"Trump Says 'Fed Board Majority Secured Soon'... Central Bank Independence in Jeopardy as He Moves to Take Control (Comprehensive)"

Trump: "Majority Secured Soon...Rates Must Be Lowered"
Cook: "Trump Lacks Authority to Dismiss...Will File Lawsuit"
Legal Battle Looms as Concerns Grow Over Central Bank Independence

US President Donald Trump has abruptly dismissed Lisa Cook, a member of the US Federal Reserve Board (Fed), over allegations of mortgage fraud, and on August 26 (local time), he publicly declared his intention to secure a majority on the Fed Board. By openly expressing his plan to reorganize the Fed according to his own wishes, going beyond repeated demands for interest rate cuts, concerns about the erosion of the central bank's independence are growing.

US President Donald Trump (right) and Lisa Cook, Member of the US Federal Reserve Board (Fed) AFP Yonhap News

At a cabinet meeting held at the White House that day, President Trump stated, "We will secure a majority on the Fed Board very soon," adding, "Once we have a majority, the housing market will turn around and the situation will become excellent." He went on to say, "People are bearing excessively high interest rates, and that is the only problem," emphasizing, "We need to lower the rates a bit."

He also continued his criticism of Board Member Cook. Trump said, "It appears that Cook has committed illegal acts," and criticized, "She is involved in mortgage-related work, so she must not engage in unlawful behavior." When asked about Cook's successor, he replied, "There are some very good people who are suitable for the position."

President Trump's remarks about securing a majority on the Board that day explicitly revealed his intention to reorganize the Fed Board with members favorable to interest rate cuts. By nominating a successor to Cook, Trump could secure at least four supporters of rate cuts out of the seven-member Fed Board. This figure includes Steven Miran, Chairman of the White House National Economic Council, who has been designated as the successor to Adriana Kugler, who recently resigned early, as well as current Fed Board members Michelle Bowman, Vice Chair, and Christopher Waller, both of whom advocate for rate cuts. In the Federal Open Market Committee (FOMC), a total of 12 members hold voting rights on interest rate decisions. Of these, the seven Board members are ex officio voting members, and if a majority of the Board supports rate cuts, they can exert significant influence over the remaining five members as well.

In financial markets, concerns about the erosion of central bank independence are intensifying over the first-ever dismissal of a Board member in the Fed's 112-year history. President Trump has repeatedly pressured Fed Chair Jerome Powell to cut rates and has even raised the possibility of dismissal and legal action, citing the cost of renovating the Fed headquarters. Now, he is openly seeking to exclude other Fed members who are reluctant to cut rates and replace them with pro-Trump figures.

As President Trump takes extreme measures to seize control of the Fed, fierce legal battles are expected to follow. On this day, Board Member Cook, through her attorney, stated, "President Trump has neither the authority nor the factual or legal grounds to dismiss me," adding, "I will file a lawsuit over this illegal act."

First, the court will review the injunction that Cook is expected to file to suspend the effect of her dismissal. If the injunction is granted, she will be able to retain her position until a final ruling is made. Conversely, if it is denied, the dismissal will remain in effect.

The key issue ultimately is whether Cook's dismissal constitutes "just cause." Under Fed law, Board members are guaranteed a 14-year term, and the President may only dismiss them for just cause. Generally, inefficiency, neglect of duty, or illegal acts are considered just cause. The court is expected to determine whether Cook's loan activities fall into this category.

If the main lawsuit reaches the Supreme Court, the outlook is mixed. Given the current conservative majority (6-3) in the Supreme Court, there is a possibility that the dismissal could be ruled lawful. However, a variable is that in May, the Supreme Court, while recognizing the President's authority to dismiss officials of independent agencies without just cause, clearly stated that this authority does not apply to the Fed, which is a "quasi-public institution with a unique structure."

The Fed has stated regarding this matter, "We will respect the court's decision."

Meanwhile, in financial markets, the value of the dollar and prices of ultra-long-term US Treasury bonds, which reflect long-term confidence in the US economy, are showing a slight downward trend. The dollar index, which measures the value of the dollar against the currencies of six major countries, is currently down 0.17% from the previous day at 98.15. In contrast to bond prices, the yield on 30-year US Treasury bonds has risen by 3 basis points (1bp = 0.01 percentage point) from the previous day to 4.92%.

This content was produced with the assistance of AI translation services.