Welcome to The Logoff: Donald Trump is attempting to fire one of the seven members of the Federal Reserve board, a legally questionable move with major implications for the US economy.
What happened? On Monday night, Trump announced that he was firing Lisa Cook, a Biden appointee to the Federal Reserve board, “for cause,” citing flimsy allegations of mortgage fraud.
As a Fed governor, Cook helps oversee the US’s central banking system and set US monetary policy, including interest rates; she has denied the allegations and said she will not resign, setting up a lawsuit that will likely make its way to the Supreme Court.
Why is Trump going after Cook? Cook is the latest target of Bill Pulte, who has emerged from an obscure federal housing agency as one of Trump’s leading attack dogs. Last week, Pulte accused Cook of committing mortgage fraud by claiming two different primary residences on loans and said his agency had made a criminal referral to the Trump Justice Department.
So far, nothing has come of that referral — and it’s unclear if anything will — but Trump seized on the allegations as pretext for Cook’s dismissal.
Why does this matter? Trump’s attempt to fire Cook is part of his larger campaign to erode the Fed’s independence in a quest for lower interest rates. If he’s successful, it could severely damage the long-term outlook of the US economy in service of Trump’s short-term political interests, potentially slowing economic growth and boosting inflation.
How does firing Cook get Trump closer to control of the Fed? The Fed is designed to be independent, and its governors serve nonrenewable 14-year terms to insulate them from partisan politics (Cook’s term, should she serve it out, will expire in 2038). But two of the seven Fed governors are already Trump appointees, and he’s currently filling a third vacancy; if he succeeds in replacing Cook, he would have a majority of the Fed board — and, potentially, a dangerous degree of power over the US economy.
