Former Federal Reserve chairs have issued an unprecedented joint rebuke of the Justice Department's criminal inquiry into Fed Chair Jerome Powell, warning that the investigation threatens the fundamental independence of America's central banking system.

Joint Statement from Former Fed Leadership

In a rare display of unity, former Fed chairs Janet Yellen, Ben Bernanke, and Alan Greenspan, along with other senior economic policymakers, released a joint statement on Monday condemning what they termed an "unprecedented attempt" to undermine Federal Reserve independence.

Background of the Criminal Inquiry

The controversy stems from a Justice Department criminal inquiry into remarks Powell made to Congress regarding renovation work at the Federal Reserve's headquarters complex in Washington. Powell disclosed the investigation in a video message on Sunday, revealing that the probe was opened under the Trump administration.

Institutional Independence at Stake

The former officials emphasized that Federal Reserve independence and public confidence in the institution are essential for achieving the central bank's core congressional mandates. They outlined the critical objectives that depend on this independence:

• Delivering stable prices
• Maintaining maximum employment
• Ensuring moderate long-term interest rates

The signatories warned that politicizing monetary policy erodes the rule of law, which they described as a cornerstone of United States economic strength. "It has no place in the United States," the statement declared, cautioning that undermining institutional credibility could have lasting consequences for financial stability and policy effectiveness.

Broader Economic Implications

The former Fed chairs drew parallels between the current situation and political interference observed in emerging market economies with weak institutions. They specifically warned that such actions have historically resulted in higher inflation and impaired economic functioning, suggesting that the inquiry could have far-reaching consequences beyond the immediate political implications.

The joint statement represents a rare intervention by former Federal Reserve leadership, underscoring the gravity with which these officials view the potential threat to central bank independence.

A bipartisan coalition of former Federal Reserve officials has rallied behind current Fed Chair Jerome Powell, expressing strong support amid ongoing scrutiny. The group includes former Fed chairs from both Republican and Democratic administrations, along with former Treasury secretaries and Council of Economic Advisers chairs.

Unprecedented Attack on Independence

The coalition has characterized the criminal inquiry into Powell as an "unprecedented" attack on the Federal Reserve's institutional independence. This marks a significant moment in the Fed's history, as such high-level criminal investigations into sitting Fed chairs are extremely rare.

Cross-Party Support

The support for Powell transcends traditional party lines, with officials from both Republican and Democratic administrations coming together to defend the Fed chair. This bipartisan backing underscores the perceived severity of the threat to the Federal Reserve's autonomy.

Institutional Concerns

The involvement of such a broad spectrum of former officials highlights concerns about maintaining the Federal Reserve's traditional independence from political interference. The Fed's ability to operate without undue political pressure has long been considered crucial for effective monetary policy implementation.

This unprecedented show of support reflects the gravity with which former officials view the current situation and their commitment to preserving institutional integrity.