Trump Is Seeking Control of the Fed. He Says He’ll Have a ‘Majority’ Soon.

President Donald Trump fired Federal Reserve governor Lisa Cook over allegations that she falsified mortgage records. (MANDEL NGAN/Getty Images (Trump); Al Drago/Bloomberg (Cook))

President Donald Trump said on Tuesday that he would soon have a majority of his nominees on the Federal Reserve Board of Governors, who will work to slash interest rates.

“We’ll have a majority very shortly,” Trump said during a televised Cabinet meeting. “So that’ll be great.”

While the president has pushed Fed policymakers to lower interest rates in the past, he hasn’t explicitly discussed an effort to take control of the bank, which is supposed to be independent. The White House didn’t immediately respond to a request for comment.

“Once we have a majority, housing is going to swing, and it’s going to be great,” he continued. “People are paying too high an interest rate. That’s the only problem with us. We have to get the rates down a little bit.”

Mortgage rates aren’t controlled or set by the Fed, although its Fed funds rate can indirectly influence them.

Trump’s comments come following his move late Monday to fire Federal Reserve governor Lisa Cook. His decision will test the limits of presidential power and possibly ignite a constitutional clash over the Fed’s independence.

Cook, the first Black woman to serve on the Fed’s board, said she wouldn’t resign, and that there is no cause under the law for her removal. She plans to seek an injunction that would allow her to remain on the board while litigation unfolds.

“President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so,” Cook said in a statement sent to various media outlets late Monday. “I will not resign,” she added.

Her attorney, Abbe David Lowell, founder of Lowell & Associates, said in a statement Tuesday that “President Trump has no authority to remove Federal Reserve Governor Lisa Cook. His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.”

A Federal Reserve spokesperson said the central bank will abide by any court decision on the issue of Cook’s continued employment.

Cook was nominated to the Fed by President Joe Biden and confirmed by the Senate in 2022 in a 51-50 vote, with Vice President Kamala Harris breaking the tie. Her term as governor is due to end in 2038.

Trump, who has been pressuring the Fed to lower interest rates, based his dismissal on allegations that Cook falsified mortgage records while she was a professor at Michigan State University before she joined the Fed. He said her alleged conduct compromised her integrity and justified removal “for cause.”

Cook hasn’t been charged, and some analysts say the claim falls short of the legal bar. “She hasn’t been officially accused of a crime…it’s not clear that it rises even to that standard,” said Mark Spindel, co-founder of Potomac River Capital and senior adviser at F/m Investments.

Others disagree. “The firing of Lisa Cook ‘for cause’ may be pretextual but is not obviously illegal,” Jack Goldsmith, a law professor at Harvard University, wrote on social media.

The Federal Reserve Act says governors can only be removed “for cause,” but Congress has never fully defined what that means. Courts have generally limited cause to neglect of duty, inefficiency, or malfeasance in office.

Because the allegations predate Cook’s time at the Fed, the law may not even apply, noted JPMorgan’s chief U.S. economist, Michael Feroli. He wrote that “for cause” protections are usually understood to cover misconduct while in office, not before.

A recent Supreme Court ruling expanding presidential authority to fire members of independent agencies specifically carved out the Federal Reserve, underscoring the uniqueness of this case.

Spindel said Cook’s legal strategy is straightforward. “I think she is going to have a temporary restraining order, an injunction, which would set aside the dismissal, if indeed it’s a proper dismissal. And I could envision, if she proceeds with litigation, it will become a Supreme Court opinion,” he said.

If the courts ultimately uphold Trump’s move, the president could further cement control of the Fed. Cook’s potential removal, Governor Adriana Kugler’s resignation earlier this month, and the expiration of Powell’s term as chair next May would give Trump the opportunity to fill three seats on the seven-member board. Together with governors Michelle Bowman and Christopher Waller, both Trump appointees who dissented in favor of rate cuts in July, they would form a five-member majority on the seven-person board.

That majority matters, and not only in determining the federal-funds rate. Governors have the authority to approve or veto the reappointment of all 12 regional Fed presidents, who are next up for renewal in February 2026. Historically, that process has been routine. But analysts at Strategas Research note the governors technically have the authority to reject or even remove presidents “at will,” a power never used but affirmed in a 2019 Justice Department opinion.

The Fed’s next policy meeting is scheduled for Sept. 16–17, and Fed Chair Jerome Powell signaled at the Fed’s Jackson Hole symposium last Friday that a rate cut is likely. “The President is going to begin to get what he has been demanding,” Spindel said.

Trump’s attack on Cook began before Jackson Hole, and made for an uneasy mood at the gathering. Security was heavier than usual, and officials spoke in whispers about the president’s escalating attacks. “I’m just keeping my head down,” one participant said.

Trump has repeatedly attacked Powell for keeping rates “too high” and has pressed for steep, immediate cuts. He has nominated Stephen Miran, chair of the Council of Economic Advisers, to succeed Kugler. Cook’s removal would give him another opening before Powell’s term as chair ends next year. But Congress must approve appointments to the board, and could push back, Spindel said.

Investors so far have shrugged off Trump’s firing of Cook. Stocks closed higher on Tuesday, and bond yields were mostly unchanged.

Write to Nicole Goodkind at nicole.goodkind@barrons.com