Trump Fires Fed Governor Lisa Cook — And Sparks a Legal and Political Firestorm

Donald Trump just did what no US president has ever done: he declared a sitting Federal Reserve governor, Lisa Cook, fired.

The late-night letter, blasted out on social media by the White House, claimed Trump had the authority under the Constitution and the 1913 Federal Reserve Act to remove her “effective immediately.” The supposed reason? Allegations of old mortgage fraud tied to loan paperwork — charges Cook denies and has never been charged with.

The problem: no one’s actually sure the president has the legal power to fire a Fed governor. Which means Trump has just set off a historic fight over the independence of the central bank — the institution meant to sit above politics and keep the economy steady.

Why This Is a Big Deal:

• The Fed board has seven governors. Cook is one of them. Booting her lets Trump install an ally, giving him a potential majority to push for faster, deeper rate cuts — a longtime Trump obsession.
• The law only allows removal “for cause,” but experts say old mortgage paperwork hardly qualifies.
• No president has ever tried this before, so the fallout is uncharted territory.

Trump has been railing against the Fed for years, furious that it hasn’t slashed interest rates as aggressively as he wants. If he can tilt the board in his favor, he can effectively stack the deck on monetary policy.

Cook, whose term runs until 2038, isn’t going quietly. She’s already said Trump has “no authority” to fire her and vowed to keep doing her job. Legal challenges are expected to land in the Supreme Court, where recent rulings have sided with Trump on other agency firings — but specifically carved out the Fed as a special case.

The Reaction:

• Democrats blasted the move as unconstitutional and authoritarian. Senate Majority Leader Chuck Schumer said it “shreds the independence of the Fed and puts every American’s savings and mortgage at risk.”
• Legal scholars call the firing a pretext to bully the Fed into doing Trump’s bidding.
• Markets dipped slightly overseas after the announcement, though no panic sell-off yet.

If Trump gets his way, expect lower interest rates in the short run — a potential sugar high for the economy. But long-term, it risks higher inflation, a weaker dollar, and higher borrowing costs down the line.

Bottom line: one governor’s fate could decide whether the Fed stays independent or becomes just another arm of the White House.

With input from Axios, Reuters, the Financial Times, the Washington Post, CNN, Politico, and Bloomberg.