Federal Reserve Governor Lisa Cook says she will file a lawsuit to block President Donald Trump from dismissing her, a lawyer for Cook said on Tuesday, signaling the start of what could be a protracted legal fight over White House attempts to influence U.S. monetary policy.
The move follows Trump’s declaration that he would fire Cook, the first Black woman to sit on the Fed’s seven-member board, over alleged deceitful and potentially criminal conduct related to mortgages she took out in 2021. The unprecedented bid to remove a sitting Fed governor comes as part of a broader pattern in which Trump has sought to extend direct control over various government functions.
Trump’s aggressive stance toward the Fed fits his broader pattern of pressing for a more aggressive approach to policy and personnel. He has previously urged lower interest rates and has threatened to fire Fed Chair Jerome Powell, though he has since backed away from that particular threat. Trump’s discussions about reshaping the Fed board have intensified consideration of who might fill Cook’s seat should she be removed.
Cook’s departure would clear the way for Trump to appoint a majority on the Fed’s board, including the ongoing nomination of White House economist Stephen Miran. The Wall Street Journal earlier reported that former World Bank Group President David Malpass, a longtime Trump ally, was also discussed as a potential candidate for the seat.
The Federal Reserve emphasized that board members serve 14-year tenures and cannot be removed easily, a design intended to ensure monetary policy decisions are grounded in economic data and the long-term interests of the American people.
Why this matters: If Cook’s position is vacated, the administration would gain greater influence over the Fed’s direction. The legal challenge highlights the ongoing tension between executive power and central-bank independence, a dynamic with potential implications for policy credibility and financial markets as investors weigh the risks to policy continuity.
Additional context and analysis: The case underscores the importance many markets place on the Fed’s independence in setting policy based on data, rather than political calculations. It also raises questions about the legal boundaries of removing central-bank officials and how such disputes could unfold within the framework of separation of powers.
Summary: The dispute centers on an attempt to remove a sitting Fed governor and the legal battle that would follow, touching on broader questions about central-bank independence, presidential authority, and the balance between political objectives and long-term economic stability.
What to watch next: The legal process will reveal how courts balance constitutional questions about executive removal powers with the Fed’s need to maintain independent monetary policy. Analysts will also be watching for any shifts in board dynamics and how potential nominees might influence future policy signals.
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