Washington (AFP) – Federal Reserve Governor Lisa Cook rejected US President Donald Trump’s unprecedented bid to oust her on Tuesday, saying he had no legal authority for such an intervention against a member of the independent US central bank.
After calling for her resignation last week, Trump posted a letter on Monday evening to his Truth Social platform purporting to have fired Cook “effective immediately.” The decision cited allegations of false statements on her mortgage agreements, claiming “there is sufficient cause to remove you from your position.”
“I will not resign,” said Cook, the first Black woman to serve on the central bank’s board, in a statement shared with AFP by her attorney Abbe Lowell. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she added. Lowell pledged to “take whatever actions are needed to prevent his (Trump’s) attempted illegal action.”
The potential legal dispute would be the latest test of presidential powers under Trump’s new term, with the 79-year-old Republican — backed by loyalists throughout the government — forcefully moving to exert executive authority. The Supreme Court’s conservative majority recently allowed Trump to fire members of other independent government boards, but notably created a carveout for the Federal Reserve in its ruling. Federal law says that Fed officials can only be removed for “cause,” which could be interpreted to mean malfeasance or dereliction of duty.
In his announcement that Cook would be removed, Trump pointed to a criminal referral dated August 15 from the Federal Housing Finance Agency’s director — a staunch ally of Trump — to the US attorney general. The referral, Trump said, provided “sufficient reason” to believe that Cook might have made “false statements” on one or more mortgage agreements. One of the alleged false statements was that Cook had claimed two primary residences, one in Michigan and another in Georgia. Cook has not been charged with a crime and the alleged false statements occurred before she was in her current position.
Earlier this month, Cook said in a statement that she had “no intention of being bullied to step down,” but would take questions about her financial history seriously. The Fed did not immediately respond to media queries. In his letter Monday, Trump said: “At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, called Trump’s move “an authoritarian power grab that blatantly violates the Federal Reserve Act.” She added in a statement that this “must be overturned in court.”
Trump has been ramping up pressure on the Fed this year, repeatedly criticizing its chief Jerome Powell for not lowering interest rates sooner despite benign inflation data. Fed policymakers have been cautious in cutting rates as they monitor the effects of Trump’s tariffs on prices. Trump has made no secret of his disdain for Powell, whom he has called a “numbskull” and “moron.” Since its last reduction in December, the Fed has held rates at a range between 4.25 percent and 4.50 percent this year. Powell on Friday opened the door to lowering levels at the bank’s upcoming policy meeting in September.
Trump also previously suggested that what he called an overly costly renovation of the Fed’s headquarters could be a reason to oust Powell, before backing off the threat. The president has picked Stephen Miran, the leader of his White House economic panel, to fill a recently vacated seat on the Federal Reserve board. Cook took office as a Fed governor in May 2022 and was reappointed to the board in September 2023. She was sworn in later that same month for a term ending in 2038. She has previously served on the Council of Economic Advisers under former president Barack Obama. The Trump administration has pursued allegations of mortgage fraud against high-profile Democrats who are seen as political adversaries of the president.
© 2024 AFP
