The Fed is cooked

President Biden made a big mistake when he nominated Lisa D. Cook to the Federal Reserve Board of Governors. She was fired last week over allegations of financial hanky-panky, offering the president an opportunity to roll back liberal idealism.

Mr. Biden selected Ms. Cook in 2022 because she, like many of his other choices, “made history” as the first Black woman on the seven-member board. Now, she makes history as the first Fed governor removed for cause. Bill Pulte, the director of the Federal Housing Finance Agency, issued a criminal referral claiming Ms. Cook fibbed on at least three mortgage applications.

According to Mr. Pulte’s most recent accusation, Ms. Cook applied for a second-home mortgage on a condo in Cambridge, Massachusetts, and then turned around and listed the property as a rental on her official ethics disclosures.

“Representing the property as a second home may have allowed Cook to secure a lower ‘Second Home’ mortgage down payment and rates, as investment properties typically carry higher down payments and higher rates due to increased risk,” Mr. Pulte said on X.

Ms. Cook may also have been fluid when self-identifying her primary residence, alternately assigning this status to the property in Ann Arbor, Michigan, or the one in Atlanta, depending on what scored her a better deal.

Certainly, people can be confused when deciphering convoluted government regulations in complex transactions, but this was straightforward. She deserves a chance to explain herself, but Ms. Cook’s attorneys haven’t denied the administration’s assertions. Ms. Cook should know better.

“I have significant experience in banking and finance,” she testified during her Senate nomination hearing. “Indeed, community banks and other local financial institutions elected me as a director of the Federal Home Loan Bank of Indianapolis.”

Ms. Cook knows how to fill out paperwork properly, and that’s bad news for Democrats. One of Mr. Biden’s other nominees to the board, Adriana Kugler, resigned last month, leaving only two Democratic appointees once Ms. Cook cleans out her office.

President Trump can and should reassert the president’s constitutional authority over this supposedly independent board by appointing two new governors. The Fed was created in 1913 in a way that insulates it from having to ask Congress for its funding or from taking direction from the White House. The Government Accountability Office isn’t even allowed to audit the Fed’s dealings.

No provision in the Constitution permits the creation of a federal fiefdom that sits outside the three branches of government. President Wilson didn’t care about such technicalities, and he didn’t have the support to pass a proper constitutional amendment. Democrats rammed his proposal through Congress anyway on a near party-line vote.

Wilson’s central bank was supposed to steer the nation away from financial crises and end the curse of inflation, but it has failed spectacularly on both counts. Since the first time a Roman emperor realized he could swindle the public by diluting the amount of gold and silver in the coins, government meddling in monetary matters has never helped ordinary citizens.

The Fed needs reforming, and the president has a unique opportunity to reshape its operations if he can survive the legal challenge. Ms. Cook hopes a Democratic-appointed federal court judge will preserve her prestigious title and salary, but her case is weak. Under the statute, governors can be removed “for cause.”

If Mr. Pulte’s allegations are correct, her ouster is as legitimate as it gets.