For the first time in the Federal Reserve’s 111-year history, a sitting U.S. president has tried to fire a governor—and the move has sparked a dramatic standoff.
Lisa Cook, who has served on the Fed’s Board of Governors since 2022, is refusing to step aside after Donald Trump announced her dismissal on Monday night.
Cook Refuses to Back Down
Cook made it clear in a late-night statement that she isn’t going anywhere.
She argued that Trump has no authority to remove her and that his reasoning is baseless.
“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. I will continue to carry out my duties to help the American economy,” she said.
Cook also retained veteran lawyer Abbe Lowell, known for representing high-profile figures like Hunter Biden and Jared Kushner, signaling that she’s gearing up for a legal fight.
Trump’s Push for Control Over the Fed
The dismissal attempt is part of Trump’s broader effort to exert influence over an institution that has historically operated independently of day-to-day politics.
He has been pushing Fed Chair Jerome Powell to slash interest rates, despite Powell’s insistence on keeping them high to tame inflation.
Trump wants a cut as steep as three percentage points, which would lower borrowing costs for households and businesses, potentially boosting spending and the stock market.
But Powell has kept rates at 4.5% since December 2024, arguing inflation is still too high.
By targeting Cook, Trump is clearing the path to appoint a loyalist who will support his agenda of lower rates.
The Mortgage Fraud Allegations
Trump justified his firing letter—posted on Truth Social—by accusing Cook of mortgage fraud.
He cited allegations that Cook claimed two different properties as her primary residence in 2021 to secure favorable mortgage terms.
The accusations were pushed last week by Bill Pulte, a Trump ally and appointee to the housing regulator overseeing Fannie Mae and Freddie Mac. Pulte also wrote to Attorney General Pam Bondi, saying his agency had obtained Cook’s mortgage documents.
“Grounds for firing,” he insisted in a public statement.
Cook has denied any wrongdoing, and the matter is likely to be tested in court.
Escalating the Fight With Powell
This battle comes as Trump is already considering replacing Jerome Powell before his term ends in 2026.
His Treasury Secretary, Scott Bessent, even said last week that he plans to start interviewing potential successors in September.
Earlier this month, Trump also filled another Fed vacancy by appointing Stephen Miran after Adriana Kugler’s sudden resignation, signaling his determination to reshape the central bank in his image.
What This Means for the Economy
The showdown has major implications for both Wall Street and everyday Americans.
If Trump succeeds in reshaping the Fed, lower interest rates could mean cheaper loans, higher spending, and a short-term economic boost.
But it also risks stoking inflation further, something the Fed has worked hard to bring down.
For now, the fight is far from over. Cook is refusing to budge, Trump is doubling down, and legal experts say this could drag into the courts for months.
Meanwhile, the central bank’s independence—the very principle it was built on—hangs in the balance.
