Letter to the editor: Trump's threats to the Fed's independence must be resisted. American Banker Newspaper. August 21, 2025, 2:39 p.m. EDT.

Trump’s latest demand—that Federal Reserve Governor Lisa Cook resign—is more than political theater. It’s a strategic assault on the Fed’s independence and a troubling effort to expunge Black leadership from America’s most consequential economic institutions.

Cook, the first Black woman appointed to the Fed’s Board of Governors, faces unsubstantiated mortgage-fraud allegations that come abruptly from Bill Pulte, director of the Federal Housing Finance Agency and a known Trump affiliate. President Trump swiftly echoed these accusations via social media, demanding that she “resign, now!!!” No credible investigation or due process has confirmed wrongdoing—underscoring the politically expedient character of the charges.

This incident is not isolated. Trump’s persistent efforts to pressure Chair Powell—mocking him publicly, criticizing Fed building renovations, and nominating rate-cut friendly governors like Stephen Miran—reveal a partisan campaign to reshape the Federal Reserve into an instrument of political will.

A Chronicle of Racial Projection

What makes the attack on Cook especially pernicious is the irony and projection it embodies. Trump has a long and well-documented history of involvement in housing discrimination and mortgage-related misconduct:

In the 1970s, DOJ sued Trump Management for denying apartments to Black applicants, who were often marked “C” for “colored” on rental forms.

His 2006 venture, Trump Mortgage, sold subprime products via unqualified executives, echoing practices at the root of the 2008 housing crisis.

Trump University defrauded real-estate hopefuls and settled for $25 million in lawsuits.

Now, Trump weaponizes “mortgage fraud” as a smear against Cook, a scholar and policymaker whose record stands in sharp contrast to his own.

It is also worth noting that Bill Pulte’s own mortgage operations raise red flags. Pulte Mortgage permitted the recording of racist, prohibited restrictive covenants and liens against FHA-insured properties. A federal audit identified 1,106 FHA-insured loans with racist and improper covenants—exposures that unnecessarily placed the FHA insurance fund at risk of losses. That history underscores the hypocrisy of Pulte’s accusations and makes clear the political nature of these attacks.

Institutional Independence at Risk

The Federal Reserve’s credibility hinges on its autonomy. By demanding Cook’s removal, Trump seeks to accelerate turnover on the Board of Governors, enabling a majority of his loyalists. That scenario jeopardizes sound monetary governance and could infuse rate-setting decisions with political bias.

Markets and institutional investors value Fed independence; eroding it would reduce policy transparency, undercut macroeconomic stability, and threaten confidence. In countries with compromised central banks, inflation tends to rise significantly—underscoring the tangible risks of politicizing monetary institutions.

The Broader Significance for Risk and Governance

As a seasoned platform for commentary on financial services, BankThink readers understand that governance matters. The ousting—or forced resignation—of Cook would not only degrade the institutional integrity of the Fed, it would also signal a broader regression in how America values expertise and diversity in economic leadership.

Moreover, removing the Fed’s first Black female governor in pursuit of political advantage would erode trust, particularly among communities historically marginalized by banking and housing systems.

Conclusion: A Line Must Be Drawn

Lisa Cook’s removal would be both a personal injustice and a structural failure. The Fed must remain shielded from partisan influence, and its leadership should represent the full richness of U.S. expertise—including voices from communities often excluded from policy-making tables.

Let’s be clear: this is not about one individual or one institution alone. It’s about preserving the norms and protections that underpin economic resilience and democratic governance.