President Donald Trump moved to fire Federal Reserve Governor Lisa Cook on Monday, August 25, 2025, marking the first time in the central bank’s 112-year history that a president has attempted to remove a sitting governor. The unprecedented action has sparked a legal battle and raised concerns about Federal Reserve independence.
Trump announced the firing in a termination letter posted on Truth Social, citing allegations that Cook made false statements on mortgage applications. The president referenced claims by Federal Housing Finance Agency Director Bill Pulte, who sent a criminal referral to the Justice Department alleging Cook committed mortgage fraud by claiming two properties as primary residences.
Cook, the first Black woman to serve as a Fed governor, immediately rejected Trump’s authority to remove her. She stated that Trump purported to fire her for cause when no cause exists under the law and that he has no authority to do so. Cook declared she would not resign and would continue carrying out her duties to help the American economy as she has been doing since 2022.
The governor hired high-profile attorney Abbe Lowell to challenge her termination. Lowell indicated that Cook would file a lawsuit challenging the illegal action, stating that Trump’s attempt lacks any factual or legal basis.
The Federal Reserve responded by emphasizing that Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only for cause. The central bank noted that long tenures and removal protections serve as vital safeguards, ensuring monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people.
Trump’s action stems from allegations made by Pulte, who claimed Cook signed documents for properties in Michigan and Georgia two weeks apart, each stating the respective property would be her primary residence for the next year. The president argued it was inconceivable that Cook was not aware of her first commitment when making the second, calling her conduct deceitful and potentially criminal.
Cook was appointed by former President Joe Biden in 2022 and her term is set to expire in 2038. She has not been formally charged with any crime related to the mortgage allegations. Cook told reporters last week that she learned of the allegations from the media and that the matter stemmed from a mortgage loan application she made four years ago, before joining the central bank.
The attempted firing comes amid Trump’s months-long pressure campaign against the Federal Reserve over interest rates. If successful in replacing Cook, Trump’s appointees would comprise a majority of the seven-member Fed board, potentially giving him significant influence over monetary policy decisions.
During a cabinet meeting on Tuesday, Trump indicated he had potential replacements in mind, stating he had several good people for the position and suggesting he might have somebody he likes. He emphasized the need for people who are 100 percent above board, claiming Cook did not meet that standard.
Democratic lawmakers strongly condemned Trump’s action. Senate Democratic Leader Chuck Schumer characterized it as a brazen power grab that shreds Fed independence and puts Americans’ savings and mortgages at risk. House Democratic Leader Hakeem Jeffries called it a baseless attack on the first Black woman to serve on the Federal Reserve Board of Governors.
Senator Elizabeth Warren described the move as an illegal attempt reflecting a desperate president searching for a scapegoat to cover for his failure to lower costs for Americans. She called it an authoritarian power grab that blatantly violates the Federal Reserve Act and must be overturned in court.
Financial experts expressed concern about the implications for Fed independence and economic stability. Analysts warned that central bankers beholden to political leaders tend to favor lower interest rates for short-term political gains, potentially leading to long-term inflation risks similar to the high inflation experienced in the 1970s and 1980s.
The Federal Reserve Act of 1913 limits the president’s authority to remove Fed governors, allowing removal only for cause, which has historically been understood to mean malfeasance or dereliction of duty. No precedent exists for such a removal in the central bank’s history.
Markets reacted negatively to the news, with long-term U.S. government bonds being sold off and the dollar initially dropping against major world currencies. Pulte praised Trump’s move, thanking his commitment to stopping mortgage fraud and following the law.
The legal challenge is expected to potentially reach the Supreme Court, which would rule on whether the firing is legal. The outcome could set a significant precedent for presidential authority over Federal Reserve governance and central bank independence in the United States.