US President Donald Trump on Monday ordered the removal of Federal Reserve Governor Lisa Cook “effective immediately,” citing allegations of false statements related to her mortgage agreements. The move marks a sharp escalation in pressure on the traditionally independent central bank.
In a letter addressed to Cook, Trump invoked the Federal Reserve Act as justification for his action, writing: “I have determined that there is sufficient cause to remove you from your position.”
Presidents are generally limited in their ability to remove Federal Reserve officials. A recent US Supreme Court ruling reaffirmed that such officials can only be dismissed “for cause”, a standard typically interpreted as requiring evidence of misconduct or legal violations.
Trump pointed to a criminal referral issued on August 15 by the director of the Federal Housing Finance Agency, a close ally of the president, to the US Attorney General. According to Trump, the referral provides “sufficient reason” to believe that Cook may have made false statements on one or more mortgage documents.
Earlier this month, Cook rejected calls to resign. In a statement, she said she had “no intention of being bullied to step down,” while emphasizing that she was taking the allegations regarding her financial disclosures seriously.
The Federal Reserve declined to immediately comment on the announcement.
Legal battle expected
Trump’s attempt to remove Cook, the first Black woman to serve on the Fed’s Board of Governors, is widely expected to trigger a legal challenge.
Cook may be permitted to remain in her post while the matter is litigated.
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, condemned the president’s decision, calling it “an authoritarian power grab that blatantly violates the Federal Reserve Act.” In a statement, she added: “This must be overturned in court.”
The president’s latest move comes amid heightened tensions between the White House and the Federal Reserve. Trump has repeatedly criticized Fed Chair Jerome Powell for not lowering interest rates more aggressively, despite what he views as favorable inflation data.
Fed officials, however, have been cautious in adjusting rates, citing ongoing economic uncertainty, including the effects of Trump’s own trade tariffs on consumer prices.
Trump has not hidden his disdain for Powell, publicly calling him a “moron” and “numbskull.” He also once suggested that an allegedly costly renovation of the Fed’s Washington headquarters could be grounds for Powell’s removal, a threat he later dropped.
The targeting of Cook, who also serves on the Fed’s key rate-setting committee, comes after a series of policy decisions by the central bank to hold interest rates steady. Since its last rate cut in December, the Fed has maintained the benchmark rate in the range of 4.25 to 4.50 percent.
Last Friday, Powell signaled the possibility of a rate cut at the Fed’s next policy meeting in September.
Cook was first appointed to the Federal Reserve Board in May 2022 and was reappointed in September 2023 for a term ending in 2038. She previously served on President Barack Obama’s Council of Economic Advisers and has long been a respected voice in academic and policy circles.
Trump’s administration has increasingly pursued investigations into alleged financial misconduct involving prominent Democrats, including those viewed as political rivals.
The coming legal fight over Cook’s removal could test the limits of executive authority over the Federal Reserve, and raise broader questions about the central bank’s independence at a time of mounting political pressure.
AFP
