- Trump tried to remove Fed Governor Lisa Cook, accusing her of lying on mortgage applications, but Cook refused to step down, saying he has no legal authority.
- Experts warn this fight could threaten the Fed’s independence, shake investor trust, weaken the dollar, and even risk a recession.
- Trump’s history of clashes with the Fed and new political pressure has raised fresh concerns about interference in US monetary policy.
On August 25, 2025, President Donald Trump fired Lisa Cook, a Federal Reserve Governor and the first Black woman on the board, saying she lied on mortgage applications.
Cook fired back, saying she’s not leaving because Trump doesn’t have the legal power to kick her out. This has people worried about the Federal Reserve staying independent and what it means for the US dollar’s strength.
A Threat to Fed Independence
Trump posted a letter on Truth Social, saying Cook’s alleged false statements on mortgage agreements justified her immediate removal. Cook, appointed by Joe Biden in 2022 with a term until 2038, responded that Trump’s “for cause” firing lacks legal ground and vowed to stay put.
Alex Obchakevich said the Fed’s independence is important for a stable economy, as it keeps monetary policy separate from politics. He warned that Trump’s action, likely driven by political motives, could shake markets, weaken the dollar, and even risk a recession.
Trump has clashed with the Fed before, criticizing Chair Jerome Powell for not cutting interest rates fast enough and threatening to fire him. In April, Trump called for Powell’s ouster, but Senator Elizabeth Warren warned that such moves could hurt trust in US markets.
Obchakevich noted Bitcoin might challenge the dollar’s role long term but isn’t a quick fix. The firing, following unproven claims by Trump appointee William Pulte about Cook’s mortgages, has raised fears of political interference in the Fed, which could unsettle investors and markets.
