, given that they've been one of the big buyers of Russian oil since the war broke out. Now, separately, the European Union is working on a plan to fast track legislation that would remove all tariffs on U.S. industrial goods. That's according to a Bloomberg report. President Trump has demanded that the EU remove those industrial tariffs before the U.S. lowers its tariffs on European auto exports.

10:45So another one to watch there. Cracker Barrel pulling a 180. The company says it will revert to its old branding after online anger erupted over a slimmed-down logo. Cracker Barrel revealed its new logo a little more than a week ago. It removed the depiction of an old man and a barrel and dropped the phrase old country store. Shares of the company's stock fell 7 percent last Thursday as social media commenters described the new logo as generic. Some conservatives also said it took away from the classic American feel of the brand. You can see the stock is up in pre-market about 6.2 percent on the latest news.

11:26It's now essentially flat since the controversy began last week, a literal 180. I spent a lot of childhood meals at Cracker Barrel, so it is nostalgic. I get it, but it's an interesting push and pull with trying to modernize old brands in this environment. It's going to get a lot of branding. It's not as controversial a U-turn as there has been of late. You mean like American Eagle? Yeah, it was almost like they went too boring and safe as opposed to being directly political. Right. Well, that's kind of the environment we're in. I think that's what's so interesting about the story is that, you know, companies do one thing thinking it's, you know, good for marketing, good for branding.

12:08But people have a different take. Let's get the latest on President Trump's efforts to remove Lisa Cook from the Federal Reserve Board. CNBC senior economics reporter Steve Leisman talked about it all day with us. Going to probably talk about it all day today, maybe the rest of the week as well. We have some news, Leslie. Sources telling CNBC that Fed Governor Lisa Cook could file her lawsuit to overturn her firing by the president as soon as today in D.C. federal court. But the president saying yesterday he's already counting on having a majority on the Federal Reserve Board of Governors. The outcome of Cook's challenge could matter a lot for Fed independence, determining how much leverage the president has over new and even existing board members.

12:52The loss of Fed independence could mean any president could order Fed officials to lower interest rates for short-term political gain, risking higher inflation over the medium to longer term. The president could demand that the Fed buy assets, including bonds, crypto, or even stocks, using its rather considerable balance sheet. And it also raises concern about the dollar reserve status and the U.S. bond market. Meanwhile, Bloomberg reporting at the White House is considering using that majority on the board to exert more influence over the 12 Federal Reserve bank districts, five of whom have a vote on a rotating annual basis.

13:24CNBC from Jackson Hole reported on this concern among Fed presidents. Multiple economists and current and former Fed officials, they've argued that it is in the president's interest to support the Fed's independence. Some have suggested the Fed's tough stance on potential tariff inflation has actually helped the president and kept a lid on price increases from spreading from tariffs to other parts of the economy. Which is to say the president can find out the value of Fed independence the easy way or the hard way. Steve, going back to those bullet points you put up of what losing independence could lead to.

13:56I mean, just replacing Lisa Cook, even replacing Chair Powell in nine months' time as well, that doesn't lead to that scale of loss of independence. It does not. And that's a great point, which is why I said the outcome of the legal challenge. What is cause? What kind of ability? But even if Lisa Cook walked out of the door yesterday and even if Chair Powell decided, I'm done with this, I'm walking out the door. Right. You're still a long way from that. Because you've got you've got a lot of steps to get through before you can directly influence them to make decisions. Well, there's two pieces to this, I think.

14:29Well, one is the people that you put in charge. Who do you who do you put? What do you put there? how do they prioritize their loyalty to the president versus their loyalty to the congressional mandate of low inflation and low unemployment? Okay, let's play this out. Let's say this goes to the Supreme Court. Let's say it's going, right? I mean, that's where it has to go. So given what you know about this Supreme Court and what you've, I know you've been talking to all sorts of legal scholars and experts around the world on this, do we think that the Supreme Court would challenge this idea or would abide by it?

