Taylor Scott
Former US President Donald Trump has been accused of attempting a takeover of the Federal Reserve Board, the seven governors in Washington, by firing Federal Reserve Governor Lisa Cook, the first Black woman to sit on the Fed Board. Trump accused Cook of falsifying records to obtain favourable terms on a mortgage, although Cook and her lawyer vowed to fight her dismissal, stating that the president did not have grounds to oust her. This move by Trump is seen as an attempt to exert control over the Federal Reserve and undermine its long-held independence, with the potential to negatively impact the US economy.
| Characteristics | Values |
|---|---|
| Reason for Trump's attempted takeover | To lower interest rates |
| Trump's statement about his authority | "I have the right to do anything I want to do. I'm the President of the United States." |
| Trump's actions | Removal of Lisa Cook from the board of governors of the Federal Reserve |
| Lisa Cook's response | She is refusing to leave and threatening legal action |
| Effect of Trump's actions | Could undermine the independence of the nation's central bank |
| Trump's view on the Federal Reserve | "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." |
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What You'll Learn
Trump's removal of Federal Reserve governor Lisa Cook
In 2025, President Donald Trump attempted to remove Federal Reserve Board Governor Lisa Cook from her position, citing "sufficient reason" to believe that Cook had made false statements on her mortgage applications. This allegation of mortgage fraud was referred by Bill Pulte, the director of the Federal Housing Finance Agency, who had also spent weeks criticising the Fed's approach to monetary policy.
Trump's move was seen as an attempt to exert control over the Federal Reserve and its seven governors, as he had been vocal about his desire for lower interest rates. The removal of Cook would have given Trump a majority on the board, allowing him to reshape the Fed's governing board and push through his preferred policies.
However, Cook disputed the allegations and vowed to fight her dismissal, arguing that the president did not have the grounds to remove her. She hired a high-profile attorney, Abbe Lowell, and filed a lawsuit challenging her removal. Cook asserted that she had no intention of resigning and would continue to carry out her duties.
The Federal Reserve Board typically enjoys independence from presidential control, and governors serve long, fixed terms. The removal of a governor typically requires a valid reason and follows a specific process outlined in the Federal Reserve Act. Trump's attempt to remove Cook raised concerns about the potential undermining of the central bank's independence and the impact on monetary policy decisions.
The outcome of the legal challenge by Cook remains to be seen, and it is unclear if Trump will successfully remove her from her position as a Federal Reserve governor.
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Trump's desire for lower interest rates
Former US President Donald Trump has made no secret of his desire for lower interest rates. In 2025, Trump attempted to exert control over the Federal Reserve Board, seeking to remove Fed governor Lisa Cook from the bank's board. Trump accused Cook of making false statements to obtain a better mortgage. However, Cook denied any wrongdoing and took the administration to court, refusing to leave her post.
Trump's efforts to gain control of the Federal Reserve Board were driven by his desire to lower interest rates. He believed that the Federal Reserve was hurting the housing market by keeping rates too high. Trump argued that slashing the federal funds rate to 1% would stimulate the economy and benefit the housing market. However, economists warned that such a drastic rate cut could undermine the credibility of the Federal Reserve and lead to an exodus of capital, pushing interest rates on government bonds higher.
Trump's attempts to influence the Federal Reserve Board and his focus on lowering interest rates highlight his unconventional approach to economic policy. While lower interest rates can have benefits, they are typically implemented during recessions or economic downturns. Trump's push for lower rates during a period of economic growth raised questions about the potential consequences for the country's financial stability and the independence of the Federal Reserve.
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The Federal Reserve's independence
The Federal Reserve, often referred to as "the Fed", is the central banking system of the United States of America. It was created by an act of Congress in 1913 and has been independent since. The Federal Reserve Board of Governors is nominated by the president and must be confirmed by the Senate.
The Fed's income comes primarily from the interest on government securities that it has acquired through open-market operations. After paying its expenses, the Federal Reserve turns the rest of its earnings over to the US Treasury. The Fed can also buy and sell US government securities and mortgage-backed securities guaranteed by the federal government, as well as municipal bonds with a maturity of up to six months.
