In an unprecedented move, President Donald Trump announced he has fired Federal Reserve Gov. Lisa Cook. In a post on his social media platform, Truth Social, Trump attached a letter addressed to Cook, accusing her of mortgage fraud.
“There is sufficient evidence to believe you may have made false statements on one or more mortgage agreements,” the letter states. “For example, as detailed in the Criminal Referral, you signed one document attesting that a property in Michigan would be your primary residence for the next year. Two weeks later, you signed another document for a property in Georgia stating that it would be your primary residence for the next year.”
Last week, Cook said in a statement that she had “no intention of being bullied to step down from my position because of some questions raised in a tweet.”
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Citing legal grounds and presidential authority
Trump claimed in the letter that he has the authority, citing Article II of the U.S. Constitution and the Federal Reserve Act of 1913, to remove Cook from her position as Federal Reserve governor immediately. However, Federal Reserve governors have fixed terms and are intended to be independent of presidential control. Cook’s term was not set to expire until 2038.
Under the Federal Reserve Act, a Federal Reserve governor may be removed from office only “for cause,” meaning there must be a legal reason for dismissal.
“The Federal Reserve Act provides that you may be removed, at my discretion, for cause,” Trump wrote. “I have determined that there is sufficient cause to remove you from your position.”
Implications for Federal Reserve leadership
“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks,” the president added. “The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.”
Trump has been critical of Fed Chair Jerome Powell over his reluctance to lower interest rates. If his decision to remove Cook is upheld, he would then gain the power to nominate someone new to fill her seat on the Federal Reserve Board of Governors, giving him an opportunity to influence the direction of the Fed for years to come.
