Last Wednesday, Donald Trump targeted Federal Reserve Governor Lisa Cook, writing online that she “must resign, now!!!” A couple of days later, a reporter asked the president whether he intended to fire Cook.
“Yeah, I’ll fire her if she doesn’t resign,” the Republican replied. “What she did was bad.”
Evidently, he was serious — at least about his intentions. NBC News reported:
President Donald Trump is removing Federal Reserve Governor Lisa Cook effective immediately, according to a letter he posted to Truth Social on Monday night. In the letter, Trump writes: ‘Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.’
This is a story with a lot of moving parts, so let’s unpack the relevant details and review what we know.
Who’s Lisa Cook?
Joe Biden appointed Cook, an accomplished economist, to the Federal Reserve’s board of governors three years ago, and at that point, she became the first Black woman to serve on the Fed board. Her tenure has been uncontroversial, at least until last week.
Has she been accused of wrongdoing?
Last week, the director of the U.S. Federal Housing Finance Agency, William Pulte, alleged in a letter to Attorney General Pam Bondi that Cook “potentially” committed mortgage fraud.
Are the allegations credible?
There’s reason for skepticism. Pulte is both a critic of the Fed and a White House loyalist — The Washington Post, for example, recently described the FHFA chief as “a prominent Trump sidekick” — who’s conveniently started going after a variety of Trump targets with dubious claims of mortgage fraud.
Has Cook been convicted of wrongdoing?
No.
Has Cook been indicted or formally charged with any crimes?
No.
Then how could Trump fire her?
I’ll leave it to legal experts to answer the question with greater authority, but according to multiple accounts, the president cannot legally fire a Fed governor simply because he wants to.
As NBC News reported, “Under the Federal Reserve Act, the only reason Federal Reserve governors can be removed from their positions is ‘for cause,’ or some kind of wrongdoing.” As things stand, Cook hasn’t even been charged, much less convicted, so Trump’s move appears to be illegal.
Has the U.S. Supreme Court weighed in on the subject?
As a matter of fact, it was just three months ago when Republican-appointed justices granted the president considerable power to oust officials serving in independent agencies, but simultaneously, the high court explicitly said that the Federal Reserve is a “uniquely structured, quasi-private entity.” That distinction appears to limit Trump’s powers over the Fed.
Why would Trump be so eager to target the Fed in the first place?
Because the White House wants to seize control over U.S. monetary policy, especially as it relates to interest rates. Trump has already launched an unprecedented campaign against Fed Chairman Jerome Powell, and if the president is able to force out Cook and replace her with someone who’ll do the White House’s bidding, it would gut the institution’s independence and shift power in the Oval Office’s direction.
Why would that be dangerous?
Because, as Paul Krugman explained, the Fed is responsible for everything from interest rates to bank supervision to avoiding systemic financial crises. If Trump successfully corrupts the institution and its work, Krugman said, “We become Venezuela. We become Turkey. We become a place where all of this stuff is just at the whims of the strongman in charge. ... No president should have the power to just arbitrarily control what the Fed does, and least of all this president. So, this is the road to things going completely wild — not five years down the pike, but months from now.”
He added, “This is a five-alarm fire.”
It sounds like this is about Cook, but it’s not just about Cook.
What we’re talking about is an attempted White House power grab, launched by an authoritarian president, that ignores the rule of law and puts global economic stability at risk.
Why “attempted”? Did Trump fire Cook or didn’t he?
The president claims to have fired the Fed governor, but Cook’s attorney described the move as “illegal,” and Cook issued a statement suggesting that, as far as she’s concerned, she hasn’t been fired.
Anything else?
“The message here clearly isn’t ‘Don’t commit fraud,’ which would be laughable coming from Donald Trump, of all people,” Krugman wrote. “Nor, despite what some commentators have said, is it all about revenge — although Trump is, indeed, a remarkably vindictive person. But mainly it’s about intimidation: ‘If you get in our way we will ruin your life.’”
This article was originally published on MSNBC.com
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