President Donald Trump announced the removal of Federal Reserve Governor Lisa Cook on Monday, marking a historic first in the central bank's 111-year history. In a letter shared on his social media platform, Trump cited allegations of mortgage fraud as the reason for his decision. He claimed there was "sufficient evidence" that Cook made false statements in mortgage agreements, which were referred to the Department of Justice by the Federal Housing Finance Agency.

Trump's letter stated, "At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator." He concluded by asserting that her immediate removal was necessary for the faithful execution of the law.

The allegations against Cook were brought to light by Bill Pulte, a Trump appointee, who accused her of claiming two primary residences in 2021 to secure better mortgage terms. This practice can lead to lower rates, as mortgages for second homes typically carry higher interest rates.

Cook has publicly resisted calls to resign, stating, "I have no intention of being bullied to step down from my position because of some questions raised in a tweet." She emphasized her commitment to addressing any legitimate inquiries regarding her financial history.

The legality of Trump's decision remains uncertain. The law permits a president to remove Federal Reserve board members only "for cause," but the definition of what constitutes "cause" is not clearly established. This ambiguity raises the possibility of a legal challenge, which could extend to the Supreme Court.

The Federal Reserve has not commented on the situation. Trump's action could have significant implications for the central bank, which has traditionally operated independently of political influence. The Fed's next monetary policy meeting is scheduled for September 16 and 17, adding urgency to the unfolding situation.

If Cook's removal is upheld, it would allow Trump to nominate a replacement, potentially someone aligned with his views on interest rates. Trump has previously criticized the Fed's chair, Jerome Powell, for not lowering rates quickly enough and has hinted at the possibility of firing him as well.