Federal Reserve Governor Lisa Cook has sued President Donald Trump over his bid to oust her from office, a move that could turn into a historic court battle over the autonomy of the US central bank.
Cook’s suit, filed Thursday, is asking for a court order invalidating Trump’s firing directive as “unlawful and void.” She also sued Fed Chair Jerome Powell and the entire Board of Governors, highlighting the gravity of the conflict.
Trump’s Justification and Allegations
Trump has justified his bid to fire Cook, stating “sufficient reason” existed for the belief that she had made false statements on mortgage applications. The president referred to constitutional powers that, he claimed, gave him the right to fire her.
A White House official, Kush Desai, explained to the BBC that Trump had acted within his legal power. “The President made a determination there was a reason to remove a governor who was credibly accused of lying on financial documents from a very sensitive position over financial institutions,” Desai stated.
The claims were made after a letter was released by Trump supporter Bill Pulte, a housing finance regulator, accusing Cook of mortgage records forgery. She signed two different sets of documents within two weeks stating two different residences as her main home, the letter said. But so far, no charges have been brought against her and it is not clear whether she is formally under investigation.
Cook’s Response and Legal Grounds
Cook’s lawyers have categorically dismissed Trump’s move as unconstitutional. Her lawyer, Abbe Lowell, contended in the lawsuit that the attempt to remove her was a breach of the Federal Reserve Act, which mandates an explicit showing of “cause” for the removal of a governor.
“This case seeks to challenge President Trump’s unprecedented and illegal effort to oust Governor Cook from office which, if permitted, would be the first of its kind in the history of the Board,” Lowell stated. He further stated that unsubstantiated claims about her private mortgage applications, made during her Senate confirmation, fall below the legal threshold.
Notably, Cook’s lawsuit sidesteps addressing the mortgage accusations directly and instead concentrates on whether Trump’s action was legal and has wider implications for the independence of the Fed.
Wider Implications for the Federal Reserve
Cook is among seven members of the Federal Reserve Board of Governors and a member of the 12-member Federal Open Market Committee, which determines interest rates for the US economy. Her removal bid follows increased tensions between Trump and the Fed, especially on its handling of interest rates.
Since his return to Washington, Trump has repeatedly urged Fed Chairman Jerome Powell to cut borrowing costs, complaining the central bank is stifling economic growth. The case could move through a series of courts and possibly reach the US Supreme Court, challenging the boundaries of presidential influence over independent financial institutions.
