Dismissed US Governor rejects Trump’s order, says President lacks such power

United States President Donald Trump has announced the immediate dismissal of Federal Reserve Governor Lisa Cook, significantly escalating tensions between the White House and the United States central bank.

President Trump asserted that there exists “sufficient reason” to believe that Cook made false statements concerning mortgage agreements, invoking constitutional powers that, according to him, authorize her dismissal.

In response, Cook refuted the president’s action, asserting that he lacks the authority to terminate her employment and declaring her intent to remain in office. “President Trump purported to dismiss me ‘for cause’ when no valid cause exists under the law, and he has no authority to do so,” she remarked in a statement. “I will not resign. I will continue to fulfill my duties to support the American economy as I have been doing since 2022.”

Cook’s attorney, Abbe David Lowell, has also pledged to contest the president’s decision, stating, “We will take whatever actions are necessary to prevent the president’s attempted illegal action.” This unprecedented action marks the first instance of a sitting United States president attempting to remove a member of the Federal Reserve board. Cook, who is one of seven governors on the board, also participates in the Fed’s 12-member committee responsible for setting interest rates.

Appointed by former President Joe Biden in 2022, Cook is noted as the first African American woman to hold this position. During the Federal Reserve’s last rate-setting meeting in July, she voted in alignment with Chair Jerome Powell and the majority of members to maintain interest rates.

The allegations made against Cook originate from a public letter issued by housing finance regulator Bill Pulte, a Trump ally, to Attorney General Pam Bondi, which labeled the matter as a “criminal referral” and called for an investigation. Cook indicated that she first learned of these allegations through the media and clarified that the issue arose from a mortgage application submitted four years prior to her joining the central bank.

“I have no intention of being pressured into resigning from my position due to queries raised on social media,” Cook stated last week, adding that she is in the process of gathering information to address any “legitimate questions” regarding her financial history.

This situation raises significant legal concerns, with experts observing that the White House may need to justify its decision in a court of law. If Cook or the Federal Reserve contests Trump’s directive, it could result in a standoff between the central bank and the presidency. The Federal Reserve, which obtained independence from the U.S. government in 1951, has not yet issued a comment regarding Trump’s decision.

President Trump has also repeatedly criticized Chair Jerome Powell, labeling him a “numbskull” and a “stubborn moron” for resisting the president’s push for substantial interest rate reductions. However, Powell has recently indicated that a rate cut may be possible in September, suggesting that the effects of Trump’s tariffs on inflation might be transient.

Markets responded swiftly to this development, with the U.S. dollar weakening against major global currencies during trading sessions in Asia on Tuesday. Investors speculate that Trump’s prospective replacement for Cook could influence the Federal Reserve’s stance on interest rates.

Julia Lee, head of client coverage for FTSE Russell, remarked, “The crucial question for markets is whether President Trump will succeed in replacing Cook and how such a change might reshape the composition of the Federal Reserve, thus impacting the market’s perception of U.S. investibility.” Shoki Omori, chief strategist at the Japanese bank Mizuho, also voiced concerns regarding the increasing pressure on Powell, warning that future appointees “may simply acquiesce to the desires of the White House,” which presents a troubling outlook.