Lisa Cook Sues Over Trump’s Attempt to Fire Her

Lisa Cook filed a lawsuit Thursday challenging President Donald Trump’s attempt to fire her from the Federal Reserve’s board of governors, marking the start of a high-stakes courtroom showdown that will test the Federal Reserve’s independence.

“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would [be] the first of its kind in the Board’s history,” the lawsuit says.

Cook’s lawsuit, filed in Washington, DC, federal court, asks a federal judge to confirm Cook’s status as a member of the Federal Reserve’s board of governors and allow her to continue working. US District Judge Jia M. Cobb, a Biden-appointee, will oversee the case.

It names Trump, as a defendant, as well as Federal Reserve Chairman Jerome Powell and the board itself, to the extent they “effectuate President Trump’s purported termination of Governor Cook.”

The lawsuit puts the central bank’s historical independence at the forefront, noting that putting it at the whims of “short-term political interests of a president” can be ruinous to the US economy.

“Presidents, facing pressure to boost the economy, may favor lower interest rates and a more expansive policy to achieve a temporary economic lift,” the lawsuit says. “However, this approach often fuels long-term inflation. A politically insulated Board of Governors can make appropriate, albeit unpopular, decisions — such as raising interest rates to combat inflation — that are crucial for the nation’s long-term financial health.”

Trump posted a letter addressed to Cook on Truth Social Monday night announcing he was removing her from the Federal Reserve.

Because the Federal Reserve is an independent agency, presidents have limited power to remove its members. Its board members are appointed by the president and confirmed by the US Senate for staggered 14-year terms. Cook’s term is scheduled to end in 2038.

A Federal Reserve spokesperson declined to comment on the lawsuit. The agency previously said it would “abide by any court decision.”

“Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people,” the spokesperson said.

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Trump’s pressure on the Federal Reserve comes as he seeks lower interest rates, which he believes will help with his economic agenda.

White House spokesperson Kush Desai said Thursday that Trump’s firing was “lawful.” Trump said in his letter said he was terminating Cook from her position for “cause” based on a criminal referral by one of his political appointees, Federal Housing Finance Agency Director Bill Pulte, who said Cook lied on mortgage paperwork. According to Pulte, Cook said two different homes would be her primary residence.

“The conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator,” Trump wrote.

Cook’s Thursday lawsuit says the allegations are “unsubstantiated” and that even if they were true, they do not meet the legal standard for cause removal.

“President Trump does not have the power to unilaterally redefine ’cause’ — completely unmoored to caselaw, history, and tradition — and conclude, without evidence, that he has found it,” the lawsuit says.

Cook is represented by Abbe Lowell and Norm Eisen, two attorneys who have criticized Trump and represent numerous government employees who he has fired and sought to punish politically.

The lawsuit accuses Trump of inventing the controversy as a way to pressure the Federal Reserve to lower interest rates, which it says puts the US economy at risk.

“Indeed, President Trump’s conception of “cause” has no limiting principle; it would allow him to remove any Federal Reserve Board member with whom he disagrees about policy based on chalked up allegations,” the lawsuit says. “That the President says he has found (or created) some basis for removing a Governor does not magically make such a basis grounds for a ‘for cause’ removal.”

Pulte mocked Cook’s lawsuit after it was filed.

“I wonder why she didn’t put her personal address on the lawsuit,” he said on X.

On Wednesday, the White House stepped up its pressure on Cook. Kevin Hassett, director of the National Economic Council, said that Cook should make the “honorable” choice and go on leave.

“If I were her, in her circumstance, I would take leave right now,” Hassett told reporters, per the White House press pool.

Hassett, who Trump has said he is considering naming to replace Fed Chair Jerome Powell, said Cook was undermining the Fed’s reputation by not stepping aside.

“The fact that she is not doing that suggests that she is partisan and is trying to make a partisan stance, which is contrary to the independence of the Fed,” he said.

Cook’s lawsuit could eventually reach the Supreme Court, which has recently upended long-held legal norms about independent agencies.

The court has largely sided with Trump over legal battles in the firing of other independent agency leaders, but a majority of justices have said the Federal Reserve deserves special treatment.

In an unsigned decision on the Supreme Court’s emergency docket in May, the majority said Trump’s firing of board members of two other independent agencies could take effect while additional legal proceedings played out. Trump had issued those firings, of the National Labor Relations Board and the Merit Systems Protection Board, without citing any cause.

But the majority opinion also said the Federal Reserve had a different standard for protections, without offering any legal reasoning.

“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the court said.

In a dissent, the Supreme Court’s three Democratic appointees criticized the Federal Reserve’s “bespoke” treatment, which they said was contrary to previous rulings.

“Today’s order poses a puzzle,” Supreme Court Justice Elana Kagan wrote. “For the Federal Reserve’s independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on.”

Cook’s lawsuit says any for-cause justification “clearly does not support removal for policy disagreements.”

“Allowing the President to remove members of the Board over policy disagreements would also render illusory the Board’s independence,” it says.