Former President Donald Trump just raised the stakes. He had to fire Lisa Cook, a Federal Reserve governor because her mortgage fraud allegations came up. Yet at the same time, this move threatens the core independence of the central bank. Cook, who led many of these reforms, as did other senior Fed policymakers, held back Trump’s incessant pressure for interest rate cuts.
Fuming on Truth Social, Trump demanded Cook’s head publicly, insisting that she “must resign, now!!! His public demand was made as part of his longstanding anti-establishment campaign against anyone and everyone he views as a threat or enemy. Cook, nominated by President Biden, was confirmed as the first Black woman to serve on the Federal Reserve Board, making history in that appointment. Appointed to the position by President Joe Biden in May 2022,
He is the subject of very serious allegations involving claims of mortgage fraud, the specifics of which have not been made public under state law. Trump has made a habit of attacking anyone he perceives as an obstacle to his policies. This even includes New York Attorney General Letitia James and California Senator Adam Schiff of previous impeachment fame, who are denying wrongdoing in their own state/fraud cases.
Cook is hardly a typical politician. She’s an accomplished economist with a strong commitment to public service. Her removal clears the path for Trump to appoint her successor. This new appointee is likely to agree with his views, which would amplify his power to shape Federal Reserve policy.
This dismissal constitutes yet another step in Trump’s years-long assault on the independence of the Federal Reserve. Not for the first time, the former president tries to do all he can to erode the Fed’s independence. Most importantly, he increasingly targets decisions made by its governors that he finds especially threatening to his economic agenda. Yet Cook’s defiance of Trump’s calls for aggressive rate cuts highlights this tension.