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Soon: Trump To Swear In Warsh To Lead Federal Reserve; Sources: Anti-Weaponization Fund Discussed During Trump's 2024 Campaign; AAA: 45M Expected To Travel 50 Plus Miles For Memorial Day Weekend. Aired 11-11:30a ET

Aired May 22, 2026 - 11:00   ET

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

WOLF BLITZER, CNN ANCHOR: And tracking suspicious trades, massive bets on the oil market worth hundreds of millions of dollars, all coming right before big announcements in the war with Iran. And now federal regulators want to figure out what's going on.

[11:00:10]

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

UNIDENTIFIED MALE: This is CNN Breaking News.

BLITZER: And we begin with the breaking news. At any moment, President Trump is set to swear in his new handpicked choice to lead the Federal Reserve. Kevin Warsh, a sharp critic of the Fed, will soon take control after clinching Senate approval in a partisan confirmation vote. Warsh will succeed one of the President's most frequent targets, the outgoing Chairman Jerome Powell, who bucked Trump's public calls to cut interest rates.

But the change in leadership comes at a pivotal moment for the U.S. -- where the U.S. is facing rising inflation, tariffs, stagnating wages, and an unfolding boom in A.I., posing mounting threats to an already fragile U.S. economy.

Let's go live right now to CNN's Betsy Klein over at the White House for us. Betsy, even though the President soured on Powell, he seems to be giving Warsh a bit of a grace period right now. What else can you tell us?

BETSY KLEIN, CNN SENIOR WHITE HOUSE PRODUCER: A bit of a grace period it's going to be very closely watched. But President Trump any moment now will be swearing in Kevin Warsh as the next Chairman of the Federal Reserve. Now, he is taking the reins of the nation's central bank from Jerome Powell after his eight-year term is set to expire.

And Kevin Warsh is a former Federal Reserve governor. He has also served at the White House as an economist during the Bush administration. He is Harvard and Stanford educated. He's also married to one of the heirs of the Estee Lauder Cosmetics conglomerate. And this moment is just going to mark the end of what has been a very acrimonious era between the Federal Reserve and this White House. The President has attempted to legally target Powell after spending years attacking him for failing to cut interest rates as much as he wants. And after all of that, Powell has announced that he is going to stay on the Fed as a governor at least until 2028. Now, Warsh is going to be inheriting a -- this leadership role at what's a very, very challenging moment for the U.S. economy. The country is at war.

The consumer prices are surging. There are threats to the Federal Reserve's independence. And this is the first time in three years that Americans' wages are no longer outpacing inflation. So he's got his work cut out for him. The President has made it very clear that he wants Warsh to move and move fast to cut those interest rates. And that's one of the things we'll be watching, along with whether he can reduce the Federal Reserve's $6.7 trillion portfolio, whether he is going to shrink the Fed's D.C.-based workforce.

But we do expect Warsh, who has called for regime change at the Fed, to take a very different communications approach. He has said that the Fed talks too much. And he is expected to hold less press conferences and says he'll approach those communications with a new framework. So all of that, we'll be watching very closely how President Trump handles this today and how much Warsh speaks for himself.

BLITZER: A significant development indeed. Betsy Klein, thank you very much.

I want to bring in economist and president of the Budget Lab at Yale University, Natasha Sarin. Natasha, thanks very much for joining us. I know you're also a counselor to President Biden's Treasury Secretary, Janet Yellen. What are some of the first decisions you think Warsh will need to make in his new role?

NATASHA SARIN, ECONOMIST: You know, Kevin Warsh, as Betsy was saying, is taking the helm at the Federal Reserve at a complicated time for the Central Bank, given that inflation is ticking upward and that the labor market, though, has been quite strong, may start to cool if we get some of this displacement and jobs falling that will come potentially from the impact of artificial intelligence.

And so Kevin Warsh has a very delicate role to play because his audience is not trying to get the nomination and administration and the President. Now his audience is the 18 members of the Federal Open Markets Committee who are going to be working with him in order to craft interest rate and monetary policy decisions, but also more generally, the members of the Federal Reserve Board system who he has maligned in recent history, and also the general public who are going to be watching closely to make sure that we're in a situation where it appears that the Central Bank is independent from political pressure. So he has a bit of a delicate dance to do as he seeks to effectuate regime change at the Federal Reserve.

[11:05:03]

BLITZER: During his confirmation hearing, as you know, Warsh said, and I'm quoting him now, inflation is the Fed's choice, his words. Do you expect he'll need to walk that back and maybe even moderate some of his stances given the current economic environment we're now in?

SARIN: Yes. You know, his entire career, really, Kevin Warsh has been incredibly focused on inflation and incredibly focused on making sure that the job of the Federal Reserve is to consider data and to consider data about two things specifically, what's happening in the labor market and what's happening with respect to prices.

