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White House Says It Has Secured Release Of Marc Fogel From Russia; Top Justice Officials Now Leading "Weaponization" Review; Fed Chair Powell: Officials In No Hurry To Cut Rates & Higher Tariffs May Not Necessarily Lead To Higher Prices; Democrats Concerned, With CFPB Shut, "No Other Regulator" Supervising Lenders. Aired 1:30-2p ET

Aired February 11, 2025 - 13:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[13:30:00]

ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: -- Russian airspace, according to the -- according to the White House.

I want to read a little bit of the statement from the national security adviser, Mike Waltz.

He says that, "President Trump, Steve Witkoff and the president's advisors negotiated an exchange that serves as a show of good faith from the Russians and a sign that we are moving in the right direction to end the brutal and terrible war in Ukraine."

A number of very interesting elements to this, Boris. Steve Witkoff is the Middle East envoy. He's been engaging with Middle East partners on the ceasefire deal. He is not necessarily someone who has Russia in his portfolio.

And the direct link in that statement to the war in Ukraine, this is something that we've been discussing a lot this week, the Trump administration moving closer to presenting a deal to end the war in Ukraine.

Lots of questions about how to get Russia to the table to negotiate. And clearly the release of Marc Fogel is playing into these negotiations. So that is extremely interesting.

Now, Fogel was not exchanged last August -- it was a major disappointment to his family -- in that historic deal that saw -- saw Evan Gershkovich and Paul Whelan come home.

He -- he was not, at the time, determined to be wrongfully held by the State Department. So consider, essentially, a hostage being held by a foreign government around the world. But he was declared to be wrongfully detained in December.

And so both the Biden administration and now the Trump administration have been trying to secure his release after he was arrested four years ago with some 17 grams of marijuana. So just over half an ounce.

Again, a disappointment to his family that he was not released last year. But now he is on his way home. According to this White House statement, he will be back on American soil and reunited with his family by tonight -- Boris?

BORIS SANCHEZ, CNN HOST: And as you put it, Alex, perhaps a precursor to more developments on a potential deal between Ukraine and Russia.

Alex Marquardt, thank you so much for the breaking news.

There are new questions about possible conflicts of interest at the Justice Department. People who defended Donald Trump in some capacity, including in his criminal cases, may now be investigating those who tried to prosecute him.

We're learning these top officials are leading what's called the Weaponization Working Group, tasked with examining current and former prosecutors and FBI employees.

CNN chief legal affairs correspondent, Paula Reid, is here with this new reporting.

Paula, talk to us about who these officials are and the work that they're carrying out now.

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: Sure. We're going to look at a few specifically that are causing consternation inside the Justice Department because of the overlap of their previous work related to January 6th and then their current role reviewing cases related to January 6th.

With Emil Bove, he is currently the acting deputy attorney general, the number-two official at the Justice Department. But back in early 2021, he was actually a prosecutor working on January 6th cases, helping to track down suspects and build these cases.

Now, he left in late 2021 to join a then-former President Trump's defense team. But sources say, at the time, he never raised any questions about the cases they were working on.

But it's not unusual for prosecutors to then become defense attorneys and make a little money. But what's unusual now is he's one of the top officials at the Justice Department.

He's the one firing off these letters to the FBI, looking for information about agents who worked on these cases.

Now, we talked to some ethics experts, and they say, look, this isn't necessarily an ethics violation, but it certainly is the appearance of a conflict.

Then also, looking at the acting U.S. attorney, Ed Martin, here in Washington, D.C. He's a former activist around Stop the Steal. He represented several defendants related to January 6th.

He is also not recused from overseeing a review of January 6th cases, specifically how prosecutors used obstruction charges in those cases. Again, the optics are not good here. It's not clear that it's, on its face, right, according to the rules, a conflict of interest. But his main option is recusal. And the problem is, we know that

President Trump does not like recusal. Remember, Jeff Sessions and Russia, right?

SANCHEZ: Yes, yes.

REID: So, look, this is all unlikely to change. But these conflicts, this overlap is definitely adding to the morale crisis within the department.

SANCHEZ: It's got to be awkward if you're an FBI agent who worked closely with Emil Bove, the acting deputy director --

REID: Yes.

SANCHEZ: -- because now he's turning around. He should know them well. He directed them to go find these suspects.

I do want to ask you about perspective that we've gotten from some legal minds, namely, folks that have been in Donald Trump's circle in the past. They think it's good to have a fresh perspective at DOJ. Help us understand that.

