Historically, September is not a great period, but Trump’s actions concerning the Federal Reserve have worsened the situation. While Jerome Powell was already convinced of interest rate cuts, Trump attempted to seize control of the FOMC by dismissing Fed member Lisa Cook. Kugler’s replacement, Miran, will soon commence their duties at the Fed, met with Senate approval.
Cryptocurrency Market Reacts
The U.S. Department of Justice launched an investigation into Fed member Lisa Cook, issuing a subpoena focused on whether Cook provided false information in mortgage applications. The department seeks justification for her removal, which resulted in Bitcoin 
$78,680 dropping below $110,000. The allegations mirror previous accusations Trump made against Powell, suggesting financial irregularities related to renovations at Fed buildings.
In response, similar proceedings commenced against Cook, swiftly escalating to a signed order from Trump for her dismissal, citing mortgage fraud charges. The cryptocurrency markets started September on a downward trend, fearing global market volatility due to threats against the Fed’s independence. Cook’s attorney, in court defense, built their case around the principle of the Fed’s independence, arguing Trump’s motivation for Cook’s removal was tied to her reluctance to support interest rate cuts.
DOJ Investigation Details
Sources familiar with the situation disclosed that the DOJ initiated a criminal investigation and issued a subpoena to examine inaccuracies in her mortgage submission details. Focused on properties in Ann Arbor and Atlanta, DOJ officials, including Trump-appointed Federal Housing Finance Agency Director Bill Pulte, attempted to substantiate the mortgage fraud allegations against Cook.
Under the Fed law, Trump can remove members with justifiable reasons. However, Cook’s attorneys insist she never engaged in mortgage fraud. The court contemplates a ruling preventing her removal from the Fed’s Board of Governors while legal proceedings are underway. With days before the September 16 Fed meeting, this chaos is troubling for risk markets.
Cook’s attorneys argued that even if such a crime existed, it occurred before her Fed tenure began in 2021, rendering it inadequate for justifying her removal. This developing situation is anticipated to cause further fluctuations in cryptocurrency this September, prompting investors to mitigate risks. Hence, markets continue trending sideways and down.
