Federal Reserve Governor Lisa Cook has taken the extraordinary step of suing US President Donald Trump, arguing that he has no legal authority to remove her from office. The lawsuit, filed on Thursday, sets the stage for a high-stakes legal battle that could reshape the boundaries of presidential power and the Federal Reserve’s independence, a cornerstone of US economic policy.
Cook’s legal team asserts that Trump violated federal law when, on August 25, he announced plans to fire her. Under the law, a Fed governor can only be removed “for cause,” a phrase never before tested in court because no president has attempted to oust a sitting member of the central bank’s board. Trump has accused Cook of committing mortgage fraud in 2021, before her appointment by President Joe Biden in 2022. Cook has strongly denied the allegation, saying even if it were true, it would not amount to “cause” for removal under the law.
In her filing, Cook sought a temporary restraining order to block the administration and the Fed from acting on Trump’s removal order. She argued that the president’s move violated her due process rights by depriving her of office without notice or a hearing. Her attorneys dismissed Trump’s allegations as politically motivated and unsubstantiated, likening them to trivial misconduct irrelevant to her role as a Fed governor.
The lawsuit has been assigned to US District Judge Jia Cobb, a Biden appointee, but observers expect it to reach the Supreme Court. The high court has previously granted presidents wide latitude in firing executive branch officials, but recently suggested that the Fed may be distinct because of its unique structure and historical independence. If the Court sides with Cook, it would reaffirm the central bank’s insulation from White House interference. If it sides with Trump, it could give the president unprecedented control over monetary policy.
Markets have already shown sensitivity to the controversy. The US dollar slipped after Trump first announced his plan to fire Cook, reflecting investor fears about the erosion of the Fed’s independence. Analysts warn that political control of the central bank could undermine global confidence in US monetary policy, potentially affecting everything from interest rates to exchange rates.
The case also highlights a broader campaign by Trump to assert control over agencies traditionally considered independent. Earlier this year, he fired Gwynne Wilcox, the first Black woman on the National Labour Relations Board, and has dismissed several other officials across regulatory bodies. Critics see a pattern of politically motivated purges targeting Democrats, minorities, and figures aligned with Biden.
The allegation of mortgage fraud against Cook was first raised in August by William Pulte, a Trump appointee at the Federal Housing Finance Agency, who referred the case to Attorney General Pamela Bondi. Cook’s disclosure forms list multiple mortgages in Michigan and Georgia, with two marked as personal residences. Her critics allege she misrepresented the nature of the loans to secure better rates, though these mortgages were public at the time she was vetted by the Senate. Experts note that if the allegations had merit, they should have surfaced before her confirmation.
Trump’s letter to Cook accused her of “deceitful and criminal conduct in a financial matter” and claimed a loss of confidence in her integrity. If she is removed, Trump would gain the opportunity to appoint his fourth member to the Fed’s seven-seat board, further strengthening his influence over monetary policy ahead of critical decisions on interest rates.
Cook, the first Black woman to serve on the Federal Reserve Board, has become a symbol of both representation and resistance against executive overreach. Her lawsuit is not just about her position but also about safeguarding the Fed’s autonomy. The eventual ruling could have consequences far beyond one individual, determining whether the Federal Reserve remains shielded from political winds or becomes subject to presidential control.
