President Donald Trump has announced his decision to remove Federal Reserve official Lisa Cook from her position, intensifying his ongoing conflict with the US central bank. The announcement, made on his social media platform Truth Social, revealed a letter addressed to Cook, informing her of the immediate termination of her position on the bank’s board of governors.
Trump cited sufficient reason to believe that Cook had made false statements pertaining to mortgage agreements. He also referenced constitutional powers which he claimed authorized him to take such action. Neither Cook nor the Federal Reserve has commented on this development, which the president revealed late on Monday.
In recent weeks, Trump has been increasingly critical of the Fed, particularly its chair Jerome Powell, for what he perceives as the central bank’s reluctance to lower interest rates. His decision to fire Cook, who is the first African American woman to serve on the Fed’s board of governors, is believed to be a historic first in the central bank’s 111-year existence. This move is also likely to raise legal questions, as experts indicate that the White House would need to demonstrate sufficient cause for firing Cook – potentially in court.
According to Trump’s letter, Cook signed a document stating that a property in Michigan would be her primary residence for the next year. However, two weeks later, she signed another document for a property in Georgia, claiming it would be her primary residence for the next year. Trump argued that it was implausible for Cook to have been unaware of her first commitment when making the second.
The president had previously called for Cook’s resignation over allegations of mortgage fraud. These claims were first raised in a public letter from housing finance regulator Bill Pulte, a Trump ally, to Attorney General Pam Bondi. Pulte urged the justice department to investigate the matter, though it is unclear whether an investigation has been initiated.
Cook responded to the allegations, stating that she learned of them through the media and that they stemmed from a mortgage loan application she made four years ago, before her tenure at the central bank. She refused to step down due to the allegations, stating that she intended to address any legitimate questions regarding her financial history.
If Cook or the Fed were to resist Trump’s decision to remove her, experts foresee a potential standoff between the central bank and the White House. This development could have significant implications for the Fed’s independence, which was established in 1951.
Trump has grown increasingly hostile towards Powell, branding him a “numbskull” and a “stubborn moron” for not supporting the president’s calls for swift, substantial cuts to borrowing rates. However, Powell recently boosted expectations of an interest rate cut in September, arguing that the inflationary impact of Trump’s tariffs could be temporary.
In response to the news of Cook’s potential replacement, the US dollar weakened against major world currencies in Asian trading on Tuesday. Investors speculated that her successor might advocate for more interest rate cuts.
Source: https://www.bbc.com/news/articles/cx275n8gx0ro?at_medium=RSS&at_campaign=rss
