Donald Trump vs Fed gov: Lisa Cook sues Trump admin; asks to 'confirm her status' as board member

Federal Reserve governor Lisa Cook has taken the Trump administration to court after the US president tried to fire her.Cook’s lawsuit, filed by lawyer Abbe David Lowell, seeks an injunction to block her dismissal and “confirm her status” as a member of the central bank’s governing board.The case is being seen as an extraordinary legal fight that could redefine Fed’s independence. In the institution’s 112 years, no US president has ever attempted to fire a Fed governor, until Donald Trump published a letter on social media announcing that Cook had been removed. He stated that she was being fired because of allegations of mortgage fraud dating back to 2021, before she joined the board, AP reported.Most observing the matter expect the battle to end up before the Supreme Court. The Court has previously said the president cannot dismiss Fed officials over disagreements on policy, but can do so “for cause,” a term that usually covers misconduct or neglect of duty.

Cook, however, has not been charged with any crime.Her lawsuit argues that the claims have nothing to do with her work at the Fed and remain unproven. It also argues she was not given a chance to respond before being targeted."The unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation—does not amount to 'cause,'" the filing says, as cited by AP.

“Allowing the President to remove members of the Board over policy disagreements would also render illusory the Board’s independence,” it continues.The move comes as Trump has stepped up attacks on Fed chair Jerome Powell and the central bank’s interest-rate committee for not lowering borrowing costs more quickly. However, Powell has already signalled another rate cut could be coming at the 16–17 September meeting.Cook’s suit suggests the allegations are just an excuse to get rid of her, “the mortgage allegations against her are pretextual, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve.”As the Trump has previously said that he will only nominate people who back lower rates, the dismissal attempt paves the way for the White House to appoint a Trump loyalist, AP reported.The Fed is one of the most powerful institutions in the US economy, influencing the cost of mortgages, car loans and business borrowing by setting short-term interest rates.If the courts allow Trump’s firing of Cook to stand, analysts warn it could strip the Fed of its ability to act independently. That would make it harder for the bank to take unpopular steps, such as raising rates to control inflation.