On Monday, President Trump made headlines by announcing the termination of Lisa Cook from the Federal Reserve Board. This decision has been branded dramatic, particularly after months of escalating tension directed at the central bank.
The announcement came via a letter shared on Truth Social, where Trump accused Cook of allegedly misleading mortgage documents, describing her actions as “gross negligence” and even hinting at potential criminal conduct. Previously, he had pressured Cook to resign, which led her to assert that she would not “be bullied” into stepping down when questioned on Twitter.
This dismissal marks a significant test of Trump’s authority over Federal Reserve members, who, per federal regulations, serve 14-year terms and can only be terminated by the president “for cause.” Cook joined the Fed in 2022 to complete another member’s unmatched term, with her current tenure set to extend until 2038.
In his letter, Trump stated, “I have determined that there is sufficient cause to remove you from your position.” These strong words were quickly met with resistance from Cook, who stated that there was no legal basis for her firing and insisted, “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Her counsel, Abbe Lowell, voiced intentions to challenge what they consider an illegally attempted firing.
Background on Trump’s Accusations Against Cook
The accusations against Cook gained traction earlier this month when Bill Pulte, Director of the Federal Housing Finance Agency and a noted Trump supporter, labeled her as involved in fraudulent mortgage dealings for properties in Michigan and Georgia back in 2021. Pulte’s claims suggest she presented these homes as primary residences to obtain better lending conditions.
Trump also amplified his demand for Cook’s resignation on Truth Social, insisting it was time for her to step down immediately.
In response, Cook expressed a commitment to addressing any legitimate inquiries regarding her financial background, signaling that she intends to provide fully accurate information.
Pulte has made similar allegations concerning mortgage fraud against Senators and other officials, all of which have been denied.
Understanding Trump’s Frustration with the Fed
Cook’s removal follows Trump’s sustained criticism of the Federal Reserve and its chair, Jerome Powell. Trump has expressed his discontent over the Fed’s management of interest rates.
Cook, Powell, and ten other Fed insiders collaborate on a committee managing U.S. monetary policy, reflecting some independence from political influence.
Recent Fed actions included increasing interest rates to tackle inflation, a move that could hinder economic growth, making borrowing costlier for consumers and businesses. Trump frequently derided Powell with names like “Too Late,” claiming mismanagement of specific projects related to the Fed.
The possibility of future interest rate cuts looms, as Powell emphasized last week the importance of avoiding inflation spikes while managing low unemployment levels. He noted that adjustments to policy may be necessary.
As Trump looks to reshape the Fed board with his appointees, speculation continues surrounding who will replace Cook. While Trump’s current selections include Powell and Christopher Waller, he hasn’t yet identified a successor for Cook. With Cook being first African American woman on the board, her removal constitutes a significant shift as she impacts key monetary decisions alongside Powell.
Early reactions to Trump’s actions have spanned the political spectrum, with support and stark opposition emerging along party lines. Republican senators have championed accountability, while their Democratic counterparts have decried it as an affront to governance.