The Fed has long been independent of the federal government, with the power to set interest rates without interference from Congress or the White House. This is because members of Congress generally recognise that if they or the president were able to directly influence the setting of interest rates, higher inflation would be the likely outcome.
However, former US President Donald Trump threatened the Fed's independence by attempting to control the Federal Reserve Board. Trump sought to remove Fed governor Lisa Cook from the board, citing allegations of mortgage fraud. Cook, however, refused to leave and challenged her dismissal in court. Trump's actions were motivated by his desire to see lower interest rates and gain more control over the Fed.
Trump's attempt to remove Cook and exert control over the Fed raised concerns about the potential undermining of the Fed's long-held independence and the possible impact on monetary policy. The Fed's independence is crucial to maintaining price stability, achieving maximum sustainable employment, and ensuring the integrity of its operations.
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Trump's unprecedented control of the federal government
The Trump administration has been characterised by unprecedented attempts to control the Federal Reserve, threatening its long-held independence. The Federal Reserve, or "the Fed", has been independent since its founding in 1913. Its two main goals are to keep prices stable and help Americans find work. Its independence means it can raise or lower interest rates without needing approval from Congress or the president, which can upset politicians.
President Trump has been explicit about his desire for more control over the Fed. He has targeted its members, including Jerome Powell, the chair, for keeping interest rates too high. Trump's anger at the Fed's refusal to lower interest rates is well documented, and he has repeatedly broken with precedent in demanding the Fed cut rates. Trump's unprecedented move to remove Lisa Cook, one of the seven governors of the US central bank, is a key example of his attempts to exert control over the Fed. Cook was accused of "cause", based on an unproven allegation of fraud in mortgage applications, though she was not charged or convicted of any wrongdoing.
Trump's motivation for removing Cook was to gain a majority on the Fed's board, which would allow him to push against interest rate policies he disagreed with. This would also enable him to replace the current members with people who share his political outlook. If Trump succeeded in getting rid of Cook, he would have appointed four out of seven governors, which would become five out of seven when Chairman Jerome Powell's term ends. This would spell "the end of central bank independence as we know it", according to Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania.
Trump's unprecedented control over the Federal Reserve is part of a broader pattern of seeking to control every aspect of the federal government. This includes deploying National Guard troops to Washington DC, taking a free 10% stake in Intel Corporation, and instructing restaurant chain Cracker Barrel to change its logo. Trump's actions have raised serious questions about the independence of America's central bank and could have significant implications for the US economy and its dependent allies.
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The potential economic impact of Trump's interference
Trump's interference in the Fed is driven by his desire to lower interest rates and his anger at the Fed's refusal to do so. By removing Fed Governor Lisa Cook, who voted consistently with Fed Chair Jerome Powell, Trump could gain a majority on the Fed's board, effectively giving him control over monetary policy. This would undermine the Fed's independence and could have far-reaching economic consequences.
The impact of Trump's interference is already being felt in the bond market, with the interest rates on 30-year US bonds rising. While financial markets have not reacted as strongly as expected, some analysts argue that the muted reaction is a mistake, and that Trump's actions could have significant implications for the US economy and its dependent allies.
If Trump succeeds in gaining control of the Fed, it could lead to a situation where political leaders exert influence over monetary policy. This could result in policies that may lower economic growth and increase inflation. It could also set a dangerous precedent for future administrations, with the potential for further erosion of the Fed's independence.
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Frequently asked questions
No, but he did attempt to take control of the Federal Bank by firing Federal Bank governor Lisa Cook.
Trump fired Cook because he believed she had committed mortgage fraud. He also wanted to see lower interest rates, and Cook had voted consistently with the Fed's chair, Jerome Powell, to keep interest rates high.
No, Cook refused to leave and threatened legal action. She argued that the president did not have the grounds to oust her as she had not been charged with or convicted of a crime.
Trump's attempt to take over the Federal Bank raised serious questions about the independence of America's central bank. Some commentators argued that it would spell "the end of central bank independence as we know it" if Trump were to gain control.
