President Donald Trump announced Monday that he had dismissed Federal Reserve Governor Lisa Cook — the first time in the Fed’s 111-year history that a president has attempted to remove a sitting governor.
The unprecedented action escalates Trump’s clash with the central bank, which he accuses of keeping interest rates too high. In a letter, Trump cited allegations of mortgage fraud, claiming Cook’s conduct amounted to “gross negligence” in financial dealings.
Cook, appointed in 2022 by President Joe Biden as the first Black woman to serve on the Fed board, rejected Trump’s move. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022,” she said in a statement released by her attorneys, arguing that the president lacks authority to remove her.
The Justice Department has not filed charges against Cook but has said it is reviewing the allegations. A CNN review of mortgage records showed she listed two properties as her primary residence, though the reason remains unclear.
Legal experts predict the dispute will head to court, possibly reaching the Supreme Court. The Federal Reserve Act allows a president to remove a governor only “for cause,” a term that has never been clearly defined.
Critics say Trump’s move threatens the Fed’s independence. “He is trying to make the Fed an arm of the administration, which would be disastrous for monetary policy,” said former Fed Vice Chair Alan Blinder.
Markets reacted swiftly: the U.S. dollar index slipped 0.3%, stock futures fell, and gold rose 0.45% as investors sought safe-haven assets.
Senator Elizabeth Warren condemned the action as “an authoritarian power grab that blatantly violates the Federal Reserve Act.” Cook’s legal team vowed to challenge the decision in court.
The showdown comes less than a month before the Fed’s next policy meeting on September 16–17, leaving the world’s largest central bank in uncharted territory.
