On Monday, President Donald Trump posted a letter to Truth Social announcing that he had dismissed economist Lisa Cook from her role as a member of the Federal Reserve Board of Governors. Whether he actually has the legal authority to do so remains a question with enormous consequences.
By law, a president can remove a Fed governor only “for cause.” To justify his move, Trump has accused Cook of making false statements on a mortgage application. Cook has not been charged with any crime and has vowed to fight the dismissal in court. Her lawyers are expected to argue that the “for cause” standard applies only to misconduct or poor performance directly tied to her duties as a Fed governor—not to unrelated issues from her personal life. Because no president has ever attempted something like this before, the issue has never been tested in court. Ultimately, the Supreme Court will likely decide the outcome. And what’s at stake goes far beyond Cook’s job. If Trump succeeds and installs a loyalist, he could be just months away from consolidating control over the Federal Reserve.
Trump has been outspoken about his frustration with the Fed, claiming that its decision to keep interest rates high is harming the economy—even while boasting that the economy is strong. Interest rates are set by the 12-member Federal Open Market Committee (FOMC), which includes the seven members of the Board of Governors. That board currently includes Fed Chair Jerome Powell, Cook, and two other members Trump appointed in his first term, Michelle Bowman and Christopher Waller. Trump has also nominated his economic adviser Stephen Miran to replace a recently departed governor. If Cook is replaced by another Trump loyalist, Trump would control four of the seven seats on the board—enough for a majority.
Normally, that still wouldn’t be sufficient to control the FOMC, because the other five voting members come from the presidents of the Federal Reserve’s 12 regional banks. These individuals are chosen by their regional bank boards, not by the president. But here’s the catch: every five years, the regional presidents must be reconfirmed by a majority of the Board of Governors. The current terms expire in February. With a four-member majority, Trump’s appointees could refuse to reappoint regional presidents who resist his push to cut rates.
How that would play out is uncertain. In the Fed’s 112-year history, no governor has ever voted against reconfirming a regional president. Past resignations have been filled by interim leaders, usually the vice president of the bank, but those too require board confirmation. In practice, this means that if Trump controls the Board of Governors, he effectively controls who gets to vote on rates across the system.
Waller and Bowman, Trump’s first-term appointees, may not fully embrace such a dramatic power grab. They are respected central bankers with mainstream backgrounds, not purely political picks. But they’ve already broken with precedent once, abstaining from the 2023 vote to confirm Chicago Fed President Austan Goolsbee, a former Obama adviser. They also dissented from the Fed’s most recent decision not to cut rates—the first dual dissent in more than three decades.
This time, the pressure would be far greater. Trump could threaten to remove them if they resist, or he could dangle the promise of promotion. With Powell’s term as chair ending next May, both Waller and Bowman are potential contenders for the top spot—and winning it could require Trump’s approval.
If the Supreme Court upholds Cook’s firing, Trump could be in a position to remake the Fed entirely and force a steep cut in interest rates, potentially down to 1 percent.
The risks of such political meddling are clear from history. In the early 1970s, President Richard Nixon pushed Fed Chair Arthur Burns to slash rates ahead of his reelection campaign. The move helped fuel the runaway inflation that plagued the U.S. for the rest of the decade. More recently, Turkish President Recep Tayyip Erdoğan replaced central-bank governors with loyalists willing to cut rates despite soaring inflation. The result was an economic meltdown, with inflation hitting 85 percent and the Turkish lira collapsing.
The Fed was designed to be insulated from political pressure for exactly these reasons. Now, the country may be on the verge of finding out what happens when that independence is tested.
