Federal Reserve Governor, Lisa Cook has filed a lawsuit arguing that United States President Donald Trump has no power to remove her from office, setting up a legal battle that could reset long-established norms between the President and the central bank.
The lawsuit was filed on Thursday, August 28, 2025, three days after Trump published a letter saying that Cook was removed from her job.
In the lawsuit, Cook argues that Trump violated federal law in attempting to remove her from her position. Under the Federal Reserve Act of 1913, Presidents may only remove a Federal Reserve Governor “for cause”, a high bar generally understood to mean grave misconduct or dereliction of duty.
As the country’s central banking system, the Federal Reserve is considered independent from political branches of government like the presidency or Congress. In theory, that allows it to set monetary policy without political influence.
However, concerns about whether the Fed can maintain its independence from the White House under Trump could have a ripple effect throughout the global economy. The US dollar stumbled against other major currencies after Trump first said he would remove Cook.
Cook’s lawsuit is likely headed to the Supreme Court, where a conservative majority has at least tentatively allowed Trump to fire officials from other agencies but the court recently signalled that the Federal Reserve may qualify for a rare exception.
In its May decision in the case Trump v Wilcox, the Supreme Court argued that Federal Reserve Governors are distinct from other federal employees, because the bank “is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”
Still, Trump has argued that he does have cause to remove Cook from her post. In his August 25 letter, he accused Cook of committing mortgage fraud in 2021, a year before she joined the Federal Reserve’s governing body.
“The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve.
“In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
Donald Trump
The Federal Reserve Act does not define what removal “for cause” means, nor does it lay out any standard or procedures for removal.Trump, however, has argued that Cook’s actions amount to “gross negligence”, though she has denied the allegations.
Questions about Cook’s mortgages were first raised in August by William Pulte, a Trump appointee who is the Director of the Federal Housing Finance Agency.
Pulte referred the matter to Attorney General Pamela Bondi for investigation. Cook took out the mortgages in Michigan and Georgia in 2021 when she was an academic, researching and teaching economics.
An official financial disclosure form for 2024 lists three mortgages held by Cook, with two listed as personal residences. Loans for primary residences can carry lower rates than mortgages on investment properties, which are considered riskier by banks.
Cook was appointed to the Federal Reserve in 2022 by former President Joe Biden, a Democrat, and is the first Black woman to serve on the central bank’s governing body.
Some experts have questioned whether transactions that preceded Cook’s appointment to the Federal Reserve would be adequate cause to remove her.
After all, Cook’s mortgages were in the public record when she was vetted and confirmed by the Senate in 2022.
Sameera Fazili, the former Deputy Director of the National Economic Council, told a news agency, “President Trump’s attempt to fire Dr Lisa Cook is continuing to add uncertainty and chaos to the US economy.”
Fazili, who previously served as a staff member at the Federal Reserve Bank of Atlanta, explained that disruptions at the central bank would negatively impact US businesses.
“An economy needs stable and predictable laws to function smoothly. That’s how you earn investor trust and raise capital for your businesses. I applaud Dr Cook for standing up and fighting for the rule of law.”
Sameera Fazili
No President has ever removed a Federal Reserve board member, and the legal standard governing removals from the central bank has never been tested in court.
A Federal Reserve spokesperson said on Tuesday, before the lawsuit was filed, that the bank would abide by any court decision.
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