Lisa Cook is refusing to back down from her firing without cause
Donald Trump thinks he can control all aspects of American life, including free market interest rates. The chair of the Federal Reserve, the global economy and now, one of the Fed’s governors, disagree.
In his latest attempt to pressure the central bank to lower interest rates to lessen political fallout from his ill-conceived tariffs, Trump is attempting to fire Fed Governor Lisa Cook, the first Black woman to serve on the board of governors. Her appointment, under Section 10 of the Federal Reserve Act of 1913, can only be terminated by a president for cause.
“Cause,” though, does not mean whatever Trump wants it to mean; rather, cause is statutorily defined as “inefficiency, neglect of duty, or malfeasance in office.”
On Aug. 25, he announced his intention to remove Cook from office on the basis of allegations falling outside that statutory definition: Unsubstantiated accusations from a Trump ally that Cook made false statements on a mortgage application in 2021, before she joined the Federal Reserve. (Cook has not been charged with or convicted of a crime.) If Trump succeeds, he will have appointed the majority of the seven-member Board of Governors, giving him direct influence over their decisions.
As the central bank of the United States, the Fed sets the nation’s monetary policy. Its dual statutory goals are to maximize nationwide employment and protect the value of the U.S. dollar. The agency is part of the federal government, but, by statute, it operates independently.
If the Fed were to fall under the influence of Trump or any other elected official seeking to tie interest rates to their political agenda, economic consequences would be dire: Investors would face heightened market volatility due to uncertainty and artificially manipulated interest rates, causing confidence in U.S. assets to drop.
The president’s action came after he made repeated threats to remove Fed officials, including Chair Jerome Powell, because he is unhappy the agency hasn’t lowered interest rates to mask market reaction to his tariffs, which have caused unprecedented levels of volatility and uncertainty. Because the economy is evolving with a potentially weakening job market, the Fed is taking a “wait-and-see” approach in lowering interest rates until it is sure its dual mandate of maximum employment and low, stable inflation can be achieved.
In a letter addressed to Cook, Trump wrote, “In light of your deceitful and potentially criminal conduct in a financial matter… I do not have confidence in your integrity.
