Federal Reserve Governor Lisa Cook has filed a lawsuit against President Donald Trump after he attempted to remove her from the central bank’s Board of Governors.
This marks the first time in the Federal Reserve’s 112-year history that a sitting governor has been dismissed.
The conflict began when Trump announced Cook’s firing, citing allegations of mortgage fraud from 2021, prior to her appointment to the Fed.
These allegations were reported to the Department of Justice by the Federal Housing Finance Agency, but no criminal charges have been filed against her.
Cook, who was appointed by former President Joe Biden, has denied the claims and refused to resign.
Her legal team argues that the allegations are unrelated to her work at the Federal Reserve and contend that her removal violates the Federal Reserve Act, which allows a governor to be dismissed only “for cause.” She is seeking an emergency court order to block her dismissal.
The lawsuit, filed in the U.S. District Court for the District of Columbia, raises questions about the limits of presidential authority over independent federal agencies.
Legal experts suggest the case could eventually reach the Supreme Court, potentially affecting the balance of power between the executive branch and independent institutions like the Federal Reserve.
Financial markets have reacted to the uncertainty, with analysts expressing concern about the possible impact on the Fed’s independence and on monetary policy.
The outcome of Cook’s lawsuit could set a precedent for presidential authority over independent agencies and influence governance practices at the central bank.
Cook’s legal challenge has drawn attention from lawmakers, economists, and market participants.
It is seen as a critical moment in U.S. political and financial history, testing the rules that protect the Federal Reserve from political interference while ensuring accountability in its leadership.