United States President Donald Trump has ordered the removal of Federal Reserve governor Lisa Cook over unproven claims of mortgage fraud, a move that analysts say could shake global confidence in the independence of the US central bank.
In a letter posted on Truth Social Monday night, Trump said Cook was being dismissed “effective immediately” under his powers granted by the Constitution and the 1913 Federal Reserve Act.
Citing allegations raised last week by the federal mortgage regulator, Trump claimed there was “sufficient reason to believe you may have made false statements on one or more mortgage agreements.”
“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks,” Trump wrote. “The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. 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. At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”
The move raises red flags about political interference in monetary policy. The Fed’s ability to set interest rates free from White House influence is seen as a cornerstone of US economic stability.
Trump has long clashed with Fed chair Jerome Powell, accusing him of moving too slowly to cut rates and warning that fears of inflation linked to Trump’s tariffs are “overblown.” Powell’s term ends in May.
Futures for the S&P 500 dipped 0.2% after Trump’s announcement, while gold prices ticked up, reflecting investor unease.
David Wilcox, senior fellow at the Peterson Institute for International Economics, said: “The latitude of the Fed to conduct monetary policy in relentless pursuit of price stability and maximum employment may not be as great as they thought yesterday. The damage done to confidence in the US system will not be easily or quickly repaired.”
Mark Spindel, founder of Potomac River Capital and a Fed historian, called Trump’s move consistent with his “aggressive attempts” to take control of the central bank: “With a majority of the board, there’s wide latitude to reorganise the system, including possibly switching district bank presidents.”
The removal could trigger a long legal battle. Under US law, a president must demonstrate “cause” — usually interpreted as misconduct — to fire a Fed governor. Cook’s allies argue the fraud claims don’t meet that threshold.
The latest news in your social feeds
Subscribe to our social media platforms to stay tuned