Friday in DC: Kevin Warsh, Prediction Markets, & OpenAI’s IPO 5/22/26

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0:34We've earned our place in the fight for our nation's future. We are Marines. We were made for this. Bring in show music, please. This is Squawk Pod. I'm CNBC producer Cameron Costa. And on today's episode, we are heading to Washington, D.C., where President Trump has postponed his executive order on AI. The reason? He doesn't want to block innovation. There really wasn't an FDA for AI. No. Is it just the wild, wild west and it could come back to haunt us? I think it's going to be tough. Then, a lawmaker putting prediction markets in the hot seat. Kentucky Republican Representative James Comer's plan for Polymarket and for Kelshi.

1:21There's overwhelming agreement in Congress that there needs to be regulatory framework. There's just not agreement on it. And Democratic whip Representative Catherine Clark, how her side of the aisle is prepping for the midterms. The fastest thing we can do to lower class for Americans right now is end this war. It is Friday, May 22nd, and Squawk Pod begins right now. Stand Becky by in three, two, one, cue it please. Good morning and welcome to Squawk Box right here on CNBC. I'm Becky Quick along with Joe Kernan. We are in Washington, D.C. this morning. Andrew Ross Sorkin is back at headquarters at the Nasdaq market site in Times Square.

2:05We are in our nation's capital, where later today at the White House, President Trump will swear in Kevin Warsh as the next chair of the Federal Reserve. Andrew? Thanks, Becky. Me time. President Trump saying he postponed a signing ceremony for his much anticipated executive order on artificial intelligence because he didn't like certain aspects of it. The event was scheduled for yesterday afternoon, but the president telling reporters the U.S. is ahead of China and the rest of the world on AI, but he didn't want to do anything that's going to get in the way of that lead. He said he was concerned the executive order, quote, could have been a blocker.

2:39Reports say the order could have empowered the U.S. and government to pre-evaluate AI models to identify security vulnerabilities. And Joe and Becky, we've been talking about just the debate and battle even inside the AI industry over what those kind of regulations could look like. What David Sachs was looking for, what some others were looking for, what people in the industry were looking for. There was also apparently just an optics issue. I don't know if you had heard about getting all of those executives there for the actual signing ceremony itself and all of the photog sprays that go on. It's a prelude, don't you think, to if we're going to err on something, I think we're going to err on not being maybe as careful as some people would like to maintain.

3:30And I'm not saying I disagree with that, because I think we do want to stay in the lead and take social media, take any technology, biotechnology. We kind of plunge headlong into it because of competitive concerns. We've got to try and stay ahead, and especially with this race, with China. Do you see any guardrails, and is it just the wild, wild west, and it could come back to haunt us? I think it's going to be tough. I think there are a lot of questions swirling about that, especially because there are states that have already moved to put some restrictions on some of these things, specifically New York and California.

4:05And any legislation that comes through or any executive order would potentially preempt those states' rights to do those things. Well, what do you think? Like, Andrew, no holds barred. I'm kind of with. No holds barred. I wasn't against the idea of having some kind of. I mean, all understanding the executive order was that it really wasn't an FDA for AI. It really was much more of a situation where you were going to effectively the next the next mythos, the next frontier model was going to go and be put in front of a group of people who were going to be, frankly, a combination, I understood, of both political leaders, but also potentially even technology leaders, people, industry people, to try to evaluate them before they went out into the wild, if you will.

4:55That unto itself didn't strike me as, you know, holding up the train, necessarily. No, it's what Mythos is already doing. And that's what Mythos is already doing, almost on a voluntary basis, if you will. So that's why I was not, I don't know how struck I was struck, by the way, two days ago. People didn't pick up on it. But there was one line in what Jeff Bezos was talking about where he said, you know, we can continue to lead in this space, you know, assuming that there's not this regulatory issue. He actually talked about regulation for just like for a tiny second. And but nobody focused on it.

5:30So but it's an issue. It's a real issue. Yeah. Well, I think we know where business leaders stand. And I'm just wondering whether, you know, does it mean something that we're not prepared for happens because of a lack of guardrail? That's certainly the fear. And once you let the genie out of the bottle, you can't put it back in. We're going to be speaking. Is that what you're going to go with? No, we're going to be speaking. No horse person in the barn. Oh, two-faced out of the two. You did genie out of the bottle. The genie does go back in the bottle, though. You just have to say the right, right?

