Federal Reserve Governor Lisa Cook has filed a lawsuit against President Trump, after the White House boss announced that he had fired her for “just cause”.
“This lawsuit challenges President Donald Trump’s unprecedented and unlawful attempt to remove Governor Lisa Cook from office. If approved, this would be the first such case in the history of the Federal Reserve Board of Governors,” Cook’s lawyers said in a 24-page lawsuit filed in federal court in Washington, DC today.
Cook wants a judge to confirm her status as Fed governor, allowing her to continue in her duties.
The move comes after President Trump announced on August 25 that he was firing Cook, effective immediately. He cited the decision as a motion to prosecute Cook for “mortgage fraud” that Federal Housing Finance Agency (FHFA) Director Bill Pulte sent to the Justice Department on August 15.
Pulte said that Cook declared her permanent residence as an apartment in Atlanta, Georgia, despite having previously taken out a mortgage to buy a house in Michigan and claiming it as her primary residence. This action occurred in 2021, a year before Cook was confirmed by the Senate as Fed Governor.
Cook’s lawsuit argues that a baseless allegation related to actions that occurred before taking office does not constitute “just cause,” and warns of the consequences if the court rules in Trump’s favor.
“Allowing the president to remove a member of the Board of Governors over policy disagreements would undermine the Fed’s independence,” the lawsuit says. This is important to ensure the stability of the US economy, “because a president’s short-term political interests often conflict with monetary policy.”
President Trump has not commented on the information. On August 26, Mr. Trump said he was ready for a legal fight. The Fed announced the same day that it would comply with the court’s ruling if Ms. Cook filed a lawsuit.
The Fed’s seven-member Board of Governors is appointed by the president and confirmed by the Senate, each serving a non-reappointment term of 14 years. The Federal Reserve Act that created the Fed in 1913 states that the president can fire a Fed governor for “good cause.”
Tensions between President Trump and the Fed have been rising as he has tried to cut interest rates to boost the economy, but the Fed has not responded. He has repeatedly attacked and even threatened to fire Fed Chairman Jerome Powell.
Ms. Cook is one of three governors appointed by former President Joe Biden. Two were picked by Mr. Trump from among the remaining governors. If Ms. Cook resigns or is fired, Mr. Trump will be able to appoint a replacement and ensure that a majority of the Fed’s Board of Governors shares his views on monetary policy.