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Early Start with Rahel Solomon

DOJ Investigates Jerome Powell; U.S. Weighs Options In Iran; FBI: Suspect Confesses To Mississippi Synagogue Fire. Aired 5-5:30a ET

Aired January 13, 2026 - 05:00   ET

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

[05:00:24]

DANNY FREEMAN, CNN ANCHOR: Good morning and welcome to our viewers joining us from the United States and all around the world. I'm Danny Freeman, in for Rahel Solomon. It is Tuesday, January 13th, 5:00 a.m. here in New York.

And straight ahead on EARLY START.

(BEGIN VIDEO CLIP)

PHIL MATTINGLY, CNN CHIEF DOMESTIC CORRESPONDENT: President Trump's long simmering war on Federal Reserve Chair Jay Powell has gone nuclear.

SEN. KEVIN CRAMER (R-ND): I don't think Jay Powell is a criminal.

SEN. CHRIS COONS (D-DE): This is a really dangerous thing.

KRISTEN HOLMES, CNN SENIOR WHITE HOUSE CORRESPONDENT: President Trump will meet with his top national security advisers as he weighs options when it comes to Iran.

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: Airstrikes would be one of the many, many options that are on the table for the commander in chief.

HADAS GOLD, CNN MEDIA CORRESPONDENT: Elon Musk defiantly defending his A.I. chatbot Grok's ability to digitally undress images of real people.

UNIDENTIFIED FEMALE: We want those images taken down. They are despicable. They are abhorrent.

(END VIDEO CLIP)

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FREEMAN: A lot of news to get to this morning, but we begin here. Lawmakers in Washington are speaking out over the Justice Department's criminal investigation into the Federal Reserve and its chairman, Jerome Powell. Now, prosecutors are looking into whether Powell mismanaged a $2.5 billion renovation of the Fed headquarters and lied about some of the upgrades in testimony to Congress. But many critics believe Donald Trump is just trying to push Powell out as Fed chair because he hasn't lowered interest rates to the president's liking. Even though Powell's term ends in just a few months.

Now, the White House, though, for its part, is now trying to distance the president from this investigation.

(BEGIN VIDEO CLIP)

LEAVITT: The president has every right to criticize the fed chair. He has a First Amendment right, just like all of you do. And one thing for sure, the presidents made it quite clear that Jerome Powell is bad at his job. As for whether or not Jerome Powell is a criminal, that's an answer the department of justice is going to have to find out. And it looks like they intend to find that out.

(END VIDEO CLIP)

FREEMAN: Meanwhile, others say the probe threatens the central bank's independence. Lawmakers on both sides of the aisle are coming to Powell's defense, and some Republicans are calling for an expedited investigation to avoid delaying other important matters.

(BEGIN VIDEO CLIP)

CRAMER: I don't think Jay Powell is a criminal. If we were to do an indictment on everybody that misled congress in a hearing, we'd have to build a couple new federal penitentiaries.

SEN. STEVE DAINES (R-MT): I support the independence of the -- of the -- of the Feds. And I hope that this investigation wraps up very, very quickly.

SEN. JOHN KENNEDY (R-LA): I know Chairman Powell very well. I will be stunned -- I will be shocked if he has done anything wrong.

SEN. THOM TILLIS (R-NC): Another example of an amateur hour, as far as I'm concerned.

(END VIDEO CLIP)

FREEMAN: CNN's Phil Mattingly has more reaction from Washington.

(BEGIN VIDEOTAPE)

PHIL MATTINGLY, CNN CHIEF U.S. DOMESTIC CORRESPONDENT: President Trump's long simmering, mostly one sided war on Federal Reserve Chair Jay Powell has gone nuclear. There's no question about it. When you talk to officials here in D.C., both those aligned with the Trump administration, particularly on Capitol Hill and those deeply opposed to it, there is unified shock at the fact that a criminal indictment may soon be looming for the Fed chair. It is an escalation on top of months and months and months of

rhetorical escalations that we've seen from President Trump and his top officials. But it is certainly one that takes things to a very different level, a level that the Federal Reserve and its more than a century in existence simply has not been a part of before.

