Lisa Cook during a Federal Reserve board meeting in Washington last June. Photo: Getty Images.
Donald Trump has moved to fire Federal Reserve governor Lisa Cook after an allegation of mortgage fraud. The U.S. president told her in a letter that her dismissal was “effective immediately.”
Trump acted after one of his allies claimed Cook listed a second home as her main residence to get a mortgage. Cook has denied any wrongdoing. She said she would not be pressured into resigning and promised to release accurate details of her finances.
Trump posted the letter online, saying he found “sufficient cause” to remove her. Cook’s removal would allow him to pick her replacement, giving him more influence over central bank policy.
Cook’s background and Biden’s appointment
Lisa Cook joined the Fed board in 2022. Joe Biden appointed her, making her the first Black woman to hold the position. Her term was set to last until 2038.
Cook has a long record in economics. She taught at Harvard and Stanford and worked as an adviser in Barack Obama’s White House. Many in the financial world view her as a respected voice.
Despite her record, Cook often resisted Trump’s demands for lower interest rates. Trump has pushed hard for cuts, but Fed leaders have warned of risks to the economy.
Dispute over presidential power
The Supreme Court ruled earlier this year that presidents cannot fire central bank governors without cause. Fed officials serve fixed terms to protect the bank’s independence. Trump’s letter claims the mortgage allegation is cause enough for dismissal.
Bill Pulte, a Trump ally, first raised the claim. He accused Cook of declaring two properties as her primary residence in 2021. Pulte wrote online: “How can this woman be in charge of interest rates if she is allegedly lying to help her own interest rates?” He passed the case to the Justice Department.
Trump quickly demanded her resignation before Cook gave a full response.
Political reaction
Democratic leaders strongly criticized Trump’s action. Senate leader Chuck Schumer accused him of risking economic stability. “Donald Trump is playing a dangerous game of Jenga with a key pillar of our economy,” Schumer said.
Elizabeth Warren called it “an authoritarian power grab.” She argued the move violates the Federal Reserve Act and must be stopped in court.
Other economists warned the dismissal attempt could unsettle markets. Rohit Chopra, a former regulator, accused Trump of trying to turn watchdog agencies into “obedient lapdogs.”
Skanda Amarnath, a former Fed economist, warned of wider fallout. He said Trump’s action could weaken the U.S. dollar and raise costs for families.
Fed policy outlook
Fed chair Jerome Powell said last week the central bank may cut interest rates soon. But he also warned Trump’s policies, including high tariffs and tighter immigration rules, could damage the economy.
For now, Cook remains on the board. The courts may decide whether Trump has the power to remove her.
