Trump renews bid to fire Fed's Cook as yields hit 5.22%

President Trump renewed his attempt to fire Federal Reserve Governor Lisa Cook, reviving mortgage fraud allegations the Supreme Court has so far rejected, as 30-year Treasury yields hit 5.22 percent, the highest in 19 years.

"The renewed attempt to dismiss a sitting Fed governor is puzzling," said Mohamed El-Erian, chief economic advisor at Allianz. "It raises fundamental questions about the independence of monetary policy."

The White House letter, attributed to Deputy Chief of Staff Dan Scavino, gives Cook three weeks to respond to allegations of mortgage-related crimes punishable by up to 30 years in prison. Cook's attorney Abbe D. Lowell called the claims "baseless" and said the defense would "challenge this latest pretext." The move follows a 5-4 Supreme Court ruling in late June that upheld an injunction keeping Cook in her position while her legal challenge proceeds.

The confrontation lands as the Fed navigates its most contentious policy environment in decades. Inflation ran at 3.5 percent in June, above the 2 percent target for more than five years, while three of 12 FOMC members voted to hike rates at the July 29 meeting. Fed Chair Kevin Warsh, in office less than three months, has refused to say when the committee might act.

The market has so far shown little reaction to the political pressure on the Fed's board. But Treasury yields have climbed sharply since the July 29 FOMC meeting, when Warsh reiterated his stance of not providing guidance on monetary policy direction. The 30-year yield closed at 5.22 percent on Aug. 6, up 5 basis points on the day, while the 10-year yield rose 6 basis points to 4.69 percent. The 30-year fixed mortgage rate climbed to 6.69 percent, the highest in a year, according to Freddie Mac.

Warsh, who has emphasized a "quiet Fed" approach of minimizing communication about future rate paths, acknowledged his remarks caused short-term market turmoil but stressed the principle of reducing the central bank's influence on markets remains intact, the Financial Times reported, citing a close aide.

Rate Path Uncertainty Deepens

Cook, who voted with the majority to hold rates at 3.5 percent to 3.75 percent at last week's meeting, said Wednesday she is "prepared to act by raising rates, if necessary" to bring inflation down. Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari dissented, preferring a quarter-point hike. New York Fed President John Williams and Philadelphia Fed President Anna Paulson have also said they would consider raising rates.

The last time a president sought to remove a Fed governor was never — Trump's August 2025 attempt was the first in the central bank's history. The Supreme Court's June ruling, authored by Chief Justice John Roberts, held that Cook was entitled to notice and an opportunity to respond before any removal "for cause," but left open the possibility of a renewed attempt once those procedural steps were taken.

If Trump's latest effort succeeds in removing Cook, it would mark an unprecedented breach of Fed independence, potentially triggering volatility across equities, bonds and the dollar. If the courts again block the dismissal, the episode may reinforce the Fed's institutional resilience but deepen the political divide over monetary policy. The next FOMC meeting is scheduled for September, with markets pricing in a growing probability of a rate hike as inflation remains stubbornly above target.

This article is for informational purposes only and does not constitute investment advice.