In a significant move that underscores Donald Trump's ongoing efforts to influence the Federal Reserve, he announced the dismissal of Governor Lisa Cook late August 25 evening. This decision marks a dramatic escalation in the president's campaign to exert more control over the nation's monetary policy, an area traditionally regarded as insulated from the whims of partisan politics.
Trump's move came days after Cook said she wouldn’t leave the seven-member Fed board despite the President calling for her to resign. Senate Democrats had been backing Cook.
Firing Cook would provide Trump an opportunity to appoint a loyalist. Trump has said he would only appoint officials who would support cutting rates.
The implications of this development are likely resonate throughout the financial markets and the broader economy, as the Fed plays a crucial role in shaping fiscal policy and ensuring economic growth.
In a letter shared on his Truth Social platform, Trump cited allegations of mortgage fraud against Cook as the primary reason for her termination.
The accusations, which surfaced last week, were brought to light by Bill Pulte, a Trump appointee with connections to the regulatory agency overseeing the mortgage giants Fannie Mae and Freddie Mac. Pulte's claims ignited a firestorm of controversy, raising questions about the integrity and oversight of financial regulators.
Pulte alleged that Cook had claimed two primary residences -- in Ann Arbor, Michigan and Atlanta -- in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
Cook, who made history as one of the first Black women to serve on the Federal Reserve Board, has faced scrutiny since her appointment, but the allegations of fraud have taken the discourse to a new level.
Critics of Trump's intervention argue that such actions undermine the independence of the Federal Reserve, a critical institution responsible for managing the nation's monetary policy, including interest rates and inflation control.
The firing of Cook is part of a broader trend of increased politicisation within the Federal Reserve, which has historically operated free from direct political pressures. Observers are concerned that Trump's aggressive stance could set a precedent that might destabilise the Fed's long-standing reputation for independence, potentially impacting economic stability.
The firing is likely to touch off a legal battle and Cook could be allowed to remain in her seat while the case plays out. Cook would have to fight the legal battle herself, as the injured party, rather than the Fed.
Trump said firing Cook was constitutional, even if doing so will raise questions about Fed's independence.
(With inputs from AP and other agencies)
Here is the full text of Trump's notice to Cook:
Dear Governor Cook,
Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.
The Federal Reserve Act provides that you may be removed, at my discretion, for cause. See 12 U.S.C. § 242. I have determined that there is sufficient cause to remove you from your position.
As set forth in the Criminal Referral dated August 15, 2025, from Mr. William J. Pulte, Director of the Federal Housing Finance Agency, to Ms. Pamela Bondi, Attorney General of the United States ("Criminal Referral") (attached to this letter as Exhibit A), there is sufficient reason to believe you may have made false statements on one or more mortgage agreements. 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. It is inconceivable that you were not aware of your first commitment when making the second. It is impossible that you intended to honor both.
The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks. 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. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity. At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.
The executive power of the United States is vested in me as President and, as President, I have a solemn duty to ensure that the laws of the United States are faithfully executed. I have determined that faithfully executing the law requires your immediate removal from office. Thank you for your attention to this matter.
Trump's move came days after Cook said she wouldn’t leave the seven-member Fed board despite the President calling for her to resign. Senate Democrats had been backing Cook.
Firing Cook would provide Trump an opportunity to appoint a loyalist. Trump has said he would only appoint officials who would support cutting rates.
The implications of this development are likely resonate throughout the financial markets and the broader economy, as the Fed plays a crucial role in shaping fiscal policy and ensuring economic growth.
In a letter shared on his Truth Social platform, Trump cited allegations of mortgage fraud against Cook as the primary reason for her termination.
The accusations, which surfaced last week, were brought to light by Bill Pulte, a Trump appointee with connections to the regulatory agency overseeing the mortgage giants Fannie Mae and Freddie Mac. Pulte's claims ignited a firestorm of controversy, raising questions about the integrity and oversight of financial regulators.
Pulte alleged that Cook had claimed two primary residences -- in Ann Arbor, Michigan and Atlanta -- in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.
Cook, who made history as one of the first Black women to serve on the Federal Reserve Board, has faced scrutiny since her appointment, but the allegations of fraud have taken the discourse to a new level.
Critics of Trump's intervention argue that such actions undermine the independence of the Federal Reserve, a critical institution responsible for managing the nation's monetary policy, including interest rates and inflation control.
The firing of Cook is part of a broader trend of increased politicisation within the Federal Reserve, which has historically operated free from direct political pressures. Observers are concerned that Trump's aggressive stance could set a precedent that might destabilise the Fed's long-standing reputation for independence, potentially impacting economic stability.
The firing is likely to touch off a legal battle and Cook could be allowed to remain in her seat while the case plays out. Cook would have to fight the legal battle herself, as the injured party, rather than the Fed.
Trump said firing Cook was constitutional, even if doing so will raise questions about Fed's independence.
(With inputs from AP and other agencies)
Here is the full text of Trump's notice to Cook:
Dear Governor Cook,
Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.
The Federal Reserve Act provides that you may be removed, at my discretion, for cause. See 12 U.S.C. § 242. I have determined that there is sufficient cause to remove you from your position.
As set forth in the Criminal Referral dated August 15, 2025, from Mr. William J. Pulte, Director of the Federal Housing Finance Agency, to Ms. Pamela Bondi, Attorney General of the United States ("Criminal Referral") (attached to this letter as Exhibit A), there is sufficient reason to believe you may have made false statements on one or more mortgage agreements. 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. It is inconceivable that you were not aware of your first commitment when making the second. It is impossible that you intended to honor both.
The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks. 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. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity. At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.
The executive power of the United States is vested in me as President and, as President, I have a solemn duty to ensure that the laws of the United States are faithfully executed. I have determined that faithfully executing the law requires your immediate removal from office. Thank you for your attention to this matter.
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