And it's interesting, over the course of the last few months as he was seeking to get this nomination and even in the testimony that you're speaking about, Wolf, he started kind of pulling back from that laser focus on inflation and kind of trying to make a case for interest rate cuts over the course of the next few months and years.

And I think that case has become much harder as a result of the war with Iran and the uptick in inflation that we're seeing, particularly in energy markets, but more generally as well. And I wonder how he's going to balance these kind of two versions of personalities and cases that he's developed in order to try to make the case for what the Central Bank should do over the course of the next many months.

BLITZER: As we all know and remember, the president frequently needled the outgoing Fed chair attacking Jerome Powell online, even bringing a criminal investigation up against him in an effort to try to force the Fed to lower interest rates. Do you have confidence the Fed will remain independent under Warsh?

SARIN: I certainly hope so. And you know, something that is quite important for your viewers to understand is central bank independence, which sounds like this sort of technical term, is actually one of the underpinnings of the American economy's success. If it starts to feel like interest rate decisions are being made not because of the long term outlook with respect to prices and the labor market, but instead about a particular election that's coming up this November, the impact of that is hugely detrimental.

And we know that because we experimented with that with Arthur Burns in this country and saw inflation uptick when he was Federal Reserve chair from 3 to 13 percent over just a two year period. And so Kevin Warsh knows this history. He is well steeped in it. He is well steeped in the Federal Reserve system.

And my hope is that he is focused on the importance of independence and that he's given the leeway from this administration to have that focus be solely on the data. And frankly, Kevin Hassett said as much this morning, which gave me some hope. He said it's time now that the President has his pick confirmed and now serving as Federal Reserve chair for the National Economic Council and the administration more generally to let the data drive decisions and stay out of them.

BLITZER: And the Federal Reserve could have such a huge impact on the U.S. economy. Natasha Sarin of Yale University, thank you so much for joining us.

SARIN: Thank you so much for having me.

BLITZER: And still ahead, fighting the fund. Senate Republicans are making it very clear they are not happy at all about the Trump administration's so-called Anti-Weaponization Fund. And CNN has new reporting just in about how the $1.8 billion fund went from an idea to reality.

[11:08:23]

And later, A.I. influence, the emerging technology is causing upheaval across various industries. But there are ways to protect yourself and your job. We'll explain all that coming up here in The Situation Room.

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BLITZER: New this morning, the Trump administration has no plans to make any change to the very controversial Anti-Weaponization Fund, as it's called, despite bipartisan blowback over the plan. Both Vice President J.D. Vance, as well as Acting Attorney General Todd Blanche, were hard pressed to defend the fund this week.

On Thursday, senators left Washington for their Memorial Day recess, but not before many of them, especially Republicans, slammed the U.S. Justice Department's move. Listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: But I just don't know how this puppy dog will work.

UNIDENTIFIED FEMALE: I do not support the Weaponization Fund as it has been described.

SEN. THOM TILLIS (R-NC): This is, I mean, this is just stupid on stilts. This is bad policy, it's bad timing and it's bad politics.

UNIDENTIFIED MALE: I think we should work to just get rid of this slush fund altogether. It is ripe for abuse.

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: Republicans have tied themselves up in knots and torn each other to shreds over Trump's brazenly corrupt slush fund for his billionaire cronies and January 6th insurrectionists.

(END VIDEO CLIP)

BLITZER: CNN's chief legal affairs correspondent Paula Reid is here with me in The Situation Room. Paula, I know you have some new reporting about how this fund came to be.

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: And that's right. This is an idea that is in percolating as far back as 2023 as Trump was plotting his return to the White House. There was this desire for some sort of fund to compensate people who they believed had been targeted by the federal government.

But even though they worked on the plan, they could never quite figure out what the funding mechanism would be. How would they get money for this? So it was shelved. But we've learned that shortly before Trump's second inauguration, Charlie Kirk actually resurrected this idea and said that it would be important to do, "reparations for people, especially those who were investigated and those prosecuted, related to January 6th."

[11:15:17]

It was still a little tricky, though, for them to figure out how they would design this fund. But I'm told in recent months, as the President filed his lawsuit against the IRS officials at the Justice Department, they modeled this after an Obama-era fund called the Keepseagle Fund. Now, that was a little different because that was about claims of racism, a settlement related to claims of racism in the Department of Agriculture.

Now, sources inside the Trump administration believe they had actually improved upon Keepseagle because any extra money would go back to taxpayers, whereas the Keepseagle Fund, it went to nonprofits. But the important difference here is also a judge signed off on that Obama-era settlement. So it's not exactly the same.

