Federal Reserve Governor Lisa Cook has sued the Trump administration to block the president’s attempt to fire her, launching an unprecedented legal battle that could test the political independence of the US central bank.
No president has sought to dismiss a Fed governor in the institution’s 112-year history until Donald Trump posted a letter on his Truth Social account late on Monday declaring Cook was fired.
Trump said the reason was allegations that she committed mortgage fraud in 2021, before joining the Fed board.
Cook has not been charged with any crime. Legal experts say such a dismissal would normally require due process, giving her the chance to respond to the allegations.
The Supreme Court has previously signalled that presidents cannot remove Fed officials over policy disagreements, but they may do so "for cause," typically misconduct or neglect of duty.
Whether Trump’s move meets that threshold is now likely to be decided in court.
Trump vs Fed
The president has repeatedly attacked Fed Chair Jerome Powell and other policymakers for not cutting interest rates more quickly.
The central bank’s key short-term rate stands at 4.3 percent after being lowered by a full percentage point late last year.
Powell signalled last week that another cut was possible at the Fed’s next meeting on September 16–17.
Critics argue the White House is using the allegations against Cook as a pretext to open up a board seat for a Trump loyalist who would support his push for faster rate cuts. Trump has said he will only appoint people to the Fed who back lower borrowing costs.
The case could have far-reaching implications.
Legal scholars note that removing a sitting governor without due process could undermine the Fed’s autonomy, long considered a cornerstone of US economic stability.
Cook’s lawsuit argues that Trump’s action violates both federal law and constitutional protections for independent agencies.
A court ruling is expected to set a precedent for how much control presidents can exercise over the Federal Reserve.
