Donald Trump ramped up his attack on the central bank, vowing to fire Federal Reserve Governor Lisa Cook from her role with “immediate effect.”
The president began pushing for Cook’s dismissal last week after he raised unproven allegations of mortgage fraud against her and demanded she “must resign now!!!”
In a letter to Cook posted to social media by the White House on Monday evening, Trump announced his plans to oust the policymaker.
He claimed there is “sufficient reason” to believe that Cook “made false statements on one or more mortgage agreements,” despite her never having been charged with any wrongdoing or convicted of a crime.
Cook rejected Trump’s unprecedented attempt to remove her from the central bank’s leadership and questioned his authority to do so.
As Democrats decry the president’s “brazen power grab” and the Justice Department urged to investigate the president’s claims, here’s what you need to know:
Who is Lisa Cook?
Cook is a prominent economist currently serving a 14-year term until January 2038, as a member of the Board of Governors of the Federal Reserve System.
She obtained two bachelor’s degrees: one from Spelman College in Atlanta and a second from Oxford University in the U.K. She then completed a PhD in economics at the University of California at Berkeley.
Cook served as a senior economist on the Council of Economic Advisers under the Obama administration and also taught at Michigan State and Harvard universities.
She became the first African American woman to serve on the central bank’s board of governors after she was appointed by former President Joe Biden and confirmed by the Senate in 2022, after former Vice President Kamala Harris broke a 50-50 party-line vote.
Cook voted alongside Fed Chair Jerome Powell and most of the members of the Federal Open Market Committee’s decision to hold interest rates steady for a fifth consecutive time this year. She recently warned that the latest jobs report was “concerning.”
What is Trump accusing her of?
Trump’s decision to fire Cook stems from allegations made by Federal Housing Finance Agency Director Bill Pulte, whom the president tapped for the position in January before being confirmed by the Senate in March.
Writing on last Wednesday, Pulte claimed that Cook had two properties – one in Michigan and another in Georgia – down as her primary residence on loan applications within two weeks.
Pulte urged the Justice Department to launch a federal probe into Cook and said Trump had “cause” to fire her.
Days earlier, Pulte penned a letter to Attorney General Pam Bondi and DOJ official Ed Martin claiming that Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.”
Later last Wednesday, Trump pounced on Pulte’s allegations and said that “Cook must resign now!!!”
Making reference to Pulte’s two properties claim in his letter on Monday, the president said: “It is inconceivable that you were not aware of your first commitment when making the second.”
He also touted his powers under the Constitution and U.S. law to justify the move, despite the Fed gaining monetary policy independence from the government in 1951.
What was Cook’s response?
Firing back at Trump’s initial claims last Wednesday, Cook said: “I have no intention of being bullied to step down from my position because of some questions raised in a tweet.”
Hours after receiving the president’s letter on Monday, she released a statement through her lawyer, Abbe Lowell, claiming that Trump lacks the authority to fire her and she would not leave her post.
“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.
“I will not resign,” she continued. “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Lowell added that they “will take whatever actions” are needed to prevent the president’s “attempted illegal action.”
Can Trump really fire her?
According to the Federal Reserve Act, members of the Fed board should serve a 14-year term “unless sooner removed for cause by the President.”
The Act does not explicitly make clear what qualifies as “cause.”
Peter Conti-Brown, a scholar of the Fed’s history at the University of Pennsylvania, told Reuters that while there is a legal gray area, his interpretation of the Act likely pertains to Cook’s conduct on the job, not things that happen in their personal life unrelated to work or before confirmation.
A 1935 Supreme Court ruling found that presidents can remove Fed governors only for cause, understood by legal scholars as a dereliction of duty.
Earlier this year, the Supreme Court issued interim rulings granting Trump the executive power to fire several independent regulators “without cause”. However, the High Court stressed that its reasoning did not apply to the Fed.
It marks Trump’s latest move in his campaign against the Fed and scrutiny of high-profile Democrats, which includes raising similar mortgage fraud claims against New York Attorney General Letitia James and California Senator Adam Schiff.
How are people responding?
Trump has faced a wave of Democratic backlash, with critics concerned that his allegations are politically motivated.
“Donald Trump is playing a dangerous game of Jenga with a key pillar of our economy,” Senate Minority Leader Chuck Schumer wore on X. “This brazen power grab must be stopped by the courts before Trump does permanent damage to national, state and local economies.”
Meanwhile, House Minority Leader Hakim Jeffries issued a statement on the “baseless attack” on Cook, claiming: “The American people are not buying your phony projection and slander of a distinguished public servant.”
Massachusetts Senator Elizabeth Warren called Trump’s move an “authoritarian power grab that blatantly violates the Federal Reserve Act.”
Rohit Chopra, the former director of the Consumer Financial Protection Bureau under Biden, said the Trump administration is attempting to convert financial regulators from “independent watchdogs into obedient lapdogs.”
Norman Eisen, a former White House ethics lawyer in the Obama administration, blasted the move and told MSNBC’s The Weeknight that Trump has capitulated to partisan pressure from Pulte.
