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Trump Fires Federal Reserve Member, But She Vows to Fight; Judge Says, Abrego Garcia Must Stay in U.S. for Now Amid Deportation Threat; House Oversight Committee Issues Subpoena for Epstein Birthday Book. Aired 10-10:30a ET

Aired August 26, 2025 - 10:00   ET

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

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PAMELA BROWN, CNN ANCHOR: Happening now, wall of dust, Arizona engulfed, near zero visibility, winds near hurricane force.

Fed fight, President Trump is saying he is firing a top official in the Federal Reserve. This morning, she's responding.

And fighting deportation. Right now, Kilmar Abrego Garcia is being held in Virginia as the Trump administration is pushing to deport him to Uganda. His lawyer will join us ahead.

And exploding wildfire, flames are incinerating parts of Oregon.

And, quote, we could have done a better job. After a flood of outrage over its new logo, Cracker Barrel is responding, but the company says it will never change.

Welcome to our viewers in the United States and around the world. I'm Pamela Brown. Wolf. Blitzer is off today, and you are in The Situation Room.

And new this morning. President Trump escalates his battle with the Federal Reserve and the independence of the nation's central banking system. The president says he is firing Federal Reserve Board Member Lisa Cook over allegations that she committed mortgage fraud. Cook denies any wrongdoing and says she will fight this dismissal. The case could go all the way up to the Supreme Court.

CNN's Alayna Treene is at the White House and Senior Reporter Matt Egan, Business Reporter Matt Egan is in New York.

Alayna, tell us more about the basis of the president's accusations here.

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Yes, Pamela. We are in uncharted territory here. U.S. president has never moved to fire a Fed governor before, but this is what he said on Truth Social yesterday. He essentially said he's attempting to fire her and said it was on the basis of allegations of mortgage fraud. Now, CNN did do a review and found that she listed two properties as primary residences, and this is relating to a 2021 mortgage application. I would note that was before she was appointed to serve on the Fed as a Fed governor.

Now, in the letter that the president posted to Truth Social, he essentially questioned Cook's competence and trustworthiness as a financial regulator. But a key question, of course, that many people are asking today is if he even has the legal authority to do this. There is a lot of ambiguity around the legal justification for cause, which the president says he does have for cause reasoning to try and remove her from her position.

Cook, though, on her part, she argues he does not have the illegal authority to do this, and she says that she will not remove or resign from her position. I want to read for you what she said in her statement. She said, quote, President Trump purported to fire me for cause when no cause exists under the law, and he has no authority to do so. I will not resign. I will continue to carry out my duties to help the American economy, as I have been doing since 2022.

Now, Pamela, I think it's important to note, of course, the context of this, which is that a lot of the president's critics are arguing this is just another move on his part to try and gain more influence over the Fed, something that, of course is independent and has been ever since its founding. And they argue that this comes of course, after he's been pressuring and urging Fed Chair Jerome Powell to lower interest rates for months now. Bottom line is this is likely to head to the courts as they consider this battle.

BROWN: All right. Matt, I want to bring you in here because many people might not know what a federal governor does and why this matters, Federal Reserve governor. Help us better understand why this is such a big deal.

MATT EGAN, CNN SENIOR REPORTER: Yes, Pamela. Look, the Fed's been around for 111 years. A president has never tried to fire a Fed governor until now. So, yes, totally unprecedented.

And economists and former Fed officials, they fear that it's also a dangerous move because the Fed is designed to be independent from politicians for a good reason. Sure, politicians might want rock bottom interest rates because that would please voters who are frustrated with the high cost to get a mortgage or pay off a credit card debt or get a car loan.

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And what president wouldn't want to run the economy hot so they could brag about blockbuster GDP and record high stock prices. But the problem economists say is that it can backfire in two ways. First off, if you have artificially low interest rates, that can actually fuel demand by overheating the economy, essentially adding demand, stimulating demand when it doesn't need to be stimulated.

The other problem here is that if the market believes that the Fed is no longer independent, that can actually drive up long-term interest rates, the ones that are controlled by investors, the ones that are linked to mortgage rates. One former Fed official told me this morning that the more the market suspects that the White House is calling the shots on interest rates, the higher mortgage rates will go, which, of course, is exactly the opposite of what voters and the White House want.

