[Fed Watch] White House Ousts Kugler and Pressures Cook for 'Immediate Resignation'... Attempt to Dominate the FOMC

Following the resignation of Federal Reserve Board Member Adriana Kugler five months before the end of her term, the White House is now pressuring Board Member Lisa Cook to step down.

The stated reason is allegations of mortgage fraud involving Cook. In 2021, Cook purchased properties in Michigan and Georgia, submitting documents claiming them as primary residences. However, the Georgia property was rented out the following year. The Federal Housing Finance Agency (FHFA) flagged this as fraud and referred the case to the Department of Justice, which would be akin to filing a criminal case with the prosecution.

The mortgage amount for the Georgia property was a 30-year loan of $540,000, or about ₩750,000,000 in Korean currency. Officials claim this constitutes fraud since different purposes require different loan conditions.

President Trump, as soon as this news broke, immediately posted on social media urging for Cook's immediate resignation.

Cook previously served as a member of the Council of Economic Advisers under former President Barack Obama. She was appointed to the Federal Reserve Board by President Joe Biden and was reappointed once, with her current term running until January 2038—more than 12 years remaining. She serves as an ex officio member of the FOMC.

The controversy over misrepresenting mortgage use now seems to be part of a broader effort to replace those appointed during Democratic administrations, potentially to pressure Chair Powell for rate cuts. The fraud allegation against Board Member Cook was raised by Director Pult, a pro-Trump figure, fueling this interpretation. Both Kugler, a Latina woman, and Cook, a Black woman, symbolize diversity within the Fed.

The Trump administration previously changed the Director of the Bureau of Labor Statistics and prompted Board Member Kugler, who had served as Chief Economist at the Department of Labor, to resign from the Federal Reserve Board. Steven Myron, current Chairman of the Council of Economic Advisers (CEA), has been named as Kugler’s successor. If Cook is also replaced, the composition of the FOMC is expected to change significantly, as 4 out of the 7 Board members would be Trump appointees. This could shift the 'mainstream' of the FOMC. In this case, the Fed’s independence could be compromised and it may become a tool for rate cuts.

Cook has stated, "I will not step down due to harassment," dismissing the calls for voluntary resignation.

Both Kugler and Cook earned their doctoral degrees at UC Berkeley. Kugler is an expert in labor economics, while Cook’s research has primarily focused on economic growth processes.

Washington—Sangeun Lee, Special Correspondent selee@hankyung.com