Image source, Bloomberg via Getty Images
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- Author, Redacción*
- Author's title, BBC News World
The pulse that Donald Trump maintains with the United States Federal Reserve only exacerbates.
On Monday, US President announced his intention to immediately dismiss Lisa Cook, a member of the Federal Reserve, ensuring that he made false statements at the time of requesting mortgages.
The president assured that the Constitution gives him powers to say goodbye to Cook, an affirmation that the affected has denied, while discarding resign and has announced the presentation of a lawsuit against Trump's decision.
Trump's measure is not preceded and occurs at a time when the president has increased the pressure on the Fed, as the Federal Reserve is popularly known, especially about its president, Jerome Powell, to achieve a reduction in interest rates.
Image source, Chip Somodevilla/Getty Images
Breaking the glass roof
Cook, who was a professor at the Harvard University Government School, is one of the seven members of the Board of Governors of the Fed and is part of the 12 -member committee responsible for setting interest rates in the US.
Cook voted along with Powell and most other members of the Committee in favor of maintaining rates in the US at the last meeting of the Fed, held at the end of July.
The academic was appointed by Trump's predecessor, Democrat Joe Biden, in 2022 and is the first Afro -American woman to occupy the position of governor of the Fed. His mandate concludes in 2038.
In the past the economist was part of the Council of Economic Advisors during the presidency of Barack Obama (2009-2017) and worked in the Treasury Department.
Image source, Bloomberg via Getty Images
Doubts about the measure
Trump's decision to dismiss Cook will probably raise legal issues, since experts indicate that the White House must demonstrate, possibly in court, that he had sufficient reasons to dismiss it.
The Federal Reserve Law does not authorize the President to dismiss any of his managers, unless there is a “justified cause.”
“For now, I think it is quite questionable if there is cause, but obviously it is in that (Trump) is based, and I hope it challenges it,” said former Shan Wu to the CNN.
“President Trump tried to say goodbye 'with just cause' when there is no legal cause, and has no authority to do so,” Cook said in a statement.
“I will not give up. I will continue to perform my functions to help the US economy, as I have done since 2022,” he added.
For his part, the directive lawyer, Abbe David Lowell, said that “we will take all the necessary measures to avoid the attempt of illegal action (of Trump).”
He later announced the presentation of a lawsuit against Trump's decision, claiming that the president “does not have the authority” to fire Cook.
Image source, AFP via Getty Images
The reasons for the current dispute
Trump published a letter addressed to Cook in which he informed him of his decision to dismiss it from the Board of Directors of the Federal Reserve with immediate effect.
In the same, Trump states that Cook signed a document requested a mortgage and in which he assured that a property in Michigan would be his main residence during the next year.
“Two weeks later, you signed another document for a property in Georgia, declaring that it would be your main residence during the next year,” said the president.
“It is inconceivable that he was not aware of his first commitment to assume the second,” he wrote.
The president had requested Cook's resignation last week for the accusation of mortgage fraud, initially presented in a public letter of the Housing Financing Regulator, Bill Ablicte, to the Attorney General PAM Bondi. Pulte is Trump's ally.
The regulator described Cook's statements as a “criminal complaint” and urged the Department of Justice to investigate. So far, it is not clear if an investigation has been opened.
Cook declared the BBC last week that he learned of the accusations through the media, and that the matter originated following a mortgage loan application that presented four years ago, before joining the Central Bank.
Image source, Getty Images
“I have no intention of allowing me to renounce my charge due to some questions raised in a tweet,” he said.
“I intend to take any question about my financial history as a member of the Federal Reserve, so I am collecting the precise information to answer any legitimate question and provide the facts,” he added.
If Cook or the Federal Reserve resist Trump's decision to dismiss it, experts suggest that they could trigger a confrontation between the Central Bank and the White House. The Federal Reserve became independent from the US government in 1951.
Trump has also repeatedly hinted at the possibility of saying goodbye to Powell, whom he has described as “fool” and “stubborn and jerk” for not supporting the requests of the president of rapid and drastic cuts of the interests.
Image source, Chip Somodevilla/Getty Images
Cuts on the way?
But last week, Powell increased the expectations of a possible cut of interest rates in September. Speaking to the bankers gathered in Jackson Hole, Wyoming, the official argued that the inflationary impact of Trump's tariffs could be temporary.
The markets remain in expectation, without great shocks.
“The key question for markets is whether Trump manages to replace Cook, could the composition of the Fed restructure and how would the market perception affect that the investment in the US?
Shoki Omori, head of the Japanese bank Mizuho, expressed concern about the pressure Trump has been exerting on Powell in recent weeks.
“For now, Powell seems to be resisting, but whoever his successor could simply listen to what the White House wants. And that doesn't look good,” he said.
*With information from Tom Geoghegan and James Fitzgerald
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