Kathmandu— The administration of President Donald Trump has revived efforts to remove Lisa Cook from her position as a governor at the Federal Reserve by issuing a formal letter threatening her role. The notice, signed by White House Deputy Chief of Staff Dan Scavino, alleges that Cook may have committed mortgage fraud and gave her a three-week deadline to respond to the unproven claims. This move marks a significant escalation in the president's ongoing clash with the central bank over interest rate policies and his desire to remove appointees from his Democratic predecessors.

Allegations Of Mortgage Fraud

The letter sent to Cook on August 5 alleges that she listed two different homes—one in Georgia and another in Michigan—as her primary residence, a move that could have allowed her to access more favorable mortgage rates. The administration's notice warned that the alleged crime is punishable by up to 30 years in prison and claimed her conduct constitutes negligence that calls into question her trustworthiness as a governor.

However, there is currently no conclusive evidence that Cook sought to deceive lenders, and legal experts suggest a successful fraud prosecution remains unlikely. Cook's legal team has dismissed the claims, with lawyer Abbe D Lowell stating, "As we did before, we will challenge this latest pretext and preserve her position and the historic role of the Fed."

Conflict Over Monetary Policy

The push to oust Cook comes amid a broader struggle between the White House and the Federal Reserve regarding interest rates. President Trump has aggressively campaigned to slash interest rates to combat economic pressures, recently stating, "We should have the lowest interest rate in the world" following the Fed's decision to hold rates steady for a fifth consecutive time.

Cook has maintained a stance aligned with other Federal Reserve officials, recently noting during an economic luncheon in Alaska that inflation is "too high" and indicating she is "prepared to act" by raising interest rates. This position directly opposes the president's desire for rapid rate cuts despite persistent inflation.

Challenges To Central Bank Independence

The attempt to remove Cook represents an unprecedented challenge to the Federal Reserve's historical insulation from political pressure. Under existing law, Federal Reserve governors can only be removed by the president "for cause," and no president since the central bank's founding in 1913 has sought to oust a governor.

While a June Supreme Court ruling blocked a previous attempt by Trump to fire Cook, it did clear the way for the president to fire heads of other independent agencies. The current administration's focus on removing Cook, who was nominated in 2022 by President Joe Biden, is part of a wider effort to replace federal appointees aligned with Democratic predecessors.

Cook's legal team has vowed to challenge the administration's latest allegations to preserve her historic role at the central bank.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.