Trump Tries To Fire Fed Governor; She Vows To Stay
Federal Reserve Governor Lisa Cook rejected President Trump’s attempt to fire her late Monday over allegations of mortgage fraud, saying she will not resign and will challenge his authority. On Tuesday, she sued to block the move.
No president has fired a Fed governor before; the Federal Reserve has traditionally been politically independent. The case is expected to go to federal court and could ultimately make its way to the Supreme Court, which has repeatedly sided with the Trump administration in its firing of agencies’ independent leadership.
INSIDE THE FIGHT
Trump announced Cook’s immediate firing in a letter Monday night. Cook is an economist and the first Black woman ever to serve on the Fed board. She was appointed to a 14-year term in 2022 by then-President Joe Biden. That term is set to end in 2038.
Trump claimed he could remove her “for cause,” accusing Cook of mortgage fraud in 2021, alleging she claimed both a Michigan home and an Atlanta condo as her primary residence.
Under the Federal Reserve Act, governors can only be removed for cause — meaning actual wrongdoing, like malfeasance or dereliction of duty.
Cook responded later Monday night, saying, “no cause exists under the law.” She has not been charged with a crime.
The move sets up a major fight over Fed independence, as Trump pushes the agency to lower interest rates. The Fed is meant to be apolitical and look out for the overall interests of the economy—not a single president. If Trump successfully terminates Cook, he’ll have a chance to install one of his own picks on the seven-member Federal Reserve board.
Right now there are three Democrat-appointed and three Republican-appointed Fed Governors, with one open seat. Successfully firing Cook will give him two immediate nominations.
At the Fed’s July meeting, two Trump appointees dissented the majority’s decision to hold interest rates steady — the first time since 1993.
Fed Chair Jerome Powell’s term ends next May, but Trump has been trying to push him out early due to his reluctance to lower interest rates because of inflation fears.
NEW POLITICAL AMMO
Mortgage fraud accusations are becoming a new political weapon for the Trump administration. So far, those targeted have included California Sen. Adam Schiff, New York Attorney General Letitia James, and now Cook.
Critics say these probes are more political than legal — given that so-called “mortgage occupancy fraud” is almost never prosecuted.
That’s when someone claims a property is their primary residence to get better loan terms.
Similar allegations at the state level have been made against Texas Attorney General Ken Paxton, a Republican and Trump ally who’s running for Senate.