Former Fed Chairs Slam Justice Department Probe into Jay Powell – Central Bank Independence Under Fire

Washington’s corridors of power are rattling. The Justice Department’s unprecedented probe into Federal Reserve Chair Jerome Powell has drawn fierce backlash from the very architects of modern monetary policy—his predecessors.

The Old Guard Rallies

It’s a rare moment of unity from past Fed leaders. They’re not just criticizing; they’re slamming the DOJ’s move as a dangerous politicization of an institution designed to operate above the fray. The message is clear: back off.

Why This Crosshairs Moment Matters

Central bank independence isn’t some dusty academic principle. It’s the bedrock of market confidence. When monetary policy becomes a tool for political score-settling, the entire financial ecosystem shudders. Investors hate uncertainty more than they hate bad news.

A Chilling Precedent for Finance

This isn’t just about Powell. It’s a test case. If a sitting Fed chair can be investigated for policy decisions, what stops future administrations from targeting any regulator or official whose actions bruise Wall Street’s ego or a politician’s poll numbers? The line between oversight and intimidation just got blurry.

The Cynical Take

Let’s be real—since when has the Justice Department needed an excuse to go fishing? In the grand theater of Washington, a high-profile probe is often less about justice and more about sending a message, creating a headline, or distracting from another scandal. It’s the oldest play in the book, dressed up in legal briefs.

The standoff is set. On one side, the weight of institutional tradition and economic stability. On the other, the relentless engine of political ambition. The market is watching, and it doesn’t like what it sees.

Former central bank leaders and economists attack the Justice Department probe

The Fed has cut rates at each of its last three meetings. Those moves brought borrowing costs down to a range of 3.5 percent to 3.75 percent, the lowest level in three years.

Trump has said that it is nowhere NEAR enough. He has publicly argued rates should sit at 1 percent and has repeatedly insulted Powell, calling him a moron and a numbskull for not moving quicker.

The Justice Department probe raised the stakes. It could end with a criminal indictment of Powell. Economists said that the possibility alone is enough to shake confidence in the system.

In their Monday letter, the signatories wrote that the independence of the Fed and how the public sees that independence are critical for economic performance. They said this includes meeting Congress’s goals of stable prices, maximum employment, and moderate long‑term interest rates.

The letter warned that using prosecutors to influence monetary policy is common in emerging markets with weak institutions. It said those systems often suffer from high inflation and broken economies. The signatories added that this approach has no place in the United States, where the rule of law is meant to be the foundation of economic strength.

Trump denied knowing anything about the investigation. The WHITE House said he is expected to name a replacement for Powell in the coming weeks, ahead of Powell’s term ending in May. The letter carried weight because of who signed it.

Ben S. Bernanke served two terms leading the Fed and later chaired the Council of Economic Advisers under George W. Bush. Jared Bernstein led the Council of Economic Advisers under Joe Biden. Jason Furman held the same role under Barack Obama. Timothy F. Geithner served as Treasury secretary and once ran the New York Fed.

Alan Greenspan signed on after five terms as chair, spanning four presidents. Glenn Hubbard, Jacob J. Lew, N. Gregory Mankiw and Henry M. Paulson also joined. Academic voices included Kenneth Rogoff and Christina Romer. Former Treasury Secretary Robert E. Rubin signed as well.

So did Janet Yellen, who has held more top economic jobs than almost anyone alive, including chair and vice chair of the Fed and head of the San Francisco Fed. Together, the group said the message was simple. Criminal pressure has no role in rate setting.

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