Trump Wrecking Fed with His "Scapegoat Economics," Wall St. Says

President Trump’s move to fire Federal Reserve Governor Lisa Cook sparked market volatility and raised alarms about political interference in monetary policy.

The dollar continues to weaken as American governance erodes. That means higher prices for all commodities.

While UBS’s Paul Donovan told clients the attempt was “completely unprecedented,” Wharton’s Jeremy Siegel argued that her ousting adds “noise but little substance” compared with the Fed’s longer-term policy shifts, Eleanor Pringle reported for Fortune.

Markets fell sharply Tuesday after Trump announced his decision to remove another member of the Federal Open Market Committee (FOMC). Many on Wall Street viewed it as further meddling by the White House.

Trump claimed he had “removed” Cook, alleging “sufficient reason to believe [she] may have made false statements on one or more mortgage agreements.”

The move followed allegations from Bill Pulte, head of the agency overseeing mortgage giants Fannie Mae and Freddie Mac and a Trump appointee, who wrote on X that Cook claimed two primary residences — in Ann Arbor and Atlanta — in 2021 to secure better mortgage terms.

Cook rejected the accusations, saying: “I have no intention of being bullied to step down from my position because of some questions raised in a tweet.”

Donovan noted that Trump has already appointed a majority of Fed governors and that “the Fed’s policy has been independent, until now.”

He added: “If the dismissal holds up in the courts, the Senate does have to confirm a successor.

The FOMC has regional Fed presidents who can strive for an independent policy, and faith in these checks may limit the negative market reaction in the near term. The Fed has become the next target in scapegoat economics.”

Skanda Amarnath, executive director of Employ America and a former Fed economist, told Fortune: “Wrecking institutions with unlawful behavior and pathetic power grabs comes with costs to Americans.

The dollar continues to weaken as American governance erodes. That means higher prices for all commodities. Powell must ensure that Lisa Cook is not removed as a result of these arbitrary and capricious actions from the president.”