Now, let's be very clear, president's pushing the Fed, mostly behind the scenes to adjust interest rates to best lead to their desired political outcomes. That in and of itself, not exactly new. President Trump has taken it to a whole new level against the chairman that he actually appointed during his first term. We've seen it play out over the course of the first year, over and over again. What we have also seen is those close to the president, particularly treasury secretary Scott Bessent, try and keep the president from making any rash moves of trying to fire the Fed Chair, a legal effort that many people have very real questions about whether it actually would reach any kind of outcome whatsoever.

Now, however, this is a very different level of things, and it was a level that was laid very bare by the fed chair himself, somebody who has gone to great lengths not to go get into a back and forth with President Trump, not to get in to a rhetorical war with the president. Despite all of the insults Trump has lobbed his way.

That changed on Sunday night with a direct to camera, two minute and extremely blunt statement from the Fed chair about the fact that these subpoenas, as they were related to the potential for false congressional testimony made by Powell, related to $2.5 billion renovation of a Fed building, we're not at all about that. They were pretext for Trump's frustration over Powell's reticence to lower rates, something the Fed has actually done meeting after meeting after meeting over the course of the last several months, and something Powell in and of itself does not have the power to unilaterally control.

[05:05:11]

It is the board that votes on that. However, this escalation, clearly unsettling markets to some degree. The dollar, stocks, bonds all dropping very real concerns about what this means going forward. One thing to be very clear about, the administration is not in full alignment about this process. Trump said he had no knowledge of it whatsoever. The treasury secretary, I'm told, not at all happy with the fact that this is playing out.

Keep in mind, the president is in the midst of deciding his Fed chair nominee, a decision he's expected to make in a matter of days, maybe a couple of weeks at this point. Powell leaves the role in May. Most administration officials assumed Trump would be willing to wait that out, even if he was frustrated.

Now there's a very real possibility that might not actually happen. What happens next, though, that remains a very open question.

Phil Mattingly, CNN, Washington.

(END VIDEOTAPE)

FREEMAN: Thank you, Phil, for that.

Joining me now is Art Hogan, chief market strategist at B. Riley Financial, to break all of this down.

Thank you so much for waking up for this, Art.

Let's start here. Many critics saying that taking legal action against the Fed chair will shake the markets, spook investors, really be a risky move for the economy. And yet yesterday, Dow and S&P hitting new highs.

From your perspective, is this legal pressure on Powell really risking hurting the economy?

ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY FINANCIAL: Well, I certainly think it would if in fact what happens here is that the Fed starts to lose independence. I think the key here is that independent central bank independence is paramount. And we've certainly seen historically when central banks lose independence, they do. It does really a great deal of damage to the economy.

Whether you go back to the '70s and look at Arthur Burns and Richard Nixon and the stagflation that preceded that relationship or just, you know, in the last couple of years, look at countries like Turkey that lost central bank independence and had skyrocketing inflation. So, I think that's the major concern here.

I think that one of the things to keep in mind, and one of the reasons that the market was able to look past this yesterday is yesterday there was an outpouring of universal support for Fed independence that came from all living previous, chairs of the Federal Reserve, and certainly several Republicans and Democrats, including former secretaries of treasury, et cetera. So, it's a pretty universal idea that the Fed independence is the most important piece of this puzzle.

The other is that it's a very low bar to actually bring charges and have subpoenas delivered. It's a very high bar to clear to get any of this justified, especially when it comes to talking about cost overruns and renovations of buildings in Washington, D.C. So I think the market for the time being is looking at this and saying a very low probability that anything comes of this.

And it's also important to remember that the chair, Chair Powell's chairmanship will be over at the month of May. By the time anything were to come about, they're likely to be another chairman nominated in, in the seat by the time, you know, something were to come of any of this.

FREEMAN: Art, is there any metric that you are looking at, though, to maybe be a warning light for you to see if this does have any impact on the larger economy? Obviously, the stock market is one metric, but Phil mentioned the value of the dollar, for example.

