U.S. President Donald Trump has escalated pressure on the Federal Reserve (Fed) by dismissing Lisa Cook, a Fed Board Member, who is facing allegations of mortgage fraud.
On August 25 (local time), President Trump made public a letter notifying Cook of her dismissal through his social media platform, Truth Social.
President Trump cited the allegations related to mortgage loans as the reason for her dismissal, stating that, under the authority granted by Article II of the Constitution and the Federal Reserve Act of 1913, he was immediately removing Cook from her position as a Board Member. In the letter, he wrote, "The American people must be able to fully trust the integrity of the Board Members responsible for policymaking and overseeing the Fed. Given your deceptive and potentially criminal actions regarding financial matters, the American people cannot trust you, and I cannot trust your integrity either."
Previously, Bill Pulte, Director of the Federal Housing Finance Agency (FHFA), sent a letter to Attorney General Pam Bondi raising allegations of mortgage fraud against Cook. Pulte claimed that Cook had obtained a $203,000 loan for a property in Michigan and a $540,000 loan for a property in Georgia in 2021, stating both were for residential use, but later listed the Georgia property for rent in 2022. Since then, President Trump has been calling for Cook's resignation.
According to the Federal Reserve Act, a Board Member can only be dismissed if neglect of duty or illegal conduct can be proven. However, Cook has not been indicted nor convicted in court. She was appointed by former President Joe Biden in 2022, with her term guaranteed until 2038.
This dismissal appears to be a step toward strengthening Trump's influence over the Fed. President Trump has been pressuring Fed Chair Jerome Powell to lower interest rates, and among the seven Fed Board Members, three-including nominee Stephen Myron-have been appointed by Trump. If Cook is ousted and replaced by a loyalist, Trump's influence over the Fed is expected to grow even stronger. Economists are warning that a hasty rate cut could result in significant damage.
The Associated Press (AP) reported that if Cook leaves, President Trump is likely to appoint a loyalist as a Fed Board Member, raising concerns about the Fed's independence. The New York Times (NYT) described this move as one of the most aggressive actions Trump has taken against the Fed Board, warning that it could shake financial markets.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
