In a dramatic escalation of tensions between the White House and the Federal Reserve, President Donald Trump announced late Monday that he was firing Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. The unprecedented move threatens to upend decades of central bank independence and has already sparked a fierce legal and political clash.
Trump posted a letter on his Truth Social platform declaring that Cook was “removed effective immediately.” He justified the action by pointing to claims made by his ally, Federal Housing Finance Agency director Bill Pulte, who alleges that Cook listed two primary residences in 2021 to obtain more favorable loan terms — an accusation that has not been independently investigated or proven.
Donald Trump Posts Lisa Cook Termination Letter on Truth Social
Cook, who was appointed to the Fed by President Joe Biden in 2022, swiftly pushed back against Trump’s order. In a statement released through her attorney, Abbe Lowell, she rejected the president’s authority to dismiss her, saying “no cause exists under the law, and he has no authority” to remove her from the role.
What’s Really Happening?
Critics of Trump say the fight over the firing isn’t about mortgages at all — it’s about interest rates. Trump has openly stated that he wants Fed members who will cut borrowing costs, even if inflation remains high. Removing Cook would let him name a new ally and shift the balance of the board. He already picked Stephen Miran to take over for Fed Governor Adriana Kugler, who quit five months early. If Cook is pushed out, Trump’s choices would control the Fed with a 4–3 edge.
It seems like a fig leaf to get what he wants, which is muscling someone on the board to lower rates,” said Sarah Binder, a senior fellow at the Brookings Institution.
In his letter to Cook, Trump said, “The American people must have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.” He added, “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.”
He claimed firing her was constitutional: “I have determined that faithfully enacting the law requires your immediate removal from office.”
However, experts warn that this move could shake investor confidence in the Fed and drive up borrowing costs across the economy — the exact opposite of what Trump claims to want.
Markets dipped after the announcement. Stock futures slipped slightly, and the dollar weakened
The law says Fed governors can be fired “for cause,” but that means typically a real process — a review, proof, and a chance to defend yourself. None of that took place here. Now Cook will likely have to take Trump to court, a fight that could end up in the Supreme Court. Legal experts say the case will test how far a president’s power can go. Senator Elizabeth Warren called Trump’s action an illegal power grab.
“It is an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court,” Senator Elizabeth Warren said.
Economists and policy experts also voiced alarm, warning that Trump’s attempt to remove Cook could have real consequences for Americans’ wallets. Rohit Chopra, the former director of the Consumer Financial Protection Bureau, accused the White House of trying to “turn independent financial regulators into obedient lapdogs that do as they are told.”
Skanda Amarnath, executive director of Employ America and a former economist at the Federal Reserve, warned that undermining the central bank’s independence carries significant economic risks. “The dollar continues to weaken as American governance erodes,” he said. “That means higher prices for all commodities. Chair Powell must ensure that Lisa Cook is not removed as a result of these arbitrary and capricious actions from the president.”