But in reporting this out, Wolf, it's clear that this idea has been marinating in Trump world for a long time. They've become very comfortable with it. In reporting on as many cases, I know that his lawyers truly believe that he was treated unfairly and that other people were treated unfairly. But because they've been marinating with this idea for so long and they're so comfortable with it, that may be why they haven't done a better job of communicating to taxpayers why they should now be on the hook for roughly $1.8 billion for people who, you know, are frustrated with their investigation.

So right now, they just haven't put forth enough details to make lawmakers especially comfortable with this fund. Instead, they're saying that these as of yet unnamed five members of this panel who will vet these claims, that these people will determine the rules. Now, they have 30 days roughly from the time this was announced to select those members.

But Wolf, I think you'll agree it's a lot to ask people to just trust that five people, you don't know who they are, they'll make sure that this does not become a feeding frenzy for taxpayer funds.

BLITZER: And Trump has already pardoned the thousand plus rioters who stormed the U.S. Capitol on January 6th. But the key question a lot of people are asking, will some of those rioters who were actually charged with beating and attacking police officers, will they be eligible to collect thousands of dollars now in so-called reparations?

REID: So this is really one of the biggest questions. And I had the opportunity to sit down with the acting Attorney General Todd Blanche, who will oversee all of this. He's going to pick these members and he put out these announcements to clarify that. And he has doubled down on the administration's stance that anyone is eligible. Each of these claims, he says, will be vetted, but he is not disclosing that possibility.

And that's something, again, with the messaging has made many lawmakers and other people a little uncomfortable. So I think this all comes down to the fact that they were in a rush to get out this announcement. They put forth a ton of money, roughly $1.8 billion, but not a lot of details. So without those details, it's hard for people to just trust these assurances right now.

But according to my sources, the Justice Department has no plans at this point to make any changes to the fund. The administration, the President, the Justice Department, they are -- they're supporting this and they're playing a long game here. They're clearly going to try to wait it out.

BLITZER: We'll see what happens. Paula Reid, excellent, excellent reporting, as usual. Thank you very, very much.

[11:18:22]

And up next, will record high gas prices be enough to stop people from hitting the roads, especially this Memorial Day weekend? We're live from Reagan National Airport here in Washington, one of the busiest in the country, as the holiday travel rush gets underway.

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BLITZER: Happening now, millions of Americans are getting ready to head out of town to celebrate this long holiday weekend. Flyers hope they don't run into any long lines or delays, and higher fuel prices are having an impact across the airline industry as well.

Let's go live right now to CNN aviation correspondent Pete Muntean. He's over at Reagan National Airport for us here in Washington. So, Pete, what can we expect to see? Are we expecting to see a lot of delays today or tomorrow?

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Wolf, if you're always trying to sell me Unclear Plus, but you really won't need it today at the Terminal 2 North Checkpoint, at least not right now. Things moving pretty smoothly here. Less than a five-minute wait to get through TSA here at Reagan National Airport. They set an all-time record here at National Airport just yesterday, 42,000 people passed through the airport, really setting the stage for things to come.

Today, going into the weekend, TSA anticipates 3 million people at airports nationwide, probably one of the top five days in the history of TSA. The big thing right now is the weather that could throw a wrench into things at airports across the country. Take a look at the departure report here. Not a lot of yellow or red there, thankfully, although that could change.

The Federal Aviation Administration's warning of ground stops from Texas to Pennsylvania. We're talking Dallas-Fort Worth, huge hub for American Airlines, Austin, Atlanta, Orlando, Tampa, Charlotte, huge hub for American as well, and then here at Reagan National Airport, also expecting a presidential movement which could slow things later.

[11:24:58]

Of course, the thing that is emerging right now is the sinkhole in Runway 422, one of the two main runways at New York's LaGuardia Airport. The Port Authority of New York and New Jersey just put out a new statement saying that they have done some radio analysis of the land there on the airfield. They say that the airport will need to keep that runway closed for at least a little while longer, into 6:00 a.m. tomorrow. That is the latest projection, although that has slid over and over again, that could have a bit of a compounding impact on flights around the country.

So many regional flights go in and out of LaGuardia, so we will see as things unfold. We are not totally out of the woods yet, Wolf, and the big thing is that so many people flying this weekend are paying so much more. The latest data from TravelSite going is that it's costing about 20 percent more for domestic airfare this Memorial Day weekend compared to last Memorial Day weekend.

Airlines insist though they are ready for the onslaught of travelers, even though they have done things to blunt the impact of higher fuel prices because of the war in Iran on themselves. They have shed flights, they have changed schedules. Fuel is the number two cost for airlines after labor. They're not -- their top cost. Things are really tough for airlines right now.

BLITZER: Pete Muntean over at Reagan National Airport, thank you very, very much as usual.

And just ahead, suspiciously timed transactions on the oil market raising serious new questions about possible insider trading amid the Iran war. How are U.S. officials responding? We'll speak with the reporter who broke this story.

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