Trump Orders Removal of Fed Governor Lisa Cook Over Mortgage Fraud Allegations

In a dramatic and unprecedented move, U.S. President Donald Trump has ordered the dismissal of Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. The announcement, made late Monday through a letter posted on Trump’s social media platform Truth Social, has raised serious concerns about the independence of the central bank.

Trump stated that Cook’s removal was “effective immediately” under the authority granted by the U.S. Constitution and the Federal Reserve Act of 1913. Referring to claims from the Federal Housing Finance Agency, Trump alleged that Cook made false statements on mortgage agreements related to properties in Ann Arbor, Michigan, and Atlanta.

“The American people must have full confidence in the honesty of those entrusted to oversee the Federal Reserve,” Trump wrote. “Your misconduct calls into question your credibility as a regulator.”

The decision comes just days after Trump threatened Cook—appointed by former President Joe Biden—with dismissal if she refused to resign.

Concerns Over Fed Independence

Economists and market analysts warn that the move could undermine trust in the Federal Reserve’s autonomy, a cornerstone of U.S. economic stability. The Fed sets interest rates and regulates banks without direct political interference, ensuring long-term confidence in financial markets.

David Wilcox, a senior fellow at the Peterson Institute for International Economics, noted:

“The damage to trust in America’s financial system will not be easily or quickly repaired.”

Mark Spindel, founder of Potomac River Capital, added that Trump’s action aligns with his “aggressive efforts” to control the Fed, potentially reshaping its structure if more resignations or dismissals occur.

Market Reactions

Following Trump’s announcement, futures tied to the S&P 500 index slipped by 0.2%, while gold prices rose slightly as investors sought safe assets. Analysts expect prolonged legal battles, as the Federal Reserve Act requires “cause” for dismissal—a condition that courts will likely interpret strictly.

What Happens Next?

If Trump succeeds, the Federal Reserve Board will face two vacancies, giving him greater influence over appointments and possibly altering future monetary policy decisions. With Fed Chair Jerome Powell’s term also nearing its end, Trump could soon reshape the leadership of the U.S. central bank entirely.

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