Former Federal Reserve Chairman Ben Bernanke speaks at a press conference at the Brookings Institution in Washington on October 10, 2022, after being selected as one of three American economists to win the 2022 Nobel Prize in Economics.
Ken Cedeno | Reuters
Former Federal Reserve chairmen, Treasury secretaries and prominent economists rallied behind Jerome Powell on Monday as the central bank leader faces perjury charges from the Justice Department.
“The reported criminal investigation against Federal Reserve Chairman Jay Powell is an unprecedented attempt by prosecutors to use attacks to undermine his independence,” said the statement, supported by more than a dozen signatories.
“This is how monetary policy is conducted in emerging markets with weak institutions, with very negative effects on inflation and broader economic functioning,” the report continued. “This law has no place in America, where our greatest strength is the rule of law, the foundation of our economic success.”
Among the signatories of the statement were former Federal Reserve Chairmen Ben Bernanke, Janet Yellen, and Alan Greenspan, as well as 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 confirmed on Sunday that he had been notified by the U.S. Attorney’s Office in Washington, D.C., that he was the subject of an investigation into comments he made to Congress last June. In testimony on Capitol Hill, Mr. Powell answered questions about a major renovation project at the central bank’s headquarters in the nation’s capital.
At the time, President Donald Trump and other officials used the cost overruns to sharpen criticism of Mr. Powell. President Trump threatened to fire the Fed chairman, but then backtracked. It is unclear whether the president has the authority to fire Powell, and an unrelated case against Federal Reserve President Lisa Cook is scheduled to be heard in the U.S. Supreme Court next week, which also addresses the president’s authority over the central bank.
“The Federal Reserve’s independence and the public’s perception of its independence are critical to economic performance, including achieving the goals of price stability, maximum employment, and moderate long-term interest rates set for the Federal Reserve by Congress,” the statement said.
Jonathan Kantner, a former assistant U.S. attorney general, told CNBC on Monday that the bar for conviction in such cases is “very high,” especially when prosecutors appear to be politically motivated.
Mr. Trump has long criticized Mr. Powell, who has pushed the Fed to cut interest rates. The central bank has approved three cuts in 2025.
Powell said in a statement Sunday that the accusations were a pretext to fire him. If established, Kantner said, “it would trigger a number of other legal disputes.” “This could get quite messy.”
CNBC has reached out to the White House and Department of Justice for comment.
Correction: Jonathan Kantner is a former U.S. Assistant Attorney General. A previous version misspelled his name.
