Trump dismisses Fed Governor Lisa Cook over a claim of mortgage fraud

The latest in the US President‘s assault on the independence of the central bank is the initiative to dismiss Lisa Cook, the governor of the Federal Reserve, on the grounds that she committed mortgage fraud.

Trump informed Cook in a letter on Monday that he was firing her from her job “effective immediately” due to a claim made by one of his supporters that she had taken out a mortgage on a second house that she had misrepresented as her primary residence.

Cook stated last week that she had “no intention of being bullied” into resigning, and the allegations have not been verified.

“As a member of the Federal Reserve, I do intend to take any questions about my financial history seriously, so I am gathering the accurate information to answer any legitimate questions and provide the facts,” she stated.

On Monday evening, Trump shared the entire letter on social media. In it, he stated that he had “sufficient cause” to dismiss her from her job because of the allegation against her.

Cook’s exit would allow Trump to tap a replacement, helping him to exert more control over Fed policy. Thus far, his calls for reduced interest rates have been ignored.

Due to allegations of mortgage fraud, the Trump administration has targeted a number of the president’s political rivals, including Senator Adam Schiff of California and Attorney General Letitia James of New York. Schiff and James both refuted the accusations.

Cook is not a politician, but is among a string of senior Fed policymakers who have defied Trump’s persistent calls for rate cuts. Appointed by Joe Biden in May 2022, she became the first Black woman to sit on the central bank’s board. Her term on the Fed’s board was not due to end until 2038.

She is a respected economist, with stints at Harvard University and Stanford University, who served on the council of economic advisers under Barack Obama.

The US Supreme Court ruled in May that the president cannot dismiss the governors of the US central bank without cause because the bank is an autonomous organization whose members are not appointed by the president.

Bill Pulte, a Trump-appointed official in charge of the US Federal Housing Finance Agency, spearheaded the administration’s assault on her future at the Fed, accusing her of claiming two separate locations were her principal residences when applying for mortgages in 2021.

“If this woman is allegedly lying to support her own interest rates, how can she be in charge of interest rates?” Pulte posted on what was once Twitter, X. He referred the case to the Department of Justice for investigation.

Trump seized on the claims before Cook had responded, writing on Wednesday on Truth Social, his social network, that she “must resign, now!!!”.

Chuck Schumer, the Democratic leader of the Senate, criticized Trump’s action against Cook.

“Donald Trump is playing a dangerous game of Jenga with a key pillar of our economy,” he said.

Before Trump causes irreversible harm to the national, state, and local economies, the courts must put an end to this blatant attempt at power. And Donald Trump will bear full responsibility for the destruction and destruction families experience if the economy collapses, families lose their savings, and Main Street suffers as a result.

The Fed chair Jerome Powell signaled on Friday that the Fed was gearing up to start cutting interest rates as soon next month, but reiterated warnings about the potential risks posed by Trump’s policies, including sweeping tariffs and an immigration crackdown, on the economy.

“The economy has encountered fresh difficulties this year. Powell said in a widely watched address to other central bankers assembled in Jackson Hole, Wyoming, “Much higher tariffs across our trading partners are remaking the global system.” “Tighter immigration policy has led to an abrupt slowdown in labor force growth.”

Leading Democrats vehemently condemned Trump’s move to dismiss Cook. The Senate Banking, Housing, and Urban Affairs Committee’s ranking member, Massachusetts Senator Elizabeth Warren, described it as “the latest example of a desperate president searching for a scapegoat to cover for his own failure to lower costs for Americans.”

“The Federal Reserve Act is being flagrantly violated by this authoritarian power grab, and it needs to be overturned in court,” Warren stated.

Experts and economists also criticized the action, cautioning that the consequences of her attempted dismissal would affect the financial stability of Americans.

The White House is attempting to “transform the financial regulators from independent watchdogs into obedient lapdogs that do as they are told,” according to Rohit Chopra, the former director of the Consumer Financial Protection Bureau under Joe Biden.

“Americans pay a price for destroying institutions through illegal activity and pitiful power grabs,” stated Skanda Amarnath, the executive director of Employ America and a former Fed economist. “As American governance continues to deteriorate, the dollar continues to decline. All commodities will see price increases as a result. Chair Powell must ensure that Lisa Cook is not removed as a result of these arbitrary and capricious actions from the president.”