Ex-Federal Reserve leaders and lawmakers criticise a US Justice Department probe into chair Jerome Powell, calling it a threat to central bank independence.
WASHINGTON: Former Federal Reserve chiefs have sharply criticised a US criminal investigation into current chair Jerome Powell, calling it an unprecedented attack on the central bank’s independence.
Two Republican senators joined in rebuking the Trump administration on Monday, questioning the Justice Department’s credibility in targeting Powell.
The investigation relates to Powell’s Senate testimony in June concerning a $2.5 billion renovation of the Fed’s headquarters.
Former Fed chairs Ben Bernanke, Alan Greenspan and Janet Yellen condemned the probe in a joint statement with other former economic leaders.
They stated it was “an unprecedented attempt to use prosecutorial attacks” to undermine the Fed’s independence, adding “it has no place in the United States”.
Powell revealed on Sunday that the Fed received grand jury subpoenas and threats of a criminal indictment.
In an extraordinary statement, Powell rebuked the administration, dismissing the building issue and his testimony as “pretexts”.
“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,” he said.
He vowed to carry out his duties “without political fear or favor”.
Investors reacted warily to the news, with the dollar falling and safe-haven assets like gold rising on Monday.
President Donald Trump has long criticised Powell’s interest rate decisions, previously calling him a “numbskull” and “moron”.
White House spokeswoman Karoline Leavitt told Fox News that Powell “has proven he’s not very good at his job”.
Republican Senator Thom Tillis vowed to oppose the confirmation of any Fed nominee until the legal matter is “fully resolved”.
“It is now the independence and credibility of the Department of Justice that are in question,” he said.
Another Republican senator, Lisa Murkowski, supported the move, calling the investigation “an attempt at coercion”.
Top Senate Democrat Chuck Schumer earlier dubbed the probe an assault on the Fed’s independence.
David Wessel of the Brookings Institution warned of serious consequences if the Fed came under political control.
He said it could lead to “more inflation, and the willingness of global investors to lend money to the Treasury will diminish somewhat”.
Powell’s term as chair ends in May, but he could remain on the Fed’s board until 2028.
Trump maintained on Sunday that he had no knowledge of the Justice Department’s investigation.
