Former Fed Chairs Condemn Criminal Investigation into Jerome Powell
Three former leaders of the Federal Reserve have publicly denounced a criminal investigation targeting current Fed Chair Jerome Powell, arguing that such actions threaten the independence of the institution. The condemnation comes from Janet Yellen, Ben Bernanke, and Alan Greenspan, along with ten other distinguished former officials.
– A Unified Stand: In a joint statement, the former officials emphasized that the investigation resembles tactics typically employed in emerging markets with weak institutions, which leads to detrimental effects on inflation and economic stability. They asserted, “It has no place in the United States, whose greatest strength is the rule of law—a core foundation of our economic success.”
– Context of the Investigation: This inquiry by the Department of Justice (DoJ) follows a year of escalating criticism from former President Donald Trump towards Powell. The President has disparaged Powell personally and questioned his decisions regarding interest rate policies, labeling him a major loser and a numbskull.
– Investigation Details: Powell first made the existence of the probe public in an unscheduled video message, revealing that the DoJ threatened criminal indictment related to his Senate testimony about renovations to Federal Reserve buildings. He referred to the investigation as unprecedented and suggested it was fueled by Trump’s frustration with the Fed’s interest rate strategies.
– Interest Rate Policies: The Federal Reserve had lowered its key lending rate three times in the latter half of 2025, bringing it to a range of 3.50% to 3.75%—the lowest level in three years. However, Trump has consistently criticized the Fed for not cutting rates more aggressively.
– Broader Implications: Powell interpreted the DoJ’s actions as part of a larger pattern of pressure from the administration that threatens the integrity of the Fed. The outcry against this investigation includes former officials appointed by both Democratic and Republican administrations.
– White House Response: When questioned about the Fed’s independence, White House spokeswoman Karoline Leavitt remarked, Jerome Powell has proved he’s no good at his job.” She emphasized that the determination of any criminality rests with the Department of Justice.
– Market Reactions: The initial response to the news in U.S. stock markets was muted, with the S&P 500 showing little fluctuation during early trading. This contrasts sharply with previous instances where threats to the Fed’s independence caused significant market turbulence. Analysts noted a slight slump in financial stocks, as concerns over potential regulatory changes, like a cap on credit card interest rates, lingered.
– Legislative Concerns: Some lawmakers have voiced their worries regarding the implications of the DoJ investigation for the Fed’s capacity to execute monetary policy effectively. Representative French Hill, chair of the House Financial Services Committee, described the investigation as an unnecessary distraction. Senator Kevin Cramer, while critical of Powell, cautioned against labeling him a criminal and expressed hope that the investigation would be resolved soon.
Janet Yellen highlighted the chilling effect the investigation could have on the economy, suggesting that it poses risks to market stability and investor confidence. She articulated concern over a presidency intent on dictating monetary policy, warning that such actions could propel the nation toward instability similar to that seen in banana republics.
In conclusion, the condemnation from former Fed chairs and the ongoing investigation into Jerome Powell raises significant questions about the future of the Federal Reserve and its independence. As political pressures mount, the integrity of U.S. monetary policy hangs in the balance.