15:07What I have, what I think we've seen a couple of things. First of all, the timing of these things. This lawsuit, if it's filed today, a judge could decide this very quickly, promptly. And then the question is, does he or her stay that ruling in awaiting appeal? Right. So let's say he rules in Cook's favor, he could stay. And then there's a similar situation with another person who has won the injunction, but now it's on appeal. The Supreme Court, not a lawyer, not even a legal analyst, has given the president a lot of deference on what is executive power. And there's a really interesting piece that I read that says, not because Lisa Cook exercises monetary policy authority, But because as a federal bank regulator, she exercises executive authority, it would give the president more leeway, which is why this paper I read argues that the Congress should go back and rewrite these statutes to make.

16:10Oh, that may be. When's the last time you think Congress. Good luck with that. I'm not saying this is a paper that's anything. They'd write the statute in the opposite way. So this is an administration that has said if in any particular place an official exercises executive authority, the president has the ability to fire this person at will. Not even with the cause stipulation. Because of her role as a banking regulator. Well, because. Which, by the way, Fed independence and banking regulation is not something that people talk about. I mean, most would say that they don't have. Says somebody who knows a lot about banking regulation.

16:47independence or don't need independence when it comes to banking regulation. They're able to, you know, deliver on whatever promise of deregulation in the current environment that the president would like. This is a place where the Fed does sort of hue to the political changes that are going on. You have a Biden administration. The Fed was maybe a little bit tougher on the banks, the Trump administration. And it's a reason why, Leslie, some have said, and why in England, by the way, they separated the banking regulatory and the Monetary Policy Authority. I just have one fact for Wilf. Wilf, check it out.

17:20In 331 years of the existence of the Bank of England, no king, queen, or prime minister has ever fired the governor of the Bank of England. Really? He's had a couple resign because of issues and things like that. But it's only been independent since 1997. Right, that's true. But in the 300, they have not fired it. Can I ask one final question? I want to explore that in more detail. Are you surprised at all that we have not heard from Lisa Cook as it relates to the actual underlying charges or allegations that have been alleged against her? I am somewhat surprised by that. But again, from a legal standpoint, what I'm told is that you do not respond to facts that have not been charged.

18:02Right. You wait until the there is no lawsuit. Right. There is just an investigation. There was a referral from FHFA to the Justice Department, right? Justice said we are investigating, right? So in general, a defendant or a potential defendant is quiet until. Now, you're right. There's a whole PR thing going on and a whole issue. Well, not just the PR thing. She's gotten fired over the allegations unto themselves. So if there was a simple, reasonable explanation and you could have come out and said, hey, look, my mortgage broker signed this document and I didn't see it, or I bought the home and it was for a handicapped relative, or it comes under these exemptions, or whatever the, if there was an explanation, I would think given also the role that she sits in, this goes back to the responsibility she has as a Fed governor, which is not just being some kind of, you know, any old person on the street.

19:03It's a different job. It has there's a moral obligation even beyond a legal obligation. I agree. And I think it's going to be interesting today if part of the lawsuit or if it comes out today argues the factual basis of the allegations or it simply says this is a targeted takeover of the Federal Reserve and talks about selective prosecution and these sorts of things. Very few of these cases are ever brought. We've asked the FHFA, how many of these referrals have you actually made public? And they have not responded. I'm sure we'll come back to this because I actually have a couple more. A couple more items on my list for you.

19:43Tees will be next. Still to come on Squawk Pod, the AT &T memo that went viral, why CEO John Stanky is holding firm on his full office return mandate, and which policies yield the most productive workforce. Some people love a tough love memo, other people. Author and podcaster Arthur Brooks weighs in. One of the best things that you can do is to create a climate of friendship inside, and that means not being buddies with the boss. That means getting out of the way so they can be friends with each other. You're not friends with people on Zoom. You're just not.

