Debating the DOJ’s Criminal Investigation into Jay Powell 1/13/26

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, the criminal investigation into Federal Reserve Chair Jay Powell that has rattled Republican unity. This is one of the first times I think we've ever seen, frankly, a break in the party like this over almost any issue since the beginning of the administration. Give Republicans a little more credit and they're not in lockstep. Yep. Who's spoken out against the probe, what it means for Fed independence and what politics has to do with it. CNBC's Eamon Javers from Washington. Bear in mind that the president's position still is that he has nothing to do with this.

0:40Then former House Speaker Kevin McCarthy on the power concentrated at 1600 Pennsylvania Avenue. President Trump is at a stronger position than I think even Ronald Reagan was at any given time. We have not seen a president with this type of power since Roosevelt. He is the chief whip. Plus a sneak peek or sneak listen at Becky Quick's two-hour CNBC special airing tonight, Warren Buffett, A Life and Legacy. He did say he was willing to write a check for$100 billion that day if someone came to him with a good idea. So he's always on the hunt. It is Tuesday, January 13, 2026. Squawk Pod begins right now.

1:20Stand Becky by in three, two, one. Cue, please. All right. Welcome back, everybody, to Squawk Box. Good morning. We are right here. I'm Becky Quick, along with Joe Cardin and Andrew Ross Sorkin. It's good to see everybody. Good morning. It's a Tuesday. The Dow is off by about 55 points after closing at a record yesterday. The S &P is off by nine points. It closed at a record level, too. NASDAQ indicated off by about 67 points, but it was a pretty big turnaround from where we were yesterday at this time when the market was down by 300 plus points ahead of the opening bell. A lot of concerns about what happened with Jay Powell and what the Federal Reserve had received in terms of some of those criminal inquiries.

2:02We'll continue to talk about that today. We've got McCarthy coming up. I don't know anybody that's really thrilled. Republicans notwithstanding. But you can interpret yesterday in either one of two ways that no one really believes Fed independence is going anywhere because of the backlash and outcry, or go ahead and cut rates. God, I sound like Trump. I read it even a different way. Force them to cut rates and the markets go up. So many people speaking out against what was happening yesterday. I think that's what it was. And you have Republicans, senators who are saying, we're not going to go along with this.

2:36I think that probably reinforced the markets. The people that don't like Powell said that that was an attempt to get a market check, his video to get a market check and that he was hoping for some some chaos in the markets to prove his point and that didn't happen they said so Jay that that that didn't work but I don't I didn't read it that way no I don't either for Jay Powell to say something after he's kind of taken this onslaught for a very long time for him to say this was kind of a line in the sand yeah he Trump last week or the week before started again and just saying the worst things you could say about about someone and we've been you've been in we've been in cutting mode right and by the way that hasn't just been the last year that the president has been in office for this term that started in his last term too um some of the things that he was saying along but soon once the thing said this better be something there and it better be serious and the thing said something and uh Kennedy down in Louisiana.

3:37Don't you think it's that commentary? Don't you think, Joe and Becky, it's that commentary from Republicans who are speaking out for the very first time? And not just that. I don't know if you saw the Wall Street Journal report about Scott Besson apparently calling the president on Sunday upset about the investigation unto himself, telling him that this was going to rattle the markets and this was going to be a problem. And then apparently a whole other group of Republican senators and potentially congressmen suggesting Maybe there's some kind of off ramp to this whole thing. So I would imagine that's that.

4:08That's what the market is settling. It's more of that. And this is one of the first times I think we've ever seen, frankly, a break in the party like this over almost any issue since the beginning of the administration. Give Republicans a little more credit. And they're not they're not in lockstep or goose step. It's what some people would say with with with Trump. Can you think of another issue? I don't think I think when. Since the administration began. Okay, Greenland. Remember what Thun said about Greenland? That's just part of the checks and balances that I was talking about with you. We still have normal people in the world.

4:45Trump tests the waters in the most insane ways. And actually, there's a piece in the Journal of Day about that. He likes the chaos. He likes what it makes other countries think when he does something like Venezuela. Or Iran doesn't know what to think. If he says something to Iran, Iran's like, whoa, I may believe it. So I just think that there are still checks and balances. And, you know, I don't know whether he he's dragged maybe kicking and screaming into the real world at times from from his own. All I'm suggesting is I think this is the first time that we have seen both sitting politicians that are part of the public party speak out so vocally.

