Scott Besent, secretary of the Treasury, said yesterday September 1, that the Federal Reserve (Fed) is and must be independent, but said that he has “made many mistakes”, and defended the right of the president of the United States (EU), Donald Trump, to say goodbye to the governor of the Fed, Lisa Cook, for the accusations of mortgage fraud.
Trump has been criticizing the Fed and its president, Jerome Powell for months, for not cutting interest rates, and recently pointed against Powell for a expensive remodeling of the bank’s headquarters in Washington.
“The Fed must be independent. The Fed is independent, but I, I also believe they have made many mistakes,” Besent a Reuters mentioned in an interview.
When asked if the administration’s efforts to dismiss Cook seem an attempt to give Trump the opportunity to appoint a majority at the Board of Governors, Besent said: “Well, do you have to do the work of the Fed for them?”
Independent central banks are considered crucial for the stability of the global financial system.
Besent said that the composition of the Fed Council – with regional banks governors – meant that the president could not “stack the council.”
The US official rejected the idea that markets are disturbed by Trump administration measures. “(The) S&P is in a new maximum and the yields of the bonds are fine. So we have not seen anything yet,” he said.
Besent believes that Cook must be dismissed or resign if the accusations against him are true, and pointed out that she has not denied them.
Trump fired Cook last week, the first black woman to be part of the Board of Governors of the Fed, after the head of the Federal Financing Agency for the US Housing appointed by Trump, William Abuce, accused her of mortgage fraud. Antlet asked the Department of Justice to investigate the complaint.
The department has not filed charges against her.
Cook and its supporters argue that fraud accusations are a pretext to dismiss it and that Trump can name an ally in the central bank that promotes his political desires. Cook has sued Trump and the Fed, claiming that Trump had no legal authority to dismiss it.
The Trump administration says that Cook described separate properties in Michigan and Georgia as main residences in mortgage requests in 2021, which could have given preferential interest rates.
The still governor has said that even if the accusations were true, they would not be a reason for dismissal because the alleged behavior occurred before it was confirmed by the Senate and assumed the position in 2022.
“I was very surprised that the Fed has not made an independent review,” said Besunt.
“She hasn’t said she did not. She has only said that the president cannot fire her. There is a big difference.”
