Thirteen influential economists, including former Federal Reserve chairs and ex-Treasury secretaries, raced to Fed Chair Jerome Powell's defense on Monday after the Justice Department launched an investigation into the central bank.
Trump and his top aides have tried distancing themselves from the DOJ investigation into Powell, which sent shockwaves through Congress and beyond
Federal Reserve Chair Jerome Powell and former Chairs of the Federal Reserve Janet Yellen and Ben Bernanke participate in a panel discussion at the American Economic Association conference hosted in Atlanta in January 2019. (Jessica McGowan/Getty Images)
Thirteen influential economists, including former Federal Reserve chairs and ex-Treasury secretaries, raced to Fed Chair Jerome Powell's defense on Monday after the Justice Department launched an investigation into the central bank.
Powell's defenders include the three living ex-Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen; ex-Treasury secretaries Timothy Geithner, Jacob Lew, and Henry Paulson; and other top economists who served in Republican and Democratic administrations. They released a statement that was staunchly critical of the Trump administration and argued its probe was reminiscent of how policy is conducted in developing countries.
"The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence," the group wrote in a statement posted on Substack. "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 went on: "It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success."
It followed the Fed announcing that the DOJ had launched a probe into ongoing renovations at its headquarters, an extraordinary escalation of President Donald Trump's campaign to strong-arm the central bank into dramatically lowering interest rates. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President," Powell said in a rare, two-minute video published Sunday evening.
The probe is centered on Powell's testimony to the Senate last year surrounding the renovations, which have been plagued by unexpected cost over-runs.
Trump later tried distancing himself from the DOJ investigation, which sent shockwaves through Capitol Hill and beyond in Washington D.C. "I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” he told NBC News.
White House National Economic Council Director Kevin Hassett — who is frontrunner to replace Powell at the Fed — also sought to keep the investigation at arm's length. He said he respected the "independence of the Fed."
Powell has labored to keep the Fed out of an existential fight against Trump, who has long berated him for not endorsing a quicker reduction in borrowing costs. His desire to avoid confrontation ended on Sunday, and now it appears Powell is busy enlisting influential defenders in the GOP-controlled Senate.
Sen. Lisa Murkowski of Alaska, who has occasionally bucked Trump, said in a Monday social media post that she'd recently spoken with Powell. "After speaking with Chair Powell this morning, it’s clear the administration’s investigation is nothing more than an attempt at coercion," Murkowski said. "The stakes are too high to look the other way: If the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer."
Republican Sen. Thom Tillis of North Carolina issued a blistering statement as well. "If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none," Tillis said in a Sunday social media post. He threatened to block the Trump administration from nominating anyone else to the central bank until the investigation is over, given his role as a senior member of the Senate Banking Committee.
If Tillis follows through on his threat, Republicans would lack a majority on the Senate Banking panel and be unable to advance Fed nominations. Powell's term is up in May 2026. If the Senate doesn't confirm someone else to take the spot, Powell stays on as Fed chair.
Other prominent Republicans issued rare criticism. House Financial Services Chair French Hill called the probe an "unnecessary distraction" that imperils Trump's economic agenda. "This action jeopardizes this and future administrations's ability to make sound monetary policy decisions," Hill said in a Monday statement.
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