In a dramatic escalation of tensions between the White House and the Federal Reserve, U.S. President Donald Trump has announced the removal of Federal Reserve governor Lisa Cook, accusing her of making false statements on mortgage documents. Trump said there was “sufficient reason” to justify her dismissal and cited constitutional powers he claims allow him to remove her from the Fed’s board of governors. The move, disclosed late Monday through a letter he posted on his Truth Social platform, marks the first time in modern U.S. history that a sitting president has attempted to directly fire a Federal Reserve governor.
Cook, who has served on the board since 2022 and is the first African American woman in the role, rejected Trump’s authority to dismiss her, vowing to remain in office. “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, insisting she would continue her work. Her lawyer, Abbe David Lowell, condemned the action as “illegal” and promised to challenge it in court if necessary. Legal experts also suggested the move could set up a historic battle between the independence of the central bank and presidential power, with the Federal Reserve notably operating independently of the U.S. government since 1951.
The controversy stems from allegations raised earlier this month that Cook signed conflicting mortgage agreements in Michigan and Georgia, both stating the properties would be her primary residence. Trump has framed this as “mortgage fraud” and called for her resignation, citing a public referral letter from housing finance regulator Bill Pulte, a Trump ally, to Attorney General Pam Bondi. Cook has denied wrongdoing, saying she first learned of the allegations through the media and that the matter involved an old mortgage application from four years before she joined the Fed. “I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said, while affirming she would provide full clarification of her financial history.
Trump’s decision comes as he continues to press the Fed to cut interest rates, frequently lashing out at Fed Chair Jerome Powell, whom he has derided as a “numbskull” and a “stubborn moron” for resisting rapid, deep cuts. Although Powell recently signaled the likelihood of a September rate cut, he also cautioned that inflationary effects from Trump’s tariff policies may be temporary, a stance that has further inflamed the president’s frustration with the central bank. Trump has openly floated the possibility of firing Powell as well, raising fresh concerns about political interference in monetary policy.
The fallout from Trump’s move rattled financial markets on Tuesday, with the U.S. dollar weakening in Asian trading as investors speculated that Cook’s removal could open the door to a more compliant Federal Reserve leadership. With the Fed yet to issue an official response, the episode is shaping up to be a major constitutional and financial standoff, testing the boundaries of presidential authority and the independence of one of the world’s most powerful economic institutions.
