The DOJ is Still Knocking on the Fed’s Door

[0:00] It's Thursday, April 16th. A judge said they didn't have enough for a subpoena. [0:04] Well, they came looking for more. We start here. [0:10] The Trump Justice Department shows up to investigate the Fed. [0:13] A source says that they were told they actually couldn't access without clearance. [0:17] Jerome Powell only has a month left on the job, but could the president accidentally keep him there? [0:22] A ship tries to sneak through a U.S. blockade. [0:25] Turn around and be boarded. [0:27] What captains are hearing is they try to leave the Strait of Hormuz. [0:30] And you knew concert tickets were expensive. [0:33] Now a jury says it's because these companies were cheating. [0:36] Almost bragging about how they could gouge consumers. [0:39] Could an antitrust verdict reshape the music industry as we know it? [0:43] From ABC News, this is Start Here. I'm Brad Milkey. [0:54] Yesterday, of course, was tax day. [0:56] At this point, most Americans know whether they got a refund this year, and if so, how much to expect. [1:01] And in many ways, this was the day President Trump was waiting for since last year. [1:05] The Treasury Department estimates more than 50 million Americans were able to claim some kind of new refund or tax break because of last year's One Big Beautiful Bill Act. [1:15] Stocks are rising. [1:16] Yesterday, they hit near record highs. [1:18] And yet, many Americans will tell you this does not feel like a moment to be optimistic about the economy. [1:24] Oil and gas prices are fluctuating by the day. [1:27] The war in Iran could end any minute or could drag on for months, depending on who you listen to. [1:32] President Trump can also point to one other thing that would juice the economy. [1:36] Interest rates. [1:38] Jerome, too late. [1:40] Powell, I call him too late because he's always too late with interest. [1:43] Should cut interest rates. [1:45] He should cut them right now. [1:46] They should have a special meeting. [1:47] For a year now, he has been asking, urging, demanding that Federal Reserve Chair Jerome Powell slash interest rates. [1:54] The FOMC decided to leave our policy rate unchanged. [1:57] Those rates had gone down, but Powell has refused to cave to political pressure and speed up these rate cuts for any reasons other than economic ones. [2:05] At one point, at the president's urging, the Justice Department launched a criminal investigation into Powell's department, citing potential fraud around building renovations that Powell denies. [2:15] We're a billion dollars in cost overruns. [2:20] Are you kidding? [2:21] DOJ lawyers insisted this investigation was unrelated to the interest rate stuff, but Powell, and crucially, a federal judge, didn't buy that. [2:29] 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. [2:40] Well, this week, it appears the DOJ, with a new acting attorney general at the helm, is once again poking its nose around the Fed, and President Trump is openly saying that Powell might be fired. [2:50] Let's bring in ABC's Elizabeth Schulze, who covers the Fed for us. [2:53] Elizabeth, after all these legal defeats, it seems like the DOJ is still investigating the guy. [2:58] What's going on here? [2:58] Brett, they are literally poking their noses around the Fed. [3:01] So we have learned from sources that federal prosecutors from the U.S. Attorney's Office here in Washington made an unannounced visit to the Federal Reserve's headquarters here in Washington on Tuesday, [3:14] where they allegedly requested to tour the construction site to look at the renovations that have been at the center of what they say is the reason for this investigation. [3:25] This big Fed headquarters building has been under construction for years. [3:32] It's a $2.5 billion project. [3:34] It does cost more than the original estimate. [3:37] The Eccles building really needed a serious renovation. [3:40] It never had one. [3:41] It was not really safe, and it was not waterproof and that kind of thing. [3:44] So what we have learned is that these federal prosecutors basically went to that construction site. [3:49] A source says that they were told they actually couldn't access without clearance. [3:52] And this did prompt immediate backlash from an attorney for the Fed chairman, Jerome Powell, Robert Herr. [4:00] You might remember him as the special counsel who actually investigated President Biden's handling of classified documents. [4:06] So he's now representing Powell. [4:07] And he wrote in this letter that was reviewed by ABC News that this is an effort to get