President Donald Trump announced on Monday evening that he has fired Federal Reserve Governor Lisa Cook, marking the first attempt by a U.S. president to remove a Fed governor in the central bank's 112-year history. Trump justified the move by accusing Cook of mortgage fraud, an allegation Cook denies. She has stated that the president has no legal authority to remove her and pledged to fight the dismissal in court.
Cook's firing comes amid a prolonged effort by Trump to exert influence over Federal Reserve policy, particularly his repeated calls for lower interest rates to stimulate economic growth. The White House contends that Cook committed misconduct by allegedly providing false information on mortgage applications, describing this as "potentially criminal." Trump’s letter to Cook claimed that he had "sufficient cause" for her removal, a threshold set by federal law for dismissing Fed governors. However, Cook's attorney, Abbe Lowell, countered that the firing lacked any factual or legal basis and announced plans to file a lawsuit challenging the dismissal.
The Federal Reserve Board issued a statement acknowledging its respect for any judicial ruling on the matter and reaffirmed the importance of the Fed’s independence in conducting monetary policy based on data and long-term economic welfare. The Fed noted that governors serve fixed terms and may only be removed "for cause" as stipulated by the Federal Reserve Act. Legal analysts anticipate that the dispute could escalate to the Supreme Court, which previously recognized the Fed's unique structure as a safeguard against political interference.
Economists and former Fed officials have expressed concern that Trump's action threatens the central bank's independence, a principle credited with contributing to the U.S. economy's relative stability over the past century. They warn the firing could lead to economic instability and higher inflation if presidential influence leads to less prudent interest rate policies. This development occurs at a sensitive time for the economy, with recent indicators showing slowed hiring and rising inflationary pressures.
Democrats in Congress have condemned the firing as an unprecedented and politically motivated attempt to undermine an independent institution critical for economic stability. Meanwhile, the Trump administration has maintained pressure on the Federal Reserve alongside plans to nominate new appointees, which could give Trump’s allies a majority on the Fed board.
Lisa Cook, the first Black woman to serve as a Fed governor, has vowed to continue performing her duties during the legal contest and emphasized her commitment to supporting the American economy.
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