Three former leaders of the US Federal Reserve have sharply condemned a criminal investigation into Fed Chair Jerome Powell, calling it an unprecedented threat to the central bank’s independence. Among them are Janet Yellen, Ben Bernanke, and Alan Greenspan, who, together with ten other senior former officials, publicly voiced their support for Powell on Monday.
In their statement, the former Fed chairs warned that such politically motivated investigations are common in countries with weak institutions, causing severe harm to their economies. “This has no place in the United States, where the rule of law underpins economic stability and success,” they wrote.
The probe, initiated by the Department of Justice (DoJ), follows a year of repeated attacks on Powell by former President Donald Trump, who criticized his interest rate decisions and publicly insulted him as a “major loser” and “numbskull.” Powell revealed the investigation in an unscheduled video statement, saying the DoJ had threatened criminal charges over his testimony to a Senate committee last year about Federal Reserve building renovations. He described the investigation as “unprecedented” and a politically motivated reaction to Trump’s dissatisfaction with the Fed’s pace of interest rate cuts.
The Federal Reserve reduced its key lending rate three times in the second half of 2025, reaching 3.50% to 3.75%, its lowest level in three years. Nevertheless, Trump repeatedly demanded sharper cuts to lower government borrowing costs and make loans, including mortgages, more affordable for Americans.
Powell emphasized that the DoJ action should be viewed in the broader context of administration pressure on the central bank. Monday’s support for Powell came from officials appointed by both Democratic and Republican presidents, highlighting bipartisan concern about the threat to Fed independence.
White House spokeswoman Karoline Leavitt declined to comment directly on Powell’s independence, saying the Justice Department would determine whether any crime had occurred. She added, “Jerome Powell has proved he’s no good at his job. As to whether he’s a criminal, that’s up to the DOJ.”
Yellen, who led the Fed during Trump’s first term before Powell succeeded her, described the investigation as “extremely chilling”. She told CNBC that Powell is unlikely to have lied, suggesting the probe is aimed at removing him from office. “This is a path to a banana republic if the Fed’s independence is undermined,” she warned, noting investors should take the situation seriously.
Trump is expected to announce a replacement for Powell, whose term ends in May, but the DOJ investigation and ensuing backlash could complicate the nomination process. Senator Thom Tillis, a Republican on the Senate Banking Committee, said he would oppose any Fed nominee from Trump until the investigation concludes.
Markets initially reacted cautiously. The S&P 500 remained flat, although financial stocks dipped slightly as investors assessed the potential impact of a 10% cap on credit card interest rates. Analysts warned that if political pressure successfully influenced Fed policy, market volatility could increase.
Some Republican lawmakers expressed concern about the broader implications. Representative French Hill described the investigation as an “unnecessary distraction” that could hinder future administrations’ ability to implement sound monetary policy. Meanwhile, Senator Kevin Cramer criticized Powell on some issues but stressed he does not believe Powell is a criminal and hoped the investigation would soon conclude.
