Donald Trump fired Federal Reserve board member Lisa Cook, accusing her of deceitful financial conduct related to mortgage filings. The allegations remain unproven and she has not been charged with a crime. The removal appears aimed at reshaping monetary policy by replacing a vetted official with a politically motivated appointee. Short-term consequences could include higher inflation and rising consumer prices. Long-term consequences could include permanently increased borrowing costs for households, businesses, and the government. Checks and balances could block such executive overreach, but the courts and Senate have so far given the administration considerable latitude.
The allegations against Cook are unproven, and she has not been charged with a crime; even if the claims are true, it is not clear that they would justify her removal. But the president has spent years harassing and denigrating Fed officials, and appears to be trying to replace Cook in order to sway the course of monetary policy-and not subtly either.
The country has a system of checks and balances to prevent this kind of executive overreach and its perilous financial consequences. The Supreme Court and Congress could prevent the White House from canning vetted officials and replacing them with unqualified, politically motivated appointees. But so far, the judicial branch has given the administration wide latitude, and the Senate has rubber-stamped candidate after candidate.
For years, Trump has harangued the country's central bankers, calling Jerome Powell, whom Trump himself appointed as Fed chair, a "stupid person," and arguing that the Fed's governors should be "ashamed" for holding interest rates where they are. But most experts agree that borrowing costs are sitting at an appropriate-enough level: The economy is growing, and inflation is tickin
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