"Lisa Cook must resign, now," former US President Donald Trump said of the Federal Reserve Board Governor on Truth Social on 20/8. He attached a Bloomberg article about a letter from Federal Housing Finance Agency (FHFA) Director Bill Pulte urging Attorney General Pam Bondi to investigate Cook over several mortgage purchases.
In the 15/8 letter, Pulte wrote that Cook had "falsified bank and real estate documents to obtain more favorable loan terms." He described this as "fraudulent behavior."
Cook quickly responded that she would "not resign over questions raised on social media". "I will address any questions about my credit history seriously, as a member of the Fed. I am gathering accurate information to provide the facts and respond," she said.
The Wall Street Journal, citing sources close to the matter, reported that Trump told officials he was "looking for ways to fire" Cook.
This is the latest move by the former administration targeting the Federal Reserve (Fed). In recent months, the institution has become a target of the former president's attacks for not lowering the benchmark interest rate. In its July meeting, the Fed held rates steady at 4.25-4.5%, after three cuts last year.
Trump believed that lower interest rates would boost the economy and make government debt less expensive. However, Fed officials hesitated, fearing his import tariffs could spark a new round of price increases.
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President Donald Trump and Jerome Powell at the White House in 11/2017. Photo: Reuters |
President Donald Trump and Jerome Powell at the White House in 11/2017. Photo: Reuters
The New York Times suggested that to achieve his goal, Trump waged a comprehensive pressure campaign on the Fed and its officials. Over the past few months, he repeatedly called for the Fed and Chairman Jerome Powell to cut interest rates, both in public statements and social media posts. He called Powell "slow," "stubborn," and "clueless." This is rare for a sitting or former president, given the Fed's renowned independence.
Tensions peaked in April when Trump threatened to fire Powell, but later affirmed he would not do so before Powell's term ended (5/2026). Advisors warned Trump that such a move could trigger global economic turmoil and lead to legal trouble.
Despite retracting the threat, Trump signaled his plans to make Powell's final months challenging. On 12/8, White House spokesperson Karoline Leavitt said Trump was considering suing Powell over the Fed's headquarters renovation project in Washington.
Trump visited the project in late July and argued with Powell on camera about the renovation costs. In a Truth Social post, he criticized Powell's "terrible" management for spending "$3 billion on what should have cost $50 million." The White House said it was investigating the matter.
Beyond firing Powell, Trump reportedly quietly influenced the Fed. In June, the Senate confirmed his nomination of Michelle Bowman as Vice Chair for Supervision. She had been a Fed governor since 2018.
CNN reported that a pillar of Trump's economic plan was deregulation. Bowman was expected to pursue this goal in banking and has done so. The Fed is reviewing and easing several banking regulations enacted after the 2008 global financial crisis.
Bowman was also one of two governors who voted against holding interest rates steady. She and Christopher Waller wanted a further 25 basis point (0.25%) cut in the July meeting. This was the first time in over 30 years that two governors dissented from the general decision.
Both were previously nominated to the Board of Governors by Trump. Waller is even considered a potential successor to Powell when his term ends next May. This has sparked debate about the influence of Trump's public pressure on an institution designed to operate independently.
The Fed's Board of Governors has also seen recent changes. In early August, Governor Adriana Kugler unexpectedly resigned to return to Georgetown University. Trump said he would nominate Stephen Miran, Chair of the Council of Economic Advisers, to temporarily fill the position. The Senate could confirm Miran before the Fed's September meeting.
The Board of Governors is the Fed's highest governing body, comprising seven members nominated by the US president and confirmed by the Senate. This group sets monetary policy, oversees banks, and maintains national financial stability.
Analysts believe that Miran's nomination, even if temporary, would give Trump a more direct channel to pursue looser monetary policy and increase his influence over the Fed. If Cook also resigned, he would have another opportunity to nominate a preferred candidate.
Besides the governor position, Trump could also exert influence through a far more significant choice: selecting Powell's replacement when his term ends mid next year. The Trump administration considered 11 candidates. Trump indicated he would only nominate someone who supports lower interest rates for chair.
However, Powell seems unfazed by the pressure. In congressional hearings this summer, he declined to address questions about political pressure, stating his focus was on maintaining a stable economy with inflation under control.
"I want to hand my successor that kind of economy. That’s the only thing I’m thinking about," he said. The US Supreme Court has supported the view that a president cannot remove a Fed chair simply over policy disagreements.
Jaret Seiberg, an analyst at TD Cowen Washington Research Group, also believes Cook's resignation is unlikely. "She knows that resigning wouldn’t get her out of legal trouble. She has no incentive to do so before the Fed's September meeting," he said.
Following a recent report showing a sharp decline in new jobs over the past three months, Trump continued to urge the Fed to act. However, even without his prompting, investors are almost certain the Fed will cut rates next month. CME's FedWatch Tool showed the probability of a rate cut in the mid-September meeting once nearing 100%, now down to 80%.
Investors now await Powell's speech at the Fed's annual conference in Jackson Hole, Wyoming, on 21-23/8. Last year, at the same forum, Powell hinted at rate cuts, pledging to "do whatever we can to sustain the labor market and keep inflation stable."
Ha Thu (according to CNN, Reuters)
