President Donald Trump announced the removal of Federal Reserve Governor Lisa Cook, the only Black woman to serve on the board. Critics call it an attack on the Fed's independence, while Cook says no legal cause exists for her firing.

Washington

President Trump has stated that he has dismissed Federal Reserve governor Lisa Cook, marking the first time a sitting president has claimed to fire a member of the Federal Reserve Board. The decision follows allegations from the Federal Housing Finance Director that Cook committed mortgage fraud related to applications for homes in Michigan and Georgia, both listing as primary residences.

Lisa Cook, who is the only Black woman to have served on the board, maintains that there is no legal cause for her dismissal and has not been charged with any wrongdoing. Legal experts note that the law regarding removal of Federal Reserve governors is unclear and anticipate that the firing will be contested in court, potentially reaching the Supreme Court. The move has raised concerns about the independence of the Federal Reserve and its implications for U.S. economic policy.

Trump says he fired Lisa Cook from Federal Reserve board

For the first time ever, the President of the United States says he has fired a Federal Reserve governor. Critics say that President Trump's targeting of that governor, Lisa Cook, who happens to be the only black woman to ever serve on the board, is an attack on the Fed's historic independence. Trump claims that Cook committed mortgage fraud and has demanded her resignation. In response, Cook says that no cause exists under the law for her to be fired. Money Watch correspondent Kelly O'Grady is here with more on this. Kelly, so go into a little more details if you could. Good morning to you. About the firing of Lisa Cook, the reasoning from the President, and can he do this? Okay, so let's start with the reason first. The Federal Housing Finance Director made allegations that Lisa Cook had committed mortgage fraud. And specifically, he cites two mortgage applications, one for a house in Michigan, one for a house in Georgia, that were filed two weeks apart. Yeah, years ago, right? Before she had this job. Correct. So, and both said that they would be her primary residence. Now, you can only have one residence listed as your primary for the year. So she is going to have to answer questions about that detail. But what I want to emphasize is these are allegations. She hasn't been charged with any wrongdoing or fraud yet. So this gets to your question of can he do this? He needs cause under the law. But the law is very murky when it comes to what exactly cause is. Is it an allegation of fraud? Is it a charge? Is it a conviction? And so I spoke to a number of legal scholars overnight when this came out. And they said this is absolutely going to be challenged in the courts. And it could even go as far as the Supreme Court. Is the law murky because of how it's written or because who is making the allegations? How it's written. This goes back to 1913. Okay. What would the impact of this firing be? So this calls into question the independence of the Federal Reserve. Remember, the Federal Reserve, it uses interest rates to keep inflation low and keep the employment market full. Any sitting president, this would set the precedent. I don't care if you're Republican or Democrat, that you could potentially use interest rates as a political tool. And that more broadly, whether you're investors, whether you are foreign countries, it just does call into question the health of the U.S. economy. Those are extreme implications here, though, right? This all has to be worked out. And as I said, this would likely be challenged in the courts. Why is he coming after her specifically? Well, because of this allegation of fraud. Exactly. It just seems interesting that they would look at something that happened before she was in that job, why that would even come up on anybody's radar screen. It's all very interesting. Kelly, don't go far, because guess what? We want you to come back in the next half hour. Stick around. Stick around, is the saying. She's back with a story about the cost of appliances. We think you need to hear about this one.

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