Trump says he's firing Fed Governor Lisa Cook, opening new front in
fight for central bank control
[August 26, 2025] By
CHRISTOPHER RUGABER and WILL WEISSERT
WASHINGTON (AP) — President Donald Trump said Monday night that he's
firing Federal Reserve Governor Lisa Cook, an unprecedented move that
would constitute a sharp escalation in his battle to exert greater
control over what has long been considered an institution independent
from day-to-day politics.
Trump said in a letter posted on his Truth Social platform that he is
removing Cook effective immediately because of allegations that she
committed mortgage fraud.
Cook said Monday night that she would not step down. “President Trump
purported to fire me ‘for cause’ when no cause exists under the law, and
he has no authority to do so,” she said in an emailed statement. “I will
not resign.”
Bill Pulte, a Trump appointee to the agency that regulates mortgage
giants Fannie Mae and Freddie Mac, made the accusations last week. Pulte
alleged that Cook had claimed two primary residences -- in Ann Arbor,
Michigan, and Atlanta -- in 2021 to get better mortgage terms. Mortgage
rates are often higher on second homes or those purchased to rent.
Trump's move is likely to touch off an extensive legal battle that will
probably go to the Supreme Court and could disrupt financial markets.
Stock futures declined slightly late Monday, as did the dollar against
other major currencies.
If Trump succeeds in removing Cook from the board, it could erode the
Fed's political independence, which is considered critical to its
ability to fight inflation because it enables it to take unpopular steps
like raising interest rates. If bond investors start to lose faith that
the Fed will be able to control inflation, they will demand higher rates
to own bonds, pushing up borrowing costs for mortgages, car loans and
business loans.
Cook has retained Abbe Lowell, a prominent Washington attorney. Lowell
said Trump's “reflex to bully is flawed and his demands lack any proper
process, basis or legal authority,” adding, “We will take whatever
actions are needed to prevent his attempted illegal action.”
Cook was appointed to the Fed’s board by then-President Joe Biden in
2022 and is the first Black woman to serve as a governor. She was a
Marshall Scholar and received degrees from Oxford University and Spelman
College, and she has taught at Michigan State University and Harvard
University’s Kennedy School of Government.
Her nomination was opposed by most Senate Republicans, and she was
approved on a 50-50 vote with the tie broken by then-Vice President
Kamala Harris.
Questions about ‘for cause’ firing
The law allows a president to fire a Fed governor “for cause,” which
typically means for some kind of wrongdoing or dereliction of duty. The
president cannot fire a governor simply because of differences over
interest rate policy.
Establishing a for-cause removal typically requires some type of
proceeding that would allow Cook to answer the charges and present
evidence, legal experts say, which hasn’t happened in this case.
“This is a procedurally invalid removal under the statute,” said Lev
Menand, a law professor at Columbia law school and author of “The Fed
Unbound,” a book about the Fed’s actions during the COVID-19 pandemic.
Menand also said for-cause firings are typically related to misconduct
while in office, rather than based on private misconduct from before an
official’s appointment.
“This is not someone convicted of a crime,” Menand said. “This is not
someone who is not carrying out their duties.”
Fed governors vote on the central bank's interest rate decisions and on
issues of financial regulation. While they are appointed by the
president and confirmed by the Senate, they are not like cabinet
secretaries, who serve at the pleasure of the president. They serve
14-year terms that are staggered in an effort to insulate the Fed from
political influence.
No presidential precedent
While presidents have clashed with Fed chairs before, no president has
sought to fire a Fed governor. In recent decades, presidents of both
parties have largely respected Fed independence, though Richard Nixon
and Lyndon Johnson put heavy pressure on the Fed during their
presidencies — mostly behind closed doors. Still, that behind-the-scenes
pressure to keep interest rates low, the same goal sought by Trump, has
widely been blamed for touching off rampant inflation in the late 1960s
and '70s.
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Board of Governors of the Federal Reserve member Lisa Cook, speaks
during a conversations with leaders from organizations that include
nonprofits, small businesses, manufacturing, supply chain
management, the hospitality industry, and the housing and education
sectors at the Federal Reserve building, Sept. 23, 2022, in
Washington. (AP Photo/Manuel Balce Ceneta, File)
President Harry Truman pushed Thomas McCabe to step down from his
position as Fed chair in 1951, though that occurred behind the scenes.
The Supreme Court signaled in a recent decision that Fed officials have
greater legal protections from firing than other independent agencies,
but it's not clear if that extends to this case.
Menand noted that the Court’s conservative majority has taken a very
expansive view of presidential power, saying, “We’re in uncharted waters
in a sense that it’s very difficult to predict that if Lisa Cook goes to
court what will happen.”
Sarah Binder, a senior fellow at the Brookings Institution, said the
president’s use of the “for cause” provision is likely an effort to mask
his true intent. “It seems like a fig leaf to get what we wants, which
is muscling someone on the board to lower rates,” she said.
A fight over interest rates
Trump has said he would only appoint Fed officials who would support
lower borrowing costs. He recently named Stephen Miran, a top White
House economic adviser, to replace another governor, Adriana Kugler, who
stepped down about five months before her term officially ended Aug. 1.
Trump appointed two governors in his first term, Christopher Waller and
Michelle Bowman, so replacing Cook would give Trump appointees a 4-3
majority on the Fed’s board.
“The American people must have the full confidence in the honesty of the
members entrusted with setting policy and overseeing the Federal
Reserve," Trump wrote in a letter addressed to Cook, a copy of which he
posted online. "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.”
Trump argued that firing Cook was constitutional. "I have determined
that faithfully enacting the law requires your immediate removal from
office,” the president wrote.
Cook will have to fight the legal battle herself, as the injured party,
rather than the Fed.
Trump's announcement drew swift rebuke from advocates and former Fed
officials.
Sen. Elizabeth Warren, D-Mass., called Trump’s attempt to fire Cook
illegal, “the latest example of a desperate President searching for a
scapegoat to cover for his own failure to lower costs for Americans.
It’s an authoritarian power grab that blatantly violates the Federal
Reserve Act, and must be overturned in court.”
Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not
cutting its short-term interest rate, and even threatened to fire him.
Forcing Cook off the Fed’s governing board would provide Trump an
opportunity to appoint a loyalist. Trump has said he would only appoint
officials who would support cutting rates.
Powell signaled last week that the Fed may cut rates soon even as
inflation risks remain moderate. Meanwhile, Trump will be able to
replace Powell in May 2026, when Powell’s term expires. However, 12
members of the Fed’s interest-rate setting committee have a vote on
whether to raise or lower interest rates, so even replacing the chair
might not guarantee that Fed policy will shift the way Trump wants.
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Associated Press writer Fatima Hussein contributed.
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