And, look, history shows that politicians who mess with the independence of central banks are playing with fire. Just look what happened in Turkey after President Erdogan installed a loyalist to lead that central bank. They had runaway inflation north of 80 percent.

So, the bottom line here, Pamela, is there is so much at stake, particularly with the number one economic issue right now, the cost of living.

BROWN: All right. Matt Egan and Alayna Treene, thanks so much.

And happening now, a federal judge says, Kilmar Abrego Garcia must remain in the United States as she considers whether the Trump administration is violating his constitutional rights to due process by pushing for his deportation to Uganda. The Department of Homeland Security posted this video right here on X yesterday of Abrego Garcia handcuffed, in Immigration and Customs Enforcement custody, with the caption, quote, he doesn't belong here and good riddance.

I want to bring in CNN's Priscilla Alvarez. So, Priscilla, just remind our viewers why this case has garnered so much attention and what happens next?

PRISCILLA ALVAREZ, CNN CORRESPONDENT: Well, Kilmar Abrego Garcia has really become the face of the Trump administration's deportation campaign. He's a Salvador national. He was mistakenly deported to El Salvador in March when multiple hundreds of detainees were sent to that notorious mega prison mistakenly, Pamela, because the administration said in court filings that it was because of, quote, an administrative error. The reason for that is because, in 2019, a federal judge said that he could not be sent to El Salvador. He couldn't be deported there because of fear of persecution, which had been established in his immigration court proceedings.

Now, fast forward to now, and this case has gone on for months. It has had so many legal twists and turns, and the latest is one that brings it back to Maryland where the question is, where is he deported? Because, Pamela, he can be deported, he just cannot be sent to El Salvador. And the question that his attorneys have is where exactly is the Trump administration planning to send him? Because, as of now, they have said they being the Trump administration, that he's going to be sent to Uganda, a far-flung country that he has no ties to, but has been the administration's approach with some detainees.

Costa Rica, however, is another option. It's one where they have provided assurances and protections if he were to be deported there and have assured that he wouldn't be sent back to El Salvador, therefore not sent to Costa Rica, then Costa Rica send him to El Salvador. So, that is why attorneys are leaning toward that.

This all really boils down to those court proceedings yesterday where a federal judge wants to hear more from the administration on their plans says that he cannot be deported until this is resolved. And what we're anticipating today is a schedule. So, what is the timeline for these proceedings? Because that's going to dictate when he could be deported by the United States as all of this is unfolding.

And the argument by the attorneys here, his attorneys, is that it's punitive for the administration to send him to Uganda. It makes no sense for them to send him there. So, really, it's a question of when and where will he be deported? And in the interim, he remains in a detention facility in Virginia.

BROWN: All right. And I'm going to be speaking to Abrego Garcia's attorney in just a few minutes about their plan. So, stick around for that. Priscilla Alvarez, thank you so much.

A new this morning, the Republican-led House Oversight Committee has issued a subpoena demanding a slew of new documents in its Jeffrey Epstein probe, including the so-called birthday book, which reportedly includes letters given to Epstein for his 50th birthday and put together by his accomplice, Ghislaine Maxwell. One of those letters reportedly written by Donald Trump, he has denied it, and then he then sued The Wall Street Journal, which first reported on it for defamation.

CNN Washington Correspondent Sunlen Serfaty is here with us now.

Tell us more about what the committee is looking for with the subpoena, Sunlen.

SUNLEN SERFATY, CNN WASHINGTON CORRESPONDENT: Well, as you said, Pam, this is really a slew of documents. Most importantly here is this much story birthday book that you said, which is a 50th birthday book that was put together, compiled for Epstein, and included a note bearing President Donald Trump's name. Of course, Trump has denied that he wrote that letter.

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So, they have subpoenaed for this birthday book, but they're also seeking any NDAs that Epstein executed. They're seeking his will. They're seeking financial documents, bank statements, and importantly here there's so much to do about whether there was a client list or not. They're specifically seeking here, and I'm quoting from the letter, any document or record that could be reasonably construed to be a potential list of clients involved in sex, sex acts, or sex trafficking.

