Written by Christopher Ruger
Washington (AP) Late on Wednesday, Lisa Cook, the governor of the Federal Reserve, declared she would not quit after Trump called on her to do so on social media due to a claim made by one of his aides that she had committed mortgage fraud.
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In a Fed statement, Cook stated, “I have no intention of being bullied to resign from my position because of some questions raised in a tweet.”
Cook allegedly claimed two principal residences in Ann Arbor, Michigan, and Atlanta in 2021 to obtain better mortgage conditions, according to Bill Pulte, the chairman of the agency that oversees mortgage giants Fannie Mae and Freddie Mac and a Trump appointee, on the social networking site X early on Wednesday. Second homes or residences bought for rental purposes frequently have higher mortgage rates.
In the most recent attempt by the administration to gain more authority over one of the few independent agencies still operating in Washington, Trump called for Cook’s resignation in response to Pulte’s accusation. Trump has often threatened to dismiss Jerome Powell, the chair of the Fed, for failing to lower the Fed’s short-term interest rate.
Trump would have the chance to name a loyalist if Cook were removed from the Fed’s governing board. Trump has stated that he will only name officials who are in favor of lowering rates.
Cook was named to the Fed’s governing board by former President Joe Biden in 2022, and Pulte urged the Justice Department to look into the appointment. The next year, she was reappointed to the longest remaining term of the seven governors, which ends in 2038.
Additionally, Cook stated, “As a Federal Reserve member, I do intend to take any questions about my financial history seriously, so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
In a letter to Attorney General Pam Bondi, Pulte stated that Cook acquired a house in Ann Arbor on June 18, 2021, and then a condo in Atlanta two weeks later. Cook taught at Michigan State University prior to joining the Fed. Additionally, Pulte claimed that Cook had put her Atlanta condo up for rent.
A spokesman for the Justice Department chose not to comment.
Trump chastised Powell just last month over the soaring expenses of renovating two Fed headquarters buildings, even implying that the cost increase would be grounds for termination. After being given a tour of the project, he retracted his threats to terminate Powell.
Additionally, Pulte implied that Cook’s purported behavior might be grounds for termination. According to the law, a president cannot fire Fed officials unless there is a valid reason, which is typically interpreted as some sort of misconduct or neglect of duty.
In any case, a legal dispute about a president’s authority to remove Fed governors may result if Trump attempts to oust Cook.
Senate Democrats criticized Trump’s actions and voiced support for Cook, notably Senator Chuck Schumer of New York.
Trump lies. Schumer posted on social media platform X, “Lisa Cook, don’t let Trump intimidate you and stand tough.”
In a statement, Senator Elizabeth Warren of Massachusetts claimed that Trump has been looking for an excuse to threaten or dismiss Chair Powell and other Federal Reserve Board members while pointing the finger at everyone but himself for the harm his failed economic policies are causing to Americans.
When Chair Jerome Powell’s term ends in May 2026, Trump will have the opportunity to take his place. However, even changing the chair does not ensure that Fed policy would change in the direction Trump desires because the Fed’s interest-rate-setting committee has 12 members who vote on whether to raise or cut interest rates.
However, Trump will have more authority over the Fed, which has long been seen as separate from daily politics, the more members he can select to the Fed’s governing board.
When it comes to setting interest rates, all seven members of the Fed’s governing board can vote. The president of the Fed’s New York branch and four of the presidents of the Fed’s other eleven regional branches alternately make up the remaining five voters.
During his first term, Trump selected Michelle Bowman and Christopher Waller to the Fed’s board. Both rejected the central bank’s July 30 decision to maintain its current rate in favor of a rate reduction.
Adriana Kugler, another Fed governor, abruptly resigned on August 1st, and Trump has chosen Stephen Miran, one of his economic advisers, to serve out the rest of her term until January.
Trump would have a definite majority on the board of governors if he could remove Kugler and Cook, the first Black woman to serve on the Fed’s board. Trump will be able to replace a fifth position on the board if Powell steps down when his tenure as chair concludes in May of next year. However, after Powell’s time as chair ends, he may remain on the board until early 2028.
The boards of directors of the regional Federal Reserve banks choose their presidents, but the Fed’s board of governors must approve their choices. All 12 regional Fed presidents have expiration dates in February of next year.
For several months, Trump has insisted that the Federal Reserve lower the 4.3% short-term interest rate it oversees. Powell, who has stated that the Fed wants to see more proof of how the economy changes in reaction to Trump’s broad tariffs before taking any action, has also been regularly insulted by him. Powell has also stated that the levies could hinder development and increase inflation.
According to Trump, a lower rate would lessen the cost of borrowing for the government’s $37 trillion in debt and improve the housing market by lowering mortgage rates. However, the Fed’s rate decisions are not necessarily followed by mortgage borrowing costs and other interest rates, including many of the ones the government pays.
Similar allegations of mortgage fraud have been made by the Trump administration against Democrats Trump has targeted, such as New York Attorney General Letitia James and California Senator Adam Schiff.
