Trump fired Federal Reserve Governor Lisa Cook, citing FHFA director's pretextual mortgage fraud allegation

On August 25, 2025, President Trump posted a termination letter to Truth Social removing Federal Reserve Governor Lisa Cook "effective immediately," citing "my authority under Article II of the Constitution" and a criminal referral filed by Federal Housing Finance Agency Director William Pulte, who alleged Cook had improperly designated two homes as primary residences in 2021 to obtain better mortgage terms. The stated basis was conduct predating Cook's 2022 Senate confirmation to the Fed Board.

The Federal Reserve Act, 12 U.S.C. § 241, limits presidential removal of Board governors to "for cause." That restriction has been in place since 1935, enacted alongside the Fed's restructuring to protect monetary policy from short-term political intervention. Courts have interpreted "for cause" to require genuine performance failures or statutory violations in office — not pretextual allegations about pre-appointment personal finances sourced from a political appointee in an unrelated agency. Pulte, who directs the FHFA, is a Trump appointee with no investigative jurisdiction over the Fed; no law enforcement body brought the mortgage allegation. Cook is the first Black woman to serve on the Fed Board, appointed by President Biden in 2022.

On September 9, 2025, U.S. District Judge Jia Cobb issued a preliminary injunction blocking the removal, finding Cook had "made a strong showing that her purported removal was done in violation of the Federal Reserve Act's 'for cause' provision." Trump subsequently escalated the case to the Supreme Court.

Updates

2026-06-29 — Supreme Court ruled 5-4 that Trump cannot fire Lisa Cook, upholding Federal Reserve independence [3]

On June 29, 2026, the Supreme Court ruled 5-4 in favor of Federal Reserve Governor Lisa Cook, holding that she could remain in her position while her legal challenge to Trump's removal proceeded. Chief Justice Roberts, writing for the majority joined by Justices Sotomayor, Kagan, Kavanaugh, and Jackson, held that accepting the administration's position "would in effect transform the Federal Reserve's for-cause protection into at-will employment — an interpretive leap out of step with the statute Congress enacted and our Nation's tradition of central banking protected from political interference." The ruling was significant in distinguishing the Federal Reserve from other independent agencies the Court had previously allowed Trump to restructure: the Fed's unique statutory framework and 111-year history of insulation from presidential removal warranted different treatment. Justices Thomas, Alito, Gorsuch, and Barrett dissented.

2026-08-05 — White House renewed removal effort using the same mortgage-fraud pretext [4, 5, 6]

White House Deputy Chief of Staff Dan Scavino sent Cook a letter stating Trump "is considering removing you from your position on the Board of Governors," citing the same 2021 mortgage-fraud allegation FHFA Director Pulte first raised in August 2025, and gave her until August 26, 2026 to respond. The letter invoked the June 29 ruling's holding that Cook was entitled to notice and an opportunity to respond before any final removal decision; it did not raise any new allegation. Cook's attorneys, Abbe Lowell and Norm Eisen, called the claims "as baseless now as they were a year ago," and said they would again challenge the pretext. Whether this notice constitutes lawful process under the Court's ruling or is itself a renewed attempt to remove Cook on a pretext the ruling left unresolved remains contested and unresolved as of this recording.

2026-08-27 — Cook's attorney called the removal threat "unfounded" in a formal response [7, 8]

Cook's attorney Abbe Lowell formally responded to the White House's August 5 letter, calling the underlying 2021 mortgage-designation allegation "an entirely inadvertent oversight" with "zero intent to defraud," and warning that removing Cook on this pretext would be "corrosive of the independence that Congress sought to preserve" for the Federal Reserve. Lowell wrote that Cook had gone to the lender's website seeking a vacation-home mortgage, and that the lender independently knew she had lived in Michigan for 15 years and worked full-time as a tenured professor there. The response came within the 21-day window the White House's August 5 letter had set.