Update your settings

DLNews News:

Trump vs. Fed: A Firing That May Not Stick

President Donald Trump has declared that Federal Reserve Governor Lisa Cook is out of a job. Cook, however, insists she’s still very much employed. In a letter posted to his social media account Monday, Trump announced that he had fired Cook, citing what he called “deceitful and potentially criminal conduct” involving mortgage filings. The announcement marks the first time in the Fed’s 111-year history that a president has attempted to fire a central bank governor—a role designed to be shielded from political whims.

Cook, appointed by President Joe Biden in 2022 as the first Black woman to serve on the Fed board, immediately pushed back. “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in a statement released through her attorneys. “I will not resign. I will continue to carry out my duties to help the American economy.”

At the heart of the dispute is whether Trump even has the legal authority to fire a Fed governor. By statute, board members may only be removed “for cause,” a phrase Congress never defined. The Justice Department has confirmed it is looking into allegations of mortgage fraud raised by Federal Housing Finance Director Bill Pulte but has not charged Cook with any wrongdoing. Former federal prosecutor Shan Wu noted bluntly, “This is not DOJ opening anything, they haven’t charged her. So as of right now, I think it’s kind of questionable for cause. It’s definitely gonna get litigated.”

Trump, in his letter to Cook, accused her of conduct unbefitting a financial regulator and declared, “I have determined that there is sufficient cause to remove you from your position.” Her lawyer, Abbe David Lowell, responded by calling the move illegal and vowed to fight it in court.

The stakes extend far beyond Cook’s personal fate. The Fed was designed to keep politics at arm’s length from monetary policy—so central bankers can focus on data, not campaign slogans. If presidents can remove governors whenever they disagree over interest rates, the United States risks not just a legal crisis but an economic credibility one. “He is trying to end that and make it an arm of the Trump administration,” warned Alan Blinder, a former Fed vice chair. “That will be very bad for monetary policy if it happens.”

Markets wasted no time in reacting. The U.S. dollar slipped 0.3% on the news, stock futures lost ground, and gold prices edged higher as investors sought safety. Senator Elizabeth Warren labeled Trump’s move “an authoritarian power grab that blatantly violates the Federal Reserve Act,” while Republicans on the Senate Banking Committee remained publicly silent.

With the Fed’s next policy meeting looming on September 16, it remains unclear whether Cook will still be sitting at the table or if Trump will attempt to install a loyalist. What is clear is that America’s central bank has wandered into uncharted waters, where the independence of monetary policy now collides head-on with the politics of the White House.