Lisa Cook Warns: Removal from the Fed Could Crash Markets and Destroy Central Bank Independence

Tensions between the White House and the Federal Reserve are escalating. Fed Governor Lisa Cook told the U.S. Supreme Court that if President Donald Trump were allowed to remove her, it would trigger a collapse of financial markets and cause irreparable damage to the independence of the U.S. central bank.

Dispute Over Mortgage Fraud Allegations Trump’s team is pushing to oust Cook over alleged irregularities in her mortgage applications. Her lawyers argue that the accusations are legally insufficient and do not meet the statutory standards under the Federal Reserve Act. In a Thursday filing, they warned that her immediate dismissal could spark “chaos and legal uncertainty,” potentially leading to a scenario in which two different candidates compete for the same Fed seat at the same time. The Department of Justice already petitioned on September 18 for the Supreme Court to overturn a lower court decision that blocked Trump from acting. Yet two lower courts — Judge Jia Cobb and later the D.C. Court of Appeals — upheld the block, ruling that the White House’s case did not meet the legal threshold.

Warnings from Former Fed Chairs and Treasury Officials Prominent economists have joined the defense of Cook’s position. Former Fed Chairs Ben Bernanke, Alan Greenspan, and Janet Yellen issued a joint letter warning that removing Cook would set a historic precedent and seriously undermine public trust in the Fed’s independence. The letter was also signed by former Treasury Secretaries Larry Summers, Robert Rubin, Jacob Lew, and Henry Paulson, as well as former IMF chief economist Kenneth Rogoff. They emphasized that allowing the removal of a sitting member of the Board of Governors would turn the Fed into a political tool and jeopardize the long-term stability of the U.S. economy.

Trump Pushes Case Directly to the Supreme Court Despite previous rulings, Trump’s legal team bypassed the usual process and escalated the dispute straight to the Supreme Court. Their goal is to have the block lifted immediately, so that Cook can be removed even before the full case is heard. Her legal team has warned this could create an absurd situation in which Trump nominates a replacement while Cook is still officially in her position.

Cook Continues Her Work In spite of mounting political pressure, Lisa Cook continues to perform her duties at the Fed. At the most recent meeting, she voted in favor of a 25 basis point interest rate cut. She has made it clear that she will not step down voluntarily and has no intention of resigning from her role.

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