Lisa Cook, the Fed governor Donald Trump is trying to sack

WHAT IS THE cost of discrimination? Lisa Cook, the first black woman to sit on the Federal Reserve’s board of governors, has built a career on finding empirical answers to that question. More than a century since Sadie Alexander became the first black American woman to earn a PhD in economics, a large majority of economists are still white men. Black people make up 14% of America’s population, but gained less than 5% of economics degrees in 2023—a share that has shrunk since the mid-1990s, according to the American Economic Association, a professional body. “If economics is hostile to women, it is especially antagonistic to black women,” Ms Cook wrote in an essay in 2019.

She is now under fire: on August 25th President Trump said he had sacked Ms Cook from the Federal Reserve, citing allegations of mortgage fraud. Bill Pulte, head of the Federal Housing Finance Agency, has said that Ms Cook gained favourable terms on mortgages for two properties by claiming that both would be her principal residence. On August 28th he raised questions over a third property on which Ms Cook took out a mortgage. Ms Cook, who is suing Mr Trump, has refused to go and says she is gathering evidence to clear her name. Her lawyer insists that President Trump has “no authority” to remove her from office. If the allegations against her turn out to be true, they would undermine her credibility as a financial regulator, which would make it difficult for her to stay in the job.

Mr Trump’s attack on Ms Cook is an escalation of his wider war with the Fed, which he argues has been too slow to cut interest rates. She did not vote to cut rates in July, when two of her colleagues did. But she does not stand out as a hawk. “The irony is she is probably one of the governors most inclined to endorse lowering interest rates at any sign of major weakening of our economy,” says William Darity, an economist at Duke University and one of Ms Cook’s mentors.

She was born into a middle-class family in Georgia in 1964, during the civil-rights era. Her father was the first black chaplain at the state’s central hospital, and organised letter-writing sessions to protest against segregation. Her mother, a nursing professor at Georgia College & State University in Milledgeville, was the first African-American to join the faculty. The small Southern town fiercely resisted integration. Rather than comply with court orders to open the swimming pool to black residents, officials filled it with concrete. Ms Cook still bears physical scars from desegregating schools with her two sisters. The murder of Martin Luther King junior in 1968 was also a personal tragedy for Ms Cook: she was friends with King’s daughter, Bernice. “The Cooks and Kings have been friends and civil-rights defenders for [three] generations,” Ms Cook later recalled.

At the age of 12 she entered a local social-science fair with a project that would foreshadow her later work. Armed with graph paper, a ruler and a pencil she plotted data from the Georgia Department of Labour office in Milledgeville. She aimed to identify the causes of unemployment among black Americans, also the topic of Sadie Alexander’s pioneering dissertation.

She studied humanities at Spelman College, a historically black women’s university, as well as at Oxford University and in Senegal. As a doctoral student in economics at the University of California, Berkeley during the 1990s she learned Russian and travelled to Moscow to research banking in post-Soviet Russia. She has held faculty positions at both Harvard University and Michigan State University.

Ms Cook’s work has broken new ground. In one paper, written under the mentorship of Milton Friedman, a Nobel-prizewinning economist, she demonstrated how segregation, lynchings and race riots between 1870 and 1940 led to a steep drop in patents filed by black inventors. In another study she explored the effect of having a distinctively black name on mortality rates; unexpectedly, it was associated with living longer. One of her most striking findings indicates that America’s economy loses nearly $1trn a year from the exclusion of black people and women from technology-driven industries. She served on President Barack Obama’s Council of Economic Advisers. In 2022 President Joe Biden nominated her to the Fed’s board of seven governors, who (alongside five Federal Reserve Bank presidents) vote on interest-rate policy.

Republicans attacked her even then and, in the Senate, voted unanimously against confirming her. Pat Toomey, then a senator, called her “grossly unqualified” on the grounds that she is not an expert in monetary policy. Democrats retorted that she brought to the central bank valuable expertise in international economics, and voted her in. Ms Cook’s elevation was an affirmation of the sort of economic study of racial inequality that she undertook before it became fashionable. Since she joined its board the Fed has broadened its research to highlight racial and ethnic disparities. Its Survey of Consumer Finances, a closely watched household study, now better disaggregates data by race and ethnicity.

The new administration dislikes everything she stands for. Its assault on Ms Cook is not a war against woke: control of monetary policy looks like the aim and the mortgage controversy looks like the weapon. But it is hard not to see it also as a proxy battle in America’s bitter culture wars.■