US President Donald Trump on Monday night said that he is firing US Federal Reserve Governor Lisa Cook, an unprecedented move that would constitute a sharp escalation in his battle to exert greater control over what has long been considered an institution independent from day-to-day politics.
Trump said in a letter posted on his Truth Social platform that he is removing Cook effective immediately, because of allegations that she committed mortgage fraud.
Cook said on Monday night that she would not step down.
Photo: Reuters
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in an e-mailed statement. “I will not resign.”
Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week. Pulte alleged that Cook had claimed two primary residences — in Ann Arbor, Michigan, and Atlanta, Georgia — in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
Trump’s move is likely to touch off an extensive legal battle that would probably go to the Supreme Court and could disrupt financial markets. Stock futures fell slightly late on Monday, as did the US dollar against other major currencies.
If Trump succeeds in removing Cook from the board, it could erode the Fed’s political independence, which is considered critical to its ability to fight inflation, because it enables it to take unpopular steps, such as raising interest rates. If bond investors start to lose faith that the Fed would be able to control inflation, they would demand higher rates to own bonds, pushing up borrowing costs for mortgages, car loans and business loans.
Cook has retained Abbe Lowell, a prominent Washington attorney. Lowell said Trump’s “reflex to bully is flawed and his demands lack any proper process, basis or legal authority,” adding: “We will take whatever actions are needed to prevent his attempted illegal action.”
Cook was appointed to the Fed’s board in 2022 by then-US president Joe Biden and is the first black woman to serve as a governor. She received degrees from the University of Oxford and Spelman College, and has taught at Michigan State University and Harvard University.
Her nomination was opposed by most Senate Republicans, and she was approved on a 50-50 vote with the tie broken by then-US vice president Kamala Harris.
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