Washington, Aug 27(HS):
Federal Reserve Governor Lisa Cook is preparing to launch a legal battle against President Donald Trump, after he announced her dismissal in a move that has ignited a storm over the independence of America’s central bank.
Trump accused Cook of making false statements on mortgage documents and claimed “constitutional authority” to remove her. But Cook’s lawyer, Abbe David Lowell, called the move “illegal” and said the president has no power to unilaterally fire a Fed governor. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis,” he stressed.
The clash has rattled global markets. Long-dated U.S. Treasury yields rose as investors worried the episode could undermine the Fed’s credibility. U.S. interest rates, which the Fed sets, are pivotal for borrowing costs worldwide.
Cook, appointed in 2022 by President Joe Biden and the first African American woman to serve on the Fed’s Board of Governors, vowed not to step down. “I will not resign. I will continue to carry out my duties… as I have since 2022,” she declared, dismissing Trump’s accusations as politically motivated.
The Fed itself pushed back, saying governors can only be removed “for cause” under the Federal Reserve Act—a safeguard designed to shield monetary policy from political interference. Chair Jerome Powell, already under Trump’s pressure to slash rates, is said to view the situation as a direct test of central bank independence.
Trump, however, insists he has “good people” in mind to replace Cook—figures more likely to align with his calls for aggressive rate cuts. The president’s allies allege Cook made conflicting claims in loan applications regarding her primary residence, a matter she says arose before her Fed appointment and has been distorted for political gain.
Markets remain wary. European stocks dipped, U.S. bond yields climbed, and the dollar briefly fell before recovering. Analysts warn the real risk lies ahead: if Trump succeeds in reshaping the Fed’s board, it could alter global perceptions of U.S. financial stability.
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Hindusthan Samachar / Jun Sarkar
