What will Trump's attempted Fed firing mean for the economy?

(NEXSTAR) - President Trump announced his intention to fire Federal Reserve Governor Lisa Cook, accusing her of mortgage fraud, in a move that could challenge the independence of the central bank.

During a cabinet meeting, President Trump defended his decision, stating the need for officials who are "100% above board." This unprecedented attempt to remove a Federal Reserve governor comes as the President seeks greater control over the central bank, which is responsible for setting interest rates.

"We need people that are 100% above board," President Trump said, justifying his attempt to dismiss Cook. Cook, however, maintains that the President lacks the authority to fire her without cause, and she has refused to step down.

George Washington University Law Professor Paul Schiff Berman commented on the situation, saying, "The president cannot remove them just at his whim, only essentially for dereliction of duty." He warned that such a move could undermine the Federal Reserve's independence.

"I think that would have catastrophic effects for our economy," Schiff Berman told Nexstar.

Cook's lawyer issued a statement asserting that the President's attempt to fire her "lacks any factual or legal basis" and indicated plans to file a lawsuit. This legal challenge could further complicate the President's efforts to exert influence over the Federal Reserve.

A Federal Reserve spokesperson stated that the body will continue to carry out its duties and abide by any court decision, indicating that the central bank is prepared to navigate the legal and political challenges ahead.

All facts in this report were gathered by journalists employed by Nexstar. Artificial intelligence tools were used to reformat from a broadcast script into a news article for our website. This report was edited and fact-checked by Nexstar staff before being published