Fed Governor Lisa Cook to Sue Trump Over Firing, Lawyer Confirms Amid Legal and Economic Backlash
WASHINGTON, D.C. — Federal Reserve Board Governor Lisa Cook, the first Black woman to serve on the central bank’s governing board, plans to file a lawsuit challenging President Donald Trump’s abrupt firing of her on Monday, her attorney confirmed Tuesday. The move, which Trump justified by citing unproven allegations of mortgage fraud, has ignited a fierce debate over the independence of the Federal Reserve and could escalate to the Supreme Court, potentially reshaping the nation’s monetary policy framework. Cook, appointed by President Joe Biden in 2022 with a term extending until 2038, vowed to continue her duties, asserting that Trump’s action lacks legal authority under the Federal Reserve Act.
Attorney Abbe Lowell, a prominent Washington, D.C., lawyer representing Cook, issued a statement emphasizing that “President Trump has no authority to remove Federal Reserve Governor Lisa Cook.” He described the firing as an “illegal action” based solely on a referral letter from a Trump ally, without factual or legal basis. “We will be filing a lawsuit challenging this illegal action,” Lowell added, signaling an imminent court battle that legal experts predict could test the boundaries of presidential power over independent agencies. The White House and Justice Department have not immediately responded to requests for comment, while the Federal Reserve’s media office remains silent on whether Cook is continuing to work from her office or remotely.
Trump announced the removal late Monday via a letter posted on Truth Social, claiming “sufficient cause” under the Federal Reserve Act of 1913, which allows presidents to dismiss governors only “for cause”—typically interpreted as malfeasance or dereliction of duty during their tenure. The president pointed to a criminal referral from Federal Housing Finance Agency (FHFA) Director Bill Pulte, a Trump appointee, who accused Cook of falsifying mortgage applications in 2021 for properties in Ann Arbor, Michigan, and Atlanta, Georgia. Pulte alleged she claimed both as her primary residence to secure lower interest rates, potentially constituting fraud. The Justice Department opened an investigation last week but has filed no charges, and the alleged actions predated Cook’s Fed appointment.
In response, Cook stated, “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so. I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.” Her defiance aligns with a May 2025 Supreme Court ruling that distinguished the Fed as a “uniquely structured, quasi-private entity” with stronger protections against removal without cause, unlike other independent agencies where Trump has successfully ousted officials.
Background on the Allegations and Trump’s Fed Pressure Campaign
The controversy stems from Pulte’s August 15 letter to Attorney General Pam Bondi, which claimed Cook signed documents attesting that separate properties would be her primary residence within weeks of each other, violating IRS rules allowing only one such designation per year and potentially securing undue loan benefits. Cook, a respected economist with expertise in international economics and African American economic history, previously taught at Harvard and Michigan State universities and served on the Obama administration’s Council of Economic Advisers. She addressed the claims last week, stating she takes her financial history seriously and is compiling facts to respond, but rejected any suggestion of wrongdoing.
Trump’s action fits a broader pattern of pressure on the Fed, which he has criticized for maintaining high interest rates at 5.25%-5.50%, hindering his economic agenda. The president has repeatedly attacked Chair Jerome Powell—whom he appointed in 2017—for not cutting rates faster, despite recent signals of potential easing at the September 17-18 meeting. Removing Cook could tilt the seven-member Board of Governors toward Trump appointees, giving him a potential 4-3 majority and influencing the Federal Open Market Committee, which sets monetary policy. Another Biden appointee, Adriana Kugler, resigned earlier this month, and Trump has nominated his chief economist, Stephen Miran, to replace her.
Pulte, a vocal Trump supporter, has leveled similar fraud accusations against Democrats like Sen. Adam Schiff and New York AG Letitia James, both involved in past legal actions against Trump, raising questions of political motivation.
Reactions from Democrats, Experts, and Markets
Democratic leaders swiftly condemned the firing as an “authoritarian power grab.” Senate Banking Committee Ranking Member Elizabeth Warren called it a violation of the Federal Reserve Act that “must be overturned in court,” accusing Trump of scapegoating to mask his policy failures. House Minority Leader Hakeem Jeffries echoed this, highlighting Cook’s historic role and lack of evidence. The Congressional Black Caucus decried it as an unprecedented attack on a Black woman leader without credible evidence.
Economists warned of dire consequences for Fed independence, essential for controlling inflation and supporting employment. Former Treasury Secretary Larry Summers called it a “problematic politicization” without due process. Brookings Institution fellow Sarah Binder described the “for cause” claim as a “fig leaf” to force rate cuts, potentially eroding investor confidence and raising borrowing costs for Americans. Markets reacted warily: U.S. stock futures dipped slightly Tuesday morning, long-dated Treasuries sold off, and the dollar weakened briefly against major currencies before recovering.
Republican Sen. Cynthia Lummis supported Trump, claiming it ends a era of unaccountable Fed members. FHFA’s Pulte suggested Cook’s resistance bolsters the fraud claims.
Potential Legal and Economic Ramifications
The lawsuit could hinge on interpreting “for cause” under the 1913 Act and the Supreme Court’s May ruling, which afforded the Fed unique protections. If successful, it would reinstate Cook and affirm Fed autonomy; a Trump win could enable further removals, risking politicized rate decisions that economists fear might fuel inflation or economic instability. For everyday Americans, this battle underscores the Fed’s role in keeping prices stable and jobs plentiful—outcomes that could be jeopardized if political interference prevails. As one analyst noted, “Wrecking institutions with unlawful behavior comes with costs to Americans,” including higher commodity prices from a weakening dollar. The case’s outcome may define the limits of executive power in Trump’s second term.