Federal Reserve Board Governor Lisa Cook will file a lawsuit after President Donald Trump moved to remove her from the Fed, her attorney Abbe Lowell confirmed Tuesday.
“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” Lowell said in a statement, describing the action as lacking both legal and factual basis. He added, “We will be filing a lawsuit challenging this illegal action.”
White House and Fed Responses
White House spokesman Kush Desai defended Trump’s decision, saying the president acted under federal law to remove a governor “for cause” following allegations that Cook lied on mortgage documents. “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,” Desai said.
The Federal Reserve released its own statement later Tuesday, noting that governors serve fixed terms and can only be removed “for cause” under the Federal Reserve Act. “As always, the Federal Reserve will abide by any court decision,” the statement said.
Allegations of Mortgage Fraud
The controversy stems from accusations by Federal Housing Finance Agency Director Bill Pulte. He claimed Cook signed mortgage documents for properties in both Michigan and Georgia, each time declaring the property as her primary residence. Pulte argued this may have been done to secure better loan terms.
The Justice Department opened an investigation last week into the allegations, which predate Cook’s appointment to the Fed. Trump cited these claims in his termination letter, saying they undermined public confidence in her integrity.
Cook’s Response
Cook rejected the president’s move, insisting that no legal cause exists for her removal. “I will not resign,” she said in a statement Monday. “I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
If Cook proceeds with her lawsuit, the case could end up before the Supreme Court. Legal scholars note that “cause” under the Federal Reserve Act has historically been interpreted narrowly — applying to misconduct or dereliction of duty rather than disputed financial paperwork.
What The Author Thinks
The clash between Lisa Cook and President Trump is more than a personnel dispute — it is a test of the Federal Reserve’s independence. If presidents can remove governors based on unproven allegations, markets may begin to question whether monetary policy decisions are being guided by politics rather than data. That risk alone could create instability, which is exactly why the Fed was designed with long terms and removal protections. However this case unfolds, it will set a precedent that could either reinforce or weaken one of the key guardrails of U.S. economic governance.
Featured image credit: Heute
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