President Trump said he is removing Federal Reserve governor Lisa Cook, citing allegations that she submitted fraudulent information on mortgage applications. “I have determined that there is sufficient cause to remove you from your position,” he wrote in a letter posted on social media.
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The move follows days of public attacks on Cook, including an image posted online that labeled her “The Fraudster.” The White House is pushing the message that the Fed must be beyond reproach. The timing adds heat to an already tense fight over interest rates and the future direction of the central bank.
Cook Rejects the Firing and Stands Firm
Cook answered the letter within hours and refused to budge. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said. “I will not resign.”
Her lawyer Abbe Lowell reinforced that stance. He said Trump’s move “is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.” The Fed did not immediately comment.
Allegations Ignite the Dispute
The allegations began with Bill Pulte at the Federal Housing Finance Agency. He said Cook sought mortgages on two homes in 2021 and listed both as a primary residence in filings two weeks apart. He said he would send a criminal referral to the Justice Department.
Trump cited those claims in the removal letter and framed the issue as one of public trust. He wrote about the “tremendous responsibility” of setting interest rates and supervising banks and said Americans must be able to trust the people who run the Fed.
Legal Questions Drive the Fight
No president has ever removed a sitting member of the Fed board. The law says governors can be removed “for cause,” but courts have never tested that language for the Fed. Recent Supreme Court rulings narrowed job protections at some agencies, yet the Court suggested in May that Fed employees may have stronger safeguards than peers elsewhere.
If Cook challenges the removal in court, the case could set the first real precedent on presidential power over the Fed. Any injunction would freeze the situation while judges weigh the law. That would keep Cook in her seat and add months of uncertainty to the board’s lineup.
Politics Press on Monetary Policy
The broader context is a running fight over rates. Trump has blasted Chair Jerome Powell for not cutting faster and argued the Fed is holding the economy back. Two current governors, Michelle Bowman and Christopher Waller, often back cuts and both are Trump appointees. Trump has already nominated Stephen Miran to fill a vacant seat.
If Cook’s seat opens, Trump could tilt the board further toward his policy view. Powell’s term as chair ends in May. A reshaped board would influence not only the September decision on rates but also the path of policy into next year. Independence is the core issue. Many economists say the Fed works best when it can make unpopular choices without political pressure.
Congress Divides on the Cook Firing
Lawmakers lined up quickly. Senator Rick Scott said Trump “is doing the right thing to hold people accountable.” Senator Elizabeth Warren called the move an “authoritarian power grab” and said any court that follows the law will overturn it. The split highlights how a legal fight over one governor could spill into a broader brawl over the Fed’s structure.
Inside the system, regional bank presidents also play a role, but the board in Washington signs off on their appointments and sets the rules. A board with more Trump picks would carry more sway over those decisions and over how policy debates unfold behind closed doors.
What Happens Next
Cook shows no sign of stepping down. She has mostly voted with Powell and the committee majority. Her term runs to 2038. If the case lands in court, the board could be stuck in limbo while the Fed tries to project stability into the September meeting and beyond.
For markets and the economy, the immediate impact is uncertainty. A court fight over Fed governance does not change inflation or jobs directly, but it can cloud confidence. The Fed will try to keep the focus on data and policy. The political storm will keep trying to pull it off course.
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