Greenspan, Bernanke, Yellen and other past officials say Trump using 'prosecutorial attacks' to undermine Fed

• Signatories include former Fed Chairs Bernanke, Yellen, and Greenspan, plus former Treasury Secretaries Paulson, Geithner, Rubin, and Lew, along with several prominent economists
• Powell confirmed he was notified by the U.S. Attorney's Office in Washington, D.C. about the investigation into statements he made during June testimony on Capitol Hill
• The statement warns that using prosecutorial attacks on central bank leadership resembles 'how monetary policy is made in emerging markets with weak institutions' and threatens the rule of law that underpins U.S. economic success

Summary: Former Fed and Treasury Officials Defend Powell Against Criminal Probe

Key Development:

A coalition of former Federal Reserve chairs and Treasury secretaries issued a statement Monday defending current Fed Chair Jerome Powell against a Justice Department criminal inquiry, calling it an "unprecedented attempt to use prosecutorial attacks to undermine" Fed independence.

Prominent Signatories:

The statement was backed by over a dozen high-profile officials including:

• Former Fed Chairs: Ben Bernanke, Janet Yellen, Alan Greenspan
• Former Treasury Secretaries: Henry Paulson, Timothy Geithner, Robert Rubin, Jacob Lew
• Prominent economists: Glenn Hubbard, Kenneth Rogoff, Jared Bernstein

Background:

Powell confirmed Sunday he was notified by the U.S. Attorney's Office in Washington, D.C. of a perjury probe related to testimony he gave to Congress in June regarding cost overruns on the Fed's headquarters renovation project. President Trump previously used these cost issues to criticize Powell and threatened termination before backing down.

Market Implications:

The signatories warned that prosecutorial attacks on central bank leadership reflect practices of "emerging markets with weak institutions" that produce "highly negative consequences for inflation and the functioning of their economies." They emphasized that Fed independence is "critical for economic performance" and achieving congressionally mandated goals of stable prices, maximum employment, and moderate long-term interest rates.

Legal Context:

Uncertainty remains about presidential authority to remove Fed leadership. A Supreme Court hearing next week involving Fed Governor Lisa Cook will address the president's power over the central bank.

The controversy raises concerns about central bank independence, a cornerstone of U.S. economic policy credibility.