Federal Reserve Board member Lisa Cook is suing President Donald Trump over her removal from the panel that manages the country’s monetary policy.
The lawsuit, filed in federal court on Thursday, comes after allegations that Cook committed mortgage fraud before joining the Federal Reserve. The case could eventually reach the Supreme Court and marks a major escalation in the growing conflict between the White House and the Fed.
The White House responded to the lawsuit, saying Trump acted within his authority to remove Cook.
“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,” White House spokesperson Kush Desai said in a statement. “The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people.”
The Federal Reserve declined to comment, and Cook’s lawyer did not immediately respond to requests for comment.
Trump wrote in a letter to Cook on Aug. 25 that he had “sufficient cause” to fire her and that her dismissal was “effective immediately.”
A day later, Cook said she would not resign from her post at the Federal Reserve, the country’s most powerful central bank. “I will continue to carry out my duties to help the American economy as I have been doing since 2022,” she said. Her term on the Federal Reserve Board of Governors is set to last until January 2038.
It is unclear whether Cook has tried to enter the Federal Reserve’s headquarters in D.C. since Trump’s letter. The Fed has not confirmed if she is working from her office, remotely, or still has access to her email and other resources.
The Federal Reserve Board, also called the Fed board, has seven members who are nominated by the president and confirmed by the Senate. This group decides the nation’s economic policies.
Cook’s appointment was historic—she became the first Black woman to serve as a governor on the Fed board. Her potential removal, tied to legal action, could create another historic moment.
The allegations against Cook were made by Bill Pulte, a Trump appointee to an agency that regulates Fannie Mae and Freddie Mac. Pulte claimed that Cook listed two primary residences in 2021—one in Michigan and one in Georgia—to get better loan terms.
On Aug. 15, Pulte sent the Justice Department a criminal referral accusing Cook of falsifying bank and property records.
Cook has denied any wrongdoing. She said she has “no intention of being bullied to step down.” “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts,” she said.
The Federal Reserve has acknowledged that Cook may take legal action. In an Aug. 27 statement, a spokesperson said the U.S. central bank will “abide by any court decision.”
“Lisa Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors,” the Fed spokesperson said.
Trump said during a Cabinet meeting on Tuesday that he is ready for Cook’s potential legal fight. “She seems to have had an infraction and she can’t have an infraction. And especially that infraction because she’s in charge of, if you think about it, mortgages. We need people that are 100% above board, and it doesn’t seem like she was,” Trump told reporters, referring to the mortgage allegations.
When asked about replacing Cook on the Fed board, Trump said he has some “very good people for that position.”
Tensions between Trump and the Federal Reserve over monetary policy have increased in recent months. Trump has criticized Federal Reserve Chairman Jerome Powell for not lowering the federal funds rate, which he says could save the country “hundreds of billions of dollars.”
Powell has kept the Fed’s main borrowing rate between 4.25% and 4.5%, taking a cautious approach while watching the effects of Trump’s tariffs. Over 80% of market participants are expecting a 25% rate cut at September’s meeting, according to the CME FedWatch Tool, which tracks interest rate probabilities.
“We’ll have a majority very shortly,” Trump said, adding that he expects to have a bigger influence in lowering rates. “So that’ll be great.”
