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Fed Governor Lisa Cook sues Trump over attempted ouster

Trump lacks authority to fire Cook, lawsuit says.

Trump says he’s firing top Fed official Lisa CookJustin Wolfers, economist and professor at the University of Michigan, joined ABC News to discuss the president’s latest announcement.

Federal Reserve Governor Lisa Cook sued President Donald Trump on Thursday over his move to fire her, saying she should retain her position as a top policymaker at the central bank.

The lawsuit, filed in U.S. District Court for the District of Columbia, describes Trump's effort as "illegal and unprecedented," claiming Cook's ouster violates the independenceof the Fed, a cornerstone of the nation's economy.

Trump's action violates Cook's constitutional right to due process, as well as her right to notice and a hearing under the Federal Reserve Act, the lawsuit says.

Hours after Cook filed the lawsuit, a judge granted a hearing for Friday morning. The case has been assigned to Judge Jia M. Cobb, who was nominated to the court in 2021 by former President Joe Biden.

Federal law allows the president to remove a member of the Fed board "for cause," though no president has attempted such a removal in the 112-year history of the central bank.

In a letter posted on social media earlier this week, the president moved to fire Cook over allegations lodged by a Trump administration official, who claimed she had committed mortgage fraud. Trump pointed to a "criminal referral" from Federal Housing Finance Agency Director William Pulte. Cook has not been charged for the alleged misconduct.

In a previous statement, Cook's attorney rebuked Trump's social media post.

“President Trump has taken to social media to once again 'fire by tweet' and once again his reflex to bully is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.”

Cook has not directly addressed the substance of the allegations against her. In a statement last week, Cook said she would seek out her financial documents to answer "any legitimate questions and provide the facts."

The move came after Trump railed for months against the Federal Reserve and its Chair Jerome Powell for declining to heed his call for lower interest rates.

In the lawsuit, Cook's attorney rebuked the allegations as a pretext aimed at removing her for political reasons. Cook has repeatedly voted against interest rate cuts, the lawsuit notes.

"That the President says he has found (or created) some basis for removing a Governor does not magically make such a basis grounds for a 'for cause' removal," the filing says. "The President had no 'cause' to remove Governor Cook."

"President Trump has indicated his desire to impede the independence of the Federal Reserve since he assumed office in January 2025," the lawsuit adds.

The lawsuit names Powell and the Federal Reserve Board of Governors as co-defendants. The Federal Reserve Board, its governors and Powell are sued in their official capacities "to the extent that any individual Governor has the ability to take any action to effectuate President Trump’s purported termination of Governor Cook," the lawsuit says.

 

President Donald Trump answers a reporter's question as he chairs a Cabinet meeting in the Cabinet Room of the White House in Washington, August 26, 2025. Chip Somodevilla/Getty Images
President Donald Trump answers a reporter's question as he chairs a Cabinet meeting in the Cabinet Room of the White House in Washington, August 26, 2025. Chip Somodevilla/Getty Images
 

 

Cook's lawsuit urged a judge to find her attempted firing "unlawful and void," adding that Cook seeks "immediate declaratory and injunctive relief to confirm her status as a member of the Board of Governors."

The lawsuit also asked the judge to issue a declaration outlining the definition of "cause" -- which Cook's lawsuit says includes only "instances of inefficiency, neglect of duty, malfeasance in office, or comparable misconduct."

In a statement to ABC News, the White House rebutted Cook's claims, saying Trump's move to fire Cook is permitted under federal law.

“The President exercised his lawful authority to remove a governor on the Federal Board of Governors for cause under 12 U.S.C. 242. The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions. The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people," White House spokesperson Kush Desai said.

The Federal Reserve declined to comment. In a previous statement, the Fed affirmed the independence of the central bank and vowed to abide by a court ruling on the matter.

"The Federal Reserve will continue to carry out its duties as established by law," the Fed said. "The Federal Reserve reaffirms its commitment to transparency, accountability, and independence in the service of American families, communities, and businesses."

Two Fed governors appointed by Trump -- Michelle Bowman and Christopher Waller -- already sit on the seven-member board. A third appointee -- Stephen Miran, chair of the White House Council of Economic Advisors -- has been nominated as a replacement for Adriana Kugler, who retired this month. If Trump were to replace Cook, his appointees would make up a majority of the Fed board.

Five meetings and eight months have elapsed since the Fed last adjusted interest rates.

Last week, Federal Reserve Chair Jerome Powell said the central bank faces a "challenging situation" as a hiring slowdown coincides with tariff-driven price increases, putting pressure on both sides of the Fed's dual mission to maximize employment and control inflation.

Powell said the Fed would "proceed carefully" but he hinted at the possibility of an interest rate cut, appearing to indicate greater concern for flagging employment growth than rising prices.

Author: Olivia Rubin , Max Zahn

Source: ABC GMA

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