Today's News: Trump’s Attempt to Fire Federal Reserve Governor Lisa Cook
This unprecedented move is being challenged by Cook, who denies wrongdoing and plans to file a lawsuit, arguing that Trump lacks the legal authority for her removal.
Photos: Getty Images
Overview
Date: August 26, 2025
Topic: President Trump’s Attempt to Fire Federal Reserve Governor Lisa Cook and the Challenge to Fed Independence
Summary: President Donald Trump has announced his intent to fire Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. This unprecedented move is being challenged by Cook, who denies wrongdoing and plans to file a lawsuit, arguing that Trump lacks the legal authority to remove her. Trump’s action is interpreted as an effort to reshape the Fed board to align with his desire for lower interest rates, potentially leading to economic instability and raising concerns about the future of the central bank’s autonomy.
Sources
The New York Times - Trump Again Escalates Power Grabs in Bid to Fire Fed Member
CNN - Who is Lisa Cook, the first Fed governor a president has ever tried to fire?
NBC News - Trump risks economic calamity by tampering with Fed independence, experts say
The Washington Post - Trump’s move to take over the Fed adds more uncertainty to the economy
The Wall Street Journal - Trump Weighs Quickly Announcing Nominee to Replace Lisa Cook on Fed Board
Key Points
President Trump is attempting to fire Federal Reserve Governor Lisa Cook, an action unprecedented for a sitting president concerning a Fed governor.
The stated reason for Cook’s removal is allegations of mortgage fraud dating back to 2021, before her appointment to the Fed.
Lisa Cook denies the allegations and, through her attorney, has stated her refusal to resign and her intent to file a lawsuit to challenge the legality of Trump’s action.
The move is widely seen as a direct challenge to the Federal Reserve’s independence, which is legally structured to shield it from political pressure and enable monetary policy decisions based on long-term economic health.
Experts across the articles warn that undermining the Fed’s independence could lead to economic instability, including worsening inflation, market disruptions, and a loss of confidence in the central bank.
Trump’s motivation is consistently linked to his long-standing desire for lower interest rates, and removing Cook would create an opportunity to appoint a new governor aligned with his monetary policy views.
The situation is expected to result in a significant legal battle, likely reaching the Supreme Court, which has recently considered presidential removal powers for officials at other independent agencies.
Unique Highlights
The New York Times details a May Supreme Court decision that allowed Trump to remove Democratic-appointed members of other boards but explicitly stated the Fed was “uniquely structured” and different, suggesting its independence was protected. It also notes that Trump’s letter to Cook added the phrase “at my discretion” to the “for cause” provision, a phrase not present in the original statute, and mentions that William J. Pulte also accused New York’s state attorney general, Letitia James, of similar mortgage misrepresentations.
CNN provides extensive biographical details about Lisa Cook, highlighting her trailblazing career as the first Black woman on the Fed Board, her background as an economics professor at Michigan State, her prior work under President Obama, her Marshall scholarship, and her family’s involvement in the civil rights movement. It also mentions her previous research on racial disparities and her voting record with Fed Chair Jerome Powell.
NBC News quotes the Economic Policy Institute, warning that presidential capture of the Fed would mean interest rates are set on “whims of the president” rather than data, leading to a loss of confidence. It includes a direct quote from Commerce Secretary Howard Lutnick questioning Cook’s alleged mortgage fraud and stating she should “get out of the federal government.” George Saravelos of Deutsche Bank is cited, expressing surprise that the market isn’t more concerned about “fiscal dominance.”
Fox News directly quotes President Trump saying he needs “people that are 100% above board,” implying Cook was not. It also states the Federal Reserve acknowledged Cook’s potential legal action and affirmed it would “abide by any court decision.”
The Washington Post reports that a White House official stated Trump’s move was driven by the “substance of how they have been setting monetary policy” and that Powell’s recent speech in Jackson Hole, signaling openness to rate cuts, was seen as “validation” for Trump’s views on inflation versus growth. It also mentions the resignation of Fed Governor Adriana Kugler and Trump’s subsequent appointment of Stephen Miran to that seat, and the unusual proposal for Miran to retain his Council of Economic Advisers role while on the Fed. The article questions whether actions taken before joining the board legally constitute “cause” for removal.
The Wall Street Journal reveals Trump is considering switching Stephen Miran from the shorter-term seat he was recently nominated for to Cook’s longer-term seat. It also names former World Bank Group President David Malpass as another potential candidate for an open Fed board seat, noting Malpass’s public criticism of the Fed for not lowering interest rates. The article specifies that Trump consulted with White House chief of staff Susie Wiles and Treasury Secretary Scott Bessent, who did not object to his decision.
Contrasting Details
Motivation for the Action: While all articles agree Trump is attempting to fire Cook over mortgage fraud allegations, The Washington Post provides a White House official’s perspective that the move is driven by the “substance of how they have been setting monetary policy” and sees Powell’s openness to rate cuts as “validation” of Trump’s views. This contrasts with the broader interpretation across The New York Times, CNN, and NBC News, which primarily frame the action as an unprecedented power grab, a direct threat to Fed independence, and a means to install governors who will lower rates for political reasons.
Legal Interpretation of “For Cause”: The New York Times highlights that Trump, in his letter to Cook, added the phrase “at my discretion” to the statutory provision allowing removal “for cause,” a phrase not present in the original Federal Reserve Act. This suggests a differing interpretation of presidential authority compared to the established legal understanding that “for cause” implies significant misconduct or neglect, not presidential discretion.
Market Reaction: NBC News states that “investors are taking the Cook drama in stride. Stocks started the day lower Tuesday but eventually returned to positive territory,” while noting the 30-year Treasury note yield briefly climbed. The Washington Post similarly reports that “the major financial markets shrugged off the news, but the U.S. dollar edged down overnight.” While not outright contradictions, there is a slight difference in emphasis on the extent of market calm versus specific signs of apprehension (Treasury yields, dollar weakening) among the articles.
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