Lisa Cook, the governor of the US Federal Reserve, will sue Trump for her attempted removal

The governor of the US Federal Reserve intends to sue Trump for his “illegal” attempt to oust her, starting a monetary policy judicial battle.

A lawyer for Lisa Cook, the governor of the Federal Reserve, announced yesterday that she would sue President Donald Trump to stop him from removing her. This might be the beginning of a lengthy court struggle over the White House’s attempt to influence US monetary policy.

There is neither a factual nor a legal foundation for his attempt to terminate her based just on a recommendation letter. Reputable Washington lawyer Abbe Lowell, Cook’s attorney, stated in a statement, “We will be bringing a lawsuit contesting this unlawful action.”

Trump made the announcement a day after declaring that Cook, the first Black woman to hold a position on the Fed’s governing board, would be fired for allegedly engaging in “deceitful and potentially criminal conduct” with mortgages she took out in 2021.

Trump told reporters at a meeting, “We need people who are 100 percent above board and it doesn’t seem like she was.” He stated that he would follow any court ruling that kept Cook in her position, but he had a number of “good people” in mind to replace her.

Trump’s confrontation with the ostensibly independent central bank comes after a number of generally successful attempts to directly influence other branches of the US government, according to Reuters.

Following his return to office in January, the president has dissolved a number of agencies, supervised the departure of hundreds of thousands of government staff, and withheld billions of dollars in congressionally approved spending.

Trump has intensified his campaign to get the Fed to decrease interest rates in recent months, having done so during his first term in office. The president has threatened to dismiss Fed Chair Jerome Powell and called for rates to be lowered by many percentage points, though he recently withdrew those threats.

Trump would be able to appoint a majority of the Fed’s seven-member board, including two incumbents and the White House economist Stephen Miran, if Cook were to step down.

Cook and other board members have 14-year terms and are difficult to dismiss, the Fed said in a statement, to guarantee that monetary policy decisions are grounded in economic data and “the long-term interests of the American people.”

The attempt to affect U.S. monetary policy has caused concerns about global financial instability and damaged trust in the dollar and US sovereign debt. The market’s response to Trump’s most recent Fed ploy, however, was muted on Tuesday.

On the day, the dollar fell while Wall Street’s major equity indexes were mostly flat. In an indication that the Fed’s ability to combat inflation may wane, yields on longer-dated bonds increased while those on 2-, 5-, and 10-year Treasury notes decreased, showing increased expectations of a rate drop in the near future.

Before joining the Fed in 2022, Cook listed separate properties in Georgia and Michigan as primary residences on mortgage applications, which Trump claimed gave him “sufficient cause” to fire her in a letter to her on Monday.

Several Black women in high government positions, such as the chair of the National Labor Relations Board and the head of the Library of Congress, have been sacked by Trump in recent months.

Using similar charges of mortgage fraud, the Trump administration has also attacked other political rivals, such as Letitia James, the Black attorney general of New York who last year obtained a half-billion-dollar civil fraud judgment against Trump. Last Monday, a New York appellate court upheld the case while dismissing the penalty.

Last Monday, Trump appointee William Pulte, the director of the Federal Housing Finance Agency, initially expressed concerns regarding Cook’s mortgages and forwarded the case to U.S. Attorney General Pamela Bondi for further examination. Bondi has not yet stated if the Justice Department will act.

Cook was accused by Trump on Monday of engaging in “deceitful and criminal conduct in a financial matter,” and he expressed his lack of trust in her “integrity.”

The two mortgages in question were taken out by Cook while she was a student. Compared to mortgages on investment homes, which banks view as riskier, primary residence loans may have lower interest rates. Cook disclosed on a 2024 financial disclosure form that he had three mortgages, including two residential dwellings.

Although she is scheduled to remain on the Fed board until 2038, a sitting governor may be removed “for cause” under the Federal Reserve Act of 1913.

US presidents have so far mostly remained detached from Fed affairs to maintain trust in US monetary policy, so that authority has not been put to the test.