President Donald Trump ordered the removal of Federal Reserve Governor Lisa Cook amid unproven claims of mortgage fraud.
In a letter posted to social media Monday night, Trump said Cook, one of seven members of the Fed’s board, was “in effect immediately” in accordance with his authority under the U.S. Constitution and the Federal Reserve Act of 1913.
Citing an allegation aired last week by the US federal mortgage regulators, Trump said “There is good reason to believe he may have made a false statement about one or more mortgage agreements.”
“The Federal Reserve is heavily responsible for setting interest rates and regulating reserve and member banks,” Trump said in a letter shared on his platform, Truth Social.
“The American people must be able to be fully confident in the integrity of their members entrusted with setting policies and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct on financial matters, they have no such confidence in your integrity.
“At the very least, the act in question shows something like a gross negligence in financial transactions that challenges your ability and reliability as a financial regulator,” Trump said.
Trump threatened to fire Cook, a former Michigan State University professor appointed by former President Joe Biden on Friday.
In a statement in response to Trump’s letter, Cook said he would not resign.
“President Trump claimed he would fire me ‘for a cause’ when there is no cause under the law. He has no authority to do so,” Cook said, adding that he will continue to carry out his duties “to help the American economy I have been doing since 2022.”
A Federal Reserve spokesman declined to comment.
Trump’s extraordinary move is set to highlight concerns about the independence of the US Central Bank. This is under intense pressure from the president on low interest rates.
The Federal Reserve’s ability to set interest rates that affect borrowing costs for consumers and businesses without political interference is widely considered an important board of trust in the US economy.
Trump repeatedly attacked committee chairman Jerome Powell, which expired in May, claiming that the fear that his tariffs could lead to runaway inflation is exaggerated as the board does not move fast to cut borrowing costs.
If Trump succeeds in removing the cook, the board will leave two vacant seats following Gov. Adriana Kugul’s resignation earlier this month.
It would give Trump the opportunity to meet the board with the majority of his appointees.
Futures on the Benchmark S&P 500 Stock Market Index are trading outside normal market hours, falling about 0.2% after Trump’s announcement.
Gold, a traditional safe inventory asset during the period of stock market volatility, has been slightly strengthened.
David Wilcox, a senior fellow at the Peterson Institute for International Economics who served as a staff member of the Federal Reserve Committee, faces the reality that “the latitude of latitude for investors to implement monetary policy to implement monetary policy to mercilessly track price stability and maximum employment may not be that large.”
“The damage caused to trust in the US system will not be repaired easily or quickly,” Wilcox said.
Mark Spindel, founder of the Potomac River capital and federal historian, cast Trump’s move as in line with his “active attempt” to gain control of the US Central Bank.
“Because there is a majority of the board, there is a wide latitude to reorganize the system, such as switching district bank presidents to vote for the Federal Open Market Committee,” Spindel told Al Jazeera, referring to a central bank committee to set up monetary policy, which includes four of the 11 regional reserve bank heads, in addition to seven governors.
Trump’s order to remove Cook is set in a potentially prolonged legal challenge.
Under the Federal Reserve Act and the US Supreme Court precedent, the president must demonstrate a “cause” that is widely interpreted to mean miscalculation in order to fire seven central bank governors.
“Perhaps it will be challenged in court due to the lack of relevant stakes and the lack of relevant case law in this area,” Wilcox said.
“Unfortunately, that process will probably run for a long time, perhaps months.”
In a letter earlier this month to U.S. Attorney General Pam Bondy and Justice Department public servants, Federal Housing and Finance Director Bill Plute claimed that Trump’s ally Bill Plute had listed two properties in Ann Arbor, Michigan and Atlanta, Georgia.
In a letter shared on social media, Pulte said Cook “can forge bank documents and property records to obtain more favorable loan terms and commit mortgage fraud under criminal law.”
Mortgages for major homes are usually seen as lower risk than investment property risk, and therefore have lower interest rates.
Cook, the first African-American woman to serve on the board, has not been accused of being cheated or convicted of a crime.
In response to Pulte’s letter, Cook said last week that he would gather information on financial history, “answer legitimate questions and provide facts,” but “had no intention of resigning.”
