Fed's Cook rejects Trump firing bid, term runs to 2034

Federal Reserve Governor Lisa Cook told the White House there is no legal basis to remove her, rejecting President Donald Trump's renewed firing bid.

Federal Reserve Governor Lisa Cook told the White House there is no legal basis to remove her from the board, rejecting President Donald Trump's renewed firing bid over mortgage fraud allegations she denies. Her term runs to 2034.

"An inadvertent error is not fraud, as the President and a third of his cabinet should know because they reportedly did the same thing," her attorneys Abbe Lowell and Norman Eisen said in a statement, adding that the attacks are "an attempt by President Trump to force the Federal Reserve to bend to his will."

Trump first sought to fire Cook a year ago after housing finance regulator Bill Pulte showed she had mortgage applications for two separate properties listed as primary residences within a short timeframe. The Supreme Court ruled Cook could remain in her position while the case is litigated, but said Trump could try again if he provided proper notice and a chance to contest it. White House deputy chief of staff Dan Scavino wrote to Cook earlier this month, citing the apparent mortgage application errors and asking for her defense.

If Trump succeeds in removing Cook, his appointees would gain a majority on the Fed's seven-member board, giving the president effective control over the central bank's monetary policy direction. Trump has long attacked the Fed for not cutting its benchmark interest rate quickly enough.

Cook's lawyers argue the mortgage filings were an "entirely inadvertent oversight." They note that Cook began the process for financing her Atlanta condominium by using the lender's website to seek information about a "vacation home" mortgage — a clear indication of the loan type she was looking to acquire. The lender, which had previously worked with Cook to refinance her Massachusetts property, knew she had lived in Michigan for more than 15 years and worked full-time as a tenured professor at Michigan State University.

Other documents show Cook regularly indicated her "primary residence" or "permanent residence" to be Michigan and confirmed her Atlanta property was a "2nd Home." Her lawyers also cite media reports that Trump himself and several cabinet members, including Treasury Secretary Scott Bessent, have made dubious claims about a property's primary residence status.

The Federal Reserve Act gives governors 14-year terms to insulate them from politics, but says the president can remove them "for cause." The Supreme Court did not lay out precise criteria for what clears that bar or how a president must establish it, leaving the definition open to interpretation. Cook's lawyers argue that even if the mortgage filings contained errors, they do not rise to the level of "cause" required for removal under the statute.

Fed Independence at Stake

If Trump is able to remove Cook, he could name a replacement and his appointees would gain a majority on the Fed's board. That would give the president unprecedented influence over monetary policy, which he has repeatedly pressured the Fed to ease. The case is closely watched as a test of whether the Fed can maintain its political independence.

The pressure on Cook is part of a broader pattern. The Justice Department has also been investigating mortgage fraud allegations against Democratic Sen. Adam Schiff of California, and New York Attorney General Letitia James was indicted this month on similar charges in a case pushed by Trump. Both have denied wrongdoing. The administration's approach has raised concerns among economists and market participants about the politicization of the central bank.

What Happens Next

The question now is whether Trump again attempts to fire Cook with more of a review process — and if so, how the courts respond. The White House did not immediately respond to a request for comment on Cook's letter. If Trump does move to fire her again, the case would likely return to the courts, where the definition of "for cause" under the Federal Reserve Act would be tested.

This article is for informational purposes only and does not constitute investment advice.