Zürcher Nachrichten - Trump moves to fire a Fed governor over mortgage fraud claims

Referring to the Federal Reserve Act as justification, Trump wrote in a letter addressed to Cook: "I have determined that there is sufficient cause to remove you from your position."

A US president is generally limited in their ability to remove officials from the central bank, with a Supreme Court order recently suggesting that Fed officials can only be removed for "cause," which could be interpreted to mean malfeasance or dereliction of duty.

But the US leader pointed to a criminal referral dated August 15 from the Federal Housing Finance Agency's director -- a staunch ally of Trump -- to the US attorney general in his announcement that Cook would be removed from her role.

The referral, Trump said, provided "sufficient reason" to believe that Cook might have made "false statements" on one or more mortgage agreements.

Earlier this month, Cook said in a statement that she had "no intention of being bullied to step down," but would take questions about her financial history seriously.

The Fed did not immediately respond to media queries on Trump's latest announcement.

In his letter Monday, Trump said: "At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator."

Trump has been ramping up pressue on the Fed this year, repeatedly criticizing its chief Jerome Powell for not lowering interest rates sooner despite benign inflation data.

He has made no secret of his disdain for Powell, whom he has called a "numbskull" and "moron."

Trump also previously suggested that what he called an overly costly renovation of the Fed's headquarters could be a reason to oust Powell, before backing off the threat.

The president's targeting of Cook, who sits on the Fed's rate-setting committee, comes after his repeated broadsides against Powell while the central bank kept the benchmark lending rate unchanged.

Since its last reduction in December, the Fed has held rates at a range between 4.25 percent and 4.50 percent this year.

But Powell on Friday opened the door to lowering levels at the bank's upcoming policy meeting in September.

Cook took office as a Fed governor in May 2022 and was reappointed to the board in September 2023. She was sworn in later that same month for a term ending in 2038.

She has previously served on the Council of Economic Advisers under former president Barack Obama.

The Trump administration has pursued allegations of mortgage fraud against high-profile Democrats who are seen as political adversaries of the president.

U.Ammann--NZN