Bloomberg Talks
Counselor to Treasury Secretary Scott Bessent Joe Lavorgna Talks Lisa Cook Lawsuit
27 Aug 2025
Chapter 1: What is the main topic discussed in this episode?
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We're tracking the story surrounding Lisa Cook with reporting today that the Fed governor's lawyer could file a lawsuit against the administration after President Trump moved to have her fired. This is just one of the stories that we're going to be talking about. With Joe Livornia, told you he was coming in.
Counsel to the Treasury Secretary Scott Besson, former economic advisor to President Trump. in the first administration, just walked over on a beautiful day in Washington. It doesn't get any nicer than this. Thanks for coming by. It's always a pleasure to see you. This is pretty interesting, the moment that we're in here involving Lisa Cook, because there are a lot of questions about process.
This is gonna go to court apparently now. What about due process? Why are we moving to fire someone who's not been charged with anything? If you look at the Federal Reserve Act, it does say for cause, and it looks like those forms were not filled out accurately, that they were filled out improperly. And this is why Secretary Besson highlighted why he believes the Fed should do an internal probe.
Chapter 2: What legal challenges is Lisa Cook facing from the Trump administration?
The law may not be clear where it dots everything out where there has to be a specific process. It says for cause. If the president believes he has cause, certainly you have to take these things very seriously given the fact the Fed is a regulator. And we'll see where it goes. Don't you want to know if he has cause, though? I mean, is it up to the president to say that something was wrong here?
Well, yes, I do. I think so, Joe. And as Secretary Besson alluded to, Governor Cook has not said she didn't do it. And that's maybe perhaps is quite important. Look, we need trust in government. And the president came in. He wanted to make things more efficient, streamline, get rid of the bloated bureaucracy. We're seeing that. We're seeing government spending slow pretty significantly.
We've seen a lot of excess federal jobs go by the wayside. He actually wants to bring trust back to institutions. We've had other episodes in the past where Fed governors have had to resign. Yeah. because of alleged improprieties.
And this one certainly could be quite serious, and it's the president's prerogative, and I believe he has the ability, because again, it's for cause, and it looks like these things are pretty serious, to basically do what he's doing. The administration willing to go to the Supreme Court on this? Well, we'll see what happens. We'll see how the law plays itself out going through that process.
I don't know. I'm not being a lawyer, not knowing how it's going to work. But the president certainly, I think, has a good reason to be concerned about what's happened. And this notion somehow about Fed independence, remember, whoever is ultimately confirmed for the Fed chair, for Adriana Coogler's position, and possibly Ms. Cook's position, has to go through court. Senate approval.
So this notion somehow that there's a hit to Fed independence is a bit misleading and out of context because whoever is chosen will have to be vetted properly. And I guess Stephen Myron will have a confirmation hearing next week. Is that what you expect? Yeah, it's supposed to be moved up. So fingers crossed. Hopefully that happens soon.
Did that conversation just get a little more difficult for him?
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Chapter 3: What are the implications of due process in Lisa Cook's case?
Democrats are going to come out swinging on this, aren't they? The problem is the Democrats have not supported any of the president's picks to begin with. So I'm not sure that really matters. It's the same prep if you're Stephen Meyer. I would think so. Yeah. He's got a very good record and he's already confirmed just back in March. So I you know, it's like, what is what's changed?
So I would hope that goes through smoothly and that Stephen gets to be a great governor. Bloomberg News reporting late yesterday in a Bloomberg scoop that the president wants to go further and actually start to affect the makeup of the 12 regional banks. Is that the next layer here? Because that will bring up a whole other conversation about independence. Yeah, well, possibly.
I mean, the thing isā Does he want to reshape the Fed?
Chapter 4: How does Secretary Besson view the Federal Reserve's internal processes?
I think the Fed needs to be, I mean, the Fed probably needs some serious overhaul and reshaping. I mean, the fact that, you know, the governors have basically agreed to every president, I think, in the history with which they've been, you know, actually the ability to not have a president get that position just shows the fact that everything has been rubber stamped.
And the presidents really aren't really going through a democratic process in that sense, right? It's a private sort of quasi-private entity elects these people to the reserve banks, and then the Board of Governors then kind of approves it. I like what the president's trying to do. He's trying to have a very populist, very everyday American, every man approach, so to speak approach.
to policymaking where he wants to lift up Main Street. And the Fed oftentimes is perceived to be a globalist, elitist institution. That's the perception that the institution has. And I think even the Fed itself would probably admit that there's been some overreach. And Secretary Besson has said that, and they want
The Fed to go back to kind of its core mission of low and stable inflation, full employment, and moderate and low interest rates. We're going to get interest rate cut or cuts starting in September, according at least to market expectations.
There's a worry, though, that if the president puts a chill across the Fed, that the Board of Governors may not always be acting on data, that it may be influenced by the president. Why do you doubt that? Well, a couple of reasons, Joe. One is you had two governors dissent, and they dissented before we had that employment report, which had massive downward revision.
So there were very strong cases to be made why rates should be lower before that meeting. And then, of course, the governors Bowman and Waller, certainly their case, I think, is more strong. The chair himself has said, look, interest rates are high relative to the neutral rate. They're high even relative to the highest dot on the dot plot.
So the Fed has put itself in a position where it needs to be accountable for its forecast and for what it's saying. Factually, their inflation forecasts have gone up. from March to June as inflation dipped slightly lower, so their forecast error got wider. The bond market is telling you that there's not an inflation problem. Break-even inflation is well-contained.
The 10-year note is well-contained. So there's nothing in the markets who are forward-looking that's worried at all about Fed independence. I think the president and Secretary Besson has been echoing this, really want to bring accountability, get rid of the mission creep. and reevaluate, get back to the basics of what the Fed is supposed to do.
I don't look at that as being at all an attack on independence, but rather, okay, let's fix this situation, which has gotten a bit broken over the past dozen and a half years. You mentioned inflation. There are still questions about when this is going to start showing up.
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