Former Treasury Secretary Janet Yellen, who previously led the Federal Reserve, sharply criticized the Department of Justice's investigation into her successor, Jerome Powell, calling it a deeply troubling assault on the central bank's independence. In a CNN interview Thursday, Yellen described President Trump's actions as unprecedented and warned that the probe represents a dangerous escalation in political pressure on the Fed.
“I think what President Trump is doing is unprecedented, and the most recent and most disturbing, in a way, is what he's done to Chair Powell in really weaponizing the Department of Justice against him in order to try to induce him to leave,” Yellen told host Erin Burnett.
The investigation, launched in December, centers on Powell's handling of building renovations at the Fed. While U.S. Attorney for D.C. Jeanine Pirro announced last week that the DOJ was dropping the case, press secretary Karoline Leavitt clarified that the probe was merely being transferred to the inspector general's office, insisting it was “not necessarily dropped.” This ambiguity has fueled concerns that the administration continues to leverage legal scrutiny against the Fed chief.
Powell, whose term as chair expires May 15, has indicated he will remain as a Fed governor—a position he holds until January 2028—citing ongoing legal threats to the institution. In a press conference following the Fed's decision to hold interest rates steady, Powell stressed the importance of protecting the central bank's ability to operate without political interference. “I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors,” he said.
Yellen, who resigned from the Fed during Trump's first term after he declined to reappoint her, praised Powell's decision to stay on as a defense of institutional integrity. “This is something he's doing to protect the independence of the Fed, and I can't stress how important that is,” she said, framing the move as vital to economic stability.
She further warned that the investigation could chill decision-making among Fed policymakers. “By and large, the Fed has done a good job, and politics doesn't enter its decision making,” Yellen said. “And now you have a situation where members of the policy-setting committee have to worry that if they make decisions that President Trump doesn't like, they could have the DOJ weaponized against them.”
The probe had stalled the confirmation of Trump's nominee to replace Powell, Kevin Warsh, after Sen. Thom Tillis (R-N.C.) vowed to block the nomination until the criminal case was dropped. Tillis lifted his hold following Pirro's announcement, allowing Warsh's nomination to clear the Senate Banking Committee on Wednesday. The full Senate is now expected to vote on the confirmation.
This episode is the latest in a series of moves by the Trump administration that critics argue are eroding the independence of key economic institutions. As the administration also escalates trade tensions—such as imposing a 25% tariff on European vehicles—the Fed's ability to navigate monetary policy free from political pressure remains a central concern for markets and economists alike.