in contact with the Fed and that this needs to be going through the legal process based on what that judge had previously ordered. [4:20] This was a pretty stark warning saying, I ask that you do not communicate outside of the presence of counsel. [4:27] So a source tells us, Brad, that those prosecutors were turned away. [4:32] In fact, the D.C. U.S. attorney, Janine Pirro, who's been at the helm of this investigation, then said in a statement that these are cost overruns and we deserve to basically take a look at them. [4:43] What this signals to us, Brad, is that this investigation into the Fed and its renovation costs and what Powell said in his testimony about the renovation costs is not yet over, despite that very pretty clear ruling from a federal judge saying there really didn't seem to be any evidence that this investigation should be moving forward. [5:03] But I guess why from from the point of view of the Justice Department, subpoenas have been quashed. [5:10] They have been told by a federal judge like you guys don't have a good basis for an investigation here. [5:14] Come back when you do. So why are they going to the site? [5:17] Like what is behind this from the D.O.J.'s perspective? [5:19] Well, look, there is one person who has made very clear that he is not happy about the Fed's renovation costs and that he is not happy about Fed Chair Jerome Powell. [5:29] And that's Donald Trump. And in an interview yesterday that aired on Fox Business. [5:35] Don't you think we have to find out what happened there? [5:37] President Trump suggested he did not plan to tell the Justice Department to drop this probe. [5:43] So whether it's incompetence, corruption or both, I think you have to find out. [5:48] I really do. I think you have to find out. [5:49] So you're not going to drop the probe? [5:51] Oh, I'm not. I have to find out. [5:53] In that same interview, Brad, we also heard President Trump double down on this threat to fire the Fed Chair Jerome Powell. [6:02] He said he's held back so far, but he might have to fire him if Powell does not step down when his term ends next month. [6:11] If he's not leaving on time, I've held back firing him. [6:15] I've wanted to fire him, but I hate to be controversial. [6:19] But wait, so he's explicitly making this about Jerome Powell then? [6:22] Like, he's making some of these connections. [6:23] Exactly right. And that is something that we have heard multiple times from President Trump is pretty much tying the Fed and its building costs to his disdain for Jerome Powell. [6:34] And the fact that Jerome Powell has not lowered interest rates as much as the president wants. [6:40] What's confusing here, Brad, is that Powell's term ends May 15th. [6:45] And President Trump has already made his pick for who will replace Powell. [6:48] It's Kevin Walsh. [6:49] But Kevin Walsh cannot become the next Fed Chair without getting approved by the Senate. [6:54] And there is a Republican Senator, Tom Tillis. [6:57] He sits on the Senate Banking Committee, which would need to clear this nomination. [7:01] If we're going to actually accuse someone of criminal behavior because of a project overrun in federal government, we better start budgeting a lot more for prisons. [7:10] Tom Tillis says that he will not move forward with confirming Kevin Walsh until that DOJ investigation into the Fed's building is essentially dropped. [7:19] I will not allow any board member for the Federal Reserve to go through the Banking Committee for chair or for replacement of expired terms until this matter is settled. [7:33] So as long as we've got that kind of ability of Tillis to block Walsh from getting forward, you kind of have this stalemate where Powell is still in charge of the Fed. [7:42] He has said he will stay on at the Fed if no one is confirmed to replace him by May 15th. [7:48] I have no intention of leaving the board until the investigation is well and truly over. [7:52] But you've got President Trump who very clearly wants Powell to get out, but at the same time is doubling down on this investigation. [7:58] So hard to see where this ends. [8:00] Right. [8:00] Like you could get rid of him if you dropped the case, but you're clearly not willing to drop the case. [8:04] But can the president fire the Fed chair? [8:07] Elizabeth, is that like has the president done that before? [8:09] It's a little bit of an open question. [8:11] We really the president does have the power to fire a member of the Federal Reserve for cause. [8:17] And we don't really know what constitutes for cause. [8:19] In fact, that's a question that's already in