Trump Announces Firing of Fed Governor Lisa Cook Over Mortgage Fraud Allegations

President Donald Trump announced Monday night that he is firing Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. The move, if upheld, would mark an unprecedented attempt by a president to remove a Fed governor, signaling a broader effort to exert greater political control over the traditionally independent central bank [1].

In a letter shared on his Truth Social platform, Trump claimed Cook’s actions undermined public trust and asserted his constitutional authority to remove her from office [1]. Cook, however, has vowed not to resign. In a statement, she rejected Trump’s claim of having “cause” for removal, arguing the allegations lack legal merit and that the president has no such authority under the Federal Reserve Act [1].

The accusations against Cook stem from allegations made by Bill Pulte, a Trump appointee to the Federal Housing Finance Agency. Pulte claimed that Cook falsely listed two properties in 2021 — one in Ann Arbor, Michigan, and another in Atlanta — to obtain more favorable mortgage terms. Such actions, if true, could have allowed her to secure lower interest rates typically reserved for primary residences [1].

Legal experts are questioning the validity of the removal. The “for cause” provision in the Federal Reserve Act allows a president to remove a governor only for misconduct or dereliction of duty. It typically requires a formal process allowing the accused to respond to the charges, which has not yet occurred in this case [1]. Lev Menand, a law professor at Columbia Law School, noted that the allegations relate to events prior to Cook’s appointment and do not constitute a criminal conviction or a failure to perform her duties [1].

Trump’s decision, if challenged, is expected to lead to a protracted legal battle that could reach the Supreme Court. The move has already sparked concerns over the potential erosion of the Fed’s political independence, a key factor in its ability to manage inflation through unpopular but necessary interest rate increases [1]. If investors lose confidence in the Fed’s independence, borrowing costs across mortgages, auto loans, and business loans could rise.

Cook, appointed by President Joe Biden in 2022, is the first Black woman to serve as a Fed governor. Her nomination was confirmed on a 50-50 Senate vote with the tie broken by then-Vice President Kamala Harris. She has also held academic positions at Michigan State University and Harvard University’s Kennedy School of Government and received degrees from Oxford University and Spelman College [1].

Trump’s effort to replace Cook would shift the balance of the Fed’s board, giving him appointees a 4-3 majority. The president has been vocal in his criticism of the Fed’s interest rate policies, particularly of current chair Jerome Powell, and has threatened to replace him when his term expires in May 2026 [1].

Legal scholars and political figures have widely criticized the move as a power grab. Sen. Elizabeth Warren called it “illegal” and an “authoritarian overreach,” while former Fed officials have also voiced their opposition. Cook’s legal team, led by attorney Abbe Lowell, is preparing to challenge the removal, arguing the process lacks proper legal foundation [1].

This incident highlights a broader struggle between the executive branch and the Federal Reserve over monetary policy. While past presidents have exerted indirect pressure on the Fed, no U.S. president has previously attempted to remove a Fed governor. The precedent could set a dangerous legal and political precedent, with significant implications for financial markets and the Fed’s institutional credibility [1].

Source: [1] Trump says he’s firing Fed governor Lisa Cook, she vows she ‘will not resign’ (https://fortune.com/2025/08/26/trump-federal-reserve-lisa-cook-says-hes-firing-supreme-court/)