REID: Yes, this comes from former Trump attorney, Tim Parlatore, who worked with a lot of these officials who are now running the department.

And he said that he thinks it's actually a good thing to have fresh eyes inside the department, specifically people who have been on the other side of federal cases.

[13:35:00]

Many of these lawyers, including Todd Blanche, who's about to likely be the deputy attorney general, they worked on Trump's federal cases. They've been on the other side of this system.

And Tim's point, I think, is an important one, which is, if you look at administrations of both parties, there tends to be this revolving door of the same political people who come in once their party is in power.

Then you have people who stay there for their whole careers, and there's not a lot of fresh perspective.

Now, the messaging, even Trump officials will -- will confess, has not been great. They have not done a great job about winning hearts and minds there. But there is a lot of distrust.

But there's also this other perspective that maybe we do need to have some new people inside the department to look at, possibly, some new ways of doing things.

SANCHEZ: Paula Reid, appreciate the reporting. Thank you so much.

Coming up, if you're in the market for a home, don't expect a rate cut anytime soon. Find out why Federal Reserve Chair Jerome Powell is not rushing to lower interest rates.

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[13:40:28]

SANCHEZ: If you're hoping for a rate cut from the Fed, don't hold your breath. The chairman of the Federal Reserve, Jerome Powell, faced questions from Senators on Capitol Hill today.

Here's a taste.

(BEGIN VIDEO CLIP)

JEROME POWELL, FEDERAL RESERVE CHAIRMAN: With unemployment at 4 percent. That's quite a low level. Inflation last year was 2.6 percent for the year. So we're in a pretty good place with this economy.

We want to make more progress on inflation. And we think our policy rate is at -- is in a good place. And we're not -- we don't see any reason to be in a hurry to reduce it further.

Once we lower rates and kind of rates return to a lower level, mortgage rates will come down. I don't know when that will happen.

(END VIDEO CLIP)

SANCHEZ: Here is something Powell said that will be music to Donald Trump's ears. As you know, may know, Powell is a frequent target of the president.

He testified that higher tariffs won't necessarily lead to higher prices for consumers, referring to the president's recent round of new tariffs.

Listen.

(BEGIN VIDEO CLIP)

POWELL: Somebody's got to pay the tariff. And it can be -- it can be the exporter. It can be the importer. It can be a middleman. And --

(CROSSTALK)

UNIDENTIFIED SENATOR: Somebody pays for that?

POWELL: Somebody does. But you know, in some cases, it doesn't reach the consumer much. In some cases, it does. And it really does depend on facts that we haven't seen yet.

(END VIDEO CLIP)

SANCHEZ: Let's discuss with Douglas Holtz-Eakin, who was the chief economist on the Council for Economic Advisors under George W. Bush. He also served as the former director of the Congressional Budget Office. And he's now the president of the American Action Forum.

Doug, thank you so much for being with us.

Let's start right there. Did it -- did it surprise you that Jerome Powell made that distinction, saying that companies or suppliers, importers may wind up picking up the cost of tariffs and not passing it along to the consumer. And also, how realistic is that?

DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM & FORMER CHIEF ECONOMIST, COUNCIL FOR ECONOMIC ADVISORS & FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE: Well, I'm not surprised. The chairman has spent a lot of time in the witness chair. And he's very careful about drawing a straight line between any administration's policies and something the Federal Reserve might have to do.

So he's not going to make a direct connection between tariffs and inflation, which would force them to raise rates. He's going to avoid that at all costs.

But having, you know, sort of looked at the issue, it is true that, in principle, the cost could be borne by the seller, a middleman or the buyer. But, in fact, the vast majority of the evidence is that those tariff costs will be passed along to the American consumer.

And so if tariffs are put in place in a substantial amount for a substantial amount of time, and those are things the chairman also emphasized, we don't know how long some of these things will be in place and how big they'll be.

But if the president goes ahead with some of his plans, we will see impacts on the price level.

SANCHEZ: What do you think about what he said regarding the Fed not being in a hurry to cut rates?

HOLTZ-EAKIN: Well, I think he was actually very clear on that. Inflation has come down from a high of 9.1 percent to 2.6, the mid twos maybe three depending on your preferred measure. But it stayed there for about six months.

And so inflation has not continued to decline toward the 2 percent target. So there's no particular reason to declare victory and cut rates further.

Unemployment remains very low. it's at 4 percent. And he emphasized that they felt that downside risks to the labor market had diminished.

And so again, you're not trying to save the economy from a recession. You still have an inflation problem. Those point toward rates staying where they are -- are being higher than they are going forward.

