Trump threatens to fire Federal Reserve chief amid claims he 'cobbled together' mortgage fraud allegations

In a letter to Ms Cook posted online, Trump cited constitutional powers which he claims allow him to remove her, saying there was “sufficient reason” to believe she had made false statements on mortgage agreements.

It follows Trump’s rage against Ms Cook on Truth Social last week, where he claimed she “must resign, now!!!” over mortgage fraud allegations.

Trump is putting increasing pressure on the Federal Reserve System over a to lower interest rates.

According to the post, Ms Cook signed multiple documents both declaring different properties to be her primary residence - one in Michigan, and another in Georgia - back in 2021.

Ms Cook said she will not step down, and stated the President has no authority to fire her under American law.

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“I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022,” said Ms Cook in a statement.

The removal of Ms Cook from her post by the President, if successful, would be unprecedented.

Reports in the New York Times saw Trump claim Ms Cook potentially falsified documents to get better lpan terms and lower interest rates.

Ms Cook is one of seven members of the Fed’s board of governors. As a consequence, she also sits on the 12-member committee which is responsible for setting interest rates in the US.

Decisions made by the Central bank affect the rate at which Americans can borrow money, as well as the savings rates on their bank accounts. The rates are also closely watched by other countries, who may be influenced by the monetary policy in the US.

The firing seemingly stems from the board’s - and Ms Cook’s - decision to not cut interest rates at a rate approved by the President. As recently as late July, Cook voted alongside chairman Powell to maintain US interest rates at their current state.

Top Democrat on the US House of Representatives committee on financial services, Maxine Waters, insisted that Trump’s attack on Cook was an effort to “undermine the independence of the Federal Reserve”.

"Let me be very clear, the allegations against Dr Cook have been cobbled together as a pretext to try to replace her with someone who will be loyal first to Trump instead of the US Constitution or US law."

The dispute raises questions about the organisation’s independence from politics - an independence that many economists believe necessary to ensure financial policy is made in public interest.

The announcement, which came on an evening post on Monday August 25, will likely raise legal questions. One possibility includes the potential for the White House to demonstrate in court that it had sufficient reason for the action.

The letter posted by Trump is dated August 15, and cites a criminal referral from William Pulte, the director of federal housing, to Attorney General Pam Bondi.

Trump states the removal of Ms Cook was “effective immediately”.Pulte claimed that Ms Cook signed a document attesting that a property in Michigan would be her primary residence for the next year, but “two weeks later” signed another document stating a property in Gerogia would be her primary residence. "It is inconceivable that you were not aware of your first commitment when making the second," wrote Trump.

Following the announcement on X, the US dollar dropped against major world currencies, but has since recovered.

Ms Cook was appointed by Democratic President Joe Biden in 2022, and is the first African American woman to serve in the position.

Lawyer Abbe David Lowell, who is representing Ms Cook, said: “We will take whatever actions are needed to prevent [Trump's] attempted illegal action."

The Federal Reserve has not yet commented on the President's announcement.

At time of writing, Ms Cook has not been charged with any wrongdoing or convicted of any crimes.