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US President Donald Trump has removed Federal Reserve Governor Lisa D Cook from her position with immediate effect, using his authority under Article II of the American constitution and the Federal Reserve Act, 1913. The US president cited loss of confidence and alleged misconduct in mortgage pacts as reason for her removal.

In a letter dated August 25, Trump wrote that the “American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve”. The action follows a criminal referral dated August 15 that raised concerns over false statements in mortgage documents. 

As per the referral, Cook allegedly signed agreements for primary residences in both Michigan and Georgia within weeks of each other, an act the Trump administration described as “deceitful and potentially criminal”.

The US central bank plays a critical role in setting interest rates and regulating banks and the alleged conduct reflected “gross negligence in financial transactions”, compromising the trustworthiness of the institution, it noted.

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Cook joined the Fed’s board of governors in 2022 under then president Joe Biden.

In September 2023, she was reappointed for a term ending January 2038. 

Cook is the first African-American woman to ever serve on the Fed board.  

A Fed governor’s position is different from that of the central bank’s chair. In the US, a governor of the central bank is part of the Board of Governors — the body that oversees the central bank. 

Appointed by the President and confirmed by the Senate, a Fed governor typically serves a 14-year term.

While every Governor has an equal vote on most policy matters, the Chair is the head of the Board of Governors and the public face of the Fed. 

Fed Governors share authority, but the central bank’s Chair leads the institution.

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