front of the Supreme Court. [8:22] Remember, when President Trump tried to fire last year a Federal Reserve governor, Lisa Cook. [8:29] So, you know, even if President Trump is making these threats, there isn't a lot of precedent for how he could actually follow through on them. [8:37] We're in really unusual territory here in so many ways. [8:40] And it is just worth remembering, Brad, that what's at stake and what we're talking about when we think about the Fed is the U.S. and global economy. [8:47] This is the most important central bank in the world. [8:49] It determines borrowing costs for consumers and businesses. [8:52] And that's why this is watched so closely, because who's going to be leading it? [8:55] It's a very big decision for, you know, everyday Americans. [9:00] Especially when you think about kind of the politics of this moment. [9:03] Remember, this was supposed to be a victory moment. [9:05] This tax season, the average American has apparently gotten $700 back because of tax refunds that they wouldn't have gotten a year ago. [9:13] And yet, the average American has also paid more than $700 in added gas prices over just the last few months. [9:19] Elizabeth Schulze covering the Fed. [9:21] Thank you. [9:21] Thank you so much, Brad. [9:23] Next up on Start here, the Strait of Hormuz is small, but is not that small. [9:29] Ships have begun testing the U.S. blockade after the break. [9:36] President Trump has claimed for weeks that Iran has already been decimated. [9:40] That it has no more military to speak of. [9:43] That it has no more cards left to play. [9:45] He has demanded unconditional surrender. [9:47] That's not what he's got. [9:48] We've been at it now for 21 hours. [9:51] And we've had a number of substantive discussions with the Iranians. [9:56] That's the good news. [9:57] The bad news is that we have not reached an agreement. [10:00] Peace talks fell apart within a day. [10:02] To which President Trump said, fine, we're going to take over the Strait of Hormuz. [10:06] A blockade has since gone into effect, specifically for ships entering or leaving Iranian ports. [10:11] For all the satellites monitoring ship movements from above every day, [10:14] it's been tough to tell how effective it's been. [10:17] But judging by Iran's reaction, it is definitely having an effect. [10:21] They are now threatening to resume attacks that U.S. allies don't want to see. [10:25] But will any of this force Iran back to the negotiating table? [10:28] ABC Senior Pentagon reporter Louis Martinez is here. [10:31] Louis, how is this blockade going so far? [10:33] What do we know about it? [10:35] Well, Brad, so far it seems that this blockade is being very effective. [10:37] It's being run by the U.S. Navy, but not only just them. [10:40] It's a whole-of-government kind of operation. [10:42] We're talking about not just U.S. Navy ships. [10:45] We're also talking about U.S. Navy aircraft. [10:47] We're talking about U.S. intelligence assets, satellites being used. [10:51] We're talking about reconnaissance aircraft. [10:53] It's a whole wide variety of systems being employed to essentially get a good idea of where [10:59] these ships are leaving from Iran and where ships are headed to if they're going into Iran. [11:04] So what we do know is that over the first 48 hours, [11:07] U.S. Central Command now says that about 10 ships were turned back towards Iranian ports. [11:13] Now, most importantly, one of them appears to have been trying to evade the blockade. [11:18] And once the United States detected it, they sent it back to its location there in the Strait of Hormuz. [11:24] It had left from a port just there, just to the north in Bandar Abbas, [11:28] which is located in the Strait of Hormuz. [11:30] But that's the first known attempt at trying to evade the blockade. [11:34] And so far, things seem to be working. [11:37] Well, and help me understand how this works then, [11:38] because U.S. ships are just out there patrolling, not just by sight, [11:42] but also, I guess, tracking like satellite imagery and transponders [11:45] and all the things they have at their disposal. [11:47] But then there are ships that are unknown to them or what? [11:50] Sure. [11:50] So one of the things that we should point out is I think a lot of us now have seen [11:53] what the Strait of Hormuz looks like, you know, that peninsula that juts out. [11:57] You've got the Persian Gulf to the left, and you've got the Gulf of Lamont to the right. [12:01] And what you're seeing is essentially a line of ships. [12:04] There are 16 U.S. Navy ships in the region right