Trump Unprecedentedly Fires Fed Governor Cook, Moves to Seize Fed Control
On August 26, former President Donald Trump announced the immediate removal of Federal Reserve Board Governor Lisa Cook, marking the first time a sitting Fed governor has been fired by a president. Citing alleged mortgage fraud under review by the FHFA, Trump invoked constitutional provisions and the Federal Reserve Act to justify his action. The unprecedented move sent U.S. stock futures lower, while the yen and gold rallied on flight-to-safety flows. If confirmed by the Senate, Cook’s ouster would give Trump control of four of seven Fed Board seats, securing a majority and paving the way to reshape Fed policy. Legal experts stress that presidential removal power requires proven misconduct, not political motives, raising constitutional concerns. Traders should watch Senate hearings and upcoming Fed nominations closely, as this escalation of White House pressure on Fed independence may heighten market volatility and influence U.S. interest rate expectations.
Bearish
The unprecedented firing of a Fed governor by President Trump undermines Fed independence and injects political risk into U.S. monetary policy. Similar past conflicts—such as Nixon’s pressure on Arthur Burns—raised market volatility. Traders typically reduce risk exposure when central bank autonomy is threatened, hampering risk-on assets including cryptocurrencies. In the short term, heightened uncertainty may trigger sell-offs in crypto markets. Long term, the prospect of a politically influenced Fed could keep volatility elevated, making market timing and risk management more challenging.