Nearly 600 economists back Fed governor Cook as Trump attempts ouster

WASHINGTON – Nearly 600 economists have signed an open letter expressing support for Federal Reserve governor Lisa Cook and US central bank independence, as she battles President Donald Trump’s attempt to fire her.

“Good economic policy requires credible monetary institutions,” said the letter, whose 593 signatories include Nobel laureates and former US government officials.

“Credible monetary institutions, in turn, require the independence of the Federal Reserve,” the letter added.

The support came after Mr Trump said on his Truth Social platform last week that

he was immediately removing Dr Cook over claims of mortgage fraud.

Dr Cook, the first black woman to serve on the Fed’s board, is challenging her ouster in court.

Mr Trump’s move to unseat her is the latest in a stream of attacks against the Fed since he returned to the White House in January, aimed at getting the US central bank to cut interest rates.

But policymakers have been cautious about cutting rates as they monitor the effects of Mr Trump’s tariffs on the economy.

If he succeeds in removing Dr Cook, it would give him the opportunity to name another Fed governor, potentially giving him a majority on the seven-member board and raising the chances that he can impose a more direct influence over the Fed’s independent rate-setting process.

“Recent public statements about governor Cook – including threats of removal and a claim that she has been fired – have arrived alongside unproven accusations,” the open letter noted.

“This approach threatens the fundamental principle of central bank independence,” it cautioned.

As at Sept 2, signatories included Nobel laureates Claudia Goldin, Joseph Stiglitz and Paul Romer.

Also on the list were Professor Christina Romer – who served as chairwoman of the Council of Economic Advisers under former president Barack Obama – and Mr Jared Bernstein, who held the post under former president Joe Biden.

The letter was organised by Dr Tatyana Deryugina, an associate professor of finance at the University of Illinois Urbana-Champaign.

On Sept 2, Dr Cook’s lawyers pushed back against Mr Trump’s justification for firing her and argued in a filing that she was not given a chance to meaningfully contest allegations against her.

Among the allegations she faces are that she claimed two primary residences on mortgage documents in 2021 – one in Michigan and another in Georgia. A primary residence typically attracts better mortgage terms for a loan.

Although Mr Trump pointed to a criminal referral in announcing Dr Cook’s removal, she has not been charged with a crime.

The alleged incidents also occurred before she took office as a Fed governor in 2022.

In their Sept 2 filing, Dr Cook’s lawyers argued that the referral letter’s language signalled that the charges against her “were nothing more than a set of cherry-picked, cut-and-paste allegations”.

They charged that the aim was “to try to give the President political cover to remove a (Fed) board member with whom he has policy disagreements”.

They also warned that allowing Mr Trump to keep Dr Cook out of her office even temporarily “would amount to a crack in the foundation” of the Fed’s near-century of independence. AFP, BLOOMBERG