Director of Fed Peita Trump and says he does not recognize resignation

United States President Donald Trump tried in vain to fire, on Monday (25), Lisa Cook, director of the Federal Reserve (Fed, the US Central Bank). The removal, released on social networks and formalized in a letter sent to the economist, was justified by alleged mortgage fraud.

The measure, however, was immediately contested by Cook, who said he did not recognize the president’s decision. “I will not resign. I will continue to fulfill my duties to help the American economy, as I have been doing since 2022,” he said in a statement released through his lawyer.

According to the defense, “there is no legal reason” for dismissal and all appropriate legal measures will be adopted to block the removal, classified as illegal and unprecedented.

The Federal Reserve himself indicated on Tuesday (26) that, until the court decision to the contrary, the status of Cook as director remains unchanged.

Trump’s accusations

In the letter sent to Cook, Trump stated that he used the provision of the Federal Reserve Creation Law, which allows the dismissal of members of the board “for just cause”. He claimed that the economist would have declared two homes as main for more advantageous financing conditions, which would configure fraud.

“In the light of their misleading and potentially criminal conduct on a financial matter, they can’t – and I can’t – have such confidence in their integrity,” Trump wrote. The case was referred to the Justice Department for investigation.

In response, Lisa Cook said she became aware of the accusations by the media and ensured that she will present documents to clarify her financial history. “President Trump claimed to have fired me ‘for just cause’ when there is no fair cause provided for by law, and he has no authority to do so,” he said.

The Central Bank Independence Problem

The dispute must go to the courts, which will have to assess whether the president has the authority to remove a director of the Fed without proof of serious misconduct.

If the decision is validated, Trump could make room to indicate names more aligned with his economic agenda – especially at a time when he tries to press the Central Bank to reduce interest in the uncertainties caused by his own trade policy.

Trump’s initiative is considered an attack unprecedented to Fed’s independence, one of the most powerful institutions of the global economy. Created to act with autonomy in relation to the government, the US Central Bank has its directors appointed to long terms in order to shield their decisions of the executive’s pressures.

Trump, who was already attacking Fed President Jerome Powell – whom he called “dumb” and “stubborn” – pressures the institution to cut interest. In your view, the rates should be “two or three points below” of the current level.

The attempt to intervene in the composition of the Council threatens the credibility of US monetary policy and can destabilize financial markets.

Who is Lisa Cook

Nominated in 2022 by then -President Joe Biden, Lisa Cook made history by becoming the first black woman on the council of Fed. Economist in Berkeley and Oxford, taught at Michigan State University and acted in the Barack Obama government.

With a mandate until 2038, Cook stood out for research on inequality and development, as well as his participation in debates on financial stability.

Lula x Campos Neto

In Brazil, President Luiz Inacio Lula da Silva also made harsh criticism of the former president of the Central Bank, Roberto Campos Neto, motivated by the high basic interest rate, but did not come close to an official onslaught against the BC.

BC’s harmful autonomy was sanctioned in 2021 by former President Jair Bolsonaro, after approval in the National Congress. The law established four -year terms for the president and the directors of the BC, not coincident with the presidential term.

As a result, the executive has lost the ability to command monetary policy, which has gone to control the financial system, which pressures high and profitable interest rates for speculators. The lack of this alignment with the macroeconomic policy prepared by the Ministry of Finance favors public indebtedness and the profitability of the financial system, to the detriment of the Lula government’s social policies.