Trump Shakes Up Fed: Fires Governor Lisa Cook in Bold Power Move

Federal Reserve Governor Lisa Cook gets the axe as Trump reshapes monetary policy landscape.

Political Shakeup at the Fed

The dismissal sends shockwaves through financial circles—another chapter in Trump's ongoing confrontation with central bank independence. Cook's removal follows months of tension over interest rate policies and regulatory approaches.

Market Implications

Traders brace for volatility as the Fed's composition shifts. Previous Trump-appointed governors typically favored looser monetary policy—potentially bullish for risk assets despite institutional concerns.

Because nothing says 'stable monetary policy' like sudden personnel changes based on political loyalty—just what you want from the world's most important financial institution.

Pulte accused Cook, Trump demanded resignation

The claims against Lisa began spreading on August 20 after Federal Housing Finance Agency Director Bill Pulte, who has regularly criticized Federal Reserve Chair Jerome Powell, posted on social media accusing her of fraud. He followed up by sending a criminal complaint to the Justice Department, which Trump then referenced in his letter.

Shortly after Pulte’s post went public, Trump called for Lisa Cook to resign, writing, “Cook must resign, now!!!” on Truth Social. Lisa responded with a firm denial and refused to leave her role.

“I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said in a statement. Trump, not waiting for a court ruling or legal outcome, made good on his threat two days later. Speaking to reporters on August 22, he said, “What she did was bad.”

The firing is now expected to trigger a legal showdown. The Federal Reserve Act says a president can only remove a governor “for cause,” but doesn’t specify what “cause” means.

Traditionally, it’s interpreted to mean criminal misconduct or failure to perform duties. Legal experts told the New York Times that if a court lets Lisa continue working during the case, it could reach the Supreme Court.

Trump moves to reshape Fed as Powell resists pressure

If Trump wins the court fight, he’ll have another seat to fill on the Federal Reserve Board, giving him further power to reshape the institution. Lisa was the first Black woman to serve as a Fed governor. Governors serve 14-year terms, meaning her removal opens up long-term influence.

Two of the seven current board members, Christopher Waller and Michelle Bowman, were appointed by Trump during his first term. He also made Jerome Powell the Fed’s chair in 2017.

Earlier this year, Adriana Kugler stepped down suddenly, creating another opening. Trump has nominated Stephen Miran, head of the Council of Economic Advisors, to take that seat. With Lisa gone, Trump now has two nominations in play, further tightening his grip on the board.

Trump has consistently attacked the central bank for refusing to slash interest rates faster. His complaints about Powell have gone on for years. Even though he installed Powell in the top job, Trump has publicly said he might fire him before his term ends next year. That threat hasn’t gone away.

At the Jackson Hole symposium, Powell said that the Fed might cut rates if necessary. He added that the central bank would proceed “carefully” going forward. Trump’s moves continue to test the line between presidential authority and the Fed’s independence, pushing it into a space no one’s seen before.

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