US President Donald Trump has announced his intention to immediately remove Federal Reserve official Lisa Cook from her position, citing “sufficient reason” to believe she made false statements on mortgage agreements. Cook, who is the first African American woman to serve on the Fed’s board of governors, has responded by saying Trump has no authority to fire her and she will not resign. The move is seen as a major escalation in Trump’s battle against the US central bank, which he has been pressuring to lower interest rates.
The issue surrounding Cook’s removal centers on allegations of mortgage fraud, which were first made by a Trump ally, Bill Pulte, in a public letter to Attorney General Pam Bondi. According to Trump, Cook signed two documents attesting that different properties would be her primary residence, which he claims is inconceivable. Cook has denied any wrongdoing, stating that the matter stemmed from a mortgage loan application she made four years ago before joining the central bank.
The Federal Reserve has not yet commented on Trump’s announcement, but experts suggest that the White House will need to demonstrate sufficient reason to fire Cook, potentially in court. Cook’s lawyer has stated that they will take whatever actions are needed to prevent Trump’s “attempted illegal action.” The situation has raised concerns about the independence of the Federal Reserve, which gained autonomy from the US government in 1951.
Trump’s decision to remove Cook has also sparked fears about the potential impact on the US economy and the Fed’s composition. Investors are betting that Cook’s replacement would be likely to push for more interest rate cuts, which has weakened the US dollar against major world currencies. The move has also raised questions about the potential for Trump to reshape the Fed’s leadership and how that would impact the market’s perception of US investibility.
The situation is seen as a standoff between the central bank and the White House, with Cook and the Fed resisting Trump’s decision to oust her. Trump has expressed increasing animosity towards Fed Chair Jerome Powell, calling him a “numbskull” and a “stubborn moron” for not supporting his calls for rapid interest rate cuts. However, Powell has boosted expectations of an interest rate cut in September, which has eased some tensions. The situation remains uncertain, with experts warning that the pressure Trump is putting on the Fed could have significant implications for the US economy and financial markets.