President Donald Trump formally established a "committee of inquiry" to investigate allegations that Federal Reserve Governor Lisa Cook made false statements related to "one or more mortgage instruments," the White House announced Friday.
The extraordinary announcement is the latest development in Trump's long-running effort to fire Cook, a nominee of former President Joe Biden, from the central bank's board. Trump, who frequently urges the Fed to lower interest rates, recently said the failure to do so by his handpicked chair Kevin Warsh is the fault of a "hostile" board.
The committee comprises three executive branch officials, including Kevin Hassett, Trump's top economic aide and a chief defender of the administration's economic record, according to a presidential memorandum posted on the White House website and shared Friday on social media.
The other two members are Keith Sonderling, acting head of the Office of Government Ethics, and Equal Employment Opportunity Commission Chair Andrea Lucas, according to the notice, which is dated Wednesday. No outside, independent arbiters are mentioned.
The highly unusual move, which hasn't been used in nearly a century, is bound to fuel new accusations that Trump and his aides are eroding the Fed's long-maintained independence while once again wielding government power against the president's enemies. Congressional Democrats quickly slammed the announcement, while Cook's lawyers expressed deep skepticism about the panel's validity.
There is no modern precedent for such a committee, though past presidents have convened similar panels. President William Taft in 1912 appointed a committee to investigate the Board of United States General Appraisers, and President Herbert Hoover did the same in 1931 to probe statements by the president of the Navy League.
The Supreme Court, in its June ruling temporarily blocking Trump from his first attempt to fire Cook, cited Taft's committee.
Trump's panel and Cook are scheduled to appear for an in-person hearing at the White House on Nov. 5, two days after the midterm election, the memo states. Its members can consult with the Department of Justice and other agencies "to aid in its inquiry," the notice says.
Cook's attorneys, Abbe Lowell and Norm Eisen, expressed deep skepticism about the legitimacy of the inquiry, but nevertheless said the governor "welcomes the opportunity to present the facts so she can clear her name."
"In light of the President's repeated statements that he has already decided to fire Governor Cook – regardless of the facts and evidence — we have grave doubts that this 'hearing' is a legitimate one that would conform to the law," the lawyers told CNBC in a statement.
"But if it is anything close to objective, the conclusion will be that Governor Cook did not commit mortgage fraud, leaving no cause to remove her from the Federal Reserve Board," they said.
"We have engaged with the White House to evaluate whether the process proposed has a possibility of being a genuine one and not simply a box checking exercise. Governor Cook welcomes the opportunity to present the facts so she can clear her name and demonstrate there is no legal basis to fire her," Lowell and Eisen said.
Trump first tried to fire Cook last year, after administration officials raised allegations that she made false statements on at least one mortgage-related document.
Cook adamantly denied wrongdoing and filed a lawsuit to block her dismissal. A federal court temporarily barred Trump from firing her, and the Supreme Court in June narrowly upheld that ruling.
But the high court did not stop Trump from trying again for Cook's removal. Rather, it rejected Trump's first bid because Cook was not given proper legal due process, and said any new attempt to fire her would require additional steps. Under the Federal Reserve Act, a president can remove a Fed governor only "for cause."
In August, White House aide Dan Scavino told Cook in a letter that Trump was once again "considering" firing her in connection with the mortgage allegations.
"As President, it is my job to ensure the laws are faithfully executed, including by firing subordinates who cannot be trusted to tell the truth and follow the law," Trump states in the memo establishing the committee of inquiry, which is addressed to Attorney General Todd Blanche.
"To assist me in carrying out that responsibility, the Committee shall investigate the allegations against Governor Cook and report to me whether there is 'cause' for Governor Cook's removal" within the meaning identified by the Supreme Court, it says.
The Fed did not provide a comment and referred CNBC to Cook's lawyers.
Sen. Elizabeth Warren, D-Mass., in a statement later Friday morning accused Trump of "convening an illegitimate show trial in his dangerous quest to illegally take over our nation's central bank."
"Instead of playing judge in a kangaroo court of his own making, Trump should end the war in Iran and cancel his chaotic tariffs," said Warren, the top-ranking Democrat on the Senate's Banking, Housing, and Urban Affairs Committee.
Senate Minority Leader Chuck Schumer, D-N.Y., said Trump "is escalating his smear campaign against Lisa Cook while turning the presidency into a personal ATM: crypto schemes, taxpayer-funded propaganda ads, cash for his family — the list could go on forever."
"This has nothing to do with 'ethical concerns.' It's about Trump trying to seize control of the Fed, something that would mean even more economic chaos for American families," Schumer said in an X post.