Lisa Cook, a governor on the Federal Reserve Board, filed a lawsuit against President Donald Trump on Thursday over his “illegal” attempt to oust her from the nation’s central bank, saying the White House does not have the authority to fire her without cause.
Just three days after Trump announced his decision to fire Cook on unproven allegations of mortgage fraud, her attorney, Abbe Lowell, filed the lawsuit claiming the president’s move was “unprecedented and illegal.”
“It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve,” Lowell said in the complaint.
Lowell argued that Trump’s move violates the Federal Reserve Act and Cook’s Fifth Amendment right to due process.
Cook’s attorney said if the court allows Trump to fire Cook, it would be “the first of its kind in the Board’s history.”
Trump has been consistently targeting the Fed in recent months, urging the board to lower interest rates and attacking Chairman Jerome Powell for not acting more quickly to do so. Already, he’s been hinting at replacing some members with individuals who align with his policies.
Setting his sights on Cook, the first Black woman to serve as a Federal Reserve governor, Trump claimed she committed mortgage fraud when she listed two separate residences as her primary residence.
The allegations stem from Bill Pulte, the Federal Housing Finance Agency director, who claimed that Cook had two properties – one in Michigan and another in Georgia – down as her primary residence on loan applications.
Trump and his top advisers have shown 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 on Tuesday.
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.”
“The unsubstantiated mortgage fraud allegations that allegedly occurred prior to Governor Cook’s Senate confirmation do not amount to ‘inefficiency, neglect of duty or malfeasance in office,’” Cook’s lawyers wrote in the complaint.
White House spokesperson Kush Desai argued Trump “exercised his lawful authority” to remove Cook from the Board of Federal Governors, citing a section of the U.S. code that says the president must show “cause” to remove a board member.
While “cause” is generally understood to mean professional recklessness or neglect, it is not clearly defined in the Federal Reserve statute.
In a statement to CNBC in response to the suit, Desai said: “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,” Desai added.
Hours after receiving the president’s letter on Monday, Cook released a statement saying 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.”
The battle between Trump and Cook is likely to spur a major legal battle, potentially all the way to the U.S. Supreme Court, with lasting implications for the Federal Reserve, which was always intended to operate independently from the executive.
Earlier this year, the Supreme Court issued interim rulings granting Trump the executive power to fire several independent regulators “without cause.” However, the justices stressed that its reasoning did not apply to the Fed.