5:59Well, only if you have a wish left to force them in. Never uncry. Fine. This is toothpaste out of the two. House Republican leaders, though, this is pretty interesting. Abruptly canceled a vote on the Iran war because too many GOP members were absent. Democrats have been forcing repeated votes on resolutions to halt U.S. military action against Iran. Republican Congressman Mike Rogers, who chairs the Armed Services Committee, said the vote was pulled because too many of the party's lawmakers weren't present. So it's expected to be rescheduled after the weeklong Memorial Day break. And then this was something to behold yesterday.

6:41It was. It was surprising. The Senate Republicans canceling plans to begin voting this week on a budget reconciliation package that would fund immigration enforcement operations through 2029. GOP senators have been sparring internally over the Trump administration's$1.8 billion anti-weaponization fund. Republican leaders sent members home early for the week-long recess because if the Senate doesn't vote on it, it was not going to make its way here. They're out again until the beginning of June, June 1st. And that is the deadline that the president had set for wanting to have that bill signed and ready to go.

7:19And we're deep in the weeds on parliamentarian issues with whether it can be part of the reconciliation. There's some fighting internally with the Republicans. They cannot agree on a lot of these things. And that's why you send them walk out. You've seen there's some animus. Maybe we can't read everything into the body language of Majority Leader Thune. But the Cornyn issue, I'm not sure Massey was quite to the same extent. But the president has flexed his muscles in terms of these. He's campaigned against Republicans. He certainly has. And Tillis was already there. Who have not gone with his wife.

7:52Cassidy, all of a sudden, is voting the opposite way, which is probably not surprising. Mitch McConnell was not happy with what he heard about this. Susan Collins was not satisfied when she walked out. Senator Collins, if she had voted last night, she would have been one of her 10 ,000 straight votes. I don't think anyone's ever done that before now. It's going to have to wait. But the journal had a piece on it yesterday. 10 ,000 straight. Straight votes. They're just about laser. OpenAI CEO Sam Altman reportedly spoke to employees on Wednesday about the timing of a potential IPO. Reported the information saying that Altman noted even if the company files for public offering, it may actually hold off on the listing.

8:34Said the company wouldn't go public until it was ready. And earlier reports said that OpenAI was preparing to file its prospectus with security regulators in the coming weeks. With an eye on a listing as soon as September. the information reporting that Allman has privately said he wants to go public before. Anthropic, of course, you can file a public listing privately with the government. So, you know, what they talk about, even in the context of SpaceX, which we'll talk about in a moment, filed effectively a private listing with and then, quote unquote, flipped the listing and made it public just this week.

9:07So that's what may very well happen. Becky? But do you think that was something because the lawsuit went their way that they just want to kind of get it out there and move forward at that point? I wondered if that was the equivalent of kind of putting your your your pawn out a little bit to signal what was coming and maybe just kind of push ahead when you just had that legal victory. Oh, I don't know. I thought that would happen, to be honest with you, was there was all the reporting around the SpaceX IPO and in particular who no, no. And who the bankers were and the whole sort of army around that.

9:45And I think in the context of that, it then got reported, meaning I think that some of the early reports were coming from bankers. I think it's the same team, to be honest with you, who's going to be doing that, which, by the way, makes for some interesting bedfellows, if you think about it. But nonetheless, I think the reporting came out that there was an IPL in the offering. Yeah. And not Altman saying, hey, I don't like the attention they're getting. I want to make sure we get some, too. But maybe the bankers. I don't even know if it was the bankers trying to get the attention so much as, you know, in the context of reporting, sometimes you're on the telephone with somebody.

10:18I was not the person who broke this story. I don't I don't recall who did. The point is sometimes you're on the phone, you're learning stuff about one thing and you say, hey, anything else going on? And somebody, you know, they never want to say no, nothing else is going on. So someone might have said, yeah, by the way, when this is over, you know, we're working on the OpenAI offering. That's how these things kind of happen. That's my guess. Cheese will be next. Coming up on Squawk Pod, Kentucky Representative James Comer is launching a probe into insider trading on prediction markets like CalShe and Polymarket.

10:56He joins us right after this break. There's a concern now that members of Congress, members of the president's administration, any type of government employee could use basic insider knowledge and make huge profits on anything government related.

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11:45My community gives me the confidence to ask myself, what would you like the power to do? So every time I'm on the pitch, I play for more than myself. Oh, what a tackle from Naomi Gurma. Absolutely brilliant. Bank of America champions U.S. Women's National Team member Naomi Gurma and everyone who dares to ask, what would you like the power to do? Bank of America, proud to be the official bank of U.S. soccer. Bank of America NA, member FDSE. The wrongs we must right. The fights we must win. The future we must secure together for our nation. This is what's in front of us. This determines what's next for all of us.

12:36We are Marines. We were made for this.

