The decision is not precedents. President Donald Trump announced on Monday the dismissal of Lisa Cook, governor of the Federal Reserve, according to a letter sent and published on his social networks. This had never happened in 111 years of history of the Central Bank, an independent institution of federal power and the pillar of American democracy.
• Why Donald Trump fired Lisa Cook?
Officially, the US President criticized the governor appointed in 2022 by Joe Biden, an alleged real estate fraud after the accusations initially raised by Bill Ablicte, director of federal housing appointed by Donald Trump. He is accused of having falsified documents to obtain a mortgage on favorable conditions.
CNN explains that Lisa Cook has hired mortgages for two properties, both listed as their main residence, which is prohibited.
Actually, Donald Trump has published his intention to get rid of Lisa Cook for weeks as part of his open war against Fed officials considered hostile to his economic policy, with his president Jerome Powell, accused of delay in reducing interest rates.
This dismissal allows the US President to strengthen his pressure and control over the Fed by having two seats to renew (another official has resigned) and, therefore, he expects, see the central bank that reduces his interest rates more quickly to support his economic measures, customs tasks and lower taxes for the richest in particular.
• What is serious this decision?
The Fed, like any central bank, is an independent institution of political leaders. This independence allows you to concentrate on economic data and not in political considerations to respect your double mandate: contain the increase in prices while supporting the labor market with a main lever, interest rates.
By acting in this way, Donald Trump affects the economic credibility of the United States against markets and investors. Like the dismissal of Erika Mcedarfer, head of the American Statistics and Employment Office (BLS), accused by the White House tenant for having “manipulated employment figures” for political purposes. Without providing any evidence.
This could have consequences on the dollar and the valuation of the shares of US companies. In addition, this Tuesday, most European scholarships return to opening.
Senator Elizabeth Warren, the highest Democrat placed within the Senate Banking Commission, said for her part that the attempt to dismiss Lisa Cook constitutes “an authoritarian blow that flagrantly violates the law in the Federal Reserve and that must be canceled.”
• How could this dismissal be played?
The law establishes that the President cannot revoke the members of the FED Board of Directors that “for valid reason”, although the circumstances that justify a dismissal for valid reasons are not explicitly defined. Therefore, Donald Trump’s decision is likely to be quickly challenged, which would allow Lisa Cook to remain in office for the procedure.
The latter also said he intends to stay in his position. “President Trump invoked a” valid reason “to send me back, when there is none with respect to the law, and he does not have the power to do so. I will not give up. I will continue exercising my functions to help the US economy as I have been doing since 2022,” he said.
The case could even return to the Supreme Court. Meanwhile, we do not know if Lisa Cook will immediately leave the Fed Board of Directors and if Trump will have the opportunity to name someone else to occupy her seat.
Source: BFM TV
