We applaud Federal Reserve Governor Lisa Cook for her historic action in filing this lawsuit in federal court in Washington, D.C. She is suing President Donald Trump over his recent arbitrary decision to fire her. Cook’s attorney Abbe Lowell makes an impassioned case that the president can’t remove her at all, except for good cause. This requirement is as clear as day in the Federal Reserve Act. The lawsuit treats the Chair of the Federal Reserve, Jerome Powell, and the Board of Governors equally as defendants.
Cook has been a Federal Reserve governor since 2022. Even upon her firing, she promised to keep helping the American economy with her functions. The action stems from claims of pervasive mortgage fraud connected to two residential homes that Cook owns. One key thing to remember is that she has not been charged or convicted of committing any crime.
President Trump’s decision to fire Cook has been several months in the making, fueled by the administration’s discontent over interest rate decisions made by the Federal Reserve. He has publicly slammed Cook, Powell and the other board members. He thinks they need to be more aggressive about lowering interest rates in order to stimulate growth.
Cook’s lawsuit argues that Trump’s actions are unprecedented, unreasonable, and illegal. In a statement, she emphasized her commitment to her role at the Federal Reserve:
“I will continue to carry out my duties to help the American economy as I have been doing since 2022.” – Lisa Cook
Abbe Lowell, Cook’s attorney, provided further context for the lawsuit, asserting that the president’s attempt to dismiss Cook is unfounded. He stated:
“It would subvert the Federal Reserve Act … 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.” – Abbe Lowell
Cook’s suit could create a hefty precedent, possibly making it all the way to the Supreme Court if it makes its way through lower courts. Cook is currently doing battle against the allegations, and against her firing. Denying the authority repeatedly, she strongly asserts that Trump “has no legal authority to do so.”
Cook’s firing uncovers the continued animosity between the Fed and the Biden administration. At the heart of these tensions is the direction of monetary policy and interest rates. Even as the individual lawsuit plays out, it has broader implications for the independence of the Federal Reserve and its governors.