Federal Reserve Governor Lisa Cook Removed

A significant legal and political battle looms over the independence of the nation’s central bank.

New Delhi, August 26, 2025: Federal Reserve Governor Lisa Cook has been removed from her position by U.S. President Donald Trump, a decision that has sparked a significant legal and political controversy over the independence of the nation’s central bank. The dismissal, announced by the president on his Truth Social account, was justified by allegations of mortgage fraud against Cook.

In a letter addressed to Cook, it was stated that she was being removed for “sufficient cause.” The allegations, originally raised by a Trump-appointed official, claim that Cook declared two different properties as her primary residence in 2021 to secure more favorable loan terms. While the matter has been referred to the Department of Justice for investigation, no charges have been filed against Cook, and she has publicly denied any wrongdoing.

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This move is seen as a dramatic escalation in the ongoing political pressure being exerted on the Federal Reserve. The central bank’s independence has long been considered a crucial component of its ability to manage monetary policy effectively, especially in combating inflation. The Federal Reserve Act allows for a governor to be removed only for “cause,” a term that is typically interpreted as proven neglect of duty or misconduct. Legal experts have noted that Cook is likely to challenge the decision in court, and she may be able to remain in her role until the legal process is concluded.

The dismissal of Cook, who was the first Black woman to serve on the Fed’s board, opens up a second vacancy on the seven-member Board of Governors, following the recent resignation of Governor Adriana Kugler. With the ability to now fill two seats, the president is presented with an opportunity to appoint new members who may be more aligned with his stated desire for aggressive interest rate cuts. This has raised concerns among economists and analysts who fear that the politicization of the Fed could undermine its credibility and potentially damage the stability of the U.S. economy.