Trump vs. Powell, Round Two

At the center: Lisa Cook’s seat, Trump’s power play, and Powell’s silence

Trump fired Lisa Cook on Monday. Or tried to. The first Black woman to serve as Fed governor says she's not going anywhere. Her lawyer Abbe Lowell (the lawyer who defended Hunter Biden) is already drafting briefs.

Bill Pulte found something. Trump's housing czar at FHFA spent August digging through Cook's 2021 mortgage applications. Two properties, both claimed as primary residences. Ann Arbor house: $203,000 at 2.75%. Atlanta condo: $540,000 at market rate. Signed two weeks apart.

Primary residence loans run 0.5–1% cheaper than investment properties. That's the alleged fraud. Pulte sent his criminal referral August 15. DOJ opened an investigation August 22. Trump posted the firing letter August 25.

38 mortgage fraud convictions nationwide in 2024. Out of 4.7 million mortgages originated. Cook's applications were pre-Fed, vetted during Senate confirmation in 2022. No lender complaints filed. No evidence she collected rent in 2021. Pulte's claimed key exhibit: a Zillow listing from September 2022 that disappeared two weeks later.

Ken Paxton, Texas AG, owns three "primary residences." Still has his job.

Federal Reserve Act of 1913: governors serve 14-year terms "unless sooner removed for cause by the President." Nobody knows what "for cause" means. Not legally defined. Never tested. 111 years of ambiguity.

Columbia's Kathryn Judge says most agencies spell out their removal standards. The Fed doesn't. Peter Conti-Brown at Penn thinks "cause" means on-the-job misconduct, not pre-appointment mortgages. The betting markets give Trump 39% odds by year-end.

Supreme Court sent mixed signals. May 2025 unsigned opinion called the Fed "uniquely structured, quasi-private."Different from other agencies. But the same court upheld Trump firing NLRB members without cause three months ago.

Powell knows this game. November 2024:

governors are “not removable except for cause.”

Then Trump started floating fraud allegations against him too. Powell's term ends May 2026. He's keeping his head down.

Six governors currently seated. One vacancy since Adriana Kugler resigned two weeks ago. Two Trump appointees already there: Waller and Bowman. Trump nominated Stephen Miran for Kugler's seat. Remove Cook, get her replacement confirmed, that's 4–3 Trump control.

The board plus five rotating regional presidents make up the FOMC. Sets interest rates. But the board alone controls other rates, including what banks earn on reserves parked at the Fed. Technical stuff that moves trillions.

Started as war finance. First central banks funded governments fighting Napoleon. By the 1990s, technocratic monetary policy became orthodoxy. Keep politicians away from the printing press. Argentina's central bank has a mandate for "employment and economic development with social equity." Their inflation hit 211% last year.

23 countries expanded their central banks' mandates beyond inflation since 2000. Belarus and Ecuador turned theirs into direct financing arms of the government. New Zealand too, surprisingly.

The U.S. Fed has a dual mandate: stable prices and maximum employment. Usually complementary. Not in 1979. Not in 2022. That's when politicians pounce.

Nixon leaned on Arthur Burns in 1971. Got his rate cuts. Got his reelection. Got 12% inflation by 1974. Truman forced Fed Chair McCabe out in 1951 over Korea War financing. These things happen. Then everyone pretends they learned the lesson.

Fed's September 16–17 FOMC meeting still scheduled. Markets expect a cut. But credibility matters in central banking. Once it's gone, long-term yields spike. Ask Turkey. Erdogan's been dictating monetary policy since 2018. Lira down 90%.

Trump wants lower rates for his tariffs and deportations. Tariffs raise prices. Deportations shrink labor supply. Both inflationary. Fed knows this. Trump knows the Fed knows. That's why Cook had to go.

Cook files in federal court. Probably D.C. Circuit. Emergency injunction likely. Escalates to Supreme Court by December. Conservative majority but that "quasi-private" language from May might save her.

Senate Banking Committee launches hearings. Elizabeth Warren already calling it “authoritarian power grab.” Tim Scott, Republican chair, staying quiet. Cynthia Lummis backing Trump: “Days of Fed members above the law are over.”

Pulte keeps digging. Posted about investigating Cook’s Massachusetts property August 21. No details yet. His Palantir AI tools flagged inconsistencies. Same tools used on Adam Schiff and Letitia James. No charges filed on those either.

Powell watches from the Eccles Building. His renovation project's $2.5 billion over budget. Trump toured it in July, made fraud jokes. Powell didn't laugh.

Stephen Miran waits for confirmation. Council of Economic Advisers chair knows he's next in line for the board. Markets pricing in aggressive cuts if Trump gets his majority. Inflation expectations creeping up. 1970s-style risks back on the table.

Cook’s public stance is unchanged: removal was purportedly “for cause,” no valid cause exists under current law, authority to do so is disputed, and duties continue as before.

The courts decide. Or they don’t. Either way, something broke Monday that won’t get fixed with emergency injunctions.