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Lawyer: Fed Governor Lisa Cook Will Sue Over Attempted Firing; Trump Says He's Firing Fed Gov. U.S.A. Cook Over Unproven Fraud Claim; Trump Holding Cabinet Meeting At The White House; Trump Administration Pushes Law Enforcement Crackdown; Trump On Crackdown: "Chicago Should Be Next". Aired 12-12:30p ET

Aired August 26, 2025 - 12:00   ET

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

[12:00:00]

MANU RAJU, CNN ANCHOR, INSIDE POLITICS: Welcome to Inside Politics. I'm Manu Raju in for Dana Bash. Any moment, we'll take you to the White House, where President Trump is holding his seventh official cabinet meeting, and we'll take questions from reporters.

You can expect to be asked about his effort to fire a top Federal Reserve official, an unprecedented move and maybe an illegal one. And his plan to send the military into major American cities, which he says is to fight crime.

While we wait, let's get to CNN's Jeff Zeleny at the White House. Jeff, we just learned that the Fed Governor Lisa Cook will sue over Trump's effort to remove her. What are you hearing?

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Well, Manu, this is an expected next chapter of this. Lisa Cook, of course, a member of the Federal Reserve Board of Governors appointed in the Biden administration, as now in the crosshairs of President Trump. So, President Trump has been, of course, escalating his attacks on the Federal Reserve, but now Lisa Cook is saying that she will sue.

So, this is going to end up likely in the Supreme Court, and it is going to test the independence of the Federal Reserve and the independence of this -- of this body, which, of course, is important to every American because it controls interest rates. But the president has taken considerable interest and has been a leveling a considerable criticism for months against Jerome Powell, the chair of the board. But now, he's also aiming his fire at Lisa Cook.

So, she is saying that the president does not have cause to fire her, and this will be litigated in the courts. And we've seen a chapter or a preview of some of these cases and other of the many, many legal cases that have come forward in the Trump administration. One that comes to mind is the National Labor Relations Board. When Trump removed the previous appointees, was allowed to do that.

However, the higher court is weighing in, I mean in that case and saying the Federal Reserve is separate. It is a quasi-independent, a quasi-independent agency. So, this has never been tested in a court of law before, and she's the first member of the Federal Reserve Board of Governors to ever be fired by a U.S. president.

So once again, we are entering sort of uncharted legal territory here, where the bottom line is, how much of the executive authority can the president actually flex and is the Federal Reserve independent or not?

RAJU: Yeah, huge, huge questions there. Another big question will be about his plans to escalate this military crackdown in America's biggest cities. What do you expect the president to say about that effort, Jeff?

ZELENY: Well, look, when he meets with his cabinet shortly, that is one of the questions hanging over this. Of course, the president signed an executive order just yesterday directing his secretary of defense to create these specialized units in every state chapter of the National Guard that could respond in a moment's notice at any disorder in public streets.

But what we are seeing here is just a blurring of the lines between the nation's military and the law enforcement agencies. So, the president is clearly quite proud of the efforts that he has done here in Washington, D.C. He has threatened to do so elsewhere. Of course, mentioning Chicago several times, Baltimore, other cities as well. We will see if he actually does that. But this is certainly something that could come up in the cabinet meeting.

But Manu, a bigger question is for all of the other challenges that actually do exist around the Cabinet Room, of course, foreign relations, Marco Rubio, the Secretary of State, whatever happened to that meeting with Vladimir Putin and President Zelenskyy, the Kremlin has been silent on that. There are many other challenges as well, really, around the room.

My question would all be looking for here is, how much of those actually come up? Or is it simply the month of changing the subject here in Washington?

RAJU: I mean often -- and often, as Jeff Zeleny live for us over the White House, we'll be back with you with news from this cabinet meeting as well. And here in the room, I'm joined by a terrific group of reporters, Jackie Kucinich of The Boston Globe, Zolan Kanno-Youngs of The New York Times, Rachael Bade of POLITICO and Josh Dawsey of The Wall Street Journal, who is also the co-author of an excellent book, 2024: How Trump Retook the White House and the Democrats Lost America. Congratulations on the book.

JOSH DAWSEY, WHITE HOUSE CORRESPONDENT, THE WASHINGTON POST: Thank you.

