Trump "fires" current Federal Reserve governor, another step forward in plan to "control the Fed"
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Trump "fires" current Federal Reserve governor, another step forward in plan to "control the Fed"
For the first time in history!
Navigating Web3 tides with focused insightsBy Zhu Xueying, Wall Street Insights
Trump has just made a major move! He announced on social media that the removal of Federal Reserve Governor Lisa Cook will take effect "immediately."
This unprecedented action has shaken financial markets and triggered widespread criticism. U.S. stock index futures fell sharply, with Nasdaq 100 futures dropping 0.2%. Safe-haven demand pushed the yen higher against the dollar, while gold recovered earlier losses.
If Trump succeeds in this move, he will come one step closer to "controlling the Fed." If Cook departs, Trump could gain four seats on the seven-member Board of Governors, securing a majority. During his first term, Trump already appointed two current governors, and recently nominated Stephen Miran, chair of his Council of Economic Advisers, to fill the third vacancy left by Adriana Kugler, who was appointed by Biden but stepped down early.
Nick Timiraos, a Wall Street Journal reporter known as the "New Fed Whisperer," analyzed in a recent article that Trump has already appointed two members to the Fed's seven-member board. If he gains two more nominations, he would secure a majority, potentially reshaping the entire Federal Reserve system.
According to Timiraos, if Trump secures a majority on the Fed board before March next year, they might refuse to reappoint regional Federal Reserve bank presidents, thereby gaining control over FOMC meetings.
"Unprecedented" Removal Shakes Wall Street
In his letter, Trump accused Cook of engaging in "fraudulent and potentially criminal conduct" in financial matters, claiming such behavior undermines her credibility as a regulator.
Citing Article II of the U.S. Constitution and relevant provisions of the Federal Reserve Act of 1913, Trump stated he has determined sufficient grounds exist to remove Cook. The letter referenced a criminal referral submitted on August 15 by the Federal Housing Finance Agency (FHFA), alleging Cook made false statements in mortgage documents—claiming a property in Michigan as her primary residence on one form, then making the same claim for another property in Georgia. Trump called this "unimaginable," questioning her integrity and fitness to serve as a financial regulator.
Trump’s threat to dismiss Cook marks a significant escalation in White House pressure on the Fed. If Trump successfully removes Cook, it would set a historic precedent—no sitting Federal Reserve governor has ever been fired by a president. Markets fear this could trigger a constitutional crisis and intensify financial turmoil.
In past political conflicts, even the intense confrontations between President Johnson and Fed Chair William McChesney Martin, or Nixon’s pressure on Arthur Burns, never resulted in actual dismissal.
Claudia Sahm, chief economist at New Century Advisors and former Fed economist, said:
"This is a new tactic by this administration to try to control the Fed—they are using every tool available to achieve that control."
Does the President Have the Power to Remove a Fed Governor? Yes, But With Conditions
Legal experts emphasize that the Federal Reserve Act explicitly states governors may be removed by the president "for cause," which requires solid evidence of misconduct, dereliction of duty, or inability to perform duties—not political reasons.
Although Bill Pulte, director of the FHFA, previously accused Cook of lying on loan applications to obtain better terms,涉嫌 mortgage fraud, the allegations against Cook have not yet been proven in court, and the Department of Justice has only stated it will investigate the claims.
Prior to this, Trump posted a photo of Cook marked with a red X on his social platform Truth Social, calling her a "fraudster." Cook is the first Black woman to serve on the Fed’s Board of Governors, joining in 2022. Senator Elizabeth Warren of Massachusetts condemned Trump’s actions on social media as "illegal and politically motivated."
Trump's "Three-Step Plan" to Control the Fed Is Being Gradually Implemented
Analysts believe that if Cook leaves, Trump will have the chance to appoint a fourth Fed governor, securing a majority on the seven-member board. During his first term, Trump appointed two current governors, and recently nominated Stephen Miran, chair of his Council of Economic Advisers, to fill the third vacancy created by Adriana Kugler’s early departure.
On August 24, Nick Timiraos, the Wall Street Journal reporter dubbed the "New Fed Whisperer," wrote in a new article that Trump has already appointed two members to the seven-member Fed board. If he secures two more nominations, he will gain a majority and could fundamentally reshape the entire Federal Reserve system.
In addition, Timiraos noted that if Trump achieves a majority on the Fed board before March next year, they might refuse to reappoint regional Fed bank presidents. Dismissing sitting regional bank presidents would break decades-long precedent and breach a key firewall protecting the Fed’s independence since its founding in 1913.
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