Lisa Cook Suggests Clerical Error May Explain Mortgage Application Issue

Summary:

Federal Reserve Governor Lisa Cook is fighting to stay on the job, and she’s blaming a clerical mistake, not fraud, for the mortgage form issue now being used by President Donald Trump to try and fire her.

That’s the core of a lawsuit Lisa filed this week in federal court, directly challenging the president’s legal authority to remove her from the Fed Board.

The case doesn’t spend much time discussing whether she actually filled out the mortgage application wrong. Instead, it hammers the claim that even if she did mess up, it still doesn’t give Trump the legal right to fire her.

One of the filings in Lisa’s lawsuit says the issue might have come from a paperwork mistake. Her legal team insists this does not rise to the level of “cause,” the only justification the Federal Reserve Act allows for firing a sitting board member.

That term has no clear legal definition and might now have to be interpreted by the Supreme Court. Lisa says this entire mortgage fraud accusation is just a distraction meant to hide what’s really happening: a push by Trump to stack the Fed Board of Governors with people who will support his demand for rate cuts.

Lisa’s lawyers say Trump has no legal basis

The lawsuit calls the mortgage fraud claims “pretextual” and says they are based on conduct that allegedly happened before Lisa was even confirmed by the Senate. It argues that no federal agency has ever investigated or proven anything about the claim.

“This allegation about conduct that predates Governor Cook’s Senate confirmation has never been investigated, much less proven,” her legal team wrote. “This allegation is not grounds for removal under the [Federal Reserve Act].”

The complaint says even if a mistake was made, it wasn’t serious enough to meet the legal bar required to fire a Fed governor. Trump and Bill Pulte, who runs the Federal Housing Finance Agency, have accused Lisa of giving false information about where she lived when applying for federally insured mortgages.

But her lawyer, Abbe Lowell, fired back in the complaint, saying that even if the president had tried to hide his real reason for firing her, the excuse he cooked up still doesn’t qualify as valid under the law.

“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook,” Abbe wrote, “the President’s concocted basis for removal, the unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation, does not amount to ‘cause’ within the meaning of the FRA and is unsupported by caselaw.”

The filing also points out that neither Trump nor Bill ever claimed Lisa benefited personally from the alleged clerical error, or that it was done intentionally. Her lawyers added, “Even if Governor Cook had committed the infractions that the President alleges, which she did not, the President would lack ‘cause’ to remove her.”

Critics question silence as markets stay calm

Bill responded in a statement to Scott Wapner of CNBC, saying, “In her filing, Ms. Cook does not deny that these are her mortgage documents, so one has to wonder why she, or [Fed Chair] Jerome Powell, would want this to be a part of the Federal Reserve, which is supposed to have preeminent integrity and which is critical to the safety and soundness of the U.S. Mortgage Market.” His statement questions why Lisa didn’t directly challenge the documents or give an explanation.

While all of this unfolds, the markets have mostly brushed it off. But that could shift. Krishna Guha, who leads global policy research at Evercore ISI, warned that the legal drama is distracting from what he calls the “Trumpification” of the Fed. “We have no privileged knowledge of the legal facts,” Krishna said in a note this week, “but believe if it were established Cook committed even accidental mortgage misrepresentation, she would have to go.”

If Trump gets his way and Stephen Miran is confirmed by the Senate to fill an open seat, he will hold a 4–3 majority on the Fed board. That could grow to 5–2 if Jerome decides not to complete his term as governor after his current run as chair ends in May 2026.

Source: CryptoSlate

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Hannah Ellis

Federal Reserve Governor Christopher Waller on Thursday said he wants to start cutting U.S. interest rates next month and "fully expects" more rates cuts to follow to bring the Fed's policy rate closer to a neutral setting, stepping up his call to lower short-term borrowing costs.

"Based on what I know today, I would support a 25 basis point cut" at the upcoming September 16-17 meeting of the rate-setting Federal Open Market Committee, he told the Economic Club of Miami.

"While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is important that the FOMC not wait until such a deterioration is under way and risk falling behind the curve in setting appropriate monetary policy."

Waller said he did not think the Fed would need to cut rates more than a quarter point next month, though he said that view could change if the Labor Department's August jobs report, due out next Friday, points to a substantially weakening economy, and inflation remains well-contained.

However, he said "the time has come to ease monetary policy and move it to a more neutral stance," which he said was around 3%, some 1.25 to 1.50 percent points below the current policy rate range of 4.25%-4.50%.

