In an unprecedented move that escalates his administration’s pressure on the U.S. central bank, President Donald Trump announced Monday he has fired Federal Reserve Governor Lisa Cook. The removal, effective immediately, is the first time a president has fired a Fed governor in the institution’s 111-year history and is expected to trigger a significant legal battle over presidential authority and the Federal Reserve’s independence.
The firing was announced in a letter posted to Trump’s Truth Social platform on August 25, 2025. “Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately,” Trump wrote. He cited what he called Cook’s “deceitful and potentially criminal conduct in a financial matter.”
The controversy stems from allegations of mortgage fraud first raised publicly on August 15 by Federal Housing Finance Agency (FHFA) Director Bill Pulte, a Trump appointee. Pulte accused Cook of claiming two different properties—one in Michigan and another in Georgia—as her primary residence on mortgage documents signed just two weeks apart in 2021. Designating a property as a primary residence can result in more favorable loan terms, such as lower interest rates. Pulte sent a criminal referral to the Justice Department, which has said it will investigate the matter, though no formal charges have been filed against Cook.
Following Pulte’s accusations, President Trump quickly amplified the pressure. On August 20, he demanded Cook’s resignation, and two days later, he told reporters, “I’ll fire her if she doesn’t resign.” Cook, the first Black woman to serve on the Fed’s board, responded defiantly to the initial calls for her to step down. In a statement, she said she had “no intention of being bullied to step down from my position because of some questions raised in a tweet” and pledged to provide facts to answer any legitimate questions about her financial history.
The legality of Trump’s action is now in question. The Federal Reserve Act of 1913 states that a president can only remove a Fed governor “for cause.” While the term is not explicitly defined in the law, it has historically been interpreted to mean malfeasance or dereliction of duty. Trump’s letter asserts that he has “determined that there is sufficient cause to remove you from your position.” This move is widely expected to be challenged in court, with the potential to reach the Supreme Court.
Former Treasury Secretary Larry Summers called the attacks on Cook “chilling for many Americans,” warning of a corrosive effect on the nation’s institutions. “If there’s a norm that all kinds of pressure tactics are legal, including bringing the power of law enforcement and investigation and demands for resignation to bear… that is a very profound threat,” Summers said.
Cook, an economist from Michigan State University, was nominated to the board by former President Joe Biden and took office in May 2022. She was confirmed for a full 14-year term in September 2023. Her removal creates another vacancy on the seven-member board for Trump to fill, further enabling him to reshape the central bank’s leadership. The Fed’s next monetary policy meeting is scheduled for September 16-17, and it is unclear how this development will affect its proceedings.
The market showed a modest reaction to the news overnight. The ICE U.S. Dollar index fell by 0.3%, while the 2-year Treasury yield, which is sensitive to Fed policy, ticked slightly lower. The firing places the Federal Reserve in uncharted territory, raising critical questions about its ability to operate independently from political pressure.
