President Trump said late Monday he removed Federal Reserve Governor Lisa Cook from her post, following through on a threat to oust her if she refused to resign. The decision comes after members of his administration alleged Cook engaged in mortgage fraud related to the purchase of two properties earlier this decade.
“You are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately,” the president wrote in a letter addressed to Cook and shared on social media. “I have determined there is sufficient cause to remove you from your position.”
In a statement, Cook said Trump has no authority to fire her and that she would not quit.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said in a statement released by her attorney, Abbe Lowell. “I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Lowell said Tuesday they would be filing a lawsuit to challenge what they called an “illegal action.”
The move marks an unprecedented action, thrusting the Federal Reserve into uncharted territory and likely setting up a legal battle that could reach the Supreme Court.
“Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only ‘for cause,'” a Federal Reserve spokesperson said Tuesday.
“Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people.” The Fed acknowledged in its statement Cook’s intention to challenge Trump’s decision, adding, “the Federal Reserve will abide by any court decision.”
Federal Reserve Chairman Jerome Powell, and Board of Governors member Lisa Cook, right, listen during an open meeting of the Board of Governors at the Federal Reserve, June 25, 2025, in Washington. (AP Photo/Mark Schiefelbein, File) · ASSOCIATED PRESS
In his letter, Trump said Cook made conflicting declarations about her primary residence, first claiming a Michigan property would serve as her main home, then signing a separate agreement two weeks later stating the same about a Georgia property. He argued it was “inconceivable” she was unaware of the initial pledge and “impossible” she intended to honor both.
“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 wrote. “At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.”
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The president had been pressing for Cook’s resignation since last week after a letter sent by Federal Housing Finance Agency head Bill Pulte urged Attorney General Pam Bondi to investigate Cook over this pair of mortgages.
Pulte wrote in a letter dated Aug. 15 that Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.”
The Financial Times reported last Thursday that the Department of Justice sent Fed Chair Jerome Powell a letter calling on the chair to remove Cook from her post.
President Donald Trump holds up a signed proclamation honoring the fourth anniversary of the attack at Abbey Gate, in the Oval Office of the White House, Monday, Aug. 25, 2025, in Washington. (AP Photo/Alex Brandon) · ASSOCIATED PRESS
Trump said Friday that he’d fire Cook just moments after Fed Chair Jerome Powell spoke at Jackson Hole, Wyo., in a key policy speech that appeared to open the door for a September interest rate cut.
In a client note on Tuesday, economists at Capital Economics said, “It remains unclear whether Trump’s letter firing Cook, posted on social media yesterday, will have any practical effect on policy setting in the near term.”
Markets were little-changed in response to the developments on Tuesday.
Read more: How much control does the president have over the Fed and interest rates?
Last week, Cook said in a statement, “I have no intention of being bullied to step down from my position because of some questions raised in a tweet.”
Cook, in challenging Trump’s removal order, could immediately seek an injunction reinstating her while litigation moves forward. No charges have been filed against her, though a Justice Department official last week signaled possible plans to investigate her.
The president’s decision to oust Cook also comes amid broader, ongoing changes on the Fed’s Board of Governors.
Earlier this month, Trump nominated Council of Economic Advisers Chair Stephen Miran to the Fed board to fill a seat left empty by Adriana Kugler, who stepped down unexpectedly from the board on Aug. 8.
The search for a replacement for Fed Chair Jerome Powell, whose term leading the central bank ends in May 2026, also continues in the background. Trump said recently that the field of possible replacements for Powell was “down to three or four” candidates.
Trump has repeatedly called on Powell to cut rates more aggressively, coining the nickname “Too Late” for the Fed chair. Trump first appointed Powell to the role in 2017; former President Joe Biden renominated Powell as Fed chair in 2021.
The president has also targeted the central bank’s $2.5 billion renovation of the Federal Reserve’s headquarters as a “sort of” fireable offense for the Fed chair. Trump and Powell met at the renovation site in late July as Trump once again called for Powell to lower interest rates.
Powell is also a member of the Fed’s Board of Governors, and his term expires in 2028. It isn’t clear whether Powell will also vacate that post when his term as Fed chair ends next year.
Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Josh Schafer contributed reporting.
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