Federal Reserve Governor Lisa Cook speaks at the Economic Club of New York in New York City, U.S., June 25, 2024.
Shannon Stapleton | Reuters
President Donald Trump on Monday fired Federal Reserve Governor Lisa Cook, according to a letter on his Truth Social, an unprecedented move and a significant escalation of his attacks on the U.S. central bank.
“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,” Trump wrote.
CNBC reached out to the Federal Reserve for comment.
Trump’s move pushes the Federal Reserve into unchartered territory and will likely lead to a legal clash that could wind up at the Supreme Court.
Congress curbed the president’s authority to unilaterally fire a Fed governor in the Federal Reserve Act of 1913, which states that president can only do so “for cause.” While the law does not elaborate on what constitutes “cause,” it has historically been understood to mean serious concerns about an official’s ability to continue serving.
The Trump administration claims that Cook, who was nominated by former President Joe Biden in 2022, committed mortgage fraud by allegedly naming two different properties as her primary residence at the same time.
Federal Housing Finance Agency Director Bill Pulte, an outspoken critic of Fed Chairman Jerome Powell, publicly accused Cook of mortgage fraud on Aug. 20 and sent a criminal referral to the Justice Department. The department is now probing the Fed official in an investigation being led by U.S. Pardon Attorney Ed Martin, POLITICO reported.
Trump quickly called for Cook’s resignation following Pulte’s claims, writing in a social media post that “Cook must resign, now!!!”
Cook said in a statement the same day that she has “no intention of being bullied to step down from my position because of some questions raised in a tweet.”
Two days later, Trump said he would fire Cook if she did not resign.
“What she did was bad,” Trump told reporters on Aug. 22.
Trump’s firing will likely trigger a legal showdown. The Supreme Court could get involved if a judge allows Cook to continue serving in her role while legal proceedings play out, the New York Times noted.
If Trump is ultimately successful in removing Cook, he will be able to nominate her replacement and reshape the Fed’s governing board for the next several years. Fed governors typically serve 14-year terms.
Two of the seven current Fed governors, Christopher Waller and Michelle Bowman, are Trump appointees.
Another spot opened up earlier this year when Adriana Kugler abruptly stepped down, giving Trump another seat to fill. He has nominated Stephen Miran, chair of the Council of Economic Advisors, to fill the vacant seat.
The move exacerbates concerns surrounding the Federal Reserve’s independence under the Trump administration.
Trump has repeatedly criticized the central bank and its chair for not cutting short-term interest rates.
Powell has so far resisted Trump’s pressure, even as the president has threatened to fire him before his term as chair expires next year.
Speaking on Aug. 22 at the central bank’s annual symposium in Jackson Hole, Wyoming, however, Powell suggested that conditions “may warrant” interest rate cuts as the Fed proceeds “carefully.”
This is developing news. Please check back for updates.