HOGAN: Yeah, certainly, we saw some weakness in the dollar. That's not new. We've had a very difficult year for the dollar in 2025. And that continued into this year. That's not helpful whatsoever. I think if you look at the price of oil, certainly the price of gold, both of those reacting a bit yesterday and they tend to be some of the safe havens that investors flock to when they're concerned about uncertainty.

But in another way, to look at this, if you look at some of the prediction markets, Polymarket, you know, sort of laid something out yesterday to say, you know, the percentage possibility of the chair, Chair Powell leaving before the end of his term. And those odds were pretty minuscule by the end of the day.

So I think those are the types of things you would look at if you say, is there is there really a chance that this could happen? And I think that the fact that we have so much bipartisan support for fed independence yesterday, everybody vocalized that. And I think that will continue to be the case.

FREEMAN: All right. Next time we have you on I want to talk about the prediction market specifically, especially when it comes to large news events. But I want to keep talking on this for a moment because CNN reported and other outlets, I should say that Treasury Secretary Scott Bessent was not happy with this decision to investigate Powell, that it would risk all the things that were talking about, market economic volatility and potentially muddying the process of choosing the next Fed chair, which is right around the corner.

From your perspective, do you think this is already complicated? The process of picking and getting a new Fed chair nominated?

HOGAN: I certainly think the process of picking the new Fed chair is probably close to being done, and I think we're down to a couple of names that the administration has been talking about.

[05:10:05]

But I think that getting that nominated, if were in the middle of this process of potentially bringing charges against a sitting chair of the Federal Reserve likely slows that down. And then what happens is you don't have, someone in the seat and either the vice chair or the FOMC itself. The seven governors can take a step back and say, were going to keep chair Powell on a pro tem basis unless and until somebody gets approved through the Senate confirmation process.

And that's in danger of happening right now. I think that unless there's some backing off of what's happening here getting the nomination approved through Congress is going to be very, very difficult process.

FREEMAN: Let me ask you this, Art. I understand that yesterday, all the former Fed chairs rallied that there was a bipartisan acknowledgment that we, like you said, support the Fed's independence. But are you concerned that to some extent, perhaps some damage has been done in that? Do you believe the American people can trust that the next fed chair won't be a rubber stamp for President Trump in terms of what he wants to do versus what may be, again, in the best interest of the economy.

HOGAN: That's the most important point. I think coming out of all of this is just that. So, presidents get to nominate governors and there are seven of them. And this president has already nominated two, most recently Stephen Miran. And he has been -- he's been a very obvious proponent of easier monetary policy. He's actually gone against the votes in the last three meetings, opting for larger rate cuts.

So, couple that together with a, you know, let's call it a very dovish or an ultra dovish Fed chair. You'll start to get meetings that have results that are going to be a bit of a split. But the important thing to remember is the fact that it's still a committee. So even with an ultra dovish chair and a recent governor nomination, now on board, you've got two or three votes and, you know, there's 12 voters at every meeting and you have to have that majority.

So, while it may well appear that there's a dovish bent to the new Fed with a new Fed chair that's nominated by this administration, you're certainly not going to get dovish results unless and until you get consensus around enough voters to get the majority of 12 voters to make a decision on a meeting by meeting basis.

FREEMAN: Right. Well said. It is not just the chair in the end. Art Hogan, thank you so much for waking up early with us and breaking all that down. Really do appreciate your time.

HOGAN: Thank you.

FREEMAN: All right. Switching gears now, Minnesota is suing the Trump administration and seeking a court order to stop the immigration crackdown in the state, calling it a, quote, federal invasion. Minnesota's attorney general says the lawsuit is over immigration operations in both Minneapolis and Saint Paul.

Take a listen.

(BEGIN VIDEO CLIP)

KEITH ELLISON, MINNESOTA ATTORNEY GENERAL: It never should have started. These agents have no good reason to be here. Minnesota -- Minnesota's non-citizen immigrant population is just 1.5 percent, which is a half -- which is half the national average.

