U.S. President Donald Trump announced the immediate removal of Federal Reserve Governor Lisa Cook on August 25, 2025, citing allegations of mortgage fraud.
The decision, described as unprecedented, has raised concerns about the central bank’s independence.
Trump’s action follows claims by Federal Housing Finance Agency Director Bill Pulte, who alleged Cook falsified mortgage documents for properties in Michigan and Georgia in 2021, before her Fed appointment.
Cook, the first African-American woman on the Fed’s Board of Governors, has denied the allegations and stated that Trump lacks the legal authority to fire her.
Trump’s letter to Cook, posted on Truth Social, referenced his authority under Article II of the U.S. Constitution and the 1913 Federal Reserve Act, claiming “sufficient cause” for her removal due to alleged false statements on mortgage applications.
The Federal Reserve Act allows the president to remove governors “for cause,” typically interpreted as malfeasance, but legal scholars argue the allegations may not meet this threshold, especially since the transactions predate Cook’s tenure.
Cook, appointed by former President Joe Biden in 2022, responded through her lawyer, Abbe Lowell, stating, “no causes exists under the law, and he has no authority.”
The announcement triggered immediate market reactions, with futures for the S&P 500 dipping 0.2 percent and gold prices slightly rising.
Analysts warn that Trump’s move could undermine confidence in the Fed’s ability to set monetary policy free from political interference, a cornerstone of U.S. economic stability.
David Wilcox, a senior fellow at the Peterson Institute, noted to Al Jazeera, “The damage done to confidence in the US system will not be easily or quickly repaired.”
With Cook’s potential exit, Trump could appoint a majority of the Fed’s board, raising fears of increased political influence over interest rate decisions and monetary policy.