Federal Reserve Governor Lisa Cook filed a lawsuit Thursday that challenges President Donald Trump’s effort to fire her.
Filed in federal court in Washington, D.C., the suit alleges that Trump violated U.S. law and Cook’s constitutional rights when he announced her removal from office earlier this week. Trump claims he is firing Cook for cause, based on allegations made by a member of his administration that she provided false information on a pair of mortgage applications in 2021.
“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.
The suit claims that Trump has no authority to remove Cook, while framing his actions as an illegal attempt to influence Fed policy. “The operational independence of the Federal Reserve is vital to its ability to make sound economic decisions, free from the political pressures of an election cycle,” the suit says.
What’s at stake: Trump’s move to fire Cook threatens to create a crisis of sorts at the central bank, which has operated more or less independently since its creation in 1913. While the seven members of the Fed board are nominated by the president, they serve 14-year terms and are not subject to removal, except for cause. No member has ever been removed by a president.
The Fed board is designed to be shielded from immediate political pressures. But Trump wants the Fed to lower its benchmark interest rate, and his effort to remove Cook is part of his effort – which includes pressuring Fed Chair Jerome Powell with insults and threats of removal – to get the policy he wants. Fed officials have held off on rate cuts this year amid concerns that Trump’s tariff hikes could reignite inflationary pressure in the U.S. economy.
If Trump succeeds in removing Cook, it will be seen as a violation of the Fed’s historical independence. Some experts have warned that Trump’s campaign could lead to higher borrowing costs and higher inflation over the long haul as political leaders push for looser monetary policies in the short term.
The Fed did not comment on Cook’s lawsuit. The central bank indicated earlier this week that it would abide by whatever decisions are made by the courts.