Fed Governor Lisa Cook is standing up to Donald Trump, suing to keep her job because she says the president is trumping up a scandal and she’s fighting for Fed independence.
Trump has called for Cook’s head for allegedly committing mortgage fraud by signing documents that she had two primary residences.
We should let the courts decide that one.
But Cook’s notion that she’s standing up for the sanctity of the Fed should be taken with a grain of salt.
The Fed has long been distracted by side hustles to its “dual mandate” of price stability within the context of maximum employment. It’s far from an apolitical agency.
Even more, Cook’s own appointment by Joe Biden in 2022 is an example of how politics, particularly of the left-wing variety, has been infused into the Fed’s plumbing.
In getting rid of Cook, you can make the case that Trump — in his own messy way — is righting the ship.
The markets may be signaling this — despite media talking heads and those of some Fed watchers exploding over Trump’s latest alleged apostasy.
The establishment commentariat is arguing that not being able to fire Fed Chair Jerome Powell or even Cook except for some on-the-job crime, aka cause — is why people keep buying our debt.
The nation’s central bank created by Congress to manage the money supply doesn’t report to the president.
It’s not subject to his political whims to juice economic growth at the expense of “King Dollar.”
OK, all good points.
But stocks and bond yields have barely budged.
The stated reasons in a recent Wall Street Journal piece: Traders believe Trump will appoint seasoned pros to fill the jobs of both Cook and his main Fed nemesis, Powell.
Big investors unfazed
Yes, but my sources provide a more prescient analysis of the market’s insouciance: Trump is merely putting his MAGA stamp on the independence charade.
Many big investors are unfazed by Trump’s power grab because for years the Fed has been straying from its mandate — constantly intervening in the economy by playing with the money supply when it isn’t needed and most recently becoming woke.
Lisa Cook’s nomination in 2022, subsequent confirmation by the then Democrat-controlled and woke-obsessed Senate is part of the proof.
Don’t believe me?
Here’s what Larry Summers, Bill Clinton’s former treasury secretary, former Harvard president and one of the most important economic minds on monetary policy said in 2021 about the Fed’s mission-creep:
“We have a generation of central bankers who are defining themselves by their ‘wokeness.’ They’re defining themselves by how socially concerned they are. They’re defining themselves how concerned they are about the environment . . . business ethics.”
In 2022, the Fed developed a “Diversity, Equity, and Inclusion Strategic Plan” to reflect the Federal Reserve Board’s “strategic initiative on diversity, equity, and inclusion, which is a shared responsibility of all Board employees.”
Now tell me exactly how DEI, which the Supreme Court says is discriminatory and common sense tells you erodes the nation’s meritocracy, helps the Fed figure out if it’s stoking inflation as it did just a few years ago during Joe Biden’s reign of error?
Or maybe I should be directing that question to Lisa Cook.
Her lawyer argued Friday before a federal judge that her firing by Trump is “unprecedented and illegal” in that it exceeds the president’s authority over an independent, nonpolitical agency.
Go back a few years to her messy confirmation battle and you will see how Cook is anything but apolitical.
Yes, she has a Ph.D. in econ, from Berkeley no less, and was a longtime academic.
She is the first African-American woman to serve as a Fed governor, which should be celebrated.
But during the hearings we discovered that her areas of interest in economics, based on her publishing record, are dominated by stuff like how lynchings hindered the economic growth of black Americans.
There is a place for such research at the university — though you gotta ask yourself why we need an economist to explain something so fundamentally obvious.
Look into Cook’s résumé and you see this is an economist who seems more obsessed with being a social-justice warrior than weighing the vicissitudes of M2 and how it impacts price stability.
Presumed innocent
Again, I’m giving Cook the presumption of innocence on the mortgage inquiry.
For the record, I hate the lack of due process she received.
Instead of a simple referral to the DOJ to determine probable cause — cause is what Trump needs to boot her from the post — Bill Pulte, the head of the Federal Housing Finance Agency, has been announcing criminal referrals on the mortgage charges via social media.
Music to the ears of his social-media-obsessed boss, who announced Cook’s firing on Truth Social.
To date, Cool hasn’t denied the central charges that she purposely stated two primary residences to get a lower mortgage rate.
(Her lawyer has suggested she possibly erred.)
I also wonder if she would accord the same due process to someone who encroached on her woke-obsessed boundaries.
Good evidence says probably not.
Consider what she did in 2020, during the insane Summer of Love when Black Lives Matter riots spread across the country, demanding that the police be defunded.
A fellow academic at the University of Chicago, Harald Uhlig, also the editor at the influential Journal of Political Economy, criticized BLM and defunding.
She joined the online assault to get him fired.
(He was placed on leave by the publication and reinstated.)
Her rationale: “Free speech should have its limits,” adding that it shouldn’t be used to “spread hatred and violate the dignity of other people.”
Now do you really want someone like that helping run the nation’s central bank?
Maybe that’s why the markets don’t care about Trump’s power play.
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