Financial markets worldwide have been rattled by President Donald Trump's announcement that he's firing Federal Reserve Governor Lisa Cook, an unprecedented move and sharp escalation in his effort to exert greater control over what has long been considered an institution independent from day-to-day politics.
But Cook said she's not leaving: “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” she said in an emailed statement. “I will not resign.”
Trump said in a letter posted on his Truth Social platform that he is removing Cook effective immediately because of allegations by one of his supporters that she committed mortgage fraud. Market reaction was swiftly negative — economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation and ensure the economic stability that is key to business confidence.
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Black leaders call Trump’s firing of Cook ‘racist, misogynistic, and unlawful’
House Democratic Leader Hakeem Jeffries noted that Lisa Cook is “the first Black woman ever to serve on the Federal Reserve Board of Governors.”
“Donald Trump is trying to remove her without a shred of credible evidence that she has done anything wrong,” Jeffries said.
The Congressional Black Caucus also condemned Trump’s unprecedented actions: “In the 111-year history of the Federal Reserve, no president has ever attempted to remove a governor of the central bank until now.”
“Let’s be clear: this is a racist, misogynistic, and unlawful attack on the integrity and independence of the Federal Reserve,” the caucus said in a statement.
Wall Street steadies, global markets sink on Trump effort to control Federal Reserve
Wall Street has recovered some overnight losses in response to Trump’s announcement that he’s firing Federal Reserve Governor Lisa Cook.
Futures for the Nasdaq, Dow Jones Industrial Average and S&P 500 swung notably lower and most markets overseas declined significantly after Trump announced he’s firing Federal Reserve Governor Lisa Cook. They recovered some overnight losses after Cook responded by refusing to leave and hiring a lawyer to prevent what she called an illegal action.
“Trump’s decision to remove a sitting Fed governor has shaken confidence in the institution that underpins the world’s financial system,” Nigel Green of the financial advisory deVere Group, said in a commentary.
Fed Governor Lisa Cook hires prominent lawyer
Trump’s effort to fire Federal Reserve Governor Lisa Cook is likely to touch off an extensive legal battle that will probably go to the Supreme Court and could disrupt financial markets. Stock futures declined slightly late Monday, as did the dollar against other major currencies.
Cook has retained Abbe Lowell, a prominent Washington attorney. Lowell said Trump’s “reflex to bully is flawed and his demands lack any proper process, basis or legal authority,” adding, “We will take whatever actions are needed to prevent his attempted illegal action.”
If Trump succeeds, it could erode the political independence considered critical to the central bank’s ability to ensure economic stability. And if bond investors start to lose faith that the Fed can control inflation, they will demand higher rates, pushing up borrowing costs for mortgages, car loans and business loans.
World shares sink after Trump escalates central bank feud
Following Trump’s Monday night announcement that he would be firing Cook, Germany’s DAX lost 0.5% to 24,148.16, while the CAC 40 in Paris slumped 1.6% to 7,716.55. Britain’s FTSE 100 gave up 0.6% to 9,269.40. The futures for the S&P 500 and the Dow Jones Industrial Average were 0.1% lower. In Asian trading, most benchmarks declined.
Democrats demand Trump resume a major offshore wind project
A nearly complete wind farm off the coast of Rhode Island and Connecticut faces an uncertain future after the Trump administration abruptly halted construction. The states’ Democratic governors, lawmakers and union workers called Monday for the president to reverse course.
Judge rules Utah’s congressional map must be redrawn for the 2026 elections
The Utah Legislature will need to rapidly redraw the state’s congressional boundaries after a judge ruled Monday that the Republican-controlled body circumvented safeguards put in place by voters to ensure districts aren’t drawn to favor any party.
What to know about cashless bail after Trump’s executive order
Trump's executive order Monday threatens to withhold or revoke federal funding to local and state governments that offer cashless bail, arguing that it is a threat to public safety.
“No cash. Come back in a couple of months, we’ll give you a trial. You never see the person again,” he said, moments before signing the order.
The order directs Attorney General Pam Bondi to submit a list of jurisdictions that have “substantially eliminated cash bail as a potential condition of pretrial release from custody for crimes that pose a clear threat to public safety and order” within 30 days.
Opponents of cash bail describe it as a penalty on poverty. They say the wealthy can pay their way out of jail to await trial while those with fewer financial resources have to sit it out behind bars. Supporters have argued that bail is a time-honored way to ensure defendants who are released from jail show up for court proceedings. And they warn that violent criminals can commit other crimes while released pending trial.
▶ Read more about cashless bail and what to know about the executive order
Trump moves to ban flag burning despite Supreme Court ruling that Constitution allows it
Trump Monday signed an executive order requiring the Justice Department to investigate and prosecute people for burning the American flag, an activity that the U.S. Supreme Court has ruled is legitimate political expression protected by the U.S. Constitution.
The order the Republican president signed in the Oval Office acknowledged the court’s 5-4 ruling in a case from Texas in 1989, but said there is still room to prosecute flag burning if it “is likely to incite imminent lawless action” or amounts to “fighting words.”
“You burn a flag, you get one year in jail. You don’t get 10 years, you don’t get one month,” Trump said. “You get one year in jail, and it goes on your record, and you will see flag burning stopping immediately.”
The order also called for Attorney General Pam Bondi to pursue litigation to challenge the 1989 ruling, aiming to return the issue to the Supreme Court, which today is much more conservative than the makeup of the court in 1989 and includes three judges Trump appointed.
▶ Read more about the executive order
Why the Federal Reserve has historically been independent of the White House
The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controls — which it typically does when the economy falters — the Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the rate — which it does to cool the economy and combat inflation — it can weaken the economy and cause job losses.
Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliance more expensive.
The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Former Fed Chair Arthur Burns has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from President Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.
▶ Read more about the relationship between the Fed and the White House
