Donald Trump increased his campaign of pressure on Friday against the Federal Reserve, threatening to fire Lisa Cook as Governor if she did not resign.
Bill Pulte (Director of the Federal Housing Finance Agency, an ally of Trump) has accused Cook of fraud in relation to mortgages.
Trump told reporters, during a trip to The People’s House (a museum at the White House), that “what she did was terrible.” If she does not resign, I will fire her.
Cook has admitted to no wrongdoing, and she’s indicated that she won’t step down. She was appointed in 2022 by the former president Joe Biden.
All claims against Cook
Pulte has publicly clashed with Fed chair Jerome Powell, and supported Trump’s call for lower rates. Cook was accused of claiming improperly two properties as their primary residences in order to get favorable terms on a mortgage.
He said earlier this week that he had sent a criminal referral of the Department of Justice. The Department confirmed Thursday it will investigate these claims.
Cook released a response in a Wednesday statement, claiming that she had learned about the accusations through social media.
She said: “I do not intend to be bullied into resigning from my post because some tweets raised questions.”
She said that she was gathering information to accurately describe her financial background.
Cook consistently votes in accordance with Powell. Most recently, Cook sided with the majority at last month’s Federal Open Market Committee meeting to maintain interest rates as they were.
Federal Reserve: Implications
Trump could reshape Fed Board of Governors with greater vigor if Cook was removed.
The Fed has two Trump-appointed members: Christopher Waller (who was appointed by Trump) and Michelle Bowman, who both dissented at the Fed’s recent decision to keep rates unchanged.
Adriana Kugler’s resignation in the summer of 2013 opened a seat.
Trump, along with Cook’s potential resignation, could fill up to four board seats, creating a majority that shares his view on monetary policies.
The governors are appointed for a 14-year term, so their appointments can influence the policy of decades.
Ed Martin, an attorney at the Justice Department who is seen to be close to Powell’s administration, urged Powell not to fire Cook.
Under current law, however, the Fed chairman does not have authority to fire board members.
Pressure on central banks and political pressure
Trump’s comments about Cook are just the latest of a long list of criticisms directed at the central bank.
Powell has been attacked repeatedly by Trump over the Fed’s interest rate policy, and overruns in budgets related to its Washington headquarters renovations.
Powell’s keynote speech at the Federal Reserve Annual Conference in Jackson Hole Wyoming was full of controversy.
Powell said in his address that rate reductions could be contemplated in the months to come
This event is attended by central bankers around the globe and sets the direction for future monetary policies.
Trump’s remarks and Pulte’s accusations highlight a broader tension that exists between the White House, the Fed and other central banks. This raises questions regarding the Fed’s independence in a crucial moment for the global markets.
Cook has vowed to fulfill her duties in spite of the criticism. Her term ends 2038.
As new developments unfold, this post Trump threatens Fed Governor Lisa Cook over mortgage fraud accusations may be updated.
