26 Aug 2025
President Trump cited Article II of the Constitution and the Federal Reserve Act of 1913 to justify firing Cook over alleged mortgage fraud. He claimed, via a Truth Social post, that Cook’s dual declaration of primary residences and false statements on mortgage documents meet the broad, historically strict “cause” standard required for removal under the Federal Reserve Act.
➡️ The Federal Reserve Board is undergoing a transition and is increasingly influenced by Trump. If Cook’s removal stands and Powell steps down after his term as chair, Trump could appoint up to five of the seven governors, securing a lasting majority
➡️ “I will not resign,” said Cook, who hired high-profile attorney Abbe Lowell to challenge her purported termination; she says ‘he has no authority to do so.
“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” said Cook in a statement late Monday. “I will not resign.”
Abbe Lowell, a lawyer for Cook, said Trump’s move “is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.”
👉 This development introduces significant uncertainty for markets regarding the Fed's independence, forward guidance, and interest rate policy. After the initial reaction, attention will likely shift to the nomination process. If Trump moves quickly to appoint candidates favouring looser monetary policy, the likelihood of earlier and steeper rate cuts could rise materially, though potential legal challenges and political pushback may moderate expectations
