Former Monetary and Financial Chiefs Publicly Criticize Powell Investigation... White House Draws Line: "Unrelated to the President" (Comprehensive)

Aftermath of Powell Investigation
Greenspan, Bernanke and Others Warn: "This Only Happens in Emerging Markets"
Bessent Also Communicates Market Turmoil Concerns to Trump
White House Distances Itself: "Not Ordered by the President"

As Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), faces the possibility of criminal indictment by the U.S. Department of Justice, a direct confrontation between the head of the U.S. central bank and the President is becoming a reality. While Chairman Powell has taken a strong stance out of concern for central bank independence, former monetary and fiscal authorities have joined in with public criticism. Meanwhile, the White House is stepping back, denying any involvement by President Donald Trump. On Wall Street, there is speculation that the Trump administration may be seeking an exit strategy.

U.S. President Donald Trump (right) and Jerome Powell, Chairman of the U.S. Federal Reserve (Fed). Photo by AFP Yonhap News

Former Monetary and Fiscal Chiefs Criticize: "This Only Happens in Emerging Markets"

Ben Bernanke, former Chairman of the United States Federal Reserve (Fed). San Francisco ? Special Correspondent Haeyoung Kwon

In a joint statement released on the 12th (local time), former monetary and fiscal chiefs strongly criticized the move, stating, "Reports of a criminal investigation into Chairman Powell represent an unprecedented attempt to use prosecutorial powers to undermine the independence of the central bank." They continued, "This is the kind of monetary policy decision-making seen in emerging markets with weak institutional foundations, which has led to severe negative consequences for inflation and the overall functioning of the economy," emphasizing, "Such actions are utterly incompatible with the United States, where the rule of law has served as the foundation for economic success."

The statement also warned, "The independence of the Fed and public trust in it are crucial to achieving the goals set by Congress-price stability, maximum employment, and moderate long-term interest rates," cautioning that undermining the central bank's independence could pose a serious risk to the entire U.S. economy.

This statement was joined by a large group of former key economic policymakers from both the Republican and Democratic parties. Signatories included former Fed Chairs Alan Greenspan, Ben Bernanke, and Janet Yellen, as well as former Treasury Secretaries Henry Paulson, Timothy Geithner, Robert Rubin, and Jacob Lew. The bipartisan nature of the statement is notable, as it brings together figures who have led monetary and fiscal policy under different administrations. Prominent American economists such as Glenn Hubbard, Kenneth Rogoff, and Jared Bernstein also added their names.

Regarding this, former Secretary Yellen said in a CNBC interview that it was an "extremely chilling" situation, adding, "What is surprising is that the market is not taking this matter more seriously. This is clearly something that should be of greater concern." She criticized the move as an irresponsible attempt to use monetary policy to reduce the national debt interest burden.

Janet Yellen, former U.S. Secretary of the Treasury, spoke at a panel discussion during the American Economic Association Annual Meeting (ASSA) 2026 held on the 4th (local time) in Philadelphia, Pennsylvania, USA. Photo by Kwon Haeyoung

Powell Responds Immediately... First Direct Confrontation with Trump

Previously, Chairman Powell revealed that he had been notified by the U.S. Attorney's Office in Washington, D.C. of the possibility of criminal charges related to his testimony before the Senate Banking Committee regarding the Fed headquarters remodeling in June of last year. In political and financial circles, the investigation is being interpreted as pressure from the Trump administration, using the issue of the Fed headquarters construction costs as a pretext, targeting Powell for not complying with demands to lower interest rates.

Having previously avoided open confrontation with President Trump, Chairman Powell responded immediately to this matter. In a statement released the previous day, he said, "The threat of criminal prosecution is a consequence of the Fed deciding interest rates in a manner that best serves the public interest, rather than following the President's preferences," and added, "This issue is about whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be dictated by political pressure or intimidation."

U.S. media have interpreted this as Powell effectively launching a direct response to President Trump. The Wall Street Journal (WSJ) commented, "Powell's unusually firm tone lacked the diplomatic exit or carefully calculated neutrality that characterized his previous remarks regarding the White House," adding, "It appears that Powell's years of avoiding conflict with President Trump are now over."

The White House Steps Back... Bessent Expresses 'Market Turmoil' Concerns to Trump

The White House has drawn a line, stating that the investigation into Chairman Powell is not at the direction of President Trump. White House spokesperson Caroline Leavitt responded "No" when asked during a briefing whether President Trump had ordered the investigation. She added, "The President has the right to criticize the Fed Chairman," and "Freedom of expression applies to the President as well. The President has made it clear that he believes Powell is not fulfilling his role, but whether a crime has been committed is a matter for the Department of Justice to determine."

Scott Bessent, U.S. Secretary of the Treasury. Photo by Reuters Yonhap News

There have also been reports that Treasury Secretary Scott Bessent expressed concerns about potential financial market turmoil related to the investigation into Chairman Powell and conveyed these concerns to President Trump. U.S. online media outlet Axios reported that Secretary Bessent late the previous day told President Trump that "the investigation into Chairman Powell could cause significant disruption in financial markets." Citing sources, the outlet said, "Secretary Bessent had expected Powell to step down if the President nominated a new Fed Chair, but now believes that will not be the case," adding, "Powell is now in full resistance mode, and this situation has thrown everything into chaos." While Powell's term as Chairman ends in May, his position as a Fed Governor continues until January 2028.

Some of Secretary Bessent's concerns have already materialized. Although the stock market managed to rebound late in the session, in early trading, concerns over the erosion of central bank independence led to a simultaneous decline in stocks, the dollar, and Treasury prices-a so-called 'Sell America' trend.

However, in financial markets, there is a prevailing view that President Trump may move to ease tensions with Chairman Powell. Krishna Guha, Vice Chairman of Evercore ISI, commented, "This is a very serious matter, but investors believe that this action will ultimately end without any substantive result and that the administration will seek an exit strategy to de-escalate tensions."