Standoff At The Central Bank As Trump Moves To Fire Fed Governor Lisa Cook

President Donald Trump moved to fire Federal Reserve Governor Lisa Cook in a letter and post to social media Monday night. 

It’s unclear if the president has the authority to oust Cook, who has been accused by Trump and his allies of mortgage fraud. But the move is a massive escalation in the White House’s fight against the central bank, which the president views as moving too slowly to cut interest rates. 

Cook, who was appointed by Joe Biden in 2022 and is the first Black woman to sit on the Fed board, is refusing to leave her post. Through her attorney, Abbe Lowell, she said that the Trump administration lacked the legal authority to force her out.

Lowell also said they would file suit challenging the president's action, Bloomberg reported.

“His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action,” 

If successful, Trump will become the first president to ever fire a sitting Fed governor. The attempt comes as analysts, experts and investors are cautiously eyeing what is supposed to be the central bank’s political independence. 

Trump, in a letter addressed to Cook and posted to Truth Social, said he had cause to fire her under the Federal Reserve Act of 1913 because “there is sufficient reason to believe [Cook] may have made false statements on one or more mortgage agreements.”

He said that Americans’ confidence in the integrity of the Fed was key to its proper functioning and that the alleged mortgage fraud shook that confidence.

“In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity,” Trump said. 

The standoff is a crescendo to what has been months of intense criticism and attacks against the Fed, its chairman, Jerome Powell, and, more recently, Cook. Trump's post faced immediate political backlash.

“This is blatantly illegal, and Trump knows it,” Rep. Don Beyer, a Democrat from Virginia, said on X. “Fed independence is vital to protect our economy from political interference. Trump is putting our financial system at risk over bogus claims of fraud—an offense of which he himself was convicted.”

Eroding faith in the Fed’s ability to set monetary policy without interference could weaken the dollar and upend its status as the default global currency. 

The dollar fell in early trading Monday, and the yield of 30-year Treasury bonds, another measure of investors’ view of the long-term health of the economy, spiked. The three major stock indexes were flat in early trading. 

A Fed spokesperson said that Fed governors' long tenures and protection from being fired without cause helped ensure "that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people."

The spokesperson noted Cook's intention to challenge her firing in court and said it would abide by any court decision. The statement doesn't indicate any disciplinary action against Cook, describe any Fed investigation into the accusations or indicate that the central bank will act on the president's demands.

"The Federal Reserve reaffirms its commitment to transparency, accountability, and independence in the service of American families, communities, and businesses," the spokesperson said.

Cook and Lowell didn’t respond to Bisnow’s request for comment Monday morning. 

Bill Pulte, head of the Federal Housing Finance Agency, led the charge against Cook and has for months been attacking the Fed for not cutting its benchmark interest rate. 

Your second home is not your primary home.

— Pulte (@pulte) August 25, 2025

Pulte first publicly lodged the mortgage fraud accusations against Cook in social media posts on Aug. 20. His posts have included what he says are matching signatures from two mortgages that Cook has for separate homes, with both listed as her primary residence. 

He said on X that he had sent a criminal referral to the Department of Justice regarding the alleged fraud and called on Cook to resign. In the following days, Pulte has continued to criticize Cook and call for her to be fired. 

“Fraud will not be tolerated in President Trump’s housing market. Thank you for your attention to this matter,” Pulte posted Monday night after Trump moved to fire Cook, using a phrase that is popular with the president in his own social media messaging. 

Pulte turned his attention to Cook after leading a campaign to oust Powell over a $2.5B renovation of Fed buildings in Washington, D.C., that is over budget and behind schedule. That line of attack has largely fizzled after Powell and the president toured the construction site together. 

Powell, who was appointed by Trump during his first stay in the White House, has said he will stay on until his term ends in May. He has also repeatedly said that the president doesn’t have the authority to fire him.

The benchmark federal funds rate has remained between 4.25% and 4.5% since December, much to the chagrin of Trump and administration officials who say that the elevated rate environment is holding back economic growth. 

Powell has consistently said inflation was running too hot and that the job market remained strong enough to cut rates. But slowing job growth seems to have shifted Powell’s tone. 

The head of the central bank gave investors the impression that a rate cut was coming last week at the Fed’s next meeting during a closely watched speech in Jackson Hole, Wyoming. But he also warned that economic impacts of recent political and trade policy shifts hadn't yet fully materialized.

“Changes in trade and immigration policies are affecting both demand and supply,” Powell said. “In this environment, distinguishing cyclical developments from trends or structural developments is difficult.”

UPDATE, AUG. 26, 3:33 P.M. ET: This story has been updated to include a statement from a spokesperson for the Fed.