FIGHTING BACK

Fed Governor Takes Her Own Boss to Court Over Trump Firing

The lawsuit paves the way for a landmark legal battle between the president and the Fed.

Federal Reserve Bank Governor Lisa Cook has sued Donald Trump—and her own chairman Jerome Powell—over what she calls an “unprecedented and illegal” attempt to fire her.

In a dramatic escalation in the feud between the central bank’s first Black governor and the president, Cook filed a lawsuit on Thursday challenging Trump’s attempt to remove her over unproven allegations of mortgage fraud.

The lawsuit also names the Federal Reserve Board and Powell as defendants, based on their “ability to take any action to effectuate President Trump’s purported termination of Governor Cook.

“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,” says the lawsuit.

“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.”

Cook’s legal challenge sets the stage for a landmark legal battle with the Fed, an independent institution that Trump has attacked for months in an effort to lower interest rates by installing his own loyalists on the board.

Tensions escalated this week when the president took the unprecedented step of writing a termination letter to Cook, whose term wasn’t due to expire until 2038, informing her that she would be removed from her position “effective immediately” due to allegations of mortgage fraud.

The allegation was made by MAGA acolyte Bill Pulte, the head of the Federal Housing Finance Agency, who has separately also referred New York’s Democrat Attorney General Letitia James and California Democrat Senator Adam Schiff to the department on similar mortgage fraud allegations.

FED UP!

Trump Goon Plots to Unseat Fed Member

Farrah Tomazin

“We’ll have a majority very shortly and that’ll be great,” Trump said on Tuesday, referencing his desire to control the direction of the independent bank’s monetary policy.

However, Cook argues in her lawsuit that independence of the Federal Reserve is vital in order to make sound economic decisions “free from the political pressures of an election cycle.”

Many have also questioned the president’s ability to fire the governor, who has not been charged or convicted of any crime.

The allegations against Cook are also unproven so far, and involve conduct that predated her time at the central bank.

Despite this, the administration has doubled down this week. Commerce Secretary Howard Lutnick suggested Cook was a “crook” despite admitting he did not know the facts of the case.

Director of the National Economic Council Kevin Hassett saying she should go on leave until the accusations are resolved; and Treasury Secretary Scott Bessent suggesting she was guilty.

“What we haven’t heard from Ms. Cook is we haven’t heard her say ‘I didn’t do it.’ She just keeps saying the president can’t remove her,” Bessent told Fox News Mornings with Maria.

The Fed, however, has stood behind the governor, issuing a statement this week pushing back against Trump’s actions.

“Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people. The Federal Reserve will continue to carry out its duties as established by law.”

Cook was confirmed by the Senate in 2022 as the first Black woman to serve as a Fed governor.

The vote to appoint her was so tight that then Vice President Kamala Harris had to break a 50-50 tie in the Senate after Republicans overwhelmingly opposed her.

The lawsuit was filed in the U.S. District Court for the District of Columbia.

See more of our coverage in your search results.

ADD THE DAILY BEAST ON GOOGLE

Farrah TomazinPolitical Correspondent

Got a tip? Send it to The Daily Beast here.