lisa cook

The Trump administration renewed its request Sunday for a federal appeals court to let him fire Lisa Cook from the Federal Reserve’s Board of Governors, a move the president is seeking ahead of the central bank’s vote on interest rates.

The administration filed a response just ahead of a 3 p.m. Eastern deadline Sunday to the U.S. Court of Appeals for the District of Columbia, arguing that Cook’s legal arguments for why she should stay on the job were meritless. Lawyers for Cook argued in a Saturday filing that the administration has not shown sufficient cause to fire her, and emphasized the risks to the economy and country if a president were allowed to fire a Fed governor without proper cause.

Sunday’s filing is the latest step in an unprecedented effort by the White House to shape the historically independent Fed. President Trump’s move to oust Cook marks the first time in the central bank’s 112-year history that a president has tried to fire a governor.

“The public and the executive share an interest in ensuring the integrity of the Federal Reserve,” Trump administration lawyers argued in Sunday’s filing. “And that requires respecting the president’s statutory authority to remove governors ‘for cause’ when such cause arises.”

Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, has accused Cook of signing separate documents in which she allegedly said that both her Atlanta property and a home in Ann Arbor, Mich., also purchased in June 2021, were “primary residences.” Pulte submitted a criminal referral to the Justice Department, which has opened an investigation.

Trump relied on those allegations to fire Cook “for cause.”

Cook, the first Black woman to serve as a Fed governor, referred to the condominium as a “vacation home” in a loan estimate, a characterization that could undermine claims by the Trump administration that she committed mortgage fraud. Documents obtained by the Associated Press also showed that on a second form submitted by Cook to gain a security clearance, she described the property as a “second home.”

Cook sued the Trump administration to block her firing, and a federal judge ruled Tuesday that the removal was illegal and reinstated her to the Fed’s board.

The administration appealed and asked for an emergency ruling just before the Fed is set to meet this week and decide whether to reduce its key interest rate. Most economists expect they will cut the rate by a quarter point.

Suderman writes for the Associated Press.

WASHINGTON — President Trump’s attempt to fire a member of the Federal Reserve’s governing board has raised alarms among economists and legal experts who see it as the biggest threat to the central bank’s independence in decades.

The consequences could affect most Americans’ everyday lives: Economists worry that if Trump gets what he wants — a loyal Fed that sharply cuts short-term interest rates — the result would likely be higher inflation and, over time, higher borrowing costs for things like mortgages, car loans and business loans.

Trump on Monday sought to fire Lisa Cook, the first Black woman appointed to the Fed’s seven-member Board of Governors. It was the first time in the Fed’s 112-year history that a president has tried to fire a governor.

Fed independence ‘hangs by a thread’

Trump and members of his administration have made no secret about their desire to exert more control over the Fed. Trump has repeatedly demanded that the central bank cut its key rate to as low as 1.3%, from its current level of 4.3%.

Before trying to fire Cook, Trump repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting the short-term interest rate and threatened to fire him as well.

“We’ll have a majority very shortly, so that’ll be good,” Trump said Tuesday, a reference to the fact that if he is able to replace Cook, his appointees will control the Fed’s board by a 4-3 vote.

“The particular case of Governor Cook is not as important as what this latest move shows about the escalation in the assaults on the Fed,” said Jon Faust, an economist at Johns Hopkins and former advisor to Powell. “In my view, Fed independence really now hangs by a thread.”

Some economists do think the Fed should cut more quickly, though virtually none agrees with Trump that it should do so by 3 percentage points. Powell has signaled the Fed is likely to cut by a quarter point in September.

Why economists prefer independent central banks

The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controls — which it typically does when the economy falters — the Fed can make borrowing cheaper and encourage more spending, growth and hiring. When it raises the rate to combat the higher prices that come with inflation, it can weaken the economy and cause job losses.

Most economists have long preferred independent central banks because they can take unpopular steps that elected officials are more likely to avoid. Economic research has shown that nations with independent central banks typically have lower inflation over time.

Elected officials like Trump, however, have much greater incentives to push for lower interest rates, which make it easier for Americans to buy homes and cars and would boost the economy in the short run.

A political Fed could boost inflation

Douglas Elmendorf, an economist at Harvard and former director of the nonpartisan Congressional Budget Office, said that Trump’s demand for the Fed to cut its key rate by 3 percentage points would overstimulate the economy, lifting consumer demand above what the economy can produce and boosting inflation — similar to what happened during the COVID-19 pandemic emergency.

“If the Federal Reserve falls under control of the president, then we’ll end up with higher inflation in this country probably for years to come,” Elmendorf said.

And while the Fed controls a short-term rate, financial markets determine longer-term borrowing costs for mortgages and other loans. And if investors worry that inflation will stay high, they will demand higher yields on government bonds, pushing up borrowing costs across the economy.

In Turkey, for example, President Recep Tayyip Erdogan forced the central bank to keep interest rates low in the early 2020s, even as inflation spiked to 85%. In 2023, Erdogan allowed the central bank more independence, which has helped bring down inflation, but short-term interest rates rose to 50% to fight inflation, and are still 46%.

