President Donald Trump fired Federal Reserve Gov. Lisa Cook from her post in a Monday night social media post, the first time a Federal Reserve Governor has ever been removed by a president.
In a move that is all but certain to ignite an unprecedented legal fight over the Fed's independence, Trump posted a letter around 8 p.m. EST addressed to Cook stating: "... you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately."
The letter adds that under the Federal Reserve Act, board governors may be removed "for cause" and that "I have determined that there is sufficient cause to remove you from your position." Trump goes on to say that last week's criminal referral from Federal Housing Finance Agency Director Bill Pulte, alleging that Cook claimed two homes as primary residences on separate mortgage applications, is the basis for her termination.
"It is inconceivable that you were not aware of your first commitment when making the second," Trump said. "It is impossible that you intended to honor both."
Congressional Democrats quickly decried Trump's move, calling it illegal and an attempt to exert maximum control over the central bank.
Senate Banking Committee ranking member Elizabeth Warren, D-Mass., said in a statement that Trump's move was "the latest example of a desperate President searching for a scapegoat to cover for his own failure to lower costs for Americans."
"It's an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court," Warren's statement continued.
Pulte posted a criminal referral for Cook to the Justice Department last Wednesday, alleging that she had taken out a pair of mortgages for homes in Michigan and Georgia in 2021 while claiming both properties as a primary residence. Cook was
Cook said in a statement following the news of the referral that she had "no intention of being bullied to step down from my position because of some questions raised in a tweet," adding that she would "take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts."
A Federal Reserve spokesperson declined to comment late Monday following the news.
Trump said
In his letter Monday, Trump said that the Federal Reserve has a "tremendous responsibility for setting interest rates and regulating reserve and member banks," and that in light of Cook's "deceitful and potentially criminal conduct in a financial matter, [the American people] cannot and I do not have such confidence in your integrity.
"At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator," Trump continued. "The executive power of the United States is vested in me as President and, as President, I have a solemn duty to ensure that the laws of the United States are faithfully executed. I determined that faithfully executing the law requires your immediate removal from office."
Jaret Seiberg, an analyst with TD Cowen, said in an analyst note Monday night that he expects Cook to challenge her removal in court because it is unclear if improprieties that occurred before she took office, even if proven, would constitute grounds for dismissal. He also said there are likely to be questions about how the FHFA became aware of Cook's alleged improprieties.
"Our expectation is that there also will be a fight over how the paperwork violation was uncovered," Seiberg said in the note. "We believe Cook is likely to argue that FHFA singled out her mortgage paperwork in order to provide the pretext for the President to more quickly take control over the Federal Reserve Board. We believe this could lead to discovery and court proceedings centered on whether FHFA is only focusing on the mortgage paperwork of high-profile Democrats rather than on all borrowers. At a minimum, this will become highly political."
Sen. Mark Warner, D-Va., who sits on the Senate Banking Committee, said the Fed is designed specifically to insulate itself and its members from political whims, and that Trump's "attempt to fire" Cook flies in the face of that tradition.
"This outrageous and unprecedented attempt to fire a member of the independent Federal Reserve on the flimsiest of unproven pretexts is clearly the latest scheme from a president determined to subvert the institutions that have kept our democracy strong and our economy the envy of the world," Warner said.
"From impulsive trade wars and erratic tariffs to deficit-exploding tax cuts and now this attack on Fed independence, Donald Trump has shown time and again that he's more interested in political theater and absolving himself of blame than in helping the American people. The result is higher costs for families, uncertainty for businesses, and diminished confidence in our economic leadership around the world."
Graham Steele, a professor at Stanford and former Treasury Assistant Secretary for Financial Institutions under Biden, said in a statement that Trump's move is "reckless, baseless, and illegal."
"The White House and its allies have concocted a set of as-yet unproven accusations in a brazen effort to seize control of the U.S. central bank, subject it to his political whims, and ignore economic data and the Fed's statutory mandates," Steele said. "The irony is that making the Fed a political football will only backfire by undermining confidence in the safety and stability of the U.S. economy."
Trump has stepped up his efforts to exert greater control over the central bank, particularly with respect to its interest rate-setting powers, since his second inauguration in January. The source of his ire Trump's has long been Fed Chair Jerome Powell, whom he has
Trump and his lieutenants raised the pressure by launching inquiries into cost overruns related to a renovation project at the Fed headquarters, suggesting those overruns could serve as a basis for removing Powell. After a
This is a developing story.
