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Federal Reserve Governor Lisa Cook will file a lawsuit to prevent President Donald Trump from firing her, a lawyer for the embattled central bank official said on Tuesday, kicking off what could be a protracted legal fight over the White House’s effort to shape U.S. monetary policy. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action,” Cook’s lawyer, prominent Washington attorney Abbe Lowell, said in a statement. The statement was issued a day after Trump said he would fire Cook, the first Black woman to serve on the Fed’s governing body, for alleged “deceitful and potential criminal conduct” related to mortgages she took out in 2021. Cook has said Trump does not have the authority to fire her and has vowed to stay on the job. Trump’s showdown with the nominally independent central bank follows other largely successful efforts to bring other elements of the U.S. government under his direct control. Since returning to office in January, the president has overseen the departure of hundreds of thousands of civil servants, dismantled several agencies and withheld billions of dollars of spending authorized by Congress. Trump pressured the Fed to lower interest rates during his first term in the White House and he has escalated that campaign in recent months. The president has demanded that rates be cut by several percentage points and threatened to fire Fed Chair Jerome Powell, although he recently backed away from that saber-rattling. The attempt to influence U.S. monetary policy has knocked confidence in the dollar and U.S. sovereign debt and sparked fears of global financial turmoil. But market reaction to Trump’s latest Fed gambit was tame on Tuesday. Wall Street’s main equities indexes were largely flat on the day, while the dollar dropped. Yields on 2-year, 5-year and 10-year Treasury notes fell, reflecting higher expectations of a near-term rate cut, and rose on longer-dated bonds, in a sign that the Fed’s inflation-fighting credentials might weaken. Trump said in a letter to Cook on Monday that he had “sufficient cause” to fire her because she had described separate properties in Michigan and Georgia as primary residences on mortgage applications before she joined the Fed in 2022. In recent months, Trump has fired several Black women who held senior government positions, including the head of the Library of Congress and the chair of the National Labor Relations Board. The Trump administration has also targeted other political opponents with similar accusations of mortgage fraud, including New York Attorney General Letitia James, a Black woman who secured a half-billion-dollar civil fraud judgment against Trump last year. A New York appeals court threw out the penalty last week, while preserving the case. Mortgage questions William Pulte, a Trump appointee who is director of the Federal Housing Finance Agency, first raised questions about Cook’s mortgages last week and referred the matter to U.S. Attorney General Pamela Bondi for investigation. Bondi has yet to say whether the Justice Department will take action. Trump accused Cook on Monday of having “deceitful and criminal conduct in a financial matter” and said he did not have confidence in her “integrity.” Cook took out the two mortgages in question when she was an academic. Loans for primary residences can carry lower rates than mortgages on investment properties, which are considered riskier by banks. Cook listed three mortgages, including two personal residences, on a 2024 financial disclosure form. She is due to serve on the Fed board through 2038, but the Federal Reserve Act of 1913 allows removal of a sitting governor “for cause.” Until now, that power has not been tested by U.S. presidents, who largely have taken a hands-off approach to Fed matters as a way to ensure confidence in U.S. monetary policy. Legal scholars and historians said the thicket of issues that could be raised in a legal challenge would span questions around executive power, the Fed’s unique quasi-private nature and history, as well as whether anything Cook did amounted to cause for removal. Peter Conti-Brown, a scholar of the Fed’s history at the University of Pennsylvania’s Wharton School, noted that the mortgage transactions preceded her appointment to the Fed and were in the public record when she was vetted and confirmed by the Senate. “The idea that you can then reach back, turn the clock backward and say, you know, ‘All these things that have happened before now constitute fireable offenses from your official position’ is to me incongruous with the entire concept of ‘for cause’ removal,” Conti-Brown said. It is unclear how the matter might play out ahead of the Fed’s next policy meeting on September 16-17. Academic research has consistently found that policymakers who are allowed to manage inflation independent of political meddling generally achieve better outcomes, a principle that may now be tested at the world’s most influential central bank. “The Fed as an institution escaped harm in the first Trump administration, and will not be so fortunate this time around,” said Tim Duy, chief U.S. economist at SGH Macro Advisors. Cook’s departure would allow Trump to select his fourth pick to the Fed’s seven-member board, including two incumbents and the pending nomination of White House economist Stephen Miran. Michael S. Derby; Additional reporting by Nicole Jeanine Johnson and Kanishka Singh; Writing by Andy Sullivan; Reuters
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E-Commerce
Americans view of the U.S. economy declined modestly in August as anxiety over a weakening job market grew for the eighth straight month. The Conference Board said Tuesday that its consumer confidence index ticked down by 1.3 points to 97.4 in August, down from Julys 98.7, but in the same narrow range of the past three months. The small decline in confidence was in line with the forecasts of most of the economists who were surveyed. A measure of Americans short-term expectations for their income, business conditions and the job market fell by 1.2 points to 74.8, remaining significantly below 80, the marker that can signal a recession ahead. Consumers assessments of their current economic situation also fell modestly, to 131.2 in August from 132.8 in July. While the unemployment and layoffs remain historically low, there has been a noticeable deterioration in the labor market this year, and mounting evidence that people are having difficulty finding jobs. U.S. employers added just 73,000 jobs in July, well