"I don't believe that policy has fallen substantially behind the curve, but one way to signal that I don't intend to allow that happen is to talk about where we go after September," he said. "As I stand here today, I anticipate additional cuts over the next three to six months, and the pace of rate cuts will be driven by the incoming data."

Answering questions after his prepared speech, Waller said that means "it could be a sequence of cuts; it may be a couple, then you may want to pause...we know we want to head towards neutral; it's just a question how fast we get there."

Any upward price pressures from tariffs should peak by the end of this year or early next, he said.

"I fully expect more rates cuts as the labor market continues to soften; growth is probably still going to be slow in the second-half of the year," he said. "Because monetary policy tends to work with these kind of long lags, you don't want to wait."

Waller and Fed Governor Michelle Bowman both dissented on July 30 from the Fed's decision to keep short-term borrowing costs unchanged, citing their worries about the labor market weakening.

Both were appointed by U.S. President Donald Trump and are said to be under consideration as possible successors to Fed Chair Jerome Powell, whom Trump has been publicly pressuring to lower interest rates dramatically.

In another move widely seen as part of an effort to exert more control over the Fed, Trump earlier this week announced he was firing Fed Governor Lisa Cook over what he said was possible mortgage fraud, a move Cook says is illegal and is suing to stop.

The Fed did lower the policy rate by a full percentage point last year, starting in September before Trump was elected and continuing after his November election win. It has held rates steady this year, citing worries that Trump's higher tariffs could reignite inflation that is still running above the Fed's 2% goal.

Powell last week appeared sympathetic to some of Waller's reasoning, noting a sharp downturn in job growth to a monthly average of just 35,000 since May, even while the unemployment rate remains a low 4.2%.

Rising downside labor market risks, Powell said, may warrant "proceeding carefully" with a policy adjustment. Analysts and financial markets took those remarks as a strong indication that the Fed would cut rates in September and proceed gradually from there.

Waller on Tuesday cited analysis by Fed staff showing that, apart from the temporary effect of tariffs, inflation is running close to the Fed's 2% goal. That, along with well-anchored longer-term inflation expectations and rising chances of an undesirable weakening in the labor market, means he feels even more strongly than in July that the Fed should be cutting rates now.

Source: Reuters

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Daniel Carter

Economic

Consumer prices excluding fresh food rose 2.5% in the capital in August from a year earlier, versus a 2.9% clip in the previous month, according to the Ministry of Internal Affairs and Communications Friday. The slowest pace of gains since March matched economists' forecast.

A deeper price indicator that also strips out energy prices climbed 3%, edging down from 3.1% and matching forecasts. For overall inflation, energy prices had a negative contribution of 0.29 percentage point.

Given it was weighed down by temporary factors, the leading indicator for nationwide price trends is unlikely to derail the BOJ from its current rate hike path. Market speculation for a move this year has ramped up in recent weeks helped by remarks by US Treasury Secretary Scott Bessent and signs of robust economic and price growth.

Economists expect the central bank to hold at its meeting ending Sept. 19.

The strength of inflation has become even harder to gauge due to one-off factors. Prime Minister Shigeru Ishiba's government decided to reinstate utility subsidies from July to September, a move that has begun showing up in the August CPI data.

The cost of rice, a staple food that has helped drive Japan's price growth this year, advanced 67.9% from a year earlier, slowing from 81.8% in July after beginning to jump about a year ago.

By marking the biggest monthly gain in half a century earlier this year, sharp inflation in rice has forced the government to dispatch a myriad of unprecedented measures to cool it, including the release of emergency stockpiles.

Food prices excluding fresh products rose by 7.4%, unchanged from the pace in July. Service prices advanced 2%, compared with 2.1% in the previous month, showing that underlying inflationary pressure remains steady.

Source: Bloomberg Europe

To stay updated on all economic events of today, please check out our Economic calendar

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Daniel Carter

Political

Ukrainian President Volodymyr Zelenskiy told a group of European leaders on Thursday it was important to produce a clear definition of security guarantees for Ukraine as part of a plan to secure a peace settlement with Russia after 3-1/2 years of war.

The virtual meeting with Polish President Karol Nawrocki and the leaders of Estonia, Latvia, Lithuania and Denmark was organised in Poland and followed an overnight Russian attack on Kyiv that local officials said killed 22 people.

