WASHINGTON (AP) — On Monday night, President Donald Trump dismissed Federal Reserve Governor Lisa Cook, intensifying his push to gain more influence over the traditionally independent financial institution.
Trump announced on his Truth Social account that Cook was being removed due to accusations of mortgage fraud. These claims were brought forth by Bill Pulte, a Trump-appointed official overseeing Fannie Mae and Freddie Mac, last week.
Pulte accused Cook of fraudulently declaring dual primary residences in Ann Arbor, Michigan, and Atlanta in 2021 to secure advantageous mortgage rates, as mortgages for second homes or investment properties typically carry higher interest rates.
This decision follows Cook’s recent declaration that she would not resign from her position, despite Trump’s earlier demands for her to do so. Cook’s removal could have significant economic and political consequences, as the Federal Reserve board is comprised of seven members.
In announcing his decision, Trump asserted that he has the constitutional power to dismiss Cook. However, this action is expected to stir debates about the Fed’s independence.
The dismissal is anticipated to trigger a legal dispute, and during this time, Cook may continue to serve on the board. She would need to pursue the legal action on her own behalf, as the affected party, rather than the Federal Reserve intervening on her behalf.
It is the latest effort by the administration to take control over one of the few remaining independent agencies in Washington. Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him.
Forcing Cook off the Fed’s governing board would provide Trump an opportunity to appoint a loyalist. Trump has said he would only appoint officials who would support cutting rates.
