US President Donald Trump fired Fed Governor Lisa Cook. Cook was accused of falsely claiming two primary residences in 2021 to get better mortgage rates.
US President Donald Trump fired Federal Reserve Governor Lisa Cook on Monday, intensifying his efforts to exert control over the traditionally independent US central bank. The announcement was made through Trumpโs Truth Social platform, where he cited allegations of mortgage fraud as the reason for her dismissal.
Fraud Allegations Spark Dismissal
The accusations against Cook were first raised by Bill Pulte, a Trump-appointed official who serves on the board that oversees mortgage giantsย Fannie Mae and Freddie Mac. According to Pulte, Cook claimed two primary residences in Ann Arbor, Michigan, and Atlanta, Georgia, in 2021 a tactic that could have helped her secure more favorable mortgage terms.
Typically, mortgage interest rates are higher for second homes or investment properties than for primary residences. Claiming two primary homes may have allowed Cook to benefit from lower interest rates, leading to allegations of mortgage fraud.
Cook refused to resign earlierย
Just days before her firing, Lisa Cook had publicly stated she would not resign from her role, despite Trumpโs earlier calls for her to step down.ย Her position on the Federal Reserve Board is one of seven seats, and her removal could significantly shift the balance of power within the institution both politically and economically. In his announcement, Trump claimed he has the constitutional authority to remove a Federal Reserve governor. However, this decision is expected to face legal challenges, as the independence of the Federal Reserve has long been considered vital to ensuring objective economic policy decisions.
Cook reportedly may be able to remain in her position while the legal battle unfolds. However, she would need to fight the case personally, as the lawsuit would be hers to pursue not the Fedโs.Trumpโs move is part of a broader effort to assert control over independent federal agencies. Throughout his presidency, Trump has frequently criticised the Federal Reserve, especially its Chair, Jerome Powell, for not lowering interest rates fast enough to match his economic agenda.
By removing Cook and potentially replacing her with someone loyal to his policies, Trump could gain more influence over the Fedโs future decisions.