US President Donald Trump has announced plans to dismiss Federal Reserve governor Lisa Cook without delay. The move represents an unprecedented escalation in his clash with the central bank.
Trump alleged there was “sufficient reason” to accuse Cook of making false statements on mortgage documents. He cited constitutional authority that he claimed grants him the power to act. Cook strongly rejected the attempt, saying the president had no legal authority to fire her. She declared she would not step down.
No president has ever tried to remove a Federal Reserve governor. Trump’s move follows months of criticism against the bank and its chair Jerome Powell. He has accused Powell of refusing to cut interest rates quickly enough.
Cook’s influence in the Fed
Cook is one of seven governors and sits on the twelve-member committee that sets US interest rates.
The Fed’s policies determine how much Americans pay on loans and what banks offer for savings. Central banks abroad also track US decisions closely when setting their own strategies.
At the July meeting, Cook voted with Powell and most of the board to keep interest rates steady. President Joe Biden appointed her in 2022, making her the first African American woman in the role.
Legal confrontation likely
Trump’s announcement is expected to face legal challenges. Analysts say the White House must prove in court that grounds exist for Cook’s removal.
The dispute between Trump, Cook, and Powell deepens concerns about the independence of the Federal Reserve. Economists argue that central banks must remain free from political interference to serve the public good.
Cook said Trump had attempted to remove her “for cause,” though no legal justification exists. She stated: “I will not resign. I will continue to carry out my responsibilities to support the US economy, as I have since 2022.”
Her lawyer, Abbe David Lowell, vowed to oppose Trump’s move through all legal means. The Federal Reserve has not yet commented.
Mortgage claims at the center
Trump announced his decision on Monday night via Truth Social. He accused Cook of listing a Michigan property as her primary residence, then declaring the same for a Georgia home two weeks later.
“It is inconceivable that you were unaware of your first commitment when making the second,” Trump wrote.
Markets respond with caution
European markets opened lower on Tuesday following the announcement. Yields on US government bonds climbed.
The dollar fell briefly against other major currencies before rebounding. Julia Lee of FTSE Russell remarked: “The key question is whether Trump succeeds in replacing Cook. That could reshape the Fed’s composition and shift investor confidence in the US.”
Allegations rooted in Trump ally’s letter
Trump had already demanded Cook’s resignation the previous week. His call came after housing finance regulator Bill Pulte, a Trump ally, accused her of mortgage fraud. He urged Attorney General Pam Bondi to investigate. It is unclear whether proceedings have started.
Cook said in a media interview that she first learned of the allegations through press reports. They relate to a mortgage application she filed four years before joining the Federal Reserve.
“I will not be forced out by claims spread online,” she insisted. She added she was compiling documents to answer legitimate questions and provide the facts.
