Trump fires Fed Governor Lisa Cook, marking the first time in history that a president has removed a Federal Reserve board member. The decision came Monday evening through a letter Trump posted on social media. He accused Cook of misconduct, citing mortgage irregularities, but she vowed to remain in her role.
Trump’s announcement shocked Washington because no president had ever attempted such a removal. He argued that Cook showed “gross negligence” and lacked integrity. However, legal experts questioned his authority. The Federal Reserve Act allows removal only “for cause,” but courts have never clarified its meaning.
Cook quickly responded. She declared she would not resign and would continue to perform her duties. She stressed her commitment to supporting the economy and maintaining Fed independence. Cook also noted that she faced no charges and that the Department of Justice had only begun reviewing allegations.
The controversy escalated when former prosecutor Shan Wu described the decision as “questionable.” He noted that the Justice Department had not filed charges. Wu predicted the matter would likely head to the courts. Analysts believe the Supreme Court may ultimately decide the legality of Trump’s action.
Appointed in 2022 by President Joe Biden, Cook became the first Black woman to serve on the Fed board. She played a visible role in shaping policy during volatile inflation and interest-rate debates. Her potential removal now leaves a significant leadership gap inside the central bank.
Cook’s attorney Abbe David Lowell stated that her legal team would challenge Trump’s attempt immediately. He described the move as an unlawful attack on the independence of the Federal Reserve.
Markets reacted swiftly. The U.S. dollar index dropped 0.3% after Trump’s statement. Stock futures also fell. Dow futures declined 100 points, while S&P and Nasdaq futures slid 0.3% and 0.5%. Investors fear that undermining central bank credibility could destabilize global markets.
Critics argue Trump’s action threatens Fed independence. Economists warn that political interference often leads to poor policy outcomes. Former Fed vice chair Alan Blinder called the attempt “very bad for monetary policy.” He stressed that the Fed must remain focused on data, not politics.
Democrats denounced the move. Senator Elizabeth Warren described it as an “authoritarian power grab” and demanded the courts overturn it. Republican leaders have remained mostly silent so far. The Fed itself declined to comment on the dispute.
The central bank faces a crucial policy meeting next month. With inflation and growth still uncertain, Cook’s role could be decisive. Her refusal to step aside ensures that the legal and political battle will intensify.
In the broader picture, the fight highlights the fragile balance between politics and monetary policy. Trump fires Fed Governor may become a defining test of whether the Federal Reserve can preserve its independence. For now, Cook continues to report to work, promising she will not be intimidated.
For more political updates, visit DC Brief.