20:24Welcome back to Squawk Pod. On August 1st, AT &T CEO John Stanky wrote a memo to his employees, a tough one, responding to an employment engagement survey. Stanky heard frustrations about the company's five-day full return to office mandate, and he addressed them in a multi-page direct letter that has gone viral. The TLDR, get on board or get out. The company culture, he wrote, is shifting away from loyalty, tenure, and conformance toward a more, quote, market-based culture. He even quoted a military general in a stark image of leaving resistant employees behind. AT &T CEO John Stanky spoke to our team about it on Squawk Box earlier this week.

21:08The fact that people spent as much time on it for as many days as they did was probably a little bit of a surprise to me. I don't know why that is. I'm not an industrial psychologist. nor a psychologist, so maybe I struck a chord in some regards. But most importantly for me, I think the memo was very well understood within the business. There's been the right kind of dialogue around it. I can't say everybody's happy about it, but I think the vast majority of AT &T employees understand the direction we're headed, and that's a really good thing. Now let's get back to Andrew, Wilfred, and Leslie.

21:44Andrew will take it from here. our next guest is going to weigh in on return to work plus the u.s government stake in intel and so many other things happiness has a new book out we got to talk about it uh harvard university professor arthur brooks columnist for the atlantic we had a whole laundry list aei president emeritus new host of the podcast office hours with arthur brooks and as i mentioned earlier the new book The Happiness Files, Insights on Work and Life. It is now a New York Times bestseller. So congratulations to you. Pretty cool. Yeah, that's great. All of those things are pretty cool.

22:21I don't even know what you do about your office. Which one do you go to, given all of the things you're doing? It's great. It's actually, people want to be happier. Who knew? You know, big news. How important is it for employees to be happy? And I asked that in the context of John Stanky writing a pretty tough love memo. to his staff. Some people love a tough love memo. Other people, you know, freak out. He's a very straightforward guy. I know John Stank. He's a great CEO. It's a terrific company. And it's when somebody's straightforward in a period of double talk. I mean, everybody, CEOs have gotten really good at not saying what they actually think or trying to shade the truth when they're talking to their own employees.

22:58And a lot of CEOs have become afraid of their employees, as a matter of fact. You know, they get blown up in the Slack channel. They don't know what to do. Something might get leaked. John Stanky doesn't care. He's running a great company and he wants to be honest with everybody. Can you just explain this? I just want to go, I don't want to relitigate the past, but a little bit. Yeah. Why do you think it was, I would say 2018, 19, into the pandemic, which is its own world. Yeah. Why CEOs felt that they were being held hostage by the employees and today they don't? And the reason I ask is, I think there was a view that maybe the job market was so tight.

23:36You remember people would say, job market's so tight, that we can't afford to let these people leave. And so we need to make their life as cushy as humanly possible. Today, by the way, job market seems just as tight. And people are saying, talk to the hand. Yeah, it really has to do with the culture of activism. So activism tends to rise. Every 50 years or so, you get a real activist culture. It was the early 1970s, you know, 2020, thereabouts. And what we saw on college campuses, this is where I make my living is on college campuses, activism became more important than inquiry, which is what ruined the university climate.

24:08There's nothing wrong with activism per se, but when it gets too great inside organizations, then a small group of people, usually three to 5 % of people, can bully the leadership, effectively. That's what happened at universities where three to 5 % that did not represent the community and were just blowing people up, that people became afraid of them. And that activist culture was really well organized inside companies, universities, the media, every place else you want to look. And now people are figuring out how to fight back. But work from home captured more than three to 5%. No, no, for sure.

24:37But the whole point is that the activists about that had disproportionate power is the way that that works or on any particular topic. You know, you can you can in the Slack channel inside inside a company, three to five percent figured out how to look like 50 percent. And then sooner or later, leadership caught on. And this is the case is what this is what we're seeing in companies and universities. And now the backlash against the activism is what we're seeing. And I think it's welcome. I'm really happy to see it. Are employees long-term more happy when they work in an office because they have the camaraderie, their career develops more short-term unhappy to be in the office, long-term happy?