What happened
President Donald Trump Monday said he had fired Federal Reserve Governor Lisa Cook, justifying the unprecedented move by citing unproven allegations of mortgage fraud. Cook, an economist whose term expires in 2038, said Trump had "no authority" to fire her "'for cause' when no cause exists under the law" and "I will not resign." Trump's maneuver was widely seen as an escalation of his push to pressure the historically independent central bank to sharply cut interest rates.
Who said what
Trump's "legally dubious" move to fire Cook, the first Black woman on the Fed's board of governors, "fit an emerging pattern of political retribution" against his "perceived enemies" using mortgage fraud allegations raised by Bill Pulte, the head of the Federal Housing Finance Agency, The New York Times said. Pulte has "trotted out similar allegations" against Sen. Adam Schiff (D-Calif.) and New York Attorney General Letitia James. No charges have been filed.
Trump is "using the criminal justice system to remove people from office over policy disagreements," Michael Strain, from the conservative American Enterprise Institute, told The Washington Post. "That is extremely dangerous and is, in the case of the Fed, a threat to long-term prosperity."
"By design, the Fed is unusually insulated from the give-and-take of politics," The Wall Street Journal said, and none of its governors "has ever been targeted for removal by the president." But "Richard Nixon and Lyndon Johnson put heavy pressure on the Fed" to "keep interest rates low," The Associated Press said, and that has "widely been blamed for touching off rampant inflation in the late 1960s and '70s." Trump's move could similarly "backfire" if investors "demand higher interest rates" to "compensate for the higher risk of inflation" from a politically compromised Fed, the Post said.
What next?
It is "unclear how the matter might play out from here," Reuters said, "with Trump saying the firing was 'effective immediately,' and the Fed set to hold a policy meeting on Sept. 16-17." Legal experts were skeptical that Trump's maneuver was legally valid, the AP said, and it is "likely to touch off an extensive legal battle that will probably go to the Supreme Court."
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