President Donald Trump is clashing with the Federal Reserve. He said he would remove Fed Governor Lisa Cook. This comes after months of publicly attacking Fed Chairman Jerome Powell. Cook, however, says the president has no legal right to fire her and she will not resign.
The Attempted Firing and Its Fallout
On Monday, Trump posted a letter on Truth Social saying he was removing Cook. He cited recent allegations made against her by Bill Pulte, the director of the Federal Housing Finance Agency. Cook, a Joe Biden appointee, stated that Trump “has no authority” to fire her. She said she will fight the “illegal action” in court. Her lawyer, Abbe Lowell, said they will take “whatever actions are needed” to stop it.
Markets reacted right away. Investors questioned the Fed’s independence. The US Dollar Index and benchmark 10-year Treasurys both fell. Futures for the S&P 500, Nasdaq, and Dow also slipped. Haven assets like gold and the Japanese yen went up as investors sought safety.
Trump’s Broader Fight with the Fed
This attempted firing follows Trump’s repeated attacks on Fed Chairman Jerome Powell. Trump has called Powell “very dumb” and “hardheaded” for not cutting interest rates sooner. The Fed is scheduled to meet in less than a month. It remains unclear how it will handle the situation.
This puts Trump on a potential collision course with the Supreme Court. The court has given him some power to fire officials from independent agencies. However, the court has also said that removing a Fed governor requires a clear reason, or “for cause.” The court has noted the Fed’s “distinct historical tradition” as a unique entity.
