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What Is The Federal Reserve And Why Trump Removed Its Governor
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“Trump’s unprecedented removal of US Federal Reserve Board Governor Lisa Cook comes amid his criticism that the central bank’s high interest rates hurt his economic agenda
If Trump succeeds in removing Lisa Cook, he will be able to nominate her successor, potentially reshaping the Fed’s governing board for the next several years. (AP/File)
President Donald Trump on Monday abruptly removed Lisa Cook from her position as a governor of the US Federal Reserve Board, effective immediately. Cook, who has not faced any accusations or convictions, said her dismissal lacks legal justification and confirmed she has no intention of resigning.
This unprecedented move by Trump comes amidst his outspoken criticism of the Federal Reserve for not reducing interest rates, which he believes undermines his efforts to strengthen the US economy.
Cook, the first black woman to serve as a Fed governor, stated, “President Trump attempted to dismiss me ‘with reason’, while there is no such reason under the law. He has no right to do so.” She affirmed, “I will not resign. I will continue to perform my duties to help the US economy, as I have been doing since 2022.”
Cook, who was appointed by former President Joe Biden, has engaged high-profile lawyer Abbe Lowell to represent her. Cook previously held positions at the US Treasury and the White House under former President Barack Obama.
Lowell commented, “President Trump has once again resorted to social media to ‘attack via tweet’ and once again his threatening response is flawed. His demands lack any due process, basis, or legal authority.” He emphasised, “We will take whatever action is necessary to stop his illegal action.”
He said that Cook plans to file a lawsuit challenging her dismissal. A Federal Reserve spokesman did not immediately comment on Trump’s letter.
This episode could lead to a prolonged legal battle, with significant stakes including the credibility of the US dollar as the world’s safe currency.
The Federal Reserve And Its Board of Governors
The US Federal Reserve comprises 12 reserve banks, each with a president, and a seven-member board of governors. The Fed has five key roles: conducting US monetary policy, promoting financial system stability, supervising and regulating financial institutions, promoting the safety and efficiency of payment and settlement systems, and promoting consumer protection and community development.
The Board of Governors, an agency of the US federal government, plays a crucial role in guiding the operations of the Federal Reserve System and overseeing the reserve banks. Its members are nominated by the President and confirmed by the Senate, but the board reports to and is directly accountable to Congress.
Allegations Against Cook
Trump has accused Cook of making false statements regarding loans on two houses in 2021.
He wrote, “For example, as detailed in the criminal referral, you signed a document certifying that a property in Michigan would be your primary residence for the next year.”
He continued, “Two weeks later you signed another document for a property in Georgia, stating that it would be your primary residence for the next year.”
Trump claimed that it is unthinkable that Cook was not aware of her first commitment when she made the second.
He concluded, “Given your deceptive and potentially criminal conduct in financial matters, the American people cannot trust your honesty and neither do I. At a minimum, this conduct demonstrates gross negligence in financial transactions, which calls into question your qualifications and credibility as a financial regulator.” Interest rates on loans for houses designated as primary residences in the US are low.
Legality Of Trump’s Move
Under the Federal Reserve Act, each member holds office for a term of fourteen years from the expiration of their predecessor’s term, unless removed earlier by the president for cause. ‘Cause’ typically means misbehaviour or incapacity while in office.
Trump stated, “I have found that sufficient cause exists to remove you from office.”
In a statement issued through her lawyers, Cook maintained that Trump had attempted to fire her without any legal cause or authority. Questions arise whether Cook can be fired while the investigation is pending and if Trump has sufficient evidence to claim ’cause.’
Historically, the US central bank has been shielded from direct political actions, and the US Supreme Court indicated this May that it is willing to provide broader protections to Fed governors.
The court stated, “The Federal Reserve is a uniquely structured, quasi-private entity that follows the distinguished historical tradition of America’s First and Second Banks.”
Potential Outcome If Cook Is Removed
If Trump succeeds in removing Cook, he will be able to nominate her successor, potentially reshaping the Fed’s governing board for the next several years. Fed governors typically serve 14-year terms. Two of the current seven governors, Christopher Waller and Michelle Bowman, were appointed by Trump. Trump appointed Jerome Powell as the chairman of the Federal Reserve in 2017.
As of Monday, the Board of Governors had six members, including Cook, with one seat vacant following Adriana Kugler’s resignation earlier this month. Trump has nominated Stephen Miran, chairman of the Council of Economic Advisors, to fill Kugler’s place. If Miran’s appointment is confirmed by the Senate and Trump succeeds in removing Cook and appointing her successor, Trump will secure a 4-3 majority on the board.
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Stock Market Live Updates: Sensex, Nifty Hit Record Highs; Bank Nifty Climbs 60,000 For The First Time
Stock Market News Live Updates: Indian equity benchmarks opened with a strong gap-up on Monday, December 1, touching fresh record highs, buoyed by a sharp acceleration in Q2FY26 GDP growth to a six-quarter peak of 8.2%. Positive cues from Asian markets further lifted investor sentiment.