(END VIDEO CLIP)

FREEMAN: State officials are accusing the federal government of violating the 10th Amendment and targeting the twin cities due to its sanctuary policies.

(BEGIN VIDEO CLIP)

MAYOR JACOB FREY (D), MINNESOTA: What we are seeing right now is not normal immigration enforcement. We are not asking ICE not to do ICE things. We are asking this federal government to stop the unconstitutional conduct that is invading our streets each and every day. (END VIDEO CLIP)

FREEMAN: Sources tell CNN that about 1,000 more immigration officers are heading into Minneapolis, and the deployment comes as protesters continue to clash with federal agents in the city following that deadly ICE shooting of a Minneapolis woman Renee Good last week.

Now, Minnesota Senator Amy Klobuchar explained to CNN why this crisis feels different.

(BEGIN VIDEO CLIP)

SEN. AMY KLOBUCHAR (D-MN): This is so extreme because they literally are sending over 3,000 ICE agents into one state, a state that has always coordinated through the horrific tragedy of Melissa Hortman and her husband's murder to the Annunciation Church Shooting, where we had these little kids killed in the pews. We coordinated between state and federal. That's what we always do.

But what's happened here is these they sent these ICE agents onto our streets against the wishes of the Minneapolis police chief. So, here's the numbers. There are like 600 sworn in officers in Minneapolis and 550 or so in Saint Paul. So you, the ICE agents, are literally overwhelming our own police force. This is not L.A. This is not Chicago.

And Minnesota is right now the center of America's heartbreak. This has been going on everywhere. And they have chosen to use this $75 billion budget that they got from that so-called Big, Beautiful Bill and put it into our state.

[05:15:07]

So the suit says basically we've had to put $2 million in overtime for Minneapolis police alone to try to deal with this.

(END VIDEO CLIP)

FREEMAN: We'll, of course, continue to follow the latest on the ground in Minneapolis.

All right. We want to turn now to Tehran's brutal crackdown on anti- government protesters. Take a look.

(VIDEO CLIP PLAYS)

FREEMAN: And although demonstrations are still ongoing, some residents tell CNN that it was quieter Monday night in Iran with less police protests. I should say activity. Now, according to a U.S. based human rights organization, at least 512 protesters, including nine children, have been killed so far, though CNN cannot independently verify these numbers.

Users of some landline and mobile phones in Iran are now being able to call abroad for the first time since last week, when authorities had imposed a near total communications blackout in the country. Meantime, U.S. president Donald Trump says he will issue a 25 percent tariff on countries that do business with Iran. He's also said he's considering some very strong military options if protesters are killed.

In response, Tehran is reiterating its threat to target U.S. military bases, ships and personnel in the Middle East if the U.S. launches strikes. But the White House press secretary says Iran's private messages to the Trump administration are quite different from their public tone.

More on this, let's turn to CNN's Paula Hancocks. She's live in Abu Dhabi.

Good morning, Paula. Tell us. What's the latest here?

PAULA HANCOCKS, CNN CORRESPONDENT: Well, Danny, let's first of all, look at those tariffs that the U.S. president announced. Now we do, I have to say, have very few details about this. We just know what the U.S. president has put in his social media post. We don't know exactly which countries will be impacted. We don't know how it will be enacted.

But what we see on face value is that countries like China will be significantly impacted. If this goes ahead. The fact that China, for example, just to show what sort of business it does with Iran in the last, first 11 months of last year, it exported some $6.2 billion of goods to Iran. And coming the other way, it imported $2.85 billion of goods. So that is significant trading between those two countries.

And when it comes to Iran's oil, its believed, according to many experts, that something like 90 percent of Iran's oil goes to China, imported through different intermediaries. So potentially, this will be very damaging to someone like China. Also, other countries, India, the UAE, Turkey could be impacted by this.

What isn't clear is how it will impact Iran in the immediate future. Certainly, any tariffs will have an impact over time. It also isn't clear at this point what sort of support this gives to the protesters on the ground. We have heard from the U.S. president that he supports the protesters. We also heard from the secretary of state. He has said that he will step in. The U.S. will step in if peaceful protesters are being killed by security forces.

