Trump says he is removing Lisa Cook from Federal Reserve Board

President Donald Trump said Monday that he was taking the extraordinary step of removing Lisa Cook from the board of governors of the Federal Reserve, in a legally dubious maneuver that could undermine the independence of the nation's central bank.

Trump justified the firing, which he said was effective immediately, by pointing to allegations that Cook may have falsified records in order to obtain favorable terms on a mortgage.

Trump said the accusations had compromised Cook, the first Black woman to serve on the board, and her ability to perform as an effective financial regulator. He invoked a power in the Fed's founding statute to dismiss her for cause.

But Cook, who was confirmed by the Senate to the position on the Fed's board, has not been charged with any wrongdoing or convicted of a crime. And she could seek to fight her dismissal, touching off what could be a landmark battle on the president's power over the Fed.

The dismissal nonetheless underscored the extent to which Trump has sought to remake the roster of the nation's central bank, which sets the nation's benchmark interest rates. All along, the president has made no secret of the true source of his anger with the Fed, which he has savaged for months for keeping borrowing costs higher than he would like.

The allegations against Cook came from Bill Pulte, director of the Federal Housing Finance Agency, who has spent weeks fanning Trump's ire against the central bank. Together, Pulte and Trump have drummed up a steady stream of accusations in a bid to install a set of political loyalists at the Federal Reserve.

Pulte had specifically accused Cook of committing mortgage fraud and called on her to resign. He also referred the case to the Justice Department, which opened a criminal investigation at his request, and urged Trump to fire Cook, which the president later said he would do if she did not resign.

On Monday, Trump followed through on that threat. "I have determined that there is sufficient cause to remove you from your position," he said in a letter posted to Truth Social.

Under the Federal Reserve Act, the law that charters the central bank, Trump may dismiss a governor only if he can demonstrate cause, typically defined as professional neglect or malfeasance. In recent days, legal experts have questioned whether the president could satisfy that burden, given the fact that the allegations against Cook have not been proved in court and involve personal matters.

But Trump sought to make the case. "The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks," he said in his letter. "The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity."

For the financial system, the consequences threatened to be far greater, given the unique and defining role the Fed plays as an apolitical arbiter of monetary policy. With Cook's departure, Trump could appoint a new loyalist to the critical board who shares his desire for a swift and dramatic reduction in interest rates, even though economists fear that a premature reduction could cause severe damage.

In firing Cook, whose 14-year term was supposed to run through 2038, Trump repeated Pulte's allegations that she had falsified bank records and other documents in order to obtain favorable terms on a mortgage.

While Pulte insisted that he sought only to combat fraud, he and Trump still appeared to target Cook with a clear political objective in mind. The two men have sought to weaponize the instruments of government against the Fed and its members, including the Fed chair, Jerome Powell, at a moment when they have kept interest rates steady out of concern that the president's policies could cause inflation.

By focusing on Cook's mortgages, in particular, their tactics also fit an emerging pattern of political retribution. Trump and Pulte have trotted out similar allegations of fraud against the president's perceived enemies, including Sen. Adam Schiff, D-Calif., who as a representative led congressional inquiries into Trump during his first term; and New York Attorney General Letitia James, who won a civil fraud trial against Trump before he returned to office.

In her sole comments, issued in a statement last week, Cook said she had "no intention of being bullied to step down from my position," but pledged to "answer any legitimate questions and provide the facts."

Her departure nonetheless would create a second vacancy for Trump to fill on the seven-member Federal Reserve Board, after another governor, Adriana Kugler, resigned unexpectedly earlier in August. The president has nominated Stephen Miran, the chair of the White House Council of Economic Advisers, to fulfill Kugler's term, which concludes in January. Both posts require Senate confirmation.

This article originally appeared in The New York Times.