Escalating Fed Tensions: Trump Demands Lisa Cook’s Resignation Amidst Mortgage Fraud Claims

Washington D.C. is abuzz as former President Donald Trump on Wednesday publicly demanded the resignation of Federal Reserve Governor Lisa Cook, following accusations of mortgage fraud. This latest move marks a significant escalation in Trump’s ongoing efforts to assert greater control over the nation’s central bank.

The call for Cook’s ouster stems from allegations made by Bill Pulte, director of the agency overseeing mortgage giants Fannie Mae and Freddie Mac. In a letter to Attorney General Pam Bondi, Pulte urged a Justice Department investigation into Cook, a Biden appointee, claiming she fraudulently obtained better mortgage lending terms in 2021 by listing two homes – one in Ann Arbor, Michigan, and another in Atlanta, Georgia – as principal residences. Pulte further alleged Cook has since listed her Atlanta condo for rent, a practice typically associated with higher interest rates than principal residence mortgages.

This aggressive stance against Cook, who holds the longest remaining term on the Fed’s governing board until 2038, is widely seen as a strategic maneuver by Trump to reshape the Federal Reserve’s composition. Trump has consistently criticized the Fed for not lowering interest rates, which he believes would reduce government borrowing costs and boost the housing market. Replacing Cook would allow the White House to nominate a new governor aligned with Trump’s desire for lower rates, potentially shifting the balance of power on the influential rate-setting committee.

Both the Federal Reserve and the Justice Department have declined to comment on the accusations. However, Senate Democrats swiftly rallied to Cook’s defense, with figures like Sen. Chuck Schumer urging her to “stand tough” against what he called Trump’s intimidation tactics. Sen. Elizabeth Warren condemned the administration for allegedly “weaponizing the Federal government to illegally fire independent Fed Board members.”

The situation highlights the ongoing tension between political administrations and the Fed’s traditional independence, setting the stage for a potential legal battle should Trump attempt to remove Cook, as Fed officials are protected from removal except “for cause.” With another Fed governor, Adriana Kugler, having recently stepped down, and Trump having already nominated an economic adviser to fill that vacancy, a successful removal of Cook could give Trump a clear majority on the board of governors, significantly impacting future monetary policy decisions.

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