Fed official sues Trump over attempt to fire her, challenging his power
over the independent agency
[August 29, 2025] By
CHRISTOPHER RUGABER
WASHINGTON (AP) — Federal Reserve Governor Lisa Cook has sued the Trump
administration in an effort to overturn the president’s attempt to fire
her, launching an unprecedented legal battle that could significantly
reshape the Fed’s longstanding political independence.
The lawsuit seeks an emergency injunction to block her firing and
“confirm her status” as a member of the Fed's governing board.
“The President’s effort to terminate a Senate-confirmed Federal Reserve
Board member is a broadside attack on the century-old independence of
the Federal Reserve System,” Cook's lawyer, Abbe David Lowell, wrote in
a court filing.
The case could become a turning point for the 112-year old Federal
Reserve, which was designed by Congress to be insulated from day-to-day
political influence. Economists prefer independent central banks because
they can more easily take unpopular measures, such as lifting interest
rates to combat inflation, than elected officials can.
The case was assigned to Judge Jia Cobb, an appointee of former
President Joe Biden. A hearing was scheduled for Friday.
Many economists worry that if the Fed falls under the control of the
White House, it will keep its key interest rate lower than justified by
economic fundamentals to satisfy President Donald Trump's demands for
cheaper borrowing. That could accelerate inflation and could also push
up longer-term interest rates, such as those on mortgages and car loans.
Investors may demand a higher yield to own bonds to offset greater
inflation in the future, lifting borrowing costs throughout the economy.
“If Cook wins, she stays in place and we achieve some semblance of
stability," said Peter Conti-Brown, a professor of financial regulation
at the University of Pennsylvania and Fed historian, in a Substack post.
"If she loses ... that’s the end of Fed independence as it has been
constructed and reconstructed over 112 years.”
If Trump can replace Cook, he may be able to gain a 4-3 majority on the
Fed’s governing board. Trump appointed two board members during his
first term and has nominated a key White House economic adviser, Stephen
Miran, to replace Adriana Kugler, another Fed governor who stepped down
unexpectedly Aug. 1. Trump has said he will only appoint people to the
Fed who will support lower rates.
No president has sought to fire a Fed governor before until Trump posted
a letter on media late Monday saying that Cook was fired. Trump said the
reason for her removal were allegations that she committed mortgage
fraud in 2021, before she was appointed to the board. Most observers
expect the case to end up at the Supreme Court.
The Supreme Court has signaled that the president can’t fire Fed
officials over policy differences, but can do so “for cause,” typically
meaning misconduct or neglect of duty. Cook has not been charged with
any crime.
The lawsuit argues that the allegations don't involve misconduct by Cook
while in office and haven't been proven. Cook should also have been
given a chance to answer the charges, the suit says.
“The unsubstantiated and unproven allegation that Governor Cook
‘potentially’ erred in filling out a mortgage form prior to her Senate
confirmation — does not amount to ‘cause,’” the lawsuit says.
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Lisa Cook, right, takes the oath of office to become a member of the
Federal Reserve Board, May 23, 2022, in Washington. (AP
Photo/Patrick Semansky, file)
 The lawsuit also denies the charges
against Cook, without providing supporting detail.
“Neither the type of ‘offense’ the President cited nor the
threadbare evidence against Governor Cook would constitute 'cause'
for removal even if the President’s allegations were true—which they
are not,” the lawsuit said.
“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," White House
spokesperson Kush Desai said. "The removal of a governor for cause
improves the Federal Reserve Board’s accountability and credibility
for both the markets and American people.”
The president’s decision comes as he has repeatedly attacked Fed
Chair Jerome Powell and the other members of the Fed’s interest-rate
setting committee for not cutting the short-term interest rate they
control more quickly. It currently stands at 4.3%, after Fed
policymakers reduced it by a full percentage point late last year.
Trump has said he thinks it should be as low as 1.3%, a level that
no Fed official and few economists support.
The suit argues that the allegations of mortgage fraud are simply a
pretext to fire Cook because she hasn't voted to lower interest
rates: “The mortgage allegations against her are pretextual, in
order to effectuate her prompt removal and vacate a seat for
President Trump to fill and forward his agenda to undermine the
independence of the Federal Reserve.”
“The President cannot rely on brute force or clever shortcuts to
circumvent Congress to bend the institution to his will,” Lowell
wrote in a request for an emergency order blocking the firing.
“History provides no sanction for an attempt to short-circuit ‘for
cause’ removal protections by conjuring up unfounded allegations of
past wrongdoing.
The lawsuit also seeks to block the Federal Reserve from accepting
the firing and asks the court to require the Fed and Powell to
“treat Governor Cook as a member of the Board of Governors.”
Powell signaled last week that the central bank was leaning toward
cutting its rate at its next meeting Sept. 16-17. Still, it's likely
that the Fed will cut its key rate more slowly than Trump wants, and
perhaps to as low as 3.25% or so — higher than Trump would prefer.
Cook is the first Black woman to serve as a governor. She was a
Marshall Scholar and received degrees from Oxford University and
Spelman College, and prior to joining the board she taught at
Michigan State University and Harvard University’s Kennedy School of
Government.
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