U.S. President Donald Trump has shaken confidence in the Federal Reserve and the strength of the dollar after announcing the removal of Federal Reserve Governor Lisa Cook from her post.
The White House published a letter on Tuesday signed by Trump, stating that Cook was being dismissed over allegedly making false declarations on mortgage documents. “Faithful execution of the law requires your immediate removal,” the president wrote.
Cook, however, pushed back. In comments to the Associated Press, she insisted that Trump has no legal authority to remove her and said she would not resign. According to her, the accusations do not amount to “cause,” a legal prerequisite for dismissal.
Legal experts share that view. Attorney Aaron Brogan noted that inconsistencies in mortgage filings don’t meet the standard of misconduct required to justify termination. He argued that courts would almost certainly grant an injunction, allowing Cook to retain her seat until her term expires.
Independence of the Federal Reserve at stake
The Fed’s autonomy is considered central to the stability of the U.S. economy. Alex Obchakevich, founder of Obchakevich Research, explained that independence protects monetary policy from political interference, helping maintain investor trust and financial stability.
“If politicians can directly control central banks, you risk short-term populist decisions leading to long-term economic damage,” Obchakevich said.
Brogan echoed the concern, warning that undermining the Fed’s independence could pressure the dollar and hurt confidence in U.S. monetary policy.
He added that the very reason for central bank independence is to shield regulators from political cycles that prioritize short-term gains over sustainable policy.
According to Obchakevich, Trump’s attempt to fire Cook looks more political than legal. He argued that the move risks higher market volatility, a weaker dollar, and even questions around the U.S. currency’s reserve status.
Asked about Bitcoin as an alternative, he said it could, over time, erode the dollar’s dominance, but in the near future, it is not positioned as a full replacement.
Trump’s history of conflict with the Fed
This clash isn’t new. Trump has frequently criticized Federal Reserve officials, including Chair Jerome Powell, accusing them of moving too slowly on interest rate cuts during periods of economic tension such as the U.S.-China trade dispute.
At one point, Trump even suggested Powell should be fired, sparking backlash from both market participants and lawmakers. Crypto investor Anthony Pompliano said such a move would set a dangerous precedent, while Senator Elizabeth Warren warned that firing Powell could shake investor confidence and trigger financial instability.
The standoff with Cook signals another chapter in Trump’s long-running battle with the Fed—one that may fuel further uncertainty about the strength of the U.S. dollar and the future of global markets.
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