Federal Reserve Governor Lisa Cook plans to file a lawsuit to block President Donald Trump from removing her from office, setting the stage for a potentially lengthy legal battle over White House influence on U.S. monetary policy.
Her attorney, prominent Washington lawyer Abbe Lowell, said in a statement on Tuesday, “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.”
The legal maneuver comes a day after Trump announced his intention to dismiss Cook, the first Black woman to serve on the Fed’s governing board, citing what he described as “deceitful and potential criminal conduct” linked to mortgages she obtained in 2021.
“We need people that are 100 per cent above board and it doesn’t seem like she was,” Trump told reporters, adding that he had “good people” in mind as potential replacements but would respect any court ruling allowing her to remain.
A Clash with the Fed
Trump’s latest confrontation with the central bank underscores his broader efforts to bring independent agencies under his direct control. Since returning to office in January, he has overseen the departure of large numbers of civil servants, dismantled agencies, and withheld billions in congressionally approved funding.
During his first term, Trump frequently pressured the Fed to cut interest rates. More recently, he has intensified those demands, calling for sharp reductions and at one point threatening to remove Fed Chair Jerome Powell before backing away.
If Cook were ousted, Trump would gain the ability to nominate enough officials to secure majority control of the Fed’s seven-member board. His administration is already advancing the nomination of White House economist Stephen Miran.
The Fed, in its response, emphasized the long-standing independence of its governors: members serve 14-year terms and “cannot be removed easily from office in order to ensure that monetary policy decisions are based on economic data and the long-term interests of the American people.”
Market and Political Repercussions
While concerns have been raised about the potential destabilization of U.S. monetary policy, immediate financial market reactions were subdued. Equities were little changed on Tuesday, though the dollar slipped. Yields on shorter-dated Treasury securities fell, reflecting expectations of a rate cut, while longer-term yields edged higher, signaling doubts about the Fed’s inflation-fighting resolve.
Trump defended his decision in a letter to Cook, claiming he had “sufficient cause” for removal based on her mortgage applications, where she allegedly listed multiple residences as “primary homes” before joining the Fed in 2022.
Broader Pattern of Dismissals
The controversy adds to criticism that Trump has disproportionately targeted senior Black women in government. In recent months, he has removed officials including the head of the Library of Congress and the chair of the National Labor Relations Board. His administration has also directed similar accusations of mortgage fraud at political opponents, such as New York Attorney General Letitia James, who previously secured a multibillion-dollar fraud judgment against him.
The allegations against Cook were first raised last week by William Pulte, a Trump appointee serving as director of the Federal Housing Finance Agency. Pulte referred the matter to U.S. Attorney General Pamela Bondi, who has not yet announced whether her office will pursue the case.
On Monday, Trump escalated his criticism, accusing Cook of “deceitful and criminal conduct in a financial matter” and declaring that he no longer had confidence in her “integrity.”
Cook’s Position
Cook, who disclosed three mortgages—including two for personal residences—on her 2024 financial disclosure, reportedly obtained the loans before her appointment while still working in academia. Primary residence mortgages often carry lower interest rates than those for investment properties, which banks consider riskier.
She is scheduled to remain on the Fed board until 2038. While the Federal Reserve Act of 1913 permits the removal of a governor “for cause,” no president has ever tested that authority. Historically, presidents have avoided interfering directly with the Fed to maintain confidence in U.S. monetary policy.
