Fed investigation is politically motivated, Powell says
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What is the investigation involving the Federal Reserve about?
The president's campaign to influence the country's central bank just took a dramatic turn. From Marketplace, I'm Sabri Beneshour, in for David Brancaccio. The Federal Reserve says it's being investigated by the Justice Department. Officially, it's about a renovation of some Fed office buildings. But in an unusual Sunday video statement, Fed Chair Jerome Powell said the Trump administration is motivated by something else. Marketplace's Nancy Marshall-Genzer joins us with the latest. Hi, Nancy. Good morning. So President Trump has been very critical of Chair Powell. He's threatened to fire him, now to sue him. What is behind this investigation?
Well, according to Powell, the Justice Department served the central bank with grand jury subpoenas on Friday. Powell says the GOJ is threatening a criminal indictment over his Senate testimony last year about those renovations. But Powell says that's a pretext.
The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by political pressure or intimidation.
Now, President Trump talked with NBC about this last night. What do you have to say?
Stein told NBC he doesn't know anything about the investigation. Trump said the only pressure on Powell is that, quote, rates are far too high.
How does Jerome Powell perceive the political motivations behind the investigation?
Congress has oversight of the Fed and would have to confirm any Fed nominees. Does Congress have anything to say about all this?
Yeah. Senators on both sides of the aisle are upset about this. North Carolina Republican Tom Tillis said on X News, that he'll oppose the confirmation of any nominee for the Fed until, quote, this legal matter is fully resolved. Massachusetts Democrat Elizabeth Warren posted on X that Trump is abusing the law and, quote, the Senate must not move any Trump Fed nominee. All right.
Marketplace's Nancy Marshall-Genzer, thank you so much. You're welcome.
Thank you.
Warner Brothers Discovery owns HBO, CNN, a movie studio, lots more. The fight over who will own Warner Brothers is still very up in the air. Netflix wants it, and Warner Brothers Board wants Netflix to get it. But Paramount Skydance also wants Warner Brothers and has launched a hostile bid to get it. One way or another, the deal is going to change the movie-making landscape. We know this because we've seen this movie before. Consolidation isn't new. And to help us take a look at what history can tell us, we went to a movie theater on Manhattan's Upper West Side where we met up with Yeshiva University finance professor Abraham Ravid. Now, Warner Brothers, we are talking about, was formed from a merger between Warner Media and Discovery in 2022.
What threats has the Justice Department made regarding the Federal Reserve?
And one thing that happened then that I found to be so insane is they literally shelved fully made movies to get a tax write-off.
Would that happen again, do you think? It certainly is a business strategy. In other words, if you have a movie... that you've made and you don't think it's any good, what are you going to do now? Marketing is very expensive. Marketing tends to be a significant percentage of the overall cost of the movie. So by shelving the movie, you save the marketing costs. And if you don't think you're going to make any money, then a tax write-off might be the right thing to do.
Avatar 3 is showing in this theater. Now, Avatar used to be owned by 20th Century Fox. Now it's owned by Disney. It's still here. Does consolidation in the entertainment industry mean fewer movies?
In principle, not necessarily. In practice, they might decide to have fewer movies at every point in time. so that there's no competition, so their own movies will not be competing with each other, so that basically you might, at every point in time, you might have fewer movies. On the other hand, studios are now also trying to strategically time their releases so that they're not competing with some big movie from another studio.
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Chapters
4 chapters
1
What is the investigation involving the Federal Reserve about?
0:01–1:35
2
How does Jerome Powell perceive the political motivations behind the investigation?
1:35–3:18
3
What threats has the Justice Department made regarding the Federal Reserve?
3:18–6:21
4
What is the role of Congress in the Federal Reserve's oversight?
6:21–6:48