Federal Reserve Governor Lisa Cook has filed a lawsuit against the Trump administration, challenging the President’s attempt to fire her and igniting a high-stakes legal and constitutional battle over the independence of the nation’s central bank. The move, which has been described by legal scholars as an unprecedented assault on a core pillar of the U.S. financial system, sets the stage for a dramatic showdown that could redefine the limits of presidential power.
The lawsuit, filed today in federal court in Washington, D.C., seeks an immediate injunction to block the President’s termination order and to reinstate Cook to her position on the Fed’s Board of Governors. Her lawyers argue that the President’s action is “illegal and without a proper basis” and violates the Federal Reserve Act, which states that a governor can only be removed “for cause.”
The conflict began on Monday, when the President announced on social media that he was firing Cook, citing unproven allegations of mortgage fraud. These allegations, which stem from a 2021 financial transaction, were brought to the administration’s attention by a Trump appointee to a housing regulatory agency.
Cook’s legal team forcefully rebutted the charges, stating in the court filing that the allegations are “unsubstantiated and unproven” and, even if they were true, do not constitute “cause” for removal. The lawsuit also claims that the President’s actions violate Cook’s Fifth Amendment due process rights, as she was given no notice or opportunity to respond before her firing was made public.
For his part, the President has defended his action. A White House spokesperson stated that the President “determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position.” The administration has also argued that the firing is necessary to ensure the accountability and credibility of the Federal Reserve.
This is the first time in the Fed’s 112-year history that a President has attempted to remove a governor. The Federal Reserve was specifically designed by Congress to be independent from political influence, with its governors serving long, staggered terms to insulate them from partisan pressures. Economists and financial experts have long argued that this independence is crucial for the central bank to make tough, and often unpopular, decisions on monetary policy, such as raising interest rates to fight inflation.
The lawsuit has been widely seen as a pretext for the President to open a seat on the seven-member board and replace Cook, a Biden appointee, with a loyalist who would be more inclined to back his agenda of lower interest rates. The legal battle is expected to go all the way to the Supreme Court, where the outcome will have profound implications for the U.S. economy and the future of its independent institutions.