5:23And then you layer on top of that the all former Fed chairman who've had this role prior. You had Treasury secretaries, including Hank Paulson and other Republicans who historically have not been outspoken. I mean, I actually think when you think about all of the moments throughout this administration where the things that felt like they were breaking norms and talked about whether people would come forward and say that these norms were being broken and they had problems with them. I do think that this is probably the first real example in break like that. I don't think that. How come I've read so many times in media?

5:55I've even been they've even said, oh, even Trump's loyal acolytes are breaking. I've seen that article a dozen times in the last year. Wow, even Trump's most loyal blah, blah, blah are pushing back. Every time they get a chance to write that article, they write that article. And it's been again and again and again. So it's not monolithic. It's not a bunch of just, you know, I know you'd like to portray the Republicans that way, of following the dictator into, you know, insanity. But I just don't think that's the case. But in this case, it's good. And I, you know, there are times where I think common sense takes over for everybody.

6:32You can't with a straight face say that you just want someone in there that's going to just lower rates all the time when the dual mandate is both inflation and full employment. We'll have McCarthy. You know what? Ask McCarthy today. Ask McCarthy today. I mean, we just had how about the five senators that voted to advance the War Act? That didn't impress you? There were Republicans that that was kind of a slap last week? More symbolic. You now have people who are saying that they're going to hold up the nomination of the next Fed chair until this is resolved. That's different. You know what's monolithic?

7:13The House of Representatives on the Democratic side and on the Senate side. That's what's monolithic. So maybe you're right. Maybe you're right, but both parties do it. It's always this whataboutism. OK, we've got it. It's always about the hypocriticism is what it's about. We've got Eamon Javris standing by. He's got some new news out of Washington this morning. President Trump threatening some new tariffs now on countries doing business with Iran as that country violently cracking down on protests. And Eamon joins us from D.C. right now. Good morning to you. Yeah. Good morning, Andrew. President Trump posted late yesterday on social media that he'll be adding a tariff to the trading partners of Iran.

7:59The president did not name any specific countries, say whether this would be on top of any existing tariffs, or explain what the criteria are to be included in this new tariff. But in the post, he said, Effective immediately, any country doing business with the Islamic Republic of Iran will pay a tariff of 25 % on any and all business being done with the United States of America. This order is final and conclusive. Thank you for your attention to this matter. That's from the president. The president also didn't say which legal authority he's going to use to impose the tariff. That's something that could become relevant in a week in which the Supreme Court may rule on the constitutionality of the president's Liberation Day tariffs last year.

8:40So we'll watch for that. His post comes at a time that the White House is reportedly considering new military action against the Iranian military as he's issued repeated warnings about the Iranian government's handling of mass protests that are taking place in that country. The White House did not respond to questions about the post last night, guys. And if you look at the top trading partners for Iran, who do you get at the top of the list? Well, it's China. It's also Iraq and the United Arab Emirates. So a big question here in terms of whether this post is going to sort of rekindle that China a tariff war, which had kind of been in a detente ever since last winter.

9:18And we'll see exactly where this lands today, guys. Back over to you. Can I pivot on you here, Eamon? You know, this is new news and fascinating, but we've also spent most of yesterday talking about Jay Powell. I know you were on the telephone and doing all sorts of reporting. Is there anything new that we should understand about the state of affairs as it relates to Jay Powell? We were talking about this Wall Street Journal report this morning suggesting that the Treasury Secretary called the president on Sunday concerned about the implications of the investigation on the markets and elsewhere.

9:53Yeah, exactly what the Treasury Secretary's position on this is is a real open question, I think, Andrew. I don't have reporting to match that phone call. And there's some question about exactly what he said to the president. Is his position more nuanced than simply opposition to this move? Or is the Treasury Secretary sort of on its face horrified by the idea of going after the Fed chair in this way? I can't tell you as I sit here the answer to that question. There are some reports out there in the media as to what he said. The question is, how did he say it? What was the nuance there? Were there layers of meaning in that?

