The Trump White House is turning up the heat on Federal Reserve Governor Lisa Cook, urging her to take a leave of absence while she prepares to sue President Donald Trump over his attempt to fire her.
Trump’s top economic adviser, Kevin Hassett, told reporters this week that if he were in Cook’s position, he’d step aside — at least for now.
“I think it’s the honorable thing to do,” he said, even as Cook’s lawyer confirmed a lawsuit is coming.
Cook, the first Black woman to serve on the Fed’s powerful Board of Governors, is fighting back hard. Her attorney, Abbe Lowell, called Trump’s firing attempt baseless, arguing that the president can only remove a Fed governor for cause — meaning proven misconduct. So far, Trump’s case rests on allegations of mortgage fraud floated by one of his appointees. Cook insists she’s done nothing wrong.
The showdown is bigger than just one Fed governor. If Cook is forced out and Trump gets his replacement through the GOP-controlled Senate, Trump allies would hold four of the seven seats on the Fed board — enough to reshape decisions about regional Fed presidents and interest rates. That could hand the president unprecedented control over US monetary policy, a move that economists warn would shatter the Fed’s long-standing independence.
“This puts the whole system potentially in play,” said Mohamed El-Erian, chief economic adviser at Allianz.
Trump, for his part, isn’t hiding his intentions.
He told reporters Tuesday, “We’ll have a majority very shortly, so that’ll be great. We have to get the rates down a little bit, and when we do, it’s going to be a tremendous difference.”
Critics say that’s exactly the problem. Lael Brainard, a former Fed vice chair, warned that politicizing Fed seats could undermine global confidence in the US dollar.
“The attack on an individual governor is really a much broader threat against the institutional independence of the Federal Reserve,” she said.
Cook’s lawsuit could end up before the Supreme Court, testing just how much power a president has over the central bank. Meanwhile, Trump’s allies — including Bill Pulte, a housing finance official and major Trump donor — are piling on. Pulte has accused Cook of misrepresenting her residences on mortgage applications, while pointedly ignoring similar cases involving Trump-friendly Republicans.
The stakes go far beyond Cook’s career. The Fed was designed to be insulated from politics, with governors serving 14-year terms to keep them from being tossed out by presidents unhappy with their decisions. If Trump succeeds, experts say it would mark a historic break from that principle — and could rattle markets worldwide.
As one analyst put it, Trump isn’t just going after Lisa Cook. He’s taking aim at the Fed itself.
CNBC, Politico, Fortune, and the Financial Times contributed to this report.
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