Zelenskiy said the meeting's participants had "synchronised" positions by seeking greater pressure on Russia ahead of diplomatic meetings on the Ukraine conflict, which began with Russia's invasion of its smaller neighbour in February 2022.

In his remarks to the meeting, posted on the presidential website, Zelenskiy said Ukraine believed Kremlin leader Vladimir Putin was still interested only in continuing the war.

Ukraine needed a solid basis for security guarantees that U.S. President Donald Trump has agreed to and that have been under discussion for a week, and a shared understanding that Putin deserved more pressure, Zelenskiy said.

"And when we talk about security guarantees, we need clear answers - who will help us defend on the ground, in the air and at sea if Russia comes again?" he said. "And how exactly you can take part. I'm asking you to define your role."

Zelenskiy said it was "important that President Trump sees we in Europe are united in our determination to end the war".

Trump has been trying to arrange a meeting between Putin and Zelenskiy, and said he could impose new sanctions on Moscow if there is no progress in ending the conflict. The White House said the president was "not happy" with the overnight Russian assault.

Zelenskiy has long backed Trump's call for a meeting and supported calls from European leaders for a ceasefire ahead of negotiations.

Senior Ukrainian officials are due to hold talks with Trump administration officials in New York on Friday.

Source: Reuters

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Manuel

Stocks

Economic

US stocks rose across the board on Thursday as Wall Street weighed signs of a resilient economy and the move by Federal Reserve governor Lisa Cook to sue President Trump, while the dust settled on Nvidia's (NVDA) earnings.

The tech-heavy Nasdaq Composite (^IXIC) led the way higher, rising 0.5% to close just shy of a fresh record. The S&P 500 (^GSPC) rose 0.4%, crossing the 6,500 level for the first time as it set a second-consecutive all-time high. The Dow Jones Industrial Average (^DJI) ticked up 0.2%, enough to notch its own record.

The government said US GDP rose 3.3% in the second quarter, a surprise bump up from its first estimate and a broad rebound from the 0.5% dip in Q1. That was due to a variety of factors — notably, a decrease in imports that followed a Q1 import surge to "front-run" tariffs, as well as a healthy pickup in consumer spending. Meanwhile, jobless claims fell as layoffs remained low.

Another economic test looms on Friday, with the July reading on PCE consumer inflation, closely watched by the central bank, due in the morning.

Investors were also watching the ongoing dispute between Trump and Cook. On Thursday, Cook sued the president after refusing to bow to his termination letter earlier this week — the biggest test yet of the central bank’s independence from executive branch influence.

Meanwhile, the initial cloud over Nvidia lifted as investors dug into its quarterly report, seen as a test of the AI trade driving stock gains this year. The chipmaker's shares closed down nearly 0.8%, paring bigger immediate post-earnings losses, as the company's disappointing data center sales and uncertainty over its future in China overshadowed its earnings beat.

Nvidia stressed that demand for its AI chips — which power applications like ChatGPT remotely from data centers — is healthy, countering recent fears of an AI bubble about to burst. CEO Jensen Huang touted "extraordinary" demand for the company's Blackwell AI GPUs (graphics processing units).

Huang also told Yahoo Finance that the company is getting "fired back up" to sell chips into the $50 billion China AI market following a short-lived export ban, though geopolitical uncertainty remains an overhang on that opportunity.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

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Manuel

Central Bank

Political

If President Donald Trump is successful in removing Federal Reserve Governor Lisa Cook, his appointees could control the central bank for years to come. Trump escalated his efforts to exert control over the nation's central bank this week when he said he was firing Cook, a member of the committee that sets the Fed's key interest rate, amid allegations of mortgage fraud. Cook sued to keep her position Thursday, claiming her dismissal was "unprecedented and illegal."

Should Trump prevail in the legal case, his nominees would have the power to deliver Trump the rate cuts he has demanded. Some experts have warned that the move could diminish the Fed's reputation for making decisions based on economics rather than politics, as well as hurt its ability to control inflation.Trump said he would soon control the board and implied that mortgage rates, which are influenced by the federal funds rate, would soon fall."We'll have a majority very shortly," Trump said Tuesday at a cabinet meeting. "So that'll be great. Once we have a majority, housing is going to swing, and it's going to be great. People are paying too high an interest rate."

