Cook's dismissal sets stage for legal battle
President Donald Trump’s effort to expand his influence over the Federal Reserve escalated Monday when he announced the dismissal of Governor Lisa Cook, citing allegations of mortgage fraud. The president pointed to a “criminal referral” from Federal Housing Finance Agency Director William Pulte alleging discrepancies in Cook’s mortgage documents.
Cook rejected the claims and pledged to fight the move in court. “No cause exists under the law” and Trump “has no authority to” remove her, she said in a statement. A Federal Reserve spokesperson emphasized that governors may be removed only “for cause,” protections established in the Federal Reserve Act to shield monetary policy from political interference, NBC News reported.
No Federal Reserve member has ever been removed for cause, making Trump’s action unprecedented.
Trump defends removal, signals broader push
At a Cabinet meeting Tuesday, Trump defended his decision. “Oh sure, always,” he said when asked if he stood by the move. “She seems to have had an infraction, and she can’t have an infraction—especially that infraction, because she’s in charge of, if you think about it, mortgages.”
Earlier that day, Cook’s lawyer vowed to file a lawsuit to block the dismissal. Trump repeated his concerns that Cook claimed two homes as her primary residence and said he already had “very good people” under consideration to replace her.
“We’ll have a majority, very shortly so that’ll be great once we have a majority, and housing is going to swing and it’s going to be great,” Trump said. He also floated shifting Council of Economic Advisers chair Stephen Miran, already nominated to a short-term Fed seat, to Cook’s long-term seat running until 2038. “We’ll see what happens,” he told reporters.
Nomination fight over Stephen Miran
Miran’s nomination to the seat vacated by Adriana Kugler is set for a Senate Banking Committee hearing next week. As Politico reported, Cook’s firing has complicated the process, with one GOP aide calling the hearing “a political stand and a referendum on Trump.” Democrats are expected to press Republicans on their commitment to Fed independence.
Republicans need full unity on the committee to move Miran forward, but some lawmakers have previously signaled caution about encroaching on the central bank.
Economic and market concerns
Trump’s latest actions continue his broader push against the Fed. For months, he has demanded interest rate cuts and criticized Fed chair Jerome Powell, calling him “too late” and a “numbskull,” a BBC report noted.
Economists warned of broader risks if political control expands. The Economic Policy Institute said “presidential capture of the Fed” would mean interest rates are based not on data but on “the whims of the president.” Elizabeth Wilkins, a former senior official at the Federal Trade Commission, said weakening the Fed “will make markets less stable and fuel inflationary pressures.”
NBC reported that markets have so far remained steady, though yields on 30-year Treasury notes briefly climbed to about 4.9%, signaling investor concern over inflation. Betting markets Kalshi and Polymarket show skepticism that Trump will succeed in removing Cook, BBC noted.
The outcome of Cook’s legal challenge and Miran’s Senate confirmation will determine how far Trump can go in reshaping the Fed—an institution designed to operate independently since its creation in 1913.
What are your thoughts on Trump’s move to oust Cook? Share your insights in the comments below.
