President Donald Trump on Monday fired Federal Reserve Governor Lisa Cook, an unprecedented and significant escalation of his attacks on the U.S. central bank’s independence over its refusal to cut interest rates quickly.
Trump, in a termination letter to Cook posted on Truth Social, cited allegations that she had made false statements on applications for home mortgages.
“In light of your deceitful and potentially criminal conduct in a financial matter, [the American people] cannot and I do not have such confidence in your integrity,” Trump wrote to Cook, who is the first Black woman to serve as a governor of the Federal Reserve
“At a minimum, the conduct that issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”
Trump’s removal of Cook could be challenged in federal courts and eventually at the Supreme Court.
Congress curbed the president’s authority to unilaterally fire a Fed governor in the Federal Reserve Act of 1913, which states that the president can only do so “for cause.”
While the law does not elaborate on what constitutes “cause,” it has historically been understood to mean malfeasance or dereliction of duty.
A spokesman for the Federal Reserve had no immediate comment on Trump’s letter.
Cook, in a statement last Wednesday, said, “I learned from the media that [Federal Housing Finance Agency] Director William Pulte posted on social media that he was making a criminal referral based on a mortgage application from four years ago, before I joined the Federal Reserve.”
“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,” Cook said.
Sen. Elizabeth Warren, D-Mass., in a statement on Monday night, said, “The illegal attempt to fire Lisa Cook is the latest example of a desperate President searching for a scapegoat to cover for his own failure to lower costs for Americans.”
“It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court,” said Warren, who is the ranking member of the Senate Banking, Housing, and Urban Affairs Committee.
Cook’s termination comes after months of complaints by Trump about the Federal Reserve and its chairman, Jerome Powell, for not cutting interest rates as the president has demanded they do.
Trump, on June 15, asked a group of Republican members of Congress if he should fire Powell, and they agreed he should, according to a senior White House official. Trump said he would follow through on that.
But a day later, Trump publicly denied that he would fire Powell even as he left the door open for it to happen at some point.
“We’re not planning on doing it,” he said at the time.
“I don’t rule out anything he said. “But I think it’s highly unlikely, unless he has to leave for fraud.”
If Trump is ultimately successful in removing Cook, he will be able to nominate her replacement and reshape the Fed’s governing board for the next several years. Fed governors typically serve 14-year terms.
Two of the seven current Fed governors, Christopher Waller and Michelle Bowman, are Trump appointees. Trump nominated Powell to be the Chair of the Federal Reserve in 2017.
As of Monday afternoon, there were six members on the Board of Directors, including Cook, with one seat vacant after the resignation of Adriana Kugler earlier this month.
Trump has nominated Stephen Miran, chair of the Council of Economic Advisors, to fill Kugler’s seat.
If Miran is confirmed by the Senate and if Trump succeeds in removing Cook and getting her replacement confirmed, it would give Trump a 4-to-3 majority of appointees on the board.
The board, along with five regional presidents who are seated on a rotating basis, makes up the Federal Open Market Committee, which sets the central bank’s key interest rate.
However, the board alone controls several other rates, including the interest paid on reserves that banks keep at the Fed.
The Trump administration claims that Cook, who was nominated by former President Joe Biden in 2022, committed mortgage fraud by allegedly naming two different properties as her primary residence at the same time.
FHFA Director Pulte, an outspoken critic of Powell, publicly accused Cook of mortgage fraud last week and sent a criminal referral to the Justice Department.
Trump, after citing that referral in his letter Monday night, wrote, “There is sufficient reason to believe you have made false statements on one or more mortgage agreements.”
“For example, as detailed in the Criminal Referral, you signed one document attesting that a property in Michigan would be your primary residence for the next year,” Trump wrote.
“Two weeks later, you signed another document for a property in Georgia stating that it would be your primary residence for the next year,” he continued.
Trump claimed that it is “inconceivable” that Cook was “not aware of [her] first commitment when making the second.”
After Pulte’s claims started to circulate last week, Trump quickly called for Cook’s resignation, writing in a social media post that “Cook must resign, now!!!”
Trump, within days, then said he would fire Cook if she did not resign.
“What she did was bad,” Trump told reporters.
Pulte on Monday evening applauded Trump’s move and thanked his “commitment to stopping mortgage fraud and following the law” in a post on X.