SANCHEZ: I mentioned a moment ago that, as you well know, Powell and President Trump had some conflicts in his first term. Trump has been very clear that he sees --

HOLTZ-EAKIN: Yes.

SANCHEZ: -- the presidency as having some role in Fed policy. What do you think of this -- this highwire act that Powell is

performing now where he has to balance what's best for the economy, and a president that's very eager to get involved?

HOLTZ-EAKIN: Well, I think every administration has strong views about what the Fed's policy should be. And the -- the real difference between President Trump and others is President Trump conveys them publicly, more frequently than do other administrations who tend to do this over lunch with the secretary of treasury.

But the Fed's reaction is the same, which is, you know, we are going to do our job regardless of what other people's opinion might be. The chairman emphasized that yet again today.

The step further of actually having the president remove the chairman or have a say in policymaking, the Fed has firmly said no.

[13:45:08]

So they have established their position. For the moment, President Trump's respecting it. And they're just going to have to agree to disagree about the -- the level of interest rates at the moment.

SANCHEZ: Now, for the moment, Trump has stayed away from the Fed.

I want to ask you --

HOLTZ-EAKIN: Yes, for the moment.

SANCHEZ: Yes. I want to ask you about something Democrats brought up, this growing concern over the apparent shutdown of the CFPB, the Consumer Financial Protection Bureau. It was ordered shuttered by Elon Musk's DOGE.

Here is Senator Elizabeth Warren, a frequent proponent of the CFPB's work.

(BEGIN VIDEO CLIP)

SEN. ELIZABETH WARREN (D-MA): If the CFPB is not there examining these giant banks to make sure they are following the laws, are not cheating consumers, who is doing that job?

POWELL: I can say no other federal regulator.

WARREN: No one, in other words.

(END VIDEO CLIP)

SANCHEZ: What does it mean for consumers to have the CFPB stop functioning?

HOLTZ-EAKIN: Well, in the near term, I think it's exactly as Chairman Powell said, there is no one who's picked up the mantle of consumer protection among the financial regulators. But if you roll the clock back prior to the creation of the CFPB,

there were consumer protections in the law and they were enforced by the -- the various financial regulators, the Federal Reserve, the FDIC, the Office of the Comptroller of the Currency.

And what happened with the creation of the CFPB is that those agencies sort of stood down on consumer protection and turned that over to the CFPB.

So if the CFPB were to be eliminated, statutorily removed, that mantle would go back to them. They'd have to do that job.

Right now, that's -- sort of everyone's looking at each other and wondering, how is this going to play out and who's going to have that role?

SANCHEZ: So you would argue that at the current moment, there would be no overlap between the work of these other agencies and what the CFPB does? Because folks that have argued that it should be dismantled have said that --

HOLTZ-EAKIN: Right.

SANCHEZ: -- it's redundant.

HOLTZ-EAKIN: So when it was created, it was redundant. I was among those who had that concern. But you know, it's been years. And in that time period, the other agencies have stepped back from the consumer protection role and they've left it to the CFPB. That's what it was created to do.

If there's not going to be a CFPB, then they will have to pick up and enforce those laws and use their authorities to do so.

SANCHEZ: Doug Holtz-Eakin, appreciate the analysis. Thanks for joining us.

HOLTZ-EAKIN: Thank you.

SANCHEZ: Straight ahead, President Trump's border czar is firing back at someone criticizing deportations -- the pope. We're following that clash.

And we're getting a firsthand look at what is unfolding on the border. A firsthand account when we come back.

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[13:52:12]

SANCHEZ: U.S. border czar, Tom Homan, is cautioning Pope Francis to stay in his own lane. Homan was responding to a letter from the pope to U.S. bishops in which he criticized Trump's deportation policies and said that forcibly removing individuals will, quote, "end badly."

Here's Homan's response. (BEGIN VIDEO CLIP)

TOM HOMAN, PRESIDENT TRUMP'S "BORDER CZAR": Stick to the Catholic Church and fix that and leave border enforcement to us. He wants to attack us from securing our border? He's got a wall around the Vatican, does he not?

(END VIDEO CLIP)

SANCHEZ: Tom Homan also says that, by his rubric, the U.S. is still not doing enough.

(BEGIN VIDEO CLIP)

HOMAN: I'm not satisfied. There's more criminal aliens that need to be arrested. Hundreds of thousands.

Sanctuary cities are putting roadblocks up. We got leaks. So we need to increase the arrests of illegal aliens, especially those with criminal convictions. So we're going to continue.

