On Monday,\u00a0President Trump\u00a0took to social media to announce, in a move with little precedent, that he was firing Lisa Cook, a member of the Federal Reserve Board of Governors, after one of his allies accused her of mortgage fraud.<\/p>\n
\u201cYou are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately,\u201d Trump wrote in a letter posted to his Truth Social Network, adding that the allegation \u201ccalls into question your competence and trustworthiness as a financial regulator.\u201d<\/p>\n
In response, Cook said that \u201cno cause exists under the law\u201d for Trump to fire her.<\/p>\n
\u201cI will not resign,\u201d Cook added. \u201cI will continue to carry out my duties to help the American economy as I have been doing since 2022.\u201d<\/p>\n
Who is Cook? What actually happened with her mortgages? And would her possible departure increase the pressure on Fed Chairman Jerome Powell, whom Trump has been urging for months to cut interest rates?<\/p>\n
Here\u2019s a quick explainer.<\/p>\n
Cook is an American economist who has been a member of the Fed\u2019s board since May 23, 2022. She is the first woman of color to sit on the board. She was appointed by former President Joe Biden and confirmed by the Senate by a 51-50 vote (with then-Vice President Kamala Harris breaking the tie). No Republicans voted to confirm Cook.<\/p>\n
At the time, Republicans accused Cook of being \u201chyper-partisan,\u201d pointing to her Twitter history as evidence.<\/p>\n
Cook was educated at Spelman College, Oxford University and the University of California at Berkeley before serving as a professor at Harvard University and Michigan State University. She is considered an expert on international economics, especially the Russian economy and the economic history of African Americans.<\/p>\n
Cook had been scheduled to serve until January 2038.<\/p>\n
In a letter dated Aug. 15 and\u00a0posted to X\u00a0last week, Federal Housing Finance Agency director Bill Pulte, a Trump appointee, urged Attorney General Pam Bondi to investigate a pair of mortgages Cook took out in 2021.<\/p>\n
The first, dated June 2021, was for a property in Ann Arbor, Mich.; according to Pulte\u2019s letter, the terms of the mortgage stipulated it would be Cook\u2019s primary home address for at least a year.<\/p>\n
The second, taken out a few weeks later, was for a property in Georgia \u2014 which Cook also listed as her primary home address, according to Pulte.<\/p>\n
Primary residence mortgages typically mean a lower interest rate, a lower down payment and a lower credit score to qualify; mortgage loans for a second home usually cost more and are harder to get. Buyers generally aren\u2019t allowed to simultaneously claim two primary residence mortgages.<\/p>\n
Cook\u2019s Georgia home was later listed as a rental \u2014 but in Pulte\u2019s words, that doesn\u2019t change the fact that she initially \u201cfalsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.\u201d<\/p>\n
In a phone interview last week with CNBC, Pulte insisted his actions were nonpartisan.<\/p>\n
\u201cThere can be no mortgage fraud. This came across our desk, and it\u2019s my duty to report it,\u201d Pulte said. \u201cIt wouldn\u2019t matter if she were a Republican or a Democrat. It is what it is.\u201d<\/p>\n
But, he added, \u201cI think she needs to resign quickly.\u201d<\/p>\n
Cook has not been charged with wrongdoing or convicted of a crime.<\/p>\n
Last Wednesday, Trump called for Cook\u2019s resignation on social media \u2014 but Cook never responded.<\/p>\n
In a commentary issued at the time, Jaret Seiberg, an analyst at TD Cowen Washington Research Group, speculated that \u201cresigning will not end [any] legal probe,\u201d so there\u2019s really \u201cno incentive for [Cook] to react \u2026 by departing.\u201d<\/p>\n
A few hours later, the Wall Street Journal\u00a0reported\u00a0that Trump had told aides he might try to fire Cook, citing a senior White House official and another person familiar with the matter.<\/p>\n
The only way for Trump to fire a Fed governor is \u201cfor cause,\u201d according to a 1935 law. That standard has usually been interpreted to mean dereliction of duty or malfeasance.<\/p>\n
\u201cI think prior private misconduct would be a stretch,\u201d Columbia University law professor Lev Menand told the Journal.<\/p>\n
On Monday, Cook\u2019s lawyer vowed to fight Trump\u2019s move, saying in a statement that \u201cwe will take whatever actions are needed to prevent his attempted illegal action.\u201d<\/p>\n
Previously, Trump\u00a0had mulled firing Powell.<\/p>\n
There\u2019s already one vacancy on the central bank\u2019s board: Fed board member Adriana Kugler, a Biden appointee, resigned earlier this month. Trump has nominated his chief economist, Stephen Miran, to take Kugler\u2019s place.<\/p>\n
If Cook leaves, that would create two vacancies \u2014 and it would leave only two governors appointed solely by a Democratic president out of a total of seven. (Powell was appointed to Fed roles by presidents of both parties, including Trump himself.)<\/p>\n
Since returning to the Oval Office earlier this year, Trump has been loudly pushing Powell to further lower interest rates (while also threatening to sue him over pricey renovations at the Fed\u2019s headquarters in Washington). But so far, central bankers have resisted the president\u2019s pressure campaign and paused additional rate cuts while they ascertain the economic impact of his tariffs.<\/p>\n
\u201cCould somebody please inform Jerome \u2018Too Late\u2019 Powell that he is hurting the Housing Industry, very badly?\u201d the president wrote earlier this month on Truth Social. \u201cPeople can\u2019t get a Mortgage because of him. There is no Inflation, and every sign is pointing to a major Rate Cut. \u2018Too Late\u2019 is a disaster!<\/p>\n
Even without new appointees, however, Trump might soon get his wish. At a symposium in Jackson Hole, Wyo., last week, Powell opened the door to a rate cut, saying in his speech that \u201cthe baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.\u201d<\/p>\n
Those cuts would come at the Fed\u2019s September meeting.<\/p>\n
Meanwhile, experts warned Monday that firing Cook could spell \u201cthe end of central bank independence as we know it,\u201d as Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania, put it in an interview with the New York Times.<\/p>\n","protected":false},"excerpt":{"rendered":"
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