US President Donald Trump announced earlier this week that he had dismissed Lisa Cook, a member of the Federal Reserve (Fed) Board of Governors. In the White House announcement, Trump cited allegations that Cook forged documents in a mortgage application. However, it is clear that Cook has not faced any charges, has not appeared in court, and there is no final decision.
Cook, in a statement through his attorney, Abbe David Lowell, denied the decision, saying, "Trump has no legal basis to remove me." Cook, who has served on the Fed since 2022 and was reappointed to a full term in 2023, will actually serve until January 2038. Cook's team has declared Trump's decision "illegal" and announced that they will file a lawsuit.
Legal Basis Debate
Trump is citing a provision in the Fed's charter that grants the president the right to remove a member "for cause." According to him, the mortgage fraud allegation is sufficient for this "justification." However, legal experts disagree. No president has ever attempted to dismiss a Fed member in this manner. Experts say Trump's move will be tested in court, and if it prevails, it could pave the way for similar dismissals of other Fed members.
Trump has long targeted the Fed, demanding a looser monetary policy stance. Last week, Fed Chair Jerome Powell's statement opening the door to a rate cut led to speculation that Trump's pressure was effective. Now, there is talk of replacing Lisa Cook with more "dovish" figures close to Trump.
The crisis has also reverberated through the markets. IG analyst Tony Sycamore said, "Trump's dismissal of Cook, following the pressure on Powell, has once again brought the Fed's independence into question. This undermines the impartiality of monetary policy." Christopher Wong of OCBC commented, “The pressure on the dollar stems from concerns that the Fed will not be able to act independently of political interference.”
Bitcoin and the dollar react
Trump's statements triggered volatility not only in the dollar but also in crypto markets. Bitcoin faced rapid selling pressure in the Asian and European sessions following the news. The price of BTC fell to $108,666 overnight. Currently, Bitcoin is trading at $109,653. The daily loss is approximately 0.4%, with a 24-hour trading range of $109,214 to $112,815.