And the chair of the committee, he feels confident that Epstein's estate has some of these materials and also confident that they will comply with the subpoena. He said in a statement issued yesterday, quote, it is our understanding that the estate of Jeffrey Epstein is in custody and control of documents that may further the committee's investigation and legislative goals. Further, it is our understanding the state is ready and willing to provide these documents to the committee pursuant to his -- to a subpoena. And Epstein's estate, they have until September 8th to turn over these documents. In a statement, they indicated that they are willing to comply here, certainly an escalation in this investigation, of course, as Congress comes back.

BROWN: And they're also looking to speak to Alex Acosta, who brokered that sweetheart deal and was Trump's labor secretary in the first term. So, that's a big deal because a lot of the victims and their lawyers have been pushing for that.

Sunlen Serfaty, thank you so much.

And happening now, look at this unbelievable video of Oregon's Flat Fire. Take a look. Over a thousand firefighters are battling this blaze. Rapid expansion of the fire is driven by dry, hot weather. And authorities at one point ordered evacuations for more than 4,000 homes. And while officials say firefighters now have protective lines of some sort around this entire fire, the threat remains at just 5 percent containment.

And over in California, the picket fire has charred ten square miles of remote Napa County. It was 13 percent contained as of yesterday, and luckily there have been no reports of damage to any vineyards in that area.

And new this morning, a massive dust storm engulfs Phoenix. It is known as a haboob. And you can see it sweeping across the area and turning day into night. And on highways, dangerous near zero visibility. Watch this.

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UNIDENTIFIED FEMALE: And I can't see anything. We're in the middle of the haboob.

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BROWN: Severe thunderstorms soon followed. Look at these huge lightning bolts streaking sideways across the Arizona sky. More than 60,000 homes and businesses in Arizona were left without power.

And this is from Burning Man in neighboring Nevada. People at the festival donate goggles and struggling to keep tents down, certainly not the experience they thought they were going to be having there at Burning Man. Wow, incredible video coming in.

And new this morning, the search for the father suspected of killing his three young daughters. Travis Decker, a former soldier, has been wanted since June 2nd. The FBI yesterday launched an extensive two-day search for clues right near the Washington State campground, where those little girls were found dead.

Authorities express their own frustration with the state of this investigation. Watch this.

(BEGIN VIDEO CLIP) SHERIFF MIKE MORRISON, CHELAN COUNTY, WASHINGTON: We want to bring closure, we want to bring answers. We understand the frustration. We're feeling it as well. It's been three months. We would love to have Travis Decker in custody standing in front of a judge.

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BROWN: Investigators also noted that there's still no evidence about whether Decker is alive or dead. The U.S. Marshal Service is offering a reward of up to $20,000 for any information leading to Decker's capture.

The students and faculty return to college campuses around the country. Some are being met by a cruel and horrifying hoax, fake emergency calls that an active shooter is on the loose. This is anyone's worst nightmare, right?

This is the University of South Carolina on Sunday. Students scrambled to safety, raising their arms to show they are not the shooter. But, in fact, there was no shooter. Just yesterday, six universities had fake reports of active shooters, six college campuses in one day. Take that in. And in the first minutes, no one knows it's a hoax.

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UNIDENTIFIED MALE: First, we heard that there was an active shooter, then there was two active shooters. Then that one of them was detained, and then there was no active shooting at all. So, I'm rather confused.

REPORTER: How are you feeling right now more so than you --

UNIDENTIFIED MALE: I'm calm. Yes, I was quite ready to -- we were ready though. We were looking for them to handle it. We're ready to handle it.

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: We figured if all of us went out at once, he couldn't shoot all of us.

UNIDENTIFIED MALE: Yes.

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BROWN: All right. I'm going to bring in CNN Security Correspondent Josh Campbell, a former FBI special agent.

You know, Josh, it is truly chilling to hear that student describe what he thinks was a life or death decision with the shooter, right. I mean, students, unfortunately, in this day and age, they have that in their mind, then they think it's actually happening, but it's a hoax.

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It's not only cruel. It's incredibly dangerous, right? JOSH CAMPBELL, CNN SECURITY CORRESPONDENT: That's right, incredibly dangerous because we've seen reports of injuries as people flee on what they think is an active shooter incident underway. There was at least one man who was killed in a previous incident after being shot by police who mistook him for some type of threat, so extremely serious.

As you mentioned, we're now in this wave of incidents recently that started last week after authorities in Chattanooga received reports that an active shooter was underway at the University of Tennessee, a few hours later, a very similar incident happening in Villanova with people fleeing a chaotic situation. Take a listen here to the district attorney outside Philadelphia who's vowing to find the people responsible.