RAJU: Yes. So, why is Trump picking this fight over Lisa Cook? Does he actually think he can win this? Because the Supreme Court has suggested that it's not something that he can do. There's not clear. There's cause to do it. What are you hearing about his strategy and his mindset here?

DAWSEY: Well, as we've seen time and now again. I mean, he tests the limits on what he can do and makes courts slap him down and pushes things to the courts. It's a multi-pronged strategy to pressure Jerome Powell. You see him attacking Jerome Powell, you know, over the building construction project, the Federal Reserve going there, you know, donning the hard act, doing the press conference, posting about him nonstop, going after other members of the board, having his team go after other members of the board.

[12:05:00]

I mean, it's a concerted effort to put pressure on Powell and Lisa Cook. I mean, you have to imagine if that Federal Reserve lowered the interest rates and did what the president want it. He might be less interested in Jerome Powell spending on a building or Lisa Cook's mortgage or other things.

But when Trump focuses on something, as we've seen time and time again, he uses various levers of the government and various people to make people's lives miserable in an effort to get what he wants. And he oftentimes, in this presidency, has been successful. He's been able to pressure people, major institutions, you know, Harvard universities, law firms, everyone, to give him what he wants.

So, we'll see here if he's able to get by with this. But it's kind of this playbook where he asks people to do something or demands they do it. If they don't do what he wants, he sort of makes their life tough, and that's what he's doing here.

RACHAEL BADE, CAPITOL BUREAU CHIEF AND SENIOR WASHINGTON COLUMNIST, POLITICO: It also feels a little bit like a trial balloon right now, right, firing Jerome Powell.

DAWSEY: Yeah, totally, totally.

BADE: I mean, a lot of people, advisers, privately, have said, you know, there could be blowback if you do something like this. Yes, you get rid of him, you try to lower the interest rates, et cetera, but the markets could freak out. There could be some sort of economic consequences.

Now, he's sort of dipping his toe into the water without going all in right now, and he'll probably be watching the coverage and how, you know, the stock market reacts in terms of whether he can do it. I mean, look, the supreme court hasn't ruled on this yet. Yeah, they've hinted that they think there could be an issue here.

But if you think about it, with Donald Trump, he has done so many things that a lot of people said were unconstitutional, and actually one in the courts. I mean, he got rid of a whole bunch of federal workers. I remember first term emergency declarations to send troops to the border, one on that. I mean, he wins all the time on these things. So, we'll just have to see.

RAJU: All right. Everyone, stand by. We're going to still discuss this. But I want to bring in CNN's Richard Quest and ask a little bit about the implications of this. So, Richard, tell us about those implications if Trump is able to fire Lisa Cook? RICHARD QUEST, CNN BUSINESS EDITOR AT LARGE: If he's able to successfully get rid of her, then essentially the whole definition of firing somebody for cause, because that's what it is, has now been then defined and he'll be able to have a much freer reign. Because the reality is, in the case of Lisa Cook, whatever the situation is with these two mortgages that she has, certainly there's no allegation that she's done anything wrong in her job at the Fed.

And secondly, these are still allegations of her work before then. So, to get rid of her for cause about something unrelated to, that's not been proved, would be a most remarkable achievement. But as one of your other panelists said, he seems to do that again and again.

I will say to the question of his ability to do these things and get away with it, it is because those other checks and balances that would have kicked in his own party. Congress are not doing so, it's different with Lisa Cook, in a sense, because there's the other Fed governors.

RAJU: So, Richard, stocks in the U.S. don't seem to be moving much on this news and this effort by Trump to fire Lisa Cook. But I'm wondering, what other economic data are you watching for today?

QUEST: Consumer confidence, that's the number people are looking at. It has dipped, not dramatically, but consumer confidence has dipped, and that's because people are worried. They're worried about, obviously, continuing inflation, which remains elevated. That's the Fed's language, elevated because of tariffs, and people are wondering where the economy is going.

We know there's a slowdown because of tariffs. We know the tariffs are here and staying, and so there is a concern, but we're still a long way off what I would describe as panic numbers for those.

