Trump Fires US Central Bank Governor Lisa Cook

JAKARTA - US President Donald Trump on Monday, August 25 ordered the dismissal of Federal Reserve Governor (the Fed) Lisa Cook. This is due to alleged irregularities regarding the mortgage agreement made by the Fed boss.

This dismissal is also a worrying step regarding the President's power in the movement of independent institutions such as the Fed. Especially, in the certification of Federal Reserve officials.

According to his letter to Cook, Trump admits that he has sufficient reason to dismiss him from the position of Governor of the Fed. Because, in 2021, Cook showed in documents for separate mortgage loans on property in Michigan and Georgia that both are the main residences he wants to live in.

Cook, who was appointed to the Fed board in 2022 by former US President Joe Biden, has not provided a detailed explanation of the transaction since a question about the transaction was filed last week by US Federal Housing Finance Agency director William Pulte, who referred the matter to Attorney General Pamela Bondi for investigation.

As is known, the Federal Reserve Law does allow the dismissal of a governor who is in office for "a reason".

This has never been tested by previous presidents, especially since the 1970s, most have taken a hands-off approach to Fed affairs as a way to ensure trust in US monetary policy.

Trump in the letter accused Cook of "fraud and criminal behavior in financial matters" and said he was unsure of Cook's "integrencies".

"At least, the behavior in question shows the type of negligence in financial transactions that question your competence and credibility as a financial regulator," he said.

Trump claims the authority to fire Cook under Article 2 of the US Constitution and the 1913 Federal Reserve Act.

Cook has been stubborn to continue his career at the Fed after this issue first came to the public last week, and Trump urged him to resign.

"I don't want to be intimidated to step down from my post just because of some questions that surfaced on Twitter," Cook said on August 20.

"I intend to take any questions about my financial history seriously as a member of the Federal Reserve, so I'm gathering accurate information to answer legitimate questions and provide facts," he added.

It's unclear how this issue will develop next. Members of other US independent institutions who have opposed Trump's attempts to fire them must file their own lawsuit at their own expense with little clarity on the possible outcome.

The Fed will meet again on September 16-17.