President
Donald Trump said Monday night that he’s firing
Federal Reserve Governor Lisa Cook, an unprecedented move that would constitute a sharp escalation in his battle to exert greater control over what has long been considered an institution
independent from day-to-day politics.
Trump said in a letter posted on his
Truth Social platform that he is removing Cook effective immediately because of allegations that she committed mortgage fraud.
I can't believe none of this worries you.
Cook said Monday night that she would not step down. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in an emailed statement. “I will not resign.”
Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week. Pulte alleged that Cook had claimed two primary residences ― in Ann Arbor, Michigan, and Atlanta ― in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
And isn't it funny that Trump was found guilty of something similar? He claimed his net worth was more than it was in order to get better interest rates from banks.
If Trump succeeds in removing Cook from the board, it could erode the Fed’s political independence, which is considered critical to its ability to fight inflation because it enables it to take unpopular steps like raising interest rates. If bond investors start to lose faith that the Fed will be able to control inflation, they will demand higher rates to own bonds, pushing up borrowing costs for mortgages, car loans and business loans.
Richard Nixon and Lyndon Johnson put heavy pressure on the Fed during their presidencies — mostly behind closed doors. Still, that behind-the-scenes pressure to keep interest rates low, the same goal sought by Trump, has widely been blamed for touching off rampant inflation in the late 1960s and ’70s.
Do you think Trump knows better than the Feds regarding lowering interest rates?