RAJU: Yeah. We'll see if that actually comes to pass. All right. Richard Quest, thank you for that analysis. Appreciate it. I'm back here in the room. I mean, this is the latest in the long line of Trump, firing or attempting to fire people who don't agree with them.

Just, you know, the Lisa Cook, there was the head of the Defense Intelligence Agency after the Iran initial assessments, the Iran strikes were not as successful as Trump had claimed initially. And then, of course, the Bureau of Labor Statistics head because the jobs report came out that he didn't like. This is a long pattern of Trump and now this unprecedented effort.

JACKIE KUCINICH, WASHINGTON BUREAU CHIEF, THE BOSTON GLOBE: And the Federal Reserve is different from all of these things, right, because they are a independent entity here. But, as Josh said, he is going to keep trying to test the fences here. Look, he tried to do this with Powell. Remember, he said, that something about the overruns of the cost of the Federal Reserve renovations or Powell's fault.

And then we had that, for lack of a better word, epic moment. In front of the Federal Reserve, you have the both in the hard hats and Powell correcting Trump right there on the spot. That seems to have dialed back perhaps some of the pressure on Powell himself. But Trump is rarely deterred by these things, and so, you know, we can only imagine that he's going to keep pressing. Now this isn't imminent, because we know that she is going to -- that Cook is going to sue Trump and tried to keep her job at this point.

[12:10:00]

ZOLAN KANNO-YOUNGS, WHITE HOUSE CORRESPONDENT, THE NEW YORK TIMES: This is a -- this moment is almost the convergence of two themes of the Trump administration. One being this expansion of Powell, the eroding of guardrails, right, trying to have a grip on traditionally independent institutions. And the other also being a sense of this retribution tour that we often talk about in the sense that the president has shown that he is willing to push out officials, career officials, a lead statistician, a bureaucrat, who are -- who he disagrees with, you know, who expressed dissent --

RAJU: Or this is saying, the facts --

KANNO-YOUNGS: Even if they're just doing their job, right --

RAJU: The facts may disagree with his narrative.

KANNO-YOUNGS: That's right, that's right. And you've seen him go after people that may be political rivals or what have you. This is different, right, because of what you just said. This is somebody who's doing their job in an independent institution, but there's a policy goal that he wants to accomplish. A policy goal that, by design, has been out of his control to lower interest rates, and actually, you know, try to shape the economy in --

(Crosstalk)

KUCINICH: But it's not -- the only out of his control in that tariffs are one of the reasons that the interest rates are where they are at this point. So, you're right, you're absolutely right that you know, where interest rates, he can't move interest rates, but his actions have produced this consequence at this point.

KANNO-YOUNGS: Yes. By design, I more so mean, the Fed, you know, traditionally, there's a reason that you don't have it be politicized, right, because this -- basically the markets, different financial institutions are relying on this to actually produce independent data that they can rely on when making financial decisions.

DAWSEY: One of the observations I've had from what covering him now and covering him in the first term because there were stoves that were sort of proverbially too hot to touch in the first term that Trump wanted to do things he didn't like, things people he wanted to go after, really times he wanted to show executive power, and people held him back.

John Kelly, others around him sort of stopped him from doing it, talked him out of it. Don McGahn, he can't do that as former White House counsel that be legal. XYZ, it's not happening.

RAJU: Yeah.

DAWSEY: I mean, if you like Trump, or just like Trump, whatever you are getting full unbridled Trump. Trump is doing, he's doing what he wants to do across the government. So, like it, not like it, all of the things they tried to stop him from doing the first term, this time, he's doing them or trying to do it.

RAJU: And there are people going them on, like Bill Pulte is one of them. He's the head of the housing agency, the Federal Housing Finance Agency. Typically, that someone who is a technocrat, a bureaucrat, this time is a very MAGA line person.

BADE: And typically, a name you would never hear. I mean, it's just so interesting to see all these obscure agencies that, you know, people never talked about, all of a sudden in the headlines.

RAJU: And I got to jump in. I'm sorry, Rachael. Look at Jeff, because Trump is now speaking. He's meeting with his cabinet at the White House. Let's listen.

DONALD TRUMP, PRESIDENT OF UNITED STATES OF AMERICA: So, we're selling missiles and military equipment, millions and millions, and ultimately, billions of dollars to the NATO people, where I'm very friendly, and we have great relationship but that was an amazing trip. So, they're funding the entire war. We're not funding anything.

