President Donald Trump on Monday announced he had fired Federal Reserve Board Governor Lisa Cook, escalating tensions between the White House and the central bank. The firing was announced in a termination letter posted on Truth Social, citing allegations by Federal Housing Finance Agency Director Bill Pulte that Cook made false statements on mortgage applications.
The letter came just days after the Justice Department said it would investigate the claims.
Cook Pushes Back
Cook, the first Black woman to serve as a Fed governor, rejected Trump’s action and vowed not to resign. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said in a statement.
She added that she would continue her work at the Fed and confirmed she had retained prominent lawyer Abbe Lowell. Lowell described the move as “illegal,” saying his client would challenge it in court.
The Federal Reserve noted that its governors serve long, fixed terms and can only be removed by the president “for cause.” The Fed emphasized that these protections safeguard its independence so monetary policy decisions remain grounded in data, not politics.
Market reactions were immediate. The U.S. dollar slipped, Treasury yields dipped, and gold prices rose modestly after Trump’s announcement.
Legal and Political Ramifications
The legality of Trump’s action will likely be tested in court, with the Supreme Court potentially weighing in. If upheld, Trump would secure the opportunity to further shape the Fed, adding to his influence over monetary policy.
Trump has been vocal in his frustrations with the Fed, particularly with Chair Jerome Powell, for not cutting interest rates. Cook’s termination follows months of public and private clashes between the White House and the central bank.
Lisa Cook was appointed by Joe Biden in 2022 and was one of six sitting Fed governors at the time of her firing. Trump has already nominated Stephen Miran to fill another vacant seat, and if successful in confirming both Miran and Cook’s replacement, he would hold a 4–3 majority on the Fed’s governing board.
The dispute underscores the growing political pressure on the Fed, an institution designed to remain independent of short-term political demands.
What The Author Thinks
Trump’s decision to fire a sitting Fed governor is more than a personnel issue — it’s a challenge to the very independence of the central bank. Even if courts ultimately block the move, the message is clear: presidents may attempt to directly influence monetary policy when it does not align with their economic agenda. Such a precedent risks undermining the credibility of the Fed, rattling financial markets, and eroding public confidence in an institution meant to operate above partisan politics.
Featured image credit: Heute
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