Former Federal Reserve chairman Ben Bernanke speaks after he was named among three U.S. economists awarded the 2022 Nobel Economics Prize, during a news conference at the Brookings Institution in Washington, October 10, 2022.
Ken Cedeno | Reuters
A chorus of previous Federal Reserve chairs, Treasury secretaries and prominent economists came together Monday to support Jerome Powell as the central bank leader faces potential perjury allegations from the Justice Department.
“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” a statement backed by more than a dozen signatories said.
“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,” it continued. “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.”
Among the signers of the statement were former Fed Chairs Ben Bernanke, Janet Yellen and Alan Greenspan among with former Treasury Secretaries Henry Paulson, Timothy Geithner, Robert Rubin and Jacob Lew. Economists such as Glenn Hubbard, Kenneth Rogoff and Jared Bernstein also signed on.
Powell on Sunday confirmed that he’d been notified from the U.S. Attorney’s Office in Washington, D.C. that he is the subject of a probe into statements he made to Congress last June. In testimony on Capitol Hill, Powell answered questions regarding the massive renovation project at the central bank’s headquarters in the nation’s capital.
At the time, President Donald Trump and other officials used cost overruns to intensify their criticism of Powell. Trump threatened to fire the Fed chair but backed off. It’s not clear that the president would have the authority to remove Powell, with an unrelated case against Fed Governor Lisa Cook set for a hearing before the U.S. Supreme Court next week that also addresses the president’s power over the central bank.
“The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance, including achieving the goals Congress has set for the Federal Reserve of stable prices, maximum employment, and moderate long-term interest rates,” the statement said.
Jonahtan Kantner, former assistant U.S. attorney general, told CNBC on Monday that the bar for convicting someone in cases like these is “very high” particularly if there’s a sense that the prosecution is politically motivated.
Trump has been a longtime critic of Powell as he has pushed the Fed to lower interest rates. The central bank approved three reductions in 2025.
In a statement Sunday, Powell alleged that the accusations are a pretext to remove him from office. If that is established, it would “set into motion a whole bunch of other legal disputes,” Kantner said. “This could get quite messy.”
