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Federal Reserve Governor Lisa Cook will file a lawsuit to challenge President Donald Trump’s attempt to dismiss her from her role. According to her lawyer, Abbe Lowell, Trump’s effort is based solely on a referral letter and lacks any factual or legal grounds. The impending lawsuit sets the stage for a potentially lengthy legal battle over the White House’s influence on US monetary policy.
President Trump announced his intention to remove Cook, the first Black woman on the central bank’s governing body, citing her alleged “deceitful and potential criminal conduct”. The allegations stem from mortgage applications Cook filed in 2021. Trump’s move is unprecedented in the Federal Reserve Board’s 111-year history and aligns with his tendency to challenge established norms.
The Federal Reserve has stated that its board members, including Cook, serve 14-year tenures and cannot be removed arbitrarily. This is to ensure that monetary policy decisions are made with “the long-term interests of the American people.” Despite Trump’s claim that Cook’s firing was “effective immediately,” the Fed’s position suggests her status remains unchanged pending any court ruling.
Trump’s attempts to influence the Federal Reserve have raised concerns about the central bank’s independence. This latest development has impacted the financial markets, with the dollar declining and the yield curve on US Treasuries steepening. Wall Street’s main equities indexes closed slightly higher on Tuesday.
The President’s efforts to shape the Federal Reserve could allow him to appoint a majority of the board’s seven members, including two current positions and one pending nomination for Stephen Miran. Trump has also considered David Malpass for Cook’s potential vacancy. Trump maintains that there are “good people” in mind to replace her, but he would respect any legal decision allowing Cook to remain.
Since returning to office, Trump has successfully reshaped other areas of the government by overseeing significant personnel changes and withholding authorised spending. His push for the Federal Reserve to lower interest rates has been a recurring theme, with escalated demands in recent months.
The legal confrontation over Cook’s dismissal could set important precedents regarding the independence of federal institutions. Cook’s lawyer, Abbe Lowell, emphasised the lack of legal basis for her dismissal, stating, “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.”
Cook’s potential removal mirrors a pattern of dismissals affecting other Black women in senior government roles during Trump’s tenure, including leaders of the Library of Congress and the National Labor Relations Board. The next Federal Reserve meeting, scheduled for September 16-17, could be pivotal if the court has not ruled by then.
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