Introduction to the Federal Reserve Controversy
The Department of Justice has launched an investigation into Federal Reserve Chair Jerome Powell, prompting a statement from three former chairs of the Federal Reserve and other top former economic officials. The statement expresses concern that the probe will undermine the central bank’s independence and hurt the U.S. economy.
A Fight Over Independence
The statement, signed by former Fed Chairs Janet Yellen, Ben Bernanke, and Alan Greenspan, as well as by former Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson, and Robert Rubin, argues that the reported criminal inquiry into Powell is an unprecedented attempt to use prosecutorial attacks to undermine the Fed’s independence. This independence is crucial for the central bank to make objective decisions based on economic data, rather than the interests of elected officials.
Powell has long defended the central bank’s independence, citing the need for monetary policy makers to make decisions without political influence. The Justice Department’s investigation into Powell’s testimony before the Senate Banking Committee in June 2025 has raised concerns about the Fed’s ability to maintain its independence.
Why Powell Says He’s Being Targeted
The investigation is related to a $2.5 billion project to renovate several Fed buildings, which came under scrutiny by the Trump administration last year. Powell has tied the investigation to President Trump’s efforts to pressure the Fed to cut interest rates and undermine the central bank’s independence. Powell has stated that the threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on its best assessment of what will serve the public, rather than following the preferences of the president.
Reaction from Lawmakers and Economic Officials
Lawmakers across the aisle have spoken out in defense of Powell, with Sen. Thom Tillis, a North Carolina Republican, stating that he would oppose any of the Trump administration’s nominees for the Fed, including to replace Powell. Sen. Lisa Murkowski, an Alaska Republican, called the investigation "nothing more than an attempt at coercion." Sen. Elizabeth Warren, a Massachusetts Democrat, said that President Trump is trying to push out Powell and complete his corrupt takeover of America’s central bank.
Other former senior economic officials, including Jared Bernstein, Jason Furman, Glenn Hubbard, and Gregory Mankiw, have also signed the statement in support of Powell. The statement signals that there is a unified front against the investigation, with many experts and lawmakers arguing that it is an attempt to undermine the Fed’s independence.
Powell’s Future at the Fed
Powell is set to step down as Fed chair in May, but he could continue to serve as a Federal Reserve governor beyond that time. If he remains, the Trump administration would be deprived of the chance to fill another seat on the board. Powell has declined to answer questions about his plans, and it is unclear whether he will remain at the Fed.
Conclusion
The investigation into Powell has raised concerns about the Fed’s independence and its ability to make objective decisions. The statement from former Fed chairs and other top economic officials highlights the importance of maintaining the central bank’s independence and argues that the investigation is an attempt to undermine it. As the situation continues to unfold, it is clear that the Fed’s independence is crucial for the health of the U.S. economy, and any attempts to undermine it could have significant consequences.
