Trump Restarts Process to Remove Fed Governor Cook Over Mortgage Fraud as Central Bank Independence Clash Escalates Again

TradingKey - According to media reports, sources said the Trump administration has taken its personnel pressure on the Federal Reserve a step further by formally launching removal proceedings against Governor Lisa Cook. Citing unproven mortgage fraud allegations, the White House issued a show-cause notice to Cook, requiring her to respond to the allegations within three weeks.

This is Trump's second attempt after his first removal effort was rejected by the courts last year, and is bound to reignite a legal tug-of-war over the independence of the central bank.

Reportedly, the trigger for this event was a 5-4 ruling by the Supreme Court in June. On one hand, this ruling guarded the core bottom line of the Federal Reserve's institutional independence: it clarified that the president cannot remove governors at will and must follow due process, including "notice of charges and an opportunity to respond," and that removal must be for statutory cause, with the final decision subject to judicial review, fundamentally denying the president's power of removal without cause.

On the other hand, however, the Supreme Court did not make any substantive judgment on the truth or falsity of the allegations themselves, but merely remanded the case on procedural grounds, effectively leaving Trump room to proceed with the removal by following the required process.

It is worth noting that the allegations against Cook have carried strong political overtones from the very beginning.

The accuser, Bill Pulte, is a core ally of Trump who, during his tenure, repeatedly initiated criminal complaints against the president's political opponents. His politicized hiring practices during his brief stint leading an intelligence agency had previously drawn bipartisan scrutiny.

To date, Cook has never faced any criminal prosecution over the allegations, and she has consistently denied all wrongdoing. In Cook's view, the essence of this removal attempt is political retaliation—stemming from her refusal to bow to political pressure to cut interest rates and her insistence on formulating monetary policy independently.

From a legal perspective, it remains highly difficult for Trump to succeed in removing her this time. Last year, both the district court and the circuit court of appeals rejected the dismissal decision, with the core logic being that the Federal Reserve's institutional design is inherently independent of the executive branch, and that governors' performance of their duties is not governed by the president's agenda. Next, the court will enter the substantive trial phase to directly review whether the so-called "mortgage fraud" allegations are true and whether they constitute "good cause" for removal.