GEOFF BENNETT: Welcome to the "News Hour."

President Trump made it explicitly clear today he is seeking more control of the Federal Reserve.

The president says he has fired Fed governor Lisa Cook from the bank's board, but she says she's not leaving and will take the administration to court.

AMNA NAWAZ: Cook's departure would create two board vacancies in just the last month.

What's at stake is the balance of power on the nation's top bank, which could potentially undermine its long-held independence.

DONALD TRUMP, President of the United States: I want to thank you all for being here.

AMNA NAWAZ: President Trump today doubling down on his fight to exert control over the Fed, repeating claims that he has the authority to fire Federal Reserve Board Governor Lisa Cook, accusing her of making false statements to get a better mortgage.

DONALD TRUMP: She seems to have had an infraction.

And she can't have an infraction, especially that infraction, because she's in charge of, if you think about it, mortgages.

And we need people that are 100 percent aboveboard, and it doesn't seem like she was.

AMNA NAWAZ: Mr. Trump announced Cook's firing in a statement late Monday, writing -- quote -- "I have determined that faithfully executing the law requires your immediate removal from office."

DONALD TRUMP: What she did was bad, so I will fire her if she doesn't resign.

AMNA NAWAZ: Trump vowed last week to remove cook if she didn't step down.

The law does allow a president to fire a Fed governor, but only for cause.

Cook fired back in her own statement today, saying - - quote -- "President Trump purported to fire me for cause when no cause exists under the law and he has no authority to do so.

I will not resign."

At the heart of Trump's justification to fire Cook are allegations that Cook lied on mortgage applications in order to secure more favorable terms.

Bill Pulte, the Trump-installed head of the Federal Housing Finance Agency, or FHFA, posted on X two sets of signatures that he says show Cook claiming both an Atlanta condo and a Michigan home as her primary residences.

Cook, the first Black woman ever to serve as a Fed governor, has maintained that the allegations are from before she was on the board.

The Justice Department plans to investigate, but has not announced any charges.

Trump and the FHFA have leveled similar accusations of mortgage fraud against political enemies, New York Attorney General Letitia James and California Senator Adam Schiff.

Schiff recently addressed the claims on NBC's "Meet the Press."

KRISTEN WELKER, Moderator, "Meet the Press": Are these allegations true?

How do you respond to them?

SEN. ADAM SCHIFF (D-CA): They're patently false, and the president knows that in the housing agency president's person Pulte knows it.

He's essentially doing the president's bidding against me, against Letitia James against this person on the Federal Reserve.

Mortgage is their new weapon to go after their critics.

AMNA NAWAZ: Lisa Cook's lawyer has vowed to challenge her removal in court.

And the Federal Reserve and the president said they'd abide by any court decision.

If Trump succeeds in ousting Cook, he could dramatically remake the board in his favor.

Among its seven members are two Trump appointees from his first term, Michelle Bowman and Christopher Waller.

He nominated White House economist Stephen Miran to replace Adriana Kugler, who left abruptly this month.

Replacing Cook on the board would give Trump nominees a 4-3 majority.

DONALD TRUMP: We will have a majority very shortly, so that will be great.

AMNA NAWAZ: Presidents of both parties have largely respected the Fed's independence, but Trump has long complained about the independent federal agency and its chairman, Jerome Powell, for not cutting interest rates.

Board governors serve for a 14-year term.

And in a statement today, the Fed confirmed they may be -- quote -- "removed by the president only for cause," also writing that the lengthy terms are -- quote -- "a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis and the long-term interests of the American people."

With Lisa Cook's attempted firing, opponents of the move worry it could further erode the Fed's independence in a political battle for its control.

For more, we're joined now by two guests who know a great deal about the Fed.

Lael Brainard was vice chair of the Federal Reserve Board of Governors and a member of the board from 2014 to 2023.

She also served as undersecretary of the treasury for international affairs under President Obama, among other roles.

And David Wessel is senior fellow in economic studies and the director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.

And just a note.

We did invite Bill Pulte to join us on the program, but the Trump administration declined.

In the meantime, welcome to you both, and thanks for joining us.

Lael, I will start with you.

You were at the Fed for nearly a decade, most recently under still-chairman Jay Powell.

How are he and other board governors looking at this moment, the standoff now between Lisa Cook and President Trump, and what does it mean for how they do their work?

LAEL BRAINARD, Former Vice Chair, Federal Reserve: Well, this is an incredibly difficult move for the Federal Reserve to navigate.

It really is an unprecedented attack on the independence of the Federal Reserve.

It is an aggressive effort to seize control of the majority on the board.

And I think the risks here are really to the economy.

If the independence of the Federal Reserve to fight inflation is seen as compromised, it actually will lead not to lower interest rates, but higher interest rates on things like mortgages and small business loans, because people will be anticipating that inflation will go up.

That's what we saw in the 1970s, the last time this kind of attack took place, and that's what we're likely to see here again.

AMNA NAWAZ: David Wessel, what's your take?

