Trump’s Takeover of the Fed Nears, Cook’s Successor Expected to Be a Pro-Trump Appointee

Stephen Miran, David Malpass Among Successors Under Consideration
Governor Lisa Cook Notified of Dismissal on Mortgage Fraud Charges
If Successful, Trump to Have Nominated 4 of 7 Fed Governors

U.S. President Donald Trump is moving to dismiss Federal Reserve Governor Lisa Cook, accelerating the process of naming her successor. The move underscores Trump’s determination to reshape the Fed’s structure, intensifying months of pressure on the central bank and seeking to install loyalists in key positions.

Miran, Malpass Floated as Cook’s Successors

According to the Wall Street Journal (WSJ) on the 27th (local time), Trump is weighing economic adviser Stephen Miran and former World Bank President David Malpass as leading candidates to replace Cook. Speaking to reporters the previous day, Trump said, “We have some very fine people,” adding, “Miran could be appointed to Cook’s seat.” He went on to target Cook directly, saying, “She seems to have violated the law, and that should not happen, especially for someone in charge of mortgages.” His remarks referred to the Federal Housing Finance Agency’s detection of two instances of “mortgage fraud” allegedly involving Cook, which were referred to the Department of Justice for investigation.

Trump further stated, “We will soon have a majority at the Fed,” adding, “It will be great when we do.” The Fed Board of Governors consists of seven members, alongside five regional Fed presidents who collectively form the 12-member Federal Open Market Committee (FOMC) that sets interest rates. Currently, two board seats are vacant; if Cook is dismissed, Trump would be able to fill three new seats. Installing loyalists in these posts would give Trump four of the seven board members, excluding Chair Jerome Powell and two other sitting governors, thereby significantly enhancing his influence over the central bank.

Miran, Trump Confidant, at Odds with Powell

Miran, already nominated for a separate Fed governorship set to expire in January, has emerged as the strongest contender. Cook’s term runs through 2038, but Trump noted he could “re-nominate Miran to a longer-term seat.” Malpass, another close Trump ally, has also openly criticized the Fed for delaying rate cuts. Should Miran take Cook’s seat, Malpass could be tapped for another vacancy.

Markets view Miran, the architect of Trump’s tariff policies, as the frontrunner. Holding a Ph.D. in economics from Harvard, Miran served as senior adviser to Treasury Secretary Steven Mnuchin during Trump’s first term. He is known to hold positions diametrically opposed to Powell’s, asserting that high tariffs do not fuel inflation and that rate cuts are necessary. Miran has also criticized the Fed’s policy framework, arguing that the boundaries between monetary and fiscal policy have blurred since the 2008–2009 financial crisis. He has claimed that the Fed’s quantitative easing (QE) program, through large-scale Treasury purchases, has extended beyond monetary policy into fiscal territory.

Miran is also well-known for advocating what he termed the “Mar-a-Lago Accord” in a report he authored last November as head of macro strategy at Hudson Bay Capital, shortly after the presidential election. In the report, he argued that to maintain the dollar’s reserve-currency status, revive U.S. manufacturing, and reduce chronic current account deficits, the U.S. and major economies needed a weaker dollar under a new global monetary system akin to the 1985 Plaza Accord. While the idea never materialized, the dollar indeed weakened sharply under Trump. The dollar index, which tracks the greenback against six major currencies, has fallen 9.6% so far this year.

Rate-Cut Momentum Likely to Accelerate

On Wall Street, expectations are growing that Miran’s entry into the Fed would quicken the pace of rate cuts. Should Miran join Governors Christopher Waller and Michelle Bowman in calling for rate reductions, the Fed’s rationale for holding rates steady could weaken further.

Joseph Gilbert, portfolio manager at Integrity Asset Management, noted, “Miran will be a voice supporting looser monetary policy, which strengthens the conviction that the Fed will cut rates by year-end. With three dissenters on the committee, the odds of a rate hold diminish significantly.” He added, “We are officially in a rate-cutting cycle.” Marco Casiraghi, economist at Evercore ISI, echoed this view, saying, “Given Miran’s alignment with Trump’s policies, he is expected to continue playing the role of loyalist, pressing for rate cuts.”

Others, however, caution against overstating the impact. David Beckworth, senior research fellow at George Mason University’s Mercatus Center, remarked, “He is just one member, and the scope for structural change or larger rate cuts is limited. I don’t think he will be able to achieve much within a matter of months.”