President Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook has triggered a clash over the central bank’s independence.
On Monday, Trump declared that Cook’s dismissal was “effective immediately,” citing allegations that she misrepresented mortgage applications years before joining the Fed.
The claims, promoted by Bill Pulte, the head of the Federal Housing Finance Agency and a close Trump ally, have not resulted in charges or any finding of wrongdoing.
Cook, the first Black woman to serve on the Fed’s Board of Governors, is refusing to step aside.
“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. “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
On Tuesday, Cook released a new statement, saying Trump was not allowed to remove her.
“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.
She has retained prominent defense attorney Abbe Lowell and vowed to keep carrying out her duties, with her current term lasting until 2038.
Trump says he is allowed to remove Fed governors “for cause,” but past precedent has protected the Fed from direct political interference. No president has ever attempted to oust a sitting Fed governor. Lowell said on Tuesday morning that Cook would sue the president.
Trump has long pressured Fed Chair Jerome Powell to slash interest rates, deriding him as “Too Late” for not cutting aggressively. Removing Cook — and filling a recent vacancy left by Adriana Kugler’s resignation — could give Trump-aligned governors a majority at a time when the Fed is weighing its next move on interest rates.
“The president has made no secret of the fact that this has nothing to do with Lisa Cook’s mortgage applications,” Peter Conti-Brown, a Federal Reserve historian at the University of Pennsylvania, told The Washington Post. “This is the escalation of a prolonged and ongoing assault on the Fed’s legitimacy and the Fed’s independence. It’s for one purpose and one purpose alone: to bully the Fed to dramatically lower interest rates.”
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Financial analysts warn that even the perception of political meddling could rattle markets. A messy legal battle over Cook’s position may push long-term borrowing costs higher, undermining the very growth Trump seeks to promote.
Reaction to the move has been swift. Sen. Elizabeth Warren, D-Mass., denounced it as “an authoritarian power grab that blatantly violates the Federal Reserve Act.”
“Dr. Lisa Cook is the first Black woman to serve on the Federal Reserve Board of Governors. Donald Trump is trying to remove her without a shred of credible evidence that she has done anything wrong,” said House Minority Leader Hakeem Jeffries, D-N.Y, in a statement. “To the extent that anyone is unfit to serve in a position of responsibility because of deceitful and potentially criminal conduct, it is the current occupant of the White House.”
On MSNBC, former White House ethics lawyer Norm Eisen tore up a copy of Trump’s termination letter on air.
“Donald Trump doesn’t care about the Constitution. He doesn’t care that Congress said that you can only fire somebody for cause. He doesn’t care that he doesn’t have cause here. This is based on a tweet by one of his sharpest partisans,” Eisen said.
“Do you know what Lisa Cook should do? What Nancy Pelosi did. She should tear that letter,” he added, handing the document to the show’s host, Michael Steele. “It’s worthless.”
