Federal Reserve Governor Lisa Cook has issued a forceful condemnation of President Donald Trump’s claims of mortgage fraud, asserting that the administration lacks legal justification for her removal from her leadership position at the central bank. Her legal team’s latest statement, released Wednesday, comes as Trump renews his efforts to pressure Cook, a move widely viewed as an assault on the bank’s independence. Under US law, Federal Reserve governors can only be removed ‘for cause’, and not for political reasons, a crucial distinction highlighted by legal experts. Trump has leveled accusations of mortgage fraud against Cook, a Democratic appointee, aiming to meet the legal standard. However, Cook’s lawyers, Abbe David Lowell and Norman Eisen, issued a letter on Wednesday, offering a detailed rebuttal to the president’s allegations. The letter states that ‘for the second time in a year, we have explained why there is no legal basis for President Trump to remove Governor Cook for cause,’ further emphasizing the lack of a legitimate basis for the alleged action. The letter serves as a response to a threat from the Trump administration this month, with a deadline of Wednesday for Cook to respond. The situation began with a White House message dated August 5, where the administration warned Trump, a Republican, that he was considering firing Cook ‘due to there being sufficient reason to believe that you made false statements on one or more mortgage agreements.’ This ultimatum, delivered with three weeks’ notice, underscores the intensity of the situation. A year ago, in August 2025, Trump issued similar accusations, stating, ‘I’ll fire her if she doesn’t resign.’ Cook responded with a lawsuit that travelled all the way to the Supreme Court. The Supreme Court ruled in June that Trump couldn’t fire a Federal Reserve governor ‘due to there being sufficient reason to believe that you made false statements on one or more mortgage agreements.’ Cook’s legal challenge, which ultimately reached the Supreme Court, established a precedent that prevents presidents from unilaterally removing governors. The Federal Reserve has not attempted to oust a Federal Reserve official since the body was founded more than a century ago. The Federal Reserve Act of 1913 enshrined certain protections for the bank to shield it from outside influences that could damage the economy in the name of political gain. Trump, however, has sought to significantly expand executive power during his second term as president. The Federal Reserve has been a significant target, with Trump pushing to increase its influence over the bank, notably by pressuring its members to rapidly slash interest rates, which were elevated to combat inflation. Experts warn that lowering interest rates too quickly could flood US markets with cash, weakening the value of the dollar. Interest rates were a point of contention with former Federal Reserve Chair Jerome Powell, whose tenure as the bank’s head ended in May. He remains a governor on its board. Powell revealed in January that the Trump administration opened a criminal probe into his actions related to a renovation effort at the bank’s headquarters. Powell denounced the investigation as an intimidation tactic, stating, “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether, instead, monetary policy will be directed by political pressure or intimidation.” In March, a federal judge nixed two subpoenas related to the investigation, depicting them as a ‘barely concealed effort to pressure Powell out of his job.’ The investigation was ultimately dropped in April, shortly before Powell’s term as chair expired. The investigation was a relatively minor matter compared to the broader implications of Trump’s actions, but it underscores the ongoing tension between the executive branch and the Federal Reserve.” 10 tags:
Source: Al Jazeera
