U.S. Federal Reserve Governor Lisa Cook has announced plans to sue the Trump administration to retain her position, following President Donald Trump's abrupt move to dismiss her over allegations tied to mortgage applications filed before her 2022 appointment. The legal clash highlights escalating tensions between the White House and the central bank, with global markets reacting nervously to fears of political interference in monetary policy.
Cook's lawyer, Abbe Lowell, called Trump's allegations of "deceitful and potential criminal conduct" baseless, emphasizing that the mortgage transactions occurred during her academic career and were publicly disclosed during her Senate confirmation. The Fed reiterated that its governors serve 14-year terms to insulate decisions from political pressure, stating Cook's status remains unchanged despite Trump's claims of "immediate" termination.
Analysts warn the dispute could destabilize confidence in the U.S. dollar and sovereign debt, with Asian stock markets and Dow Futures dipping Tuesday. Trump's simultaneous threats to impose tariffs and microchip export controls have further rattled investors, underscoring the interconnectedness of U.S. policy shifts and Asia's export-driven economies.
Mortgage Allegations Under Scrutiny
Trump cited Cook's listing of separate Michigan and Georgia properties as primary residences in 2021 mortgage applications as grounds for dismissal. However, Wharton School scholar Peter Conti-Brown noted the transactions were reviewed during her confirmation, calling retroactive punishment "incongruous" with legal standards for removing Fed officials.
The outcome could reshape the Fed's leadership, as a Cook departure would let Trump appoint a majority of its seven-member board. Potential replacements include White House economist Stephen Miran and former World Bank President David Malpass, both seen as aligned with Trump's push for aggressive rate cuts.
