President Trump sought to fire Lisa Cook, the first Black woman on the Fed's seven-member governing board, marking the first presidential attempt to remove a governor in the Fed's 112-year history. The move follows allegations of mortgage fraud that Cook says are a pretext for political control. A court may soon consider temporarily blocking the firing while litigation proceeds. Economists warn that a Fed aligned to political pressure and pushing sharp short-term rate cuts could produce higher inflation and ultimately raise borrowing costs for mortgages, car loans and business loans. Trump has repeatedly demanded steep rate cuts and attacked Fed leadership.
The consequences could impact most Americans' everyday lives: Economists worry that if Trump gets what he wants - a loyal Fed that sharply cuts short-term interest rates - the result would likely be higher inflation and, over time, higher borrowing costs for things like mortgages, car loans and business loans. Trump on Monday sought to fire Lisa Cook, the first Black woman appointed to the Fed's seven-member governing board. It was the first time in the Fed's 112-year history that a president has tried to fire a governor.
Cook has argued in a lawsuit seeking to block her firing that the claims are a pretext for Trump's true goal: Gaining more control over the Fed. A court may decide next week whether to temporarily block Cook's firing while the case makes its way through the legal process. Cook is accused of claiming two homes as primary residences in July 2021, before she joined the board, which could have led to a lower mortgage rate than if one had been classified as a second home or an investment property. She has suggested in her lawsuit that it may have been a clerical error but hasn't directly responded to the accusations.
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