URGENT UPDATE: President Donald Trump has initiated the removal of Lisa Cook from the Federal Reserve’s Board of Governors, raising alarms about the independence of the Central Bank. This dramatic move comes in the wake of allegations that Cook may have provided false information on mortgage applications for properties in Michigan and Georgia, a claim Trump asserts warrants her immediate dismissal, effective August 25, 2023.
In a letter posted on Truth Social, Trump stated, “The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.” He cited “deceitful and possibly criminal conduct” as grounds for Cook’s termination, escalating tensions between the White House and the Fed.
Cook, the first Black woman to serve on the Fed Board, was appointed by President Joe Biden in 2022 and reappointed for a new term through 2038. She has stood firm against Trump’s accusations, insisting that he lacks the legal authority to fire her and plans to challenge the removal. “I will not resign. I will continue to carry out my duties to help the American economy,” Cook stated, emphasizing her commitment to transparency.
The allegations originate from Bill Pulte, Director of the Federal Housing Finance Agency, who accused Cook of mortgage fraud. Pulte claimed that Cook misrepresented two properties as her primary residences on loan applications, urging the Justice Department to investigate. Trump’s support for Pulte’s claims has intensified scrutiny of the Fed, particularly as he has expressed frustration over the Fed’s interest rate policies.
Trump’s actions have drawn criticism from various quarters. Senator Elizabeth Warren condemned the move as an “authoritarian power grab” that undermines the independence of the Federal Reserve. Former Treasury Secretary Larry Summers cautioned that such “pressure tactics” could pose a profound threat to U.S. democracy.
Observers note that if Trump successfully removes Cook, he could install a fifth Republican on the seven-member board, drastically shifting its dynamics. The implications of this power play could reverberate through economic policy, especially as Trump has made it clear he will not appoint a Fed Chair who won’t lower interest rates.
The situation remains fluid, with Cook’s legal team preparing to contest the dismissal. “This is a kill shot at Fed independence,” stated Aaron Klein from the Brookings Institution, highlighting the stakes involved in this unfolding drama.
As the nation watches, the coming days will be critical in determining the future of the Federal Reserve and its leadership. Stay tuned for updates on this developing story.
