Federal Reserve Governor Lisa Cook rebuffed President Donald Trump’s attempt to “remove” her from her position on the central bank’s main governing body, saying that he has “no authority” to remove her.
Earlier Monday, Trump posted a letter addressed to Cook on his social media platform, Truth Social. In the letter, Trump said she would be “removed” from the Board of Governors “for cause.”
In the letter, Trump wrote:
“Pursuant to my authority under Article II of the Constitution of the Untied States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.”
Cook disagrees, saying that she isn’t going anywhere, doubling down on earlier comments that she would not resign in light of political attacks by Trump and colleagues, who have been increasingly outspoken about the Fed’s policy.
In recent weeks, Federal Housing Finance Agency Director Bill Pulte alleged that Cook committed “mortgage fraud” by marking that both of her homes — one in Michigan and another in Georgia — were primary residences. While the matter has been referred for criminal prosecution, no charges have actually been brought.
The standoff sets up a significant escalation of the President’s attack against the central bank and its independence, with Cook standing between the President and a possible third nomination to the Fed Board of Governors.
That would be a big win for the President, who seeks to corral interest rates lower to fit his economic agenda. But his incursion into central bank independence stands to influence or sway policy in a crucial time.
Former Treasury Secretary Larry Summers has said that the attacks are “chilling” and “should alarm anyone” concerned about the state of the Fed. The question of whether or not Trump can remove Cook might ultimately lie in the hands of the courts.
Today, the Fed Funds Rate (FFR) is 4.25% to 4.50%. Trump has repeatedly indicated his desire to see rates reduced, calling them too high in repeated attacks on Fed chair Jerome Powell, as well as other Fed leaders.
U.S. equity futures fell on the news. Gold and the Cboe Volatility Index spiked.
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