Trump fired the Fed governor and escalated the fight with the regulator. What the media is writing
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- Trump fired the Fed governor and escalated the fight with the regulator. What the media is writing
US President Donald Trump has fired Lisa Cook, a member of the Board of Governors of the Federal Reserve System, accusing her of mortgage fraud. She herself refused to resign and threatened legal proceedings. The head of the White House continues to try to subjugate the American regulator so that it lowers interest rates. What the media write about Trump's struggle with the Russian Federation is in the Izvestia digest.
Financial Times: Trump fired Cook over fraud allegations
Trump published a letter on Truth Social in which he stated that he was dismissing Lisa Cook, a member of the Fed's board of governors, "with immediate effect." He wrote that there were "sufficient grounds" to believe that she had made false statements about mortgage agreements, which gave him the right to dismiss her. The president invoked his authority under the constitution and U.S. law to dismiss the official.
Financial Times
Cook has stated that she is not going to resign. "President Trump tried to fire me 'for a reason,' even though there is no legal reason, and he has no authority to do so," she said. She added: "I will continue to fulfill my responsibilities to help the American economy, as I have been doing since 2022." Her interests will be represented by star lawyer Abby Lowell, whose clients have also included Jared Kushner and Hunter Biden.
Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, called Trump's intervention "an authoritarian seizure of power that grossly violates the Federal Reserve Act and must be overturned in court." The confrontation between the White House and the Fed is taking place against the background of the fact that representatives of the US central bank are considering the possibility of lowering the interest rate as early as next month.
The New York Times: Can Trump fire a Fed member
Trump's firing of Lisa Cook opens a new legal chapter in his efforts to reform the government. Congress has limited the president's authority to fire Fed officials, saying they can only be fired for "good reason," which is usually understood as gross misconduct. The Trump administration accused Cook of mortgage fraud, and the head of the White House referred to this as an excuse in his letter about her dismissal.
The New York Times
Cook could have sued to keep her job, and a judge would then determine whether there was enough evidence to satisfy the "good cause" requirement. The judge would also make a decision on what will happen in the near future while the issue is under consideration. If the judge had allowed Cook to remain in her position while the case was being considered, the administration would almost certainly have asked the Supreme Court to intervene.
The 90-year-old precedent of the Supreme Court allowed Congress to shield the heads of independent agencies from politics, making it more difficult to dismiss them. Trump argues that these barriers are an unconstitutional restriction on the president's authority to control the executive branch and that he should be able to dismiss officials for any reason or without it.
Associated Press: Trump has opened a new front in the fight for control of the Fed
Trump's actions are likely to provoke a large-scale legal battle that could reach the Supreme Court and destabilize financial markets. Stock futures declined slightly on Monday evening, as did the dollar against other major currencies. If Trump succeeds in removing Cook from office, it could undermine the Fed's political independence, which is considered critical to its ability to combat inflation and take unpopular measures.
Associated Press
If bondholders begin to lose faith in the Fed's ability to control inflation, they will start demanding higher interest rates on bonds, leading to higher borrowing costs for mortgages, car loans, and business loans.
Trump said he would appoint only those Fed officials who would support lowering interest rates on loans. He recently appointed Stephen Miran, the White House's chief economic adviser, to replace another executive, Adriana Coogler, who resigned about five months before the official end of her term. In his first term, Trump appointed two governors, Christopher Waller and Michelle Bowman, so replacing Cook will give Trump's appointees a 4-3 majority on the Fed's board of directors.
Bloomberg: Who is Lisa Cook and how she voted on rates
Cook is a member of the Fed's seven-member board of governors, which, along with five of the 12 reserve bank presidents, forms the federal open market committee, which sets interest rates. She became the first black woman appointed to the board in the Fed's more than 100-year history when President Joe Biden nominated her in 2022. The term of office expired in 2024. Biden then reassigned her to a new 14-year term expiring in 2038.
Bloomberg
Cook holds a doctorate in economics, which is a common specialization for Fed staff, and before joining the central bank, she taught economics and international relations at the University of Michigan. Her research focuses on international central banks, financial crises, racial economic inequality, and the impact of innovation on the economy.
Cook was a member of President Barack Obama's Council of Economic Advisers, and worked at the Treasury Department in the early 2000s. She joined the Fed at a time when the central bank launched the most aggressive rate hike campaign in the last 40 years, trying to stop rising inflation. She has voted with the majority of Fed members and Chairman Jerome Powell at every meeting since joining the organization, including five meetings this year at which governors have kept rates at the same level.
The Washington Post: Trump uses mortgage fraud to attack opponents
Last week, Trump and other officials brought mortgage fraud charges against Cook. The Justice Department is investigating the allegations, and Trump says the allegations alone are enough to remove her from office. In addition, the Justice Department has received a criminal investigation into the real estate cases of New York Attorney General Letitia James, who has filed several lawsuits against both Trump administrations. And in July, the president publicly accused Democratic Senator Adam Schiff, who led the impeachment proceedings, of mortgage fraud.
The Washington Post
According to lawyers, the result has been a tightening of measures taken by Trump officials to punish, remove from office, or even imprison opponents. After the transfer of the cases by the Federal Housing Finance Agency, a relatively small agency headed by a close Trump ally and overseeing the mortgage market, all three defendants are now facing criminal prosecution by the Department of Justice.
Mortgage fraud cases usually involve people using false information to obtain a loan they would not otherwise be eligible for. Those who tell creditors that they plan to use the house as their main home, but actually plan to use it as a second home or rent it out, may be held accountable. Mortgage lenders view basic housing as a less risky asset, so they offer lower rates on it. The charges against James, Schiff, and Cook focus on which of their properties were designated as primary housing.
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