Federal Reserve Governor Lisa Cook has threatened to sue Donald Trump over his “illegal” attempt to oust her from the central bank.
A day after Trump vowed to fire the policymaker “effective immediately,” citing unproven allegations of mortgage fraud, Cook’s attorney Abbe Lowell argued Tuesday that the president has “no authority” to do so.
“His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis,” Lowell continued. “We will be filing a lawsuit challenging this illegal action.”
Trump and his top advisers showed no sign of backing down in their campaign against the Federal Reserve and prominent Democrats, which has included leveling similar mortgage fraud accusations against New York Attorney General Letitia James and California Senator Adam Schiff.
“She can’t have an infraction, especially that infraction,” the president said at a cabinet meeting Tuesday, according to The New York Times.
White House spokesperson Kush Desai has argued Trump “exercised his lawful authority” to remove Cook from the Board of Federal Governors, citing a section of the U.S. code.
“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,” he told NBC News.
Later Tuesday, the Federal Reserve’s media office said in a statement that “Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only ‘for cause.’”
“As always, the Federal Reserve will abide by any court decision,” the statement added.
According to the Federal Reserve Act, members of the Fed board should serve a 14-year term “unless sooner removed for cause by the President.” The Act does not explicitly make clear what qualifies as “cause.”
If Cook does take legal action against the Trump administration, the case could end up being decided by the Supreme Court.
Earlier this year, the Supreme Court issued interim rulings granting Trump the executive power to fire several independent regulators “without cause”. However, the High Court stressed that its reasoning did not apply to the Fed.
Trump began pushing for Cook’s dismissal last week after he accused her of mortgage fraud against her and demanded she “must resign now!!!”
The president began peddling allegations made by Federal Housing Finance Agency Director Bill Pulte, whom the president tapped for the position in January, who claimed that Cook had two properties – one in Michigan and another in Georgia – down as her primary residence on loan applications within two weeks.
Pulte urged the Justice Department to launch a federal probe into Cook and said Trump had “cause” to fire her.
After Trump declared last Wednesday that “Cook must resign now!!!,” the president ramped up his attack against the policymaker this week.
In a letter to Cook posted to social media by the White House on Monday evening, Trump said that he had fired her, touting his powers under the Constitution and U.S. law to justify the unprecedented move.
He claimed there is “sufficient reason” to believe that the policymaker “made false statements on one or more mortgage agreements.”
Hours after receiving the president’s letter on Monday, Cook released a statement through Lowell claiming that Trump lacks the authority to fire her and she would not leave her post.
“I will not resign,” she said. “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
Trump has faced a wave of Democratic backlash, with critics concerned that his allegations are politically motivated.
Senate Minority Leader Chuck Schumer decried the move as a “brazen power grab” while Norman Eisen, a former White House ethics lawyer in the Obama administration, said that Trump capitulated to partisan pressure from Pulte.