10:34And we just don't know. But you guys are right that there's been this sort of, you know, reaction in Washington to what the administration has done. And bear in mind that the president's position still is that he has nothing to do with this. White House Press Secretary Caroline Levitt told us yesterday that the president did not direct this. So take that for what you will. But the position of the administration is this is just the Department of Justice on its own. A viewer actually asked me this question, so I'm going to ask it to you. And they said, if you care, and I think we all care about holding government accountable, everybody wants to know how our taxpayer funds are being spent.

11:14And when you see a building like this that costs an extraordinary amount of money and is way over budget, they said to me, should the government be able to look into that, to try to understand that, to hold them accountable? And I thought to myself, yes, I think we'd all want that. And my question, though, is, is there a way to do such a thing without starting what is, in this case, a criminal investigation? Meaning, can this be done through hearings? Can this be done through other courses of action that wouldn't appear to be coercive to the extent that that is the perception right now? Yeah, I mean, there are a lot of ways.

11:55I mean, throughout the federal government, Andrew, there are inspectors general who exist. They were established post-Watergate as a way of going into the federal government. They're independent of the agency they work for. They go into the government and investigate and look for waste, fraud, and abuse. They issue reports all the time, actually comb through a lot of those to find a lot of interesting nuggets, about this kind of excessive spending if they find it. There's also, of course, the congressional hearing, as you mentioned. You can do a lot of things to investigate wasteful government spending.

12:27Now, the Fed is a slightly different beast because it is sort of separate and apart from the federal government in terms of the way it's set up. So it finances itself. So there's a real question here about whether these even are taxpayer dollars, right? Because the Fed finances itself out of its ongoing operations. It doesn't take a congressional appropriation. So Congress is not sending taxpayer dollars to the Fed. Is there a way to do this in a way that doesn't, is there a way to look at these numbers to the extent you want to look at these numbers on behalf of the taxpayers without it appearing or raising the question about the independence of the Fed?

13:04Yeah. Look, I mean, the Fed discloses these numbers all the time. I mean, their annual reports have detailed descriptions going back years of this construction project, right? So you can go back and look at them and they put it all out there in black and white. So the accounting is there. The ability to investigate this is there. You can have Congress could do it. You know, you could have independent agencies do it. There's a million ways to set this up. But the president, you know, if he directed this, he didn't choose to go that way. The president says he didn't direct it. And then we got to run.

13:38But final question, maybe you can arbitrate the debate we were having earlier. You've been here now following this administration for the past year. No, I'm curious if you look at this past year and think about the times that there have been public breaks between the party and the president and potentially folks like former Fed chairs and others. Have we seen this movie before or is this new at a new level? Yeah, look, I think this is new, especially when it comes to the issues that matter to our audience of finance and the economy. But I think there's been two big breaking points between Republicans and President Trump over the past year.

14:18One was the Epstein files and the other one was this. And they're both sort of core principle issues, right? I mean, a lot of Republicans campaigned on the idea of releasing the Epstein files and sort of the president. And when he switched on that and said, actually, I'm going to suppress the Epstein files. I don't want to see those out. There was just nothing for Republicans to do with that. This was one of their key issues. And you saw this sort of open rebellion against President Trump that is very rare among Republicans, but does happen. And then this one you saw, you know, Tom Tillis sort of leading the charge yesterday on this.

14:53You know, he's a guy who's not running for reelection, so it's easy for him. Others, you know, have a harder time coming out in public and going against the president. But you did see it. Eamon Javras in Washington. Thank you, sir. Appreciate it. Cheese will be next. Coming up next on Squawk Pod, one year in, we're unpacking President Trump's second-term agenda with former House Speaker Kevin McCarthy. With every great successful CEO, they have to upset the apple cart. There's people who are not going to like it because you can't be nice to everybody. You can't make it easier on everybody. Global affairs, defense, and much more, right after this.

15:36This is Squawk Pod. Stand by Joe. His mic. Q. And join us now on all the latest news out of Washington. Former House Speaker Kevin McCarthy is now chairman of the Alpha Institute. We're back in. It was weird because just last week, and welcome, gracing us on the set. Welcome. Just last week, I was saying if Warsh is in the lead in the prediction markets, then I would say that that dispels some of the concerns about a Fed chair that's just in the tank for the president, because Warsh is an independent thinker. So I said, maybe we don't need to worry about, you know, Santelli agreed with me that maybe the hair on fire loss of Fed independence, maybe we didn't, so we didn't have to worry about it.