Now, we know that they are being killed by security forces. We know that that is the case from the limited footage and information that's able to get out from Tehran, given that Internet blackout.

Now, when it comes to other options, the U.S. president is looking at, he has suggested that Iran has reached out to him to negotiate. We haven't heard that from Tehran. But what we have heard is the foreign minister saying potentially they would be willing to negotiate. And then, of course, the third option is the military option -- Danny.

FREEMAN: Man, just a fascinating, evolving story there in Iran on the ground. Paula Hancocks, thank you so much for that reporting. I really do appreciate it. And still to come, an Ohio couple found shot to death in their home.

Well, now, the wife's ex-husband is charged with their murders. We'll have the latest on his first court appearance.

Plus, the FBI says a suspect has confessed to torching the largest synagogue in Mississippi. We'll have more on that investigation as well, just ahead.

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[05:23:49]

FREEMAN: The man accused of murdering an Ohio couple in their home has made his first court appearance. Michael David McKee waived his right to an extradition hearing Monday in Illinois, where he was arrested back on Saturday. He faces two counts of premeditated aggravated murder in the shooting deaths of his ex-wife Monique Tepe and her husband Spencer. Now, police say they were found dead in their home on December 30th after Spencer Tepe failed to show up to work at his dental practice. Their two young children were also inside the home but unharmed.

An attorney for McKee, who is a physician and surgeon, says he'll enter a not guilty plea.

The FBI says a suspect has confessed to setting fire to Mississippi's largest synagogue. Authorities are not ruling out possible hate crime charges, as incidents of antisemitism are on the rise nationwide.

CNN's Rafael Romo has details on the investigation.

(BEGIN VIDEOTAPE)

RAFAEL ROMO, CNN NATIONAL CORRESPONDENT (voice-over): Tonight, a confession from the man authorities say set fire to Mississippi's largest synagogue. This, according to a new court filing.

Surveillance video shows a man wearing a hoodie and a mask pouring liquid from a can inside the synagogue. The man seems to be making an effort to douse every crevice and corner as he moves around the building.

[05:25:00]

According to a criminal complaint filed Monday, Steven Spencer Pittman confessed to his father to setting the building on fire after confronting his son about burn on his ankles, hands and face. The complaint also says Pittman laughed as he told his father what he did, later referring to the Jewish temple as the synagogue of Satan when interviewed by investigators.

According to the Beth Israel congregation president, there was significant damage to the temples library and offices, as well as smoke and ash damage throughout the building.

ZACH SHEMPER, PRESIDENT, BETH ISRAEL CONGREGATION: They had broken in through one of the windows from the outside with an ax, apparently, and then proceeded to pour gasoline or some kind of accelerant from a gas can.

ROMO (voice-over): Two Torahs and other sacred scriptures were also destroyed.

SHEMPER: It's all gone. All of it.

ROMO (voice-over): Beth Israel is Mississippi's first and largest synagogue, built just after the Civil War, and the only synagogue in Jackson. According to the synagogue's website in 1967, the Ku Klux Klan bombed Beth Israel in part because of the congregation's work in the civil rights movement.

Several local officials have publicly expressed support for the congregation.

DEPUTY CHIEF CLEOTHA SANDERS, JACKSON FIRE DEPARTMENT: We just want to let the Beth Israel community know that the city of Jackson is standing with this community. So attack against the synagogue is an attack against all of us.

ROMO (voice-over): The fire comes amid a wave of antisemitic events across the country. The Anti-Defamation League documented more than 9,300 antisemitic incidents across the United States in 2024, a 5 percent increase from the year before.

SHEMPER: The outreach of the community has been overwhelming. All of -- you know, a lot of the churches in the area have offered their worship space as our worship space as we need it.

ROMO: Rafael Romo, CNN, Atlanta.

(END VIDEOTAPE)

FREEMAN: All right. Rafael, thank you for that.

Coming up, Venezuela's opposition leader is due to meet Donald Trump in the coming days. The big question, though, can she convince the president that her party is fit to lead Venezuela?

Stay with us.

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