Other U.S. presidents have badgered the Fed. President Johnson harassed then-Fed Chair William McChesney Martin in the mid-1960s to keep rates low as Johnson ramped up government spending on the Vietnam War and antipoverty programs. And President Nixon pressured then-Chair Arthur Burns to avoid rate hikes in the run-up to the 1972 election. Both episodes are widely blamed for leading to the stubbornly high inflation of the 1960s and ‘70s.

Trump has also argued that the Fed should lower its rate to make it easier for the federal government to finance its tremendous $37-trillion debt load. Yet that threatens to distract the Fed from its congressional mandates of keeping inflation and unemployment low.

Independence vs. accountability

Presidents do have some influence over the Fed through their ability to appoint members of the board, subject to Senate approval. But the Fed was created to be insulated from short-term political pressures. Fed governors are appointed to staggered, 14-year terms to ensure that no single president can appoint too many.

Jane Manners, a law professor at Fordham University, said there is a reason that Congress decided to create independent agencies like the Fed: Lawmakers preferred “decisions that are made from a kind of objective, neutral vantage point grounded in expertise rather than decisions are that are wholly subject to political pressure.”

Yet some Trump administration officials say they want more democratic accountability at the Fed.

In an interview with USA Today, Vice President JD Vance said, “What people who are saying the president has no authority here are effectively saying is that seven economists and lawyers should be able to make an incredibly critical decision for the American people with no democratic input.”

Stephen Miran, a top White House economic advisor, wrote a paper last year advocating for a restructuring of the Fed, including making it much easier for a president to fire governors.

The “overall goal of this design is delivering the economic benefits” of an independent central bank, Miran wrote, “while maintaining a level of accountability that a democratic society must demand.” Trump has nominated Miran to the Fed’s board to replace Adriana Kugler, who stepped down unexpectedly Aug. 1.

There could be more turmoil ahead

Trump said he wants to oust Cook from the Board of Governors because of allegations raised by one of his advisors that she has committed mortgage fraud.

Cook has argued in a lawsuit seeking to block her firing that the claims are a pretext for Trump’s desire to assert more control over the Fed. A court may decide this week whether to temporarily block Cook’s firing while the case makes its way through the legal process.

Cook is accused of claiming two homes as primary residences in July 2021, before she joined the board, which could have led to a lower mortgage rate than if one had been classified as a second home or an investment property. She has suggested in her lawsuit that it may have been a clerical error but hasn’t directly responded to the accusations.

Trump also has personally insulted Powell for months, but his administration now appears much more focused on the Fed’s broader structure.

The Fed makes its interest rate decisions through a committee that consists of the seven governors, including Powell, as well as the 12 presidents of regional Fed banks in cities such as New York, Kansas City and Atlanta. Five of those presidents vote on rates at each meeting. The New York Fed president has a permanent vote, while four others vote on a rotating basis.

While the reserve banks’ boards choose their presidents, the Fed board in Washington can vote to reject them. All 12 presidents will need to be reappointed and approved by the board in February, which could become more contentious if the board votes down one or more of the 12 presidents.

Reappointing the reserve bank presidents and upending that structure would be “the nuclear scenario,” said Adam Posen, president of the Peterson Institute for International Economics.

That, he said, “would be the signal that things are truly going off the rails.”

Rugaber writes for the Associated Press.

WASHINGTON — When Bill Pulte was nominated as the country’s top housing regulator, he told senators that his “number one mission will be to strengthen and safeguard the housing finance system.”

But since he started the job, he’s distinguished himself by targeting President Trump ‘s political enemies. He’s using property records to make accusations of mortgage fraud and encourage criminal investigations, wielding an obscure position to serve as a presidential enforcer.

This week, Trump used allegations publicized by Pulte in an attempt to fire Lisa Cook, a member of the Federal Reserve board, as he tries to exert more control over the traditionally independent central bank.

Pulte claims that Cook designated two homes as her primary residence to get more favorable mortgage rates. Cook plans to fight her removal, laying the groundwork for a legal battle that could reshape a cornerstone institution in the American economy.

Trump said Tuesday that Cook “seems to have had an infraction, and you can’t have an infraction,” adding that he has “some very good people” in mind to replace her.

Pulte has cheered on the president’s campaign with a Trumpian flourish.

“Fraud will not be tolerated in President Trump’s housing market,” he wrote on social media. “Thank you for your attention to this matter.”

Pulte targets Democrats but not Republicans

Pulte, 37, is a housing industry scion whose official job is director of the Federal Housing Finance Agency. He oversees mortgage buyers Fannie Mae and Freddie Mac, which were placed in conservatorship during the Great Recession almost two decades ago.

Like other political appointees, he routinely lavishes praise on his boss.

“President Trump is the greatest,” he posted over the weekend.

Pulte has made additional allegations of mortgage fraud against Sen. Adam Schiff, one of Trump’s top antagonists on Capitol Hill, and New York Attorney General Letitia James, who filed lawsuits against Trump. Those cases are being pursued by Ed Martin, a Justice Department official.

