Frank Yuan
Postdoctoral Fellow

Trump’s war on core American institutions has just escalated. On Monday, President Trump fired US Federal Reserve governor Lisa Cook, accusing her of mortgage record fraud. This is the first time an American president has attempted to fire a Federal Reserve governor in its century-long existence.

It’s an escalation in his attacks on the Federal Reserve, over his grievance that the central bank has been too slow in cutting interest rates. Trump may well be overstepping his authority. And even if he had the authority to sack her, Cook has not been charged with any wrongdoing through an investigation, which would be required to justify such an unprecedented move.

Perhaps Trump can claim expertise in mortgage fraud: in September 2023, a court found Trump to have fraudulently overvalued his real estate properties to obtain favourable loan and insurance rates. Only last week he had the hefty financial penalty overturned, but the judgement disqualifying him from serving in corporate leadership remains.

Of course, nothing has disqualified him from the US presidency, so he is free to wreak havoc on the institutions that have made America great. If Trump gets his way dismissing an official on a spurious accusation, he will have even less hesitation to strongarm heads of other public institutions to comply with his whims. It also opens up a dangerous precedent for any successor with dictatorial aspirations.

The danger isn’t confined to America. Trump’s attack on the Federal Reserve also risks weakening its position as lynchpin institution for global financial stability.

Donald Trump’s America is now a source of instability and risk for Australia, and it’s time we planned and acted accordingly.