'we're In A Bad Spot': Fed Leaders Push Back On Trump's Attacks On Powell

The leaders of Federal Reserve regional banks who play a key role in setting interest rates are pushing back on the Trump administration’s move to subject Fed Chair Jerome Powell to a criminal inquiry.

“I consider Chair Powell to be a first-ballot Hall of Fame Fed chair,” Chicago Fed President Austan Goolsbee told NPR Wednesday morning. “If we’re going to get into a circumstance where the independence — or even the integrity — of Chair Powell is in question? We’re in a bad spot.”

In a separate interview with The New York Times, Minneapolis Fed President Neel Kashkari echoed Powell’s claims that the “escalation” of the administration's attacks on Fed officials over the last year “is really about monetary policy,” not cost overruns on the renovation of central bank headquarters, which President Donald Trump has criticized.

New York Fed President John Williams said earlier this week that Powell was “completely dedicated” to the Fed’s mission and was a man of “impeccable integrity." He cautioned that undue attempts to influence the central bank's policies could lead to higher inflation. And Raphael Bostic, the outgoing leader of the Atlanta Fed, said Powell's statement on how the administration has threatened and pressured Fed officials "said all it needed to say.”

The rebukes from top regional Fed officials are landing as the White House faces a cascade of criticism from top CEOs, Republican lawmakers, economic policy heavyweights and global central bank leaders over the Justice Department’s criminal inquiry into Powell’s congressional testimony last year covering the costly headquarters renovation.

Trump has battered Powell repeatedly over his resistance to cutting rates, and the administration’s investigations of the outgoing central bank chief’s testimony — along with a separate effort to oust Fed Gov. Lisa Cook over mortgage fraud allegations — have been widely interpreted as a pretext for pressuring him on monetary policy.

The Fed’s relative independence from direct White House influence is viewed as essential to its ability to contain inflation, which often requires politically unpopular interest rate hikes.

Bostic, Goolsbee, Kashkari and Williams are among 12 regional bank presidents throughout the country who also have a say on rates. The Federal Open Market Committee, which sets short-term borrowing costs, is comprised of the Fed's seven board members, the New York Fed president and a rotating cast of four regional bank leaders. Goolsbee is currently a voting member and Kashkari is an alternate.

Lawmakers from across the political spectrum — including several Senate Republicans— were alarmed by the news that the Justice Department had subpoenaed Powell, whose term as chair expires in May.

On Tuesday, Wall Street CEOs Jamie Dimon of JPMorgan Chase and Robin Vince of BNY said the administration’s actions could undermine bond markets and diminish investors' faith that the Fed can operate without direct political influence. The leaders of several major central banks, including European Central Bank President Christine Lagarde, issued a statement that forcefully defended Powell earlier this week.

Fed Gov. Stephen Miran — who took a leave of absence from his role as Trump's top economic adviser to join the central bank last year — said Wednesday that the statement from other central bank leaders was inappropriate.

"I don't think it's appropriate for central bankers to get involved in non-monetary policy issues in their own country, and I think it's even less appropriate in other countries," Miran said during a fireside chat at the Delphi Economic Forum, shortly after delivering a speech framed around Greek deregulatory efforts.

Trump and other top administration officials have sought to distance themselves from the probe. Even so, the president responded to Dimon’s comments to reporters at the White House, saying the powerful Wall Street CEO is “wrong” and that “Jamie Dimon probably wants higher rates. Maybe he makes more money that way.”

The White House did not immediately respond to a request for comment. JPMorgan declined comment.