Trump orders a White House inquiry into Fed governor Lisa Cook

President Donald Trump announced on Friday the creation of a three-person committee to investigate allegations of mortgage fraud against Federal Reserve governor Lisa Cook³. The instrument is a presidential memorandum titled “Establishment of a Committee of Inquiry to Investigate Allegations of False Statements by Lisa DeNell Cook”, addressed to the Attorney General, the Counsel to the President, the Assistant to the President for Economic Policy, the Director of the Office of Government Ethics and the Chairman of the Equal Employment Opportunity Commission¹. The allegations are the White House’s own characterisation and have not been established in any proceeding^1,7.

Trump has ordered Cook, an economist at Michigan State University, to appear at a hearing on 5 November⁶. The move follows a first attempt to remove her that was thwarted by the Supreme Court⁶, and comes after a ruling by that court on the question⁴.

Cook’s lawyers said the hearing would show there is no mortgage fraud case to answer⁷. Her counsel issued a statement after reports of the White House inquiry, alongside statements from Cook herself and from Democracy Defenders Fund and Lowell & Associates PLLC².

Why it matters to investors

The dispute is about who can be removed from the body that sets US interest rates. CNBC noted that the attempt to fire Cook could bear on Jerome Powell, on central bank independence and on interest rates themselves⁴. The Wall Street Journal reported that the administration’s wider pressure on the Fed has included a criminal investigation of Powell, the former chair⁸; the Financial Times reported that Powell was later cleared of any criminal wrongdoing⁹.

One analyst quoted by CNN, Mills, said Cook is “very clearly at risk of being fired, and it is unclear if the Supreme Court would block President Trump in Round 2”⁵. That uncertainty, rather than the allegations, is what a rate market has to price: the first attempt was stopped in court, and there is no settled answer on whether a second would be^4,5,6.

What to watch

The hearing date of 5 November is the next fixed point⁶. Beyond it, the questions are whether the committee recommends removal, whether Cook’s lawyers take the matter back to court on the basis they have set out⁷, and whether the Supreme Court is asked to rule a second time⁵. The Journal also reported Trump’s view of Kevin Warsh, the chairman he chose to succeed Powell⁸.