Trump fires Fed Governor Lisa Cook, citing mortgage fraud allegations

Lisa Cook, the first African American woman on the Federal Reserve Board, is set to challenge Trump's move in court, with the decision likely to spark a legal battle

US President Donald Trump on Monday dismissed Federal Reserve Governor Lisa Cook, escalating his bid to exert greater control over the central bank, which traditionally functions independently of political influence.

 

Trump announced the decision on Truth Social, accusing Lisa Cook of mortgage fraud. The claims originated from a referral to Attorney General Pam Bondi by Federal Housing Finance Agency Director Bill Pulte, who alleged that Cook falsified bank records to obtain favourable loan terms.

Allegations of dual residences

Pulte, a Trump appointee and vocal critic of Fed Chair Jerome Powell, claimed that in 2021 Cook listed two different properties in Ann Arbor, Michigan, and Atlanta, Georgia, as her primary residences. Such a move could have allowed her to access lower interest rates, as mortgage costs are generally higher for second homes or investment properties. The allegations led to a criminal referral to the Department of Justice earlier this month.

 

Lisa Cook refused to resign

Days before her dismissal, Lisa Cook rejected calls to step down. “I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said in a statement. 

 

Cook, appointed by former President Joe Biden in 2022, was the first African American woman to serve on the Board of Governors, which has seven members who shape US monetary policy. Her removal could alter the balance of power at the Federal Reserve.

Trump cites constitutional authority

In his letter to Lisa Cook, posted online, Trump wrote: “Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.”

 

Trump argued that his authority extends to removing a Fed governor “for cause.” However, the Federal Reserve Act stipulates that governors may only be dismissed for cause, historically defined as misconduct or neglect of duty. Legal experts said the move is likely to face judicial scrutiny. 

Potential legal battle ahead

Cook is expected to challenge the dismissal in court, and she may continue in her role until the dispute is resolved. The case would be hers to pursue rather than the Fed’s.

 

The move underscores Trump’s long-running tensions with the central bank, which he has repeatedly criticised for not cutting interest rates to support his economic agenda. Removing Lisa Cook provides him with an opportunity to exert influence over the Fed’s policy direction, though at the cost of heightened institutional conflict.