now. [12:08] 11 of them are destroyers. [12:09] So imagine that a good number of those destroyers are being employed as a line, [12:13] essentially, if they see any ships headed their way, [12:16] if they are able to track with their long-range radars [12:19] any ships that appear to be moving or have left from one of those ports inside Iran, [12:25] then they track them, and then they hail. [12:28] That's what's called a bridge-to-bridge communication. [12:32] They use the radio to contact, hail, the other ship. [12:36] The U.S. has announced a formal blockade of Iranian ports in coastal areas. [12:40] This is a legal action. [12:41] There's going to be this message. [12:42] It's been fully vetted legally, and the message is a script, [12:45] and it's going to be read by someone on the bridge. [12:48] And the message is essentially, this is a U.S. Navy vessel. [12:51] We are enforcing a blockade. [12:53] This is legal. [12:55] Turn back around. [12:56] These blockades will be boarded for interdiction and seizure, [13:00] transiting to or from an Iranian port. [13:02] Boarded. [13:04] To comply with this blockade, we will use ports. [13:07] So it's a very direct message, but also heavily scripted, [13:10] and because they're following international law, Brad. [13:13] And so when they do something like this, [13:15] they want to ensure that everything is on the up and up. [13:18] And no one's trying to test that necessarily. [13:20] Like, there hasn't been like an arms standoff, right? [13:22] Like everyone who's been caught has basically just made a U-turn? [13:25] For the most part, everything seems to have been going according to plan. [13:28] Whenever some kind of a ship approaches, we saw that the messages were conveyed either by ship to ship or by air to ship, [13:37] and those vessels turned around. [13:38] But we are now being made aware by U.S. Central Command that there was at least one instance where an Iranian ship tried to evade the blockade. [13:46] And so this is very interesting language from U.S. Central Command because they are saying this was an active attempt to evade the blockade, [13:53] and that the Wios destroyer did intercept it. [13:56] And then at that point, the radio communications were sent again, [14:00] and they were ordered back to their port, and that's what they did. [14:04] Where does this all put Iran? [14:05] If the goal of this is to put a lot of pressure on the Iranians of like, [14:09] you're not going to have access to anything from the outside world. [14:12] We know they've already shut down their petrochemical shipments over the last 24 hours. [14:17] How do they view all of this? [14:18] Well, let's remember, Brad. [14:19] What's going on right now is a two-week ceasefire. [14:21] And we saw the first round of negotiations in Islamabad did not go well. [14:26] There may be another attempt at negotiations or restarting those negotiations. [14:30] But what we're seeing is that Iran sees this as an act of war. [14:35] They're saying, we are engaging in a ceasefire, and yet you, the United States, [14:40] are carrying out this kind of action, which we see as a violation of the ceasefire and is an act of war. [14:46] Formal authorization from Congress is not necessary because we're currently in major combat operations. [14:51] But it's an interesting dynamic, Brad, because the United States Congress has not declared war against Iran. [14:57] What we've heard descriptions of is that this is a major combat operation against Iran, but it's not a war. [15:04] But again, the U.S. Central Command is using the term blockade, so it kind of goes to the question, [15:10] it's a very fine line legally, are we at war with Iran, or is it still a major combat operation? [15:17] And which is why then you wonder if that forces Iran to say like, well, then we're going back to, [15:21] if you guys are going to war with us, we're going back to war with you. [15:23] And that's why, again, so complicated just to get these sides to the table. [15:27] Louis Martinez, covering the Pentagon, as always. Thank you. [15:30] Thanks, Brad. [15:30] I'm going to try to be unbiased here as a journalist, but let's talk about ticket prices. [15:40] So, tickets to most big events are expensive. [15:44] Okay, this is very difficult. They're too expensive. [15:46] Is that okay to say, you guys, that they're just, they're too expensive? [15:50] Anyway, over the last month, a trial has been happening. [15:53] A lawsuit targeting Ticketmaster, which has always sold tickets, [15:56] and Live Nation, which promotes events and owns venues across the