By CHRISTOPHER RUGABER and WILL WEISSERT
WASHINGTON (AP) — President Donald Trump fired Federal Reserve Governor Lisa Cook late Monday, an unprecedented move that constitutes a sharp escalation in his battle to exert greater control over what has long been considered an institution independent from day-to-day politics.
Trump said in a letter posted on his Truth Social platform that he is removing Cook because of allegations that she committed mortgage fraud. Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week.
Pulte alleged that Cook had claimed two primary residences — in Ann Arbor, Michigan, and Atlanta — in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
The firing is likely to touch off an extensive legal battle that will probably go to the Supreme Court and could disrupt financial markets, potentially pushing interest rates higher. The independence of the Fed is considered critical to its ability to fight inflation because it enables it to take unpopular steps like raising interest rates. If bond investors start to lose faith that the Fed will be able to control inflation, they will demand higher rates to own bonds, pushing up borrowing costs for mortgages, car loans and business loans.
Legal scholars noted that the allegations are likely a pretext for the president to open up another seat on the seven-member board so he can appoint a loyalist to push for his long-stated goal of lower interest rates.
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