Cook sues Trump over ‘illegal attempt’ to fire her from Fed

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Federal Reserve Gov. Lisa Cook filed a lawsuit against President Donald Trump on Thursday seeking a court injunction confirming her status as a confirmed member of the Fed board after Trump publicized a letter Monday saying he had fired her from her office.

The lawsuit, filed Thursday morning in the District Court for the District of Columbia, notes that the Federal Reserve Act only allows the president to remove a Federal Reserve Board governor “for cause,” and argues that the allegations presented by Trump and his lieutenants do not meet that standard. 

“This case challenges President Trump’s unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would [be] the first of its kind in the Board’s history,” the lawsuit said. “It would subvert the Federal Reserve Act, which explicitly requires a showing of ’cause’ for a Governor’s removal, which an unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not.”

Last week, Federal Housing Finance Agency Director Bill Pulte published a criminal referral to his social media account, alleging that Cook — who joined the Fed Board in 2022 — had claimed primary residence on two mortgage applications for homes in Michigan and Georgia in 2021. Mortgages made for primary residences generally have more favorable terms than for secondary residences, and claiming two homes as primary residences, Pulte claimed, amounted to mortgage fraud. 

President Trump — who has been pressuring the Fed to lower interest rates for months — said last Friday that he would fire Cook if she didn’t resign, and Cook responded in a statement by saying that she would not leave office. Trump then took to his social media account on Monday evening, publishing a letter to Cook informing her that she was “removed” from her position on the Fed board “effective immediately.” Trump said in his letter to Cook that, as president, he had determined that her actions had violated the public trust, and that determination alone was sufficient to effect her removal. 

“The executive power of the United States is vested in me as President and, as President, I have a solemn duty to ensure that the laws of the United States are faithfully executed,” Trump said in his letter to Cook. “I determined that faithfully executing the law requires your immediate removal from office.”

Cook’s lawsuit argues that Trump’s actions violated her Fifth Amendment right to due process and her statutory right to notice and a hearing, making her removal unlawful.

“Accordingly, Governor Cook seeks immediate declaratory and injunctive relief to confirm her status as a member of the Board of Governors, safeguard her and the Board’s congressionally mandated independence, and allow Governor Cook and the Federal Reserve to continue its critical work,” the lawsuit said. 

The suit goes on to explain that the central bank’s political independence — as enshrined in its leadership’s protection from arbitrary removal by the president — is crucial to its ability to function. Markets and the broader public tend to expect that inflation will be lower in the long term if they believe that the central bank is free and willing to use its powers to keep inflation under control, even if it means a period of politically unpopular higher interest rates. 

“The ‘for cause’ removal protection guaranteed by the FRA, which has been the bulwark of the Federal Reserve’s independence for the past century, prevents the President from firing a Federal Reserve Board governor except ‘for cause,’ meaning instances of inefficiency, neglect of duty, malfeasance in office, or comparable misconduct,” the suit said. “Whether or not the FRA’s ‘for cause’ removal provision is interpreted using the usual standard of ‘inefficiency, neglect of duty, or malfeasance in office,’ it clearly does not support removal for policy disagreements.”