country. [16:01] Well, more than a decade ago, Live Nation bought Ticketmaster, [16:04] a move that created a behemoth in the live event space. [16:07] Well, yesterday, a jury said this company has not just been dominant over the last several years, [16:12] it's been acting illegally like a monopoly. [16:15] This is a major decision that could impact the entire music and live performance landscape. [16:19] ABC's chief investigative correspondent, Aaron Katursky, is with us. [16:22] Aaron, can you just break down what we heard from the jury yesterday? [16:25] Well, you remember when you were trying to get tickets to the Ares Tour, [16:28] and it was just a disaster? [16:30] No, but okay. [16:31] Whatever. [16:31] Yeah. [16:32] For millions of people, they tried to log on, they wanted to see Taylor Swift, [16:36] and the whole system just melted down. [16:39] I would click on it, and it would instantly be like, [16:41] no, this ticket is sold, you can rebuy it for $9.50. [16:43] It's almost like you're at the back of the line, and then there's the other line, [16:46] and it just feels like it's pushing me back further from even going to see a show anymore. [16:49] And effectively, the jury in Manhattan Federal Court said, Brad, that that happened [16:55] because Live Nation and Ticketmaster have been operating as a monopoly. [17:02] Live Nation is in control of too many concert venues [17:06] and in control of the ticket sales for too many shows, [17:11] and that's hurting consumers, and it's causing problems in the entire industry. [17:16] Tickets used to be $20, but now they're upwards of $75 for the same experience, [17:22] if not worse, because there's less amenities, more crowds, and everything is more expensive. [17:27] And with this jury verdict, the hope by the nearly three dozen states [17:32] that brought the lawsuit is that concert tickets are going to get a little cheaper [17:37] and maybe easier to come by. [17:39] Yeah, what is the impact, and I guess how big is this to the music industry? [17:43] Because it's not like this judgment was basically not like these companies are a monopoly in and of themselves. [17:48] They have to disassociate forever, was it? [17:50] So, like, do people get refunds or what? [17:52] Well, it could be. [17:54] Consumers were overcharged per ticket, the jury found, by about $1.72. [18:00] Now, that doesn't sound like a lot, but think about all the concerts in all the venues in the last decade or so, [18:07] and that adds up. [18:08] Try to control the venues, trying to control the performances, and also adding on various fees and other costs. [18:17] So the states are seeking a financial penalty of at least $700 million that Live Nation could be forced to pay. [18:26] It will be up to the judge to decide. [18:27] There could be additional penalties as well, maybe even forcing Live Nation to sell Ticketmaster, [18:35] which would be something of an earthquake in the live music space. [18:40] But either way, the hope is that this is just better for consumers. [18:46] Live Nation already settled part of this lawsuit with the federal government, [18:50] which had initially spearheaded it, paying $200 million and selling off 13 amphitheaters where concerts are held. [18:59] The vast majority of the AGs who started on this lawsuit are going to stay on this lawsuit. [19:04] That's Republicans and Democrats. [19:06] To the states that carried on with the lawsuit, that wasn't enough, [19:10] and that wasn't going to be enough of a change to actually benefit consumers. [19:13] Wait, I totally forgot about that, Aaron. [19:15] Right, there was this settlement with the federal government. [19:17] Does that look bad for the Trump administration's DOJ? [19:22] Of all the companies to let off the hook, you'd think, [19:25] Ticketmaster and Live Nation are not the most sympathetic companies to most Americans. [19:29] And critics of the Trump administration's decision said it was just a bad look. [19:33] It's a pretty bad deal. [19:35] So the core issue here was that Live Nation and Ticketmaster, [19:39] when they merged a few years back, they became so powerful that they were able to raise ticket prices. [19:43] Especially now with this successful outcome for the original case, [19:49] which under the Biden administration, the Justice Department and its antitrust unit really took control of. [19:56] It is time for fans and artists to stop paying the price for Live Nation's monopoly. [20:03] It is time to restore competition and innovation in the entertainment industry. [20:08] They're out of the case now. The states carried it on, but it