I think it's an important point to make as a lot of people don't understand that. And we will continue to do that, and we're trying to get as much as we can for them. They want the American product, the American military product, is by far the best in the world and that's what they want to get. They have lots of options, but that's what they want to get.

So, where the factories are doubling up and tripling up, where they make the patriots and other really -- you could say, defense and offensive weapons. The wages for blue collar workers are now rising at the fastest rate in 60 years, which is so important to all of us around this table.

The average American worker has already seen a $500 wage increase this year, and there's no inflation because there's been decreases, tremendous decreases, with thanks to Doug and Chris, some of the people, the great job they've done with energy. Thank you very much. And Chris, thank you very much.

I see you down close to $60 a barrel, and you'll be -- you'll be breaking that pretty soon, and that has a huge impact. So, we have groceries are down. Energy is way down. Energy is way down. It was $4 to $5 for a gallon of gas. Think of that gasoline, and now it's probably 225. There are some places, it's $2, it's even -- it broke $2 at a couple of locations in the south, in places like California where they judge --

RAJU: All right. We're going to keep monitoring President Trump and his cabinet meeting here. We're going to take a quick break, come right back, and we'll talk more about it on the other side. (COMMERCIAL BREAK)

[12:15:00]

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RAJU: All right. You're looking at President Trump inside the White House in a cabinet meeting. We're listening to it. We'll bring you any news. One thing we do expect him to address, his push to send the National Guard into democratic run cities, like he has done here in Washington, D.C.

My smart reporters are back at the table, and Zolan, you cover the White House. What are you hearing about this next step, where we're seeing Trump sending in the National Guard, federalizing the National Guard, without the governor's consent. Remember, that has not really been done since the 60s, until he did it with Gavin Newsom, and in California, he's going to do it again in Illinois, it sounds like that.

[12:20:00]

KANNO-YOUNGS: They think this is a winning issue, right? I mean, they're really leaning into this. You saw the announcement yesterday that would create units in the National Guard to try and respond to different civil disturbances as well. You've seen the president lean in and the administration talk about the National Guard deployment in Washington, D.C. Even having Stephen Miller and the vice president go to Union Station to sort of put a spotlight on this.

And the White House's view, this deployment isn't about overreach or crackdown. It is -- well, they say, you know, about driving down crime, but it's also politically about putting Democrats on their heels right, and putting them into a position where, now -- OK, if you push back against this deployment, are you pushing back on efforts to fight crime, right? Like that's the tricky position here.

This issue of crime and policing has sort of been a third rail politics where Democrats, you know, if they go out and talk about it, they face backlash from their progressive flank. If they don't talk about it, then they're accused of neglecting an issue that a lot of people do care about, right and feel.

RAJU: And that Trump and the Republicans have successfully run again run on in past election cycles. Rachael, you wrote about this and in POLITICO just yesterday, saying the headline, Trump is leaning in on crime. Democrats need a better response and fast.

BADE: Yeah. I mean, he lays trap for Democrats, and they're just smiling and waltzing right into this trap. I mean, look, going out there saying, statistically, crime is down. Voters don't believe that. You look at the polling, they don't believe it. They think it's getting worse, or they think it's just staying the same, and they want to see it addressed.

You know, Democrats sort of saying this is a whole authoritarian power grab by Donald Trump. But the problem with that politically is that, while a lot of voters don't like political power plays, the thing they don't like even more is feeling unsafe in their own neighborhoods, being worried about getting carjacked or mugged. I mean, the homelessness on the streets of the cities that has taken off, drug overdoses, that sort of thing.

And so, this issue is a top issue for voters, and a lot of times, they respond with their fear. And Republicans have very -- played very well to those fears for the past few decades. And that's especially true in the past couple of years. I mean, we saw this trend across the country in the past year or two.

A lot of progressive district attorneys, progressive mayors, progressive local officials who are getting blown like either pushed out of office or seen some sort of blowback for supporting these sort of criminal justice overhauls that became very popular after the George Floyd riots and protests. So, I mean, look, Republicans, they own this issue, they know it.

