US President Donald Trump has declared he will remove Federal Reserve governor Lisa Cook from her post without delay. The move heightens his showdown with the central bank.
Trump claimed there was “sufficient reason” to accuse Cook of giving false information in mortgage filings. He cited constitutional authority he said gave him the power to act. Cook swiftly rejected the decision, stressing that the president had no legal right to dismiss her. She stated she would not resign.
No president has ever attempted to fire a Federal Reserve governor. Trump’s action comes amid his growing frustration with the bank’s policies and chair Jerome Powell. He blames Powell for not cutting interest rates aggressively enough.
Cook holds a decisive role
Cook is one of seven governors and sits on the twelve-member committee that determines interest rates.
The Fed’s policies influence how expensive loans are for American households and businesses. They also affect bank savings rates and shape monetary strategies worldwide.
At the July meeting, Cook joined Powell and most colleagues in voting to hold rates steady. Biden appointed her in 2022, making her the first African American woman in the role.
Court battle expected
Trump’s order is likely to trigger legal proceedings. Analysts believe the White House must prove in court that a valid basis exists for her dismissal.
The clash between Trump, Cook, and Powell intensifies concerns about the Fed’s independence. Economists argue that central banks must remain free from political pressure to act in the public interest.
Cook responded that Trump had tried to remove her “for cause,” though no such cause existed. She said: “I will not resign. I will continue to serve the American economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, pledged to challenge Trump’s move with all available legal means. The Federal Reserve has so far stayed silent.
Trump highlights mortgage dispute
Trump announced his decision late Monday on Truth Social. He accused Cook of signing a Michigan mortgage document declaring a property her primary residence, then signing another in Georgia two weeks later making the same declaration.
“It is inconceivable that you did not know of your first commitment when making the second,” Trump wrote.
Markets under pressure
European stock markets opened weaker on Tuesday. Yields on US government bonds rose as investors digested the news.
The dollar briefly slipped against other currencies before rebounding. Julia Lee of FTSE Russell observed: “The central question is whether Trump can remove Cook. If he succeeds, it could shift the Fed’s makeup and influence how investors view the US.”
Allegations emerged last week
Trump had already demanded Cook’s resignation days earlier. His call followed a letter from housing finance regulator Bill Pulte, a Trump ally, who accused her of mortgage fraud. He asked Attorney General Pam Bondi to investigate. It remains uncertain whether an inquiry is under way.
Cook said in a media interview that she first heard about the allegations through press reports. They stem from a mortgage application she filed four years before joining the Fed.
“I will not be forced out by social media claims,” she insisted. She added that she was preparing full documentation to respond to legitimate questions and establish the facts.