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BRIAN STOLLSTEIMER, DISTRICT ATTORNEY, DELAWARE COUNTY, PENNSYLVANIA: My office, Criminal Investigation Division, the FBI. We're all going to work to try to get to the bottom of who might have done this, because if this was indeed a cruel hoax, this is a crime. And we will track you down if it's the last thing we do.

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CAMPBELL: Now because there have been so many of these incidents, authorities are starting to learn some of the key attributes, including if a 911 call comes into a non-emergency line, for example, that could be a red flag because oftentimes these people will use the internet to call sometimes from overseas and they can't access the 911 system, where they also say that if the caller's voice doesn't actually match the urgency of the moment, that could be a red flag.

They're trying to get their arms around at the FBI under previous Director Christopher Wray created this task force. So trying to ensure law enforcement across the country understands what's happening here.

BROWN: All right. Josh Campbell, thanks so much, as always.

Happening now, Cracker Barrel is responding to backlash over a new logo that set off a flood of outrage and a drop in the company's stock. The new logo there on the right is just a simple font with the iconic old timer wiped from it entirely. And let's just say many folks, particularly on the right, are not happy with this more simplistic design.

John Rich, part of the country's duo, Big and Rich, asked on X, will you go to Cracker Barrel now that it's going woke? This could be a Bud Light moment in the making. And actor James Wood also weighed in, quote, cracker Barrel was the only place I'd ever stop. No mob fights, a fun, corny atmosphere and delicious food when you're hungry and tired, I'll never step foot in one again.

Well, for more, we are joined by CNN Tech Reporter Clare Duffy in New York. All right, so, Clare, shares of Cracker Barrel took a major hit. The company is now addressing this, but it doesn't appear as of now it's going to go back to that original logo, right?

CLARE DUFFY, CNN TECH REPORTER: Yes, Pamela, that's right. The company is basically acknowledging this backlash, but it doesn't appear that the company is going to be unwinding this rebranding, which is part of a $700 million brand transformation that the company has been undergoing. That includes this new logo, but also updates to its menu, changes to the interior decor of its restaurants, doing away with some of that, you know, vintage Americana that the company is known for.

All of this has sparked that backlash that you alluded to there. You know, right wing conservatives calling this transformation woke. Here's what Cracker Barrel said in this statement yesterday. They said, if the last few days has shown us anything, it's how deeply people care about Cracker Barrel. You've also shown us that we could have done a better job sharing who we are and who we'll always be.

And the company is saying that some of those core parts of the brand are in fact sticking around. The old timer will remain featured on the menu and on road signs. They're keeping, for example, the rocking chair is on the porch that the company is known for. But it doesn't look like this new logo is going anywhere. Pamela?

BROWN: Interesting. All right, Clare Duffy, thanks so much.

Still ahead, right here in The Situation Room, do not come to Chicago. That is the warning from the Illinois governor as President Trump threatens to send the National Guard there.

Up next, we're going to speak to one of the attorneys for Kilmar Abrego Garcia as they fight to keep him in the United States.

We'll be right back.

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BROWN: Happening now, a federal judge says Kilmar Abrego Garcia must remain in the United States as she considers whether the Trump administration is violating his due process rights by pushing for his deportation to Uganda. Abrego Garcia, who is in the U.S. illegally, made national headlines in March when he was unlawfully deported to El Salvador.

The Department of Homeland Security posted this video on X of him handcuffed in Immigration and Customs Enforcement custody yesterday. As of the afternoon, Abrego Garcia was detained at a facility in Virginia.

Joining us now is one of his attorneys, Benjamin Osorio. Hi, Benjamin. Thank you for coming on. So, if you could just give us a sense of the state of play right now, is he still at the Virginia detention facility where ICE moved him yesterday, and when do you expect to talk to him next? BENJAMIN OSORIO, PARTNER, MURRAY OSORIO: Yes, ma'am. He's still detained there. Obviously, we're happy that he's detained locally so that his family can go and visit him. I fully anticipate talking to him along with Simon, one of the other law partners working on his case on Friday morning. So, that'll be the next time we have an opportunity to speak with him. We've got a video meeting set up to go over sort of the status of everything that's happening right now on both the immigration front, the habeas front, and then I think his criminal defense is also trying to set up a meeting with him as well.