The BSE Sensex was trading at 85,994, up 288 points or 0.34%, after touching an all-time high of 86,159 in early deals. The Nifty 50 stood at 26,290, higher by 87 points or 0.33%, after scaling a record intraday high of 26,325.8.
Broader markets also saw gains, with the Midcap index rising 0.27% and the Smallcap index advancing 0.52%.
On the sectoral front, the Nifty Bank hit a historic milestone by crossing the 60,000 mark for the first time, gaining 0.4% to touch a fresh peak of 60,114.05.
Meanwhile, the Metal and PSU Bank indices climbed 0.8% each in early trade.
Global cues
Asia-Pacific markets were mostly lower on Monday as traders assessed fresh Chinese manufacturing data and increasingly priced in the likelihood of a US Federal Reserve rate cut later this month.
According to the CME FedWatch Tool, markets are now assigning an 87.4 per cent probability to a rate cut at the Fed’s December 10 meeting.
China’s factory activity unexpectedly slipped back into contraction in November, with the RatingDog China General Manufacturing PMI by S&P Global easing to 49.9, below expectations of 50.5, as weak domestic demand persisted.
Japan’s Nikkei 225 slipped 1.6 per cent, while the broader Topix declined 0.86 per cent. In South Korea, the Kospi dropped 0.30 per cent and Australia’s S&P/ASX 200 was down 0.31 per cent.
US stock futures were steady in early Asian trade after a positive week on Wall Street. On Friday, in a shortened post-Thanksgiving session, the Nasdaq Composite climbed 0.65 per cent to 23,365.69, its fifth consecutive day of gains.
The S&P 500 rose 0.54 per cent to 6,849.09, while the Dow Jones Industrial Average added 289.30 points, or 0.61 per cent, to close at 47,716.42.
Osmond ChiaBusiness reporter
Getty ImagesSouth Korea’s largest online retailer, Coupang, has apologised for a massive data breach potentially involving nearly 34 million local customer accounts.
The country’s internet authority said that it is investigating the breach and that details from the millions of accounts have likely been exposed.
Coupang is often described as South Korea’s equivalent of Amazon.com. The breach marks the latest in a series of data leaks at major firms in the country, including its telecommunications giant, SK Telecom.
Coupang told the BBC it became aware of the unauthorised access of personal data of about 4,500 customer accounts on 18 November and immediately reported it to the authorities.
But later checks found that some 33.7 million customer accounts – all in South Korea – were likely exposed, said Coupang, adding that the breach is believed to have begun as early as June through a server based overseas.
The exposed data is limited to name, email address, phone number, shipping address and some order histories, Coupang said.
No credit card information or login credentials were leaked. Those details remain securely protected and no action is required from Coupang users at this point, the firm added.
The number of accounts affected by the incident represents more than half of South Korea’s roughly-52 million population.
Coupang, which is founded in South Korea and headquartered in the US, said recently that it had nearly 25 million active users.
Coupang apologised to its customers and warned them to stay alert to scams impersonating the company.
The firm did not give details on who is behind the breach.
South Korean media outlets reported on Sunday that a former Coupang employee from China was suspected of being behind the breach.
The authorities are assessing the scale of the breach as well as whether Coupang had broken any data protection safety rules, South Korea’s Ministry of Science and ICT said in a statement.
“As the breach involves the contact details and addresses of a large number of citizens, the Commission plans to conduct a swift investigation and impose strict sanctions if it finds a violation of the duty to implement safety measures under the Protection Act.”
The incident marks the latest in a series of breaches affecting major South Korean companies this year, despite the country’s reputation for stringent data privacy rules.
SK Telecom, South Korea’s largest mobile operator, was fined nearly $100m (£76m) over a data breach involving more than 20 million subscribers.
In September, Lotte Cards also said the data of nearly three million customers was leaked after a cyber-attack on the credit card firm.
Agency workers hired to cover Birmingham bin strikers will join them on picket lines on Monday, a union has said.
A rally will be held by Unite The Union at Smithfield Depot on Pershore Street, Birmingham, on Monday morning to mark the first day of strike action by agency refuse workers.
Unite said the Job & Talent agency workers had voted in favour of strike action “over bullying, harassment and the threat of blacklisting at the council’s refuse department two weeks ago”.
The union said the number of agency workers who will join the strike action is “growing daily”.
Strikes by directly-employed bin workers, which have been running since January, could continue beyond May’s local elections.
The directly-employed bin workers voted in favour of extending their industrial action mandate earlier this month.
Unite general secretary Sharon Graham said: “Birmingham council will only resolve this dispute when it stops the appalling treatment of its workforce.
“Agency workers have now joined with directly-employed staff to stand up against the massive injustices done to them.
“Instead of wasting millions more of council taxpayers’ money fighting a dispute it could settle justly for a fraction of the cost, the council needs to return to talks with Unite and put forward a fair deal for all bin workers.
“Strikes will not end until it does.”
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Stock Market Live Updates: Sensex, Nifty Hit Record Highs; Bank Nifty Climbs 60,000 For The First Time
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