Unlock the free White House Watch newsletter
Your guide to what Trump’s second term means for Washington, business and the world
Every living former Federal Reserve chief on Monday attacked the Justice Department’s investigation of central bank chief Jay Powell and accused the Trump administration of running the US like an emerging market.
Ex-Fed chairmen, including Janet Yellen, Ben Bernanke, and Alan Greenspan, signed a statement calling what they called an “unprecedented effort to use prosecutorial attacks to undermine the Fed’s independence.”
“Monetary policy is conducted similarly in emerging markets with weak institutions, which has broadly negative effects on inflation and the functioning of their economies.” the group wroteWhich included top economic officials from Republican and Democratic administrations.
“This has no place in the United States of America, whose greatest strength is the rule of law, which is the foundation of our economic success,” the statement said.
The sharp rebuke came after it was revealed late Sunday that prosecutors had launched a criminal investigation into Powell over a $2.5 billion renovation of the Fed’s headquarters in Washington.
Powell criticized the DoJ investigation as a pretext to attack him on interest rates, which President Donald Trump has repeatedly pressured the central bank to lower.
“The threat of criminal charges is the result of the Federal Reserve setting interest rates based on our best assessment of serving the public rather than following the President’s preferences,” the outgoing Fed chair said Sunday.
Many lawmakers – including a handful of Republicans – also quickly criticized the administration’s pressure campaign against Powell.
Senator Thom Tillis, a Republican from North Carolina who sits on the powerful Senate Banking Committee, threatened to block future Fed nominations over the DoJ investigation, accusing the president’s advisers of “actively pressuring him to dismantle the independence of the Federal Reserve.”
Alaska Republican Lisa Murkowski on Monday called the investigation “nothing more than an attempt at coercion,” adding: “If the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer.”
Elizabeth Warren, the top Democrat on the Senate Banking Committee, called the investigation the latest example of Trump attempting to “put (his) hand on the dial of monetary policy.”
“This is simply a question about weaponizing the Justice Department to give Donald Trump a chance to take over the Fed quickly so he can make political decisions,” Warren said in remarks at the National Press Club in Washington on Monday.
The Treasury Department did not respond to requests for comment on the DoJ investigation and the response provided by Powell.
The outcome was echoed internationally, with Bank of France Governor François Villeroy de Galhau also expressing his support for Powell on Monday.
“I want to reiterate loudly and clearly my full solidarity and admiration for Jay Powell, a model of integrity and commitment to the public interest,” Villeroy de Galhau said during a speech.
The Fed has cut rates at each of its last three meetings, taking them to a three-year low of 3.5 to 3.75 percent. But the cuts have not been fast enough for Trump, who has said borrowing costs should be below 1 percent and has branded Powell a “foolish” and “stunner” for not acting more quickly.
But the DOJ investigation, which could lead to criminal indictment of Powell, marks an escalation that has raised serious concerns among economists about the future independence of the US central bank.
In Monday’s letter, which was signed by 13 of America’s most prominent economists, the signers wrote: “The independence of the Federal Reserve and the public’s perception of that independence are critical to economic performance.”
Along with the three living ex-Fed chairmen, the letter was also signed by former Treasury Secretaries Timothy Geithner, Jacob Lew, Robert Rubin and Hank Paulson, as well as several senior economic advisers to Presidents Joe Biden, Barack Obama, George W. Bush and Bill Clinton.
These included Jared Bernstein, Jason Furman, Glenn Hubbard, Gregory Mankiw, and Christina Roemer, all former chairmen of the Council of Economic Advisers, and ex-IMF chief economist Kenneth Rogoff.
Trump has denied any knowledge of the DoJ investigation. The president is expected to announce a replacement for Powell, whose term ends in May, in the coming weeks.
White House press secretary Carolyn Leavitt said on Monday that the DOJ was “in charge” of the investigation, but added: “Jerome Powell has proven that he is not very good at his job.”
“Whether he’s a criminal is something the Justice Department will have to answer,” he told Fox News.
Additional reporting by Adrien Klasa in Paris
