President Donald Trump walks on the South Lawn of the White House (Aaron Schwartz/CNP/Bloomberg via Getty Images).
President Donald Trump said he was firing Federal Reserve Governor Lisa Cook over mortgage fraud allegations on Monday evening, in what amounted to a staggering escalation of his withering attacks against the central bank.
It was unclear whether Trump had the legal authority to pull off the move, which could trigger a court battle and send tremors through financial markets. Trump had threatened to take the drastic step against Cook on Friday following allegations she may have falsified records to obtain a cheaper mortgage.
"The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks," read a letter posted on social media by Trump, which said he had lost confidence in Cook. He argued her conduct constituted "gross negligence" that fit into his authority to remove her from the Board of Governors.
Trump wrote that Cook was hereby “removed from your position ... effective immediately."
Spokespeople for the White House and the Federal Reserve did not immediately respond to requests for comment.
The U.S. dollar fell 0.2% against major peer currencies following Monday evening's development.
In statements released on Monday evening, Cook said "no cause" exists within the law for her ouster.
"I will not resign," Cook said. "I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
"We will take whatever actions are needed to prevent his attempted illegal action," said Abbe Lowell, Cook's attorney, in another statement.
Trump has waged a relentless campaign against the Federal Reserve and its chair Jerome Powell through the summer. He has consistently demanded the central bank lower interest rates by several percentage points to fortify U.S. economic growth. Fed officials led by Powell, though, have waited to determine whether Trump's tariffs will cause either a brief or sustained hike in prices before adjusting interest rates in either direction.
Other administration officials have joined Trump in stepping up their criticism of the Fed, to the unease of some GOP senators. Last week, Federal Housing Finance Agency Director Bill Pulte disclosed mortgage documents on social media that his agency obtained on Cook. He alleged she had sought cheaper loans with misleading information on applications in 2021.
That formed the basis of a criminal referral that the FHFA sent to the Justice Department, which has reportedly taken steps to open an investigation into Cook. Trump quickly demanded her resignation over social media.
Cook has spoken only once about the matter and indicated last week that she wouldn’t step aside. She was appointed to the Fed Board of Governors by then-President Joe Biden and confirmed in a party-line Senate vote in early 2022.
“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said in a statement, adding she would "take any questions about my financial history seriously" and "answer any legitimate questions."
Cook's options include waging a legal battle to keep her job if she chose. The president can only fire Fed officials "for cause," which is interpreted to mean severe wrongdoing. A Supreme Court decision earlier this year fortified the Fed's legal protection from Trump's en-masse federal firings since it is a "uniquely structured, quasi-private entity."
Trump recently had an opportunity to imprint his stamp on the central bank after the early resignation of former Fed Governor Adriana Kugler. That allowed him to name White House aide Stephen Miran to the slot — at least for now, since he must still be confirmed by Senate. Another opening in the Board of Governors would pave the way for the president to install a second pick who's inclined to slash the cost of borrowing.