The Fed has held its key rate steady throughout 2025, which has led Trump to repeatedly lambaste Fed Chair Jerome Powell, whose term as chair expires next May. The Fed has been reluctant to cut rates until it's clear that tariffs aren't spurring inflation, though Powell signaled last week that economic conditions could warrant a policy change when the policy committee meets next month.

How Trump Could Take Over The Fed

The Fed is set up to resist the president's influence but is not completely immune, especially in the face of the kind of attacks that Trump has launched.

"While some safeguards are there, the challenges to Fed independence have been unprecedented," said Victor Li, an emeritus professor of economics at Villanova and expert on the Fed.

The central bank is controlled by a board of seven governors, whom presidents appoint to serve 14-year terms. Trump appointed three of the board's seven members, Christopher Waller, Michelle Bowman, and Powell during his first term in office. (Once his term as Fed chair ends, Powell could stay on as a governor through January 2028, though he hasn't said whether he would do so.)Additionally, Trump has appointed his economic advisor, Stephen Miran, to replace Adriana Kugler, who resigned from the board this month. Should Trump successfully replace Cook, Philip N. Jefferson and Michael S. Barr would be the only remaining governors not appointed by Trump. In other words, his nominees would dominate the board by 5-2.

That alone wouldn't be enough to give Trump appointees control of the crucial Federal Open Market Committee, which votes to set the central bank's influential fed funds rate. That group's 12 members consist of the seven Fed governors plus five presidents of the regional Federal Reserve banks. Out of those five, one is always the New York Fed, with the other 11 regional bank presidents occupying the four remaining seats on a rotating basis.

However, the governors have the power to approve those bank presidents every five years, with the next opportunity coming in February 2026 when all the regional bank presidents' terms expire."In theory, this could be a way to populate the FOMC with members that would do Trump’s bidding, empowering the president to get the big rate cuts he seeks," Bill Dudley, a former president of the Federal Reserve Bank of New York, wrote in a column for Bloomberg Wednesday.An open question is whether Trump's nominees would rubber-stamp his agenda to lower interest rates.

Trump appointees Bowman and Waller have called for lower rates and voted to lower them at the FOMC's most recent meeting in July, going against the other 10 voters. However, the two officials said their votes were based on economic considerations.

Source: Investopedia

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Manuel

Cryptocurrency

US tokenized treasury products reached a new all-time high of $7.45 billion on Aug. 27, surpassing the previous peak of $7.42 billion registered on July 15.

According to rwa.xyz data, the milestone caps a 14% recovery over two weeks following a market correction that bottomed out at $6.51 billion on Aug. 13. The tokenized treasury sector experienced a 12% decline from its mid-July peak.

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) maintains market leadership with $2.38 billion in assets, representing 32% of total tokenized treasury market capitalization.

Top 30-day performers

Net flow data for the 30 days ending Aug. 28 shows WisdomTree Government Money Market Digital Fund (WTGXX) leading inflows with $440 million, followed by Circle’s USD Coin (USYC) at $253 million.

OpenEden Dollar (TBILL) captured $95 million in new deposits during the recovery period.

Libeara and Ondo Finance also contributed to the rebound, with their ULTRA and OUSG products attracting $36 million and $24 million, respectively.

These inflows offset outflows from Franklin Templeton’s OnChain U.S. Government Money Fund (BENJI), which recorded $78 million in redemptions, and Centrifuge (JTFSY) with $49 million in net outflows.

The five largest tokenized treasury products by market capitalization represent a concentrated market share of 73.6%.

WisdomTree ranks second at $931 million, down from recent highs, while Franklin Templeton’s BENJI holds $744 million. Ondo’s OUSG and USDY products round out the top five with $732 million and $689 million, respectively.

Market structure evolution

The recovery demonstrates growing institutional appetite for blockchain-based treasury exposure despite traditional fixed-income market volatility. Most of these funds have high minimum investment thresholds, such as BUILD’s $5 million minimum deposit.

Tokenized treasuries provide 24/7 trading capabilities and programmable features that are not available in conventional government bond markets. The liquidity model, available at any time, prompted a 256% year-over-year growth in tokenized US treasuries.

Despite the increased appetite for tokenized real-world assets, they still have a long way to go.

Max Gokhman, Deputy Chief Investment Officer for Franklin Templeton Investment Solutions, recently stated that most fund managers are not interested in cryptocurrency.

However, education and yield-related moves, such as approving crypto exchange-traded funds with staking, could help drive more adoption among these investors.