“In a world where housing is too expensive, we do not need to subsidize housing for fraudsters by letting them get better rates than they deserve,” Pulte wrote on social media.

Pulte has ignored a similar case involving Ken Paxton, the Texas attorney general who is friendly with Trump and is running for Senate in his state’s Republican primary. Paxton took out mortgages on three properties that were all identified as his primary residence.

He also has mortgages on two other properties that explicitly prohibit him from renting the properties out, but both have been repeatedly listed for rent, according to real estate listings and posts on short-term rental sites.

Asked about Pulte’s investigations and Trump’s role in them, the White House said that anyone who violates the law should be held accountable.

“President Trump’s only retribution is success and historic achievements for the American people,” said Davis Ingle, White House spokesman.

It’s unclear whether Pulte is using government resources to develop the allegations he has made. Mortgage documents are generally public records, but they are typically maintained at the county level across most of the U.S., making them difficult to comprehensively review. However, Fannie Mae and Freddie Mac, which are both government-sponsored entities, purchase large tranches of mortgages from lenders, which could centralize much of that information, real estate and legal experts say.

FHFA did not respond to a detailed list of questions from the AP, including whether Pulte or his aides used government resources to conduct his research.

It’s not just mortgages

Pulte’s broadsides go beyond mortgages. He’s been backing Trump’s criticism of Jerome Powell, chair of the Federal Reserve, over expensive renovations at the central bank’s headquarters. Trump is pressuring Powell to cut interest rates in hopes of lowering borrowing costs, and his allies have highlighted cost overruns to suggest that Powell is untrustworthy or should be removed from his position.

“This guy is supposed to be the money manager for the world’s biggest economy, and it doesn’t even look like he can run a construction site,” Pulte said while wearing a neon safety vest outside the building. “So something doesn’t smell right here.”

Since returning to the White House, Trump has reached deep into the government to advance his agenda. He’s overhauled the federal workforce with the Office of Personnel Management, pushed ideological changes at the Smithsonian network of museums and fired the commissioner of the Bureau of Labor Statistics when he didn’t like a recent report on job numbers.

With Pulte in charge, the Federal Housing Finance Agency is becoming another instrument of Trump’s mission to exert control and retaliate against enemies.

It’s a contrast to the Internal Revenue Service, where Trump has unsuccessfully discussed ways to use tax policies as a pressure point. For example, during battles over higher education, Trump threatened to take away Harvard’s long-standing tax-exempt status by saying, “It’s what they deserve.”

However, there are more restrictions there, dating back to the Watergate scandal under President Richard Nixon.

“It’s been hard for the administration to use the inroads it wants to use to pursue its enemies,” said Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center.

She said, “The law is very clear about taxpayer privacy and the criminal penalties at play are not small.”

Before going on the attack, Pulte played nice online

Pulte is heir to a home-building fortune amassed by his grandfather, also named William Pulte, who founded a construction company in Detroit in the 1950s that grew into the publicly traded national housing giant now known as the Pulte Group.

He spent four years on the company’s board, and he’s the owner of heating and air conditioning businesses across the U.S. He had never served in government before being nominated by Trump to lead the Federal Housing Finance Agency.

“While many children spent their weekends at sporting events, I spent mine on homebuilding jobsites with my father and grandfather,” Pulte said in written testimony for his nomination hearing. “From the ground up, I learned every aspect of housing — whether it was cleaning job sites, assisting in construction, or helping sell homes.”

He once tried to make a name for himself with good deeds, describing himself as the “Inventor of Twitter Philanthropy” and offering money to needy people online. He was working in private equity at the time, and he told the Detroit Free Press that he funded his donations with some “very good liquidity events” to power his donations.

Even six years ago, he appeared focused on getting attention from Trump.

“If @realDonaldTrump retweets this, my team and I will give Two Beautiful Cars to Two Beautiful Veterans on Twitter.”

Trump replied, “Thank you, Bill, say hello to our GREAT VETERANS!”

Pulte, whose most recent financial disclosure shows a net worth of at least $180 million, was also ramping up his political donations.

Over the past six years, he and his wife have donated over $1 million to the political efforts of Trump and his allies, including a $500,000 contribution to a super PAC affiliated with Trump that was the subject of a campaign finance complaint made with the Federal Election Commission.

The Pultes’ $500,000 contribution was made through a company they control named ML Organization LLC, records show. While such contributions are typically allowed from corporations, the same is not always true for some limited liability companies that have a limited business footprint and could be set up to obscure the donor.

The FEC ultimately exonerated the Pultes, but found in April that the Trump super PAC, Make America Great Again, Again! Inc., did not properly disclose that the Pultes were the source of the donation, said Saurav Ghosh, the Campaign Legal Center’s director of federal campaign finance reform.

Ghosh said the donation raises serious questions about Pulte’s appointment to lead FHFA.

“Why is Bill Pulte even in a government position?” he said. “Maybe he’s qualified, maybe he isn’t. But he did pour hundreds of thousands of dollars into a pro-Trump super PAC. And I think it’s clear there are these types of rewards for big donors across the Trump administration.”

Megerian, Slodysko and Hussein write for the Associated Press.