On August 25, 2025, President Donald Trump announced his intent to remove Lisa Cook from her position as a Federal Reserve governor, citing allegations of mortgage fraud. Cook, the first Black woman on the Fed’s board, has challenged the move, filing a lawsuit on August 28 to block her dismissal.
What Happened
Trump’s decision followed a criminal referral by Federal Housing Finance Agency Director Bill Pulte, who alleged Cook made false statements on mortgage applications in 2021, claiming two properties as primary residences. In a letter posted on Truth Social, Trump stated that the Federal Reserve Act allows him to remove governors “for cause” and that Cook’s alleged actions undermine public confidence in the Fed’s integrity. Cook responded, stating, “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so.” Her lawsuit, filed in federal court in Washington, D.C., seeks a judicial ruling to confirm her position and block Trump’s action. A hearing for a temporary restraining order is scheduled for August 29, 2025, before Judge Jia Cobb.
Reasons Cited
The White House, through spokesman Kush Desai, stated that Trump’s action aims to ensure accountability, as Cook’s alleged false statements relate to her role overseeing financial institutions. The allegations stem from Pulte’s referral, which prompted a Department of Justice investigation, though no charges have been filed against Cook. Trump has also expressed broader frustration with the Federal Reserve, particularly its refusal to lower interest rates, currently set at 4.25% to 4.5%.
Expert Opinions
Legal and economic experts have raised concerns about the implications. Jane Manners, an associate professor at Fordham School of Law, called the allegations “pretextual,” suggesting Trump’s move is an attempt to influence Fed policy. Peter Conti-Brown, a Fed governance expert at the University of Pennsylvania, warned that a successful removal could “mark the end of central bank independence.” Edward Mills of Raymond James noted that markets may view this as an attack on Fed autonomy, potentially increasing economic uncertainty. The Supreme Court, in a May 2025 ruling, described the Fed as a “uniquely structured” entity with historical insulation from political interference, which may support Cook’s case.
Context
Cook’s term, which began in 2022 and extends to 2038, is protected by the Federal Reserve Act, which allows removals only “for cause,” typically defined as professional misconduct. The Fed, responsible for setting interest rates and regulating banks, has emphasized its commitment to independence. The outcome of Cook’s lawsuit, likely headed to the Supreme Court, could reshape the balance of power between the presidency and the central bank.