Trump is being sued by Federal Reserve Chairman Cook.
In a surprising turn of events, U.S. Federal Reserve Vice-Chair Lisa Cook has filed a lawsuit against President Donald Trump, aiming to prevent her removal from office. The lawsuit stems from Trump's announcement on his Truth Social platform, citing grounds for believing Cook made false statements in one or more mortgage contracts.
Cook, who joined the Federal Reserve Board of Governors in 2021, has vehemently denied any wrongdoing. She argues that Trump's attempt to dismiss her is unlawful, as the grounds for removal are not present. The lawsuit seeks to clarify the circumstances under which Federal Reserve governors can be removed, with Cook asserting that they can only be removed "for cause."
Trump's call for the resignation of current Fed Chair Jerome Powell and his persistent advocacy for interest rate cuts have been well-documented. However, the Fed's Board of Governors, not just Powell, decides on interest rates. The Federal Reserve's current policy rate is in the 4.25 to 4.5 percent range.
Trump's push for lower interest rates is based on the belief that they can make borrowing more affordable for consumers and businesses, potentially stimulating economic growth. However, it's important to note that too low rates could further fuel inflation, leading to a more restrictive policy, according to Powell.
In the lawsuit, Cook's lawyers cite examples such as "inefficiency, dereliction of duty, abuse of office, or similar misconduct" as grounds for removal that are not present in this case. No investigation or charges have been brought against Cook regarding the mortgage contracts.
Cook's legal team has also sought a temporary restraining order to halt the removal process. The lawsuit will determine whether Trump has the legal authority to fire Fed governors, a power that is widely contested. It's worth noting that Trump does not have the legal authority to fire Jerome Powell directly.
In the midst of this legal battle, Jerome Powell's term ends in May. The outcome of this lawsuit could have significant implications for the future of the Federal Reserve and monetary policy in the United States.
