Trump Refuses to Give Up, Sets Up Investigative Committee to Restart Process of Removing Governor Cook, Fed Independence Faces Another Stress Test

Title context: Trump Refuses to Give Up, Sets Up Investigative Committee to Restart Process of Removing Governor Cook, Fed Independence Faces Another Stress Test Text: U.S. President Donald Trump's personnel offensive around the Federal Reserve Board has escalated once again. On October 7, the White House issued a presidential memorandum announcing the formation of an investigative committee and arranging a closed-door White House hearing to determine whether there is "good cause" to remove Federal Reserve Governor Lisa Cook from office. The hearing is scheduled for November 5 local time, two days after congressional election voting ends. This move not only pushes Cook herself into a rare legal battle but also reignites outside concerns about the Federal Reserve's independence. According to the White House memorandum, the newly established committee will investigate mortgage fraud allegations against Cook. Committee members include Trump's chief economic policy adviser Kevin Hassett, Equal Employment Opportunity Commission Chair Andrea Lucas, and Office of Government Ethics Acting Director Keith Sonderling. These members, their representatives, or Department of Justice personnel will question Cook, with the hearing lasting no more than four hours. The hearing will be held behind closed doors at the White House on November 5, and the committee must submit recommendations to Trump as soon as possible after Cook submits a post-hearing statement by November 10. Trump said in the notification: "As President, my duty is to ensure the law is faithfully executed, including firing subordinates who are not worthy of trust, cannot tell the truth, and do not follow the law." He said the committee will assist him in fulfilling this duty, investigate the allegations against Cook, and report whether there is "good cause" to remove Cook from office. Cook's lawyers Abbe Lowell and Norm Eisen issued a statement saying that "as long as this hearing maintains basic objectivity," the conclusion must be that Governor Cook did not commit mortgage fraud and therefore there is no reason to remove her from the Federal Reserve Board. They said Cook is willing to use this opportunity to state the facts, clear her name, and prove there is no legal basis for her dismissal. The lawyers also said they have communicated with the White House regarding the relevant procedures. But the two previously also said they have "serious doubts" about whether this "hearing" is legal and complies with legal requirements. Supreme Court "Limited Ruling" Leaves a New Battleground Trump's attempt to remove Cook has lasted more than a year. In August 2025, Trump first tried to fire Cook, announcing the decision on social media based on allegations by senior government officials that Cook may have falsely listed a second residence as her primary residence in a mortgage application to obtain more favorable loan terms. Cook denied the allegations, saying they were fabricated false reasons intended to provide a legal pretext for her removal. Her lawyer Lowell called the allegations "baseless and untrue." Cook herself also denied that there is any evidence she intentionally provided false information or intended to deceive financial institutions. Her lawyers argued that Cook signing a "primary residence" mortgage agreement for a property in Atlanta was a "completely unintentional oversight," and that she made other disclosures showing the property was a vacation home. Cook subsequently filed a lawsuit. The case eventually reached the U.S. Supreme Court. In June of this year, the Supreme Court ruled 5-4 that Trump cannot immediately fire Cook because he did not give her sufficient advance notice and opportunity to respond to the allegations. The majority justices emphasized that Federal Reserve governors should be protected from political interference, and the president can only remove them "for good cause," not "at will." Chief Justice John Roberts wrote in the opinion that Congress "has good reason to limit the president's power to remove governors," and noted that the Fed's monetary policy decisions should long remain free from White House intervention. He also said: "We see no reason to leave the public in suspense or to sow doubt about the status of one of the most important financial institutions in the country and the world." But the Supreme Court did not provide detailed standards defining "good cause," nor did it rule on whether the allegations against Cook, if true, would be sufficient to remove her during her 14-year term. Roberts said the Supreme Court ruled on a "limited basis" and left open the possibility that if Trump chooses to try again to remove Cook and gives her an opportunity to defend herself, the case could evolve into a new legal battle, and Cook could again appeal to the courts. It is precisely this ruling based on "limited grounds" that left room for the White House to restart the process this time. Mortgage Allegations and Cook's Defense The allegations against Cook were initially raised by Bill Pulte, director of the U.S. Federal Housing Finance Agency. Pulte is a staunch Trump ally. He said on social media that Cook stated in a mortgage for a property in Ann Arbor, Michigan, that the property would serve as her primary residence, but two weeks later made the same statement in a mortgage for a property in Georgia. Cook has not been criminally prosecuted, and she denies all wrongdoing. Cook said in the lawsuit that any alleged discrepancy may have been a clerical error and does not constitute the serious misconduct required by law to support removal "for good cause." Her lawyers also emphasized that Cook did not commit fraud. The Trump administration is trying to use