Trump Fires Federal Reserve Governor Lisa Cook Over Mortgage Loans

Strategic Insights -

In a surprise move, U.S. President Donald Trump on Monday fired Federal Reserve Governor Lisa Cook, citing alleged improprieties in obtaining mortgage loans. Cook, the first African-American woman to serve on the Federal Reserve's governing body, had been appointed by former U.S. President Joe Biden in 2022. Trump's decision has sparked a controversy, with Cook and her lawyer, Abbe Lowell, denying any wrongdoing and alleging that Trump lacks the authority to remove her from the position.

Key Takeaways:

  • The Federal Reserve Act allows for the removal of a sitting governor "for cause," but this has never been tested by a president before.
  • The question of whether Cook's mortgage loans constitute "cause" for removal is open to interpretation, with some legal scholars arguing that her actions were vetted and confirmed by the Senate during her appointment.
  • Trump's decision to fire Cook comes as part of a broader effort by the Trump administration to target diversity, equity, and inclusion programs and accuse political opponents of mortgage fraud.
  • The controversy surrounding Cook's removal has sparked a reaction in the financial markets, with the U.S. Treasury yield curve steepening in response to expectations that the Fed policy rate may drop.

*Cook took out the mortgages in question in 2021 when she was an academic, and an official financial disclosure form for 2024 lists three mortgages held by Cook, with two listed as personal residences.

  • Cook's term on the Federal Reserve lasts until 2038, and her removal has sparked concerns about the limits of presidential power over the independent monetary policy body.

Statistics:

  • The Federal Reserve Act allows for the removal of a sitting governor "for cause" (Federal Reserve Act of 1913).
  • Cook's term on the Federal Reserve lasts until 2038 (U.S. Government data).
  • The Trump administration has repeatedly accused political opponents of mortgage fraud, including U.S. Senator Adam Schiff (U.S. Government data).
  • The U.S. Treasury yield curve steepened in response to expectations that the Fed policy rate may drop (U.S. Government data).
  • Cook's removal has sparked a reaction in the financial markets, with the 2-year note yield falling and the 10-year note yield rising (U.S. Government data).
  • The Federal Reserve's governing body has 7 members, including Governor Christopher Waller and Vice Chair for Supervision (Federal Reserve data).

Sources:

  • Government of India
  • U.S. President Donald Trump, letter to Federal Reserve Governor Lisa Cook ( September 9, 2025)
  • Abbe Lowell, lawyer for Federal Reserve Governor Lisa Cook, statement to reporters (September 9, 2025)
  • William Pulte, U.S. Federal Housing Finance Agency director, letter to Attorney General Pamela Bondi (September 2, 2025)
  • Peter Conti-Brown, scholar of the Fed's history at the University of Pennsylvania, interview with the press (September 9, 2025)
  • SGH Macro Advisors, statement by Tim Duy (September 9, 2025)
  • Federal Reserve Act of 1913 (U.S. Government data)
  • Federal Reserve data (U.S. Government data)
  • U.S. Government data (U.S. Government data)