Former Fed Chairs Slam Justice Department Investigation Into Jerome Powell
Powell Under Fire: The Fed vs. Political Pressure
Watching the Justice Department go after Jerome Powell feels like a page out of an emerging-market playbook — and not in a good way. Former Fed chairs, including Bernanke, Greenspan, and Yellen, are rightly sounding the alarm. They warn that using the courts to pressure the central bank is dangerous, reckless, and frankly, unprecedented in the U.S.
The investigation targets a $2.5 billion renovation at the Federal Reserve headquarters. Somehow, this turned into criminal subpoenas. Trump has made it clear for years that he’s unhappy with Powell over interest rate policy, and now the administration appears willing to weaponize the Justice Department to make a point.
Powell’s Response: Standing Firm Against Political Pressure
Powell isn’t buying it. He says the renovation and his Senate testimony are excuses. The real issue? He refuses to bend monetary policy to political whims. Setting interest rates based on the economy — not Trump’s mood — suddenly makes him a target. Powell insists he’ll keep doing his job without political pressure. Good for him. That’s exactly how central banking should work.
Even John Williams from the New York Fed warned of consequences. Political interference in monetary policy almost always ends badly — higher inflation, lower confidence, a shaky economy. Markets seem to understand that, closing at record highs. Bernard Yaros says investors aren’t buying the investigation as a threat to Fed independence. Yet you can’t help but wonder: for how long?
Bipartisan Criticism of the Investigation
Both parties are speaking out. Republican senators like Thom Tillis threaten to block all future Federal Reserve nominations until the issue is resolved. Lisa Murkowski calls it coercion. Democrats aren’t quiet either. Chuck Schumer says the investigation is an attack on Fed independence.
David Wessel from the Brookings Institution warned that political control of the Federal Reserve could push policymakers to lower interest rates before elections, fueling inflation and shaking global confidence in U.S. Treasury debt.
History Shows Political Pressure Can Escalate
Let’s be clear: Powell was appointed by Trump. His term ends next May, though he could stay on the board until 2028. Trump has a history of going after Fed members he dislikes — remember his attempt to oust Lisa Cook last year? Politics creeping into the Federal Reserve isn’t new, but this investigation feels like escalation.
Powell’s calm, measured stance in the face of political intimidation is almost heroic. But one has to ask: if the courts bend to political pressure, what does that mean for the Fed’s future? And more importantly, what does it mean for the American economy?
We’re watching more than a renovation dispute — we’re watching the independence of the Federal Reserve under fire. How long before politics wins over policy?
