U.S. Federal Reserve Governor Lisa Cook has filed a lawsuit to stop President Donald Trump from removing her from office, in what her legal team describes as an unlawful and politically motivated move.
Cook’s attorney, Abbe Lowell, said in a statement that Trump’s attempt to fire her was based only on a referral letter and lacked any factual or legal basis.
The lawsuit comes a day after Trump declared that Cook—who made history as the first Black woman to serve on the Fed’s governing board—was being dismissed over alleged “deceitful and potentially criminal conduct” tied to mortgages she obtained in 2021.
Trump told reporters he had “good people” in mind to replace her but would respect a court ruling if she retained her seat.
The clash has reignited concerns over political interference in U.S. monetary policy. During his first term, Trump repeatedly pressured the Fed to slash interest rates and even threatened to fire Fed Chair Jerome Powell. Recently, he has renewed his push for steep rate cuts, escalating tensions with the central bank.
Cook’s removal would allow Trump to tilt the balance of the Fed’s seven-member board. With two seats already in play and the pending nomination of White House economist Stephen Miran, a vacancy in Cook’s position could give Trump decisive influence. According to The Wall Street Journal, Miran and former World Bank President David Malpass, a close Trump ally, are being considered for the role.
However, the Fed pushed back on Monday, stressing that board members serve 14-year terms and cannot be dismissed easily, a safeguard designed to ensure policy decisions are grounded in data and the long-term interests of Americans. Despite Trump’s declaration that Cook’s firing was “effective immediately,” the Fed said her status remains unchanged.
Trump’s attempted ouster rattled global markets, undermining confidence in the dollar and U.S. sovereign debt. The Wall Street Journal and AFP reported that Dow futures and Asian stocks fell on Tuesday, amid fears of financial instability. Investors were further spooked by Trump’s renewed threats to impose tariffs on trade partners and expand export controls on microchips.
At the heart of the dispute are two mortgages Cook took out before joining the Fed. Trump accused her of misrepresenting two separate properties in Michigan and Georgia as primary residences in 2021, before she was appointed to the central bank in 2022.
The issue was first raised last week by William Pulte, a Trump appointee at the Federal Housing Finance Agency, who referred the matter to Attorney General Pamela Bondi. The Justice Department has yet to announce whether it will pursue an investigation.
Cook’s term is set to run through 2038, and the Federal Reserve Act of 1913 permits the removal of a governor “for cause.” But legal scholars note that the clause has never been tested in court.
Peter Conti-Brown, a Fed historian at the Wharton School, said the case represents uncharted territory.
“The idea that you can reach back and use pre-appointment conduct—already vetted during Senate confirmation—as grounds for removal is incongruous with the very concept of ‘for cause’,” Conti-Brown argued.
The lawsuit is now expected to set the stage for a high-stakes legal showdown that could reshape not only Cook’s future but also the independence of America’s central bank.
