On August 25, 2025, President Donald Trump announced the immediate dismissal of Federal Reserve Governor Lisa Cook, citing alleged false statements on mortgage applications as the cause. Cook, the first African-American woman to serve on the Fed's board, was accused of claiming two properties as her primary residence to obtain favorable mortgage terms. The allegations, stemming from loans she obtained in 2021 before joining the Fed, were referred to the Attorney General for investigation.
Cook has not commented, and neither has the Fed. Her firing, potentially the first test of the president’s legal authority to remove a Fed governor under the "for cause" standard in the Federal Reserve Act, marks an extraordinary incursion into the traditionally independent institution. The move has sparked concerns over political interference and could impact market expectations, as reflected in a steepening U.S. Treasury yield curve.
Critics argue the action signals Trump’s intent to reshape the Fed with more compliant figures, undermining its independence. Cook, appointed by President Biden in 2022 for a term lasting until 2038, had resisted calls to resign, saying she intended to respond factually to any legitimate concerns. The unprecedented decision may prompt legal challenges and further complicate U.S. monetary policy governance.
The allegations against Cook were brought to light by Bill Pulte, Director of the Federal Housing Finance Agency, who referred the matter to the Department of Justice. Pulte alleged that Cook misrepresented her primary residences to secure more favorable loan terms, potentially constituting mortgage fraud. Cook has denied any wrongdoing and has vowed to remain in her role, stating she is prepared to clarify the transactions.
This development marks a significant escalation in the Trump administration's efforts to influence the Federal Reserve's composition and policy direction. The situation continues to evolve, with potential legal battles on the horizon regarding the president's authority to remove a sitting Fed governor.
