Donald Trump said he has ordered the removal of Lisa Cook, a governor at the Federal Reserve, “effective immediately” amid accusations that she falsified mortgage documents to get a better interest rate.
The president’s move, announced on Truth Social, marks a drastic escalation in his administration’s attacks on the central bank, which has enjoyed the privileged status of being independent from the US government since 1951.
In a statement, Lisa Cook said she would continue to “carry out my duties to help the American economy as I have been doing since 2022”.
She also cast doubt on Trump’s reasoning behind his attempts to remove her from the Federal Open Market Committee (FOMC), the group that sets interest rates in the United States.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said.
The dollar index, which measures the greenback against six comparable currencies, edged down by 0.03 per cent. The yield on the benchmark ten-year US government bond climbed by 2 basis points to 4.3 per cent. Yields rise when bond prices fall.
Officials at the central bank have been seen for decades as being protected from political interference under the Federal Reserve Act, which prevents presidents from sacking rate setters owing to disagreements over monetary policy. The act, however, permits them to dismiss US Fed officials “for cause”, but it is unclear exactly what that would involve. Earlier this month, Trump fired the head of the US statistics agency after it published a downbeat set of labour market numbers.
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In a letter addressed to Cook, which was also posted on Truth Social, Trump said that the act “provides that you may be removed, at my discretion, for cause”.
The letter read: “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.”
In 2021, Cook purchased two properties, one in Georgia and one in Michigan, but she declared each to be her primary residence. Doing so typically entitles a buyer to a lower mortgage rate.
The matter was first raised by Bill Pulte, head of the Trump administration’s Federal Housing Finance Agency, last week, which prompted Trump to post on Truth Social that Cook “must resign, now!!!”.
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Cook has enlisted Abbe Lowell, a prominent lawyer who has also represented Hunter Biden, the former president’s son, and Trump’s son-in-law Jared Kushner, to defend her.
She joined the FOMC in 2022 after being nominated by Joe Biden, but has been critical of Trump’s economic policies and has vocalised the potential for tariffs on US goods imports to strengthen inflation.
Trump has repeatedly called for the Fed to lower interest rates from their current range of 4.25 per cent to 4.5 per cent. He has said that they should be as low as 1 per cent. Like the Bank of England, the Fed is charged with keeping inflation at 2 per cent by setting the base level of interest in the US economy. American inflation was unchanged in July at 2.7 per cent.
Lisa Cook with Jerome Powell in June
AP PHOTO/MARK SCHIEFELBEIN
Jerome Powell, chairman of the Fed, has been the target of persistent attacks by the president, who has repeatedly called him a “numbskull” and a “stubborn mule” for leaving policy unchanged. At the annual Jackson Hole economic symposium last week, Powell signalled that the Fed could cut interest rates at its next meeting in September.
If Cook is eventually removed, it would open the door for Trump to add another official to the FOMC who favours interest-rate cuts and his unusual economic policies. The president nominated Stephen Miran, seen as an architect of his administration’s measures, to replace Adriana Kugler on the FOMC after she announced her intention to leave the central bank before her term finished in January.