Federal Reserve Governor Lisa Cook will file a lawsuit to block President Donald Trump’s attempt to remove her from office, her lawyer Abbe Lowell said on Tuesday. Trump announced on Monday that he had fired Cook, the first Black woman to serve on the Fed’s governing board, citing alleged misconduct tied to mortgage applications she filed before joining the central bank in 2022. The Fed, however, emphasized that governors serve 14-year terms and cannot be removed without clear legal grounds.
The unprecedented move has raised alarm over the independence of the U.S. central bank. Trump’s effort, if successful, would give him the opportunity to reshape the seven-member Fed board with a more dovish tilt, heightening concerns on Wall Street about political influence over interest rate decisions. The dollar weakened and U.S. Treasury yields steepened on Tuesday as investors weighed the prospect of disruption to monetary policy ahead of the Fed’s September 16-17 meeting.
Legal scholars argue that Trump’s case is unlikely to succeed, as the mortgage transactions predated Cook’s tenure and were scrutinized during her Senate confirmation. The lawsuit could set up a historic test of presidential power under the Federal Reserve Act, which allows governors to be removed “for cause” but has never been invoked in the Fed’s 111-year history.
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