Three former chairs of the Federal Reserve and different high former financial officers are rebuking the Division of Justice for launching an investigation into Fed Chair Jerome Powell, saying the probe will undermine the central financial institution’s independence and damage the U.S. financial system.
The assertion, posted on Substack on Monday, was signed by former Fed Chairs Janet Yellen, Ben Bernanke and Alan Greenspan, in addition to by former Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson and Robert Rubin.
“The reported felony inquiry into Federal Reserve Chair Jay Powell is an unprecedented try to make use of prosecutorial assaults to undermine that independence,” the signers of the assertion stated. “That is how financial coverage is made in rising markets with weak establishments, with extremely adverse penalties for inflation and the functioning of their economies extra broadly.
President Trump has pushed the Fed to extra aggressively lower rates of interest, arguing that the U.S. financial system would profit from decrease borrowing prices.
A combat over independence
Powell has lengthy defended the central financial institution’s independence on the grounds that shielding the Fed from political affect permits financial coverage makers to make goal choices based mostly on financial information, quite than the pursuits of elected officers.
Justice Division subpoenas to the Fed threaten a felony indictment associated to Powell’s testimony earlier than the Senate Banking Committee in June 2025, Powell stated in a video assertion on Sunday.
“That testimony involved partially a multi-year mission to renovate historic Federal Reserve workplace buildings,” Powell stated.
Different former senior financial officers to signal the assertion: Jared Bernstein, chair of the Council of Financial Advisers (CEA) below former President Joe Biden; Jason Furman, CEA chair below former President Barack Obama; Glenn Hubbard and Gregory Mankiw, who each led the CEA below former President George W. Bush; Kenneth Rogoff, former chief economist of the Worldwide Financial Fund; advert Christina Romer, CEA chair below Obama.
“The Federal Reserve’s independence and the general public’s notion of that independence are important for financial efficiency, together with attaining the targets Congress has set for the Federal Reserve of secure costs, most employment, and average long-term rates of interest,” the signers wrote.
The assertion indicators that “people are unifying towards this,” Nick Anthony, a coverage analyst on the Cato Institute, a nonpartisan suppose tank, instructed CBS Information. “Whether or not it modifications the administration’s thoughts is a troublesome query as a result of it is a new supply of stress. However on the identical time, it’d amplify their resolve in seeing that the institution is towards this, so we have to be proper.”
Why Powell says he is being focused
The $2.5 billion mission to renovate a number of Fed buildings, together with Powell’s testimony about that effort, got here below scrutiny by the Trump administration final yr, with Workplace of Administration and Funds Chair Russell Vought accusing Powell of main an “ostentatious” mission that could be “violating the legislation.”
Powell had referred to as some descriptions of the renovation “deceptive and inaccurate,” disputing claims by the Trump administration that the overhaul included water options or rooftop gardens.
In his video remarks on Sunday, Powell tied the investigation to Mr. Trump’s efforts to stress the Fed to chop rates of interest and undermine the central financial institution’s independence.
“This new risk isn’t about my testimony final June or in regards to the renovation of the Federal Reserve buildings. It’s not about Congress’ oversight function. The Fed, by testimony and different public disclosures, made each effort to maintain Congress knowledgeable in regards to the renovation mission. These are pretexts,” Powell stated. “The specter of felony expenses is a consequence of the Federal Reserve setting rates of interest based mostly on our greatest evaluation of what’s going to serve the general public, quite than following the preferences of the president.”
The Federal Reserve has lower its benchmark charge thrice since Mr. Trump’s inauguration in January 2025, with Mr. Powell citing easing inflation and a slower labor market as causes for the reductions.
Lawmakers throughout the aisle spoke out in protection of Powell. Sen. Thom Tillis, a North Carolina Republican and member of the Senate Banking panel, stated on Sunday that he would oppose any of the Trump administration’s nominees for the Fed, together with to interchange Powell.
“If there have been any remaining doubt whether or not advisers throughout the Trump Administration are actively pushing to finish the independence of the Federal Reserve, there ought to now be none,” Tillis stated in a assertion.
Sen. Lisa Murkowski, an Alaska Republican, referred to as the investigation “nothing greater than an try at coercion.”
Sen. Elizabeth Warren, a Massachusetts Democrat, stated in a speech on the Nationwide Press Membership on Monday that “Trump is attempting to push out the chairman of the Federal Reserve Board and full his corrupt takeover of America’s central financial institution in order that it serves his pursuits, alongside together with his billionaire associates.”
Powell’s future on the Fed
Powell is about to step down as Fed chair in Could, however he may proceed to function a Federal Reserve governor past that point. If he stays, the Trump administration can be disadvantaged of the prospect to fill one other seat on the board.
Powell has declined at a number of press conferences to reply questions on his plans. Requested on Monday by reporters if Powell deliberate to stay a Fed governor, Kevin Hassett, director of the White Home Nationwide Financial Council and a number one candidate to change into Fed chair, stated he was unaware of Powell’s plans.
“I’ve not talked to Jay about that,” Hassett stated.
Within the meantime, Mr. Trump has additionally referred to as on one other Fed official, Lisa Prepare dinner, to step down. Invoice Pulte, who Mr. Trump appointed as director of the U.S. Federal Housing Finance Company final yr, claimed Prepare dinner dedicated mortgage fraud after designating two houses as her main residence.
Prepare dinner stays in her place on the Fed Board of Governors after the Supreme Court docket in October stated it will hear arguments in January about whether or not the president has the authority to fireside her.
