Republican lawmakers break from US president on Fed chair indictment | Banks News

Former Federal Reserve chairs called the indictment an ‘unprecedented attempt’ to undermine the independence of the US central bank in a joint letter.

United States Senator Lisa Murkowski threw her support behind fellow Republican Thom Tillis’s plan to block President Donald Trump’s Fed nominees after the Justice Department over the weekend threatened to indict Fed Chairman Jerome Powell.

“The stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer,” Murkowski wrote on X on Monday.

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Murkowski is one of a small handful of Trump’s fellow Republicans who have shown themselves willing to vote against his wishes at times in the US Senate, where his party holds a 53-47 majority.

Since returning to office last year, Trump has been increasingly publicly pressuring the Fed to cut interest rates, breaking with longstanding practice meant to insulate the central bank from political pressure and allowing it to focus on economic data.

Alaska lawmaker Murkowski said she had spoken earlier on Monday with Powell, who on Sunday said the US central bank had received subpoenas last week that he called “pretexts” aimed at the Fed’s basing interest rates on policy and not on Trump’s preferences.

Murkowski called the Justice Department threat “nothing more than an attempt at coercion”, adding that Congress should investigate the department if it believes probing the Fed was warranted over renovation cost overruns, which she called “not unusual”.

Hassett weighs in

Powell’s term is up in May, and White House economic adviser Kevin Hassett has largely been seen as a potential pick to succeed him.

Hassett questioned Powell’s congressional testimony about the Fed’s new building construction, which is at the centre of the Justice Department’s probe.

“Right now, we’ve got a building that’s got like, dramatic cost overruns and plans for the buildings that look inconsistent with the testimony, but again, I’m not a Justice Department person. I hope everything turns out OK for Jay,” Hassett told the CNBC news programme Squawk Box.

Later, Hassett said he would support the investigation if he were in charge of the Fed, telling reporters that it “seems like the Justice Department has decided that they want to see what’s going on over there with this building that’s massively more expensive than any building in the history of Washington”.

Trump, who has long pushed for more aggressive interest rate cuts, said in a post on his Truth Social platform in December, “The United States should be rewarded for SUCCESS, not brought down by it. Anybody that disagrees with me will never be the Fed Chairman!”

Former officials condemn probe

The past three heads of the US Federal Reserve on Monday joined with other former federal government economic policy leaders in condemning the Trump administration’s criminal probe of the Fed chair, likening it to the interference with central bank independence more often seen in emerging market countries with “weak institutions”.

“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” a statement signed by former Fed chairs Janet Yellen, Ben Bernanke and Alan Greenspan said.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”

The three were joined by 10 other former top economic policymakers appointed by both Republican and Democratic presidents.