In a stunning political clash, Federal Reserve Governor Lisa Cook is refusing to back down after Donald Trump declared he was firing her — a move that could shatter decades of central bank independence.
Late Monday, Trump posted a letter on his Truth Social platform saying Cook was “removed effective immediately” due to alleged mortgage fraud. The accusation came from Trump ally Bill Pulte, who claims Cook listed two primary residences in 2021 to get better loan terms — an accusation that hasn’t been investigated or proven.
Cook didn’t flinch.
“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 in a statement. “I will not resign.”
Trump’s attempt to remove a sitting Fed governor is unprecedented — and almost certainly illegal, according to legal scholars. Governors are appointed to 14-year terms and can only be fired “for cause,” such as misconduct or failure to perform official duties. Personal financial claims — especially from before the appointment — don’t meet that bar.
“This is a procedurally invalid removal under the statute,” said Columbia law professor Lev Menand. “This is not someone convicted of a crime. This is not someone who is not carrying out their duties.”
Cook, who was appointed by President Joe Biden in 2022, is the first Black woman to serve on the Fed’s Board of Governors. She’s now fighting back with a legal team led by high-powered attorney Abbe Lowell.
“His reflex to bully is flawed and his demands lack any proper process, basis or legal authority,” Lowell said of Trump. “We will take whatever actions are needed to prevent his attempted illegal action.”
What’s Really Going On
Trump’s critics say the firing attempt has nothing to do with mortgages — and everything to do with interest rates.
Trump has openly said he wants to stack the Fed with loyalists who will lower borrowing costs, even if inflation is still a threat. Firing Cook would give him the chance to appoint a replacement and tip the board in his favor.
He recently nominated Stephen Miran to replace Fed Governor Adriana Kugler, who resigned five months before her term officially ended. If Cook is forced out, Trump-appointed governors would hold a 4-3 majority.
“It seems like a fig leaf to get what he wants, which is muscling someone on the board to lower rates,” said Sarah Binder, a senior fellow at the Brookings Institution.
In his letter to Cook, Trump said, “The American people must have the full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.” He added, “In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
He claimed firing her was constitutional: “I have determined that faithfully enacting the law requires your immediate removal from office.”
But experts warn this move could shake investor confidence in the Fed and drive up borrowing costs across the economy — the exact opposite of what Trump says he wants.
Markets dipped after the announcement. Stock futures slipped slightly, and the dollar weakened.
The law allows “for cause” firings, but that usually requires a formal process — a review, a chance for the accused to respond, and actual evidence. None of that happened here.
Cook will now have to fight Trump in court, likely taking the battle all the way to the Supreme Court. Legal analysts say the case will test the limits of presidential power.
“We’re in uncharted waters,” Menand said.
Senator Elizabeth Warren slammed Trump’s move as an illegal power grab.
“It’s the latest example of a desperate President searching for a scapegoat to cover for his own failure to lower costs for Americans,” she said. “It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court.”
The Federal Reserve was designed to be insulated from day-to-day politics so it can make tough calls — like raising interest rates to fight inflation — without worrying about re-election cycles.
Past presidents have pressured the Fed behind closed doors. Trump is taking it public and going further by trying to remove a sitting governor — something no president has ever done.
