WASHINGTON, D.C. — President Donald Trump said Friday that he would fire Federal Reserve Governor Lisa D. Cook if she did not resign, escalating his campaign to reshape the central bank by installing loyalists aligned with his economic agenda. However, legal experts point out that the president’s authority to remove a sitting Federal Reserve Board member is significantly limited by law.
Trump’s remarks followed allegations from Bill Pulte, Director of the Federal Housing Finance Agency, who accused Cook of falsifying information on mortgage applications to secure preferential loan terms. The Justice Department has acknowledged the referral and stated the case “requires further examination.”
Despite the accusations, Cook has not been formally charged with any wrongdoing. In response, she stated she had "no intention of being bullied" and is committed to providing “accurate information to answer any legitimate questions.”
Legal scholars widely agree that removing a Federal Reserve governor requires proof of misconduct that meets the legal standard of “cause,” typically interpreted as gross negligence or malfeasance. This is a high bar, and there is little legal precedent for removing Fed officials under such circumstances. The Supreme Court has also suggested that the Federal Reserve may enjoy greater independence from executive interference compared to other federal agencies.
Political Context and Broader Strategy
Trump's threat comes at a time of heightened political tension surrounding the Federal Reserve. His administration is actively pursuing changes to the Fed’s leadership, including replacing Chair Jerome H. Powell when his term ends in May 2026. Though Powell’s chairmanship will soon expire, his term as a governor extends until 2028.
The president has already nominated Stephen Miran—currently chair of the White House Council of Economic Advisers—to fill the seat vacated earlier this month by Adriana Kugler. Miran is a noted Fed critic and will require Senate confirmation. If confirmed, his appointment would be temporary.
This broader effort appears to be driven by Trump’s desire to push the central bank toward a more aggressive policy of interest rate cuts. Despite ongoing concerns about inflation, the administration has publicly criticized the Fed for not lowering rates more significantly. Trump has specifically called for rates to be cut by three percentage points.
Tensions at Jackson Hole
The controversy unfolded as Powell delivered a key address at the annual Jackson Hole Economic Symposium in Wyoming. In what may be his final appearance at the event as Fed Chair, Powell hinted that the central bank may soon begin easing monetary policy. Still, he emphasized the Fed would "proceed carefully" with rate reductions, signaling a cautious approach.
The administration’s criticism has not been limited to policy. Over the summer, Trump and his allies scrutinized a costly renovation project at the Fed's Washington headquarters, which is now approximately $700 million over budget and projected to cost $2.5 billion. During a visit to the site, Trump clashed publicly with Powell over the project’s expenses.
Pattern of Political Targeting
This is not the first time the Trump administration has used allegations of mortgage fraud against political adversaries. Similar investigations have been raised against figures like Senator Adam B. Schiff of California and New York Attorney General Letitia James, both of whom have led legal or congressional actions against Trump.
Legal experts have voiced concern over the pattern. Heather K. Way, a clinical professor at the University of Texas School of Law, warned that “the weaponization of mortgage fraud claims as part of a political witch hunt undermines the rule of law and diverts federal resources from more serious threats to homeowners.”
As political pressure on the Federal Reserve mounts, the outcome of these investigations—and the limits of presidential authority—may shape both the institution’s independence and the broader economic landscape in the months ahead.
Source: nytimes.com
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