President Donald Trump moved to fire Federal Reserve Governor Lisa Cook on Monday evening, August 25, marking the first time in the central bank’s 112-year history that a president has attempted to remove a sitting Fed governor. Cook, the first Black woman to serve on the Federal Reserve Board of Governors, immediately rejected the action and vowed to fight the dismissal in court.
Trump posted a termination letter on Truth Social citing allegations from Federal Housing Finance Agency Director Bill Pulte that Cook made false statements on mortgage applications. The president claimed there was sufficient reason to believe Cook had made false statements on one or more mortgage agreements, specifically alleging she signed documents for properties in Michigan and Georgia within two weeks of each other, both claiming them as primary residences.
Cook responded within hours, stating that Trump purported to fire her for cause when no cause exists under the law and he has no authority to do so. Cook declared, “I will not resign” and indicated she would continue carrying out her duties to help the American economy as she has since 2022. She hired high-profile attorney Abbe Lowell to represent her in the matter.
Lowell announced on Tuesday that Cook would file a lawsuit challenging her termination, describing Trump’s action as lacking any proper process, basis, or legal authority. The attorney characterized the move as another example of Trump attempting to fire by tweet and using bullying tactics without legal foundation.
The Federal Reserve issued a pointed statement on Tuesday emphasizing that Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only for cause. The central bank noted that long tenures and removal protections serve as vital safeguards, ensuring monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people.
The allegations against Cook originated from Pulte, who sent criminal referrals to the Justice Department last week. Pulte has been conducting an aggressive campaign against Federal Reserve leadership, particularly targeting Chair Jerome Powell over interest rate policies. The housing finance agency director has also made similar mortgage fraud allegations against other Democrats, including California Senator Adam Schiff and New York Attorney General Letitia James.
Cook was appointed by former President Joe Biden in 2022 and her term was set to expire in 2038. She has not been charged with any crime and told the BBC last week that she learned of the allegations from media reports, noting the matter stemmed from a mortgage loan application made four years ago, before she joined the central bank. Cook indicated she was gathering accurate information to answer legitimate questions and provide facts.
Trump’s attempt to remove Cook comes amid his broader pressure campaign against the Federal Reserve over interest rates. The president has repeatedly criticized Powell and the Fed’s monetary policy decisions, making an unusual in-person visit to the central bank last month. If Trump successfully replaces Cook, his appointees would comprise a majority of the Fed’s seven-member board, granting him significant influence over the agency responsible for setting interest rates.
Democratic lawmakers condemned Trump’s action as unconstitutional and politically motivated. Senate Democratic Leader Chuck Schumer described it as a brazen power grab that shreds Fed independence and puts Americans’ savings and mortgages at risk. House Democratic Leader Hakeem Jeffries called it a baseless attack on Cook, emphasizing her historic role as the first Black woman on the Fed board.
Senator Elizabeth Warren, ranking member on the Senate Banking Committee, characterized the move as an illegal attempt reflecting a desperate president searching for a scapegoat to cover for his failure to lower costs for Americans. She described it as an authoritarian power grab that blatantly violates the Federal Reserve Act.
Financial experts expressed concern about the implications for Fed independence. Edward Mills of Raymond James described the move as marking an unprecedented moment for central bank independence, signaling the White House’s escalating campaign to exert direct influence over monetary policy decisions. He predicted markets would view this attack on Fed independence negatively, amplifying uncertainty over future policy direction.
The controversy raises significant questions about presidential authority over the Federal Reserve. While federal law allows the president to remove Fed board members for cause, no precedent exists for such action in the central bank’s history. The Supreme Court may ultimately need to rule on whether Trump’s firing is legal, with the case potentially setting important precedents for Fed independence and presidential power.
On Tuesday, Trump indicated he had several good people in mind to replace Cook and suggested he might have someone he likes for the position. The president reiterated his position that officials need to be completely above board, claiming Cook did not meet that standard.
