US President Donald Trump has announced he is firing Federal Reserve governor Lisa Cook, a dramatic escalation in his long-running campaign to exert greater control over the nation’s central bank. The move, which is legally questionable and could trigger a protracted court battle, was announced by the president on his social media platform, Truth Social.
In a letter posted online, Mr. Trump stated that he was removing Ms. Cook from her position “effective immediately,” citing “deceitful and potentially criminal conduct” related to allegations of mortgage fraud. The accusations, which have not resulted in any charges, were first raised by Bill Pulte, a Trump appointee who directs the Federal Housing Finance Agency. Mr. Pulte alleges that Ms. Cook, the first black woman to serve on the Fed’s Board of Governors, secured more favourable loan terms by claiming two separate properties in Michigan and Georgia as her primary residence in 2021.
Ms. Cook has denied the allegations and last week vowed not to be “bullied” into stepping down. Her term as a Fed governor was not due to expire until 2038.
The Federal Reserve Act of 1913, which established the central bank, specifies that a president can remove a governor only “for cause,” a provision widely understood by legal experts to mean proven misconduct or neglect of duty. The unprecedented nature of Mr. Trump’s action has prompted swift criticism from Democrats and economists who warn it threatens the central bank’s independence.
Senator Elizabeth Warren called the move “an authoritarian power grab” that “blatantly violates the Federal Reserve Act.” Analysts say the firing appears to be an attempt by Mr. Trump to install a loyalist on the Fed’s policymaking board, which sets interest rates and regulates banks.
Mr. Trump has for months been a vocal critic of the Federal Reserve, repeatedly demanding that it cut interest rates to stimulate the economy. He has often targeted Fed Chair Jerome Powell, but has so far not attempted to remove him. Ms. Cook’s removal, if it holds up in court, would create a second vacancy on the seven-member board, following the recent resignation of Governor Adriana Kugler. This would give the president an opportunity to appoint a majority of his own choices to the board.
The Federal Reserve, which has held rates steady this year amidst the president’s demands, has not yet commented on the matter. Markets have reacted with some volatility to the news, with the dollar weakening and bond yields shifting. The legal challenge from Ms. Cook is expected to begin immediately, setting the stage for a constitutional showdown over the limits of presidential power and the future of America’s economic policy.