US President Donald Trump has announced the removal of Federal Reserve Governor Lisa Cook, an unprecedented move that has set up a potential legal battle between the White House and the US central bank.
Trump said he acted on “sufficient reason” to believe Cook made false statements on mortgage agreements, arguing that his constitutional powers grant him authority to dismiss her.
Cook rejected the decision, insisting the president has no legal right to fire a Fed governor. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so. I will not resign,” she said in a statement.
Her lawyer, Abbe David Lowell, vowed to challenge the decision in court, calling it an “illegal action.”
Cook, appointed by former President Joe Biden in 2022, is the first African American woman to serve on the Federal Reserve Board. She also sits on the Fed’s policy-setting committee, which voted in July to keep interest rates steady.
Trump’s order stems from allegations raised by housing finance regulator and Trump ally Bill Pulte, who accused Cook of providing conflicting information on two mortgage documents. Cook has denied wrongdoing, saying the issue related to a mortgage application filed years before her appointment.
The move marks the first time a sitting president has attempted to dismiss a Federal Reserve board member, raising questions over the independence of the central bank. Experts warn the dispute could end in a court battle if Cook or the Fed refuses to comply.
The Federal Reserve, which has operated independently since 1951, has yet to comment.
Markets reacted to the announcement, with the US dollar weakening against major currencies in Asian trading on Tuesday. Analysts say investors are concerned Trump could reshape the Fed’s board and increase pressure on Chair Jerome Powell, who has faced repeated criticism from the president for resisting sharp rate cuts.