the newly created committee and White House hearing to remedy the procedural defect previously identified by the Supreme Court, namely that Cook was not given notice and an opportunity to respond. At the legal level, Section 10 of the Federal Reserve Act provides that members of the Federal Reserve Board may be removed "by the President for good cause." Courts generally interpret "good cause" as inefficiency, neglect of duty, or malfeasance in office. Roberts noted in the opinion that the Trump administration believes "good cause" can be "any concern" about a governor's "conduct, ability, suitability, or competence," as long as it is not merely policy disagreement, and that this position is "too lax"; while Cook believes "good cause" can only be limited to misconduct while in office or failure to meet qualifications, and that this position is "too strict." The Supreme Court's refusal to provide a clear standard means both sides will continue to clash over this key definition. Cook's side also argues that the conduct she is accused of occurred one year before she was appointed and is unrelated to the duties of a Federal Reserve governor, and therefore does not meet the standard for removal. The Supreme Court has not yet ruled on whether the allegations against her, if true, would be sufficient to constitute grounds for dismissal. A Stress Test for Federal Reserve Independence Trump's continued pressure on the Federal Reserve, including repeated threats to fire former Fed Chair Jerome Powell, has already tested the Fed's independence. Economists generally believe that central bank independence ensures U.S. monetary policy prioritizes long-term economic stability rather than short-term political gains. Roberts also mentioned in the opinion that there is a long tradition of allowing the Fed to conduct monetary policy free from White House intervention. Currently, Powell remains on the Federal Reserve Board after his term as chair ended in May of this year. Trump also once accused Powell of possible financial misconduct in the Federal Reserve building renovation project, but the related Justice Department criminal investigation has ended, and an independent oversight body also rejected the claim last month. In May of this year, Trump appointed Kevin Warsh to succeed Powell as Federal Reserve chair. Last month, the Federal Reserve raised interest rates under Warsh's leadership. Cook was appointed as a Federal Reserve governor by former President Biden in 2022 and reappointed in 2023, with a term running until 2038. She is the first Black woman to serve on the Federal Reserve Board. Materials show that Cook has consistently voted with the majority in Federal Open Market Committee votes. Evercore ISI analyst Krishna Guha wrote in a report that Trump appears to believe the Fed turned hawkish because his chosen chair, Warsh, is constrained by a hawkish and politically hostile Federal Reserve Board. Trump's creation of the investigative committee "once again increases the threat to Federal Reserve independence," and from the president's perspective of wanting lower interest rates, it may be counterproductive. Senate Banking Committee ranking Democrat Elizabeth Warren criticized the hearing as a "kangaroo court" and a "dangerous attempt by Trump to illegally take over America's central bank." If Cook is ultimately successfully removed, it would create a vacancy on the Fed's seven-member Board of Governors. The Senate is responsible for confirming the president's Fed nominees, and the hearing being scheduled two days after the election also intertwines the matter with the fight for congressional control. Can It Succeed? Courts May Intervene Again From a legal possibility standpoint, Trump may still succeed in removing Cook. The Supreme Court previously blocked immediate dismissal mainly because of procedural defects, rather than completely denying the president's removal power. As long as the White House provides notice and an opportunity to defend herself, Trump can try again. Roberts also clearly envisioned that if Trump starts a new removal process, the case could be replaced by a new legal battle, and Cook could still appeal to the courts again. The president's clearest power over the Fed is by filling board vacancies and placing some appointees in leadership positions, including chair. The Fed is in theory designed as a nonpolitical institution that sets interest rate policy considering only the best economic interests. But in reality, the Fed still operates in a political environment: its leaders work closely with the Treasury Department, especially during crises, and maintain contact with congressional lawmakers; its decisions must also consider the economic impact of tax cuts or large spending plans pushed by the president and Congress. The core argument supporting central bank independence is that if investors and consumers believe the central bank will take necessary measures without fear of political consequences, the economy will perform better over the long term. Economic research shows that central banks with autonomy have a better record in controlling inflation. Supporters of an independent central bank argue that freedom from political pressure is what allows the central bank to take necessary but sometimes unpopular measures, such as raising interest rates to fight inflation. Politicians generally prefer low interest rates because cheaper money stimulates current consumption and economic growth. Regardless of the final outcome, the White House investigation and White House hearing have already constituted the latest stress test for Federal Reserve independence. The case is likely to return to the courts again, and markets will also closely watch whether this battle over whether Cook stays or goes will change the balance of power and policy expectations on the Federal Reserve Board.