Trump Fires Fed Governor Lisa Cook Amid Mortgage Allegations: Legal Battle Looms

Political Shockwave: Trump Removes Fed Governor Lisa Cook

In a move that has stunned financial and political institutions, U.S. President Donald Trump announced the immediate removal of Federal Reserve Governor Lisa Cook, citing alleged false statements in mortgage documents. Cook, appointed in 2022 by President Joe Biden, is the first African American woman to serve on the Fed’s Board of Governors.

Trump claims Cook signed conflicting mortgage agreements for properties in Michigan and Georgia, calling the act “deceitful and potentially criminal” in a letter posted on his social media platform Truth Social. Cook responded firmly:

“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.”

Her attorney, Abbe Lowell, stated that the president’s action lacks legal basis and will be challenged in court.

Photograph: Reuters

Legal and Constitutional Questions

The Federal Reserve Act allows governors to be removed only “for cause,” typically involving proven misconduct. Cook has not been charged with any crime, and legal experts suggest Trump’s move could trigger a constitutional battle over executive authority and central bank independence.

Senator Elizabeth Warren called the dismissal “an authoritarian power grab,” warning that it undermines the Fed’s ability to make impartial decisions in the public interest.

Market Reaction and Global Implications

Following the announcement, European markets dipped slightly, U.S. bond yields rose, and the dollar briefly weakened against major currencies. Analysts warn that if Trump succeeds in reshaping the Fed’s leadership, it could erode investor confidence in U.S. monetary policy.

“The key question for markets is if Trump succeeds in replacing Cook, could he reshape the Fed’s composition and how would that impact the market’s perception on U.S. investability?” — Julia Lee, FTSE Russell

Source: BBC