So three times higher is good. I'm -- I'm -- the numbers are good. For me, not good enough. We got to get more.

(END VIDEO CLIP)

CNN's Rosa Flores is getting a closer look at how Trump's immigration crackdown is impacting U.S. Border Patrol operations.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: 916 radio check.

CHRISTINA SMALLWOOD, U.S. CUSTOMS AND BORDER PROTECTION AGENT: So what we look for is any disturbance in the ground.

ROSA FLORES, CNN CORRESPONDENT (voice-over): In the dark by ground and at racing speeds on the Rio Grande at daybreak --

SMALLWOOD: We had a shooting incident in --

FLORES: -- Border Patrol Agent Christina Smallwood shows us what border enforcement looks like in south Texas under Trump 2.0.

(on camera): Since the new administration started, how has your job changed?

SMALLWOOD: It hasn't.

FLORES (voice-over): She still tracks smuggler hotspots and analyzes footprints from border crossers.

SMALLWOOD: It may be evening hour foot traffic.

FLORES (on camera): So last night?

SMALLWOOD: Right.

FLORES (voice-over): The most significant changes, she says, President Donald Trump ending the Biden-era CBP One app, which was used by migrants to enter the U.S. legally.

And the de facto end of catch-and-release, a term for authorities releasing migrants into border communities after immigration processing.

(on camera): What is the biggest impact?

SMALLWOOD: Apprehension, detention, ultimately leading to removal.

FLORES (voice-over): She says the de facto end of catch-and-release is not due to a directive from the president but actually the result of extremely low migrant crossings and swift deportations.

SISTER NORMA PIMENTEL, CATHOLIC CHARITIES, RIO GRANDE VALLEY: We spoke to a Border Patrol agent --

FLORES: Sister Norma Pimentel is the head of the prominent migrant respite center in the area who over the years has received tens of thousands of migrants from Border Patrol under both Republican and Democratic administrations.

(on camera): So since Trump took office the number of migrants released to --

PIMENTEL: Oh, very few.

FLORES: -- you see very few.

PIMENTEL: Almost zero.

FLORES: Almost zero?

PIMENTEL: Right.

FLORES: So practically the end of what they call catch-and-release?

PIMENTEL: Correct.

FLORES (voice-over): She says not zero but close enough.

[13:55:01]

Monthly migrant apprehension on the U.S. southern border started declining over a year ago. Last summer, after the Biden administration essentially barred asylum and upped deportations, border crossings plunged further.

Despite the sizable drop, President Trump declared a national emergency --

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Stop the invasion at our southern border. FLORES: -- citing, in part, a flood of migration, announcing tariffs -- some of those now deferred -- all while continuing an ICE enforcement blitz across the country's interior that has led to more than 8,700 arrests.

EDDIE GUERRA, SHERIFF, HIDALGO COUNTY, TEXAS, SHERIFF'S DEPARTMENT: In south Texas, I mean --

FLORES: Eddie Guerra, the Democratic sheriff of Hildalgo County, says the ICE blitz has taken six suspected criminals off the streets.

(on camera): What types of crimes?

GUERRA: Individuals with aggravated assault, sexual assaults, indecency with children.

FLORES (voice-over): The Republican mayor of McAllen, Javier Villalobos, has some reservations about another looming Trump policy.

(on camera): What concerns you most about the tariffs?

MAYOR JAVIER VILLALOBOS, (R-MCALLEN, TEXAS): Our economy, putting food on the table, inflation.

FLORES (voice-over): Historically, migrant crossings are cyclical, which means the de facto end of catch-and-release could just be temporary.

Take Trump's first term. Migrant crossings initially dropped but then spiked in 2019. At the time, Sister Norma said Border Patrol was sending up to 1,000 migrants a day to her center. And ICE described it like this.

VILLALOBOS: The humanitarian and national security crisis the likes of which we have never seen.

FLORES: Which raises concerns about yet another aspect of Trump 2.0, the move to freeze federal aid that nonprofits in cities like McAllen depend on during migrant searches.

GUERRA: The city cannot be footing the bill.

FLORES: Back on the Rio Grande with Agent Smallwood all quiet after hours of patrol.

(on camera): Do you see any footprints?

SMALLWOOD: I don't. No activity this morning.

FLORES (voice-over): Rosa Flores, CNN, along the U.S.-Mexico border.

(END VIDEOTAPE)

SANCHEZ: Our thanks to Rosa for that report.

Coming up, it's President Trump versus the courts as judges pause parts of his agenda. CNN NEWS CENTRAL is back in just a moment.

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