President Donald Trump announced his decision to fire Federal Reserve Chair Lisa Cook.
The move, unprecedented in history, marks a sharp escalation in his efforts to exert influence over a financial institution that has traditionally remained independent of current politics.
In a letter posted on the Truth Social platform, Mr Trump said Ms Cook would be fired immediately, citing allegations of mortgage fraud.
In response, Ms Cook on Monday evening categorically refused to resign.
“President Trump allegedly removed me ‘for cause’ when there is no legal basis or authority to do so,” she said in an emailed statement. “I will not leave my post.”
The allegations were previously made by Bill Pulte, a Trump-appointed spokesman for the agency that oversees mortgage corporations Fannie Mae and Freddie Mac.
He claims that in 2021, Ms. Cook purchased two primary residences — in Ann Arbor, Michigan, and Atlanta — to get favorable mortgage terms, although rates are typically higher for properties that are not primary residences or that are purchased as rental properties.
Trump's actions could trigger a major lawsuit, possibly ending up in the Supreme Court, that could cause instability in financial markets. Stock futures and the dollar fell slightly against major currencies late Monday.
A successful removal of Ms. Cook could undermine the Fed's political autonomy, seen as key to fighting inflation because it allows it to take unpopular measures such as raising rates.
If bond investors lose confidence in the Fed's ability to control inflation, that would trigger higher interest rates, increasing the costs of mortgages, auto loans and business loans.
Ms. Cook has brought in Abby Lowell, a prominent Washington lawyer, to help. “Trump’s history of intimidation is misguided, and his demands lack due process, reason, and legal authority,” Ms. Lowell said. “We will take all necessary steps to prevent illegal actions.”
Appointed to the Federal Reserve Board by President Joe Biden in 2022, Ms. Cook is the first African-American woman to hold the job. She is a Marshall Scholar, a graduate of Oxford and Spelman College, and has taught at the University of Michigan and the Harvard Kennedy School.
Senate Republicans largely opposed her nomination, which was approved in a tie vote, with then-Vice President Kamala Harris casting the deciding vote.
By law, the president can fire the Fed chief only for “good cause,” which includes misconduct. Disagreements over interest rates are not legal grounds for removal.
Lawyers emphasize that establishing the cause requires a procedure that allows the accused to present arguments in his defense, which was not the case in this case.
“This is a procedurally illegal removal,” said Lev Menand, a Columbia University law professor and author of “The Fed Unleashed,” a book about the central bank’s handling of the COVID-19 pandemic.
Mr. Menand also pointed out that dismissal “for cause” typically relates to official misconduct, not to private misconduct prior to appointment.
“This is not about criminal prosecution or neglect of duty,” he added.
Sourse: breakingnews.ie
