Challenges Facing the Federal Reserve’s Governance Principles
The issues surrounding the saga of Lisa Cook keep on going, like the Energizer Bunny. They never seem to slow down. If you have been following the recent events, you will have noticed that she did not deny the accusation(s) leveled against her concerning the perceived fraud on her mortgage applications. Her latest statement was that this was old news, and if there were concerns, they should have been asked during her confirmation process as a Federal Reserve Board Member.
I have news for her. There are no time limits on honesty, integrity, and transparency. Because good governance is a shared responsibility, the Fed’s board of directors has failed to live up to its responsibility by not announcing any actions they are considering or how it is reviewing the circumstances around these events. The actions of the Chairman, Jay Powell, have been nonexistent, at least in the public arena. He has been quite vocal about defending his job performance as the Chairman, but has been eerily quiet on this topic.
Good governance is intended to form a broad effort to promote:
- Increased transparency, including full disclosure of all the facts,
- Integrity, and
- The rule of law.
It appears none of these have been applied in this case. The financial sector participants, including other banking regulators, private sector investors, senior commercial bank officials, and the financial community, should demand and expect a more thorough and critical response to these matters than what has been taken to this point. In an increasingly integrated world, the expectations for better governance practices are something that the US Government and our publicly traded companies cannot afford to ignore. This is vital to the long-term competitiveness of our financial institutions and to the overall health of our economy.
My View: Ms. Cook should be placed on unpaid leave by the Federal Reserve’s Board and should have no further involvement with any policy decisions taken by the Federal Reserve until this matter has been fully resolved either by her resignation or a final adjudication by the Courts.
Prepared by Terry L. Stroud – September 2025
