The unsavory saga began when William Pulte, the Director of the Federal Housing Finance Agency made a criminal referral concerning Cook to Attorney General Pam Bondi, alleging that Cook had made false statements on one or more of the mortgage documents.
A week-long drama over Federal Reserve Board Governor Lisa Cook’s position, following allegations of mortgage fraud, culminated in President Donald Trump firing the central bank official.
“You are hereby removed from your position on the Board of Governors of the Federal Reserve, effectively immediately,” Trump said in a letter addressed to Cook, which was posted on his Truth Social account.
Trump based his action on Article II of the Constitution, which allows the president to remove a federal official at his discretion, for cause. Cook is the first African-American woman to serve as a governor on the Fed board.
“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks,” Trump said, adding that “the American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.
“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.”
Reacting to the move, Sen. Elizabeth Warren (D-Mass.) said in an X post that “Trump is desperately looking for a scapegoat to cover for his own failure to lower costs for Americans and firing Lisa Cook is his latest move.”
“It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and any court that follows the law will overturn it.”
The market has in the past reacted with volatility to Trump’s rub-offs with the Fed, which many saw as a threat to the central bank’s independence. Nevertheless, the trend has been generally upward.
The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) ETF are up 10.28% and 11.85%, respectively, for the year.
The unsavory saga began when William Pulte, the Director of the Federal Housing Finance Agency (FHFA) and a Trump ally, made a criminal referral concerning Cook to Attorney General Pam Bondi, alleging that Cook had made false statements on one or more of the mortgage documents.
In Pulte’s report, he said Cook “falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute.”
Immediately after, Trump called for Cook’s resignation through a Truth Social post. The Fed Governor responded by issuing a public statement that she has “no intention of being bullied to step down from my position” but pledged to “answer any legitimate questions and provide the facts.”
The Federal Reserve Board comprises seven members, who are nominated by the President and confirmed by the Senate. A full term is 14 years, and Cook’s term is set to expire by 2038.
Trump has had a fractious relationship with the Fed since assuming office, calling Fed Chair Powell “Too Late Powell” and criticizing him in interviews and on social media for being slow to reduce interest rates.
Trump, as well as his administration, has in the past called for the resignation of Powell as chair, although his term is set to expire only by May 2026. Powell was also pulled up for alleged improprieties in the renovation of the two buildings of the Federal Reserve’s headquarters, with Trump visiting the buildings for inspection.
Following a rate pause decision in July, Adriana Kugler, who served as a governor and absented herself from the rate-setting meeting, stepped down before her term was to expire. Trump has nominated Stephen Miran as a replacement for Kugler.
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