{"id":24647,"date":"2026-01-16T09:55:56","date_gmt":"2026-01-16T09:55:56","guid":{"rendered":"https:\/\/finderica.com\/?p=24647"},"modified":"2026-01-16T09:55:56","modified_gmt":"2026-01-16T09:55:56","slug":"former-fed-officials-markets-still-trust-fed-independence","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=24647","title":{"rendered":"Former Fed officials: Markets still trust Fed independence"},"content":{"rendered":"<div>\n<div class=\"Enhancement\" data-align-center=\"\">\n<div class=\"Enhancement-item\">\n<figure class=\"Figure\">   <\/figure>\n<\/div><\/div>\n<p>Processing Content<\/p>\n<ul class=\"rte2-style-ul\">\n<li> <b>Key Insight:\u00a0 <\/b>A panel of former Federal Reserve officials discussed the implications of a probe into Fed Chair Jerome Powell, saying the market&#8217;s muted reaction reflected political pushback against a potential indictment.<\/li>\n<li><b>Expert Quote: <\/b>\u00a0&#8220;Markets think these institutions will be strong enough to withstand these types of shocks.&#8221; \u2014 Randall Kroszner, former Fed governor.<\/li>\n<li><b>What&#8217;s at stake: <\/b>The central question is whether the Federal Reserve can remain independent from political influence. Panelists and lawmakers warn that a forced removal of Powell or Fed Gov. Lisa Cook could undermine confidence in the Fed and its ability to set monetary policy based on economic conditions rather than political priorities.<\/li>\n<\/ul>\n<p>Former Federal Reserve officials say the market&#8217;s measured response earlier in the week to a potential indictment of Federal Reserve Chair Jerome Powell indicates confidence remains in the central bank&#8217;s independence from political influence.<\/p>\n<p>Speaking at an event hosted by the University of Pennsylvania&#8217;s Wharton School, Loretta Mester, former president of the Cleveland Fed, and Randall Kroszner, a former Fed governor, said opposition from allies of President Donald Trump helped ease mounting concerns on Wall Street.<\/p>\n<p>The former officials pointed to comments from prominent Republicans, including <ps-link><u>Sen. Thom Tillis of North Carolina<\/u><\/ps-link>, a senior member of the Senate Banking Committee, as well as reports that <ps-link><a href=\"https:\/\/www.cnn.com\/2026\/01\/12\/politics\/bessent-unhappy-jerome-powell-investigation\" class=\"Link\" target=\"_blank\" rel=\"noopener\"><u>Treasury Secretary Scott Bessent was unhappy<\/u><\/a><\/ps-link> with the situation.<\/p>\n<p>&#8220;From the press reports, Bessent isn&#8217;t pleased by it, and markets haven&#8217;t gone haywire because they know that someone is there to tell the president that this is problematic,&#8221; predicted Kroszner. &#8220;Markets think these institutions will be strong enough to withstand these types of shocks.&#8221;<\/p>\n<p>Mester echoed that view, describing the <ps-link><u>market reaction as muted<\/u><\/ps-link> and attributing it in part to political pushback against the Trump administration.<\/p>\n<p>After months of clashes with the Trump administration over monetary policy, Powell announced in an extraordinary address that an investigation had been launched into his testimony <ps-link><u>related to $2.5 billion<\/u><\/ps-link> in renovation costs at the Fed&#8217;s headquarters. The Justice Department served grand jury subpoenas <ps-link><u>to the Fed on Friday<\/u><\/ps-link>.<\/p>\n<p>Powell added that the potential indictment is politically motivated and reflects the administration&#8217;s desire to exert greater control over monetary policy.<\/p>\n<p>&#8220;The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,&#8221; Powell said.\u00a0<\/p>\n<p>During Thursday&#8217;s panel, former Fed officials, which also included Patrick Harker, former president of the Philadelphia Fed, and Donald Kohn, a former Fed governor, praised Powell&#8217;s response but said the central bank needs to improve its messaging to explain to the public why attacks on the Fed matter.<\/p>\n<p>&#8220;A lot of communication is focused on making sure the markets understand what you&#8217;re doing, but I think there has to be more emphasis on ordinary people,\u00a0folks who do not understand what the Fed does,&#8221; said Kohn.<\/p>\n<p>Panelists also discussed the case of Federal Reserve Gov. Lisa Cook, saying an <ps-link><u>upcoming Supreme Court decision on<\/u><\/ps-link> whether she can remain in her role could pose an equal or greater threat to the Fed&#8217;s independence.<\/p>\n<p>&#8220;I want to emphasize the greatest threat is if the [Supreme Court] decides against the Fed, independence is gone,&#8221; warned Harker.\u00a0<\/p>\n<p>Kohn said Powell&#8217;s speech was significant for Cook&#8217;s case. &#8220;Jay Powell&#8217;s statement was important and to get that out before the hearing of the Lisa Cook case because it surfaced the independence issue and made it clear what is at stake,&#8221; the former Fed governor said.<\/p>\n<p>The Supreme Court will hear Cook&#8217;s case on Jan. 21 to decide whether the Fed official can remain in her post while her litigation against President Donald Trump, accusing him of <ps-link><u>illegally attempting to remove her<\/u><\/ps-link> from her role, unfolds in a lower court. Separately, Sen. Elizabeth Warren, D.-Mass., and a group of former financial regulators and economic policy experts held a press call Thursday to discuss how the probe into Powell and Cook&#8217;s litigation could affect financial markets and consumers.<\/p>\n<p>Warren warned that if Powell and Cook were forced out, it would open two seats on the Fed&#8217;s board of governors, giving the Trump administration a majority.<\/p>\n<p>&#8220;A Trump takeover will mean the Fed can set interest rates to please a president who wants to juice the economy ahead of the midterm election, no matter what happens to inflation,&#8221; Warren said. &#8220;The consequences will hit families hard.&#8221;<\/p>\n<p>Warren also said that a Trump-controlled Fed could provide special privileges, including master accounts or emergency loans, to favored companies, including Trump-affiliated crypto firm <ps-link><u>World Liberty Financial<\/u><\/ps-link>, which recently applied for a federal banking charter.<\/p>\n<p>Former Consumer Financial Protection Bureau Director Rohit Chopra said during the call that a &#8220;takeover&#8221; of the Fed Board of Governors would likely result in higher inflation and higher interest rates.<\/p>\n<p>&#8220;That means consumers will pay more on their loans, small businesses won&#8217;t be able to make the numbers work, and taxpayers will pay more as the cost of government debt rises,&#8221; Chopra said. &#8220;If you care about the cost of living and affordability, you&#8217;ve got to care about what&#8217;s happening at the Fed.&#8221;<\/p>\n<p><i>Claire Williams contributed reporting to this story.<\/i><\/p>\n<\/div>\n<p><a href=\"https:\/\/www.americanbanker.com\/news\/former-fed-officials-markets-still-trust-fed-independence\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Processing Content Key Insight:\u00a0 A panel of former Federal Reserve officials discussed the implications of a probe into Fed Chair Jerome Powell, saying the market&#8217;s muted reaction reflected political pushback against a potential indictment. Expert Quote: \u00a0&#8220;Markets think these institutions will be strong enough to withstand these types of shocks.&#8221; \u2014 Randall Kroszner, former Fed<\/p>\n","protected":false},"author":1,"featured_media":24648,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[218],"tags":[137,4634,175,3110,758],"class_list":{"0":"post-24647","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking","8":"tag-fed","9":"tag-independence","10":"tag-markets","11":"tag-officials","12":"tag-trust"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/24647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24647"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/24647\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/24648"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}