TD Cowen sees 25% chance Trump will succeed removing Fed's Cook

Investing.com -- The White House has given Federal Reserve Governor Lisa Cook three weeks to respond to allegations of false statements on mortgage documents, according to TD Cowen analysts.

TD Cowen said this marks President Trump's second attempt to remove Cook from her position as a Fed governor for cause. The firm assigned a 75% probability that the President will use Cook's response as grounds to fire her, but only a 25% probability that he will succeed in removing her.

The analysts said they expect the legal process to extend beyond the end of Trump's second term, similar to the timeline of his previous attempt to fire Cook over the same allegation. TD Cowen said Cook will likely remain in her position as the litigation unfolds.

The firm noted that the Justice Department has not pursued criminal prosecution against Cook related to the alleged misrepresentation on her mortgage application.

TD Cowen said the initial judge's ruling will be critical in determining the outcome. The analysts said if Trump succeeds in removing Cook, he may target other Fed governors. The firm added this would set a precedent for future presidents to similarly seek removal of governors.

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