Scott Bessent, the U.S. Secretary of the Treasury, criticized the Central Bank, the Federal Reserve (Fed), saying it "should be independent, but has made many mistakes." This is in response to remarks from President Donald Trump, who has openly criticized the Federal Reserve and defended the dismissal of Fed Director Lisa Cook.
In an interview with Reuters on Labor Day, Sept. 1 (local time), Secretary Bessent expressed his principled respect for the independence of the Federal Reserve. However, he pointed out that the Fed has made many mistakes over time, giving legitimacy to the pressure exerted on the Fed by the Trump administration.
Especially regarding the question of whether President Trump's decision to dismiss Director Cook was an attempt to control the Fed, Secretary Bessent responded, "Isn't it rather that we are doing what the Federal Reserve should do?" Director Cook is under suspicion of mortgage fraud. The Administrator of the Federal Housing Finance Agency (FHFA), appointed by President Trump, claimed that Director Cook reported different properties in Michigan and Georgia as her primary residence in 2021 to obtain improper loan rate benefits. President Trump dismissed Director Cook last week based on these allegations. Director Cook has filed a lawsuit, arguing that the president does not have the authority to dismiss her.
Secretary Bessent raised concerns about the absence of an internal investigation by the Federal Reserve regarding this controversy. He said, "I was very surprised that the Federal Reserve did not conduct its own review." He added, "Director Cook has never denied the charges. She only claims that the president cannot dismiss her. That is a big difference."
Responding strongly to concerns that the Trump administration's actions are causing instability in the financial markets, Secretary Bessent stated, "The S&P (Standard & Poor's) index is at an all-time high, and bond revenue is also good. I have not seen any (negative) reactions from the market yet."
President Trump has criticized Jerome Powell, the chairman of the Federal Reserve, for not lowering interest rates for several months. Remarks from key administration officials in this context are expected to further increase pressure on the Federal Reserve. Secretary Bessent also urged the Senate to quickly confirm Steven Myron, the chair of the White House Council of Economic Advisers, to fill the vacancy left by the resignation of former Fed Director Adriana Kugler. He did not hide his intention to send a "Trump person" to the Federal Reserve.
Independence of the Central Bank is regarded as a key principle supporting the global financial system. However, Secretary Bessent argued that since the regional Federal Reserve Bank presidents compose the Federal Reserve Board, the president cannot completely dominate the board.