Trump's "three-step method" to control the Federal Reserve is advancing: replace Powell, control the board, dismiss regional Fed presidents. If successful in dismissing Cook, Trump could potentially secure four seats, gaining a majority in the Fed's seven-member board. According to analysis, if he gains majority control by March next year, he could refuse to reappoint regional Fed presidents, thereby controlling the FOMC and reshaping the Fed system.

Trump just made a major move! He announced on social media that he is removing Fed Governor Lisa Cook from her position "effective immediately."

This unprecedented action has shocked financial markets, sparking widespread criticism. U.S. stock index futures fell in response, with Nasdaq 100 contracts down 0.2%, while safe-haven sentiment drove the yen higher against the dollar and gold recovered earlier losses.

If Trump's action succeeds, it would bring him closer to "controlling the Fed." Cook's departure would potentially give Trump four seats, allowing him to hold a majority on the seven-member board. Trump appointed two current governors during his first term and recently nominated his Economic Advisory Council Chairman Stephen Miran to fill a third seat recently vacated by Biden appointee Adriana Kugler.

Analysis suggests that Trump currently has two appointees on the Fed's seven-member board. If he gains two additional nomination seats, he would secure a majority, potentially allowing him to fundamentally reshape the entire Fed system.

Furthermore, analysis indicates that if Trump gains majority control of the Fed board before March next year, they could refuse to reappoint regional Fed presidents, thereby achieving control over FOMC meetings.

Dismissal "Unprecedented" - Shocks Wall Street

In his letter, Trump accused Cook of "fraudulent and potentially criminal behavior" in financial affairs, claiming such conduct has undermined her credibility as a regulator.

Citing Article II of the U.S. Constitution and relevant provisions of the Federal Reserve Act of 1913, Trump stated he has determined sufficient grounds exist to remove Cook from office. The letter referenced criminal referral materials submitted by the Federal Housing Finance Agency on August 15, alleging Cook made false statements in mortgage documents. For example, she allegedly declared a property as her primary residence on a Michigan document, then made the same declaration on a Georgia document. Trump called this behavior "unimaginable," questioning her integrity and competence as a financial regulator.

Trump's dismissal threat against Cook marks a significant escalation in White House pressure on the Fed. If Trump successfully removes Cook, it would set a historic precedent - no sitting Fed governor has ever been dismissed by a president, raising market concerns about potential constitutional crisis and increased market volatility.

In previous political conflicts, even intense confrontations between President Johnson and Fed Chairman William McChesney Martin, or President Nixon's pressure on Arthur Burns, never resulted in actual dismissals.

Former Fed economist and New Century Advisors Chief Economist Claudia Sahm previously stated: "This is a new way for this administration to try to control the Fed. They are using every tool they can find to achieve this control."

Does the President Have Power to Remove Fed Governors? Yes, But With Conditions

Legal experts emphasize that the Federal Reserve Act clearly states governors "may be removed by the President for cause," but this requires concrete evidence of misconduct, such as negligence, malfeasance, or inability to perform duties - not political motivation.

While Federal Housing Finance Agency Director Bill Pulte previously accused Cook of lying on loan applications to obtain more favorable terms, allegedly involving mortgage fraud, the charges against Cook have not been proven in court, and the Justice Department has only stated it will investigate the allegations.

Trump previously posted a photo of Cook marked with a red X on his Truth Social platform, calling her a "fraud." Cook is the first Black woman on the Fed's board of governors, joining in 2022. Massachusetts Senator Elizabeth Warren condemned Trump's action on social media as "illegal and politically motivated."

Trump's "Three-Step Method" to Control the Fed Being Implemented Gradually

Analysis suggests that if Cook leaves office, Trump would have the opportunity to appoint a fourth Fed governor, gaining majority control of the seven-member board. Trump appointed two current governors during his first term and recently nominated Economic Advisory Council Chairman Stephen Miran to fill the third seat recently vacated by Biden appointee Adriana Kugler.

Analysis indicates that Trump currently has two appointees on the Fed's seven-member board. If he gains two additional nomination seats, he would secure a majority, potentially allowing him to fundamentally reshape the entire Fed system.

Additionally, analysis suggests that if Trump gains majority control of the Fed board before March next year, they could refuse to reappoint regional Fed presidents. Dismissing competent presidents would break decades of precedent and breach key firewalls protecting Fed independence since its establishment in 1913.

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