Lisa Cook to Challenge Trump’s Attempted Firing from Federal Reserve

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Federal Reserve Governor Lisa Cook plans to sue President Donald Trump after he announced her removal from the central bank, escalating tensions between the White House and the Fed.

Cook’s attorney, Abbe David Lowell, said Tuesday that Trump “has no authority” to dismiss her from the Fed’s Board of Governors, calling the move both unlawful and unprecedented.

Trump argued he had “sufficient reason” to act, accusing Cook of making false statements on two separate mortgage applications. In a post on his social media platform Truth Social, he claimed she declared different properties in Michigan and Georgia as her “primary residence” within weeks of each other.

Cook denied wrongdoing, saying the president’s action was “for cause when no cause exists under the law.” She vowed not to resign:

“I will continue to carry out my duties to help the American economy as I have been doing since 2022.”

A Test of the Fed’s Independence

Cook, appointed in 2022 by President Joe Biden, is the first African American woman to serve on the Fed’s board. As one of seven governors, she holds a key vote on the Federal Open Market Committee (FOMC), which sets U.S. interest rates.

At the Fed’s most recent policy meeting in July, she joined Chair Jerome Powell and most of the committee in voting to keep rates unchanged—despite Trump’s public push for cuts.

By attempting to remove Cook, Trump could seek to replace her with a governor more aligned with his call for lower interest rates, a move that economists warn could undermine the Fed’s independence.

Market Reaction

Financial markets responded swiftly to the news. Long-dated U.S. Treasury bonds sold off, signaling investor concerns about political interference in the Fed. The U.S. dollar initially fell against major currencies before recovering, while European stock markets opened lower on Tuesday.

Analysts say the bigger risk is whether Trump can reshape the Fed’s composition.

“[The] key question for markets is if Trump succeeds in replacing Cook, could he reshape the Fed’s composition and how would that impact the market’s perception on U.S. investability?” said Julia Lee, head of client coverage at FTSE Russell.

The Allegations

The push to remove Cook followed a referral letter from housing finance regulator Bill Pulte, a Trump ally, who accused her of mortgage fraud and urged the Justice Department to investigate. It is unclear whether any investigation has begun.

Cook said she first learned of the allegations through media reports, describing them as stemming from a loan application she submitted four years before joining the Fed. She dismissed the claims as politically motivated:

“I have no intention of being bullied to step down from my position because of some questions raised in a tweet.”

What Comes Next

Legal experts say the White House will likely have to defend Trump’s decision in court, since Fed governors are typically protected from political removal to safeguard the central bank’s independence.

The Federal Reserve itself has yet to issue a statement on the matter.