In a move that could dramatically alter the balance of power over the United States’ central bank, former President Donald Trump announced he was dismissing Federal Reserve Board Governor Lisa Cook—only for Cook to refuse to step aside.
Legal analysts say the president’s authority to remove a sitting Fed governor is unclear, setting up a potential court showdown that could redefine presidential control over independent agencies.
Trump’s effort to oust Lisa Cook, one of the seven Federal Reserve governors, has generated controversy and raised legal questions. Appointed by President Joe Biden in 2022, Cook has declared she will remain in her position, directly challenging Trump’s assertion of authority.
Legal experts say the action rests on uncertain legal footing. “It’s an improper firing, though the president may argue the Constitution permits it,” said Lev Menand, a law professor at Columbia University.
Menand noted that while the Supreme Court has increasingly affirmed presidential authority over certain agency officials, a case involving a Federal Reserve governor has yet to be tested in court.
The implications are significant. The Fed’s independence is viewed as critical to ensuring financial stability and controlling inflation.
If Trump succeeds in forcing Cook out, it could shake confidence in the central bank and potentially drive up borrowing costs for mortgages, auto loans, and business credit.
Trump cited mortgage fraud allegations in a letter posted to his Truth Social account, claiming Cook misrepresented ownership of two primary homes—one in Ann Arbor, Michigan, and one in Atlanta—in 2021 to obtain favorable mortgage terms. The accusations were made by Bill Pulte, a Trump appointee to the oversight board for Fannie Mae and Freddie Mac.
Cook has retained prominent attorney Abbe Lowell to contest her removal.
Lowell criticized Trump’s action, saying, “His reflex to intimidate is misguided, and his demands lack proper procedure, justification, or legal authority. We will take all steps necessary to block this unlawful attempt.”
Cook, the first Black woman to serve as a Fed governor, is a Marshall Scholar with degrees from Oxford University and Spelman College, and has taught at Michigan State University and Harvard Kennedy School.
Her choice to stay in office underscores both her personal determination and the legal ambiguity surrounding presidential control of independent agencies.
Conclusion:
The clash between Trump and Cook highlights the fragile balance between executive power and the autonomy of key federal institutions.
As Cook prepares to defend her role in court, the case could establish a landmark precedent on the limits of presidential authority over the Federal Reserve.
Beyond its legal consequences, the outcome will carry broad implications for the Fed’s ability to maintain stability, manage inflation, and sustain public trust in the U.S. financial system.