Trump faces legal challenge from Fed’s Lisa Cook
In a lawsuit filed, Cook asked the court to declare Trump’s firing order “unlawful and void,” and also named Fed Chairman Jerome Powell as a defendant.
Federal Reserve governor Lisa Cook has taken legal action against President Donald Trump after his attempt to remove her from office, opening a constitutional and institutional battle that could test the independence of the US central bank.
In a lawsuit filed Thursday, Cook asked the court to declare Trump’s firing order “unlawful and void,” and also named Fed Chairman Jerome Powell as a defendant.
The case could advance all the way to the Supreme Court, given its implications for the Federal Reserve’s autonomy.
Trump defended his decision, saying there was “sufficient reason” to believe Cook had falsified mortgage records, citing what he described as his constitutional power to remove her. Cook has maintained that “no cause exists under the law” to sack her.
“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position, which, if allowed to occur, would be the first of its kind in the Board’s history,” her lawyer Abbe Lowell said in the lawsuit.
He added that the attempt “would subvert the Federal Reserve Act … which explicitly requires a showing of ‘cause’ for a Governor’s removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not.”
White House spokesperson Kush Desai said the president “exercised his lawful authority to remove” Cook.
“The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions. The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people,” he told the BBC.
The controversy stems from a letter written by Trump ally Bill Pulte, a housing finance regulator, who accused Cook of falsifying records to obtain a mortgage.
The letter claimed she signed two different documents two weeks apart, each listing a separate home as her primary residence. No charges have been filed against Cook, and it remains unclear whether she is under investigation. Her lawsuit does not address the allegations.
Cook sits on the Federal Reserve’s seven-member board of governors, which plays a key role in US monetary policy.
She is also part of the 12-member committee that sets interest rates. At the Fed’s July meeting, she joined Powell and most of her colleagues in voting to keep borrowing costs unchanged.
Trump has repeatedly criticized the Fed and Powell for resisting his calls to cut interest rates, arguing lower borrowing costs are needed to stimulate growth. Removing Cook would allow him to appoint someone more aligned with his economic agenda.
The Fed’s decisions are closely watched not only by American households and businesses — since they affect loans and savings — but also by central banks around the world that follow US policy trends.
