Fired US Fed Governor Lisa Cook to sue Trump in rare legal challenge

Trump dismissed Federal Governor Lisa Cook on charges of mortgage fraud. Her removal comes at a time when Trump has been trying to ramp up efforts to exert control over the US Fed

A day after US President Donald Trump fired Federal Governor Lisa Cook over mortgage fraud allegations, the embattled governor has decided to sue his administration in an attempt to stop her removal, Associated Press reported.

 

Abbe Lowell, Cook’s lawyer, on Tuesday (local time), said that Trump has no authority to fire Cook. He said, “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.”

 

Trump announces Cook’s removal citing constitutional authority

 

On Monday (local time), Trump dismissed Cook and made the announcement via his private social media platform, Truth Social. The move comes as Trump increases efforts to assert control over the US Federal Reserve, a body historically designed to be free from political influence.

 

 

In a letter to Cook, Trump cited his constitutional powers, stating: “Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.” 

 

The decision underscores growing friction between the White House and the central bank, which has frequently been criticised by Trump for not lowering interest rates in line with his economic priorities.

 

What are the allegations against Lisa Cook?

 

According to Trump and his administration, Cook allegedly falsified bank records to obtain more favourable mortgage terms. Bill Pulte, Director of the Federal Housing Finance Agency and a Trump appointee, alleged that in 2021, Cook claimed two primary residences—one in Ann Arbor, Michigan, and the other in Atlanta—to benefit from better interest rates.

 

Such actions, Pulte argued, allowed Cook to obtain mortgage terms typically reserved for first homes, as second homes or investment properties usually carry higher rates. 

   

Cook refuses to resign, calls firing illegal

 

Cook, who was appointed to the Federal Reserve Board by Democratic President Joe Biden in 2022, responded on Monday night (local time) that she would not resign. In an emailed statement, she said, “President Trump purported to fire me for cause when no cause exists under the law, and he has no authority to do so.”

 

What happens next?

 

According to Associated Press, the dispute is likely to reach the US Supreme Court and could set a significant precedent concerning presidential authority over the Federal Reserve, which has traditionally operated as an independent entity.

 

If Trump is successful in removing Cook, it could raise concerns about the central bank’s independence—especially its ability to raise interest rates or implement other anti-inflationary measures without political interference.

 

Does the president have the power to fire a Fed governor?

 

Legal experts have described the case as legally uncertain but unprecedented. While Cook’s dismissal may not be strong on legal grounds, analysts note that the US Supreme Court has shown increasing willingness to grant broader powers to the president in recent rulings, including decisions related to the removal of agency officials.

 

Whether Trump’s firing of Lisa Cook stands or is overturned, the case is expected to set a new legal benchmark in the ongoing debate over the limits of presidential authority and the independence of financial institutions in the US.