Kathmandu— Federal Reserve Governor Lisa Cook has publicly refuted claims made by the Trump administration seeking to remove her from her position at the central bank, asserting that these efforts lack legal basis and threaten the institution's autonomy. The dispute centers around accusations of mortgage fraud, which Cook’s legal team argues are unsubstantiated and mirror errors committed by others, including members of the current administration. This marks the second time President Trump has attempted to use such allegations as grounds for dismissal, following a previous challenge that reached the Supreme Court.

Legal Battle Over Governor's Removal

Cook’s lawyers, Abbe David Lowell and Norman Eisen, issued a letter on Wednesday detailing their rebuttal to the president’s accusations. They emphasized that under US law, Federal Reserve governors can only be removed “for cause,” not for political reasons. The White House had sent Cook a message on August 5 threatening potential dismissal due to alleged false statements on mortgage agreements, giving her three weeks to respond.

Supreme Court Ruling and Precedent

This latest effort follows a similar attempt last year, which led to litigation that culminated in a Supreme Court ruling in June. The court blocked Trump from firing Federal Reserve governors at will, reinforcing the protections enshrined in the Federal Reserve Act of 1913 designed to shield the bank from political interference. No president has previously attempted to oust a Federal Reserve official since its founding.

Trump's Push for Control Over Monetary Policy

The dispute comes as Trump seeks to expand executive power during his second term, specifically targeting the Federal Reserve. He has repeatedly pressured the bank to lower interest rates quickly to stimulate the economy, despite warnings from experts that such a move could devalue the dollar and exacerbate inflation. Former Federal Reserve Chair Jerome Powell also faced scrutiny from the administration, including a criminal probe into renovations at the bank’s headquarters – an investigation Powell denounced as intimidation.

Prior Investigation Into Powell

In January, Powell revealed the Trump administration had opened a criminal probe into his actions related to a renovation effort at the bank’s headquarters. He described the investigation as an attempt to influence monetary policy through political pressure or intimidation. A federal judge later dismissed subpoenas related to the investigation in March, and it was dropped in April shortly before Powell's term as chair expired.

The current dispute remains unresolved, with Cook continuing to defend her position against the administration’s accusations. The situation highlights ongoing tensions between the White House and the Federal Reserve over monetary policy and the independence of the central bank.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.