12:47Welcome back to Squawk Pod with Joe Kernan, Becky Quick and Andrew Ross-Sorkin. Our next guest is launching an investigation into insider trading on prediction market platforms. We're going to now Congressman James Comer, chairman of the Oversight and Committee Reform Committee. It's good to see you. Thanks for having me. We were talking about AI earlier and, you know, the president must go, you know, full bore or at least we seem to have already done that with the prediction markets. And we have talked about. It's if there was literally a Wild West scenario at this point, I don't know what's legal.

13:25I don't know what you're allowed to do. I don't know what you're allowed to to wager on at this point. The horse is out of the or the toothpaste is out of the tube and we're trying to out of the tube. Yeah, the eggs have been scrambled. What are you looking into and how much egregious stuff are you finding? You're exactly right. It's the Wild West. There are no rules there. You know, you and I may think we know what's ethical and what's not, but there's no written law against it. This is so new and this has never been a problem until a few months ago. It really amplified when you had the situation in Venezuela.

13:59And now we know there was an inside high level military person that made a significant bet, made a four hundred thousand dollar profit when, you know, when the raid happened in Venezuela. So there's a concern now that members of Congress, members of the president's administration, any type of government employee could use basic insider knowledge and make huge profits on on anything government related. So we want to not only launch investigations to see how widespread this has been thus far, but also to prove a case that we've got to pass some type of legislation. And I think it wouldn't be too much to ask to say members of Congress can't participate in the predictions market, nor can government employees or people in the president's administration.

14:49Got to go further than that, though, probably. Probably. Doesn't it? Who's in charge? I know. And, you know, so I can't do it, but you're my golf buddy. And I say, OK, Joe, listen, I think that somebody in the Epstein investigation is going to get indicted tomorrow. I would have inside information on something like that. If I told you, you know, if the language isn't written correctly, then then I didn't break any law. You made a bunch of money and you can take me out to eat or buy something for my business. I mean, there's so many loopholes, as you know, they're always unintended consequences when you pass legislation.

15:26So anytime you set up a regulatory framework, it's very difficult. Just like with cryptocurrency, members of Congress all agree that we need to have regulations on cryptocurrency. There's just not an agreement on how to do that. Same with AI. Right. That's what we were talking about earlier this morning. So you've got cryptocurrency, AI, and the prediction market, all relatively new things where there's overwhelming agreement in Congress that there needs to be regulatory framework. There's just not agreement on how that. So as is prediction markets, how much of it will be able to survive this scrutiny, let's say, two years from now?

16:07What does it look like? Who's in charge? Who's regulating? Where's the oversight? Yeah. I think it's going to be harder to regulate, to get agreement to regulate the predictions market because just like with crypto and AI, everyone agrees something needs to be done. I think where we can have agreement is we can ban members of Congress and ban government employees from participating in it. And it's probably going to have to go further. You're going to have to have tight language where you can't even consult or give tips or anything like that. It's the same language that exists for this SEC when it comes to publicly traded securities.

16:45If you are someone who has that information, you are bound to not trade that information or give it to anyone else and eventually benefit. Yes. A hundred percent. A hundred percent. We were joking earlier. I got the jacket on, but I'm still jacketless in my mind. And when you sat down, I said, just because it's called a slush run doesn't mean that there aren't people entitled to lawfare retribution. And you said I should run for Congress. But I mean, I can see the rationale given the president's experience over the last decade or whatever. I can see ire. I can see, you know, being furious about things.

17:25And but will the rest of of the Senate and the House join in? Where does that. So how do you. That's a very controversial subject, as you can imagine. I have been a big critic of government weaponization. There are on both many people on the previous stuff that they did to Trump or what he's doing. I think you go back president several administrations. Trump was special because he was weaponized. I mean, the lawfare from the different levels of court, all the frivolous lawsuits, the whole Russia hoax, that was a hoax. I mean, there was never any today. There's no evidence that there was any type of Russia.

18:09There were five other situations and he went off seven sinks or six swing states. Everything. You know, the tax evade, you know, the things they tried to convict him on was a joke. It was a joke. So I think that there is a need for it. But what the president needs to do to be able to get this through is to explain it and have a plan. This is who's going to determine who gets compensated, because you're exactly right. There have been a lot of people that have lost everything they had in legal fees trying to defend themselves against an overzealous bureaucrat. But it can't look like a slush fund that is handed out as political favors.

18:45Well, yeah, it got branded early, the slush fund. And you're going to immediately take the other side will take it to the most extreme point. And that's J6. Yes. Yes. That that that beat up or harmed or tried to harm Capitol Police. And I mentioned to you, even the FBI informants that may have been involved beating up. How did you feel about how did you feel about President Biden pardoning himself and his family members? Oh, I was pretty vocal on that. I was not good. It looks like the same thing. Because he said he wasn't going to do it, too. Right, but it looks like it's self-dealing on both sides.

