US President Donald Trump has declared he will immediately remove Federal Reserve governor Lisa Cook from office. The announcement marks a dramatic escalation in his ongoing clash with the central bank.
Trump said there was “sufficient reason” to accuse Cook of making false statements in mortgage agreements. He pointed to constitutional powers he claimed granted him the right to dismiss her. Cook quickly rejected the move, insisting Trump had no authority over her position. She ruled out stepping down.
It is unprecedented for a US president to attempt to dismiss a member of the Federal Reserve’s leadership. The move comes as Trump increases pressure on the central bank and its chair Jerome Powell. He accuses Powell of refusing to lower interest rates quickly enough.
Cook plays key role in setting US rates
Cook serves as one of seven members on the Fed’s Board of Governors. That role places her on the twelve-member committee that sets US interest rates.
The Fed’s decisions determine how much Americans pay for borrowing and how much they earn from savings. Central banks worldwide also follow US rates when adjusting their own monetary policy.
At the last meeting in late July, Cook joined Powell and the majority in voting to hold rates steady. She was appointed in 2022 by Trump’s predecessor Joe Biden. Cook is the first African American woman ever to serve on the board.
Legal showdown expected
Trump’s announcement is likely to trigger a court battle. Analysts say the White House will have to prove a valid legal basis for dismissal.
The clash involving Trump, Cook, and Powell highlights concerns about the independence of the Federal Reserve. Many economists argue central banks must operate without political interference to protect the public interest.
Cook issued a statement saying Trump attempted to fire her “for cause” even though no legal cause existed. She declared: “I will not resign. I will continue my duties to support the American economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, vowed to take all necessary legal steps against what he called Trump’s unlawful action. The Fed has not commented on the matter.
Mortgage documents under scrutiny
Trump revealed his decision late Monday on his social media platform Truth Social. He accused Cook of signing a Michigan document declaring a property her primary residence, then signing another in Georgia two weeks later making the same claim.
“It is inconceivable that you did not know of your first commitment when you signed the second,” Trump wrote.
Markets react cautiously
European stocks opened slightly lower on Tuesday following the announcement. Yields on US government bonds also climbed.
The dollar briefly weakened against other major currencies but soon recovered. Julia Lee of FTSE Russell said: “The key question is whether Trump succeeds in removing Cook. That could reshape the Fed’s balance and change how investors see the US market.”
Allegations surfaced last week
Trump had already urged Cook to resign the week before. His demand followed a public letter from housing finance regulator Bill Pulte, a Trump ally, who accused her of mortgage fraud. He urged Attorney General Pam Bondi to open an investigation. It remains unclear whether such an inquiry has begun.
Cook said in a media interview last week that she only learned of the allegations through press reports. They stemmed from a mortgage application she submitted four years ago, before joining the Federal Reserve.
“I will not be forced out by social media pressure,” she insisted. She said she was collecting all relevant information to respond to legitimate questions and present the facts.
