Jerome Powell and Lisa Cook have been referred to the Department of Justice over allegations that could prompt criminal investigations. President Trump has called for their resignations to enable appointment of officials who would favor lower interest rates. Financial markets reacted with bond-market weakness and stock sell-offs, and analysts warn of broader risks to the dollar and U.S. assets. The core concern centers on the erosion of Federal Reserve independence, potential politicization of monetary policy, and investor recoil if policy shifts prioritize political objectives over low inflation and full employment.
Fed chair Jerome Powell and governor Lisa Cook have now both been referred to the Department of Justice by Trump's political allies in the hopes that criminal charges can be brought against them. The bond market flinched yesterday at the news. Stocks sold off. And Wall Street analysts are worrying that we may be looking at the end of independent monetary policy.
Powell is trying to steer the Fed through a jaw-dropping crisis: He has been referred to the U.S. Department of Justice for a criminal investigation into the mostly baseless allegation that he made misleading remarks to Congress; and yesterday Fed governor Lisa Cook was also referred to the DOJ for alleged fraud over a pair of mortgages in which she allegedly claimed both houses were her principal residence.
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