16:19That was rekindled in spades. You know, now it's exponentially higher after this. But the market closed up yesterday. So we have been going back and forth in the I'm making the argument that common sense and cooler heads were bound to prevail here, that this is not the way necessarily to to get what you want in terms of monetary policy. And that is, you know, by by sort of bludgeoning or blackmailing the Fed chair to do what you want. I mean, if you think about whatever staff thought this was a smart idea, it's not playing out the way they thought it. Because there's enough people on both sides out who think Powell has not done a good job, too slow in action and movement.

17:08But now it's united people around him. It's going to make it a little harder when it comes to confirmation hearings. It's going to raise different questions. Tom Tillis has to sign off on things. And Tillis has nothing to lose. Right. He's already made that statement. He's not running for reelection. And Jay Powell may decide to stay just instead of leaving. Okay, so Jay's as chairman. He's out in May, but his term as governor is to January 31st to 28th. Right. So it's not having the outcome that you want. It's not having the debate that you want. Look, nobody's above accountability. I get that.

17:43You're spending too much. People look at that. And if this whole election is going to be based on the economy. But a criminal inquiry. Yeah, it doesn't play. But if you look, Bessett didn't like what happened here. President said he didn't know about it or didn't have anything to do with it. A staff could have taken an action. Trying to appease him based on what he said publicly. Let's talk about actual sources that the journal is citing here. And it's an opinion piece. But they're saying that, you know, we saw the president visit the building with Jay Powell. And he was, you know, up in arms.

18:15They both had, you know, a hard hat on. But then it kind of went quiet. The journal says its sources tell them that Bill Pulte got into Pirro's ear thinking he could curry more favor. And the journal's not very nice to Bill Pulte, says one particularly eager toady is Bill Pulte. That got into Pirro's ear. Pirro then goes to Pam Bondi, who's already in hot water, according to the journal. So she's all too willing to do something that maybe they think Trump would like to do. Although the general points out this would be the first time any of this stuff has happened without President Trump. No, they're not doing the president any favors there.

18:56But the president handled the right way when he was concerned about the building. What did he do? He went to tour the building with Jay Powell and Senator Tim Scott. And then you heard it kind of go away afterwards. But he raised the questions. He raised accountability. I was looking at him when he was saying some of the stuff when they were there. You saw the video. The president was saying things and Jay Powell was going, what are you talking about? Yeah, but you've got that all out in the air. That's how you do accountability. That's how you do hearings. It wasn't doing some probe into it that was criminal or anything else.

19:23That's how the president had it. I thought that was right. But now we've moved on. The economy is so critical in this election. We've watched the economy grow better than anybody thought beforehand. He's gone through the tariff problem that people thought that didn't bring his inflation. He just had it very successful when you went down in Venezuela. I mean, everything is hitting in place. You do not want to have a hiccup that takes you off message on this. And I think what you said happened yesterday. Calmer heads will prevail. And we know that the president is the chief whip of the Republican Party.

19:57We know that. Any other whip is. But I made the point that there have been plenty of times, and articles written about me, that, oh, my God, the Trump loyalists are finally breaking with it. And I've seen it in the past year. I've seen it six, seven, eight times. This just didn't happen to be the most egregious time when Republicans break. And, of course, I made the point that, oh, in the last administration, did any Democrat ever say that Biden was a potted plant in the White House? Did you ever hear that while it was happening? I mean, Brian Stelter even came up with cheap fakes, not deep fakes, when he's stumbling along the beach that that was like a fake video or something.

20:36Look, parties don't break with the guy in charge. And President Trump is at a stronger position than I think even Ronald Reagan was at any given time. We have not seen a president with this type of power since Roosevelt. He is the chief whip. He is more than the chief whip. And at your own peril, break with him. Is that a good thing or a bad thing? Well, you don't just get it. You have to earn it. I can make arguments all different ways. But if you want to catch up with China, if you want to do something about critical minerals, this Congress was not going to do anything. He has moved us forward.

