The White House campaign to unseat Cook marks an unprecedented bid to reshape the Fed’s seven-member governing board, which was designed to be largely independent from day-to-day politics. No president has fired a sitting Fed governor in the agency’s 112-year history.
The ruling comes just before the Fed’s interest rate-setting committee begins a two-day meeting on Tuesday. Senate Republicans have confirmed Stephen Miran, Trump’s nominee to an open spot on the Fed’s board.Trump sought to fire Cook on August 25, but a federal judge ruled last week that the removal was illegal and reinstated her to the Fed’s board. Trump appointee Bill Pulte has accused Cook of mortgage fraud because she appeared to claim two properties as “primary residences” in July 2021, before she joined the board. Such claims can lead to a lower mortgage rate and smaller down payment than if one of them were declared as a rental property or second home. Cook has denied the charges.
The case threatens to erode the Fed’s longtime political independence. Economists prefer independent central banks because they can do unpopular things like lift interest rates to combat inflation more easily than elected officials.
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