On August 25th, Trump published an Executive Order: It cites Article II of the Constitution and the Federal Reserve Act, claiming she can be removed “for cause.” The alleged “cause” is a criminal referral accusing Fed Governor Cook of false statements on mortgage documents.

The "cause" stems from FHFA Director Bill Pulte: He submitted a criminal referral to the DOJ alleging she declared 2 different properties as her "primary residence." This occurred within a 2-week span in 2021, one in MI and one in GA. Trump has called this "mortgage fraud."

But, here's why Trump cares so much: There are 7 Fed Governors, including Fed Chair Powell, who vote on interest rate policy. Currently, excluding Powell, Trump has appointed 3 of these 7. If he is able to replace Fed Governor Cook, Trump-appointees would be the MAJORITY.

As it stands, Fed Governor Cook's term does not expire until January 2038. The Federal Reserve Act says they serve 14-year terms and can only be removed “for cause.” This is intended to isolate the Fed from political pressure to allow it to function "independently."

If Cook is removed, Trump's path to rate cuts becomes far more certain. Trump is calling for 300 bps of rate cuts. This would be 3 TIMES larger than the 100 bps cut on March 15th, 2020, the largest in history. Governor Miran is already stating he is ready to cut rates.

Hours ago, Fed Governor Cook and her lawyer responded: She said that President Trump has no authority to fire her and that she will not resign. Fed Governor Cook’s lawyer said they plan to take “whatever actions are needed to prevent” Trump’s “illegal action.”

This leaves the Fed in a difficult position: Will Cook be able to resume duties as a Fed Governor while this case goes through the courts? If so, would a ruling upholding Trump's Executive Order be applied retroactively? This case is unprecedented and so are its implications.

Ultimately, with or without Fed Governor Cook, a 25 bps rate cut is coming in 1 month. On Friday, Powell said the "shifting balance of risks may warrant adjusting our policy stance." As the labor market slows down, the Fed will CUT rates and blame a "weaker labor market."

Ongoing changes at the Fed will have huge market implications: The macroeconomy is shifting and its implications on stocks, commodities, bonds, and crypto are investable. Want to see how we are doing it? Subscribe to access our premium analysis below: http://thekobeissiletter.com/s...

The Fed is set to cut rates with Core CPI inflation ABOVE 3%. Since 1985, the Fed has only cut rates 1 time with Core CPI above 3% AND the 3m change was >0.3%: in 1990-1991. It's a great time to own assets. Follow us @KobeissiLetter for real time analysis as this develops.

@KobeissiLetter Do you think this move will actually help stabilize the economy or just throw everything into chaos? 🤔

@gulshanhk If successful, it would materially increase the odds and quantity of rate cuts.

@KobeissiLetter We just want rate cuts. But we got a drama series instead.

@333blacksea 2026 is going to be a wild year.

@KobeissiLetter Yield curve control

@TheMLBrown Asset owners love this.

@KobeissiLetter News flash to all the “righteous” people in the comments. A large majority of the government including those accusing her of mortgage fraud (regardless if she did it or not) is guilty of breaking the law somewhere if they are also screened with a fine tooth comb. The issue here

@KobeissiLetter The federal reserve is under the executive branch and therefore is subject to oversight by the President…just bc it hasn’t happened before doesn’t mean it’s not Constitutional…yes I know the Fed Reserve Bank is a private institution….however “nobody is above the law”, not

@KobeissiLetter That might be the Problem!!! That in a century nobody gets fired for sucking at their Job! I voted for this!!! 🇺🇸🇺🇸🇺🇸

@KobeissiLetter She is a woke hire, hired by the loony Biden admin because she was a black woman, that's the only reason, unqualified for the job, the color of your skin and your sex are not qualifications!

@KobeissiLetter WHY then does the president pick the Fed Chair? It's so fucking contradictory. Independence but exec branch chooses? What is that ?

@KobeissiLetter How many Fed Governor's have had criminal referrals. They usually resign before that happens. And, most of the resignations have been because of violating Fed rules, nothing criminal.

@KobeissiLetter In the 111yr history how many Fed board members bought two houses, committed fraud claiming both as primary residence, lived in neither and rented them out. Paying no taxes? Gimme a break. Propaganda outlet 🤡🤡🤡🤡🤡🤡🤡🤡🤡🤡🤡🤡🤡

@KobeissiLetter TLDR - she clearly committed mortgage fraud, which is a crime for everyone, BUT she's also a Fed gov That clearly is 'cause' and don't give the 'but but but it's an allegation' speech - it's a 5 min investigation This your signature? This the place you claimed as your primary

@KobeissiLetter How many times in the 111 year history has a fed governor committed mortgage fraud

@KobeissiLetter So are you insinuating that lying on mortgage loan applications is not cause to fire someone who is supper to be a honest and impartial professional in charge of our economic policies?

@KobeissiLetter 2 primary residence mortgages in 2021 means she almost certainly has 2 mortgages that are less than 3%. Being in a position to keep rates higher for those that follow the law while you allegedly broke it is unconscionable. However, I would've preferred a ruling not an accusation

@KobeissiLetter If this wasn't already priced-in, then what exactly pushed risk assets for the last 18 months?

@KobeissiLetter @grok, who appointed her to the Fed ? Was it likely because she is a "woman of color?"

@KobeissiLetter Trump is desperate for rate cut