RAJU: Yeah. But given that, I mean, is there a risk of overreaching? Is that even consideration in the White House right now about setting military to the streets and maybe that turns off some swing voters. Is that even a pot thing that is crossing the mind, remember, people in the White House?

DAWSEY: Not in the course of my reporting, I haven't picked up any of that. I mean, it was in the first term. Again, as I said earlier, John Kelly, who was President Trump's first chief of staff said, one of the things we had to keep him from doing because he often want to do was involve the military in domestic affairs and policing.

This time, the White House seems to be full throttle behind it. If you look at Washington, D.C., as we all do, it's noticeably different on the streets. I mean, there are National Guard folks on 14th Street. Almost every night, they're stopping, they're taking people out of cars. I mean, walking around the city. I have to walk my dog around the city. You see folks everywhere.

I mean, the vibe, the folks of city, you know, some folks who, I think, are concerned and are scared. I was talking to some friends recently who said -- and they're building their folks who aren't coming outside. I mean, it's a different vibe. Now, the president and some of his folks say, you know, they're making the city safer, the numbers are going to go down.

You saw the argument just today that people finally feel safe to go on the streets. But you know, I say, for example, walking on the street, lots of people out, banging pots and pans, screaming at the National Guard, yelling free D.C. I mean, the tenor of the streets in Washington in the last few weeks have really changed. And if you saw that happened in cities across the country, I don't know how that would play out politically, but it certainly feels very different.

KANNO-YOUNGS: It's also worth noting. They've exaggerated the numbers, right? I mean, like, D.C. crime has been going down. Now, whether crime stats are a measure of how people feel is one thing, but the president has also exaggerated the data and the numbers here.

And if you talk to like, grassroots leaders and community leaders in D.C., as I have in the past couple of weeks, which probably national Dems could take a note on, like, people aren't noticing as much of a presence in, say, Anacostia, which is your high crime area. You are noticing a downtown.

People also do have a problem that I've been talking to with a D.C. budget still on hold and in limbo. Social safety net getting cut, but they're seeing Homeland Security Investigations in ICE and FBI clearing out homeless people, right? Like, there's a break here when you ask the residents of actual solutions to an issue that they acknowledge is very real in this city, but I don't see this deployment as being a solution to it.

[12:25:00]

Now, whether that means that Democrats don't have a problem here in defending against this, they still do, but this solution is not a panacea too, that Trump has done here.

KUCINICH: Read a story today about just what a departure this was from Trump's first term. When you think about the First Step Act, right? One of the things he said yesterday, and it's something he's very much walked away from, and it was this huge effort.

RAJU: They've campaigned on in 2020.

KUCINICH: They did. They did. And now, yesterday, he was talking about incarcerating more people in D.C. --

BADE: And riding along with police, right?

KUCINICH: No, absolutely. So, it just yet another thing that really has just turned on its head as the political winds have changed for this president.

BADE: I would just say there is a bit of a political challenge for Republicans on that and that is trying to make this the number one issue for voters. I mean, midterms are typically a referendum on the president and power.

Right now, the top issue, when you look at polling over and over again, is the economy. You know, what are people thinking about inflation? How's their own pocketbook? And I was talking to Karl Rove about this. I mean, he knows a thing or two about political messaging, very successful over the past few decades in terms of helping Republicans turn out voters and framing issues.

And he was skeptical that this would be a big thing that plays in the midterms next year. He said, look, typically, these things are the number one issue when there are riots in the streets, you know, when there is violence of some sort. And while people are worried about crime, they are, and they don't feel those statistics at all.

We're not seeing something like that. And ironically, he pointed out that Trump could have done something like this in 2020 -- during the George Floyd protest. And he actually held back quite a bit back then, because -- probably because, you know, we're talking and talking very differently about criminal justice reform back then, but Trump had an opportunity to do it back then, he didn't. And so, we'll just have to see if they can make this the number one issue for voters when really they're worried about their own pockets.

RAJU: All right, interesting take from Bush's brain. All right, much more. We're keeping an ear on the cabinet meeting. We'll bring you any updates, of course. But first, a top Trump administration official says if a business relies on government contracts, the government should get a piece of that business. Well, some might call that socialism. We'll discuss after a quick break.

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