Trump calls on Fed Governor Cook to resign from mortgage claims
President Donald Trump has called on Federal Reserve Gov. Lisa Cook to step down after allegations over mortgages he holds in Michigan and Georgia.
On August 25th, President Donald Trump fired Federal Reserve Gov. Lisa Cook. This is an unprecedented move that brings the president one step closer to shaping the balance of the Fed’s seven-member board in his favor.
In a true, socially shared letter, Trump argued for “sufficient causes” to remove Cook immediately, pointing to accusations that Cook made false statements about his mortgage agreement.
The move comes amid Trump’s months of efforts to influence central banks’ interest rate cut decisions. Trump previously focused on putting pressure on Fed Chairman Jerome Powell to lower the rate through name calls and threats of fire, but the president then returned the threat to remove the Fed’s chair.
What should you know about this:
U.S. stock futures are low after President Donald Trump fired Federal Reserve Gov. Lisa Cook and said he filed fraudulent mortgage applications.
“I have determined that there is a good reason to remove you from your position,” Trump wrote in a letter to the food posted on social media.
Cook replied that Trump had no authority to fire her and said he would not resign.
At 6:15am on ET, futures tied to the Blue Chip Dow fell -0.14%, while the Broad S&P 500 futures slipped -0.08%, while the Tech-heavy Nasdaq futures lost -0.06%.
“Merry
Cook’s firing escalates Trump’s efforts to turn the Fed’s make-up into his preferences.
Another Biden appointee, Gov. Adriana Kugler, announced her early resignation in August. Trump nominated Stephen Milan, chairing the White House Economic Advisors Council, serving the remainder of Coogler’s term, which has not yet been confirmed by the Senate.
The board will be home to two Trump-appointed board members, Michelle Bowman and Christopher Waller. Both have expressed support for low prices.
Powell, who was appointed chairman by Trump in 2017 and re-appointed under former President Joe Biden in 2022, is due to end his term as chairman in May 2028, but was able to serve as governor until 2028.
If Milan replaces Kugler and Cook is kicked out of her seat, Trump’s candidates will have a majority on the seven-person board.
Board members, along with five presidents of the Regional Federal Reserve Bank, constitute the Federal Open Market Committee, which determines the Fed’s key interest rates.
Powell had already shown that the Fed could move towards interest rate cuts soon.
The Fed adjusts interest rates to support the dual mission of stabilizing prices and keeping employment high. If inflation is high, the Fed can raise interest rates and make borrowing more expensive and cooler economic activity. If unemployment is high, reductions can drive economic growth and employment.
The Fed has been stable since late 2024 amid concerns that tariffs could raise consumer prices, but that could change soon. The Fed has yet to commit to interest rate cuts, but on August 22, Powell said “the balance of risk appears to be changing.”
The central bank was established as an independent institution, so its decision is based on what is best suited to the economy. The Fed’s self-government can be hit if it falls at the president’s demands without a healthy foundation.
“The concern is the Trump administration’s intention. It’s not about maintaining the integrity of the Fed, but about setting up Trump’s own people in the Fed,” said Kyle Rodda, senior financial market analyst at Capital.com, as reported by Reuters. “It goes back to trust in the institutions…it’s another crack in the US buildings and their investments.
Analysts say this could erode the value of the US dollar. This has already weakened this year.
“The dollar continues to decline as American governance continues to erode,” said Skanda Amarnath, executive director of think tank Empericate America and former Fed economist. “That means all products are priced higher.”
Cook previously said, “I’m not going to be bullied to resign.” After Trump asked her to resign on August 20th, Cook said he was gathering information to answer “providing valid questions and facts.”
Cook responded hours later by email to reporters through lawyer Abbe Lowell’s office, with a statement saying Trump had no authority to rule out her, Reuters reported.
“I will continue to do my duties to support the American economy,” Cook said in a statement.
Lowell said Trump’s “request lacks the appropriate process, basis, or legal authority. We will take the necessary actions to prevent legal action in this attempt.”
Contribution: Reuters