19:21100%. Yeah, there's problems in both parties. There's problems with every administration. We do have what I consider a deep state with bureaucrats that abuse their power. They hide in the shadows. They're unelected. Many people don't know who they are. And they've inflicted huge financial damage on a lot of people. that they're enemies, the people that they don't agree with. And there needs to be something. Hopefully the president can get the reset on this and explain the guardrails. That's what we want. We want guardrails because we don't want to read about. I know my friend, Andrew, you got an audit question, Andrew.

20:03You're going there, right? Well, we could talk about audits. I was just going to on this particular topic. My question to the chairman is sort of longer term. How concerned are you if if this fund exists that we will politicize this even more, meaning, you know, to the extent the Democrats come into power in the future at some point, whether they go after all these other things, create their own funds in the future, similar to this to give out money to people. I mean, that's the longer you talk about the sort of credibility long term of Washington and how politicized these things can be. You know, there's there's a whole view right now, for example, that the administration for political purposes has gone after media companies, for example.

20:49Should they in the future be able to get some form of compensation back from, you know, the next president's fund if it's a Democrat? And I think that's the sort of longer, bigger, bigger piece of this. This is our money that you're paying. And there was already one in the Obama administration for Native Americans and forming and everything else. There are several funds in the government now to pay for, as you said, agriculture, things, civil rights, things like that. So the unfortunate thing about this, it wasn't rolled out very well and no one understood. And the media and the liberals were quickly were quick to label it a slush fund.

21:29And that sounds really bad. So I think if the president comes out and says, these are the guardrails, this is how it's going to be done. But you're exactly right. Your concern is well-founded. It could very easily be abused, and most government programs eventually fall to some type of things. It's bizarre because you hear both sides say, wait till we get back in power. Like the things that the Democrats are complaining about, and then they'll turn around and go on CNN and say, just wait until we're going to go after anyone who supported Trump. You're going to answer for it. So you hear it from both.

21:58That's right. It's a problem. Anytime you set up something, there are always unintended consequences. That's a big word in this town. Unintended consequences. Chairman, very quickly, Quinnipiac recently put out a poll that showed voters are not really fond of the Democrats at this point. I think their approval ratings are 20 percent. That's near all time lows. But they like the Republicans less because the 50 percent of them said they would like to see the Democrats running Congress. Thirty eight percent said Republicans. What do you do about that? Well, I think we've got to continue to highlight what our policies are, what we're trying to do.

22:33We're trying to get the backs of the taxpayers. We're trying to reduce wasteful spending. We're trying to eliminate fraud. I think the Democrats want to spend more money and have a bigger welfare state and tax tax. You know, kind of what you're going to see in New York City and some of these other cities with these far left wing liberals that are getting elected. The Democrat Party's being hijacked by the socialist crowd. And I think if the voters realize that and understand what what the future is going to look like with it, with a Democrat led Congress versus Republican led Congress, I think they'll vote Republican.

23:07Now, the American people are frustrated, obviously, with inflation, with oil prices and things like that. But at the end of the day, I think the president's focused and Republicans are focused on trying to make sure that we can do everything we can in this building to try to get prices down. And hopefully oil prices will be down by November. All right, Cameron, James Comer, thank you. And the CBC has reached out to Calci and Polymarket for comment on this probe. It will bring you any response and a note that CBC and Cal State have a commercial relationship that includes customer acquisition and a minority investment.

23:46Next up on Squawk Pod, Democratic Whip Representative Catherine Clark of Massachusetts. She's getting into the key issues for her party heading into the midterms. We have always been a party where we know that our majority is built by aligning ourselves with working people. We'll be right back. It's the Smucker's Uncrustables Radio Hour. With round-soft, pillowy bread filled with delicious PB &J, here's your host, Uncrustables. Call her on line three. What's eating you? No one. Crust, is that you? Ugh. Uncrustables are the best part of the sandwich. Sorry, Crust. My community gives me the confidence to ask myself, what would you like the power to do?

24:31So every time I'm on the pitch, I play for more than myself. Oh, what a tackle from Naomi Gurma. Absolutely brilliant. Bank of America champions U.S. Women's National Team member Naomi Gurma. And everyone who dares to ask, what would you like the power to do? Bank of America, proud to be the official Bank of U.S. Soccer. Bank of America N.A. Member FDSE. The wrongs we must right. The fights we must win. The future we must secure together for our nation. This is what's in front of us. This determines what's next for all of us. We are Marines. We were made for this.