Cook files suit against Trump to keep Fed board seat

Mark Schoeff Jr., CQ-Roll Call on Aug 28, 2025

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WASHINGTON — Federal Reserve Governor Lisa Cook filed a lawsuit against President Donald Trump on Thursday to stop his effort to fire her, launching a legal battle over the Fed’s independence that could work its way to the Supreme Court.

Cook’s suit, filed in a federal court in Washington, says Trump’s actions violate her due process rights under the Fifth Amendment. Trump on Monday released a letter saying he had dismissed Cook for alleged fraud on mortgage applications.

Cook is seeking to maintain her seat on the Fed board and “safeguard her and the Board’s congressionally mandated independence,” says the lawsuit filed in U.S. District Court for the District of Columbia.

The suit also names Federal Reserve Chair Jerome Powell and the Fed board as defendants to prevent them from carrying out Trump’s action. The Fed said on Tuesday that it would stand by Cook.

Cook’s suit says Trump is exceeding his authority by firing her.

“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 suit states. “It would subvert the Federal Reserve Act (‘FRA’), 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.”

Trump’s Monday letter said he was acting under Article II of the Constitution as well as the FRA to remove Cook “for cause.” He justified his case by citing a criminal referral to the Justice Department by Federal Housing Finance Agency Director William Pulte alleging that Cook made misstatements on mortgage applications by claiming two properties — one in Michigan and one in Georgia — as her primary residence.

Trump’s threat to remove Cook comes amid his campaign to pressure Powell and his fellow Federal Open Market Committee members, including current members of the Fed board, to lower interest rates. Cook, whose term isn’t scheduled to end until 2038, casts one of those votes on rate decisions.

“The operational independence of the Federal Reserve is vital to its ability to make sound economic decisions, free from the political pressure of an election cycle,” the lawsuit says.

Cook, an economist and the first Black woman to serve on the Fed board, was confirmed by the Senate in September 2023 for a 14-year term.

The suit says Fed independence is granted by its founding statute as well as related amendments and court cases. Fed separation from the White House is essential for a sound economy, according to the suit.

“Presidents, facing pressure to boost the economy, may favor lower interest rates and a more expansive policy to achieve a temporary economic lift,” the suit states. “However, this approach often fuels long-term inflation. A politically insulated Board of Governors can make appropriate, albeit unpopular, decisions — such as raising interest rates to combat inflation — that are critical for the nation’s long-term financial health.”

Statutory provisions that shield the Fed from political interference include those that place its funding outside the congressional appropriations process; give the Fed authority to set terms and conditions of board employment; and prevent Congress from overturning monetary policy decisions, according to the suit. It also cited the requirement of “for cause” removal protection for some Fed officials.

The Supreme Court suggested in a ruling in another case this year that there are limits on a president’s ability to fire a member of the Fed board.

In a case involving Trump’s removal of members of the National Labor Relations Board and the Merit Systems Protection Board, the high court disagreed with the plaintiffs that they deserve the same “for cause” protections granted to Fed governors and FOMC members.

“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the Supreme Court majority wrote.

Congressional Democrats have defended Cook following Trump’s actions.

The House Financial Services Committee said it will look into the allegations against Cook.