NEW YORK: US President Donald Trump on Monday (Aug 25) said he was firing Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, an unprecedented step that could test the boundaries of presidential power over the independent monetary policy body should it be challenged in court.
Trump said in a letter to Cook, the first African-American woman to serve as head of the Federal Reserve’s governing body, that he had “sufficient cause to remove you from your position” because in 2021 Cook indicated on documents for separate mortgage loans on properties in Michigan and Georgia that both were her primary residence where she intended to live.
Cook, appointed to the Fed board in 2022 by former US President Joe Biden, has yet to provide a detailed account of the transactions since questions about them were raised last week by US Federal Housing Finance Agency director William Pulte, who referred the matter to Attorney General Pamela Bondi for investigation.
Neither Cook nor the Fed had immediate comment.
Though the terms of Fed governors are structured so they outlast the term of a given president, the Federal Reserve Act does allow removal of a sitting governor “for cause”, an aspect of the law that has never been tested by presidents who, particularly since the 1970s, largely have a taken hands-off approach to Fed matters as a way to ensure confidence in US monetary policy.
Trump in the letter accused Cook of having “deceitful and criminal conduct in a financial matter” and said he did not have confidence in her “integrity”.
“At a minimum, the conduct at issue exhibits the sort of negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator”, he said.
Trump claimed he had the authority to fire Cook under Article 2 of the US Constitution and the Federal Reserve Act of 1913.
Cook had been defiant about continuing onward at the Fed after the issue first became public last week with Trump calling for her to resign.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” Cook said on Aug 20. “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve, and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
