Lisa Cook, governor of the US Federal Reserve, during the Federal Reserve Integrated Review of the Capital Framework for Large Banks Conference in Washington, DC, US, on Tuesday, July 22, 2025. (Al Drago/Bloomberg via Getty Images)
Federal Reserve Governor Lisa Cook intends to file a lawsuit against the Trump administration and challenge her removal from the central bank, her attorney said on Tuesday morning.
It comes less than a day after President Donald Trump said on social media he was firing Cook over allegations of mortgage fraud.
“President Trump has no authority to remove Federal Reserve Governor Lisa Cook. His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis," said the statement from Cook's personal counsel Abbe David Lowell. "We will be filing a lawsuit challenging this illegal action.”
The developments didn't roil financial markets as some had initially feared. The Dow Jones Industrial Average was breaking even while the S&P 500 was up about eight points, or 0.1% as of noon Tuesday.
Cook's decision to sue sets the stage for a legal battle that will likely carry enormous stakes for the Fed's independence from the executive branch. Most legal experts say that Trump lacked the legal justification for attempting to remove Cook, since the conduct in question took place before she was installed on the seven-member Board of Governors.
The confrontation started last week after Federal Housing Finance Agency Director Bill Pulte disclosed mortgage documents on social media from Cook. He alleged she had sought cheaper loans with misleading information on applications in 2021, a year before her Senate confirmation to the Fed's Board of Governors.
The mortgage documents formed the underpinning of a criminal referral that Pulte sent to the Justice Department. Trump quickly demanded her resignation within days on social media. Cook responded in a statement at the time saying she was not stepping aside but was willing to answer questions about her financial past.
The president can only fire Fed officials "for cause," an untested definition that's been interpreted to mean gross wrongdoing. A Supreme Court decision earlier this year fortified the Fed's legal protection from Trump's en-masse federal firings citing its existence as a "uniquely structured, quasi-private entity."
