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Trump, Donald

Trump's War on the Fed: A Landmark Case

Strategic Insights

— 3 min read

The U.S. Court of Appeals for the District of Columbia Circuit ruled Monday that President Donald Trump cannot fire Federal Reserve Governor Lisa Cook while her administration's legal claims against her continue to play out in court. The decision upholds a lower court decision, which ruled the Justice Department's charges against Cook for alleged mortgage fraud likely were not sufficient grounds for removal under the 1913 law that created the Fed. The unprecedented case has raised concerns about the politicization of the central bank and the independence of the Federal Reserve.

Key Takeaways:

  • The U.S. Court of Appeals for the District of Columbia Circuit ruled that President Donald Trump cannot fire Federal Reserve Governor Lisa Cook while her administration's legal claims against her continue to play out in court.
  • The decision upholds a lower court decision, which ruled the Justice Department's charges against Cook for alleged mortgage fraud likely were not sufficient grounds for removal under the 1913 law that created the Fed.
  • The Trump administration's pressure campaign against the Fed is part of its larger pattern of controlling information, according to Hannah Bloch-Wehba, a professor of law at Texas A&M.
  • Trump's attempt to fire Cook is unprecedented, as no president has ever tried to remove a Federal Reserve governor in the central bank's more than 100-year history.
  • The Federal Reserve Act includes a clause which only allows the president to remove a Fed governor "for cause," meaning serious wrongdoing or "malfeasance in office."
  • The Trump administration's targeting of Cook is part of its war on the Fed, which began with Trump's attempts to fire or demote his own Federal Reserve Chair appointee Jerome Powell for raising interest rates.
  • The administration's use of "bogus mortgage fraud allegations" to attack its political foes, including New York Attorney General Letitia James and Sen. Adam Schiff, has been widely criticized, with many calling it an attempt to intimidate and politicize the Fed.

Statistics:

  • 4,923%: The record-high inflation rate in Argentina in 1989, which was partly due to politicized monetary policy.
  • 85%: The inflation rate in Turkey in 2022, which is a result of compromised independence within the country's central banking system.
  • 9%: The pandemic-related inflation rate in the United States in 2022, which incensed U.S. voters and allegedly lost Democrats the most recent presidential election.
  • 48-47: The vote in the Senate to confirm Trump's nominee to fill a Federal Reserve governor vacancy left by Adriana Kugler, a Biden appointee.
  • 2025: The year in which Trump fired the BLS chief when he didn't like the jobs report.

Sources:

  • "Trump Loses Bid to Keep Lisa Cook Off the Federal Reserve" by Talking Points Memo
  • "Trump Says He Never Threatened to Demote Fed Head Jerome Powell" by NBC News
  • "Trump Urges Powell to Cut Interest Rate by a Full Percent" by CNBC
  • "Trump Attacks Powell During Rare Presidential Visit to the Fed" by NPR
  • "Trump Threatens to Fire Powell After Fed Doesn't Cut Interest Rates" by NPR
  • "Federal Reserve Powell Cites Tariffs as Reason to Hold Interest Rates" by NPR
  • "ProPublica Report Finds at Least Three Trump Administration Officials Have Mortgages for Two Homes Listed as Primary Residences" by ProPublica
  • "Bill Pulte Accused Fed Governor Lisa Cook of Fraud" by Reuters
  • "Michigan Town Revokes Tax Exemption and Charges Pulte's Parents for Back Taxes" by Reuters
  • "Cook Did Identify Atlanta Property as a Vacation Home" by Reuters
  • "Georgia Officials Say Cook Never Declared Atlanta Home as Primary Residence for Tax Purposes" by Reuters
  • "Cook Followed Lawful Procedures When Renting Out Michigan Home" by Reuters
  • "Pulte Doubles Down on Claims That Cook Violated Law" by X
  • "What Happens When Central Banks Are Politicized?" by Brookings Institution
  • "Why Is the Federal Reserve Independent, and What Does That Mean in Practice?" by Brookings Institution
  • "Trump's Attempt to Fire Cook Will Fail, Expert Says" by TPM
  • "Stephen Miran Confirmed to Fill Federal Reserve Governor Vacancy Left by Adriana Kugler" by Senate Vote
  • "Trump Fires BLS Chief When He Didn't Like the Jobs Report" by TPM

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