may limit the real impact here. [20:15] The states are still going to push, but the judge, when he decides how to punish Live Nation for this anti-competitive conduct, [20:25] will have to take into account its settlement with the Justice Department that included no admission of wrongdoing. [20:31] Primary ticketing companies, including Ticketmaster, do not set ticket prices. [20:37] Live Nation always said it was no monopoly, that it became an empire because of its business acumen, [20:43] its success in the marketplace. [20:46] And really what the trial exposed was how some of its own employees were messaging back and forth, [20:54] almost bragging about how they could gouge consumers, how they could charge these inordinate prices. [21:00] And it wasn't a great look when those messages came to light in court. [21:04] But Live Nation is going to fight to keep itself intact. [21:08] It does not want to sell off any part of its business. [21:11] And Live Nation says, look, they're in charge of just as many ticket sales as some of its competitors. [21:18] Right. In fact, Live Nation put out a statement last night saying the jury's verdict is not the last word on this matter. [21:23] Pending motions will determine whether the liability and damages rulings stands. [21:27] So you can imagine their lawyers still fighting this as the judge is basically going to be another trial [21:32] or another legal proceeding to figure out what the punishment should be here. [21:35] And we're Katursky in New York. [21:36] Thank you. [21:36] Thank you, Brad. [21:37] All right. One more quick break. [21:40] When we come back, who knew pilots could catch such a catitude? [21:44] One last thing is next. [21:49] And one last thing. [21:50] I have reported many times on plane crashes, helicopter crashes. [21:53] And what never ceases to amaze me is how professional pilots and air traffic controllers are. [21:59] Remember Sully Sullenberger as he decided to emergency land in the Hudson River? [22:03] We're going to be in the Hudson. [22:06] That was it. [22:06] No panic. [22:07] No drama. [22:08] You never know. [22:08] He was quietly saving hundreds of lives. [22:11] But it turns out not all pilots are this buttoned up meow-a-days. [22:16] This is sound from air traffic control radio that was posted on ATC.com of pilots meowing at each other. [22:23] One pilot meows. [22:26] Another responds. [22:27] At one point, another voice chimes in, reprimanding them. [22:30] You guys need to be professional pilots. [22:32] You need to be professional pilots, he says. [22:35] Guess how they respond. [22:36] Meow, meow, meow, meow. [22:40] Was that a dog bark? [22:41] Now, the FAA says that pilots are prohibited from non-essential conversations below 10,000 feet. [22:47] And they're investigating this particular dialogue. [22:49] But a couple things. [22:50] One, this is apparently not that uncommon. [22:53] A pilot source tells ABC News that meowing is rather common on the airwaves and that [22:59] it usually happens on less trafficked guard channels. [23:02] But guard channels are quiet specifically because they're designated constantly monitored [23:07] emergency channels. [23:09] This would be like knowing someone's listening to a silent 911 dispatch line and going, [23:13] I gotta fill that silence with something. [23:15] Maybe meowzik? [23:16] And maybe you're thinking, hey, this isn't smart, but maybe this is some tiny private airport [23:21] in the desert somewhere. [23:22] This happened at Reagan National Airport in D.C., site, by the way, of last year's [23:27] plane crash that became the deadliest on American soil in decades. [23:31] Which might be why this other voice was so annoyed. [23:34] Or maybe it's just because he's had it with meowing pilots wherever he goes. [23:38] He even tells them at the end, this is why you're still flying RJs, regional jets. [23:43] In other words, you're not ready for the big leagues, kids. [23:46] This is why you're still flying RJ. [23:47] You could almost hear that land, right? [23:52] I can't be positive, but it sounded persuasive. [23:56] When I first heard about this trend, I thought it was because maybe like meow sounds like a [24:03] jet or a race car rushing by, like meow. [24:05] But many cat people I've talked to have just convinced me it's because people like making [24:08] that noise. [24:09] That's the joke. [24:10] Quite a tale anyway. [24:11] Many thanks to our transportation producer, Clara McMichael, for landing that one. [24:15] I'm Brad Milkey. [24:15] I'm out tomorrow, but I'll be right back next week. [24:18] I'll see you soon.