21:08He has reset the world stage when you look at how he dealt with Iran. If you watch from the Middle East, if you watch from the settings of ending these wars, if you watch what he did on the border, I think that is very successful, and you never would have been able to do that if you sat around and waited for Congress back. It's coming back to me. There were times where you tried to step away from certain things that the president was pushing at your own peril, too. I can remember some specific instances. And you got back in the fold, but you were out of the fold at times? It happens to everyone.

21:42I think the way people, what I always, how I deal with President Trump is, talk to him directly. And when people just sit and say no, he's going to find another way. What was it about? Do you remember what I'm talking about specifically? What were you in the doghouse for? You don't want to go. What I would say, look, we have difference of opinion. You're not going to tell me? Wait a second. I have AI. Look it up. Look it up. point yeah there's different opinion when it comes to january six there's difference of opinion that's right but the other six but the truth but these are healthy and this is the way i look at president trump i want to have a very honest discussion and i have it directly with him the thing i like about where he is he's not so rigid in one certain way what i always ask him is what do you want to achieve there's other ways to achieve it make your case for it if he thinks it's better the say go that way is i am a leader of the party Nope, that's not it.

22:35There's another one? There's more. There's many more. McCarthy breaks with Trump over lynching comments over January 6th. See, this supposedly never happened ever before. Oh, no, no. But it's healthy. The president breaks with other parties. People have differences. What about Greenland? What's he want? Do you think that this is going to be the same situation with Greenland, that people are going to go, Mr. President, you know, Denmark, they're longtime allies. They went with whenever we've needed Denmark. They've been on our side. We don't need to. Do we need to do this? There's always style where people go, but Europe was upset with Trump of how he would deliver and say, you've got to spend more on defense, otherwise Russia, Putin's going to invade you.

23:15You know what? He was right about that. Merkel was wrong. She dealt with Putin more and got more dependent upon him. What he's really doing is resetting the world stage. One of the other sort of major debates is some of the moves that the president has made around things like trying to cap the rates on credit cards, trying to limit buybacks, trying to limit dividends. I mean, things that when Elizabeth Warren was talking about, the Republican Party was having a heart attack about and now seems to be just fine with. Where are you? No, I think what this is, this is Trump's way of negotiating. I believe the credit cards are going to be because does he have the power, the jurisdiction to be able to do that?

23:59I don't think he does. I think this is going to be like how he got the pharmaceutical prices lower. It's a little different because the government has greater control over where you're spending on pharmaceuticals, but he's probably going to get these credit cards to come in and say, yes, they're going to lower some rates. His whole focus is get this economy moving. His negotiation style is different, but his outcome, it actually works many times. That is what he's focused upon, and I think that's where you're going to continue to see this move. Let me ask you, though, is defense different? If they're behind on projects and if they're not doing what they need to do to supply the united states with what it needs in that case would a republican say that did that the executive branch telling them what to do with executive but is it okay in that case okay but you're not giving the full story what president trump did in that this is where he's very smart okay so he goes in and says i don't want any more buybacks i think you can't pay the ceo's as much he's trying to get their attention in the exact same day he goes I want to spend$1.5 trillion on defense.

24:58So what he's doing is a Reagan moment. I don't want three people to get all the money, and you're too slow. I need Silicon Valley in. I need, like, the Andrels. It just so happens next week I'm going to announce I'm joining the board of a brand-new defense company that we'll take public later in this year, but it's a smart way to do. You need more suppliers in this. We need to be able to build these weapons faster, cheaper. You've watched the Secretary of War. Where is he today? Yesterday he was at Lockheed. He was out in L.A. before going to Divergent and others. These are new tech companies redoing our military.

25:33And you watch what happens in Venezuela. Nobody else can do that. Dividends and buybacks don't go to three people. They go to the shareholders. It's getting their attention. It doesn't have the... What he's wanting to do is, look, I'm going to put a whole new pot of gold over here, but I'm not just going to give it to have you keep doing what you're doing now because we won't get there. I need to shake you up and get your attention. Can I ask a question about the shake it up, get your attention, just conceit? I get that's what he's doing. But I do think there's a lot of Americans that look at this approach as a shakedown, that so much of the way this administration often operates is around shaking people down, whether it's in the context of what seems to be happening with Jay Powell or in so many other instances, whether it was the law firms or some of the media companies, if there's something this president doesn't like, there is a shakedown.