President Donald Trump announced on Tuesday that he had fired Federal Reserve Governor Lisa Cook, citing alleged mortgage misrepresentations as grounds for removal. Hours later, Cook rejected the move, declaring the President has no authority to dismiss her and pledging to continue her duties (Reuters, AP News).
Trump’s unprecedented step
In his letter, Trump alleged that Cook engaged in “mortgage fraud” and argued this constituted “cause” for dismissal. Legal experts immediately pushed back, stressing that Federal Reserve governors are protected by statute and can only be removed for proven misconduct during their tenure, not for pre-confirmation issues (Reuters).
Cook stands firm
Cook, the first Black woman to serve as a Fed governor, responded through her attorneys, stating she will remain in her position and is preparing to sue the administration. “This attempt undermines the independence of the Federal Reserve and the rule of law,” her lawyer Abbe Lowell said (Reuters, AP News).
Markets react cautiously
Financial markets showed signs of unease. The U.S. dollar weakened, short-term Treasury yields fell, while longer-term yields edged higher, reflecting investor concern about Fed independence (Financial Times). Analysts warned that politicizing the Fed could destabilize monetary policy and fuel volatility.
What’s next
The legal fight is expected to escalate, potentially reaching the Supreme Court. The case may determine not only Cook’s future but also the limits of presidential power over the Federal Reserve, an institution historically shielded from direct political pressure (Wall Street Journal).
Sources: Reuters, Reuters, AP News, Financial Times, Wall Street Journal
