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“Federal Reserve governor Lisa Cook will file a lawsuit challenging her removal by President Donald Trump, setting up a potential standoff between the president and the US central bank. ‘President Trump has no authority to remove Federal Reserve Governor Lisa Cook,’ her lawyer Abbe David Lowell said in a statement…
“The president has said there was ‘sufficient reason’ to believe Cook had made false statements on her mortgage, and cited constitutional powers which he said allowed him to remove her. The unprecedented move comes as Trump has put increasing pressure on the Fed - especially its chair Jerome Powell - over what he sees as an unwillingness to lower interest rates.” BBC
“Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, alleged last week that Cook had claimed two primary residences -- in Ann Arbor, Michigan, and in Atlanta -- in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those bought to rent.” AP News
Many on both sides worry that firing Cook will result in higher inflation:
“Many economists think that inflation expectations are self-fulfilling prophecies and that persistent inflation tends to take hold in populations that take it as a given. For that reason, trustworthy and independent central banks are tremendous bulwarks against inflation, because the public knows that they will make hard decisions when push comes to shove. If Trump is allowed to sow doubts, he’ll make it that much harder to wring out the last of America’s inflation problem today and in the future…
“In [a] post on Friday, Trump had shared an image of the seven members of the Federal Reserve Board of Governors labeled as either ‘Biden’ appointees (three) or ‘Trump’ appointees (three). Cook, the theoretical tiebreaker, was in the center of the graphic with a red X over her face. The not-so-subtle subtext was that Trump could seize influence on the board by ousting Cook.”
Jonathan Levin, Bloomberg
“This isn’t a prudent fight for Mr. Trump to pick—and it isn’t in the best interests of the country… We know from history what happens to central banks that become arms of politicians. See inflation in Turkey under President Recep Tayyip Erdogan and in Argentina for decades. Richard Nixon jawboned then Chair Arthur Burns to keep monetary policy easy, and the result was the 1970s great inflation…
“Mr. Trump doesn’t even need this legal brawl because he is already getting his way on interest rates. Mr. Powell signaled as much Friday in his Jackson Hole speech. The Fed has made many policy mistakes—not least being too late to raise rates when inflation heated up during the pandemic—and this is one reason it is politically vulnerable to Mr. Trump’s attack. But if he wants to change the Fed, Mr. Trump has ample opportunity through appointments to the board, including a successor for Mr. Powell as chair next year.”
Editorial Board, Wall Street Journal
Other opinions below.
“Mr. Trump has asserted that [Ms. Cook] ‘may have made false statements on one or more mortgage agreements.’ We have two words for the president: Prove it. In the absence of any finding of wrongdoing by a judge — or even presenting evidence to one — Mr. Trump is effectively asserting that the president gets to decide what counts as cause [for firing a Fed governor], which would render the standard meaningless.”
Editorial Board, New York Times
“A referral is not a criminal charge. It’s not an indictment or a warrant. It represents no more than a suspicion of wrongdoing. There’s no requirement of probable cause or even investigation…
“I don’t imagine that Trump considers himself somehow less qualified for office as a result of the 2022 criminal referrals about his own conduct, sent to the Justice Department by the Jan. 6 committee. And he’s right. A criminal referral isn’t a legal document. It’s only a suggestion that particular conduct might be worth looking into. Most criminal referrals lead nowhere. Moreover, precisely because criminal referrals have no legal significance, they can be easily concocted.”
Stephen L. Carter, Bloomberg
“It’s unlikely that the FHFA head just happened upon the alleged fraud… Pulte likely directed Fannie Mae or Freddie Mac ‘to pull her application’—an unheard-of move. Taken with the Trump administration’s evidently politically motivated mortgage fraud claims against Senator Adam Schiff and New York Attorney General Letitia James, Cook’s corrupt firing raises the troubling possibility that Pulte is working through a list à la Richard Nixon’s list of political enemies.”
Robert McCoy, New Republic
“Trump critics say he is finally taking over the Fed so he can lower interest rates by fiat. But he’s not. There is no doubt that he desires de facto control of the board so he can force rates lower; but, just as he has not fired Fed Chairman Jerome Powell despite all the saber-rattling, he is also not firing Lisa Cook at will. He insists that he is firing her for cause — namely, her private conduct that he frames as mortgage fraud…
“Maybe Trump is right, or maybe he is being unfair to Cook. Either way, he has not fired her at will. He is claiming to fire her for cause. That means he is adhering to Congress’s rules for the Federal Reserve, regardless of whether his motives are pure.”
Andrew C. McCarthy, National Review
“[Trump] has an argument to make on just cause, but given the presumption of innocence on criminal matters (even after an indictment), I doubt a firing would stick in court -- for now. An indictment from the DoJ might strengthen the case, but it seems unlikely that a federal judge would allow the firing to stick. The Supreme Court already warned Trump that the Federal Reserve is a different issue than the so-called ‘independent’ agencies in the executive branch…
“However, I'm not sure Cook is his real target anyway. Trump likely wants to draw attention to the Fed's monetary policy, plus the hypocrisy of the lawfare conducted against him over the last couple of years, especially in New York. If he can bully Jerome Powell into compromising on lower interest rates, so much the better for Trump, although one has to wonder what that precedent would bring in future administrations.”
Ed Morrissey, Hot Air
