U.S. President Donald Trump on Monday said he was firing Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, an unprecedented step that could test the boundaries of presidential power over the independent monetary policy body should it be challenged in court.<\/p>\n
Reuters<\/p>\n
U.S. President Donald Trump<\/a> said Monday night that he\u2019s firing Federal Reserve Governor Lisa Cook, an unprecedented move that would constitute a sharp escalation in his battle to exert greater control over what has long been considered an institution independent from day-to-day politics.<\/p>\n Trump said in a letter posted on his Truth Social platform that he is removing Cook effective immediately because of allegations that she committed mortgage fraud.<\/p>\n Cook said Monday night that she would not step down. \u201cPresident Trump purported to fire me \u2018for cause\u2019 when no cause exists under the law, and he has no authority to do so,\u201d she said in an emailed statement. \u201cI will not resign.\u201d<\/p>\n Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week. Pulte alleged that Cook had claimed two primary residences \u2013 in Ann Arbor, Michigan, and Atlanta \u2013 in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.<\/p>\n Trump\u2019s move is likely to touch off an extensive legal battle that will probably go to the Supreme Court and could disrupt financial markets. Stock futures declined slightly late Monday, as did the dollar against other major currencies.<\/p>\n<\/p>\n If Trump succeeds in removing Cook from the board, it could erode the Fed\u2019s political independence, which is considered critical to its ability to fight inflation because it enables it to take unpopular steps like raising interest rates. If bond investors start to lose faith that the Fed will be able to control inflation, they will demand higher rates to own bonds, pushing up borrowing costs for mortgages, car loans and business loans.<\/p>\n Cook has retained Abbe Lowell, a prominent Washington attorney. Lowell said Trump\u2019s \u201creflex to bully is flawed and his demands lack any proper process, basis or legal authority,\u201d adding, \u201cWe will take whatever actions are needed to prevent his attempted illegal action.\u201d<\/p>\n Cook was appointed to the Fed\u2019s board by then-President Joe Biden in 2022 and is the first Black woman to serve as a governor. She was a Marshall Scholar and received degrees from Oxford University and Spelman College, and she has taught at Michigan State University and Harvard University\u2019s Kennedy School of Government.<\/p>\n Her nomination was opposed by most Senate Republicans, and she was approved on a 50-50 vote with the tie broken by then-Vice President Kamala Harris.<\/p>\n The law allows a president to fire a Fed governor \u201cfor cause,\u201d which typically means for some kind of wrongdoing or dereliction of duty. The president cannot fire a governor simply because of differences over interest rate policy.<\/p>\n Establishing a for-cause removal typically requires some type of proceeding that would allow Cook to answer the charges and present evidence, legal experts say, which hasn\u2019t happened in this case.<\/p>\n \u201cThis is a procedurally invalid removal under the statute,\u201d said Lev Menand, a law professor at Columbia law school and author of \u201cThe Fed Unbound,\u201d a book about the Fed\u2019s actions during the COVID-19 pandemic.<\/p>\n