Donald Trump has fired Federal Reserve governor Lisa Cook over allegations she committed mortgage fraud, the latest escalation in the US president’s attack on the central bank’s independence.
Trump wrote to Cook on Monday, telling her that he was removing her from her position “effective immediately” based on the allegation from one of his allies that she had obtained a mortgage on a second home she incorrectly described as her primary residence.
The claims have not been confirmed and last week Cook said she had “no intention of being bullied” into stepping down.
She said: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
Trump posted the full text of the letter on social media on Monday night. In it, he said that he found “sufficient cause” in the allegation against her to remove her from her position.
Cook’s exit would allow Trump to tap a replacement, helping him to exert more control over Fed policy. His demands for lower interest rates have so far fallen on deaf ears.
The Trump administration has pursued several of the president’s political enemies, including the New York attorney general, Letitia James, and the California senator Adam Schiff, over claims of mortgage fraud. Both James and Schiff denied the allegations.
Cook is not a politician, but is among a string of senior Fed policymakers who have defied Trump’s persistent calls for rate cuts. Appointed by Joe Biden in May 2022, she became the first Black woman to sit on the central bank’s board. Her term on the Fed’s board was not due to end until 2038.
She is a respected economist, with stints at Harvard University and Stanford University, who served on the council of economic advisers under Barack Obama.
In May, the US supreme court suggested the president does not have power to fire governors of the US central bank, an independent agency whose members do not serve at the pleasure of the president, without cause.
The administration’s attack on her future at the Fed was led by Bill Pulte, a Trump-appointed official leading the US Federal Housing Finance Agency, who alleged she had claimed two different properties were her primary residences when obtaining mortgages in 2021.
“How can this woman be in charge of interest rates if she is allegedly lying to help her own interest rates?” Pulte wrote on X, formerly Twitter. He referred the case to the Department of Justice for investigation.
Trump seized on the claims before Cook had responded, writing on Wednesday on Truth Social, his social network, that she “must resign, now!!!”.
The Fed chair Jerome Powell signaled on Friday that the Fed was gearing up to start cutting interest rates as soon next month, but reiterated warnings about the potential risks posed by Trump’s policies, including sweeping tariffs and an immigration crackdown, on the economy.
“This year, the economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global system,” Powell said in a closely scrutinized speech to other central bankers gathered in Jackson Hole, Wyoming. “Tighter immigration policy has led to an abrupt slowdown in labor force growth.”
Top Democratic lawmakers furiously denounced Trump’s attempt to fire Cook. Elizabeth Warren, a Massachusetts senator and ranking member on the Senate banking, housing, and urban affairs committee, called it “the latest example of a desperate president searching for a scapegoat to cover for his own failure to lower costs for Americans”.
“It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court,” Warren said.
Economists and experts also decried the move warning that the ramifications of her attempted firing could reach Americans’ pocketbooks.
Rohit Chopra, former director of the Consumer Financial Protection Bureau under Joe Biden, accused the White House of seeking to “transform the financial regulators from independent watchdogs into obedient lapdogs that do as they’re told”.
“Wrecking institutions with unlawful behavior and pathetic power grabs come with costs to Americans,” said Skanda Amarnath, the executive director of Employ America and a former Fed economist. “The dollar continues to weaken as American governance continues to erode. That means higher prices for all commodities. Chair Powell must ensure that Lisa Cook is not removed as a result of these arbitrary and capricious actions from the president.”
