Trump Fires Federal Reserve Governor Lisa Cook Amid Central Bank Control Dispute

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 platform that he is removing Cook effective immediately because of allegations that she committed mortgage fraud. 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, potentially pushing interest rates higher.

"The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve member banks. 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, even if doing so will raise questions about control of the Fed as an independent entity.

"The executive power of the United States is vested to me as President and, as President, I have a solemn duty that the laws of the United States are faithfully enacted," the president wrote in the letter to Cook. "I have determined that faithfully enacting the law requires your immediate removal from office."

Among the unresolved legal questions are if Cook could be allowed to remain in her seat while the case plays out. She may have to fight the legal battle herself, as the injured party, rather than the Fed.

In a statement, Rohit Chopra, former director of the Consumer Financial Protection Bureau, said: "The President's effort to fire a sitting Federal Reserve Governor is part of a concerted effort to transform the financial regulators from independent watchdogs into obedient lapdogs that do as they're told. This could have real consequences for Americans feeling the squeeze from higher prices."

No president has sought to fire a Fed governor before. 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.

The announcement came days after Cook said she wouldn’t leave despite Trump previously calling for her to resign. Senate Democrats had expressed support for Cook, who has not been charged with wrongdoing.