In a remarkable show of unity, every living former chair of the US Federal Reserve has issued a forceful condemnation of a criminal investigation launched by the Department of Justice (DOJ) into the current chair, Jerome Powell.
An Unprecedented Assault on Independence
The blunt statement, signed by 13 former senior Fed officials including Alan Greenspan, Ben Bernanke, and Janet Yellen, labels the probe an "unprecedented attempt to use prosecutorial attacks to undermine" the central bank's cherished independence from political influence. The group warned that such tactics are typical of emerging markets with weak institutions and lead to damaging economic consequences.
"This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly," the statement read. It argued these actions "have no place in the United States," a nation whose economic success is built on the rule of law.
Details of the Justice Department's Move
The controversy erupted after it emerged that late on Sunday the justice department had served the Federal Reserve with grand jury subpoenas the previous Friday. The subpoenas threaten a criminal indictment against Powell related to his testimony before the Senate banking committee in June last year. The testimony concerned renovations to the Fed's historic office buildings in Washington DC.
In a robust response, Chair Powell argued the threat of criminal charges stemmed from the Fed's commitment to setting interest rates based on independent economic assessment, rather than political preference. He stated he was being targeted because the Fed acts "based on our best assessment of what will serve the public, rather than following the preferences of the president."
Broader Implications for Economic Stability
The extraordinary intervention from the Fed's former leaders underscores the severe institutional alarm over the probe, which is seen as part of a broader campaign by the Trump administration against the central bank. The ex-chairs' collective warning highlights the fundamental risk such political pressure poses to monetary policy credibility and long-term economic stability.
By drawing a direct parallel to countries with weaker governance, the statement serves as a stark caution that undermining the Fed's autonomy could erode investor confidence and exacerbate inflationary pressures, harming ordinary Americans.
