Instant Reaction: Trump Moves to Fire Fed's Lisa Cook

President Donald Trump moved to oust Federal Reserve Governor Lisa Cook from her post at the US central bank in the wake of allegations from a White House ally that she falsified documents on mortgage applications.

“The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve,” Trump wrote in a letter sent to Cook on Monday, which he posted on Truth Social. “In light of your deceitful and possibly criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”

Presidents can remove Fed governors from office, but only for cause. Laws that describe “for cause” generally define the term as encompassing three possibilities: inefficiency; neglect of duty; and malfeasance, meaning wrongdoing, in office.

For instant reaction, host Doug Krizner speaks with Enda Curran, Bloomberg global economy reporter. 

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is a breaking
news update from Bloomberg, instant reaction and analysis from our
three thousand journalists and analysts around the world. I'm Doug Krisner,
and we do have breaking news regarding the Federal Reserve. Tonight,

(00:23):
President Trump removed Governor Lisa Cook. This is effective immediately.
You may recall last Friday, Trump said he would fire
Cook if she did not resign over accusations of alleged
mortgage fraud. For a closer look, now, I'm joined by
Bloomberg's and the current He is Global Economy reporter joining
us from Washington, DC, and it's always a pleasure directionally

(00:45):
if you look at the developments over the last week,
this move seems to have been entirely predictable, does it not.

Speaker 2 (00:53):
Well, it's fast moving job, no doubt about it. And
we're into something of on presea of the territory here,
because they now have a president removing a Fed governor
for cause, not something money are familiar with. So at
the very least, there's probably going to be some legal
debate over this, whether or not the president has the powers,
whether or not the grounds they're there for that, and

(01:15):
of course we have to await miss Cook's response. She
said she wouldn't be bullied out of her position and
had said she would come back with an explainer about
the allegations of mortgage row in the first place. So
there's the whole legal side of this that probably needs
to play out. But on face value, the President appears
to have removed a governor at a very critical juncture

(01:36):
for FED policy, at a time when's key appointments are
coming up for vacancy, at a time when the President
is very critical up to set for not bringing them
interest rates. So certainly would suggest that if this vacancy
does come through, it's another it's an opportunity for the
President to put someone in there who shares his view
on the economy.

Speaker 1 (01:54):
So last week we know that Bill Pulti, he is
the head of the Federal Housing Finance Agency, referred this
case to the Department of Justice for some type of investigation.
Do we know whether that has taken place so far, We.

Speaker 2 (02:09):
Don't have much satonal on that, but clearly has just
been fast moving since the emerged only last week maybe
mid last week, to where we are now. It's a
pretty quick moving exercise. But by all accounts, the President
seems to have made his own decision on this jog.
It's clearly going to come as a surprise I think
a lot of observers and analysts that has reached the

(02:30):
point that the House so quickly, and now that raises
the questions out where next. And as they're saying earlier,
on the one hand, one would assume there's still a
legal story and is to play out. And then on
the other side you have to ask, well, what does
it mean for policy? Will this vacancy come through, and
therefore what does it mean for where introts are headed
near terms? So it's quite a significant moment for the FED,
both legally in terms and in terms of its in standing

(02:53):
independent standing from the White House, and of course on
the policy front.

Speaker 1 (02:56):
Two, is there risk I mean, at least from the
point of view of the markets, that we're going to
see much less independence on the part of the Fed.

Speaker 2 (03:05):
Well, look, there will be a perception about this. Much
will depend on what comes out of the legal side
of this, whether or not these allegations stand up in
the first case, for example, but there certainly will be perception.
And it said it's more political pressure under FED for sure.

Speaker 1 (03:20):
Thank you so much, Bloomberg. SENDI Kerrent, global economy reporter
joining from Washington, d C. Helping us understand a little
bit more about the breaking US tonight regarding the FED,
President Trump removing Governor Lisa Cook, effective immediately last Friday.
He said that he would fire Cook if she did
not resign over accusations about alleged mortgage fraud.