BROWN: The Trump administration has leveled very serious allegations at your client, accusing him of being a gang member and a human smuggler. Have you received any evidence from the Justice Department in discovery leading up to his January trial to support those claims, any information that isn't already out there from this administration?

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OSORIO: So, I'm not on the, on the criminal defense team. I'm working on the immigration case. So, as far as I've seen, I mean, I've seen what you've seen publicly. I've seen what's been posted on based around the federal docket. I mean, multiple federal judges, the federal judge in Maryland, the federal judge in Tennessee that decided the bond had looked at this and said that the government had little to nothing with regards to him being a gang member.

Now, obviously, the smuggling sort of charges are ongoing. Those is what he's charged with in Tennessee. But from an immigration standpoint, I haven't seen anything that would lead me to believe that he's been guilty of these things.

BROWN: Early on in this case, there were concerns about your client's due process rights when he was sent to El Salvador against a judge's order. Now, he is set to get a trial in January. A federal judge has ordered him to remain in the U.S., as she considers his case, and you confirm that he is still here. Is this how the legal process is supposed to play out? Are you satisfied that his due process rights are being respected here?

OSORIO: I am. I mean, we've been very lucky to have the help of the team at Quinn Emanuel, and also he's got an excellent criminal defense team. So, I mean, with tremendous pro bono legal efforts, I believe that now he's going to get the due process and I'm sure that the federal district court in charge of the habeas is going to make sure he gets the due process that he deserves. We are also working with the immigration court to try to work back and sort of remove the removal order that would then, at least for now, there would be no imminent deportation. So, that's also something that we're working on as well.

BROWN: And my understanding is the administration does have the right to deport because he was in the U.S. illegally. He has this trial coming up in January. But can you just help us better understand what the specific concerns are related to sending him to Uganda, which is what the Trump administration wants? And he has pushed for going to Costa Rica instead, but the administration wants him to agree to a plea deal, which he won't, apparently. OSORIO: So, I mean, there's a huge difference between what's facing him in Costa Rica and Uganda. One, Costa Rica's offering him status. Two, Costa Rica's offering not to detain him once he arrives there in Costa Rica. Three, they're saying that they will not deport him to El Salvador. We have none of those guarantees from Uganda. So, my fear is that he would go to Uganda, get no status, be detained, and almost immediately be deported to El Salvador. So, it's just allowing the government to have an end run around the withholding order in place.

You know, there's no problem, you know, with Uganda specifically. The problem is I don't think he's going to stay in Uganda. The problem is he's going to end up back in CECOT.

BROWN: And is there any scenario which he would agree to, any sort of plea deal to go to Costa Rica as the administration has offered him?

OSORIO: I don't know. I mean, I think I respect, you know, him for standing his ground. I think it takes a lot of bravery for somebody who's been in CECOT, been tortured, been through what he's been through, and not taking that deal. Because if you told me, you know, Ben, I think you're going to end up back in CECOT if you don't take this deal, I would feel a lot of incentive to do it. So, I respect him for wanting to pursue his constitutional rights and go to trial.

BROWN: I want to ask you about this video of your client that the Department of Homeland Security posted on X yesterday, and it shows Kilmar Brigg Garcia handcuffed and in the custody of Immigration and Customs Enforcement. The full post from DHS reads, quote, he doesn't belong here. He won't be staying here. America is a safer nation without this MS-13 gang banger in it. Good riddance. How do you respond to that?

OSORIO: Charge him. If you think he's a gang member, we have gang statutes on the books. If you think that he's committed some type of conspiracy, charge him. There's RICO statutes on the books. Like it's not fair that they just go out and defame him and slander him in public, but in their court filings and in the actual charges, none of that's there. I mean, if you look at the actual charges in Tennessee, none of those allegations are actually being litigated or actually being what he's charged with.

So, I mean, I just think it's extremely unfair for an administration that has often complained about liable slander laws and defamation laws and then the government gets to do it willy-nilly because of sovereign immunity.

BROWN: All right. Benjamin Osorio, thank you so much for coming on.

OSORIO: Thank you for having me.

BROWN: And coming up, the Republican-led House Oversight Committee is deepening its Epstein investigation. We're going to ask a legal expert about the subpoenaed documents next.

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