Federal Court Allows Lisa Cook to Remain as Federal Reserve Governor to Contest Mortgage Fraud Allegations
By The Blog Source
Federal Reserve Governor Lisa Cook may stay in her job as she fights President Donald Trump's effort to remove her on mortgage fraud charges, a federal judge decided Tuesday.
On August 25, Trump declared that Cook was being fired on the grounds that she had falsely described two houses she had bought in 2021 as primary residences to obtain better mortgage conditions. Cook's lawyers said she was not given a hearing and that the removal was illegal, as Fed governors may only be dismissed "for cause," which is usually characterized as incompetence, neglect of duty, or misconduct while in office.
A federal court decision on Tuesday gave Federal Reserve Governor Lisa Cook a temporary win in her battle against President Donald Trump's effort to remove her, according to the New York Post. Cook, who is contesting the dismissal on the grounds that she misrepresented two houses she bought in 2021 as principal residences to get better mortgage rates, was permitted to stay in her job by the court. Her lawyers argue that Trump's action violates the Federal Reserve Act, which limits the president's power to dismiss Federal Reserve officials "for cause." Cook has refuted the accusations.
This debate represents the first attempt to remove a Fed governor by a sitting president. Trump has frequently blasted the Fed for maintaining interest rates higher than he would like, calling for a dramatic reduction from the current rate of 4.3% to about 1.3%. The court's ruling delays Trump's attempt to take more control of the Fed, potentially having far-reaching effects on the American economy.
If Trump succeeds in unseating Cook, he is likely to secure a majority on the Fed's board. Trump has chosen White House economic advisor Stephen Miran to succeed Governor Adriana Kugler, who resigned on August 1, and two of his appointments are already on the board. Cook's lawsuit may test the 112-year-old central bank independence concept and establish a precedent for presidential power over the Fed.
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