Treasury Secretary Scott Bescent expressed on Monday that while the Federal Reserve should maintain its independence, he acknowledged mistakes have been made. He mentioned that President Trump defended Governor Lisa Cook’s position amid allegations of mortgage fraud.
Trump has, for months, been vocal about the Fed and its chair, Jerome Powell, criticizing the reluctance to lower interest rates. Recently, he also called out Powell regarding the expensive renovation of the Fed’s Washington headquarters.
In a diner interview outside Washington, Bessent told Reuters, “The Fed is independent, but I think they made a lot of mistakes.”
When asked if the administration’s actions to oust Cook appeared to be aimed at giving Trump the chance to appoint a friendly majority to the board, Bescent responded somewhat cryptically. “Well, or do you have to do federal work for them?” he remarked.
Many believe that independent central banks are crucial for a stable global financial system.
Bescent also noted that the makeup of regional bank governors and federal committees means the president can’t just “strap the boards.” He dismissed the notion that the Trump administration’s actions have disrupted the market, stating, “(The) S&P is fine with its new highs and bond yields. So we haven’t seen anything yet.”
He suggested that if allegations against Cook were valid, she should either step down or address them. He mentioned that Cook hadn’t denied the claims.
Cook and her supporters contend the accusations of fraud are merely a pretext to remove her, allowing Trump to appoint individuals aligned with his policy objectives. Cook is currently suing Trump and the federal government, asserting that he lacks the authority to dismiss her.
Last week, Trump dismissed Cook, who made history as the first black woman on the federal president’s committee—an appointment made by the Federal Housing Finance Agency under Trump. The DOJ was requested to investigate, but there have been no charges against her.
The Trump administration has alleged that Cook misrepresented her primary residence on a mortgage application in 2021, but Cook argued that the accusations, if true, shouldn’t warrant her removal since they occurred prior to her Senate confirmation and taking office in 2022.
Bessent expressed surprise that an independent review by the Fed hadn’t yet been conducted, noting, “She’s not saying she’s not doing that. She’s just saying the president can’t fire her. There’s a huge difference.”
He also stressed the need for the Senate to expedite the confirmation of Stephen Milan, chairman of the White House Council of Economic Advisers, to a temporary position following Adriana Coogler’s resignation on August 1.
