President Trump has attempted to fire Lisa Cook, one of the Federal Reserve’s six governors, as part of his effort to gain control over the central bank. In a move that economists warn could lead to higher inflation and government borrowing costs, Mr. Trump removed Ms. Cook “for cause” citing allegations of mortgage fraud.
Ms. Cook has not been charged with any crime, but her removal sets up a long legal battle between her and the president. Legal experts say she has a strong case given that the alleged fraud involves private conduct, not her work at the Fed. A protracted legal battle is likely, with Ms. Cook potentially fighting for her seat on the board until 2038.
The move comes as Mr. Trump seeks to remake the Fed and install loyalists in key positions. If successful, he will have appointed a majority of the Fed’s seven-member board even before his term ends next spring. Economists warn that this could lead to worse economic performance and higher inflation, as businesses, investors, and consumers lose confidence in policymakers’ decisions.
The allegations against Ms. Cook are part of a larger effort by Mr. Trump to install loyalists at the central bank. Experts say that attempting to oust Fed officials could cause panic in financial markets, particularly among bond investors who count on the Fed to keep inflation low. However, so far, the market reaction has been muted, fueling concerns that Mr. Trump may be emboldened to take further steps.
The timing of the move is ironic, as policymakers appeared poised to begin giving Mr. Trump the rate cuts he has long demanded. The Fed’s next meeting in mid-September will likely be affected by Ms. Cook’s ouster, potentially leading to a standoff with no precedent in the Fed’s century-long history.
Source: https://www.nytimes.com/2025/08/26/us/politics/trump-fed-lisa-cook.html