President Donald Trump has announced the immediate removal of Federal Reserve Governor Lisa Cook, accusing her of making false statements on mortgage applications — a move experts say is unprecedented in the central bank’s 111-year history.
Trump, in a letter posted late Monday on his Truth Social platform, said there was “sufficient reason” to believe Cook signed conflicting mortgage documents for homes in Michigan and Georgia, each listed as her primary residence. He argued that his constitutional powers, alongside provisions of the Federal Reserve Act, gave him authority to dismiss her.
Cook, however, rejected the move outright. “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 in a statement on Tuesday. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Her lawyer, Abbe David Lowell, described the firing attempt as “baseless” and vowed to pursue all necessary legal actions to block it.
No Precedent for Dismissal
The Federal Reserve Act allows a governor to be removed “for cause,” but the statute does not define the term, leaving legal experts to question whether pre-appointment personal conduct qualifies. No U.S. president has ever dismissed a sitting Fed governor. Analysts say the matter could end up in the courts, raising fresh questions about the balance of power between the White House and the independent central bank.
Cook, who became the first African American woman to serve on the Fed’s Board of Governors in 2022, has said the mortgage issue stemmed from a loan application four years ago, before she joined the central bank. “I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said last week.
Market Reaction
The announcement rattled financial markets. The U.S. dollar weakened in Asian trading on Tuesday, while Treasury yields shifted as investors bet on an increased likelihood of interest rate cuts. Futures markets are now pricing in more than an 80% chance of a rate cut in September.
Trump has in recent weeks intensified his criticism of the Fed, particularly its chair, Jerome Powell, accusing the central bank of refusing to cut borrowing costs aggressively. His move against Cook comes after he repeatedly floated the idea of firing Powell himself.
What’s Next
If Cook and the Federal Reserve resist the dismissal, the standoff could trigger a constitutional test of the president’s powers over the central bank — potentially the most serious challenge to its independence since 1951.
