President Donald Trump has moved to fire Lisa Cook from the Central Bank’s Board of Governors in what critics say is just his latest attack on the independence of the Fed, which has not capitulated to Trump’s demands to lower interest rates.
[time-brightcove not-tgx=”true”]
In a letter addressed to Cook that was posted to Truth Social late on Monday, Trump said he was removing Cook, who was nominated by former President Joe Biden, “effective immediately” with “sufficient cause” based on allegations that Cook lied on loan applications for two properties.
“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,” Trump wrote. “In light of your deceitful and possibly criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
Trump has publicly pushed for Cook to resign since the allegations were made earlier this month, while Cook has maintained that the President has no authority to fire her and is challenging the removal order.
Trump has railed against Fed Chair Jerome Powell and publicly mused about firing him, which he is not allowed to do without cause. He has also celebrated the early resignation of Democratic Fed Governor Adriana Kugler, which gave him the opportunity to install a fourth Republican on the seven-member Board. If Trump successfully terminates Cook, he’ll have a chance to install a fifth.
Critics have already worried that the President’s assault on the Fed has undermined the Central Bank’s credibility, especially as Trump has said that he won’t appoint a Fed Chair that would not cut rates.
Read More: Who Does Trump Want to Be the Next Fed Chair?
Here’s what to know.
Who is Lisa Cook?
Cook became the first Black woman to serve on the Fed Board in 2022, with a term set to expire in 2024. Biden in 2023 reappointed her to a new 14-year term that is set to expire in January 2038.
Cook, who holds a doctoral degree in economics from the University of California, Berkeley, previously served on former President Barack Obama’s Council of Economic Advisers and worked at the Treasury Department. She has also been a fellow at Stanford University’s Hoover Institution, advised the Nigerian and Rwandan governments, and taught economics and international relations at Michigan State University.
Cook was scrutinized heavily by Republican lawmakers during her first confirmation process. Some accused her of lying on her resume, which she denied. Sens. Pat Toomey and Bill Hagerty, both Republicans, also argued that her academic background was overly focused on racial policies. Her research has shown that lynchings depressed the rate of patent applications by Black Americans, which could have otherwise contributed to innovation and economic growth. She also wrote about the challenges that Black women entering economics face in a 2019 New York Times op-ed titled, “It Was a Mistake for Me to Choose This Field.”
Cook was confirmed after former Vice President Kamala Harris broke a 50-50 party-line vote.
Cook backed the rate-setting Federal Open Market Committee’s decision to hold interest rates steady for five consecutive times this year, but she recently warned that the latest weaker-than-expected jobs report was “concerning.” Powell has also indicated that rates could be cut in September in light of the report.
Why has Trump fired Cook?
Trump said in his letter to Cook that he has “sufficient reason to believe you may have made false statements on one or more mortgage agreements.”
It stems from allegations made by Federal Housing Finance Agency Director Bill Pulte that Cook committed mortgage fraud.
Pulte claimed in an Aug. 20 post on X that Cook had claimed two properties—one in Michigan and one in Georgia—both as her primary residence on loan applications. Pulte called on the Department of Justice to investigate Cook and said Trump had “cause to fire” her. He also wrote a letter to Attorney General Pam Bondi and Justice Department official Ed Martin on Aug. 15 alleging that Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.”
Pulte told Bloomberg that his allegations are not political and not a “witch hunt.” Nevertheless, the move has endeared Pulte to the Trump Administration and its base amid Trump’s campaign against the Fed and scrutiny of high-profile Democrats, including similar mortgage fraud claims against New York Attorney General Letitia James and California Sen. Adam Schiff.
“I hear Jay Powell is scrambling this morning,” Pulte posted on X on Aug. 20. “He can scramble all he wants, but he might as well be scrambling eggs, because the party at the Fed is OVER!”
Trump jumped on the allegations, posting on Truth Social on Aug. 20, “Cook must resign, now!!!”
“At minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your experience and trustworthiness as a financial regulator,” Trump wrote in the Aug. 25 letter.
Pulte thanked Trump for his “commitment to stopping mortgage fraud” Monday in a post on X, adding: “If you commit mortgage fraud in America, we will come after you, no matter who you are.” He added in another post, “Mortgage fraud can carry up to 30 years in prison.”
No charges have been filed against Cook. The Justice Department last week signalled a possible probe of Cook.
How has Cook responded?
Cook, who has resisted calls to resign, plans to challenge the removal order, her attorney Abbe Lowell said on Monday.
“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 to media outlets on Monday. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Trump’s “reflex to bully,” Lowell said, “is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.”
The Supreme Court earlier this year indicated that it would protect Fed officials from Trump’s broader mass firings across independent federal agencies. The May 22 ruling allowed for Trump to fire members of two independent U.S. labor boards but clarified that the implications of their decision did not extend to the Federal Reserve, which is “a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”
Cook, who said she learnt of the claims against her through the media, told news outlets last week that she had “no intention of being bullied to step down from my position because of some questions raised in a tweet.”
She said she would “take any questions about my financial history seriously as a member of the Federal Reserve” and that she was “gathering the accurate information to answer any legitimate questions and provide the facts.”
How are people reacting?
Critics have raised concerns that the allegations are politically motivated and part of the Trump Administration’s broader attacks on the Central Bank.
“Trump is desperately looking for a scapegoat to cover for his own failure to lower costs for Americans and firing Lisa Cook is his latest move,” Sen. Elizabeth Warren (D, Mass.) posted on X. “It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and any court that follows the law will overturn it.”
Former Treasury Secretary Larry Summers, also a Democrat, said that if such “pressure tactics” become “the new norm in American politics … that is a very profound threat.”
“This is a kill shot at Fed independence,” Aaron Klein, a senior fellow at the Brookings Institution, told Bloomberg. “Trump is saying the Fed is going to do what he wants it to do, by hook or by crook.”
