Federal Reserve Governor Lisa Cook will sue to block President Donald Trump’s move to remove her from office, her lawyer said on Tuesday, setting the stage for a legal battle over the White House’s influence on U.S. monetary policy.
Cook’s attorney, Abbe Lowell, described the president’s action as unlawful. “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action,” he said in a statement.
The announcement came a day after Trump said he intended to dismiss Cook, the first Black woman to serve on the Fed’s board, over alleged mortgage irregularities dating back to 2021. Trump accused her of “deceitful and potential criminal conduct,” claiming she listed more than one property as a primary residence on mortgage applications.
“We need people that are 100 percent above board and it doesn’t seem like she was,” Trump told reporters, adding that he would accept a court ruling if Cook retained her post.
The standoff has heightened concerns over the independence of the U.S. central bank. Federal Reserve governors are appointed to 14-year terms and can only be removed “for cause,” a provision designed to shield monetary policy from political pressure. The Fed, in a statement, stressed that such protections ensure decisions are made in the nation’s long-term economic interest.
Cook, who joined the Fed in 2022, disclosed the mortgages in a 2024 financial filing. At the time she was an academic, and loans for primary residences typically carry lower rates than those for investment properties.
Trump’s move comes as he presses for steep interest rate cuts and positions himself to reshape the Fed’s leadership. If Cook is removed, he would gain the opportunity to appoint a majority of the seven-member board, alongside his pending nominee, White House economist Stephen Miran.
The controversy follows other high-profile dismissals of Black women in senior government positions under Trump, including the heads of the Library of Congress and the National Labor Relations Board. Similar accusations of mortgage fraud have also been directed at political opponents, such as New York Attorney General Letitia James, who previously won a major civil fraud case against Trump.
Market reaction to the news was muted on Tuesday. U.S. stocks closed largely flat, while Treasury yields fell on shorter-term notes, reflecting expectations of lower rates, and rose on longer-dated bonds, signaling investor concern about the Fed’s policy independence.
Cook’s term is scheduled to run through 2038. Legal experts note that while the Federal Reserve Act allows removal “for cause,” no U.S. president has ever attempted to fire a sitting Fed governor, making this case a potential first test of the law.