short of the 115,000 analysts expected. Worse, revisions to the May and June figures shaved 258,000 jobs off previous estimates and the unemployment rate ticked up to 4.2% from 4.1%. That report sent financial markets spiraling, spurring President Donald Trump to fire Erika McEntarfer, the head of Bureau of Labor Statistics, which tallies the monthly employment numbers. Another government report showed that U.S. employers posted 7.4 million job vacancies in June, down from 7.7 million in May. The number of people quitting their jobs a sign of confidence in their prospects elsewhere also fell. More jobs data comes next week when the government releases its August job gains and June job openings reports. The Conference Board’s report said that references to high prices and inflation increased again and were often mentioned in tandem with tariffs. Other government data this month showed that while prices at the consumer level held fairly steady from June to July, U.S. wholesale inflation surged unexpectedly last month. Economists say that’s a sign that Trumps sweeping taxes on imports are pushing costs up and that higher prices for consumers may be on the way. The share of consumers expecting a recession over the next year rose in August to the highest level since April, when Trump’s tariff rollout began. The share of survey respondents who said they intended to buy a car in the near future rose, while those planning to purchase a home remained stable after Julys decline. Those saying they planned to buy big-ticket items like appliances fell, but there were big variations among product categories. Respondents who said they planned to take a vacation soon, either inside of the U.S. or abroad, also declined. Matt Ott, AP business writer
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E-Commerce
On August 25, 2005, right before it made landfall north of Miami, Tropical Storm Katrina became Hurricane Katrina. As it blew through the southern tip of Florida, it caused some damage and 11 fatalities, but no one ranked it as one of the storms of the century at the time. After crossing the southern tip of the state, though, the storm entered the warm waters of the Gulf of Mexico, where it rapidly grew, eventually reaching Category 5 status, the highest on the Saffir-Simpson Hurricane Wind Scale. Four days later, on August 29, 2005, Katrina made a second landfall over Hancock County, Mississippi as a strong Category 3 storm, affecting areas from New Orleans to Mobile, Alabama. The destruction is well known today. Nearly 1,400 people lost their lives and damages totaled $125 billion. Since that time, the U.S. has seen one Category 5 storm (Michael in 2018) make landfall and a handful of Category 4 storms (such as Ian in 2022 and Helene in 2024). And just days ago, another Category 5 storm, Erin, gave east coast residents a scare with its 160 mile per hour winds, before taking a northern turn and avoiding the U.S. From rare to routine: The rise of Category 5 storms Erin was the 11th Category 5 storm to threaten North America since 2016and if that sounds like a lot in a short time, you’re right. Since 1924, there have only been 33 Category 5 storms. Prior to 2016, it took 27 years for 11 to form. And it took 34 years for the first 11 to come together. (Erin might not be the only Cat 5 we see this year, either. We’re just entering the busiest part of hurricane seasonand the biggest storms usually form in September.) Between 1996 and 2005, there were 25 storms that reached at least Category 4 strength. In the past 10 years, that number has hit 27with the bulk of this year’s storm season to goand hurricane wind strengths have increased by 18 miles per hour since 2019. More worrisome, perhaps, than the increased frequency of these storms is what will happen should one make landfall in the U.S. while at peak or near-peak strength. The fragile safety net Employees at FEMA (the Federal Emergency Management Agency) have warned Congress that plans by the Trump administration to scale down FEMA and shift disaster response to the states could reverse much of the progress that has been made since Katrina. An aerial view of New Orleans in the aftermath of Hurricane Katrina in 2005. [Photo: Michael Appleton/NY Daily News Archive via Getty Images] “Hurricane Katrina was not just a natural disaster, but a man-made one,” the group wrote. “Our shared commitment to our country, our oaths of office, and our mission of helping people before, during, and after disasters compel us to warn Congress and the American people of the cascading effects of decisions made by the current administration.” In June, FEMA scrapped its revised hurricane response plan and announced it would use the same one it used in 2024. Staffers, though, were reportedly unsure about how the old plan, which includes going door to door in affected areas, can be carried out this year following sizable staff departures. In that same meeting, acting FEMA leader David Richardson said “Yesterday, as everybody knows, [was the] first day of hurricane season. I didnt realize it was a season. A spokesperson has said Richardson was joking, but that didn’t quell criticism for the comment. FEMA’s not alone in its growing unease about the U.S. state of readiness for tropical activity. Meteorologists warn that cuts by the administration at National Oceanic and Atmospheric Administration (NOAA) and to weather satellites could impact forecasting accuracy, which has also progressed significantly since Katrina. A five-day tracking forecast of a hurricane today is as accurate as a two-day forecast was in 2005. The money spent on that more accurate forecasting is a wise investment, says the National Bureau of Economic Research, which found that the amount saved because of improved forecasts for a single hurricane exceeds the federal funding cost of the entire weather forecasting operation. (And, obviously, the number of annual hurricanes is far greater than one.) September is comingand its peak danger time Last year saw 27 weather and climate disasters, including hurricanes, with losses exceeding $1 billion each. All totaled, hurricanes caused an estimated $124 billion in damagesand some areas, like Asheville, North Carolina, continue to struggle to get back to normal. Forecasters have said the 2025 hurricane season will be an active one, with above-normal activity in the Atlantic thanks to higher than usual temperatures in the Atlantic Ocean.
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E-Commerce
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