Federal Reserve Governor Lisa Cook will sue the Trump administration to prevent them from firing her, according to her lawyer.
“President Trump has no authority to remove Federal Reserve Governor Lisa Cook,” said Abbe Lowell, a longtime Washington lawyer who has represented figures from both major political parties.
"His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.”
This comes just a day after U.S. President Donald Trump said he would fire the Joe Biden appointee and the first Black woman ever to serve on the central bank’s governing body. He cited “deceitful and potentially criminal conduct” related to mortgages she took out in 2021 for reasons to terminate her.
Trump’s removal attempt is unprecedented in the bank's 111-year history, and if successful, could challenge the Fed’s political independence, which could lead to Americans paying higher interest rates due to investors demanding a higher yield to own bonds to offset potentially greater inflation in the future, pushing up borrowing costs throughout the economy.
Cook’s case is likely to end up at the Supreme Court and is likely to define the president’s legal authority at the independent institution.
Trump’s attempted removal of Cook comes as he has repeatedly demanded that Chair Jerome Powell and the Fed’s rate-setting committee cut rates to boost the economy and reduce interest payments on the government's US$37 trillion debt pile.
Cook's leaving the central bank would also allow Trump to pick a majority of the Fed’s seven-member board.
The Fed meets next month to set interest rates on 16-17 September, meaning it would take a court ruling between then and now for her to be prevented from participating following Trump’s call for her to step down immediately.
