Fed Gov. Lisa Cook Rejects Trump’s Attempted Firing, Says Illegal/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ President Donald Trump declared he had fired Federal Reserve Governor Lisa Cook, citing alleged financial misconduct. Cook rejected the move, saying the president has “no authority” to remove her and vowed to stay in office. The unprecedented clash raises major questions about Fed independence, legality, and U.S. economic stability.
Trump–Fed Showdown Quick Looks
- Trump claims to have fired Fed Governor Lisa Cook — first in Fed’s 111-year history
- Cook says Trump has no legal authority and will not resign
- Trump cites alleged mortgage fraud; Cook has not been charged
- DOJ has said it will investigate, but no case filed
- Legal experts say “for cause” removal grounds remain undefined
- Fed independence designed to shield monetary policy from politics
- Move immediately hit markets: dollar index dropped, stocks fell, gold rose
- Senator Elizabeth Warren calls Trump’s attempt an “authoritarian power grab”
- Republicans in Senate Banking Committee have yet to comment
- Cook is first Black woman appointed to Fed board (2022, by Biden)
Deep Look: Trump Sparks Constitutional Clash by Attempting to Fire Fed Governor Lisa Cook
WASHINGTON — August 25, 2025 – President Donald Trump declared Monday that he had fired Federal Reserve Governor Lisa Cook, issuing a letter posted to his social media platform that accused her of misconduct. The move marks the first time in the 111-year history of the Federal Reserve that a U.S. president has attempted to dismiss a sitting Fed governor — and it could unleash a legal and constitutional battle over the independence of America’s central bank.
“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 in a statement through her attorneys. “I will not resign. I will continue to carry out my duties to help the American economy.”
Legal Gray Area: Can a President Fire a Fed Governor?
The Federal Reserve Act allows a president to remove a governor “for cause”, but does not clearly define what constitutes such grounds. Trump argued that Cook’s alleged financial dealings amount to “gross negligence,” but legal experts say the issue is far from straightforward.
Former federal prosecutor Shan Wu called the firing “questionable for cause,” adding that the matter “will definitely get litigated.”
Cook’s attorneys signaled readiness to fight in court. Abbe David Lowell, her lawyer, said they will take “whatever actions are needed to prevent his attempted illegal action.”
The Allegations: Mortgage Questions
Trump’s justification rests on allegations of mortgage fraud, first raised by Federal Housing Finance Director Bill Pulte. Cook allegedly listed two separate homes as her “primary residence” on mortgage applications.
A CNN review of records confirmed the dual listings but found no evidence of intent or fraud. Cook has not been charged with any crime. The Justice Department has said it will review the matter but has not brought charges.
In his letter, Trump accused Cook of “deceitful and potentially criminal conduct” and said her actions undermine confidence in her integrity as a regulator.
Fed Independence Under Fire
The attempted firing raises profound concerns about the political independence of the Federal Reserve. The central bank was designed to operate separately from elected officials to insulate monetary policy from partisan pressure.
“The Fed is designed to be independent of politics for very good reasons. He is trying to end that and make it an arm of the Trump administration, which will be very bad for monetary policy if it happens.”
If Trump’s move is upheld, analysts fear it could shake global markets, increase borrowing costs, and damage the U.S. dollar’s credibility.
Market Reaction
Financial markets reacted swiftly to the announcement:
- Dollar index dropped 0.3% against other currencies
- Dow futures fell 100 points (-0.2%)
- S&P 500 futures slipped 0.3%
- Nasdaq futures dropped 0.5%
- Gold prices rose 0.45%, reflecting investor flight to safe havens
Political Fallout
The clash has already sparked partisan responses.
Sen. Elizabeth Warren, top Democrat on the Senate Banking Committee, called the attempted firing an “authoritarian power grab that blatantly violates the Federal Reserve Act.”
Republican Sen. Tim Scott, the committee’s chair, has not issued a statement.
Cook’s position, meanwhile, could remain in limbo for months. It is unclear whether she must step down immediately or continue serving while the courts decide. If removed, Trump would gain the power to appoint a replacement, potentially reshaping Fed policy just as it considers whether to cut interest rates in September.
The Bigger Picture
Trump has long criticized the Fed for not cutting rates aggressively enough, blaming it for stalling growth. His attempted dismissal of Cook reflects a more direct effort to bend the Fed toward political priorities.
Cook, in her own statement last week, vowed she would not be “bullied” into resigning.
“I have no intention of stepping down because of some questions raised in a tweet,” she said. “I will take questions about my financial history seriously, but I will continue to serve.”
With the Fed’s next policy meeting scheduled for September 16–17, the standoff comes at a delicate time for U.S. monetary policy and could determine whether investors still view the U.S. central bank as independent and credible.
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