As Lael points out, this move is unprecedented in the 100-year-plus history of this institution.

What are the risks?

What are the implications?

DAVID WESSEL, Brookings Institution: I think we're wearing out the word unprecedented in this administration.

This is just another move by the president to assert control over every single aspect of the federal government.

He clearly wants to get control of the Federal Reserve Board, the seven governors in Washington, because he would like to see lower interest rates.

Importantly, there are monetary policies made by these seven governors, but also the presidents of five of the 12 reserve banks.

All 12 reserve bank presidents are up for reappointment at the end of February.

They are subject to be removed by a vote of the Federal Reserve Board.

And, clearly, Trump is trying to get a majority before the board can reaffirm these people.

And we don't know what he will do, but there's a possibility that they will try and get rid of some of the Fed bank presidents who are not with the president's program.

AMNA NAWAZ: Lael, do you view -- do you see that happening ahead?

And also if Trump's nominees do make up the majority, does it make it easier for interest rates to be lower?

Does it make it easier for the president to fire Jay Powell, as he's threatened to do?

LAEL BRAINARD: Well, absolutely.

Look, I think you have to ask yourself, why not go through an investigation?

Why not go through the facts?

Why not provide due process?

It does suggest that the White House is in a real hurry to seize control of the majority of the board.

And, yes, if that results in a majority of the overall monetary policy-setting committee being aligned with the White House, it becomes a political interest rate-setting policy, which will lead, again, to higher inflation, bad for American households, and higher interest rates on mortgages and cars.

And so it's very, very dangerous, and it will take years to fix it.

AMNA NAWAZ: And would it make it easier for the president to fire the chair, Jay Powell, if he had a majority on the board?

LAEL BRAINARD: So I think the issue really has gone beyond that.

This is really seizing control of the majority, which means that you have enough votes to push against interest rate policy that you don't like one way or the other.

And the other thing I think is really important to think about is, if you are on the board or you are one of the Reserve bank presidents, how fearful are you going to be by this kind of intimidation to state your views, your honest views about what's the appropriate course of policy to fight inflation and keep the labor market strong?

AMNA NAWAZ: David Wessel, as you know, the Senate would need to confirm anyone that Mr. Trump nominates to fill these roles on the Board of Governors.

They need a simple majority.

They did block one of President Trump's picks back in his first term, but do you see that happening in a second term?

Would Republicans push back on a nominee they view as partisan or someone who's not qualified for the role?

DAVID WESSEL: Well, so far, the Senate Republicans have seemed pretty willing to confirm almost anybody that the president sends up.

Now, there is -- there has been some reluctance on the part of some Republican senators to attack the Fed.

Senator Thom Tillis is on the Banking Committee.

He's been a defender of Jay Powell and the Fed.

So there's a possibility there, but I think some of this depends on how the Senate sees the markets reacting.

And so far the markets have been, to my view, surprisingly complacent.

Yields on long-term treasures have gone up a little bit.

And I think that will encourage the president to think that I can get away with this.

And so far the Senate has let him get away with almost anything he wants.

AMNA NAWAZ: Well, we also know, David, that the president pays very close attention to the stock market.

So far, it seems to be taking the news in stride.

What do you make of that?

DAVID WESSEL: I have a hard enough time trying to figure out what motivates President Trump.

Understanding the markets is really beyond my competence.

Clearly, they expect lower interest rates, at least in the short term.

They seem to be euphoric about the possibility that artificial intelligence will boost our prospects long term.

And they seem to have this -- the markets seem to have this belief that somehow the stuff they like about Trump will prevail and the stuff they don't like, like tariffs, won't.

I just can't explain it.

AMNA NAWAZ: Lael, we know that Lisa Cook is challenging her firing.

The case could make its way all the way up to the Supreme Court, but regardless of what happens legally, are we now just in this period where a U.S. president, at least this one, can and will try to influence economic policy decisions that were previously independent, that were nonpartisan, in much more aggressive ways?

Have we just entered a new era?

LAEL BRAINARD: Yes, we are absolutely in uncharted territory, where every person who is entrusted with setting monetary policy by statute, by Congress in an independent way has now got to be thinking, what if the president doesn't like my position?

Should I be continuing to talk about how tariffs lead to higher inflation?

And should I continue talking about how it is difficult to be lowering interest rates in an environment where inflation is going up?

So I do think, again, this very unprecedented attack, lack of due process, has to be giving everybody on that monetary policy committee pause about what that means for their own ability to conduct the responsibility of being independent from the White House in setting monetary policy.

AMNA NAWAZ: You're saying it would have a chilling effect; is that right?

LAEL BRAINARD: I think it would really undermine the independence and the quality of the discourse.

You couple that with the fact that an official statistical agency head was fired for delivering bad news on the labor market, and it starts to really undermine the fundamental pillars of our exceptionally strong and dynamic economy.

AMNA NAWAZ: Lael Brainard and David Wessel, thank you to you both for joining us tonight.

Appreciate it.

LAEL BRAINARD: Thank you.

DAVID WESSEL: You're welcome.