The president said he had fired Lisa Cook over mortgage fraud allegations, but a bitter legal fight could be looming
President Donald Trump said Monday that he is firing Federal Reserve governor Lisa Cook, citing allegations of mortgage fraud in an unprecedented move that could upend the independence of the US central bank.
In a formal letter dated August 25 and released on Truth Social, Trump wrote that Cook’s alleged conduct amounted to “gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”
He cited a criminal referral submitted by Bill Pulte, director of the Federal Housing Finance Agency (FHFA), to US attorney general Pam Bondi. Pulte alleged that Cook claimed two separate primary residences—one in Ann Arbor, Michigan, and another in Atlanta, Georgia—within weeks of each other in 2021 to secure favorable mortgage rates.
“It is inconceivable that you were not aware of your first commitment when making the second. It is impossible that you intended to honor both,” Trump wrote. “The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. 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.”
Cook refuses to resign
Cook, however, said Trump’s action carries no legal force. “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.”
Her attorney, Abbe Lowell, dismissed Trump’s move as “flawed” and vowed to pursue legal remedies.
Legal fight looms
The Federal Reserve Act permits governors to be removed “for cause,” but legal experts said that provision has rarely been tested.
“This is a procedurally invalid removal under the statute,” Lev Menand, a Columbia law professor, told AP News. “This is not someone convicted of a crime. This is not someone who is not carrying out their duties.”
Sarah Binder of the Brookings Institution said Trump appeared to be using the clause “as a fig leaf” to push for lower interest rates by reshaping the Fed board.
Markets, politics react
Markets reacted cautiously. US stock futures and the dollar edged lower Monday night, while analysts warned of growing risks to the Fed’s credibility. “This doesn’t look good. The Fed doesn’t look like an independent organization anymore,” said Shoki Omori of Mizuho Securities, according to Reuters.
Though presidents have sparred with Fed leaders in the past, no president has attempted to fire a governor. The Supreme Court has recognized stronger protections for the Fed than for some other agencies, but Trump’s effort could test the limits of executive power.
Sen. Elizabeth Warren, D-Mass., called the move “an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court.”
Cook, the first Black woman appointed to the Fed board, was confirmed in 2022 under president Joe Biden. She has pledged to continue serving, saying, “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
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